RPF-0054-Interview_With_John

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00:00:30.000 | Have you ever heard of the millionaire next door?

00:00:34.000 | I bet you have.

00:00:35.000 | Today we're going to interview John Pogliano

00:00:38.000 | who is one of many millionaires next door.

00:00:42.000 | Radical Personal Finance, episode 54.

00:00:45.000 | (upbeat music)

00:00:49.000 | (upbeat music)

00:00:52.000 | Welcome to the Radical Personal Finance podcast.

00:01:04.000 | Thank you so much for being here.

00:01:06.000 | My name is Joshua Sheets and I am your host.

00:01:08.000 | Today is Thursday, September 4, 2014.

00:01:12.000 | Today I'm going to bring you an interview show

00:01:14.000 | and this interview is with John Pogliano

00:01:17.000 | who is now a financial advisor.

00:01:20.000 | Doesn't have a long history in that business.

00:01:22.000 | He's also a podcaster, blogs a little bit.

00:01:25.000 | He's a millionaire next door and so we're going to talk

00:01:27.000 | to him a little bit about his journey.

00:01:29.000 | (upbeat music)

00:01:32.000 | I'm working hard to bring you a broad array of guests

00:01:38.000 | and I love to bring you people from all different backgrounds

00:01:40.000 | and John is no exception to that rule.

00:01:43.000 | I want to bring you somebody from a unique background.

00:01:45.000 | He is currently working in the financial advisory space.

00:01:48.000 | He's currently working in the financial podcasting space

00:01:52.000 | but he doesn't come from a history of that

00:01:55.000 | and so we have recorded and had put together

00:01:58.000 | a really great conversation of some of the concepts

00:02:00.000 | and ideas that have served him as he was able

00:02:03.000 | to grow his wealth over his career

00:02:05.000 | to ultimately becoming a millionaire

00:02:07.000 | by about the age of 50.

00:02:08.000 | I think he said 50.

00:02:09.000 | It was maybe 50 or 52, something like that, 53.

00:02:12.000 | About 50-ish to become about a millionaire-ish

00:02:16.000 | and you'll hear all the details in the interview.

00:02:19.000 | So that's going to be today's show.

00:02:20.000 | Two quick administrative notes.

00:02:22.000 | FYI, in the beginning of the show,

00:02:24.000 | we talk a lot about John's experience and John's history

00:02:28.000 | and some of the lessons that he has learned

00:02:30.000 | and I have learned about personal finance in the first half.

00:02:33.000 | The second half of the show, we talk a little bit about

00:02:36.000 | some of what John has learned with regards to stock investing.

00:02:39.000 | So at this point in time, he works as an active manager

00:02:43.000 | of portfolios for clients and it's very interesting.

00:02:45.000 | So I would love to bring you as much information as I can

00:02:48.000 | from as many people from very diverse backgrounds

00:02:52.000 | and John is part of that.

00:02:53.000 | And I try to give an opportunity,

00:02:54.000 | try to ask some difficult questions.

00:02:56.000 | I apologize, sometimes I sound a little snarky.

00:02:59.000 | I don't mean to and I'm actually going to clean that up.

00:03:01.000 | Sometimes when I ask these snarky-sounding questions,

00:03:04.000 | I don't mean to sound too snarky

00:03:06.000 | but I do like to ask good questions

00:03:08.000 | and try to hear different people's observations and opinions.

00:03:12.000 | So I hope you like that.

00:03:13.000 | Number two is that at one point during the Skype interview,

00:03:16.000 | I wasn't able to hear him at all

00:03:17.000 | and so I thought the call dropped.

00:03:19.000 | So you'll hear me say, "Hello, hello,"

00:03:21.000 | and then I hit pause on the recorder

00:03:22.000 | because I thought the call had dropped

00:03:24.000 | and that's what I do in that situation.

00:03:26.000 | But I wound up, I just had a problem with my headphone

00:03:28.000 | so I quickly realized it but I'm probably missing

00:03:30.000 | maybe 10 seconds of audio, 15 seconds of audio,

00:03:32.000 | something like that.

00:03:33.000 | So don't be too surprised.

00:03:34.000 | With that, here's the interview.

00:03:36.000 | (electronic whirring)

00:03:39.000 | - So John, welcome to the Radical Personal Finance Podcast.

00:03:41.000 | I appreciate you being with me this morning.

00:03:43.000 | - Hey Joshua, thanks for having me on.

00:03:45.000 | - So this should be fun.

00:03:46.000 | I'm looking forward to this.

00:03:47.000 | I always like to talk to people

00:03:48.000 | who are experienced and knowledgeable about finance

00:03:52.000 | because I always learn something new

00:03:55.000 | and I love to learn.

00:03:56.000 | So I've been looking forward to this conversation

00:03:59.000 | ever since we scheduled it.

00:04:00.000 | For the benefit of the audience,

00:04:02.000 | share with us a little bit about your story

00:04:04.000 | and why on earth would you feel yourself,

00:04:07.000 | why on earth would you want to be

00:04:09.000 | on a personal finance podcast

00:04:11.000 | talking about what you've learned over the years?

00:04:13.000 | - Sure thing.

00:04:14.000 | Well, you know Joshua, I guess just in terms of your podcast,

00:04:18.000 | I found you just a couple weeks ago.

00:04:19.000 | I have listened to I think most, if not all of your shows.

00:04:23.000 | I like the direction you're coming from.

00:04:24.000 | That's why I wanted to be on your show.

00:04:26.000 | In terms of me, I'm just, I'm really kind of just a guy.

00:04:31.000 | I'm just kind of the millionaire next door kind of guy.

00:04:34.000 | A few years ago, I decided to start my own investment firm.

00:04:38.000 | I wasn't happy with what I saw the industry offering.

00:04:41.000 | And so I put out my shingle in regards

00:04:45.000 | to starting my own investment firm.

00:04:47.000 | But I'm just somebody that, a middle class guy,

00:04:51.000 | kind of struggled in life like most people do,

00:04:53.000 | trying to figure out where you fit, where you belong.

00:04:56.000 | I was about 35 years old before I really figured it out.

00:04:59.000 | And over the course of that next 13 years or so, 12 years,

00:05:04.000 | I was able to get myself financially independent

00:05:06.000 | where I could leave the corporate world

00:05:08.000 | and I could basically live the lifestyle that I wanted to.

00:05:12.000 | - What was your path to financial independence?

00:05:14.000 | Were you an extreme saver?

00:05:16.000 | Were you just generally frugal?

00:05:17.000 | Were you starting businesses on the side?

00:05:19.000 | How did you become financially independent?

00:05:21.000 | - Yeah, I was a saver and an investor.

00:05:24.000 | I think I'm one of the few people

00:05:25.000 | that actually have done pretty well in the stock market.

00:05:28.000 | I usually hear people that have made money somewhere else

00:05:31.000 | and then invest later.

00:05:32.000 | But yeah, I was a really good saver.

00:05:34.000 | My wife and I are very diligent savers.

00:05:36.000 | And I'd always been interested in the stock market.

00:05:40.000 | Really didn't make it a kind of a moonlighting job

00:05:43.000 | until I was about 35 years old.

00:05:45.000 | And over the course of that next decade or so,

00:05:49.000 | I was able to really do well for myself.

00:05:53.000 | And at the same time, I also learned more

00:05:54.000 | about how to sell myself professionally,

00:05:56.000 | how to make more in my industry,

00:05:58.000 | and my income raised as well.

00:06:01.000 | - Sure.

00:06:02.000 | What was your industry?

00:06:03.000 | What type of work were you doing?

00:06:04.000 | - I was an industrial sales rep.

00:06:06.000 | Did sales and marketing for about 20 years.

00:06:09.000 | Everything from packaging machinery

00:06:12.000 | to plastics, products, paper.

00:06:14.000 | So nothing glamorous, nothing fancy.

00:06:18.000 | And I tell people, don't discount that.

00:06:20.000 | Particularly young people.

00:06:21.000 | You can make a lot of money in sales.

00:06:23.000 | Sales and marketing is by far the place

00:06:26.000 | where you're gonna, I think,

00:06:27.000 | make the most money with the least effort.

00:06:29.000 | - I agree.

00:06:30.000 | The thing about sales, at least just from my observation

00:06:33.000 | and my experience, I always wanted to learn

00:06:35.000 | to be a good salesperson.

00:06:37.000 | Because I was convinced that in order to do well financially,

00:06:41.000 | you needed to master a financially valuable skill.

00:06:44.000 | And sales is one of those things where

00:06:47.000 | if you have an entrepreneurial bent,

00:06:50.000 | but you don't know what business you might want to start,

00:06:53.000 | or you're not good at perhaps the organization

00:06:56.000 | of a small business,

00:06:57.000 | then sales gives you an opportunity

00:06:58.000 | to sell a product for someone else.

00:07:00.000 | And in a good sales organization,

00:07:01.000 | there is no ceiling on your income.

00:07:04.000 | So whether that's industrial sales,

00:07:06.000 | or whether that's selling Boeing 747s,

00:07:08.000 | or whether that's selling a network marketing product

00:07:12.000 | that's a quality product,

00:07:14.000 | or whether that is real estate or insurance,

00:07:16.000 | or shoot, investments,

00:07:19.000 | then selling is a way to generate a substantial income.

00:07:24.000 | And that's one of the necessary keys to building wealth.

00:07:27.000 | You've got to have an income that's able to support the family

00:07:29.000 | and then enough to accumulate a difference.

00:07:31.000 | - Yeah, absolutely.

00:07:32.000 | And what you said right there

00:07:33.000 | is what I try and point out to people.

00:07:35.000 | All the things you just mentioned in terms of selling,

00:07:37.000 | people think about, I don't know, used car salesmen

00:07:39.000 | or door-to-door salesmen or something,

00:07:41.000 | but it doesn't matter what your personality type is.

00:07:44.000 | There's inside sales, there's outside sales,

00:07:46.000 | there's highly technical sales,

00:07:48.000 | there's sales that involve decades of lead time.

00:07:52.000 | If you're selling Boeing jets,

00:07:55.000 | it isn't like you're not going to go

00:07:57.000 | get a purchase order tomorrow for that.

00:07:59.000 | There are long lead times.

00:08:01.000 | All personality types, all skill levels.

00:08:03.000 | It's a fascinating, excellent career for people.

00:08:06.000 | - It really is, and it's a career that...

00:08:09.000 | The thing I love about sales

00:08:10.000 | is you are purely judged on your results.

00:08:14.000 | It doesn't really matter if you have a college degree

00:08:18.000 | or if you don't have a college degree

00:08:20.000 | or if you're black or if you're white.

00:08:22.000 | It doesn't matter.

00:08:24.000 | What matters is your results.

00:08:26.000 | And if you're male, female, any of the stuff,

00:08:28.000 | if you're handicapped, if you don't have one leg,

00:08:30.000 | if you have tattoos all over,

00:08:31.000 | if you can get good results in sales,

00:08:34.000 | then you can do well.

00:08:38.000 | And so it's one of the great equalizers,

00:08:41.000 | the great egalitarian businesses

00:08:43.000 | where you're paid for your performance and that's it.

00:08:45.000 | And you're right about...

00:08:46.000 | I remember reading...

00:08:47.000 | I'm not sure, have you read Tom Stanley's book,

00:08:49.000 | "The Millionaire Mind"?

00:08:51.000 | - Oh, yeah, I've read...

00:08:53.000 | I've tried to read all of his stuff.

00:08:54.000 | When I mentioned being about 35 years old,

00:08:57.000 | that's the year "The Millionaire Next Door" came out.

00:08:59.000 | - Really?

00:09:00.000 | - 1996 is when I was 35.

00:09:02.000 | That book changed my life.

00:09:04.000 | It changed my thinking.

00:09:05.000 | - That's awesome.

00:09:06.000 | So you just weren't thinking along those lines.

00:09:08.000 | Tell me more.

00:09:09.000 | - Well, I was thinking...

00:09:12.000 | I was brought up in a middle-class,

00:09:17.000 | I'd say lower-middle-class type economic environment.

00:09:21.000 | And I was taught that...

00:09:23.000 | or had ingrained in me somehow, brainwashed in me,

00:09:26.000 | that being a white-collar...

00:09:28.000 | you had to be a white-collar guy.

00:09:29.000 | I mean, it was getting an office job,

00:09:31.000 | working for a big corporation.

00:09:33.000 | That was the way to build wealth.

00:09:36.000 | And so I pursued that path.

00:09:38.000 | I'd done a lot of time in the military.

00:09:40.000 | I went from being an enlisted guy to being an officer.

00:09:43.000 | I'm not real into bureaucracy and things,

00:09:46.000 | so that didn't work out well for me.

00:09:48.000 | I went into corporate America,

00:09:50.000 | and again, that was a lot like...

00:09:52.000 | that's the reason they hired junior military officers,

00:09:54.000 | because it's a big bureaucracy.

00:09:56.000 | So I didn't do really well there,

00:09:58.000 | and I just didn't feel like...

00:09:59.000 | I say that wrong.

00:10:00.000 | It isn't that I didn't do well.

00:10:01.000 | I didn't feel like I fit.

00:10:03.000 | And I gravitated to the sales end of things

00:10:05.000 | because I was very entrepreneurial.

00:10:07.000 | I could have my independence.

00:10:09.000 | The office politics didn't matter.

00:10:11.000 | What mattered was if I was out on the road selling things,

00:10:14.000 | and that's why I gravitated that way.

00:10:15.000 | But when I read Thomas Stanley's book,

00:10:19.000 | that's really the first time that I...

00:10:22.000 | His original title for that book,

00:10:23.000 | "The Millionaire Next Door,"

00:10:24.000 | the original title was going to be

00:10:26.000 | "The Blue-Collar Millionaire."

00:10:28.000 | Really?

00:10:29.000 | And the publishers didn't like that,

00:10:30.000 | so he changed it to...

00:10:32.000 | and eventually evolved into "The Millionaire Next Door."

00:10:35.000 | But he talks about the guys that own

00:10:38.000 | the scrap lot or the junkyard,

00:10:42.000 | the plumbing contractor.

00:10:44.000 | When I read that book, it rang true to me.

00:10:47.000 | I thought back to my life of all the people I grew up around,

00:10:50.000 | and it was the guy next door that owned the machine shop

00:10:54.000 | that you wouldn't think he was.

00:10:55.000 | He looked like an old grandpa,

00:10:56.000 | but he was the guy that had the money.

00:10:58.000 | It was the doctor that lived a few doors up from me,

00:11:01.000 | but he wasn't a flashy doctor.

00:11:03.000 | He was your Ron Paul kind of obstetrician

00:11:08.000 | that delivered 10,000 babies,

00:11:10.000 | and he probably never spent a dime.

00:11:12.000 | He drove an old beat-up car,

00:11:14.000 | and that's just the way he was.

00:11:15.000 | Those were the guys that had the money.

00:11:17.000 | It wasn't the flashy people.

00:11:19.000 | It wasn't the vice presidents.

00:11:21.000 | It wasn't the guys living on the country clubs.

00:11:23.000 | They were all broke.

00:11:24.000 | They were all living paycheck to paycheck.

00:11:26.000 | Right.

00:11:27.000 | Yeah, that was my experience, too.

00:11:29.000 | I read that when I was a kid in high school,

00:11:31.000 | and it gave me just that--

00:11:33.000 | The thing I loved about it is because it was so survey-based

00:11:37.000 | and research-based,

00:11:38.000 | that book Millionaire Next Door gave me the confidence

00:11:41.000 | to believe what I thought I believed,

00:11:43.000 | and it gave me the numerical background to say this.

00:11:46.000 | Then I went on to read--

00:11:47.000 | When I started working in financial planning,

00:11:50.000 | I read Marketing to the Affluent,

00:11:52.000 | Selling to the Affluent,

00:11:53.000 | and Networking with the Affluent.

00:11:54.000 | Have you read those at all?

00:11:55.000 | I have.

00:11:56.000 | Okay, so I just found the blueprint.

00:11:58.000 | Good.

00:11:59.000 | I've almost never found anybody who--

00:12:01.000 | I find lots of people who've read Millionaire Next Door,

00:12:03.000 | but I've almost never found anybody who's read

00:12:05.000 | Marketing, Selling, and Networking with the Affluent.

00:12:07.000 | But the game plan that he uses to lay out there

00:12:10.000 | as far as who to sell to,

00:12:11.000 | working in industry organizations,

00:12:13.000 | going where the competition is not,

00:12:14.000 | figuring out what your key differentiator is,

00:12:17.000 | being an advocate for your clients--

00:12:19.000 | The Networking with the Affluent is one of my mandatory

00:12:23.000 | must-read books for anybody

00:12:25.000 | just because it lays out the idea of--

00:12:28.000 | well, to steal Bob Berg's title,

00:12:30.000 | the go-giver.

00:12:31.000 | The way that you build is by going and giving

00:12:33.000 | and serving your clients beyond what they expect,

00:12:35.000 | and that's how you build this strong loyalty.

00:12:38.000 | But when talking about the blue-collar business worker,

00:12:42.000 | when I started in financial planning,

00:12:44.000 | when you sign up in your first day--

00:12:46.000 | Let's say that, unlike you--

00:12:47.000 | So you're working on building an investment advisory firm now,

00:12:50.000 | but you were doing it after the fact,

00:12:52.000 | after you have built another career.

