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00:00:30.620 | It's Friday, and today that means Q&A.

00:00:34.660 | ♪

00:00:50.680 | Welcome to Radical Personal Finance,

00:00:52.140 | a show dedicated to providing you with the knowledge,

00:00:53.880 | skills, insight, and encouragement you need

00:00:56.180 | to live a rich and meaningful life now

00:00:58.420 | while building a plan for financial freedom

00:01:00.060 | in 10 years or less.

00:01:02.060 | Today it's Friday Q&A.

00:01:03.260 | We're going to begin with a short discussion of politics

00:01:06.000 | as it relates to the fiscal reality of the United States.

00:01:10.100 | Thought it was interesting to watch

00:01:11.060 | the Democratic presidential debates.

00:01:12.940 | We'll brief comment on that.

00:01:14.300 | Also with a question on investing,

00:01:16.340 | and then from there we go to the phones

00:01:17.580 | and see what shows up.

00:01:18.700 | ♪

00:01:23.680 | I hope that you are in line for an excellent weekend.

00:01:26.280 | It will be an excellent weekend.

00:01:27.120 | It will be a holiday weekend next week in the United States.

00:01:29.520 | I know that's a big deal for many people.

00:01:30.980 | Hope you have wonderful plans in store for yourself.

00:01:34.260 | Each Friday whenever I can arrange it,

00:01:35.620 | I do a live Q&A show,

00:01:37.560 | and sometimes that means I take live call-ins.

00:01:39.960 | Well, generally that's what a live Q&A show means.

00:01:42.040 | Sometimes, though, I take questions

00:01:43.540 | that have been written in,

00:01:44.360 | and sometimes live callers.

00:01:45.660 | And today it's going to be a mix,

00:01:46.740 | a little bit of current events,

00:01:47.580 | and a little bit of all of the above.

00:01:50.340 | We begin today with a quick comment

00:01:52.700 | on the presidential debates

00:01:55.440 | that I watched this last week,

00:01:57.580 | the Democratic candidate debates.

00:02:00.880 | Don't worry, I'm not going to get too deep into the politics.

00:02:02.920 | I'm simply going to mention a couple of things,

00:02:05.420 | specifically as it relates to money,

00:02:08.660 | especially to the future of the finances

00:02:12.260 | of these United States.

00:02:15.900 | As long-time listeners know,

00:02:17.540 | I have been concerned for some time

00:02:20.040 | over the burgeoning government debt

00:02:22.680 | that we see in the United States,

00:02:24.600 | running basically a little under a trillion dollar deficit,

00:02:27.780 | and this is completely unprecedented.

00:02:30.740 | It's not that a trillion dollar deficit

00:02:32.920 | is in and of itself unprecedented,

00:02:34.740 | but it's unprecedented to be running

00:02:36.580 | a trillion dollar deficit

00:02:38.420 | in a time of relative prosperity,

00:02:41.480 | where markets are generally doing well,

00:02:43.200 | employment is generally doing well, et cetera.

00:02:45.820 | For context, you should go back,

00:02:47.300 | if you haven't heard it,

00:02:48.140 | and listen to episodes 628 and 629

00:02:52.060 | of Radical Personal Finance,

00:02:53.540 | called "Federal Debt, the Ticking Time Bomb

00:02:55.500 | "that No One is Willing to Diffuse,"

00:02:57.800 | where I go over in detail the basic situation

00:03:01.340 | that we face in terms of governmental finances

00:03:04.680 | in the United States.

00:03:06.280 | Now, in this series of shows,

00:03:07.880 | and even in my commentary today,

00:03:10.120 | I don't have any specific predictions,

00:03:12.460 | other than to point out that basically it's impossible

00:03:17.100 | that we will ever, one, pay off the federal,

00:03:21.200 | we can close deficits,

00:03:22.300 | but it's impossible that federal debt

00:03:24.100 | will ever go down or be paid off,

00:03:28.000 | and that the most optimistic scenarios

00:03:31.940 | that can be laid out basically require massive changes

00:03:36.940 | with regard to the way that the United States runs

00:03:40.580 | and structures its finances.

