RPF0441-Friday_QA
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00:00:30.000 | It's Friday, and Friday means Q&A.
00:00:34.000 | (upbeat music)
00:00:37.000 | Welcome to the Radical Personal Finance Podcast,
00:00:52.000 | the show dedicated to providing you with the knowledge,
00:00:54.000 | skills, insight, and encouragement you need
00:00:56.000 | to live a rich and meaningful life now
00:00:59.000 | while building a plan for financial freedom
00:01:00.000 | in 10 years or less.
00:01:01.000 | My name is Joshua Sheets, and I am your host.
00:01:04.000 | And today, this is kind of like a radio show.
00:01:07.000 | You got phone lines, you got callers,
00:01:09.000 | and you got a host behind a microphone, so.
00:01:12.000 | A little bit of live Q&A today.
00:01:14.000 | (upbeat music)
00:01:17.000 | Right now I have two callers waiting on the line,
00:01:25.000 | and so we'll see if anybody else calls in as we get started.
00:01:28.000 | But it works just like a live call-in show for a radio.
00:01:31.000 | And the way to get notified about these shows
00:01:34.000 | is I've been doing these shows exclusively for patrons,
00:01:37.000 | patrons of the show, where I put it out on the Patreon page
00:01:40.000 | and I let patrons know that I,
00:01:43.000 | that we can call in and do a Friday Q&A show.
00:01:46.000 | But the last two times that I put that out,
00:01:48.000 | I have had zero, zero participation from patrons.
00:01:52.000 | I guess all the patrons have all their questions answered
00:01:54.000 | 'cause I've done such a good job in other places, right?
00:01:57.000 | So today I put it out to the email list,
00:01:59.000 | and so I've got a couple of callers
00:02:01.000 | who have called in on the email list.
00:02:02.000 | So basically, and I've also in the past,
00:02:04.000 | in a previous one, when my Patreon participation was low,
00:02:08.000 | I put this in the Radical Personal Finance
00:02:09.000 | Facebook community group.
00:02:11.000 | So if you're not connected with me on the email list,
00:02:14.000 | and also if you're not connected
00:02:15.000 | in the Radical Personal Finance Facebook community,
00:02:17.000 | or if you're not a patron of the show,
00:02:19.000 | you're basically not getting any of these notifications.
00:02:21.000 | But if you're in those things, so from time to time,
00:02:24.000 | you might get something nice like this live Q&A show.
00:02:28.000 | Quick note on the email list, by the way,
00:02:30.000 | one of my commitments was to do a better job with that,
00:02:34.000 | and I utterly failed for a while.
00:02:35.000 | But those of you who are subscribed to the email list
00:02:38.000 | will notice and will have noticed that
00:02:40.000 | I've gotten better at that,
00:02:43.000 | and that's my number one priority right now,
00:02:45.000 | is to do a good job communicating via email.
00:02:48.000 | And so I'll be sharing a lot of personal stuff
00:02:50.000 | through the email, I'll be trying to make that
00:02:52.000 | really valuable, so if you have any interest
00:02:54.000 | in receiving emails from me, especially really good ones,
00:02:57.000 | then come on by and subscribe
00:02:59.000 | to the Radical Personal Finance email list.
00:03:02.000 | I would be glad to have you there.
00:03:04.000 | Our first caller today is Zach calling in from Illinois.
00:03:08.000 | Zach, go ahead and introduce yourself
00:03:09.000 | and let me know what you'd like to talk about today, please.
00:03:12.000 | - Hi, so I'd like to talk about,
00:03:15.000 | if you were a 13-year-old like me
00:03:20.000 | and you wanted to become a financial advisor,
00:03:23.000 | knowing what you now know,
00:03:25.000 | what you would tell me I should be doing right now
00:03:29.000 | to kind of prepare for that.
00:03:31.000 | - That is a brilliant question.
00:03:33.000 | So you're 13 years old and you are interested
00:03:35.000 | in becoming a financial advisor.
00:03:37.000 | When would you like to start working as a financial advisor?
00:03:42.000 | - So in your show when you're talking about
00:03:46.000 | getting a bachelor's degree by 18,
00:03:48.000 | that's what I'm working on,
00:03:50.000 | so hopefully sometime around that time.
00:03:53.000 | - Okay, and when you think of the term financial advisor,
00:03:57.000 | what does that mean as far as what type of business
00:04:00.000 | are you interested in, what type of areas
00:04:01.000 | are you interested in working in?
00:04:03.000 | - Probably just helping people with their money
00:04:08.000 | to be able to find out what they want and how to get there.
00:04:14.000 | I don't know specifically who I'd want to work with
00:04:17.000 | since I'm only 13.
00:04:18.000 | I don't have experience with being an adult.
00:04:21.000 | - Right, well I applaud you for calling in,
00:04:25.000 | and man, I hope that my son someday
00:04:28.000 | when he's 13 years old is calling somebody smart
00:04:31.000 | and asking them good questions like that.
00:04:34.000 | So I applaud you for that.
00:04:35.000 | Here are a couple of ideas for you.
00:04:37.000 | A couple more questions just to clarify, though.
00:04:39.000 | Would you be interested in working now
00:04:42.000 | as an advisor of some kind,
00:04:45.000 | or is this something in the future
00:04:47.000 | that you only want to do in the future?
00:04:49.000 | Are you too busy where you can't do anything now,
00:04:51.000 | or is this something where you'd be interested
00:04:53.000 | in getting into it now?
00:04:55.000 | - That'd be really cool to get into it right now,
00:04:57.000 | but I don't know how that would be possible.