00:12:55.000 | When I started in financial services,

00:12:58.000 | I was the stereotypical 23-year-old guy

00:13:00.000 | who was like, "Oh, let's go make a bunch of money

00:13:03.000 | selling investments."

00:13:04.000 | And it's this horrible stereotype, but it's true.

00:13:07.000 | And so when you start off in that,

00:13:10.000 | generally what everyone does is they call

00:13:12.000 | every single attorney, they call every single doctor,

00:13:14.000 | and they call every single corporate person.

00:13:16.000 | I discovered I didn't like working with attorneys, generally.

00:13:19.000 | I had a couple of clients that I did like.

00:13:20.000 | I didn't like working with doctors, generally.

00:13:22.000 | I had two clients that I did like.

00:13:25.000 | But I loved working with blue-collar business owners.

00:13:29.000 | And so I started doing what he would say.

00:13:31.000 | I would try to find the industrial park type of thing

00:13:34.000 | and get networked around within the industrial park.

00:13:36.000 | And those were the people that I loved being with

00:13:38.000 | for so many reasons.

00:13:40.000 | It fit my personality, it fit who I liked,

00:13:43.000 | and it fit what I did.

00:13:44.000 | Right. Yeah, go to 7-Eleven at 5.30, 6 o'clock in the morning

00:13:49.000 | when the guys are in there filling up their trucks with gas.

00:13:52.000 | And that's where all the millionaire next doors are.

00:13:55.000 | And Tom Stanley, I actually have reached out to him

00:13:57.000 | to try to get him on the show.

00:13:58.000 | He saved me a bunch of money, too,

00:14:00.000 | because I was struggling with this--

00:14:03.000 | I'd never liked fancy cars,

00:14:05.000 | but I was struggling with this image,

00:14:07.000 | like self-consciousness of what kind of image am I--

00:14:11.000 | what will people think of me, this image that I'm projecting?

00:14:14.000 | So I had this old Honda Accord when I started,

00:14:16.000 | and it's this $2,000 car.

00:14:18.000 | And I would pull it up in front of--

00:14:20.000 | it had 300,000 miles on it by the time I sold it.

00:14:22.000 | And I would pull up in front of some millionaire's house

00:14:25.000 | and walk in and talk to him about his financial planning.

00:14:27.000 | And finally, someone said, "Joshua, listen,

00:14:29.000 | you've got to get another car, because you're a great guy,

00:14:31.000 | but, man, I have to look past your car to see you."

00:14:34.000 | So I'm looking around, and I'm thinking,

00:14:35.000 | "Well, maybe I should buy a Mercedes or a BMW,

00:14:38.000 | because that's what everyone in my business seems to drive."

00:14:41.000 | But I didn't want to, and so I was looking at it.

00:14:44.000 | But I wrote to Tom Stanley, and I said, "Tom--"

00:14:46.000 | or I said, "Mr. Stanley," I said, "What would you suggest

00:14:50.000 | if you--what would you suggest a sales rep,

00:14:54.000 | someone who's in financial services

00:14:56.000 | or trying to work with the millionaire next door,

00:14:58.000 | what would you suggest that I drive?"

00:15:00.000 | And he--you know, "Mercedes, BMW,"

00:15:02.000 | and he wrote back, "Full-size American SUV."

00:15:05.000 | And he said, "Every single wealthy family

00:15:07.000 | has a Suburban or an Expedition or a Tahoe

00:15:09.000 | or something like that."

00:15:10.000 | And I said, "Ah."

00:15:11.000 | And I went and bought--and I found a very nice Ford Expedition

00:15:14.000 | that had--you know, it was four years old,

00:15:16.000 | and it was a third of the price new.

00:15:18.000 | And it worked.

00:15:19.000 | It solved my personal self-confidence problem,

00:15:21.000 | but at a cheap price.

00:15:23.000 | And I never forgot that lesson.

00:15:25.000 | And he--so he saved me a bundle of money.

00:15:27.000 | I was so thankful for him.

00:15:29.000 | Yeah, and you talk about the image.

00:15:31.000 | You know, I work--or I try, and he was exclusively work

00:15:35.000 | with the millionaire next door people,

00:15:37.000 | the blue-collar guys, the entrepreneurs

00:15:41.000 | that have started their own business,

00:15:42.000 | you know, the guy that--whatever, he paints cars

00:15:46.000 | or has a landscaping business, things like that.

00:15:50.000 | And I--in fact, I heard one of your podcasts--

00:15:53.000 | you were talking about, I think, when you went

00:15:55.000 | to the Podcast Now thing, you know,

00:15:57.000 | guys wearing tennis shoes and stuff.

00:16:00.000 | Right.

00:16:01.000 | You know, I dress very casually.

00:16:03.000 | I always say, when I go to church,

00:16:04.000 | I put on a white shirt and a tie because I respect God.

00:16:07.000 | I'll do that for God, but I pretty much--

00:16:09.000 | I don't do it for too many other people.

00:16:11.000 | But, you know, I've gotten to the point in my life

00:16:13.000 | where I can do what I want to do.

00:16:14.000 | Good call.

00:16:15.000 | But, you know, when I meet with people,

00:16:18.000 | when we go down that path--and I can tell

00:16:20.000 | whether they're voracious savers or whether they're spenders,

00:16:24.000 | and basically, if they're spenders,

00:16:25.000 | they don't have any money, I can't do anything for them.

00:16:27.000 | I can only work with people that have money.

00:16:29.000 | And, you know, we talk about those things.

00:16:30.000 | I see my CRV out there in the parking lot, 2009.

00:16:34.000 | I bought it with cash.

00:16:35.000 | I'm going to keep it for another 10 years

00:16:37.000 | or hand it down to one of my kids someday or something.

00:16:39.000 | The Timex watch on my wrist, $35 at Walmart.

00:16:43.000 | I actually just the other day upgraded to an iPhone 5

00:16:49.000 | because the battery went dead in my other phone,

00:16:51.000 | and it cost more to replace the battery than the--

00:16:53.000 | I think than the $25 I had bought the refurbished smartphone for.

00:16:57.000 | So I broke down. I got an iPhone 5.

00:16:59.000 | But I just--I don't spend a lot of money.

00:17:03.000 | I don't see a need for it.

00:17:04.000 | And I don't do it because I'm cheap or because I'm a tightwad.

00:17:08.000 | I just--I think it's one of those habits you develop

00:17:12.000 | where I do have nice things.

00:17:14.000 | I have things I like.

00:17:15.000 | You know, my car has leather seats.

00:17:16.000 | It has a sunroof.

00:17:18.000 | It has air conditioning.

00:17:19.000 | It has good tires on it for the winter.

00:17:21.000 | You know, I mean, it has the things that I need.

00:17:23.000 | I personally--you know, although my kids would love to have a BMW,

00:17:27.000 | I don't see any reason for it.

00:17:30.000 | Sure.

00:17:31.000 | So I want to talk about two things with you,

00:17:33.000 | and I want to talk about your financial services practice

00:17:37.000 | because one of the things that--you and I are in a unique position.

00:17:40.000 | We're working in an investment business,

00:17:43.000 | but because you have an RIA--right?

00:17:46.000 | Registered Investment Advisory Firm--then you're free--

00:17:49.000 | you are more free to talk candidly about the investment business

00:17:53.000 | than is somebody who's a broker at a large wire house.

00:17:57.000 | So I want to talk about that, but I don't want to start there

00:18:00.000 | because I think it would be interesting for two people with experience

00:18:04.000 | to kind of help people understand the financial services business a little bit

00:18:08.000 | and kind of see behind the scenes a little bit.

00:18:10.000 | I've worked in it.

00:18:11.000 | You came from the outside, and so I thought that would be a good thing.

00:18:15.000 | But I would like to start with just maybe share with us--share with me

00:18:19.000 | because I'm younger than you are and I'm poorer than you are.

00:18:21.000 | You know, I'm not a millionaire yet.

00:18:23.000 | I'm working hard on my way, but I'm still in this wealth-building stage.

00:18:27.000 | But you have, over a period of time, built up wealth

00:18:31.000 | and become the millionaire next door.

00:18:33.000 | How did you do it, and what lessons would you share with me and the audience

00:18:37.000 | as far as what worked for you in your path?

00:18:41.000 | Yeah, there's no secret formula.

00:18:44.000 | There's no get-rich-quick schemes.

00:18:47.000 | I never did figure out how to do the four-hour workweek kind of thing.

00:18:51.000 | Tim Ferriss doesn't do it either. Don't worry.

00:18:53.000 | Yeah.

00:18:56.000 | No hype involved.

00:18:57.000 | It was hard work.

00:18:59.000 | It was prudent planning, and it was luck.

00:19:02.000 | You get lucky as well.

00:19:05.000 | I started off always working.

00:19:08.000 | As a kid, I had my first job, I think, at 15.

00:19:12.000 | My brother got me a job at a restaurant that he worked at.

00:19:14.000 | I started delivering room service and bussing tables.

00:19:19.000 | I remember just as a kid on weekends, I'd make, I don't know, $300, $400.

00:19:24.000 | That was in the '70s.

00:19:26.000 | That was in the mid-'70s when $300 was a lot of money.

00:19:31.000 | I'd just make that taking people coffee in for breakfast to their--

00:19:37.000 | delivering room service and just getting tips.

00:19:40.000 | Every time I ran a room, I'd get $1, $5, $10 tips.

00:19:48.000 | I learned about money from that.

00:19:51.000 | I learned how to not spend it and what that could do for me.

00:19:56.000 | We talked a little bit about that white-collar corporate America thing.

00:19:59.000 | I was always chasing my freedom as opposed to chasing money.

00:20:05.000 | I didn't really want to have the BMW, so everybody looked at me and said,

00:20:08.000 | "Wow, that guy's driving a BMW."

00:20:10.000 | I wanted to be doing whatever it was that I wanted to do at that particular minute.

00:20:15.000 | I was more interested in my personal freedom than I was in being flashy or showy.

00:20:20.000 | I found that money doesn't buy you happiness, but it does buy you freedom.

00:20:24.000 | It does if you use it the right way.

00:20:27.000 | I think that's what I was driven to, but I didn't know how to get it.

00:20:30.000 | As I said, I thought you had to go down that white-collar path, get a college degree,

00:20:35.000 | go work for a big company.

00:20:38.000 | I'm just a middle-of-the-road person.

00:20:42.000 | I didn't do that well in high school.

00:20:44.000 | When I was in high school, I knew that I wasn't ready for college.

00:20:47.000 | I had no idea what I wanted to study, didn't know what I wanted to do.

00:20:50.000 | I wanted to go see the world.

00:20:52.000 | I joined the Marine Corps and I traveled the world for four years with the Marine Corps,

00:20:57.000 | deployed every six months, learned a great deal.

00:21:02.000 | More than anything, I learned being in the Marine Corps that I wanted to not do that for the rest of my life.

00:21:09.000 | That put me on the path.

00:21:11.000 | When I was 22, I went to college. I was more mature at that point.

00:21:15.000 | I knew about finances. I had money saved up.

00:21:19.000 | I worked through high school. I joined Army ROTC because that gave me more money.

00:21:23.000 | I met my wife in college at the same time.

00:21:26.000 | She was also older. She was the same age as I was.

00:21:30.000 | She had waited four years to go to school.

00:21:32.000 | We both bankrolled our own cash flow to college.

00:21:37.000 | We didn't have any student loan debts.

00:21:40.000 | We got married while we were still in school, graduated debt-free.

00:21:43.000 | I just lived that kind of a lifestyle.

00:21:48.000 | You said a little bit ago about the formula to saving.

00:21:53.000 | I say that the secret to wealth is you have to earn, you have to save, and you have to invest.

00:21:58.000 | You have to do it in those three steps.

00:22:00.000 | You start by earning. You really don't start earning until you're in your 30s,

00:22:05.000 | unless you're one of these Tim Ferriss guys.

00:22:08.000 | America won't pay you anything until you're 40.

00:22:12.000 | For whatever reason, you talk about discrimination and things.

00:22:15.000 | There's definitely big age discrimination.

00:22:17.000 | I know when I turned 40, people took me a lot more seriously.

00:22:20.000 | I was saying the same dumb things that I said when I was 20, but they took me serious when I was 40.

00:22:26.000 | It's about earning. You have to get that earnings part down first.

00:22:32.000 | Everybody thinks they're saver. Everybody wants to know how they invest this $2,000.

00:22:38.000 | That's not the point. The point is learning how to earn, how to earn it first.

00:22:43.000 | Whether you do that through going to college, getting a university degree,

00:22:47.000 | or learning how to fix cars, or learning how to write code and program, you have to earn first.

00:22:55.000 | One of the things that I've learned as a financial advisor,

00:23:00.000 | here's one of the things when I was working in the business,

00:23:03.000 | is that I got frustrated because when you get compensated based upon selling investments or selling insurance,

00:23:13.000 | then what happens is a lot of times you're looking at a client and you're saying,

00:23:18.000 | "What would I do if I were in this client's position?"

00:23:21.000 | A lot of times, the answer is, "I probably wouldn't buy stocks.

00:23:25.000 | I would probably rather invest in earning my income."

00:23:28.000 | But the challenge was, and I would often give this speech to clients, and I would try to encourage them,

00:23:35.000 | but the challenge, and I would try to encourage them because I would see that the best investment is in your earning ability.

00:23:41.000 | Most people know that, and we're taught that in our society, but that means go to college.

00:23:45.000 | It doesn't mean go to college. You can go to college and get a college degree and come out with zero earning ability.

00:23:50.000 | Or you can go to college and you can come out with a college degree and come out with a great earning ability.

00:23:55.000 | It has more to do with what you did in college, and if you've actually enhanced your earning ability.

00:23:58.000 | It's not just the college degree. It's not the ticket to riches that it once was considered to be.

00:24:05.000 | It doesn't mean it's not valuable, but it's not the ticket to riches it once was.

00:24:09.000 | But the frustration that I ran into was I would talk to people about investing in their earning ability and how to do that,

00:24:17.000 | but then I had no mechanism for following through, and they had no mechanism for following through for themselves.

00:24:23.000 | So just like we make jokes in February about all these failed New Year's resolutions, I would work with clients year after year after year,

00:24:29.000 | and I would say, "Listen, put a little bit into savings, but you've got $500 a month available in your cash flow.

00:24:36.000 | Why don't we save, say, $200 or $300, but take the other $200 or $300 and invest it in yourself and invest it in your earning ability?"

00:24:44.000 | But what was frustrating is it got pulled into consumption instead, and I've always found that to be frustrating

00:24:50.000 | because I've observed that the people who become wealthy do not become wealthy necessarily because of their specific skill with investing,

00:24:58.000 | unless that's their business.

00:24:59.000 | They become wealthy because they have the ability to earn a high income, and that's where most of our focus should be up front.

00:25:06.000 | Absolutely. It's all about the income.

00:25:09.000 | Like you mentioned, they have to put that money into reinvesting in themselves,

00:25:13.000 | and then they also have to put a large chunk of it into savings.

00:25:16.000 | Again, I'm someone that believes in savings, so I'm going to tell people, "Save 20%, 25% or more."

00:25:22.000 | Somebody comes to me, and I hear this all the time, whether they're 20 years old or whether they're 40 years old,

00:25:28.000 | they have $2,000 and they want to know where to invest it.

00:25:31.000 | Don't.

00:25:32.000 | That's what I tell them. Absolutely don't invest it. Most of them, that's all they have is $2,000.

00:25:37.000 | And I say, "Don't. I don't care if you put it under your mattress. I don't care if you put it in a bank account."

00:25:44.000 | Whatever you want to do with it, put it someplace where you're not going to spend it,

00:25:47.000 | and then don't worry about trying to buy Google and get a 10% or 15% capital gain.

00:25:55.000 | You're currently working. Put your money aside.

00:25:58.000 | If you're under 50, you can put $5,500 in an IRA, in a Roth or a traditional IRA.

00:26:06.000 | If you do that, at the end of the year, you'll have the $5,500 you just saved plus the $2,000 you didn't spend.

00:26:12.000 | You have $7,500. Where are you going to get a return on your investment like that?

00:26:16.000 | You're looking at your net worth. You're not looking at getting 10% investing in a stock or some mutual fund or something.

00:26:23.000 | Look at your overall net worth. How are you going to get the $7,500 next year?

00:26:27.000 | You're going to do it by saving the $2,000 you have now and then adding another $5,500 to it.

00:26:32.000 | It's in a tax-advantaged account.

00:26:35.000 | If you're prudent and disciplined and you put that away, when you're as old as me, you'll have a million plus.

00:26:41.000 | As long as you are prudent, you will find that that time value of money is true.

00:26:49.000 | What you read in the books about interest rates and how your money can compound over time,

00:26:55.000 | and if you're in a tax-advantaged account where you're not having to constantly pay taxes on it, that is all absolutely true.

00:27:01.000 | When I read Thomas Stanley's book when I was 35, I had about a $70,000 net worth, $73,000, something like that.