00:03:42.580 | And it's possible, I don't think this is likely,

00:03:45.920 | but it's possible that if we were to see

00:03:47.720 | some kind of major changes in the next few years,

00:03:51.360 | it's possible that the long-term crises

00:03:54.020 | could be potentially avoided,

00:03:56.660 | or at least some say that that is the case.

00:03:59.940 | Now, in order to have some kind of change,

00:04:03.100 | you would need to, there needs to be a couple of things.

00:04:05.000 | Either, number one, there needs to be massive decreases

00:04:07.780 | in governmental spending

00:04:09.000 | and/or massive increases in taxation.

00:04:12.280 | If that doesn't happen,

00:04:13.640 | and if we don't see people taking significant steps

00:04:17.280 | towards that end within the next few years,

00:04:20.320 | then you can be absolutely sure

00:04:22.980 | that the only potential outcome is bankruptcy.

00:04:26.360 | Now, I'm 97% confident

00:04:28.860 | that that is the only potential outcome

00:04:31.000 | that I can see working,

00:04:32.000 | is basically bankruptcy of different kinds.

00:04:34.200 | And the question is not whether or not

00:04:37.040 | the US government will default on its various promises,

00:04:39.980 | but simply what that default will look like.

00:04:42.080 | And none of us know exactly

00:04:43.440 | what that default will look like.

00:04:45.160 | We can't know.

00:04:46.180 | It'll probably look like many different things.

00:04:48.880 | The best example I always like to point to

00:04:50.840 | is what has happened to the Social Security Administration

00:04:54.000 | when it has gone bankrupt multiple times

00:04:55.900 | over the past few decades.

00:04:57.460 | Well, things change.

00:04:58.560 | Benefits are chopped, things change,

00:05:00.800 | and there are a couple of different options.

00:05:02.560 | But back to that point of what if I'm wrong?

00:05:05.200 | I've always looked for that.

00:05:06.160 | Well, what if I'm wrong?

00:05:06.980 | What would be the evidence that I would expect to see

00:05:09.640 | if I am wrong?

00:05:11.440 | And in episodes 628 and 629 of the show,

00:05:14.760 | I talked about how the next few years

00:05:17.400 | are gonna make a big difference,

00:05:19.640 | or are gonna be very predictive.

00:05:21.440 | And I said we need to watch the various people involved

00:05:25.600 | in governmental financing and see what they say

00:05:28.440 | and see what they do.

00:05:30.500 | Now, what is quite challenging is at the moment,

00:05:33.160 | it's very hard to find anybody

00:05:34.920 | who is lobbying for fiscal restraint.

00:05:38.540 | Basically, you have a political party in the United States

00:05:41.240 | that wants to spend massive amounts of money,

00:05:43.080 | and you have another political party

00:05:44.460 | that wants to spend massive amounts of money times seven.

00:05:47.080 | And that's basically the difference.

00:05:49.240 | So I don't expect at this point

00:05:51.320 | really any fiscal restraint from the Republican Party.

00:05:55.240 | I don't expect any fiscal restraint from President Trump.

00:05:57.740 | That's never been something that he's interested in.

00:06:00.400 | It's not something that,

00:06:01.880 | it's basically something that the Republican Party

00:06:04.300 | has largely abandoned.

00:06:05.680 | There are at least a few Republican politicians

00:06:07.760 | that kind of quietly say,

00:06:09.040 | "Well, we might have problems in the future,"

00:06:10.780 | but they don't really talk about it.

00:06:13.000 | No one's out there holding the torch.

00:06:14.900 | Basically, at this point,

00:06:16.260 | I can't point to any prominent politician

00:06:18.640 | who is loudly discussing the need for fiscal restraint.

00:06:22.880 | So on the Republican side,

00:06:24.520 | there doesn't seem to be any reason

00:06:26.200 | to expect things to change.