00:05:00.000 | - So here's kind of the challenge
00:05:02.000 | of trying to figure things out.
00:05:05.000 | The first challenge that you have to do is
00:05:08.000 | you've got to develop a skill set
00:05:12.000 | that's going to help somebody.
00:05:13.000 | So there are many different types of financial advisors,
00:05:16.000 | and there are some things that are easy to do
00:05:18.000 | and some things that are not easy to do.
00:05:20.000 | And you've got to figure out,
00:05:22.000 | and figure out based upon what can you do
00:05:25.000 | that's going to build a skill set.
00:05:28.000 | So here are a couple of ideas and ways to approach it.
00:05:32.000 | The first thing is to start with
00:05:34.000 | the simplest of financial skills
00:05:36.000 | that you can develop and market.
00:05:38.000 | And in my mind, I think that would be
00:05:41.000 | the skill of bookkeeping.
00:05:43.000 | Your challenge as a 13-year-old is the same challenge
00:05:46.000 | except worse that I faced when I was 23 years old.
00:05:49.000 | And I started in the business when I was 23 years old,
00:05:51.000 | and I have underneath my massive red beard,
00:05:54.000 | I have a baby face, and I look very young for my age.
00:05:58.000 | And so take that and multiply it times way worse,
00:06:02.000 | and you have that at 13 years old.
00:06:04.000 | Now, if you walked into some wealthy person's house
00:06:08.000 | and you asked them at 13 years old for stewardship,
00:06:13.000 | and you said, "Please, would you be willing
00:06:15.000 | "to give me stewardship of your $10 million
00:06:17.000 | "investment portfolio?"
00:06:19.000 | They might be disinclined to say yes
00:06:22.000 | because it would be hard for them to know
00:06:26.000 | how could they be confident that you would actually
00:06:31.000 | be able to deliver value.
00:06:33.000 | But you could develop a skill very simply
00:06:36.000 | with good self-study through something like bookkeeping.
00:06:40.000 | And business owners hire bookkeepers all the time.
00:06:43.000 | You learn how to use QuickBooks, get the program,
00:06:46.000 | you go down and you get a book from the library
00:06:49.000 | on how to use QuickBooks, or you buy a book on QuickBooks,
00:06:52.000 | and then you start working with local family and friends.
00:06:55.000 | So if you can find a family business that you can work in,
00:06:58.000 | that's an ideal thing.
00:07:00.000 | If you can find some friends of businesses,
00:07:02.000 | maybe some parents of your friends
00:07:04.000 | who have small businesses,
00:07:06.000 | and you're looking for small businesses,
00:07:08.000 | and you can start to say,
00:07:09.000 | "Hey, I'm building a bookkeeping business."
00:07:11.000 | And the key is to find somebody
00:07:12.000 | who'd be willing to train you.
00:07:14.000 | So I would look to see if there's a connection
00:07:17.000 | with an accountant or with a bookkeeper
00:07:20.000 | who's already established that you can work with them.
00:07:23.000 | And if you can work with them as an intern,
00:07:26.000 | that starts to help you to build financial skills,
00:07:29.000 | skills of bookkeeping.
00:07:30.000 | Once you're competent, there's no reason why
00:07:32.000 | you can't hire yourself out as a bookkeeper,
00:07:36.000 | and there's no reason whatsoever
00:07:39.000 | why you can't do that from an early age.
00:07:41.000 | The problem with starting work in your teen years
00:07:43.000 | is you have to figure out how to get around
00:07:45.000 | the child labor laws.
00:07:46.000 | So there's all these stupid child labor laws
00:07:48.000 | that keep teenagers from working.
00:07:50.000 | And the answer, the way to get around them,
00:07:52.000 | is self-employment.
00:07:54.000 | You can work for yourself,
00:07:55.000 | and you can run your own business.
00:07:57.000 | It's the same panther problem
00:07:58.000 | that people like illegal immigrants face.
00:08:00.000 | They can't get a job
00:08:01.000 | because they don't have a social security number,
00:08:03.000 | and they can't get a fake one for whatever reason,
00:08:05.000 | or the company won't accept it.
00:08:06.000 | Well, the answer there is self-employment.
00:08:08.000 | You start your own business.
00:08:09.000 | And so you could start something
00:08:10.000 | like a bookkeeping business,
00:08:12.000 | and that gets you around the topic of finance.
00:08:14.000 | If you find that it's a good fit for you,
00:08:16.000 | then a bookkeeping business could lead very easily
00:08:19.000 | to an accounting business.
00:08:21.000 | And one of the great things
00:08:22.000 | about an accounting business
00:08:23.000 | is it's very technical,
00:08:26.000 | it's pretty easily learned,
00:08:28.000 | and people would find it relatively simple
00:08:33.000 | to place their confidence in you
00:08:35.000 | if you can demonstrate your competence.
00:08:38.000 | The way that I would get into the accounting business
00:08:41.000 | would be twofold.
00:08:43.000 | I don't think you'll be able to do this yet,
00:08:46.000 | but for someone who's a little bit older,
00:08:47.000 | if you can find a seasonal company,
00:08:51.000 | like an H&R Block, something like that,
00:08:53.000 | you can get a job there,
00:08:55.000 | and you can get that with very minimal qualifications,
00:08:58.000 | with basic experience, prove basic competency.
00:09:01.000 | And that will start to factor in
00:09:03.000 | as the experience requirements that you need
00:09:06.000 | if you're going to sit for something
00:09:08.000 | like the CPA exam down the road.