00:27:09.000 | I had about $30,000 in a 401(k) plan, and I had about another $30,000 or so equity in my home.

00:27:17.000 | That's what I had when I was 35 years old.

00:27:22.000 | I was able to really magnify that by putting more money away when I made more by not spending it,

00:27:30.000 | by keep rolling it over, letting it compound.

00:27:32.000 | So then, moving on from the earning and the saving, when you get to investing, where do you usually encourage people to start?

00:27:43.000 | It depends whether it's someone that's coming to me that wants me to manage their money or somebody that wants to do it on their own.

00:27:51.000 | If it's somebody that wants to do it on their own, I tell them they have to go with whatever talents they have and abilities.

00:27:56.000 | I personally was able to make money in the stock market because I have a talent for that.

00:28:00.000 | It's my interest. I studied it. I went from my part-time job to being my full-time job.

00:28:07.000 | Other people can do it with real estate. I have no luck with real estate.

00:28:11.000 | I own my own home. That's all I own. I'm not interested in being a landlord.

00:28:16.000 | I don't understand commercial real estate. That's just not where I excel.

00:28:22.000 | But I've met plenty of people that have made money on that.

00:28:25.000 | If that's their talent, they can do that.

00:28:27.000 | I've met a blue-collar guy that owns five, ten, or twenty small starter homes that he rents out for investment property.

00:28:41.000 | He's made millions on that. I just wasn't interested in going that path.

00:28:45.000 | I think you're either going to make money trading it in stocks, you're going to make money in real estate,

00:28:50.000 | and not necessarily flipping it, but owning it and getting the income stream from renting it.

00:28:55.000 | And then the other way is to have a small business.

00:28:59.000 | It doesn't have to be a revolutionary Silicon Valley startup.

00:29:06.000 | A flower shop, I mentioned the automotive stuff.

00:29:12.000 | I have met people in all walks of life that have a small business that have done very well.

00:29:19.000 | They get the tax advantage from it. They build their lifestyle around it.

00:29:24.000 | That's definitely the way to go.

00:29:27.000 | In my later years, that's what I've combined.

00:29:29.000 | I've combined my love with investing to creating my own investment firm.

00:29:34.000 | It seems like one of the things I would like us to see come back to the US-American conversation

00:29:44.000 | is a wider view of investment opportunities.

00:29:47.000 | I like to put myself in other people's—I love to travel.

00:29:51.000 | I always like to think, if I woke up and I have some friends in Nigeria and Kenya,

00:29:57.000 | and I think, "If I woke up and all of a sudden I found myself living in Nigeria or Kenya,

00:30:02.000 | and I didn't have any money, what would I do?"

00:30:05.000 | That was why I recorded a show on how I would become a multimillionaire

00:30:09.000 | if I were working a minimum wage job at Walmart.

00:30:12.000 | I thought of the idea and I thought, "That would be fun."

00:30:15.000 | But I gained more—I don't know if anyone from that listened to the show learned a lot.

00:30:20.000 | I learned more by thinking that through for myself than anything else

00:30:25.000 | and thinking, "Okay, what would I do? How would I do it?"

00:30:28.000 | Knowing what I know now, how would I approach that?

00:30:30.000 | The same thing with if I were on the streets of Nigeria.

00:30:33.000 | I guarantee if I were living on the streets of Nigeria,

00:30:35.000 | I wouldn't be thinking about how can I buy stocks in the US.

00:30:41.000 | That wouldn't be appropriate.

00:30:42.000 | I would start by getting my life stabilized.

00:30:45.000 | That would mean if I didn't have enough food—

00:30:48.000 | it's funny, in our culture we don't think about the practical realities of life.

00:30:52.000 | But if I didn't have enough food, I would start by making sure that my family had food.

00:30:56.000 | I would work on getting shelter figured out.

00:30:58.000 | These basic things of life, and then you look for a way to convert your energy every day

00:31:04.000 | into a useful endeavor to build up more capital.

00:31:07.000 | Then you're always thinking and saying, "Where can I deploy this capital?"

00:31:10.000 | But what happens is that in the US, generally when people think about investing,

00:31:14.000 | they think about stocks or they think about real estate, and very few think about business.

00:31:20.000 | But I would love to see people incorporate in a self-examination of what are my skills and talents and abilities.

00:31:26.000 | So that's what you said, "Hey, I'm going to combine a business, running an investment advisory firm,

00:31:31.000 | with an interest and a skill. I've done this over time."

00:31:34.000 | That's where you combine those.

00:31:36.000 | I'd love it if a client walked in and said, "I'm thinking about buying a Dunkin' Donuts franchise

00:31:42.000 | because I've recognized that there's not one here.

00:31:45.000 | I'm also looking at buying a hotel franchise, and I'm also considering purchasing this single-family house,

00:31:51.000 | and I've had my eye on this blue-chip stock that I really think is undervalued right now.

00:31:57.000 | Joshua, what should I do?"

00:32:00.000 | But we don't seem to think that way in our culture.

00:32:03.000 | I wonder if you have any comment on that. That's how I think, and that's what I would like to see enhanced,

00:32:07.000 | is us to think, the person with $2,000, the reason they need to keep that $2,000 available

00:32:13.000 | is because likely what's going to happen is they're going to need to switch from one job to another job,

00:32:17.000 | or move across the state, or move across the country,

00:32:20.000 | and you need that $2,000 as insurance between you and needing to go on food stamps because your cupboard is empty,

00:32:26.000 | or because of needing to buy a moving truck to move across the country.

00:32:31.000 | That's going to be a better investment, but if you don't have the $2,000 to pay for the moving truck

00:32:35.000 | and the gasoline to get your family across the country, then you may wind up putting that on a credit card,

00:32:40.000 | then you wind up in a cycle of debt because you didn't have a buffer in life.

00:32:44.000 | Yeah, that's how you're living paycheck to paycheck, and the $2,000 should be their emergency fund

00:32:49.000 | or just their living fund so that they don't have to--when the transmission goes out or the tire blows or whatever,

00:32:55.000 | they're going to go put on their credit card, and three months later something else happens,

00:32:59.000 | and a year down the road they have $20,000 in unsecured debt and they don't understand it.

00:33:04.000 | What you said is exactly the way I try and tell young people in particular.

00:33:09.000 | It's too late to tell somebody that's 50 that, but maybe not too late.

00:33:15.000 | I try to emphasize that to kids whenever I speak before groups or talk with young people.

00:33:20.000 | I emphasize that on my website. I have a section on building wealth, and it's not about investing.

00:33:25.000 | It's all about the things you just talked about. I talk about a three-stage process.

00:33:29.000 | The first stage is being an apprentice. It's the whole concept of being an immigrant.

00:33:35.000 | My grandfather was an Italian immigrant. He came over multiple times, but the last time he came over was right after World War I.

00:33:43.000 | He had a third-grade education. He spent his whole life as a laborer, but he had that immigrant mentality of working hard,

00:33:50.000 | saving his money, owning his own home, raising his family, not being indebted to anybody.

00:33:56.000 | His personal freedom was very important to him as well. He wanted to own his own property.

00:34:00.000 | He wanted to be able to garden his own piece of land, kind of homestead his own land.

00:34:06.000 | People say, "You can't do that today." You can do that. I don't care.

00:34:10.000 | You look at the people that come here as immigrants and the people that are coming here today as immigrants,

00:34:15.000 | as well as the people that came 100 years ago.

00:34:18.000 | They have that drive and that desire that, unfortunately, a lot of native-born people don't have.

00:34:24.000 | I'm not talking about the immigrants that are coming across for free health care or to get on welfare benefits.

00:34:29.000 | I'm talking about the people that come here with a desire to work.

00:34:34.000 | I heard somebody say one time that there may not ever be enough jobs, but there's always plenty of work.

00:34:41.000 | That's what the immigrants do. They come over and they find out a way to work.

00:34:45.000 | That's what you start off with. You start off with work to generate an income.

00:34:49.000 | But on that apprenticeship phase, like you had mentioned, investing in yourself, you don't just become a wage slave

00:34:55.000 | or just count on your employer to be your benefactor.

00:35:00.000 | You need to figure out how you get to that next step. How do I invest in myself?

00:35:04.000 | Instead of just being a laborer, instead of just being the guy that's digging a ditch,

00:35:08.000 | I'm the guy that learns how to be the building contractor.

00:35:11.000 | I'm the guy that saves up enough money so I can buy a backhoe and I can replace 20 of these immigrant guys with me and my one backhoe.

00:35:21.000 | That's the path you have to take. It's all about that first stage, getting an education.

00:35:26.000 | It doesn't matter whether you're a cabinetmaker or whether you're a cardiologist.

00:35:33.000 | You have to get that training period. Your income is ultimately going to depend on…

00:35:38.000 | I like to break things down into simple equations. We talked about the wealth thing.

00:35:43.000 | Wealth is a matter of earning plus saving plus investing.

00:35:46.000 | The income that you earn is a matter of the time it takes to train for your particular occupation,

00:35:53.000 | the demand that there is for whatever you're doing, and the skill level that you take.

00:35:59.000 | It's just those three things.

00:36:01.000 | A cardiologist has to train for decades and decades.

00:36:04.000 | That's why he makes a million dollars a year, because he had to train so long to get to that point.

00:36:09.000 | If you're working at Burger King or McDonald's, they can train you in 45 minutes.

00:36:13.000 | That's why they're paying you minimum wage.

00:36:16.000 | It isn't that they're mean, it isn't that they're cruel, it isn't that they're 1%.

00:36:20.000 | It's just that that's what your time is worth.

00:36:23.000 | You can be trained in 45 minutes.

00:36:26.000 | There is a demand for fast food workers.

00:36:29.000 | You have the demand part of the equation, but it only takes 45 minutes to train you.

00:36:33.000 | No matter how good of a skill level you have, you're just not going to be able to make more than $10 or $12 an hour.

00:36:40.000 | In that environment, that's all you're going to have.

00:36:43.000 | But even if you're working at that level, if you start out at $750 or whatever minimum wage is,

00:36:48.000 | and you work your way up to $10 or $12, you get to be maybe a team leader or assistant manager at one of those fast food places,

00:36:55.000 | you can get to the point where you either get to manage a regional area,

00:36:59.000 | or someday you can own your own franchise.

00:37:02.000 | And again, those are the middle-class millionaires.

00:37:04.000 | Those are the millionaires next door.

00:37:06.000 | I know people in the fast food industry that are making $250,000, and they started out flipping burgers.

00:37:13.000 | Right. It's one of the things that I learned.

00:37:15.000 | I had a client who was an upper-level management with McDonald's,

00:37:19.000 | and the thing he talked to me about that I had never been aware of is he talked about the McDonald's University program,

00:37:25.000 | like what they have as far as their training program.

00:37:28.000 | And he started as a front-line cook, exactly that.

00:37:34.000 | But he worked his way through their training program, and he was doing very well, and he had an excellent career.

00:37:40.000 | I really like how you divided that out, time, demand, and skill.

00:37:44.000 | I haven't formulated that myself as far as being able to say here are the three things.

00:37:50.000 | But the amount of time needed, because you're absolutely right, an anesthesiologist or a cardiac surgeon is generally going to make a higher wage than is a general practitioner.

00:38:02.000 | But they also have another five or six years in school.

00:38:05.000 | The demand, and that's the one that I don't see a lot of people talk about, is sit down and look at where is the demand for labor going.

00:38:16.000 | The demand for—I hate picking on fast food, but it's so ubiquitous in our culture, I'll do it.

00:38:21.000 | The demand for burger flippers, I was going to profile this on the show last week.

00:38:25.000 | I just saw somebody invented a—and they're working on inventing a machine that will do every stage of cooking, making, cooking, creating, and assembling and wrapping the hamburger.

00:38:35.000 | And so they've created a robot that is able to—and I'll find it and link to it in the show notes.

00:38:42.000 | But they've created a robot that is able to make the complete finished product of this very good-looking robot—excuse me, of this very good-looking hamburger.

00:38:53.000 | And so I look at that and I say, "If you are working in something that is straightforward and production line, you are going to be replaced in the next 15, 20 years."

00:39:03.000 | As costs go up for workers, then machines will replace the workers.

00:39:08.000 | So we've got to be looking at where is the demand going.

00:39:11.000 | The demand for that is going to the person who can work on the machines and fix the machines and program the machines and maybe even design the machines.

00:39:18.000 | And then, yeah, the personal skill, because skill does come into play.

00:39:22.000 | There may be a business that is very difficult to learn.

00:39:24.000 | There may be a demand for it, but you may just not have the personal skill or be able to accumulate the personal skill or have the—you may not have the raw talent, the raw ability, any of those things to actually develop the skill.

00:39:38.000 | I like your formula.

00:39:39.000 | Yeah, on the automation side, like I said, I spent 20-some years as an industrial sales guy.

00:39:45.000 | So I've been in factories all over the world.

00:39:47.000 | And people say manufacturing in the U.S. is dead.

00:39:49.000 | And that's not true.

00:39:50.000 | I mean, we're producing more in the U.S. than we've ever produced.

00:39:53.000 | But you go inside a factory today versus going into a factory even 20 years ago when I started, there are no people there.

00:39:59.000 | The only people in those factories for the most part, they're either doing the very rudimentary end packaging or assembly work or something like that.

00:40:08.000 | But most people are the engineers and the line staff that are maintaining the equipment.

00:40:14.000 | They have the robots that palletize everything, that do all the precision work.

00:40:20.000 | There's been so much hype and things about three-dimensional printing in the last few years.

00:40:25.000 | But you just look at what CNC routers did over the last 15 years, just a phenomenal amount of work that they've taken out.

00:40:35.000 | But automation, by the way, we talk about that, and that becomes an investment opportunity.

00:40:40.000 | So on the downside, you say, "Well, hey, that may take some people out of the market from employment.

00:40:44.000 | But what companies can I invest in that are in the automation side?

00:40:48.000 | Who's going to be wrapping those hamburgers? Who's going to be doing the driverless cars?"

00:40:53.000 | They talk about things like Uber and that.

00:40:55.000 | I mean, imagine not only an Uber where you can get a sedan to come and pick you up, but now it's not even a driver anymore.

00:41:04.000 | It's just a remote car. That will happen someday.

00:41:08.000 | And then look for those companies that are automating. Those are the kind of opportunities I look for.

00:41:14.000 | As far as that formula goes, I mean, those three things, particularly as a young person, if you look at that and you look at that demand side,

00:41:24.000 | and not only on the low end, the hamburger flipper side, but even on the high end, you may be very interested in medieval literature or Elizabethton plays or something, but there's no demand for it.

00:41:40.000 | In that case, it doesn't matter how great you are at writing poetry, and it doesn't matter how many PhDs you have, how many years you studied.

00:41:49.000 | If there's no demand for what you do, you're still going to be poor.

00:41:54.000 | So that's where that equation comes in, even for people that are maybe on high-level jobs.

00:41:59.000 | And frankly, I think even people like pharmacists, they could be under threat in coming years.

00:42:07.000 | Yeah, I don't think there's any industry that is insulated from change.

00:42:13.000 | And this is the problem, because going theoretical, but I'm interested because you probably have some opinions on this.

00:42:23.000 | But I've been thinking a lot. I'm planning a whole series on education, and part of that is going to be the technical financial planning side of here is how you pay for college,

00:42:31.000 | here's what the things that everyone knows about 529s, ESAs, blah, blah, blah.

00:42:35.000 | Here's some really interesting ways that you can get similar things.

00:42:39.000 | But then let's step back and let's talk about it.

00:42:41.000 | And I'm not going to start with the technical financial planning, because the biggest mistake I see is people always just ask, "How should I pay for college?"

00:42:49.000 | instead of all the precursor questions.

00:42:52.000 | But one of the things, I've been thinking a lot about education for my son. I have a one-year-old son.

00:42:56.000 | Because you have children, right, John?

00:42:58.000 | Oh, I have six. You want one? I'll give you a couple more.

00:43:01.000 | We'll see. Who knows? Maybe we'll catch up with you in the future.

00:43:05.000 | In fact, down the road, you need to invite me back, and we need to have a show on big families, because I understand you're one of seven.

00:43:12.000 | I am. I'm the youngest of seven.

00:43:13.000 | Someday, let's come back and talk about the economics of big families.

00:43:17.000 | Okay. Well, maybe, yeah, I would like that. That would be great.

00:43:20.000 | I love coming from a big family. It was amazing.

00:43:26.000 | Who knows how big our family will be? Right now, we have one, and we're thrilled for the one.

00:43:33.000 | We hope for more in the future.

00:43:35.000 | But where I was going was that—I don't remember where I was going.

00:43:42.000 | You were talking about education.

00:43:43.000 | Right, right, right, right. Okay. So I've been thinking about—there we go. Thank you. You saved me.

00:43:47.000 | I've been thinking about, "What do I want my son to know, and what do I want my son to learn?"

00:43:52.000 | And the thing that just seems so hopeless to me is the entire idea of primary school education, the way that it's taught right now.

00:44:00.000 | This idea that in, you know, what is it, 12 years, the idea that in 12 years, that we can design a course of study that's going to help a student to be able to have job skills available for the market.

00:44:12.000 | That's what most people assume schooling is about, is about job skills, and that's what they even say college is about, job skills.