00:06:27.560 | What about the Democratic side?

00:06:30.000 | Well, I thought this was interesting,

00:06:31.240 | and I watched a little bit,

00:06:32.620 | and I read the transcripts of the Democratic debates

00:06:35.900 | of the 20 different presidential candidates

00:06:38.960 | who made the debate stage

00:06:41.780 | for the initial round of debates this week.

00:06:44.180 | And for context, I'm recording and releasing this show

00:06:46.560 | on Friday, June 28, 2019.

00:06:50.060 | So if you're listening at a later date,

00:06:51.120 | it'd be interesting to see what has actually happened.

00:06:53.580 | Now, these debates are a difficult format,

00:06:55.800 | 20 people, a total of four hours of discussion.

00:06:58.160 | It's pretty much an impossible format.

00:07:00.120 | But I thought it was interesting to see

00:07:01.600 | what is actually discussed.

00:07:03.760 | Well, first, it's very clear that if in the future,

00:07:07.880 | a Democrat were to be elected as president,

00:07:10.640 | it's very clear that that candidate,

00:07:13.400 | whoever they wind up being,

00:07:14.600 | is very likely to want to increase welfare programs

00:07:19.080 | of various kinds.

00:07:20.480 | If you watched the debates or read about them

00:07:23.080 | or pay any attention to the political movement,

00:07:25.120 | there are a bunch of big, loud advocacy programs,

00:07:28.520 | things like government healthcare programs.

00:07:31.720 | Basically, I don't know

00:07:33.320 | of a Democratic presidential candidate

00:07:35.000 | who at this point in time is not pretty loudly advocating

00:07:38.700 | for a government-run healthcare program.

00:07:42.240 | The majority of them have indicated

00:07:44.800 | that they would like to eliminate

00:07:46.060 | the private insurance marketplace in the United States.

00:07:49.080 | That's an interesting position to take,

00:07:50.680 | and we'll see what happens in the long term.

00:07:53.020 | But that's a massive increase in government spending.

00:07:56.240 | We'll see what happens with that.

00:07:58.680 | One of the other big issues that's very loudly talked about

00:08:02.440 | is programs like cancellation of student debt.

00:08:05.380 | That's also an interesting issue to think about,

00:08:08.180 | but costs a lot of money.

00:08:09.960 | And there are a number of other minor programs.

00:08:12.240 | You have people talking about reparations,

00:08:14.440 | reparations to blacks.

00:08:15.720 | Or you have Andrew Yang talking about universal basic income

00:08:20.480 | and a couple other candidates hinting

00:08:22.000 | at various permutations of universal basic income.

00:08:25.760 | But you have, I think it's fair to say,

00:08:27.600 | a fairly broad consensus among the Democratic candidates

00:08:32.600 | that there's going to be,

00:08:34.640 | we need more government programs.

00:08:35.920 | We need more new, big, expensive government programs.

00:08:38.520 | The most worrying, of course, is healthcare.

00:08:41.320 | Obamacare didn't work, was too expensive.

00:08:43.960 | And so now because Obamacare, I guess, didn't work,

00:08:46.760 | then now we need to replace it with government healthcare.

00:08:50.640 | So that's the starting point.

00:08:52.040 | Now, what about the flip side?

00:08:53.780 | Is anybody talking about fiscal restraint?

00:08:56.600 | Well, I searched the transcripts

00:08:58.760 | to make sure that I had this right.

00:09:00.480 | And in four hours, two nights of discussion,

00:09:03.760 | I found two discussions and/or allusions

00:09:08.400 | to the federal debt and/or the deficit, one on each night.

00:09:13.020 | The first one came on night one,

00:09:15.520 | and it was in an exchange with candidate Amy Klobuchar.

00:09:20.520 | And when talking about immigration,

00:09:23.400 | she was being questioned about immigration and her answer.

00:09:26.360 | I'll just read her answer.

00:09:29.280 | Guthrie was asking the question.

00:09:30.640 | Guthrie says this.