00:09:10.000 | But the other way that I would go
00:09:11.000 | is I would search for, again, find a local accountant,
00:09:15.000 | look for, ask your parents if they know people.
00:09:18.000 | Your parents may be involved
00:09:20.000 | in a local community service organization,
00:09:22.000 | something like a Kiwanis Club or a Rotary Club,
00:09:25.000 | something like that.
00:09:26.000 | They may be involved,
00:09:27.000 | there may be somebody in your church.
00:09:29.000 | If you go to a part of a church,
00:09:31.000 | usually there'll be a few accountants
00:09:32.000 | in many normal-sizes churches.
00:09:34.000 | If not, you might have to start from scratch
00:09:35.000 | and try to find a place where you can intern
00:09:38.000 | underneath an accountant.
00:09:39.000 | And along the way, you can start studying
00:09:41.000 | for your enrolled agent certification.
00:09:48.000 | And the enrolled agent program
00:09:50.000 | is the best way that I know of
00:09:54.000 | for you to be able to start
00:09:56.000 | to build your own tax practice.
00:09:58.000 | And you don't need the experience requirements
00:10:00.000 | that you need from the CPA.
00:10:02.000 | You don't need some of the educational requirements
00:10:04.000 | that you need from the CPA,
00:10:06.000 | but you're authorized to practice before the IRS
00:10:08.000 | and to represent clients before the IRS
00:10:10.000 | with an enrolled agent designation.
00:10:12.000 | The enrolled agent designation is a federal--
00:10:16.000 | basically a series of exams.
00:10:18.000 | So you get a book and you study it
00:10:19.000 | and you learn the material.
00:10:21.000 | And I'm not aware of any reason why
00:10:23.000 | you couldn't at 15 years old
00:10:25.000 | have a tax practice of your own
00:10:28.000 | and a bookkeeping practice of your own
00:10:30.000 | and be able to serve your clients
00:10:32.000 | very, very competently.
00:10:34.000 | The great thing about your age
00:10:35.000 | is you can do this very informally
00:10:38.000 | and nobody will be offended by your
00:10:40.000 | working out of your house.
00:10:42.000 | Nobody will be offended by
00:10:44.000 | you're not having an office.
00:10:46.000 | You can do this with very low expense.
00:10:48.000 | It's just a matter of marketing your services.
00:10:50.000 | Then, from then on,
00:10:52.000 | I would start to look at insurance.
00:10:55.000 | And insurance is going to be the simplest
00:10:57.000 | and easiest way for you to start to move
00:11:00.000 | from the world of accounting
00:11:02.000 | into the world of financial advice.
00:11:05.000 | And so I would consider getting
00:11:06.000 | a life insurance license,
00:11:07.000 | a life insurance and a health insurance license
00:11:09.000 | and try to find a local agency
00:11:11.000 | with whom you can contract
00:11:13.000 | as the general agency
00:11:14.000 | to start to do a little bit of
00:11:16.000 | life insurance business.
00:11:17.000 | I'm not aware of any reason why
00:11:20.000 | a young person can't have an insurance license.
00:11:23.000 | There may be in your state
00:11:24.000 | some requirement that you have to be 18,
00:11:26.000 | but I'm not aware of that.
00:11:27.000 | So you would need to research that.
00:11:29.000 | If you find yourself blocked,
00:11:31.000 | no problem. Just adjust.
00:11:33.000 | This is what...
00:11:35.000 | So I can't stand licensing schemes.
00:11:40.000 | I can't stand licensing schemes
00:11:42.000 | because basically all licensing schemes
00:11:45.000 | serve exclusively to protect the cabal
00:11:49.000 | of people who are already established
00:11:51.000 | and already in the business.
00:11:52.000 | That's why licensing schemes exist.
00:11:54.000 | So it's designed to keep people like you out.
00:11:57.000 | So if you find an age thing,
00:11:59.000 | you find a reason why you can't be licensed,
00:12:01.000 | then you've got to find a workaround
00:12:02.000 | and you've got to figure out
00:12:03.000 | how can I adjust
00:12:04.000 | and how can I offer a product
00:12:06.000 | that will help people.
00:12:07.000 | A good person that you should look at
00:12:09.000 | and that you should research
00:12:10.000 | would be somebody like Caleb Maddox.
00:12:13.000 | I think his name is spelled M-A-D-D-I-X.
00:12:16.000 | But he's a young man.
00:12:17.000 | He's I think 15 years old now,
00:12:19.000 | something like that.
00:12:20.000 | But he's been working as a motivational speaker
00:12:23.000 | since he was about 11 or 12 years old.
00:12:25.000 | You can find his website.
00:12:26.000 | He wrote a book that was basically called
00:12:29.000 | Success for Kids.
00:12:30.000 | And for the last couple of years,
00:12:35.000 | for the last few years,
00:12:36.000 | he's been building a business
00:12:37.000 | where he's been serving and working
00:12:40.000 | as a success coach for kids.
00:12:42.000 | And I don't remember his exact age,
00:12:44.000 | but something like 15 years old.
00:12:46.000 | But he earns in excess of six figures a year,
00:12:49.000 | I would guess much more at this point in time,
00:12:52.000 | because he's done such a great job
00:12:53.000 | with his business.
00:12:54.000 | But he's doing a tremendous job
00:12:56.000 | of building a business,
00:12:57.000 | serving kids with success coaching.
00:13:02.000 | You could do the same type of thing
00:13:03.000 | in an area of personal finance.
00:13:05.000 | You could do something like that
00:13:10.000 | where you developed a financial course
00:13:13.000 | or a financial seminar
00:13:15.000 | to teach other young men and women
00:13:17.000 | how to handle their money.