00:44:18.000 | Well, sit back and look at it. And I'm only 29 years old, and so I graduated from high school in 2003, so that makes me—that's 11 years ago.

00:44:28.000 | When I graduated from high school, iPhones didn't exist, iPods didn't exist, Android didn't exist, apps didn't exist, computers existed, but they were very different.

00:44:38.000 | And if I look back, I don't know what the statistics are on this, but a huge majority of the fastest growing job and career opportunities did not exist 10 years ago.

00:44:50.000 | So how could I ever sit down and say, "I could design for my son an education that would give him skills," because all of those skills are obsolete.

00:44:59.000 | The only thing I can hope to accomplish, and the whole point of education should be to develop him to be able to teach himself anything he needs to do, because then if I can teach—anything he needs to learn,

00:45:11.000 | because if I can succeed in teaching him to be a self-learner, learner, an autodidact, then he can then apply that to whatever it be, whether it's sewing up hearts as a cardiac surgeon,

00:45:23.000 | whether it's fixing the robots that are sewing up hearts, or whether it's investing his money, I can teach him that.

00:45:30.000 | And what seems such a travesty to me is it seems to me like that's what's taken away from the youth of today,

00:45:38.000 | is that it seems to me that instead of giving somebody the skills of learning to teach themselves what they need to do,

00:45:45.000 | the majority of our population is basically dumbed down and taught that learning is stupid, that nobody wants to learn, that it's boring, that nobody should care.

00:45:56.000 | And then there are very few people that escape, and then those people that escape end up educating themselves,

00:46:02.000 | and so the gap between the rich and the poor grows greater and greater and greater because of the fact that there are very few people who escape through the system

00:46:13.000 | and continue to be self-learners and continue to go on and learn. It's a big deal for me.

00:46:18.000 | I still can't figure out how it all works, and I've got some ideas as far as for how to teach my son, but the world seems so backwards to me.

00:46:27.000 | Well, you know, we're institutionalized because people make a living on forcing kids to sit through 12 years of school and the whole university system.

00:46:40.000 | There's a lot of people whose paychecks are dependent on that, and so I think that's the reason it is the way it is, but it's going to change.

00:46:46.000 | You can learn between Google and YouTube, you can learn almost anything, and you don't need to sit in a school anymore.

00:46:54.000 | I would encourage you to teach your son three things, and they're what we've already talked about.

00:46:59.000 | How to think, he needs to learn how to think for himself, how to basically educate himself.

00:47:04.000 | He needs to learn how to work, how to have the discipline to work, and then the discipline to save.

00:47:09.000 | And with those three things, no matter what the economic conditions are or what changes, people will be able to adapt and be able to work through it.

00:47:19.000 | And all the things you mentioned, I think the same way about when I graduated from high school in 1979.

00:47:25.000 | I mean, there was nothing then. There were no cell phones. There was not even a concept of an internet.

00:47:31.000 | Computers were basically just dumb terminals, but that's the beauty of it. That's why I'm optimistic.

00:47:38.000 | I mean, it's bad, and you can point to a lot of bad things. You can look at the $17 trillion debt.

00:47:44.000 | You can look at the $4.5 trillion on the Federal Reserve balance sheet, all those reasons to be pessimistic.

00:47:49.000 | But on the other side, it's never been a better time to be alive.

00:47:52.000 | There are so many great opportunities for the young and the old, for anybody that's willing to do those three things I talked about.

00:47:58.000 | Educate themselves, save, and work. The world is wide open to you.

00:48:04.000 | Even with school, we talked about it. I graduated. It cost me a lot of money and time and effort, but I graduated debt-free from college.

00:48:13.000 | I have six kids. So far, three of my children were old enough to graduate from college, and two of them have master's degrees.

00:48:20.000 | That's awesome. Good for them.

00:48:22.000 | Debt-free, and Dad didn't pay for it. They figured out a way to pay for it themselves.

00:48:26.000 | I paid for one semester of all that education. I forked over enough money for one semester.

00:48:31.000 | Since I know my kids never listen to my podcast, I can say this on the air here.

00:48:36.000 | I raised them with that in mind. Most people are raised that you're going to go to school.

00:48:41.000 | I raised them that, yeah, you should go to school and get an education, but I took the next step and said, "And you're going to pay for it."

00:48:47.000 | It was like, "You're going to school, and you're going to pay for it."

00:48:50.000 | They just heard that for 18 years of their life.

00:48:54.000 | I actually didn't think they would. I put money aside and stuff, and I thought that they would have come and asked for money, but they didn't.

00:49:04.000 | So I didn't give it to them, because I didn't ask for it.

00:49:08.000 | Tell me more. Teach me about—I have a show that I've been working on an outline, as far as my ideas for training my son with money.

00:49:19.000 | I've got a few ideas that I think are interesting, but I'm at the very front end, and I haven't seen it proved out.

00:49:25.000 | Tell me more about some of the ways that you've worked with your children to try to encourage them and train them toward financial success.

00:49:32.000 | What have you implemented? What have you done over the years? What's worked? What hasn't worked?

00:49:37.000 | I like the idea of making them wait for things or making them save up their own money for things.

00:49:42.000 | Even once they save up their money, whether they get it through an allowance or whether they worked or they got birthday money or whatever,

00:49:48.000 | making them wait a certain period of time for whatever they want.

00:49:51.000 | Because generally, you can make them wait 24 hours or seven days or whatever, depending on how cruel of a parent you are, that you make them wait for something.

00:50:00.000 | They generally don't want it, and they forgot about it, and they're on to something else, and so the clock restarts.

00:50:05.000 | So I think that's a great thing to do.

00:50:07.000 | If you have a five-year-old and he gets his birthday money and he wants to go buy whatever hot toys are anymore, he wants to go buy a toy or an app or whatever five-year-olds buy,

00:50:20.000 | you make them wait five hours, five days, five weeks. You kind of use their birthday as a means.

00:50:29.000 | Generally, 24 hours is a good starting point, even for older kids.

00:50:33.000 | But you just make them wait, because again, most of this stuff is fleeting.

00:50:37.000 | They really don't want it, and that teaches them to not have that impulse.

00:50:41.000 | And that's where people spend all their money.

00:50:44.000 | I mean, people are rational.

00:50:47.000 | I mean, that's why I don't personally--divert a little bit here--that's why I don't believe in the rational stock market theory.

00:50:53.000 | People are not rational.

00:50:55.000 | I don't care how much information is available to everybody.

00:50:58.000 | I was getting a massage the other day, and the lady was telling me how she's investing in the stock and stuff.

00:51:03.000 | It's not based on any rational standpoint, right?

00:51:06.000 | She's investing in this because she heard a tip on CNBC or something.

00:51:11.000 | So people are not rational.

00:51:13.000 | And that's how they get all this credit card debt.

00:51:16.000 | I mean, they don't go out to get $20,000, $30,000 worth of credit card debt.

00:51:19.000 | It's an impulse buy.

00:51:21.000 | Their tire blew out, and they have to have a new tire.

00:51:24.000 | Or they got a date with this hot chick, and they have to buy dinner that night, and they don't have any cash.

00:51:29.000 | So they've got to spend $100 on dinner.

00:51:32.000 | And it's that impulse.

00:51:34.000 | If you can learn to overcome the impulse purchase, you'll be way ahead.

00:51:39.000 | The other things with kids are just to make them understand the value of things.

00:51:42.000 | Because if you give them everything, even if you give it to them, you still need to relate to them what that costs.

00:51:48.000 | You know, Dad had to work three hours in order to get that.

00:51:53.000 | Or you doing your chores, you had to shovel snow or cut the grass or whatever.

00:51:58.000 | You had to shovel snow for three days in order to buy whatever you wanted to buy.

00:52:05.000 | And if you instill that in them when they're little, and you let them be part of your family discussions,

00:52:10.000 | when you and your wife are talking about paying the bills or buying a car or something like that,

00:52:14.000 | you let them listen in on those conversations so that they understand that Mom and Dad are not an infinite source of wealth,

00:52:22.000 | and that they're scarcity, and that they have to save and be frugal in order to get the things that they want.

00:52:29.000 | And I'm always sarcastic with my kids.

00:52:32.000 | They'll again point out, "Well, that guy over there is driving a BMW," or "This guy has a boat or has a bigger house," or whatever.

00:52:40.000 | And I'd find a sarcastic way to kind of tease my kids about it, but I'd always come back to the point of saying,

00:52:45.000 | "You know, that guy probably doesn't really have any money. What do you get right down to it?"

00:52:49.000 | And I know over the years, my kids have gotten older, they've come back to me and said, "Dad, you were right.

00:52:54.000 | That guy really was a broker. That guy really did lose his house in 2008 or 2009 when the housing market fell apart."

00:53:02.000 | So you have to... We don't talk about sex politics and religion kind of thing.

00:53:08.000 | People don't talk about money. You need to talk about money. You need to instill that in your kids.

00:53:14.000 | Play games with them. You know, we'd play the Monopoly kind of games where they're just dealing with fake money,

00:53:21.000 | but they can see what they can and can't buy.

00:53:24.000 | I was just talking to my 14-year-old daughter the other day. She was studying inflation in school.

00:53:30.000 | They're teaching her about inflation, and we were talking about that.

00:53:33.000 | I answered her question based on Monopoly money, and she got it right away.

00:53:38.000 | I said, "If you're playing Monopoly..." Because we're talking about how the money grows,

00:53:42.000 | how the government inflates money and how it's worthless.

00:53:44.000 | So we're saying, "If everybody's playing Monopoly and you all have $500..."

00:53:48.000 | She got that, that everybody has an equal amount of money.

00:53:50.000 | I said, "Well, what if you had $10,000 and everybody else only had $500?"

00:53:54.000 | She said, "Oh, that's great. I could buy Park Place and I could buy all these things on the Monopoly board."

00:53:58.000 | I said, "Yeah, but what if everybody has $10,000?"

00:54:01.000 | She said, "Well, yeah, I'm back to where I was at before."

00:54:03.000 | She just got that, "Hey, that's the way money works.

00:54:06.000 | That's the way government promises everybody all these services,

00:54:10.000 | and then they print money to pay for it, and then the end result is nobody has anything."

00:54:15.000 | So just play those games with your kids.

00:54:19.000 | Again, you put that expectation in them.

00:54:22.000 | As my kids got older, they always had jobs.

00:54:25.000 | When they went to school, they either funded their educations through--90% of it was through working.

00:54:33.000 | A couple of men ended up--they did get academic scholarships because they excelled in a particular area or not,

00:54:38.000 | but most of it was from working, and they cleaned toilets.

00:54:42.000 | They went door-to-door selling pest control.

00:54:45.000 | They worked in restaurants.

00:54:48.000 | They just worked. They worked and they saved their money.

00:54:51.000 | I'm glad to hear you say expectations.

00:54:53.000 | I think a lot about that, and in the same way that you had those expectations with your kids--

00:54:58.000 | my dad had--you're talking about big family economics.

00:55:03.000 | My father always told us the same thing.

00:55:05.000 | He's like, "Listen, if you want to go to college, I think that's great.

00:55:09.000 | I think you probably should consider it because in our world today, it's one of those things that--

00:55:14.000 | it just in some ways is necessary and it's mandatory, but you're on your own as far as paying for it,

00:55:19.000 | so don't expect me to pay for it.

00:55:21.000 | You better get good grades so you can get someone else to pay for it.

00:55:23.000 | Otherwise, you're going to be working really hard to pay for it."

00:55:27.000 | I'll contribute. If you're in school, I'll allow you to live at home.

00:55:30.000 | You can live here rent-free while you're in school.

00:55:32.000 | That'll be my way to contributing, but I'm not going to pay your $30,000 tuition bill.

00:55:37.000 | Every single one of my siblings, with the exception of one who has a technical degree--

00:55:45.000 | all of us have college degrees, and all of us took different paths,

00:55:50.000 | but several of my siblings got paid to go to college just because they worked hard

00:55:54.000 | and they kept good grades and they got plenty of scholarships.

00:55:57.000 | I had some scholarships. I paid my own way, but I never expected to go to Dad and say,

00:56:01.000 | "Hey, I need $30,000. Can you do it?"

00:56:04.000 | I never felt like that was a hardship.

00:56:06.000 | Looking back on it, I'm finding some academic research to illustrate that his opinion was that

00:56:15.000 | if I paid for school, I would value it more.

00:56:18.000 | I think he was right. I found some academic research supporting that,

00:56:21.000 | although I've seen it both ways.

00:56:24.000 | It's not a major statistical difference, but there's a small difference.

00:56:30.000 | I think about this in terms of things like savings rates.

00:56:33.000 | I admire parents who teach their children,

00:56:36.000 | "Look, when you earn a dollar, you're going to save 10 cents of it, and you're going to give 10 cents away."

00:56:40.000 | But I think, "Why not set the expectation, when you earn a dollar, you're going to save 50 cents of it?"

00:56:44.000 | Or, "You're going to spend 50 cents of it, and you're going to save 50 cents of it."

00:56:49.000 | Or, "You're going to spend 25 cents of it and save 75% of it."

00:56:52.000 | Or, "I found one book, and I'm going to try to have them on the show. It's on my reading list. I haven't read their book yet."

00:56:58.000 | But their expectation that they set for their children was that they would be able to purchase their own house,

00:57:04.000 | mortgage-free, by the time they were in their early 20s.

00:57:08.000 | I think they have had either two or three sons who have done that.

00:57:11.000 | And all of them have started their life in their early 20s with a paid-for house,

00:57:15.000 | based upon the money that they saved over time.

00:57:18.000 | So I wonder a lot about the expectations, because you could probably go overboard with that.

00:57:23.000 | You're only going to spend 2 cents of your dollar, and you're going to save 98 cents.

00:57:27.000 | That's probably a little extreme, but children are probably more capable than we give them credit for.

00:57:32.000 | Yeah, and I try to be a real libertarian in my own life with things.

00:57:36.000 | You can't with kids. You've got to rein in kids. They have to have boundaries, because they're kids.

00:57:42.000 | They'd end up dead if they didn't have any boundaries.

00:57:48.000 | But I try to be even libertarian with my kids and teach them those things.

00:57:52.000 | Particularly, when you're 18, you can do whatever you want, but you should consider these things.

00:57:57.000 | You should understand the way these things work.

00:57:59.000 | And if you want to waste and blow all your money, that's fine.

00:58:03.000 | But look where you're going to be, because Dad's not going to help you.

00:58:06.000 | Dad's not going to send you to dental school and put you in a BMW.

00:58:11.000 | If you want to do that, you need to fund it yourself.

00:58:13.000 | I don't care if you go to dental school. I don't care if you have to drive a BMW.

00:58:16.000 | But you're going to pay for it. Dad's not paying for it.

00:58:19.000 | So you have to do that with them.

00:58:22.000 | And again, make it fun. Kids love to earn money.

00:58:27.000 | They like to earn money. I wish I would have kept track.

00:58:29.000 | I guess had I known one day that I would have my own financial business, I would have kept better records.

00:58:35.000 | But I remember one of my kids, when they were 19, they had over $35,000 saved up.

00:58:43.000 | And I'm sure that's probably more than the average American has a net worth.

00:58:49.000 | And this is a kid. And I've got to say, my kids are not like me. I'm their dad.

00:58:53.000 | They can't be rocket scientists. They're just average kids.

00:58:57.000 | They're just people that came from a large family.

00:59:00.000 | They knew they had responsibilities.

00:59:02.000 | And they, for the most part, did what they were raised to do.

00:59:07.000 | Those expectations, they go both ways, too.

00:59:09.000 | If I was out blowing my money, setting a bad example, my kids wouldn't have learned to save.

00:59:15.000 | My wife and I had to not be hypocrites.

00:59:18.000 | We had to live the same life that we were teaching them about.

00:59:21.000 | And people say, "Well, I had to go in debt to buy a car," or "I had to go in debt to do this or that."

00:59:28.000 | You don't have to.

00:59:30.000 | I have owned--I've got to think about this so I don't tell a lie--I've only ever had one car payment in my life.

00:59:40.000 | I'm 53 years old right now.

00:59:42.000 | I've had one car payment in my entire life. One. Just one.

00:59:48.000 | And even now, I could probably lease a car and write it off in my business and save $1,000 or some tax gimmick scheme.

00:59:58.000 | I'd just buy the car. I'd just pay cash for it and keep it for 15 years.

01:00:04.000 | I don't worry about writing it off or depreciating it.

01:00:06.000 | I don't get all wrapped up in trying to be pound-wise and penny-wise and pound-foolish.

01:00:14.000 | But I think you just have to set those expectations for yourself.

01:00:17.000 | You and your spouse or your partner or whatever, you've just got to say, "This is what our budget is. This is what we're going to do."

01:00:23.000 | And people say, "Well, how do you pay cash for a car? You must be rich."

01:00:27.000 | Well, no. I told you, when I was 35 years old, my whole net worth was $70,000.

01:00:33.000 | And I had a stay-at-home wife. At that time, I had four kids, I guess.

01:00:38.000 | We had to save and scrimp and make ends meet just like everybody else.

01:00:43.000 | And I didn't drive a new car. That was the point.