00:09:32.000 | He wants to no longer have it be a crime

00:09:33.960 | to illegally cross the border.

00:09:35.560 | Do you support that?

00:09:36.560 | Do you think it should be a civil offense only?

00:09:39.080 | And if so, do you worry about potentially

00:09:41.160 | incentivizing people to come here?

00:09:43.360 | Klobuchar responds,

00:09:44.680 | immigrants, they do not diminish America.

00:09:47.260 | They are in America, and I'm happy to look at his proposal,

00:09:49.800 | but I do think you wanna make sure

00:09:51.000 | that you have provisions in place

00:09:52.560 | that allow you to go after traffickers

00:09:54.160 | and allow you to go after people who are violating the law.

00:09:56.960 | What I really think we need to do,

00:09:58.680 | what I really think we need to step back and talk about

00:10:01.160 | is the economic imperative here,

00:10:03.120 | and that is that 70 of our Fortune 500 companies

00:10:07.040 | are headed up by people that came from other countries.

00:10:09.880 | 25% of our US Nobel laureates were born in other countries.

00:10:13.760 | We have a situation right now

00:10:15.000 | where we need workers in our fields and in our factories.

00:10:17.800 | We need them to start small businesses.

00:10:20.200 | We need their ideas,

00:10:21.180 | and this president has literally gone backwards

00:10:23.240 | at a time where our economy needs immigrants.

00:10:26.000 | And so my proposal is to look at that 2013 bill

00:10:29.280 | that passed the Senate with Republican support

00:10:31.520 | to upgrade that bill to make it as good as possible

00:10:34.240 | and get it done.

00:10:35.080 | It brings the debt down by $158 billion.

00:10:37.800 | That was the extent of the discussion on night one

00:10:43.520 | was that one single allusion in Amy Klobuchar

00:10:46.800 | to a bill from evidently 2013

00:10:49.400 | that allegedly brings the debt down by $158 billion.

00:10:52.960 | I have no idea what that proposal was from 2013.

00:10:55.760 | I'm not interested to go and research it at this point,

00:10:58.480 | but just without commenting on the proposal

00:11:01.320 | or what's even in it, the number is a joke.

00:11:04.840 | And that's the thing you need to remember.

00:11:06.480 | In an era where we're running

00:11:07.800 | almost a trillion dollars of deficit,

00:11:10.720 | $158 billion isn't even relevant in terms of the deficit,

00:11:15.720 | let alone the debt.

00:11:19.880 | And so assuming that she was accurate with her statements,

00:11:22.620 | I don't know if she was talking about

00:11:23.800 | bringing the deficit down by $158 billion

00:11:25.920 | or lowering the national debt by $158 billion.

00:11:28.720 | It's just a joke.

00:11:30.000 | There's no relevance here

00:11:31.440 | to the long-term problem whatsoever.

00:11:33.960 | That was the only reference or allusion I could find

00:11:37.160 | to the discussion in night one of the debates.

00:11:40.600 | Well, what about night two?

00:11:42.440 | The first time I could find where,

00:11:44.560 | or the first and only thing I could find in night two

00:11:47.000 | where national debt was discussed

00:11:49.240 | or governmental debt was discussed

00:11:51.080 | was when candidate Kamala Harris was asked a direct question

00:11:55.600 | as to whether Democrats have a responsibility

00:11:57.760 | to talk about how they will pay

00:12:00.320 | for ambitious new spending programs.

00:12:03.320 | And I'll read it to you.

00:12:05.200 | Debate moderator Guthrie asks a question.

00:12:10.040 | Says, "Senator Harrison, sorry, Senator Harris,

00:12:12.760 | "there's a lot of talk in this primary

00:12:14.260 | "about new government benefits,

00:12:16.060 | "such as student loan cancellation,

00:12:17.860 | "free college, healthcare, and more.

00:12:20.200 | "Do you think that Democrats have a responsibility

00:12:22.640 | "to explain how they will pay

00:12:24.640 | "for every proposal they make along those lines?"