00:13:18.000 | And you did it from a unique age perspective
00:13:20.000 | of your own age.
00:13:22.000 | The other thing that you can do
00:13:23.000 | is you go and you pivot
00:13:26.000 | and you go into a place
00:13:27.000 | where there's no licensing required.
00:13:29.000 | So my go-to example here
00:13:30.000 | is social security planning.
00:13:32.000 | There's no reason why
00:13:33.000 | you have to be a certain age
00:13:35.000 | in order to build a business
00:13:38.000 | working as a social security consultant.
00:13:40.000 | I'm not aware of any licensing
00:13:41.000 | that needs to be done.
00:13:43.000 | I'm not aware of any board of requirements.
00:13:46.000 | I'm not aware of any age, of anything,
00:13:48.000 | to market yourself
00:13:49.000 | as a social security consultant.
00:13:51.000 | All you need is knowledge, expertise,
00:13:53.000 | and a good marketing plan.
00:13:55.000 | And so if you, for example,
00:13:57.000 | let's say that you wanted to build
00:13:59.000 | a business working as a financial advisor
00:14:02.000 | but you found that
00:14:03.000 | the Merrill Lynch guy's not going to hire you,
00:14:04.000 | the local financial advisor
00:14:05.000 | doesn't think you can sell investments,
00:14:07.000 | you could build in the coming five years,
00:14:09.000 | you could build a tremendous knowledge
00:14:12.000 | and it'd be of tremendous service
00:14:14.000 | in learning how to do social security planning.
00:14:18.000 | All you got to do is read
00:14:19.000 | a half a dozen or a dozen books,
00:14:21.000 | carefully look at them,
00:14:22.000 | carefully study the material,
00:14:24.000 | and then you've put yourself
00:14:25.000 | from a novice into the position of an expert
00:14:28.000 | and you could give advice.
00:14:29.000 | And you could build a business
00:14:31.000 | where you provided social security consultation
00:14:33.000 | for people who were in their 50s,
00:14:36.000 | their 60s, who were heading towards retirement.
00:14:38.000 | You can provide a consultation
00:14:40.000 | which would be well worth
00:14:41.000 | $200, $300, $400 for an hour consultation
00:14:45.000 | that would help them figure out
00:14:47.000 | what social security filing strategy
00:14:50.000 | they should implement.
00:14:51.000 | So those are some of the ideas
00:14:54.000 | that I would start with
00:14:55.000 | because you're going to face
00:14:56.000 | tremendous discrimination
00:14:58.000 | because of your age in the mainstream world.
00:15:01.000 | One of the unfortunate things
00:15:03.000 | about being a motivated young man
00:15:06.000 | is you're going to face ageism,
00:15:08.000 | age discrimination based upon being young.
00:15:10.000 | So whenever you face discrimination,
00:15:12.000 | the secret is pivot and try to figure out
00:15:15.000 | how to go in another route.
00:15:16.000 | And this is what black people and women,
00:15:19.000 | when black people and women
00:15:20.000 | have faced lots of discrimination in the past,
00:15:23.000 | the way that they were successful through it
00:15:26.000 | was to pivot and don't take it head on.
00:15:28.000 | So there were many women writers
00:15:30.000 | who were fantastic writers,
00:15:31.000 | but they would write under a male pen name
00:15:34.000 | and they would just simply publish their work
00:15:37.000 | using a man's name instead.
00:15:39.000 | There were many black people
00:15:41.000 | who would face discrimination
00:15:42.000 | based upon the color of their skin
00:15:44.000 | if somebody found out that they were black,
00:15:46.000 | but all they needed to do
00:15:48.000 | was to figure out a way to conceal that.
00:15:50.000 | And so for you,
00:15:51.000 | it'd be the same kind of thing.
00:15:52.000 | You could develop skill
00:15:53.000 | as a social security consultant,
00:15:55.000 | as an example.
00:15:56.000 | And you could do that
00:15:59.000 | primarily through written content and consulting,
00:16:03.000 | and that minimizes the need
00:16:04.000 | for people to see your face.
00:16:06.000 | And I mean, you could go all kinds of crazy with this.
00:16:08.000 | I have software that I could use very easily
00:16:11.000 | to change your voice.
00:16:14.000 | And so you could develop a more bassy voice
00:16:18.000 | that sounds more appropriate.
00:16:19.000 | The two things that you gotta watch out for
00:16:21.000 | as a young man is,
00:16:22.000 | number one, the tone of your voice
00:16:24.000 | can sound very young
00:16:25.000 | and the cadence of your speech.
00:16:27.000 | But you can practice
00:16:28.000 | and change the cadence of your speech
00:16:29.000 | and you can use digital equipment
00:16:31.000 | to change the tone of your voice.
00:16:32.000 | So all of these problems are surmountable,
00:16:35.000 | but those are just a long list of ideas
00:16:37.000 | of things that would be,
00:16:38.000 | if you were my son,
00:16:39.000 | those would be the first areas
00:16:41.000 | that I would be encouraging you to focus on.
00:16:44.000 | - Wow, that's really cool.
00:16:48.000 | Never thought of any of that.
00:16:50.000 | (laughing)
00:16:52.000 | - Yeah, the key thing I would say is,
00:16:55.000 | of course, your primary focus at this point in time
00:16:58.000 | should be knocking out your academics,
00:17:00.000 | and you're obviously very focused on that.
00:17:02.000 | So focus on knocking out your academics.
00:17:05.000 | But to get into the financial business,
00:17:08.000 | you wanna just start getting close to it
00:17:10.000 | with whatever you can find.
