The Financial Warning Most Investors Aren't Ready For | Adam Taggart

0:07I'm Dave Rubin and yes, it is August and I am still off the grid, but that does not stop us from bringing you fresh content. And joining me today is the host of the Thoughtful Money podcast, Adam Taggart. Adam, how are you? I'm great, Dave. Total honor to be here. Huge fan. I appreciate that. As I said to you in the moments before we started recording, anyone with a nice, well-lit moss wall, pretty much good to go in my book. I appreciate the moss. Hey, no worries. You've got to differentiate yourself in this industry. And before we start, some may say this is buttering up the host, and maybe it's part of it.

0:46But a huge fan of your work and what you do here. Huge fan of your team. Connor, Phoenix, Christy, Joseph. Joseph, by the way, you should kick that. Do me a favor, kick that bucket of fish heads closer to Joseph. Let's let him have a cup of coffee. He does get it. You know, I keep it right out of reach. So he really has to, you know, late night, really just has that extra effort to get the fish heads. Well, he's been working hard. He deserves at least a whole head at this point. But also, I think you do a great show. But just as a guy in the business, I'm really impressed by the business that you've built here.

1:22Not just with the Rubin Report, and I think your videos are up to like 600 ,000 views a video right now. I mean, you're absolutely crushing it. But also what you've done with Locals, what you've done with the Creator Network, Copal. I mean, you're really building a business or an empire business off of all this, and I think you're doing it in a really fantastic way. Oh, wow. Well, I truly, truly appreciate that. And interestingly, that was sort of, although I wasn't going to say all those nice things about myself, That was kind of how I was going to start this interview because I did not learn much about finances in high school.

2:00And most people seem to not learn much about finances. They don't learn much about debt. They don't really understand credit cards. We don't really learn what the markets are. I'm sure you get a version of this question all the time. So all of the things that I built, I was kind of learning about them all the way. And that still goes to today where I'm learning things about all of this. So when I'm off the grid for August, I like doing shows that are a little more evergreen, and we did some on lifestyle and health. But I thought finance would be perfect, and that's why we wanted to talk to you.

2:32So first off, are you surprised that still in 2026, there is such a lack of knowledge around all of these things, so that a guy like me has to be learning on the fly as I'm building things just because I think they're kind of interesting, and then I have to surround myself with good people who can fill in all the blanks on the stuff that I don't know? Yeah, I'm not so much surprised as I'm just saddened. So what you just mentioned there, this dearth of financial education, financial literacy in our society, it's why I created thoughtful money in the first place. And Dave, I went to a good public schooling system.

3:09I then went to an Ivy League undergrad. I then got my MBA at Stanford. Nowhere in there was I given a practical course on money management, the practical things that we need to know in life, like how to manage credit card debt or how to take out a mortgage, all that type of stuff. So if I didn't get that, I just can't imagine what the vast majority of people who aren't going to as, quote unquote, illustrious schools as I did. And what kind of put me on this journey was my parents got divorced when I was real young. I ended up, my mom ended up getting custody of us. So she was a single mom and she did not have any real financial background.

3:48She didn't have any real mentors to help her either. Her parents had already passed away. So I got to see firsthand what it's like to live your life without a lot of financial knowledge. And she ended up making poor decision after poor decision. And of course, the older you get in life, those decisions become more and more desperate because you're trying to make up for more and more lost time. and there's just way too many people in our society that I think are caught in that trap. And it's crazy because a question I like to ask people, Dave, is why do we value education? And I think the short answer most people come up with is because, well, I guess because if I go to school, I'll be better off in life.

4:26Okay, great. That makes sense. What do you mean by better off in life? I think in most cases, people say, well, I'm going to make more money and I'll have more options as a result, right? But our schooling system doesn't teach us at all about money. I think most people watching this channel probably never received a single class anywhere in their education journey around the practicalities of personal finances or money management or the basics of investing. Right. I mean, I remember taking macroeconomics in college, I guess, maybe sophomore year, but it didn't talk about like the granular stuff.