00:12:28.120 | Harris responds, "Well, let me tell you something.

00:12:30.960 | "I hear that question, but where was that question

00:12:34.080 | "when the Republicans and Donald Trump passed a tax bill

00:12:37.320 | "that benefits the top 1%

00:12:39.280 | "and the biggest corporations in this country

00:12:42.960 | "contributing at least $1 trillion to the debt of America,

00:12:46.720 | "which middle-class families will pay for

00:12:48.720 | "one way or another.

00:12:50.560 | "Working families need support and need to be lifted up.

00:12:53.820 | "And frankly, this economy is not working or working people."

00:12:57.380 | I assume she meant for working people.

00:13:00.220 | "For too long, the rules have been written

00:13:01.820 | "in the favor of the people who have the most

00:13:03.900 | "and not in favor of the people who work the most,

00:13:06.740 | "which is why I am proposing that we change the tax code

00:13:09.940 | "so for every family that is making

00:13:11.700 | "less than $100,000 per year,

00:13:14.000 | "they will receive a tax credit

00:13:15.360 | "that they can collect up to $500 a month,

00:13:18.140 | "which will make all the difference

00:13:19.400 | "between those families being able to get

00:13:21.240 | "through the end of the month with dignity

00:13:23.580 | "and was support or not.

00:13:25.340 | "And on day one, I will repeal that tax bill

00:13:27.840 | "that benefits the top 1%

00:13:29.480 | "and the biggest corporations in America."

00:13:32.140 | And that was the extent of the discussion

00:13:34.460 | for night two of the debate.

00:13:38.280 | Now, first, of course, a president cannot repeal a tax bill

00:13:42.020 | by executive order.

00:13:43.460 | Such a move would require the involvement of Congress

00:13:47.140 | to change the tax code,

00:13:48.580 | but that's relatively insignificant.

00:13:50.540 | It's important to know that,

00:13:51.380 | but it's relatively insignificant for my purposes.

00:13:53.860 | The first part of her answer was certainly true,

00:13:55.980 | but it was just basic whataboutism.

00:13:58.500 | The idea is, well, since no one is pressing President Trump

00:14:01.360 | or the Republicans on their spending,

00:14:02.980 | especially with this giant new tax bill

00:14:04.440 | that wasn't offset with spending cuts,

00:14:06.140 | why should the Democrats have to talk about the subject?

00:14:09.320 | Well, certainly the criticism is accurate.

00:14:11.260 | Any fair-minded person would have to acknowledge

00:14:14.120 | that the Republicans are not doing a great job

00:14:18.260 | driving the governmental fiscal situation.

00:14:21.180 | But that's just whataboutism in politics.

00:14:23.700 | The second part of the answer is interesting

00:14:26.060 | because not only, basically,

00:14:29.100 | she winds up spending more money in what she's proposing.

00:14:31.860 | Basically, as I understand it,

00:14:32.980 | she's proposing something like a $500 a month UBI of sorts

00:14:37.020 | for any family earning less than $100,000.

00:14:39.600 | And although it's not UBI, it's a tax credit,

00:14:42.020 | but then she's trying to offset it

00:14:43.260 | with increased taxes on the 1% and corporations,

00:14:46.660 | is the quote of what she said.

00:14:49.300 | Now, this kind of proposal is not remotely serious

00:14:53.860 | with the actual facts.

00:14:56.100 | That's what's so troublesome.

00:14:57.560 | It's just simply not at all dealing squarely

00:15:02.560 | with how desperate the situation is

00:15:07.820 | with regard to the overall fiscal situation

00:15:10.460 | in the United States.

00:15:13.020 | Let me read to you just a quick excerpt

00:15:15.200 | from the article that I discussed

00:15:19.360 | where in episode 628 and 629

00:15:22.380 | that put the size of the problem into context.