00:17:12.000 | So it's a whole lot easier for you
00:17:14.000 | to go the path that I've said,
00:17:15.000 | such as bookkeeper, accountant, consultant,
00:17:20.000 | move into insurance,
00:17:22.000 | and then move into,
00:17:24.000 | if you find it's a good fit for you,
00:17:25.000 | if you find the skills that are helpful,
00:17:28.000 | then you find it's a good fit for you,
00:17:29.000 | then at that point in time,
00:17:30.000 | go ahead and move on to something like
00:17:33.000 | trying to figure out
00:17:35.000 | how to get a certified financial planner designation
00:17:37.000 | or whatever it is that exists five years from now.
00:17:42.000 | The problem with the CFP board,
00:17:44.000 | or financial advisor world,
00:17:46.000 | is they're going to have to get hired
00:17:48.000 | by most financial advisors.
00:17:50.000 | I don't know if there's an age requirement
00:17:52.000 | to have a securities license.
00:17:54.000 | You would have to research that.
00:17:56.000 | But the major problem is,
00:17:58.000 | who do you work with,
00:17:59.000 | and how do you build confidence in somebody?
00:18:02.000 | And that's the problem with
00:18:04.000 | the technical financial advisor space.
00:18:06.000 | The technical financial advisor space
00:18:09.000 | involves the fact that
00:18:12.000 | you're going to be governed by securities laws.
00:18:15.000 | And in securities laws,
00:18:16.000 | you can't do the marketing,
00:18:18.000 | something like I've demonstrated.
00:18:20.000 | You have to do in-person solicitation, generally.
00:18:24.000 | So if you're going to do in-person solicitation,
00:18:26.000 | that stacks the deck against you.
00:18:28.000 | Now all of a sudden,
00:18:29.000 | you're trying to say to some,
00:18:30.000 | as a 13 or 15 year old,
00:18:32.000 | you're trying to say,
00:18:33.000 | "Hey, give me your $10 million."
00:18:34.000 | You've got no track record.
00:18:35.000 | And you can't prove a specific skill.
00:18:37.000 | So focus on something
00:18:38.000 | that you can prove a specific skill in,
00:18:40.000 | and also focus on building some way
00:18:45.000 | that you can market yourself as an expert.
00:18:48.000 | First you become an expert,
00:18:49.000 | then you market yourself as an expert.
00:18:51.000 | And when you can market yourself as an expert,
00:18:53.000 | then the discrimination that you face
00:18:55.000 | because of your age will start to melt away.
00:18:58.000 | And people's initial response of,
00:19:01.000 | "Ooh, this guy's super young,"
00:19:03.000 | turns into, "Wow, this guy's fantastic."
00:19:07.000 | That would be the encouragement I would give.
00:19:09.000 | Finally, my other encouragement for you, Zach, is this.
00:19:13.000 | There's no reason why you can't,
00:19:16.000 | if you're really interested in investing,
00:19:19.000 | not just helping people with money,
00:19:21.000 | like if you're really into investing,
00:19:23.000 | there's no reason why in the next five years
00:19:25.000 | you can't become a phenomenal investor
00:19:29.000 | and become a phenomenally knowledgeable person.
00:19:35.000 | There's a man who writes by the name of Joshua Kennan.
00:19:40.000 | His website is joshuakennon.com.
00:19:44.000 | He's now, I think, in his late 20s or early 30s.
00:19:48.000 | But he was somebody who,
00:19:51.000 | during his middle teenage years,
00:19:53.000 | early and middle teenager years,
00:19:55.000 | he was obsessed with investing.
00:19:57.000 | And again, back to that ageism,
00:19:59.000 | how to overcome ageism.
00:20:01.000 | He was writing, he is, I think, still,
00:20:04.000 | he is the columnist or the writer
00:20:07.000 | for the website About,
00:20:11.000 | which is owned, I think, by the New York Times,
00:20:13.000 | for their personal finance
00:20:15.000 | and their money and investing section.
00:20:18.000 | And he's written tens of thousands of articles publicly,
00:20:23.000 | and he's a world-class expert.
00:20:25.000 | He is financially independent
00:20:27.000 | through his own businesses
00:20:29.000 | and through his own personal finance prowess,
00:20:32.000 | his own investing prowess.
00:20:34.000 | And he did that all during a time
00:20:37.000 | when he looked very young,
00:20:38.000 | and he sounded very young.
00:20:40.000 | But he played to his strengths.
00:20:41.000 | He never tried to go out and focus on speaking in public.
00:20:46.000 | What he focused on was applying what he learned
00:20:48.000 | with his own investment portfolio,
00:20:50.000 | building businesses that didn't require him
00:20:52.000 | to be public-facing, and writing,
00:20:55.000 | in which it's the quality of your writing
00:20:58.000 | and the quality of your ideas
00:21:00.000 | that made the difference.
00:21:02.000 | So he would be another person that you could look at
00:21:04.000 | and research some of his early years.
00:21:07.000 | On his blog, he used to have more personal information.
00:21:09.000 | He recently started an investing fund,
00:21:13.000 | and so he doesn't have much of the personal information
00:21:15.000 | on his blog anymore,
00:21:16.000 | but he has a very interesting story.
00:21:18.000 | Any other questions, Zach?
00:21:19.000 | Does that spark anything or anything else
00:21:20.000 | you want to ask me before I go on?
00:21:23.000 | I think that's it.
00:21:24.000 | Keep up the great work.