4:58Like once we throw you out of this four-year university and you got to make it on your own. yeah, you were learning some theory stuff. And usually, I guess it's sort of lefty theory around these things at most schools, especially now. So what do you, if you were, if someone came to you right now, someone's listening to your podcast and they're just messaging you like, man, I'm just starting out in the world. I got a degree. Okay. I got some job. I'm trying to figure out the basics of what to do with my money and set myself up correctly. I know you have several kind of bulleted out ideas on the direction that you would send people and what they should be thinking about.

5:35Sure. So just trying to keep it simple, there are really three key muscles you need to develop to become financially well-off. There's the earning muscle, there's the saving muscle, and there's the investing muscle. And generally, I recommend that people focus on developing those muscles in that order. You can't really save until you've got income coming in the door, right? And really, your whole financial foundation is built on how can I create value in the world that the world will pay me for, right? Pay me a good wage or I go out and be an entrepreneur and create a company and people want to buy my product or my service.

6:16so you know I would I would start there then once you've got an income stream coming in you know then it's all a matter of okay great how do I contain my costs as much as possible so that I can take as much of that income that's coming in and put it away right and then once you've got that working well then it becomes okay great how can I put my money to work for me so that my money is increasing my money is increasingly making money so that I'm not quite as essential to continuing to build my wealth from here. So at a very high level, just turn that on, right? I think, again, if this is somebody who's brand new to all this, some key foundational things you need to know are compounding and how compounding works.

6:57Humans' brains, we think linearly. We don't think exponentially. And compounding is definitely an exponential function. And this is wonderful. So when you put money away over time, That money continues to increase by the return on whatever that money is getting and and those the absolute gains you get as you go along in the timeline get bigger and bigger and bigger This is why wealth generally is associated with age the older people are they've had more time to benefit from compounding And so a really key element there is the earlier in life you can start saving The much more you can benefit from that over time So a good example is if you're 18 years old, if you put$5 ,000 away that year, and then you just put$5 ,000 away year after year after year, you're going to be a millionaire by the time you hit 50.

7:46And you'll be like$3.5 million by the time you're 75. Can you lay out a little bit? You don't have to go into every specific on that, but a little bit of how that math works? Because I think people hear that. They're like, that can't possibly be. In their head, they're just like, that makes no sense. And, you know, Trump, obviously, with these Trump accounts and what he's doing with Michael Dell, he's trying to do a version of sort of what you just described, like right there with the public private partnership. Yeah, exactly. And so, I mean, the simplest thing I could I could do, and maybe I'll just show it here, Dave, real quick, is just build yourself a very simple little spreadsheet.

8:22Ooh, I like this. A guest with it. This is a first time Rubin Report happening right now. We got a spreadsheet on the show. I hope you're not going to show anything else you don't want us to see there. Yeah, hopefully not. Hopefully not. But here's just a simple spreadsheet. This is the math I just mentioned. You plop 5 ,000 is your starting amount. 8 % is your annual return. We can make that bigger or smaller, however you like. And then you put in how much you want to add every year. and then here I just show you the math. By age 18 when you're starting out, well, you've made 400 bucks in interest that year at 8%.

8:58As that number that you have in terms of total capital continues to grow, it's still compounding at an 8 % rate every year. So that 8 % becomes a bigger and bigger number. So you can see the numbers start getting pretty big here. Now,$5 ,000 might be a lot when you're 18 or in your early 20s to put away, but it's not that much if you're 30 or 40 years old. So if you want to say, well, I think on average over the course of my life, I could put away$10 ,000 a year. Well, bang, you're a millionaire here sometime in your mid-40s. And obviously, people can put, as you have windfalls in life or inheritances or family things, you can add that in here.

9:37These numbers get even bigger. So again, like I said, the human brain doesn't really think exponentially, which is why sometimes a spreadsheet helps. but it's a phenomenal force. Now, what's really important to remember is it can work for you, like in the example I just mentioned, or it can work against you, right? So if you have debt, then debt has an interest rate and every year you've got to pay, let's say 8 % on your debt. It's exactly what I showed you just working in reverse. And this is what I think is really criminal is we don't teach this to kids in our schooling system. And what's, I don't know if you remember Dave, But when I went to college, the first day I went to my college mailbox, I opened it up.