01:00:46.000 | I didn't go out and buy a Suburban for $40,000 because I knew I couldn't afford it.

01:00:52.000 | I knew that someday I wanted to be where I'm at today.

01:00:56.000 | And so I bought an old used station wagon and I drove it for a while until it fell apart.

01:01:01.000 | And then I had saved my money and bought something better.

01:01:04.000 | I think you mentioned a minivan. For a family, for anybody, a minivan.

01:01:09.000 | I mean, they're ugly, they're not cool, but a minivan is like the most economical car you can own or operate.

01:01:15.000 | They're awesome.

01:01:16.000 | They're awesome. They're not very expensive. The bang you get for your buck.

01:01:20.000 | You can put a lot of people in it, you can haul a lot of things.

01:01:23.000 | They last forever. The maintenance on them is--the minivans I've owned over the years,

01:01:29.000 | I think I've had one bad apple in the whole bunch.

01:01:31.000 | I mean, most of them, I just change the oil, put tires on them, and they run until they just fall apart.

01:01:37.000 | I mentioned earlier the Expedition that I bought.

01:01:40.000 | And I bought the Expedition, and I'm glad I did.

01:01:45.000 | And then after I had it for a while, I just started hating it.

01:01:47.000 | And I got over that whole stupid self-confidence issue that I had, and I just hated it.

01:01:53.000 | Because I recognized, this SUV does nothing well.

01:01:56.000 | It does everything in a mediocre manner, and it does nothing well.

01:01:59.000 | The only reason--if I needed to have a four-wheel drive vehicle that could pull a big trailer and haul some people,

01:02:05.000 | then the SUV would have been ideal.

01:02:08.000 | It just didn't have a lot of space.

01:02:10.000 | If I put the third row up, then I didn't have any luggage space.

01:02:14.000 | And so I was so happy to sell it.

01:02:16.000 | It was a 2006 Expedition. The day it sold, I was thrilled.

01:02:19.000 | And then I took the money, and I found a 2007 minivan for $5,000.

01:02:23.000 | And that car was awesome.

01:02:26.000 | And I told my wife--we're driving home--I think we bought it a couple years ago--

01:02:29.000 | and I said, "I'm probably the only 27-year-old male in the United States of America

01:02:32.000 | that is so thrilled to be driving a minivan, because this is the best vehicle ever.

01:02:38.000 | It's comfortable. It gets great gas mileage. It's got loads of room.

01:02:41.000 | I can carry way more stuff than I ever could with the Expedition.

01:02:44.000 | I can still haul a trailer, just not a very big one.

01:02:47.000 | And I live in Florida. What do I need a four-wheel drive vehicle for?"

01:02:50.000 | Absolutely.

01:02:52.000 | One area that I wanted to just ask you, because I thought it would be interesting,

01:02:58.000 | and then let's go to the investment business.

01:03:01.000 | Are you doing okay on time? Do you have a few more minutes?

01:03:05.000 | I work myself. I have all day.

01:03:08.000 | Perfect.

01:03:10.000 | That's the beauty of being financially independent.

01:03:13.000 | It's easier to give a little bit more time now than to try to arrange another time

01:03:16.000 | and stick to some arbitrary time limit.

01:03:19.000 | You mentioned earlier, you were talking about your Italian immigrant grandparents,

01:03:25.000 | and you were talking about that he was homesteading his land.

01:03:28.000 | The title of your podcast is "Wealthsteading."

01:03:31.000 | Is that what you're talking about? Is this idea of homesteading?

01:03:33.000 | Is that where that name comes from?

01:03:35.000 | Yes, it does.

01:03:37.000 | "Stead" I think is Old English for "farm," but it's the root word of things like "steady" or "steadfast."

01:03:42.000 | And I wanted to teach people to "wealthstead."

01:03:46.000 | We're not necessarily all going to go back to the land and get 40 acres and a mule,

01:03:50.000 | but we can get $40,000 in an IRA and use that to get our financial independence.

01:03:56.000 | Because, again, it's all about the freedom. It's about the independence.

01:03:59.000 | It's interesting, because I actually own a domain, and I thought about starting another podcast.

01:04:05.000 | When I wasn't able to do this show while I was working in the financial services industry,

01:04:09.000 | I had thought about starting a podcast called "South Florida Homestead."

01:04:14.000 | And I love that word "homesteading."

01:04:17.000 | And the thing I love about it is I think it's a word that, to me,

01:04:23.000 | has a lot of practical applications for wealth, and I can apply it in a lot of ways.

01:04:28.000 | But the way I think about it is that if you think about homesteaders,

01:04:31.000 | what they were doing is they were going out, and when they were--

01:04:34.000 | whether it was the Oklahoma land rush or you're an immigrant of an Italian grandfather,

01:04:39.000 | but the guy that was going out to Oklahoma, he went out there and he bought--

01:04:43.000 | my grandfather had a section, so what was that?

01:04:46.000 | No, he had a quarter section, which I think was 160 acres, that was originally a homestead.

01:04:52.000 | So if you had your 160 acres or your 640 acres, I think, is a section,

01:04:59.000 | or whatever, whatever, you had your land, the thing that you were looking for from the land

01:05:04.000 | was you were looking for the land to produce for you, to produce the needs of your life.

01:05:11.000 | And so one of the things that I think about is how can we apply that in a modern era

01:05:16.000 | to our living situation and to our housing?

01:05:19.000 | And it seems silly to me that we pay lots and lots of money for a house,

01:05:24.000 | and this house, basically what it does is it keeps the rain off of an empty living room

01:05:28.000 | while we're away working, and it keeps the electricity flowing to an air conditioner or a heater

01:05:33.000 | that's keeping it hot or cool all day while we're working away at a job that we don't like

01:05:37.000 | to stereotype the American culture.

01:05:40.000 | And I look at it and say, how can we turn our houses from a consumption item

01:05:45.000 | into a production item?

01:05:48.000 | And Robert Kiyosaki in his book "Rich Dad, Poor Dad," he popularized this concept for many people,

01:05:53.000 | saying your house is not an asset; it's a liability.

01:05:56.000 | And although I get his point, clearly he doesn't understand accounting,

01:05:59.000 | because that's not true, but his point is that the house eats money

01:06:02.000 | and it doesn't produce for you.

01:06:04.000 | And I think a lot about how can I make my house produce for me?

01:06:07.000 | So how can I make it so that it's less energy costly, make it less--produce--

01:06:14.000 | maybe some food, produce some shelter.

01:06:16.000 | How can I shelter my business?

01:06:19.000 | How can I make my house an item of production instead of consumption?

01:06:23.000 | And that's a concept that I've almost never heard explored in the financial world,

01:06:27.000 | but to me it makes a lot of sense, and it's one of those things I think a lot about

01:06:32.000 | and I'm working a lot about, because if you have $2,000, you might not want to go and buy Apple stock,

01:06:39.000 | but it might be a good idea to put some insulation in the attic to lower your AC bill by $100.

01:06:44.000 | Right, right. And those are things I try and cover and plan to cover on my podcast about--

01:06:49.000 | Awesome.

01:06:50.000 | --because I know that 90% of my listeners probably--

01:06:53.000 | they couldn't engage me as their investment advisor, they don't have the assets to do that.

01:06:57.000 | Probably 99% of them wouldn't have that money.

01:07:00.000 | But they all have the opportunity to build their wealth just by what we're talking about--

01:07:04.000 | saving, making their home productive.

01:07:07.000 | Things like having a garden.

01:07:09.000 | And again, it gets back to--I had a big family, so my emphasis is on the family,

01:07:14.000 | but if you have a garden, you're not only growing your own food, but if you have children,

01:07:18.000 | you're teaching the kids, right?

01:07:20.000 | You're teaching the kids about science, you're teaching the kids about nature,

01:07:23.000 | you're teaching the kids about hard work, you're teaching the kids about patience.

01:07:26.000 | I mean, so it's not that you're stacking your functions like in permaculture,

01:07:29.000 | you're just not growing a garden, you're raising kids, too.

01:07:33.000 | And I also like to think in terms of slavery--again, taking that down to a simple equation--

01:07:38.000 | what's a slave? A slave is someone that works, and 100% of his earnings are taken away from him.

01:07:44.000 | He has a place to sleep, he's fed, he has a place to sleep if he gets sick.

01:07:49.000 | The slave master doesn't want him to die, so he gives him health care.

01:07:52.000 | But he doesn't get to keep any of his wages.

01:07:54.000 | So look at you as a modern-day consumer in America.

01:07:58.000 | You're paying 40% of your income for your house,

01:08:01.000 | you're paying 20% of your income for transportation,

01:08:04.000 | you're paying 30% of the government in taxes,

01:08:07.000 | and sales taxes, all that kind of stuff, income taxes.

01:08:10.000 | At the end of the day, you find out you're worse than a slave

01:08:13.000 | because you're living 120, 130% of your income.

01:08:16.000 | That's why you're racking up all these credit card bills.

01:08:19.000 | So you're worse than a slave, you're worse off.

01:08:22.000 | You need to look at your home and look at how can it be a refuge for you,

01:08:26.000 | how can it be a safe place to raise your children,

01:08:28.000 | how can it be a place where you're enjoying it.

01:08:32.000 | You're not going to work, working 80 hours to pay for your home.

01:08:35.000 | You're living in your house and enjoying it.

01:08:39.000 | And by the way, if you can be--like we talked about being a salesman,

01:08:42.000 | an outside salesman or an entrepreneur or someone--

01:08:47.000 | a software engineer that can work from home,

01:08:49.000 | that's exactly what you want to do.

01:08:51.000 | If you're in corporate America, you can figure out a way to somehow telecommute

01:08:54.000 | or work out of your home or start your own business and work from your home.

01:08:57.000 | You'll be miles ahead of the game.

01:08:59.000 | Think of all the traffic you won't sit in.

01:09:02.000 | Think of all the time you won't be commuting.

01:09:04.000 | Think of all the ridiculous meetings you won't be sitting in in your office

01:09:07.000 | or the time wasted in your cubicle.

01:09:09.000 | It really does make a major difference.

01:09:11.000 | And just the name, even just the word "wage slave"

01:09:16.000 | I think is a really valuable word that we don't--

01:09:21.000 | it's a word that we don't think about very much today.

01:09:24.000 | But if you actually go back and you look--

01:09:27.000 | now I'm not ready to say this is absolutely true

01:09:33.000 | because I can't prove it,

01:09:35.000 | but I made a comment on a show last week.

01:09:38.000 | I was talking about slavery, and one of the things that I've learned--

01:09:40.000 | I wasn't taught in school, but there was good evidence that in this country,

01:09:45.000 | in the awful period of the beginning of the 19th century,

01:09:49.000 | when we enslaved human beings,

01:09:52.000 | that slavery was decreasing naturally because it was simply too expensive.

01:09:58.000 | And that the southern plantation owners were finding

01:10:03.000 | that they could not compete with the northern industrialists

01:10:07.000 | because the northern industrialists would say,

01:10:09.000 | "You come work for me. I'll pay you a wage. You're a free man.

01:10:12.000 | You're not enslaved, but now you have to pay for your housing, your food.

01:10:20.000 | You have to take care of all of these things yourselves."

01:10:22.000 | And I have read some of the letters from that time

01:10:26.000 | in the historical record that indicate to me--

01:10:29.000 | although again, I'm not ready to say I can prove this,

01:10:33.000 | but I've read some of the letters that are in the historical record

01:10:35.000 | that show that this was recognized, at least, by the industrialists.

01:10:39.000 | And they recognized this fact.

01:10:41.000 | Now, whether or not they did it, to me, that in no way disqualifies

01:10:46.000 | the horrific nature of enslaving a human being

01:10:52.000 | and having a human being under your control.

01:10:54.000 | That in no way makes that argument.

01:10:56.000 | If you look at the historical record, you do see that many--

01:11:01.000 | some slaves, human slaves at that time,

01:11:05.000 | had a better relationship with their former master,

01:11:09.000 | such that after slavery was abolished,

01:11:11.000 | they continued working as freedmen, where they were earning wages.

01:11:15.000 | And it certainly makes you scratch your head sometimes

01:11:17.000 | when you look at it and say,

01:11:19.000 | "How is it that we all live our lives as wage slaves?"

01:11:22.000 | Now, I'm clarifying again. I am in no way saying,

01:11:25.000 | "Give me an option any time to be enslaved as a human being

01:11:28.000 | versus being an employed person and responsible.

01:11:31.000 | I will take responsibility every time,

01:11:33.000 | and I will fight for every person to have that responsibility."

01:11:37.000 | But the challenge is that recognizing that we are in that situation,

01:11:41.000 | do we use our freedom to free ourselves,

01:11:45.000 | or do we continue on being used as,

01:11:48.000 | to borrow the metaphor of the Matrix,

01:11:50.000 | a battery for someone else's purposes?

01:11:53.000 | Right, yeah. And my understanding of history,

01:11:55.000 | my reading of history is along your lines, too.

01:11:59.000 | Even in the way the Constitution was put together,

01:12:02.000 | I mean, they were basically trying to put a sunset limit on slavery.

01:12:05.000 | They knew it was going to fall apart on its own.

01:12:07.000 | We were the only country that had to go to a civil war to stop slavery.

01:12:10.000 | Britain was able to do it without going to war.

01:12:13.000 | It was falling apart.

01:12:15.000 | The slaves were getting whiter and whiter because...

01:12:18.000 | Exactly. That was what the Southern...

01:12:21.000 | I read an essay by a historian, and he said,

01:12:23.000 | "Listen, the Southern women were putting an end to it

01:12:26.000 | because the slaves, again, were getting...

01:12:29.000 | there were some lighter slaves around."

01:12:32.000 | And the wife was saying, "This is absolutely not going to happen.

01:12:35.000 | We're done with this."

01:12:37.000 | Absolutely. I mean, you read Frederick Douglass in his autobiography,

01:12:40.000 | he talks about that, he talks about how the slave masters,

01:12:44.000 | I mean, their kids were getting whiter.

01:12:46.000 | He says it right there in his thing.

01:12:49.000 | So slavery was going to come to an end one way or another.

01:12:56.000 | And I guess the point of all that, too, is, like you said,

01:13:01.000 | so many people did stay, just like people,

01:13:04.000 | they stay in these bad situations that they're in now.

01:13:07.000 | People stay with alcoholic, abusive husbands, right?

01:13:10.000 | Because they're just, what is it, codependent,

01:13:13.000 | or whatever the buzzword is for that.

01:13:15.000 | I mean, you have to break yourself away from that.

01:13:18.000 | You have to think of yourself as a capable individual,

01:13:21.000 | someone that's on this earth for...

01:13:24.000 | You have God-given talents and abilities,

01:13:26.000 | and you're on this earth for a purpose,

01:13:28.000 | and you need to say, "How can I achieve those things?

01:13:32.000 | Am I going to achieve them being tied down to this

01:13:36.000 | $600,000 mortgage in this home,

01:13:40.000 | or sit in this cubicle every day?

01:13:43.000 | Is that what I was meant to be?

01:13:45.000 | Is that any better than picking cotton?"

01:13:49.000 | Right. I think that's, overall, what the theme of my show is,

01:13:54.000 | basically, is, and is becoming more and more, is freedom.

01:13:58.000 | And that can be exactly what you said.

01:14:01.000 | Freedom can be found in a job.

01:14:03.000 | Freedom can be found in entrepreneurship.

01:14:05.000 | Freedom can be found in many ways.

01:14:07.000 | But I want all of us to have the sensation

01:14:10.000 | and the feeling of freedom,

01:14:13.000 | because then, can you ever really be free?

01:14:17.000 | I'm not sure how to express what I'm trying to express,

01:14:22.000 | but very few of us have ever been free.

01:14:25.000 | And I even recognize this in my life.

01:14:27.000 | I've recognized that it's only recently in my life

01:14:31.000 | that I've ever had the full knowledge

01:14:34.000 | and appreciation and sensation of being free.

01:14:38.000 | Free to do well, and free to screw everything in my life up.

01:14:41.000 | Because I worked through, okay, high school, not really free.

01:14:45.000 | I was commanded, "Here, you need to go to this."

01:14:46.000 | College. I voluntarily chose to go to college,

01:14:49.000 | but then, because I submitted myself to that,

01:14:51.000 | then I was--I needed to work.

01:14:54.000 | I needed to do certain things.

01:14:56.000 | Corporate world after that.

01:14:57.000 | Worked in the corporate world.

01:14:58.000 | I chose, and I got a lot of benefit from a job,

01:15:01.000 | but I was also under those corporate laws.

01:15:04.000 | Then I became self-employed, working as a financial advisor,

01:15:07.000 | and there I was more free than I'd ever been,

01:15:10.000 | but yet I still had all the rules of the financial industry.

01:15:13.000 | And it's only now, in the last two months,

01:15:15.000 | that I've had an appreciation of what it's like to truly be free.

01:15:20.000 | And it's amazing to me that it took me until 29 years old

01:15:23.000 | to experience that sensation of freedom.

01:15:26.000 | And I don't want to overstate that or understate it,

01:15:28.000 | because it really has been--life is not terrible.

01:15:31.000 | Life is better than it has ever been,

01:15:33.000 | even if I'm working in a cubicle job, to beat that metaphor.