00:21:26.000 | It's so encouraging to me to get a call
00:21:29.000 | from somebody like you,
00:21:30.000 | so keep up the great work, I think,
00:21:33.000 | and keep in touch.
00:21:34.000 | We want to keep hearing what's going on.
00:21:36.000 | Let's go to John in Pittsburgh.
00:21:38.000 | Welcome to the show.
00:21:39.000 | Let me know how I can serve you today, please.
00:21:42.000 | Yeah, hi, Joshua.
00:21:44.000 | I'm not sure how to follow that one.
00:21:47.000 | It makes you feel like a loser, doesn't it?
00:21:49.000 | Yeah, it really does.
00:21:50.000 | I feel like a loser.
00:21:53.000 | Yeah, it sounds like he'll be all right.
00:21:57.000 | I have probably a simple question
00:22:00.000 | just on how to do some simple calculations,
00:22:03.000 | I think, related to an income plan.
00:22:05.000 | Okay.
00:22:06.000 | So I've been trying to lay out
00:22:08.000 | just kind of a forward-looking set of numbers
00:22:13.000 | on a spreadsheet,
00:22:14.000 | and what I did was very simply just set out
00:22:17.000 | different buckets of assets
00:22:20.000 | according to essentially how they're taxed.
00:22:23.000 | It's some taxable investments,
00:22:25.000 | 401(k), Roth IRA, and traditional IRAs,
00:22:28.000 | and I just tried to project them
00:22:30.000 | along with my age looking into the future
00:22:33.000 | with some simple assumptions.
00:22:34.000 | Okay.
00:22:35.000 | And I also did a cost-of-living-per-year reduction,
00:22:41.000 | and I only did some simple modifications to the numbers,
00:22:46.000 | and I'm wondering where I may have gone wrong mathematically
00:22:49.000 | because the projections didn't match.
00:22:52.000 | I guess they were better than I expected.
00:22:54.000 | [Laughter]
00:22:56.000 | All I simply did was I took an inflation rate
00:23:02.000 | on my cost of living each year.
00:23:06.000 | I think I looked it up,
00:23:07.000 | and it came out with something like 3.18%,
00:23:11.000 | so I just did that every year.
00:23:13.000 | It sounded like a reasonable number to use
00:23:15.000 | that I just found on the Internet.
00:23:17.000 | If it's on the Internet, it must be true.
00:23:20.000 | Yeah, right.
00:23:22.000 | And for the other accounts,
00:23:26.000 | as far as their growth,
00:23:27.000 | before I started subtracting the yearly income
00:23:35.000 | that I'd need to take from various buckets,
00:23:37.000 | I just increased their value at 7%.
00:23:40.000 | It might have been a little bit high.
00:23:42.000 | Maybe that's why it was better than I expected,
00:23:44.000 | but I didn't think I should grow those only at 4%
00:23:47.000 | because I thought that was kind of double-hedging the inflation.
00:23:53.000 | Most people say chop 3% or 4% off for inflation,
00:23:56.000 | but I think if I did that with the increased cost of living,
00:23:59.000 | I don't need to do that over in the other buckets for their growth.
00:24:04.000 | It's probably pretty hard to answer a question like that over spreadsheets.
00:24:08.000 | I'm just kind of wondering if there's any templates to use or anything.
00:24:10.000 | Why do you think that you don't have too much money?
00:24:13.000 | Why do you think that the numbers aren't accurate?
00:24:18.000 | Well, going back to probably another bad rule to use all the time,
00:24:21.000 | but if I use the 4% rule,
00:24:25.000 | I think I probably need to build up more than I have,
00:24:29.000 | and maybe that just doesn't take into account
00:24:32.000 | what I've been able to do on the spreadsheet,
00:24:34.000 | which is to "wisely" draw from different buckets at different times
00:24:42.000 | when they're more advantageous.
00:24:44.000 | This is before getting into anything more complicated
00:24:47.000 | like a conversion line or anything.
00:24:49.000 | This is just straight taking from buckets where it seems appropriate.
00:24:53.000 | But it got me out to--
00:24:57.000 | I think if I calculated the two areas
00:24:59.000 | where I just took the most drastic measures of a 10% penalty
00:25:03.000 | on the taxable buckets,
00:25:06.000 | I still got myself out to age 95,
00:25:09.000 | and that kind of surprised me, I guess.
00:25:12.000 | And maybe it's just because I used a pretty aggressive 7% growth number.
00:25:16.000 | I don't know if that's aggressive or not.
00:25:19.000 | I guess I'm just kind of playing around
00:25:21.000 | and using numbers I've heard other people say.
00:25:26.000 | - Okay. So it's a hard question, obviously,
00:25:29.000 | to answer in an audio format like this.
00:25:31.000 | I can't answer the question. I can't take the spreadsheet.
00:25:34.000 | So it's hard to know.
00:25:35.000 | If you'd like to talk more about it, you can set up a consulting call.
00:25:38.000 | By the way, if any listener ever wants to just talk to me personally,
00:25:42.000 | you can always set up a phone call with me
00:25:45.000 | at radicalpersonalfinance.com/phonecall.
00:25:48.000 | Those are paid consulting calls,
00:25:49.000 | but that's a pretty simple thing to do-- radicalpersonalfinance.com/phonecall.
00:25:53.000 | So obviously I can't analyze the spreadsheet or anything like that.
00:25:59.000 | Here would be how I would approach it, though, John.
00:26:03.000 | How many years between now and when you were trying to calculate
00:26:07.000 | your retirement plans?
00:26:09.000 | Is this within the next 10 years or 10 years out?