10:20It was just crammed full of credit card offers. Oh, yeah. I used to get them all the time, all the time. All the time. So we push people out into a world where they are getting marketed to take on credit all the time from everywhere. And yet we don't educate them about the dynamics of credit. So what happens? Well, they very quickly find themselves in a hole. and they're saying, Jesus, I'm doing everything I can to pay this damn credit card bill every month, but it's just not going down, right? That$20 pizza you bought late one night with your new credit card in college ends up costing you like 450 bucks over the life of a company.

10:54Yeah. I did a lot of balance transfers when they were zero APR back in the day. And then eventually it caught up to me because eventually they run out. Yeah. Okay. So just moving on real quick for some of the basics here, and Dave, interrupt me at any point in time. So understand how compounding works both in your favor and against it. And obviously, when you learn about how it can work against you, you want to minimize its ability to do so in general, take on as little debt as you can, or at the very least, understand the difference between unproductive and productive debt, right? A productive debt might be something like a degree to go to school that's going to help you, you know, earned a degree that you're going to make a lot of money with, or it might be a capital investment in a new business that you're starting.

11:37It's debt that can hopefully create a stream of future cash flows that will pay off the debt and then some, right? But then there's a lot of unproductive debt. And my pizza example is a great example of that, right? It's just debt you're spending on a one-time fling, and then all you have after it is memories and a bunch of debt, right? So understand the difference between the two. Then understanding inflation. Inflation is essentially the erosion of the purchasing powers of our dollars over time. So even though I gave you that chart of all the money nicely growing over time, what it can actually buy on a per dollar basis is also diminishing over that period of time.

12:16So a good financial advisor will tell you, look, the purpose of investing is not to get rich. I mean, that's a goal. And if you do it right, you can get rich. But the number one objective of investing is to keep the money that you've saved, your net worth, at or above the rate of inflation going forward. So that at least it's going to buy as much as it buys today in the future, if not more, if you're able to grow it faster than the rate of inflation. And of course, a lot of people, it's called a silent tax. It's something that a lot of people just don't notice is going on. Now, that's been revealed.

12:54It's been a little more in your face lately, you know, coming out of COVID when inflation spiked to 9%. And even though it's come down to, you know, whatever it is today, it's sort of in the 3 % range, you know, that's the official number. I think the actual number that most people experience in their daily lives is substantially higher than that. So you want to make sure that when you're investing, you're putting your money there so that it will grow hopefully more than 5%, 6%, 7%, which is probably where the actual real increase in cost of living is these days. Let's pause on kind of the granular stuff for a second.

13:31We can get back to that. But more on like the sort of philosophic side. It seems to me that a lot of people have financial problems because of the nature of their relationship with money, that they just think either money is the root of all evil or now there's this weird hatred of capitalism in America, capitalism, and there's this seeming ascendancy of socialism. that they somehow fundamentally think that success and creation and all of these things are bad. And that seems to me to be a major impediment to accomplishing a lot of the things that you'd like people to accomplish. That's absolutely true.

14:08And it's interesting because I think at the same time, Dave, there's sort of a vilification of the wealthy and the rich. And let me underscore folks. Sort of. You're putting it mildly if you've been watching my show lately. I probably am. And I want to be sensitive. There are reasons to be frustrated with how our current socioeconomic dynamics are working right now. In other words, the wealth gap has been increasing over time. And there are some real grievances there. But in my opinion, and I think you think similarly, Dave, is the solution is not abandoning the capitalist free market model that has created more prosperity for more people than ever in the course of human history by a long shot.

14:58The solution doesn't lie in abandoning that and potentially embracing the solution that we know has a 0 % track record of success. Right. So I just want to note at the beginning here that there are some, I think, valid claims of things that we could be doing better. But the solution lies in fixing what's not working perfectly with capitalism versus abandoning it. But to your point, there is a vilification. But I also think at the same time, in parallel, there's an envy. Right. There's an envy that these bastards, these rich guys are enjoying a quality of life that I feel like I deserve. and the solution for that is I should take what they have, right?