00:15:26.740 | Now, remember, the entire article that I discussed,

00:15:29.120 | which was Brian Riedel's comprehensive federal budget plan

00:15:32.440 | to avert a debt crisis,

00:15:33.880 | his proposal, which was carefully calculated out,

00:15:36.760 | didn't actually solve any problem

00:15:38.920 | as far as didn't result in a decrease of debt,

00:15:42.340 | didn't result in a decrease of deficit,

00:15:43.800 | basically just potentially forestalled an absolute crisis

00:15:47.600 | by freezing the deficit at 95% of GDP.

00:15:50.960 | And when he was talking about liberal fantasies,

00:15:53.240 | he talked about conservative fantasies

00:15:55.800 | and liberal fantasies,

00:15:56.640 | talked about what a fantasy the idea is

00:15:58.640 | that you can just simply just tax the rich.

00:16:01.320 | And I'll read you a couple of paragraphs.

00:16:02.680 | Just tax the rich.

00:16:03.820 | Liberal advocates often vastly overstate the degree

00:16:07.180 | to which upper income tax increases

00:16:09.640 | can finance the ever-expanding government.

00:16:12.240 | In the first place,

00:16:13.080 | the United States already has the most progressive tax code

00:16:16.560 | in the OECD,

00:16:18.160 | even adjusting for differences in income inequality.

00:16:21.240 | And setting aside the moral questions

00:16:23.240 | that would be raised by the government

00:16:24.640 | seizing the vast majority of any family's income,

00:16:27.240 | basic math shows that large tax increases

00:16:30.240 | on high income Americans

00:16:32.120 | cannot close most of the long-term budget deficit.

00:16:36.180 | Start with an extreme proposition,

00:16:38.160 | a 100% tax rate on all income over $500,000.

00:16:43.160 | Result, this would raise barely more than 5% of GDP,

00:16:48.200 | at least for year one.

00:16:49.840 | After that, one needs a heroic, if not absurd, projection

00:16:54.060 | that this tax would have no effect on working or investment.

00:16:58.000 | Next, try a slightly more realistic doubling

00:17:00.240 | of the top 35% and 37% tax brackets to 70% and 74%.

00:17:05.640 | Result, this would raise only approximately 1.6% of GDP.

00:17:10.640 | And even that figure ignores all revenues lost

00:17:13.480 | to the economic effects of 85% marginal tax rates

00:17:17.120 | when including state and payroll taxes on work or investment

00:17:20.040 | as well as tax avoidance and evasion.

00:17:22.680 | And he goes on and talks about this,

00:17:25.040 | one more about corporate taxes.

00:17:26.720 | Nor can corporate tax hikes close much of the gap.

00:17:29.720 | America's total corporate tax revenues

00:17:31.680 | are generally in line with other developed nations.

00:17:34.300 | Although modest reforms may be on the table,

00:17:36.640 | major changes, such as a 10-point rate increase,

00:17:39.760 | would raise less than 0.5% of GDP,

00:17:42.760 | while giving more companies an incentive to relocate abroad.

00:17:46.680 | And he goes on.

00:17:47.520 | The point is that there's no,

00:17:51.520 | these numbers, these proposals,

00:17:53.880 | they're nowhere near relevant to what could actually happen

00:17:58.640 | in terms of the amount of money that could be collected.

00:18:01.660 | It sounds good as a line in a debate,

00:18:04.060 | but it doesn't give anything more than that.

00:18:06.320 | It panders to this idea, this fantasy,

00:18:09.240 | but it's not actually relevant math in any way whatsoever.

00:18:13.480 | Those are the only two things I could find

00:18:15.640 | in the debate on the Democratic side.

00:18:18.280 | Now, I wanna be fully, I wanna concede the point

00:18:21.120 | that one debate like this is not necessarily

00:18:23.980 | in and of itself indicative of everything

00:18:26.520 | that can happen in a larger context.

00:18:31.000 | The political season is still young.

00:18:33.120 | There are a lot of things that will happen

00:18:34.340 | in the political season in the months to come.

00:18:37.220 | But watch and see if there's any discussion or nod

00:18:40.600 | towards the actual fiscal situation in the United States.