00:26:13.000 | - It was starting to withdraw within four years-- four or five years.
00:26:17.000 | - If you're in the place where you're starting to withdraw
00:26:19.000 | within four or five years, then yes,
00:26:21.000 | you're going to get more precise with your calculations.
00:26:24.000 | And so your precision in the financial planning situation--
00:26:31.000 | a spreadsheet is not going to give you anything more than what I can do
00:26:36.000 | with my financial planning calculator pretty easily.
00:26:40.000 | And that's just to say, okay, if I did have a 7% growth
00:26:45.000 | and if we did have a 3% inflation rate,
00:26:48.000 | we just simply figure out what the inflation-adjusted return is
00:26:51.000 | and then we grow the money and figure out how the money's going to come out.
00:26:56.000 | But all you're going to get from that is a number.
00:27:00.000 | And the reason it won't be perfectly accurate is because your returns
00:27:04.000 | are not going to be perfectly consistent and perfectly accurate.
00:27:08.000 | So you can't really do any solid stress testing of it.
00:27:12.000 | We're just kind of figuring out, are we in the right ballpark?
00:27:15.000 | In that context, that's why something like the 4% rule--
00:27:19.000 | and the 4% rule is the idea that if you have a portfolio
00:27:22.000 | that's made up of largely stocks, then you can withdraw from that portfolio
00:27:29.000 | if the future is like the past in some way, a pretty similar way,
00:27:33.000 | you can withdraw from that portfolio about 4% per year of its value
00:27:38.000 | adjusted for inflation, and you can do that for at least 30 years
00:27:43.000 | basically into perpetuity.
00:27:45.000 | So that's the 4% rule.
00:27:47.000 | That's as good as anything you're going to get with a spreadsheet
00:27:50.000 | to get you in the direction of knowing, do I have enough money saved?
00:27:54.000 | If you want to get beyond that, you need to talk to a financial planner
00:27:57.000 | if you want to do things like do your own Monte Carlo analysis
00:28:02.000 | or have them vary in a little bit more than that.
00:28:07.000 | I guess you can use FireCalc, right? Isn't that one of the free ones?
00:28:12.000 | FireCalc will work on and help you. You can try FireCalc.
00:28:15.000 | I've never played with it myself, but I know that's really popular
00:28:19.000 | in the do-it-yourself community.
00:28:22.000 | But you're not going to get any better results.
00:28:25.000 | At the end of the day, when you're projecting a long retirement--
00:28:31.000 | because you're not a traditional 65-year-old retiree--
00:28:36.000 | when you're projecting a long retirement, you're basically taking a guess.
00:28:40.000 | And you're saying, "Yeah, I think I've got enough money,"
00:28:43.000 | whether it's based upon the 4% rule or anything.
00:28:46.000 | You're going to guess based upon the academic research and say,
00:28:48.000 | "Yes, I think it's going to last forever. I think I'll be okay."
00:28:52.000 | And then you're going to watch it as time goes on.
00:28:55.000 | And you're going to watch it and see what your spending is.
00:28:57.000 | You're going to see what your income is.
00:28:58.000 | You're going to see how much you actually need to take out.
00:29:00.000 | And you're going to need to crunch those numbers.
00:29:03.000 | At the end of the day, you're not going to get any better than a guess.
00:29:06.000 | And you can make an educated guess, but it's just going to be a guess.
00:29:10.000 | And a spreadsheet, in many ways, can give you a false confidence.
00:29:14.000 | A spreadsheet may not give you what you want.
00:29:19.000 | So, to me, I don't know if your calculations are right or not right,
00:29:26.000 | but 4% rule is as good a place to start as any.
00:29:29.000 | If you want to be super, super confident, then you can go on dividend rates
00:29:33.000 | and say, "How can I live on dividends?"
00:29:36.000 | But at the end of the day, you're just going to have a guess,
00:29:39.000 | and you're going to watch it as time goes on.
00:29:41.000 | And you're going to tighten your belt when your portfolio is down.
00:29:44.000 | And as I am convinced, you're not going to quit and not be working.
00:29:48.000 | If you are going to quit and not be working,
00:29:50.000 | then you're going to want to be confident that your portfolio is large enough.
00:29:54.000 | So you're going to be earning income from time to time.
00:29:56.000 | And at the end of the day, I think your confidence is going to come from
00:30:01.000 | the size of the portfolio, recognizing that you've got plenty of money
00:30:06.000 | to make changes, and then you just go for it and see,
00:30:09.000 | because you can't predict 50 years.
00:30:11.000 | You can't model 50 years.
00:30:13.000 | And there's no way that the financial industry,
00:30:15.000 | even if you sit down with an advisor and they do a beautiful Monte Carlo simulation,
00:30:19.000 | there's no way that the financial advisor industry can model 50 years accurately.
00:30:23.000 | I mean, the world in 50 years is going to be so different.
00:30:26.000 | So at the end of the day, you're saying, "I think I'm probably good to go.
00:30:30.000 | I've got quality investments.
00:30:32.000 | I'm a smart guy.
00:30:33.000 | I'm a good saver, and I can make it."
00:30:38.000 | I don't see any other option other than that.
00:30:41.000 | There's probably some things in the early retirement community I would reach out to.
00:30:45.000 | If I were you, I would take this question to Doug Nordman
00:30:49.000 | or some of the other guys that are very active in the early retirement
00:30:51.000 | who are actually retiring.
00:30:53.000 | Those are the guys that I would take this question to and see.
00:30:56.000 | There are forums, there are communities of people that will take a look at your spreadsheet.
00:31:01.000 | Try the Money Mustache community.