15:36And of course, we're seeing a lot of political momentum around that right now. So it's funny, you know, money is, it's extremely measurable, right? I can create a spreadsheet like I just showed you, right? But what's funny is there's a great field of study out there called behavioral economics and behavioral economics basically says, yes, while money itself is inherently quantifiable, we make very irrational decisions around it because we are human animals, right? And there's a video, Dave, I don't know if you've got a chance to put the clip in here or now, but maybe we can put the link in the description for folks.

16:19Yeah, we'll throw some B-roll in and we'll put the link. Okay. But it's an experiment being run by a behavioral scientist, a behavioral economist. And he basically shows how not just humans, but most mammals are hardwired for justice. And what he uses to describe this is he does a test with these two capuchin monkeys, and he gives them both cucumbers.

16:46The monkey is supposed to press a button. and then if he does, he gets a little cucumber from the researcher. And the monkeys are happy to do this all day long, getting cucumbers. Monkeys think cucumbers are awesome. But then the researcher starts giving one of the monkeys a grape. And monkeys love grapes. And so what happens is the monkey who gets the cucumber, pushes the button, gets his little reward, then sees his buddy push the button and get a grape. So he rushes and pushes the button, expecting a grape. Like he gets a cucumber again and he chucks it at the researcher. He starts banging his fist.

17:21Yeah. And I think the reason why I mentioned all this is just to show that the sense of justice and injustice is hardwired in all of us. And if we feel that we are being taken advantage of, that if we are somehow being unfairly treated or victimized by a group of people or a society, we get really angry. Right? I mean, we get kind of rageful. And I think that's what's going on right now is there has been an increase in the wealth defied for reasons we can get into or not. And people are looking at that and saying, hey, that's not very fair. So these are corporate bailouts and things like that where it seems like the rich – I think objectively most of the policies that our government has pursued over the past couple decades, even if they were made with the best of intent in the moment, have rewarded people who own assets.

18:11They've ended up pushing stock prices, the prices of financial assets higher. And that's a minority of the country, right? And oftentimes, the policies that have pushed those assets higher have done so by increasing the money supply in the system, which more money asset prices will go up in response, but also more money prices of everything will go up. So the people who don't have financial assets, the regular people out there, all they get is the increase in their costs, right? They don't get the benefit of the rising asset prices. So the rich kind of move further and further away from the less rich, right?

18:46So there's that, I think, objective thing going on. But I think a lot of people, both politically inside the country and outside our country, have used that as a lever point to divide this nation and to sell this victimized victimhood narrative to the dispossessed and the younger population who are looking and saying, look, it's a harder road to climb than I have to climb to try to afford a house. middle-class lifestyle than my parents had. And I'm pissed off about that. And people say, great, here's where you should direct that anger. And I think that's the very toxic dynamic that's going on right now.

19:21We should not be vilifying the successful, the job creators, the people that are trying to drive this economy forward, because I think that's where the answer lies. And I can talk more about that in a moment, but I'll take it. Yeah, let's, well, actually, let's pause there for a second, and I'm going to read an ad that pays for this program, which I think makes sense relative to what we're talking about. And I think you're going to like where we're going with this, Adam. Guys, this video is sponsored by CallShe, and as you know, it's like buying or selling a stock, very apropos, except the line isn't set by some algorithm working against you.

19:52It moves based on where the money actually goes. It shows where people are putting their money, not what the media wants you to believe. Maybe I can get an answer from Adam on this. So, will the S &P's 500 annual will return beat bitcoins this year. Well, here's what the Carl Shee markets are showing. If you put 100 on, yes, the S &P 500, then you can earn$108, correct? Guys, download the Carl Shee app and use code RubinReport to get$10 when you trade$10. That's K-A-L-S-H-I. Carl Shee, put your money where your prediction is. Adam, you want to take a stab at that one real quick? You think the S &P is going to outperform Bitcoin by the end of the year?