01:15:39.000 | But you have to experience freedom,

01:15:43.000 | and then once you experience it,

01:15:45.000 | then you can choose to go back and submit yourself voluntarily,

01:15:49.000 | and it's much more powerful than if you've never had a chance to taste freedom.

01:15:53.000 | The human slave that had the opportunity to go and taste freedom

01:15:57.000 | and came back and chose to work for someone

01:16:01.000 | to whom they were formerly enslaved,

01:16:03.000 | that's very different than the person to whom all they had ever known

01:16:06.000 | was the conditioning of being a slave,

01:16:08.000 | and they chose to--and they just simply, out of fear,

01:16:11.000 | continued in that codependent relationship.

01:16:14.000 | And I think that's probably what happened more often than the other.

01:16:19.000 | Right.

01:16:20.000 | Go ahead.

01:16:21.000 | And we're talking about this from the perspective of two white guys, right?

01:16:25.000 | Right, yeah.

01:16:26.000 | Even if--and I mentioned Frederick Douglass--

01:16:29.000 | you go back and read Malcolm X, go back and read Malcolm X,

01:16:32.000 | he says the same thing.

01:16:33.000 | Really?

01:16:34.000 | He talks about the field Negro and the house Negro,

01:16:37.000 | and the different mentalities they have, right?

01:16:39.000 | I mean, you know, the field guys out there sweating and dying and bleeding

01:16:45.000 | and working hot in the sun,

01:16:47.000 | and the guy in the house is taking care of the master,

01:16:50.000 | and he wants to help the master and all this.

01:16:53.000 | He's supporting the master.

01:16:54.000 | Malcolm X draws that analogy to--I guess he was alive, what, in the '60s,

01:16:58.000 | maybe early '70s.

01:17:00.000 | He draws that analogy to people living in that time

01:17:03.000 | and the comfort of their American society,

01:17:07.000 | saying, "Are you in the house or are you in the field?"

01:17:10.000 | Because the guy in the field, he's praying that the master dies,

01:17:13.000 | and he's praying that the master's house burns down.

01:17:15.000 | The guy in the house, he's putting out the fire, he's trying to help master.

01:17:20.000 | Yeah.

01:17:21.000 | So challenging to work through these things.

01:17:23.000 | I talked a little bit about them in the last few days,

01:17:25.000 | and I had such a reaction from the audience.

01:17:27.000 | I got some great emails that just really challenged my thinking,

01:17:30.000 | and hopefully we've done a good job of looking at it rationally,

01:17:34.000 | but it is tough.

01:17:35.000 | Neither of us has ever experienced it, and it's challenging.

01:17:40.000 | Let's move on, and let's wrap up with talking about, actually,

01:17:45.000 | some of the business of financial services.

01:17:49.000 | What on earth makes you qualified to think that you have any idea

01:17:53.000 | or any ability with my money?

01:17:55.000 | What on earth makes you think that you could do something?

01:17:59.000 | After all, the markets are efficient,

01:18:03.000 | and nobody can ever consistently predict or time the market.

01:18:08.000 | So how on earth can you be so brazen as to say that you have any insight

01:18:15.000 | to offer me with my money?

01:18:17.000 | Right.

01:18:20.000 | I temper a little bit of that when I talk to my clients about--

01:18:23.000 | I tell them to be leery, very leery of anybody that claims to be an expert.

01:18:27.000 | I'm not an expert.

01:18:28.000 | I don't have some secret algorithm.

01:18:32.000 | I don't have any insider information, and obviously if I did,

01:18:35.000 | I couldn't trade on it anyways.

01:18:37.000 | So when you see these advertisements or headlines either in newspapers

01:18:42.000 | or the internet, the five next stocks to buy,

01:18:46.000 | the thing that kills me is everybody quotes Warren Buffett.

01:18:51.000 | I always say, "If the headline has Warren Buffett in it, don't read it."

01:18:55.000 | Because the one thing they're taking probably Warren out of context,

01:18:59.000 | two, Warren lies to you about what he really does,

01:19:02.000 | and three, if they're talking about Warren Buffett,

01:19:05.000 | then they're obviously telling you that they don't have any credentials themselves

01:19:08.000 | because why would they be referencing Warren Buffett?

01:19:11.000 | So to kind of come to that, say, "Joshua, listen.

01:19:16.000 | This is my life experience.

01:19:18.000 | This is the things that I believe," and again,

01:19:20.000 | breaking them down into very simple equations.

01:19:22.000 | You save, you earn, you invest.

01:19:26.000 | When you get to that investment part, you have to make prudent decisions.

01:19:29.000 | There are times and seasons for all things.

01:19:31.000 | Things go up and down, and I do believe overall, yes,

01:19:35.000 | the market's efficient in terms of duration.

01:19:39.000 | Over five or ten or 20 years, things work themselves out,

01:19:44.000 | but there are obviously bubbles.

01:19:46.000 | I mean, how can we deny that things get either underpriced or overpriced,

01:19:50.000 | oversold, undersold?

01:19:53.000 | The house that I'm living in was a foreclosure.

01:19:56.000 | The guy spent, I don't know, over half a million dollars, $550,000 for it.

01:20:02.000 | 2007, I bought it in 2010 for $300,000.

01:20:08.000 | Did he pay too much or I paid too little?

01:20:10.000 | I don't know, but either way, I'm sitting on an asset now,

01:20:13.000 | and that guy was bankrupt because I knew how to take advantage of it.

01:20:16.000 | I knew how to distinguish and determine value.

01:20:21.000 | Me personally, I didn't do it through a formal education.

01:20:25.000 | Although I am formally educated, I'm not formally educated in finance.

01:20:28.000 | I studied science and engineering.

01:20:31.000 | I don't have any fancy titles behind my name.

01:20:34.000 | I know you do.

01:20:35.000 | You have a whole bunch of help with this.

01:20:37.000 | That doesn't mean anything except I'm good at taking tests.

01:20:40.000 | As you say, of all those things,

01:20:42.000 | I am so pathetic in terms of the financial industry.

01:20:45.000 | I only know what one of those means.

01:20:46.000 | I don't even know what the rest of them mean.

01:20:48.000 | Probably better that way.

01:20:49.000 | I have no clue what they even mean.

01:20:50.000 | I know the certified financial planner designation.

01:20:52.000 | I don't even know the rest of them.

01:20:53.000 | I don't know those things, but I do know value.

01:20:57.000 | I know that things ebb and flow.

01:21:00.000 | I know that the United States stock market--

01:21:04.000 | again, there are all kinds of troubles.

01:21:06.000 | The debt's too high.

01:21:07.000 | The Fed's balance sheet is too large.

01:21:09.000 | There's too many people on food stamps.

01:21:11.000 | I get all that, but we've been in bad times before.

01:21:15.000 | Because of all the things we talked about before in our conversation

01:21:19.000 | about the apps that didn't used to exist,

01:21:21.000 | the smartphones that didn't used to exist.

01:21:24.000 | You and I are talking free over Skype, right?

01:21:27.000 | We could be doing a visual one.

01:21:30.000 | We're just doing voiceover.

01:21:32.000 | But we could be seeing each other as well.

01:21:34.000 | When I was a kid, that was George Jetson.

01:21:37.000 | That was the cartoons.

01:21:39.000 | We all thought, yes, someday that's going to happen.

01:21:41.000 | But the fact that it's happening today, it's free.

01:21:44.000 | We're not even paying for it.

01:21:46.000 | It's just like part of our Internet bill.

01:21:48.000 | Starbucks is doing the same thing for free.

01:21:51.000 | That's the beauty of the American--

01:21:55.000 | what's left of the free enterprise system that we have.

01:21:58.000 | But it's still solid.

01:21:59.000 | It's still alive and well.

01:22:01.000 | There's nothing, in my opinion, no market that's more transparent,

01:22:05.000 | no market that's more honest.

01:22:08.000 | And so, in my regards, like I said, you can make money in real estate, other things.

01:22:12.000 | I think that if you're going to take a portion of your portfolio,

01:22:15.000 | you do want to invest it in United States equities.

01:22:19.000 | Depending upon how much you have, you want to put that in individual stocks

01:22:22.000 | or in exchange-traded funds.

01:22:24.000 | And you can't absolutely 100% time the market, but you can see trends.

01:22:30.000 | You can see, again, these flows of when there's euphoria,

01:22:38.000 | there's times of irrational exuberance,

01:22:41.000 | and there's other times of sheer despair and depression.

01:22:45.000 | And if you, over time, learn to invest in those,

01:22:49.000 | you can significantly increase your returns.

01:22:52.000 | And I'm not always right.

01:22:55.000 | Right now, I'm 90% in cash.

01:22:57.000 | I have clients that are scratching their heads saying,

01:22:59.000 | "John, why am I paying you anything?"

01:23:03.000 | And I say--and first of all, I tell them,

01:23:05.000 | "Really, you don't have to pay me.

01:23:09.000 | I'm a fee only. I charge in arrears at the end of the month.

01:23:13.000 | I mean, you can leave me at any time you want to."

01:23:16.000 | But that is my trading stat.

01:23:18.000 | I think cash is an undervalued asset class.

01:23:25.000 | You can always go to cash.

01:23:27.000 | And the only thing you're going to risk there is the opportunity cost,

01:23:31.000 | which, to me, really isn't a risk.

01:23:33.000 | You're going to miss an opportunity cost of maybe missing a market upswing.

01:23:37.000 | The only other thing you're going to lose is to inflation.

01:23:40.000 | And right now, when I look at the fact that I can be in bonds,

01:23:44.000 | but what if the Federal Reserve or just the market itself does raise interest rates?

01:23:48.000 | Well, bonds have come down since the past 30, 35 years.

01:23:53.000 | I understand that.

01:23:54.000 | But that doesn't mean that if yields go back up,

01:23:57.000 | you can lose principal and bond funds.

01:23:59.000 | And people don't understand this.

01:24:00.000 | So that's a concern to me.

01:24:02.000 | The stock market, although I don't think it's necessarily a bubble right now,

01:24:05.000 | it is certainly fully valued, fully priced.

01:24:08.000 | And I don't see that next--what's the next big invention?

01:24:11.000 | Apple is going to come up with a bigger screen on their iPhone.

01:24:15.000 | What's really going to drive that next sales?

01:24:19.000 | I look at things like GoPro, the GoPro IPO.

01:24:22.000 | I mean, come on.

01:24:24.000 | That's way overvalued.

01:24:26.000 | In six months, when all the insiders sell their shares--

01:24:29.000 | by the way, I'm not making a stock prediction.

01:24:32.000 | I'm just illustrating a point.

01:24:34.000 | I look at those kind of things in the marketplace right now,

01:24:36.000 | and I'm very concerned.

01:24:38.000 | And so right now, I'm 90% in cash with mine and some of my clients are 100% in cash.

01:24:46.000 | But no one would be more than in any kind of a 10% position.

01:24:50.000 | Some of that's in the U.S. dollar itself.

01:24:54.000 | Overall, I'm up probably somewhere between 3% to 4.5%

01:24:59.000 | depending upon what kind of portfolio I'm managing.

01:25:02.000 | So I'm not up a great deal, but I'm up certainly enough to cover my 1% transaction fee

01:25:07.000 | that I would charge someone in a year, and then factoring in 2% inflation.

01:25:11.000 | We're still above that, and it's September,

01:25:14.000 | and there's still plenty of time for a Santa Claus rally if I decide to go that route.

01:25:19.000 | So kind of in a nutshell, long-term and short-term, that's what I tell my clients.

01:25:22.000 | That's what I talk about.

01:25:23.000 | I think there's a value.

01:25:24.000 | I think you can't absolutely 100% time the market.

01:25:27.000 | And again, if someone tells you they can, if they tell you they have an algorithm

01:25:30.000 | or high-speed trading, you know they're lying, and you should just discount everything they say.

01:25:36.000 | But if you use common sense and you're prudent, and in some years you don't make--

01:25:42.000 | right now the market's up about 5.5%.

01:25:44.000 | Last year it was up 30%.

01:25:46.000 | The year before it was, what, up 2%.

01:25:48.000 | The year before that it was down 10%.

01:25:50.000 | I mean, you don't know what you're going to make from year to year.

01:25:55.000 | But if you're prudent and you know that 90%--or excuse me, about 70%, 75% of a stock's performance

01:26:02.000 | is based on the overall market trend.

01:26:04.000 | That's a William O'Neill, a Bill O'Neill thing that he's researched,

01:26:10.000 | and I've looked into numbers.

01:26:11.000 | I agree with it.

01:26:13.000 | If the market's up, 75% of stocks are going to be up.

01:26:17.000 | It kind of gets back to that thing we talked about with earning it.

01:26:20.000 | It depends on their skill and their ability.

01:26:22.000 | Some are up more than others.

01:26:23.000 | But when the market's up, the tide rises all boats.

01:26:27.000 | And when the market's down, even the high flyers fall apart.

01:26:30.000 | I remember the summer, the fall of 2008, every asset class was down.

01:26:36.000 | I don't have the numbers in front of me, but I remember S&P was down.

01:26:40.000 | Internet stocks were down.

01:26:42.000 | Gold was down.

01:26:44.000 | Even the U.S. dollar was down there for a while.

01:26:47.000 | There was pandemonium.

01:26:50.000 | And what you do is you want to avoid those busts.

01:26:54.000 | You want to avoid the Internet bubble of 2000.

01:26:57.000 | You want to avoid a market crash of 2008, 2009.

01:27:03.000 | And if you can avoid those big things, if you see the storm clouds--

01:27:06.000 | I can look out my window right now, and, hey, it's sunny out.

01:27:10.000 | There's a few clouds.

01:27:12.000 | So I take a risk.

01:27:13.000 | Everything has a risk.

01:27:14.000 | I can say, "Eh, I'm probably going to be 80% sure it's not going to rain."

01:27:19.000 | You can do that with the stock market.

01:27:21.000 | You can look at it and say, "Hey, I don't know if terrorists are going to fly airplanes

01:27:25.000 | into a building tomorrow and crash the stock market,"

01:27:27.000 | or "I don't know if Russia is going to drop a nuclear bomb on Ukraine."

01:27:32.000 | Those are things you can't predict.

01:27:34.000 | But, yeah, that other stuff, you can get a feel for it.

01:27:37.000 | You can say, "Hey, the Federal Reserve is totally ending QE3 next month in October."

01:27:45.000 | You can say, "Gee, the German and the Japanese stock markets are both down 10% right now,

01:27:55.000 | year to date, based on their market highs this year.

01:27:59.000 | The French 10-year Treasury is paying under 1%."

01:28:04.000 | You can look at all those things and say, "Gee, we're just not seeing correlations.

01:28:08.000 | Why is the Fed backing out of their $85 billion a month QE and our interest rates,

01:28:16.000 | the yields have actually come down instead of gone up?"

01:28:19.000 | That doesn't correlate.

01:28:21.000 | Something's not right.

01:28:22.000 | It doesn't mean that you're going to predict accurately what's going to happen,

01:28:25.000 | but it does mean that you can say, "Hey, I'm going to go to cash for a while

01:28:28.000 | because my model isn't working.

01:28:31.000 | When my model doesn't work, there's a better chance that I'm not going to make money

01:28:35.000 | than I am going to make money."

01:28:37.000 | So you sit in cash for a little bit.

01:28:39.000 | And you do that through a discount broker, it costs you next to nothing.

01:28:43.000 | Right.

01:28:44.000 | In the years that I've been working in the financial business,

01:28:47.000 | I've changed my thoughts and opinions quite a bit,

01:28:50.000 | and it's one of the drivers behind this show.

01:28:53.000 | I used to think that there was one way and there was one right way,

01:28:59.000 | and that one right way could be found.

01:29:02.000 | So my job was just to find the one right way, no matter what the situation was.

01:29:06.000 | And so whether that were an investment philosophy, whether that were a person,

01:29:10.000 | whether that were a guru, an oracle, a company, like this is the right way.

01:29:17.000 | I've learned over time that just through hard experience

01:29:22.000 | and through screwing some stuff up that that may not exactly be an accurate perception.

01:29:30.000 | And there's a lot of pride and a lot of hubris in that perspective

01:29:35.000 | because when you have a worthy opponent to your point of view,

01:29:39.000 | and this is a person who is intelligent, and this is a person who is learned,

01:29:43.000 | and yet they disagree with you, it's very easy to dismiss them and say,

01:29:48.000 | "Well, they're just wrong."

01:29:50.000 | But that's probably not true.

01:29:52.000 | It's probably a better idea to say, "Let me just try to understand why they think what they think."

01:29:58.000 | Now, they could think what they think, and they could be sharing their opinion because they're nefarious.

01:30:02.000 | They have a hidden agenda. They have an ulterior motive.

01:30:06.000 | They could also be ignorant.

01:30:08.000 | Or they could have a different set of information to look at things with.

01:30:14.000 | And I've learned over time that I think many of the discussions,

01:30:17.000 | as I've become more knowledgeable about investments, about financial planning,

01:30:22.000 | about different approaches, the more I learn, the more I recognize that in general,

01:30:27.000 | one of the biggest problems is that we have a soundbite culture,

01:30:32.000 | and people aren't either able or willing to spend time really understanding a position.