00:31:04.000 | Try--I forget the name of it, but there's another forum that the early retirees hang out in.
00:31:12.000 | Put your spreadsheet in there.
00:31:13.000 | Put your scenarios in there, and they'll give you feedback.
00:31:16.000 | At the end of the day, I think it's just an educated guess.
00:31:20.000 | That's helpful, and I think that's probably what I need to hear
00:31:23.000 | because my primary reason for wanting to do that wasn't necessarily to say,
00:31:28.000 | "Okay, yeah, I'm definitely good for a number of years."
00:31:32.000 | I really wanted to see how that--whatever answer I came up with--
00:31:36.000 | changed over the next few years as the market goes up or more than likely down,
00:31:43.000 | and I wanted to see how far it pushed out forward or backwards.
00:31:47.000 | Some of my main motivations for doing it, but I didn't want to enter in with an incorrect,
00:31:54.000 | like you said, guessing model into that as I go forward.
00:32:00.000 | So I was trying to work out the bugs.
00:32:02.000 | But that's a good idea to ask the forums, and maybe a coaching call would be a good idea to get it taken out.
00:32:08.000 | Yeah, I'd be happy to do that.
00:32:09.000 | And the forums are great because the forums will do--
00:32:12.000 | the forums do a great job of having people who are actually doing it,
00:32:16.000 | who are going to get the lifestyle, who are going to get what you're going for.
00:32:20.000 | They're going to understand what you're trying to accomplish.
00:32:23.000 | I mean, one of the best things that happens about the world we live in
00:32:26.000 | is the easy access to other people, like-minded people in forums,
00:32:30.000 | specialized forums who can help you.
00:32:33.000 | So let me know if I can help you more in the future.
00:32:36.000 | Let's go to--I got a 619 phone number from San Diego, California.
00:32:40.000 | Let me know who you are, and let's see how I can serve you today, please.
00:32:47.000 | If I had a producer, this would be great.
00:32:49.000 | Let's try again.
00:32:50.000 | 619 phone number, San Diego, California.
00:32:52.000 | Who's that?
00:32:59.000 | Well, hey, if it happens on live, radio can happen on my podcast.
00:33:02.000 | All right, that's it.
00:33:03.000 | I thought we had one more call, but I think that's it for today's show.
00:33:06.000 | Thank you all for listening to the Q&A call.
00:33:09.000 | How's that for a diversity of even two questions,
00:33:12.000 | but two super interesting questions?
00:33:15.000 | Hopefully there were some ideas to spark your creativity.
00:33:18.000 | I am so passionate about--I probably showed pretty obviously,
00:33:23.000 | but I am so passionate about people like that 13-year-old young man.
00:33:29.000 | He's got such an awesome opportunity, and it's easy to kind of--
00:33:33.000 | I think it's important not to put too much pressure on people,
00:33:35.000 | but I do want to just show the opportunities.
00:33:37.000 | I mean, if you look at what someone--Caleb Maddox is one of a kind,
00:33:40.000 | but you look at what he's been able to do--I need to see if I can get him on the show.
00:33:44.000 | You look at what he's been able to do, he'll blow your brain from what you
00:33:50.000 | and I thought we could do when we were younger.
00:33:52.000 | That's it for listening.
00:33:53.000 | Thank you all so much for being here.
00:33:56.000 | I would love it if you'd like to participate in a call like this in the future.
00:34:03.000 | Number one, this one was sent out to the email list,
00:34:06.000 | so join us on the email list.
00:34:08.000 | You can sign up for that at RadicalPersonalFinance.com.
00:34:10.000 | Jump into the Facebook group.
00:34:11.000 | That community group is over 1,000 people now and lots of people interacting there.
00:34:15.000 | I'm pretty accessible there, so jump into the Radical Personal Finance Facebook group.
00:34:19.000 | And thank you to those of you who have been sending in your pictures and your voicemails.
00:34:25.000 | I'm starting to get voicemails.
00:34:26.000 | I've been getting a bunch of voicemails.
00:34:27.000 | Thank you so much.
00:34:28.000 | If you're not aware of it, I'd love for you to just--if you're listening to the show,
00:34:31.000 | if you wouldn't mind, send me a picture of yourself or your family.
00:34:33.000 | I'm making just a screensaver that I can look at it.
00:34:35.000 | I like that, and it helps me to be able to see who my audience is instead of just staring at a microphone.
00:34:41.000 | And then more importantly, for episode 500, I want to do a show just kind of profiling the changes that you've made in your life.
00:34:48.000 | So if over the last couple of years, if it's been since listening to Radical Personal Finance, that's really cool, of course.
00:34:53.000 | But if over the last few years you've been making progress, you've learned something, do me a favor.
00:34:58.000 | Pull out your cell phone, record a quick little voice memo of about two to three minutes, and tell us what's happened.
00:35:03.000 | Radical Personal Finance is not for the elite.
00:35:06.000 | Radical Personal Finance is for you and me.
00:35:10.000 | And so I want to make sure that I profile real stories from real people, and that means you.
00:35:15.000 | So grab your phone, record a voice memo, two or three minutes, tell us what you've learned on Radical Personal Finance and the changes that you've made in your life.
00:35:22.000 | Email that to me, joshua@radicalpersonalfinance.com.
00:35:25.000 | Joshua@radicalpersonalfinance.com.
00:35:27.000 | And I'll be back with you 5 a.m. Monday morning.
00:35:32.000 | This show is part of the Radical Life Media network of podcasts and resources.
00:35:37.000 | Find out more at RadicalLifeMedia.com.
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