20:29I think so, because it's got a huge head start so far this year. Yeah. It does seem like it. Bitcoin's a little banged up. Well, let me ask you, relative to what you were just talking about there, and that there's a certain set of people who are weaponizing sort of perceived injustice, while at the same time you're saying there are legitimate concerns about the way the system has worked and all those things. How much of it do you think is sort of baked in mindset with people? And what I mean by that, you may have heard me talk about this on the show, but the one thing that I really want that I don't have is I want to have an indoor basketball court one day like that that is my dream and I will work to make that happen and a few months ago I was in Austin at Joe Lonsdale's house and I'm sure you're familiar with Joe co-founder of Palantir with Teal and he's done great things and he he actually invested a small amount in locals but he was a great advisor for me more than he was there for the money and that that actually meant more to me than the money and I walked into his house I did his podcast I didn't know he had an indoor basketball court.

21:27And as I'm walking out, he's like, oh, you might want to see this. And I opened the door and like my jaw hit the floor. I was like, this is the great, but, but the reason I'm mentioning this is I was not jealous for a second. I've been around people that have tremendous wealth and I've always been kind of inspired by it. Like to me, it's like, wow, what could I, what else could I do? What else could I do to either have that or be part of this world or something like I'm not wired to look at something and be like, oh, I should have that or be angry at that. But I think some people actually seem to be wired in that way too.

21:59And so I think we're fighting a version of human nature. Well, I think absolutely that's a big part of the case. But I think that's going to be true no matter what environment we're in, right? But I think what's going on in parallel that kind of like what we're talking about earlier is I think there actually is an intentional indoctrination going on to try to shift people. you've got the hero mindset, Dave, right? I want to change my station. I want to change my situation. I want a basketball court. Great. I'm going to go forth and go get that, right? The flip side of that is the victim mentality.

22:37Oh my gosh, these rich people have basketball courts. I'm never going to have one because life sucks, right? I think there's an intentional indoctrination going on right now towards that. And you talk about this all the time. This is in our education system. And look, I saw this firsthand. I mentioned I went to an Ivy League undergrad. I went to Brown University. You went to Brown, yeah. Yeah, this was the, was it Wuhan Virology Institute of the woke movement. This is where it was all created and it was called the PC movement back there, the politically correct movement, right? And I got to see the genesis of this and, you know, metastasized into what became woke.

23:17But, But in parallel with that, colleges kind of became these ideology madrasas of this new way of thinking. And a lot of it is, look, rich, bad, poor, good. We need to seize the means of production from them. We need to seize their assets and stuff like that. And I think, sadly, that's really infected the mindset of anyone kind of under 30 here in America because it's pretty much what they've heard through the education system. And I actually want to ask you this, David, but it's a question I've had for you watching your show a lot. Yeah, yeah. I don't hear much. I don't personally like to take too much of a Republican-Democrat point of view on my side just because I think that financial literacy should be for anybody.

24:00I mean, I'll talk to you whether you've got white hair, no hair, or blue hair. I think everybody can benefit from being more financially literate. But very clearly, it seems that the education system was captured a good while ago by a specific ideology. I have not heard much about, OK, if we think that went way too far, what's the movement to actually correct that? I mean, I know Betsy DeVos is trying to dismantle the general federal Department of Education, but that doesn't do much about what's happening nationally in every state and every private college. You know, it's a great question. I'm going to let you do most of the talking here.

24:36But by the time this airs, what we're doing right now, I had just taped an interview with Chris Rufo, who I'm sure you're familiar with, from the Manhattan Institute, who's really been one of the kind of leaders on getting wokeness out of the institutions. And do we have to reform these institutions or burn them down or build parallel things and all of this? And we actually got into that, that why is it that the capitalists, why is it that the people who are for free markets and everything can't seem to market free markets properly. And what do we have to do at the educational level? I would say you probably should model it after the state that I'm living in, Florida, which is now doing school vouchers.

25:14We're doing charter schools. Ironically, we now have, I think, number one public schools in the nation when 30 years ago, as I'm sure you know, Florida had basically the worst public schools because everyone went to Florida to retire and die. So they weren't putting money into it. And now it's completely flipped. So, I mean, I would think that you broadly agree with me that the more choice you give to the system and we have, you know, there's tons of pod learning now here and everything else. Like that's the only way out. I don't know that you can go in and really and truly reform the inner city schools right now.