01:30:38.000 | And most of the positions are more nuanced.

01:30:40.000 | So I bait you, and I bait other people, and I invite anybody who has very--

01:30:45.000 | I love people with strong opinions about investments.

01:30:48.000 | I like to have people on who say, "Only index funds every time."

01:30:53.000 | I like to have people come on and say, "Only real estate every time."

01:30:56.000 | I like to have people come on and say, "Only gold coins every time,"

01:31:00.000 | or "Only jars of soup," or "Only cash," or whatever the situation is,

01:31:05.000 | because you can learn from them.

01:31:07.000 | But as I've learned, I've understood that most positions are more nuanced.

01:31:15.000 | So an example I would give--I tried to bait you with the efficient market hypothesis.

01:31:18.000 | I never knew until I was taking CFP classes that the efficient market hypothesis had three versions,

01:31:23.000 | that it had the weak form hypothesis, the semi-strong form hypothesis, and the strong form.

01:31:28.000 | And all of a sudden now I understood that, wait a second,

01:31:30.000 | what I understood to be the efficient market hypothesis, it may not exactly be so.

01:31:35.000 | Maybe there's some nuance to it.

01:31:37.000 | So me personally at this point, I think I am a proponent of what's called the weak form,

01:31:43.000 | but I have a tough time buying the semi-strong--I'm okay with the semi-strong form,

01:31:48.000 | but I can't buy the strong form, personally.

01:31:51.000 | But I'll buy the weak form.

01:31:52.000 | Yeah, sure, and the whole efficiency--I mean, it makes sense, right?

01:31:55.000 | Stocks are valued based on their earnings.

01:31:58.000 | At the end of the day, that's what it's based on.

01:32:01.000 | They have to have earnings, but we don't know what's going to happen in the future,

01:32:04.000 | because it's not based on earnings today, it's really based on future earnings.

01:32:09.000 | What are the earnings expectations?

01:32:11.000 | And so, yeah, we can look at Apple stock right now, and we can say,

01:32:14.000 | "Oh, yeah, $700 a share," or it's splitting, it's $100 a share.

01:32:18.000 | Yeah, that makes sense based on their earnings history and their projected earnings,

01:32:22.000 | but we don't know.

01:32:24.000 | We don't know what those earnings are going to be in three months.

01:32:27.000 | What if another tsunami hits Japan and wipes out more of their nuclear reactors

01:32:33.000 | and the supply chain for some intricate part of the next iPhone 6 gets affected

01:32:39.000 | and they can't make iPhones anymore, right?

01:32:41.000 | Or someone comes up with a better idea, or you don't know what future earnings are.

01:32:46.000 | So, yeah, most of the time, it's like the clock that's right twice a day, right?

01:32:51.000 | Most of the time, you can gauge the price of a stock,

01:32:54.000 | but sometimes it's going to be undervalued, sometimes it's going to be overvalued.

01:32:57.000 | And you can even be wrong and make money.

01:33:00.000 | See, I'm not a genius, right? I've probably been wrong plenty of times.

01:33:03.000 | I've still made money in the market because I don't buy and hold.

01:33:07.000 | I don't buy a stock.

01:33:09.000 | You could have made money off of Enron as long as you sold it before it fell apart.

01:33:12.000 | You could have made money in 1997, '98, '99, and up until about June of 2000 in the Internet bubble,

01:33:21.000 | the dot-com bubble, you could have made money all the way up there

01:33:24.000 | as long as you were out before around June of 2000.

01:33:28.000 | That's what I think people have to understand is they can't just buy and hold because the market--

01:33:35.000 | this is why I have less than full respect for people in the financial industry.

01:33:41.000 | I'll quote the statistics, and people always want to know to me,

01:33:43.000 | "What's the average of when we have a 20% decline in the stock market?"

01:33:48.000 | Or, "How long are we in a recession?"

01:33:50.000 | Or, "What's the average return on a stock portfolio?"

01:33:53.000 | Well, yeah, I can tell you it's 7% or 8%.

01:33:56.000 | But when we calculate that, what, over 187 years of the stock market?

01:34:00.000 | No one--I don't know any--my grandfather lived to be almost 100.

01:34:04.000 | He didn't live for 187 years, right? He didn't invest that long.

01:34:08.000 | We're all going to only invest for 20 or 30 years,

01:34:11.000 | and the time that it really matters is that last quarter of that time anyways

01:34:16.000 | because that's--the more money you have, the more you're going to be affected by fluctuations in the market.

01:34:21.000 | So who cares if the average return over the last 100 years is 8%?

01:34:25.000 | If you needed your money in 2007, 2008, 2009, you were in a lot of trouble, right?

01:34:30.000 | If that was a year that you were retiring or whatever, you know, you needed bypass surgery,

01:34:36.000 | you needed to sell your stocks, you lost 48%, 50% of your net worth if you just bought and hold.

01:34:41.000 | I don't believe in that.

01:34:43.000 | I encourage people to--obviously, I don't encourage people who don't know what they're doing--

01:34:48.000 | I don't encourage them to trade, but I encourage people to be wise about their investments.

01:34:52.000 | And even if they're just in exchange-traded funds or if they're mutual funds,

01:34:57.000 | just because everybody else is doing it doesn't mean that they should be invested.

01:35:01.000 | If they're feeling concerned, if they think there's a recession coming,

01:35:04.000 | just take some money off the table, just roll it into their money market fund.

01:35:08.000 | Right, and that's where the intersection is between--that's what I call financial planning.

01:35:15.000 | And I view portfolio management as a subset of financial planning.

01:35:19.000 | I've got an interview lined up with--I think it's--I can't remember if it's this week or next week--

01:35:23.000 | but with a guy who's got a history, worked for, I think, what, 20 years as a portfolio manager.

01:35:28.000 | But there is a major difference in how you would manage a portfolio.

01:35:32.000 | If you're managing a portfolio for a non-profit foundation

01:35:35.000 | versus if you're managing a retirement portfolio when you have a clear retirement date

01:35:39.000 | versus if you have a substantial amount of income coming from a business

01:35:43.000 | and you have cash reserves and you have another portfolio that's allocated towards your retirement

01:35:48.000 | or towards your kids' inheritances.

01:35:50.000 | All of these portfolios can be managed differently.

01:35:54.000 | And I'm going to disagree with you, and feel free to disagree right back if you think.

01:36:00.000 | I would say there's no reason that buy and hold can't work if buy and hold--

01:36:06.000 | if the strategy of buy and hold--if we've clearly identified it.

01:36:09.000 | Because, yes, you would have gotten creamed if you owned--let's take my friend Jim Collins.

01:36:14.000 | Awesome guy. Jim is a really good guy, and he's written a whole series on stock investing.

01:36:20.000 | And his deal for everybody is basically buy the total stock market index fund and sit tight.

01:36:25.000 | That can work brilliantly for you, because if you had done that in 2007,

01:36:31.000 | you would today have all of your money plus a gain.

01:36:34.000 | But if you didn't incorporate financial planning--and to your point,

01:36:38.000 | if that was a portfolio that you needed in 2009, or if you bailed on the plan

01:36:42.000 | because you didn't have someone to coach you through it,

01:36:46.000 | or there could be any number of reasons why investors shoot themselves in the foot.

01:36:51.000 | And the problem is that when you are--until you get to the point where you can look behind the numbers,

01:36:57.000 | when you can open up a brochure from Vanguard, dig into the numbers, read the study,

01:37:01.000 | when you can open up a--when you can read the ADV for--what's the name of your--investable wealth

01:37:07.000 | for John Pogliano, and read his ADV and see what he does, and you can take that and compare that,

01:37:12.000 | you need to develop an interest enough to know why certain things work and why they don't,

01:37:17.000 | and where the tricky points are and where they're not.

01:37:20.000 | Why would you choose an ETF instead of a mutual fund?

01:37:22.000 | Why would you choose a mutual fund instead of an ETF?

01:37:24.000 | Why would you trade an option on a prediction, or why would you go ahead and buy the stock?

01:37:28.000 | That's what I'm hoping my show can accomplish, is to encourage people to get interested enough

01:37:33.000 | to understand what they're doing and why it works or doesn't work,

01:37:37.000 | because only with knowledge comes comfort.

01:37:40.000 | With comfort, that's when you can sit passively by and follow your strategy, whatever it be.

01:37:48.000 | And many strategies can work if they're followed, but strategies that aren't followed don't work.

01:37:55.000 | Right. And I agree with you, and again, sure, if you had $10,000 in 2007,

01:38:00.000 | and you sat through today, you'd have more than that, you'd have actually,

01:38:04.000 | at this point, you'd have been caught up with inflation.

01:38:07.000 | Where I see the negative to that is it's the guy that had the million dollars or the two million dollars,

01:38:13.000 | and he had saved up all the way through retirement.

01:38:16.000 | He takes a major hit, and he had to wait a good five years to beat that with inflation to get that money back.

01:38:26.000 | It was different than the guy that only had $10,000 in the game.

01:38:29.000 | On the other side of that, you could say, well, why did that guy have so much money?

01:38:32.000 | Why wasn't he better diversified?

01:38:34.000 | Well, we don't know how much he had in bonds or other funds, but again, like I say, bonds are not safe.

01:38:40.000 | Bond funds, if we see interest rates go to 4%, if the 10-year goes to 4%, people are going to lose 50% in their bond funds.

01:38:48.000 | It isn't that you can't lose money in a bond, you know, to pay on the duration,

01:38:52.000 | if they're in 20- or 30-year duration bond funds.

01:38:55.000 | You can lose money in bonds as well.

01:38:57.000 | So my rationale would be, well, why not have a disciplined method to it where, hey, if you see it falling below whatever your particular number is,

01:39:08.000 | if the S&P breaks its 50-day line or its 200-day moving average or whatever, maybe that's just where you get out.

01:39:15.000 | You just say, hey, I'm going to get out when that happens, and I'm going to get back in when it gets back over its 50-day line or something.

01:39:21.000 | And you just follow that strategy.

01:39:23.000 | To me, that's a better strategy than buy and hold.

01:39:27.000 | And, you know, for just the normal investor, the person that doesn't -- for the person that has less than, say, $250,000, I don't consider them investors,

01:39:37.000 | particularly people that only have $10,000, $20,000, $30,000.

01:39:41.000 | The industry -- and again, this is my grape with the industry -- they want everybody to think they're an investor,

01:39:45.000 | because if they're an investor, I can charge them fees, right?

01:39:48.000 | I can charge them mutual fund fees and 401(k) fees, and I can charge them planning fees.

01:39:54.000 | But if they're a saver, I really don't make any money.

01:39:57.000 | It's sort of like insurance, right?

01:39:58.000 | If they buy term insurance, which is probably what they need, I don't make a commission.

01:40:02.000 | If they buy whole life, I make a big commission.

01:40:04.000 | If I can sell them an annuity, I make a big -- I say I.

01:40:07.000 | I don't do any of that, so I don't make a commission.

01:40:09.000 | But that's what a salesman in the financial industry, he is worried about, for the most part.

01:40:14.000 | He is worried about his financial success.

01:40:17.000 | And so he's going to sell people annuities and all these things they don't really need.

01:40:21.000 | If you have a small amount of money, you should be saving it in your emergency fund.

01:40:25.000 | You should be spending it on your preps, right, making sure you have food and water in case a hurricane comes through or whatever.

01:40:32.000 | Spending that money, educating yourself, learning how to get to that next job level.

01:40:37.000 | Because, again, it gets back to that thing of saving.

01:40:39.000 | If you have $10,000, no matter what kind of return you get on it, it's not going to be as good of a return as it's going to be if you can figure out how to go from a $30,000 job to a $50,000 job or a $50,000 a year job to an $80,000 a year job.

01:40:57.000 | So at that point, you need to be investing in other things.

01:40:59.000 | And generally, besides maybe me and you and a few other people, you're not hearing people in the financial industry tell you that, right?

01:41:06.000 | I mean, they're telling you, "Buy whatever they're selling."

01:41:11.000 | And the other side of it, too, is even for the people that have a lot of money, the people that have, say, more than $200,000, I don't see financial planners taking care of those people where they are moving them to cash when they're concerned or where they're buying protective puts for them or where they're doing other kind of hedge strategies.

01:41:28.000 | It takes a risk, right?

01:41:30.000 | If you're going to buy this put, maybe you are going to maybe lose 2% or something on it.

01:41:35.000 | But it's a hedge.

01:41:37.000 | And I don't see them doing that for their clients.

01:41:39.000 | I see them -- it's the standard 25% in emerging markets, 25% in large caps, 25% in technology, 25% in bonds.

01:41:49.000 | And they say they're diversified.

01:41:51.000 | To me, I think if you're going to invest that way, you're better off getting an exchange-traded fund like the SPY, SPDRS.

01:41:58.000 | It's an S&P 500 ETF.

01:42:02.000 | You're paying very low transaction fees if you buy it through a discount broker.

01:42:08.000 | You're paying virtually nothing in management fees.

01:42:11.000 | And you're going to get the performance of the market.

01:42:13.000 | And you're going to get all the performance of the market.

01:42:15.000 | Whenever half the companies in the S&P are getting more than half of their earnings from overseas, you have your overseas exposure.

01:42:23.000 | When Apple goes out and buys a company like Beats or these big companies buy small companies, you're kind of getting that exposure, getting that growth.

01:42:32.000 | You're getting the constant churning of the S&P.

01:42:35.000 | It isn't always the same companies.

01:42:37.000 | It wasn't too long ago that Alcoa got dropped from the Dow Industrial and Nike came on.

01:42:45.000 | Things are always changing.

01:42:47.000 | So if you could invest in nothing else, exchange-traded fund, SPYDRS, S&P 500, to me that's the way to go.

01:42:55.000 | And just know when to take some money off the table.

01:42:59.000 | Would you rather have knowledgeable clients or would you rather have ignorant clients?

01:43:04.000 | I don't have time for ignorant clients.

01:43:07.000 | I only want intelligent.

01:43:10.000 | My clients are all smarter than me.

01:43:13.000 | I would say I don't have any client that isn't as smart as me.

01:43:16.000 | But my clients don't want to manage their money.

01:43:20.000 | That's the kind of clients I have.

01:43:21.000 | I obviously don't want a client that wants to manage their own money because they wouldn't need me, what they need me for.

01:43:25.000 | I'm like the guy Jiffy Lube that changes the oil on your car.

01:43:29.000 | You could change it yourself.

01:43:31.000 | I used to change my oil.

01:43:32.000 | I was a mechanic in my early life and I know all about changing oil.

01:43:37.000 | I know the benefits of it.

01:43:38.000 | I know how to do it.

01:43:39.000 | But I'm 53 years old now.

01:43:42.000 | I'm not going to get underneath my car and burn my hand on the filter.

01:43:46.000 | I don't have any place to dispose of the dirty oil, stuff like that.

01:43:50.000 | So I take it to Jiffy Lube.

01:43:52.000 | I wait until I get a coupon.

01:43:53.000 | I take it to Jiffy Lube.

01:43:54.000 | The people's money that I manage are the same way.

01:43:56.000 | They're probably capable of managing their own money.

01:43:58.000 | But they don't have the time.

01:44:01.000 | I look at it all day long.

01:44:03.000 | If I wasn't talking to you right now, I'd be looking at stocks.

01:44:07.000 | Not necessarily trading them, but I would be looking at the market.

01:44:10.000 | I'd be trying to figure out why the heck are people paying less than 1% for 10-year bonds in France right now.

01:44:18.000 | And I know what's driving.

01:44:19.000 | I know it's negative interest rates from the ECB and that.

01:44:21.000 | But it's just like these things don't correlate and I try and understand that.

01:44:26.000 | And my clients, they don't have time to do that.

01:44:28.000 | They're engineers and they're doctors and they're small business owners.

01:44:32.000 | Right.

01:44:33.000 | To me, and with this we'll wrap up and I'll give you the last word, anything that you want to share.

01:44:39.000 | And then feel free to mention all your sites and make sure people can know where to find you.

01:44:44.000 | To me, I've always experienced this.

01:44:48.000 | And I'm trying to tackle head on one of the most despised businesses in the world.

01:44:57.000 | I've read surveys that financial advisors and stock brokers and whatnot are more, in many ways,

01:45:07.000 | less trusted than just about any other profession.

01:45:10.000 | But one of the things that I've always struggled with is how to reconcile my personal experience in the industry with common perception.

01:45:21.000 | Because many people are quick to talk about what the perception of the industry is versus my personal experience.

01:45:28.000 | And to me, one of the things that I learned just doing it is that working in the industry,

01:45:35.000 | I met a couple of people that I just wanted to run away from.

01:45:38.000 | But the majority of financial advisors, the majority of insurance agents,

01:45:42.000 | the majority of stock brokers that I've interacted with, the majority of accountants and planners,

01:45:47.000 | and the majority of people that I've interacted with were caring, straightforward people who want to really do an honest, ethical job.

01:46:00.000 | But I think what happens is a lot of times that there's not a good fit between a specific client and a specific advisor.

01:46:10.000 | And so what happens is you have clients and advisors who aren't a good fit for each other,

01:46:14.000 | but a lot of times the clients aren't knowledgeable enough to know who they're a fit for and who they're not.

01:46:19.000 | So they're not knowledgeable enough to buy the services that they need or want from the person who's able to offer it.

01:46:27.000 | So my hope is that I'm just like you.

01:46:30.000 | I would always rather have a client who's an expert at everything.

01:46:37.000 | I would rather have a client that knows everything that I know, because those were the easiest clients to work with.

01:46:42.000 | And they know specifically, "Joshua, I'm hiring you for this."

01:46:46.000 | And so that's my vision with this show is I'm going to try to give away every bit of knowledge that I have about financial planning.

01:46:52.000 | And by that, I imagine that the market for financial planning services will grow hugely.

01:46:58.000 | The market for investment services will grow hugely because people will be more educated,

01:47:03.000 | and they will be able to purchase the services of the advisor that's a good fit for them,

01:47:08.000 | the advisor that's pursuing the strategy that they want pursued.

01:47:12.000 | And I think that'll--my hope is that that'll lead to much better relationships across the industry and a better reputation for the industry.

01:47:18.000 | So, John, I'll give you the last word, and feel free to share anything else that you'd like to share with the audience,

01:47:23.000 | and then mention where you can be found on the web and anything else you'd like to mention.

01:47:27.000 | Sure thing, and I do agree with you about giving it away for free and doing things like these podcasts.

01:47:31.000 | I mean, that's the same thing I'm doing with my podcast.

01:47:33.000 | I'm trying to educate people, and I believe in the prosperity theory.

01:47:37.000 | Again, it isn't--I don't hold back anything on my podcast.

01:47:41.000 | I tell people what I think.

01:47:44.000 | If I--you know, I basically try to train them and use the processes that I've used over the last 30, 40 years to get where I'm at,

01:47:52.000 | and I think that that brings me clients.

01:47:54.000 | That doesn't take clients away from me because, you know, ultimately, like I said, people don't want to change their own oil.

01:48:00.000 | They'd rather have me do it for them.

01:48:02.000 | But where--and I would agree with you, too, in terms of--I don't think financial people are evil, right?

01:48:08.000 | I mean, they're--I was going to say they're like politicians, but that's not true.

01:48:11.000 | We know politicians are evil.

01:48:15.000 | You know, they're--you know, it's one of those things that--but they're caught up in their matrix, right?

01:48:20.000 | They're caught up in what they're at, right?

01:48:23.000 | And they--ultimately, their good intentions are probably persuaded by where their paycheck comes from,

01:48:31.000 | and they're--they just--and even if they believe in what they're telling you,

01:48:35.000 | what they're telling you may not be the whole truth because of the way they've been indoctrinated.

01:48:40.000 | So that's just the problem I have with the general financial industry.

01:48:42.000 | But anyways, having said that, it's not their fault, though.

01:48:46.000 | I tell people that even if your financial advisor, you know, was a sleazy guy or whatever, ripped you off,

01:48:52.000 | I mean, if you had Bernie Madoff as your financial guy, you know what?

01:48:56.000 | It was your own fault because the warning signs were there.

01:48:59.000 | Bernie was a crook.

01:49:01.000 | And, you know, just like a normal financial person that wouldn't be anywhere near that bad,

01:49:08.000 | I mean, if they're giving you bad information and you're not smart enough to educate yourself,

01:49:12.000 | I mean, it is your money.

01:49:13.000 | As a client, it's your money.

01:49:15.000 | You can't expect that someone else--you have to be cautious.

01:49:18.000 | You have to know that other people may not either be informed

01:49:22.000 | or they may be trying to sell you something you don't need,

01:49:24.000 | or they may be just out and out trying to rip you off.

01:49:27.000 | And so, as an investor, it's your responsibility.

01:49:30.000 | You can't blame the financial advisor.

01:49:33.000 | You need to--legally, you can.

01:49:35.000 | I'm not saying it that way.

01:49:36.000 | I'm just saying the way the universe works, you need to be responsible for your own wealth.

01:49:41.000 | I named my firm very specifically--you know, I could have named it some kind of wealth management

01:49:47.000 | or Pugliano Capital Management or something.

01:49:51.000 | I named it Investable Wealth for a specific reason because part of--in educating my clients,

01:49:56.000 | I want them to know that part of that equation where they get wealthy is that income part,

01:50:01.000 | and they have to invest their wealth.

01:50:03.000 | It's about investing their wealth.

01:50:05.000 | Now, I can help them with that.

01:50:06.000 | I can make those discretionary decisions about where to invest it,

01:50:10.000 | but they're responsible for their overall wealth.

01:50:12.000 | And again, that's why my podcast is called Wealth Steading.

01:50:15.000 | It's about the individual investor, the client, taking responsibility for their own wealth.

01:50:20.000 | I can help them.

01:50:21.000 | I can hold their hand.

01:50:22.000 | But I can't stop them from using their credit card.

01:50:25.000 | I can't stop them from, you know, making poor lifestyle decisions

01:50:30.000 | or from not educating themselves so they get a better job.

01:50:34.000 | I can't--that's where their wealth is going to be derived from.

01:50:37.000 | I can only help them from that investable wealth part that we're working with together.

01:50:42.000 | So the investor has to beware and its buyer beware.

01:50:45.000 | Take responsibility for your own money.

01:50:48.000 | If you only have $1,000, you're not an investor, you're a saver.

01:50:51.000 | Work on improving yourself.

01:50:54.000 | Work on getting the discipline to educate and inform yourself.

01:50:58.000 | Learn how to make more money.

01:50:59.000 | You're not going to get rich.

01:51:00.000 | You're not going to win the lottery.

01:51:02.000 | You're not going to get an inheritance.

01:51:04.000 | If you don't make it on your own, no one's going to give it to you.

01:51:06.000 | So understand where you fit in society and how you can increase your earnings.

01:51:11.000 | And think of that immigrant mentality because from the history of our country,

01:51:16.000 | immigrants have come here, they didn't speak the language, they weren't formally educated,

01:51:19.000 | and in 30 years, you know, they were financially independent.

01:51:22.000 | If they can do it, then you certainly can do that as well.

01:51:25.000 | And then on the other side, for people that do have a lot of money, just be very cautious.

01:51:29.000 | Don't think that bond funds aren't risky.

01:51:32.000 | Don't think that the stock market isn't risky.

01:51:35.000 | Don't think that the Federal Reserve cares if we have a stock market crash.

01:51:39.000 | That's the latest thing I keep reading is that, you know, everybody's saying that,

01:51:42.000 | "Oh, well, the Federal Reserve won't do this or that because they don't want to crash the market."

01:51:46.000 | Last time I checked, you know, it's the member banks, our banks,

01:51:50.000 | and they recapitalized themselves over the last six years.

01:51:53.000 | They pretty much have sold all their bad loans and they've got all this money on their balance sheets.

01:51:58.000 | I don't know that they care that the stock market would crash.

01:52:01.000 | That's not a mandate for the Federal Reserve.

01:52:03.000 | And I think Janet Yellen's even maybe teed herself up for her comments, you know,

01:52:07.000 | a couple of weeks ago about irrational exuberance in the social media

01:52:12.000 | and biotech stocks, things like that.

01:52:17.000 | Don't think the Federal Reserve has your back.

01:52:19.000 | You have to be responsible for your own wealth.

01:52:22.000 | As far as people finding me, they can Google my name, John Pogliano.

01:52:26.000 | It's fairly unique. No matter how you spell it, you'll probably find me.

01:52:30.000 | Investable Wealth is my investment firm.

01:52:33.000 | There's some information on there, whether you have a little bit of money or a lot of bit of money,

01:52:36.000 | like I said, I talk on there about building wealth.

01:52:39.000 | So if you don't have that half a million dollars or something, you want to figure out how to get there,

01:52:43.000 | you can read my section about being an immigrant and going through these business models on building wealth.

01:52:49.000 | And then I'd love to have people listen to my podcast, Wealthsteading Podcast.

01:52:54.000 | Wealthsteading.com is a website.

01:52:56.000 | You can find me on Stitcher, iTunes.

01:53:00.000 | They'll get a different, I think, interpretations of that.

01:53:06.000 | It's different than your show, but I think our shows complement each other.

01:53:11.000 | And obviously that's why I enjoy being a guest on your show.

01:53:13.000 | I think you definitely, we are like minds, but we come through things a little bit differently.

01:53:19.000 | You're not 30. I'm over 50.

01:53:22.000 | You're more formally educated. I'm less educated.

01:53:26.000 | So we come from it from different angles.

01:53:30.000 | I think our overall message is very similar and rings true.

01:53:33.000 | But we'll cover different topics and come at it from different angles.

01:53:37.000 | So I think people would enjoy listening to both of our shows.

01:53:40.000 | Absolutely. And my philosophy is spend 50% of your time listening to and learning people that concur with what you believe already.

01:53:50.000 | And spend the other 50% of your time learning from and listening to people that you absolutely disagree with

01:53:57.000 | and trying to understand how they get to that thinking so you can figure out whether you're right or wrong.

01:54:01.000 | The worst thing that we do is we have this total confirmation bias where we kind of glom on to an idea and say, "This is correct."

01:54:08.000 | And so then we just go out looking for people and evidence to point to how we're correct.

01:54:11.000 | And that's exactly the wrong thing to do.

01:54:14.000 | Understand what makes sense, but then go look for someone that absolutely disagrees with you

01:54:19.000 | and try to lay aside your judgment of them and say, "Let me understand what their argument is and what they're thinking,

01:54:25.000 | and then let me figure out how to apply that to my situation and see if I still believe what I believe."

01:54:30.000 | We've lost the ability to argue with ourselves in a rational way, and I think we've got to develop that critical thinking.

01:54:37.000 | And the only way that happens is by being exposed.

01:54:41.000 | That's why, again, that's why I'm glad to have you on.

01:54:43.000 | And we talk about what we agree on, and we talk about what we disagree on, and we'll both be the better for it.

01:54:48.000 | Yeah, and I'm glad you said that. Let me throw in one more shameless plug.

01:54:51.000 | Sure.

01:54:52.000 | What you just talked about, too, is what I call propaganda.

01:54:55.000 | And I have the first 10 episodes of my podcast are what I call the wealth-building skills.

01:55:00.000 | So there's 10 wealth-building skills.

01:55:02.000 | I believe number eight is about decrypting propaganda.

01:55:05.000 | And I talk about exactly what you said.

01:55:08.000 | You've got to listen to people you agree with.

01:55:10.000 | You've got to listen to people you don't agree with.

01:55:12.000 | You even have to listen to people that are on the left and the right.

01:55:15.000 | I mean, you see something on Fox News.

01:55:17.000 | You see something on CNBC.

01:55:18.000 | You know they're both lying to you or distorting the news in one way,

01:55:22.000 | but also there's an element of truth in both of what they're saying, or they wouldn't be able to develop it.

01:55:27.000 | So you listen to both of those sources, and then just like you would when you're navigating, you triangulate.

01:55:32.000 | You say, "Well, so this is probably true, and that's probably true," and then you draw the line,

01:55:36.000 | and somewhere, not necessarily in the middle, you'll find the truth.

01:55:39.000 | You find that based on facts.

01:55:42.000 | And I absolutely would encourage people to do that.

01:55:44.000 | Listen to the first 10 episodes of my podcast to understand those wealth-building principles.

01:55:49.000 | Yeah. I'd give it one more.

01:55:51.000 | Listen to Fox News.

01:55:52.000 | Listen to MSNBC.

01:55:53.000 | Then go to moveon.org.

01:55:54.000 | Then go to infowars.com.

01:55:56.000 | Then go to, I don't know, Media Matters.

01:55:59.000 | Then go to--

01:56:00.000 | I think it's called Drug Report.

01:56:01.000 | There we go.

01:56:02.000 | Get a little outside of this stupid, you know, what we perceive to be political dichotomy,

01:56:09.000 | and let's go to the extreme.

01:56:10.000 | Read the Communist Party newsletter and read the Libertarian Party newsletter.

01:56:15.000 | Absolutely.

01:56:16.000 | John, thanks for coming on.

01:56:17.000 | I really enjoyed this conversation, and I appreciate your making the time for such an in-depth conversation.

01:56:22.000 | Absolutely. I enjoyed it.

01:56:23.000 | I know you've got great listeners.

01:56:25.000 | You have really good content, and I do want an invitation back to talk about the economics of large families.

01:56:30.000 | Deal. We will do it.

01:56:32.000 | Awesome.

01:56:33.000 | Thanks so much.

01:56:34.000 | Thank you.

01:56:35.000 | And that's the interview.

01:56:38.000 | John, thanks again for coming on.

01:56:39.000 | I really enjoyed that.

01:56:40.000 | I hope that you enjoyed it as well.

01:56:43.000 | I just want to point out a couple of the lessons, the few things that I learned from the interview,

01:56:47.000 | and a couple of these themes that I've observed and you can hear again in John's story.

01:56:52.000 | First, frugality.

01:56:55.000 | Do you see now why frugality is such an important, important skill?

01:57:00.000 | Frugality plays a role in all long-term success stories.

01:57:08.000 | All.

01:57:10.000 | There are plenty of stories that you can find of people who have come into quick wealth and quickly lost it

01:57:18.000 | because of a lack of frugality.

01:57:20.000 | Frugality, the major reason for frugality is frugality allows you to get the difference, the delta,

01:57:28.000 | between your income and your expenses so that you have capital to invest.

01:57:32.000 | If you don't have capital to invest, you never have the opportunity to become financially independent, period.

01:57:39.000 | So you have to be frugal.

01:57:41.000 | But that level of frugality will change over time.

01:57:43.000 | So the level of frugality that you might need if you are just getting started, you're young,

01:57:48.000 | you're working for low wages, versus the level of frugality that you may need later in life

01:57:52.000 | when you're more established, your wages and your income are higher,

01:57:55.000 | and your investment portfolio is a little bit thicker, that will change.

01:57:59.000 | But it never is okay to forget about frugality.

01:58:05.000 | Next, notice that John pursued a financially valuable skill.

01:58:10.000 | Again, sales is the great equalizer because in many industries, I won't say all,

01:58:14.000 | but in many industries, no matter what your background, no matter what your experience,

01:58:18.000 | if you can sell product, you can get paid very well.

01:58:22.000 | But you have to find the right type of sales position.

01:58:26.000 | As John said, there are plenty of sales positions that are very intricate,

01:58:30.000 | and there are sales positions that are very straightforward.

01:58:33.000 | There have been people that have made their money and made their fortune in every industry.

01:58:39.000 | There really are.

01:58:41.000 | So don't discount sales.

01:58:45.000 | Next, pay attention to the formula that he taught me about career success.

01:58:49.000 | Career success is a matter of time, demand, and skill.

01:58:54.000 | The more time it takes to develop the skills, the higher the demand,

01:58:58.000 | and then the higher your level of personal skill, the higher the level of income.

01:59:03.000 | I thought that was an excellent formula.

01:59:05.000 | Then I hope you learned something by listening to John and listening to his stories

01:59:09.000 | about what he thinks of when it comes to investing and how he invests.

01:59:14.000 | A lot of times it seems--I played the wrong sound effect.

01:59:17.000 | A lot of times it seems like investing is this overwhelming, daunting thing

01:59:22.000 | that can never be accomplished, but John did it.

01:59:26.000 | He's doing it. He's making a business off of it.

01:59:29.000 | So just consider that. Learn for yourself. Become an expert. Learn for yourself.

01:59:34.000 | As with all investing shows, none of what you heard today is considered to be investment advice.

01:59:39.000 | I don't even know how you could take it as that, but sorry.

01:59:41.000 | You've got to say these things when we talk about investing.

01:59:44.000 | Neither John nor I know your personal situation

01:59:46.000 | and can't give personal commentary on your situation.

01:59:49.000 | Hope you enjoyed the show.

01:59:50.000 | Tomorrow, come back.

01:59:52.000 | We're going to do an interesting reader question tomorrow, a Q&A show.

01:59:56.000 | We're going to talk about if you have a million bucks, is that enough money to retire early?

02:00:03.000 | We received a very interesting question from a reader, a listener.

02:00:06.000 | I think you'll enjoy it.

02:00:08.000 | Make sure to call in some questions from--I haven't gotten any questions on the Q&A line.

02:00:12.000 | I set that up last week.

02:00:14.000 | Make sure to call in some questions on the Q&A line.

02:00:16.000 | Come to the website, either on your phone or on your computer,

02:00:19.000 | and click the "Leave a Voicemail" button that will pop up right on the page

02:00:22.000 | and leave a voicemail with a question for a Friday Q&A show.

02:00:25.000 | I would be thrilled to answer those for you.

02:00:28.000 | Thank you so much for listening.

02:00:30.000 | Hope you like the show.

02:00:31.000 | Talk to you soon.

02:00:33.000 | [music]

02:00:36.000 | [music]

02:00:40.000 | [music]

02:00:43.000 | *Instrumental*

02:01:07.000 | *Upbeat Music*

02:01:23.000 | *Upbeat Music*

02:01:33.000 | Hey parents, join the LA Kings on Saturday, November 25th for an unforgettable Kids Day presented by Pear Deck.

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RPF-0054-Interview_With_John_Pugliano