00:18:44.360 | That's extremely important.

00:18:45.980 | So we'll see what happens as time goes on,

00:18:49.300 | but watch and see.

00:18:50.340 | At the moment, I don't expect anything good to come.

00:18:53.900 | I don't see any reason why President Trump

00:18:56.340 | or the Republican Party will all of a sudden

00:18:58.300 | become the party of fiscal conservatism,

00:19:00.300 | and I don't see any indications

00:19:02.180 | that the Democratic Party is going to become

00:19:05.460 | fiscally conservative in any way either.

00:19:07.900 | And if that's the case, assuming that's the case,

00:19:12.260 | a couple years from now,

00:19:13.420 | when after the presidential election,

00:19:15.660 | we'll be into another administration,

00:19:17.340 | I don't see any change in the expenditures

00:19:20.340 | of the US government in coming years.

00:19:23.160 | So we are in uncharted waters,

00:19:25.540 | and it will be interesting to see what winds up happening.

00:19:28.940 | Let's watch it together, but let's keep an eye on it.

00:19:30.980 | As far as I'm concerned, there's a good reason

00:19:32.760 | at this point in time to be paying very careful attention

00:19:35.420 | and planning for the worst,

00:19:37.420 | which is ultimately in the coming decades,

00:19:39.740 | the long-term bankruptcy of the US federal government.

00:19:42.540 | We begin in Maryland.

00:19:43.580 | Welcome to Radical Personal Finance.

00:19:44.960 | How can I serve you today?

00:19:46.020 | - Hi, Josh, a long time fan of yours.

00:19:48.140 | I've been listening to your podcast

00:19:50.540 | for quite a little while.

00:19:51.780 | And so I'm calling today because I just have some question

00:19:58.220 | about on a financial planning side,

00:20:02.540 | I just wanted to ask.

00:20:04.460 | And I mean, I'm currently around 31, 33 in range

00:20:09.460 | and make a reasonable income, not six figure income.

00:20:13.940 | And I have a little bit over like 200, 300,

00:20:18.940 | thousand dollars in assets.

00:20:20.580 | And I'm kind of just trying to figure it out

00:20:26.460 | how to design my life so that I can live the life

00:20:31.020 | that I want to live at the same time

00:20:33.460 | while trying to achieve financial independence

00:20:37.020 | without stressing too much about the numbers.

00:20:40.260 | - Okay.

00:20:41.100 | So tell me more.

00:20:43.900 | - In which area would you like to learn a little bit more?

00:20:49.980 | - What would it, let's just start with a question.

00:20:53.900 | Let's assume that you had today,

00:20:56.380 | say five to $10,000 a month of income coming in

00:21:00.220 | from your investment portfolio.

00:21:02.740 | You didn't have to work.

00:21:04.220 | What would you do with your life?

00:21:05.860 | - I think I would try to organize,

00:21:12.780 | try to organize more events around personal finance,

00:21:16.260 | try to do a little bit more financial coaching,

00:21:20.900 | do a help, I mean, as I understand it from previous podcasts

00:21:25.500 | that you have already been putting out there,

00:21:29.500 | like that industry, it's not necessarily money generating

00:21:33.580 | because a lot of people don't really care

00:21:37.180 | about finances too much.

00:21:39.580 | But so for me, if money is no issue,

00:21:42.060 | I would still probably want to do that,

00:21:43.860 | try to bring awareness to,

00:21:46.220 | that they should care about their finances

00:21:48.780 | and they should, and I'm teaching in finances.

00:21:52.500 | - Are you currently working

00:21:54.700 | in the financial industry in any way?

00:21:56.540 | - I'm currently, I'm a financial analyst,

00:22:02.540 | but I crunch number, you know,

00:22:04.060 | I review number, analyze number for companies.

00:22:07.460 | I have a background in finance and accounting,

00:22:11.180 | but I do not work in the financial service industry

00:22:14.540 | because for the reason why you leave the industry,

00:22:17.500 | because the people that tend to use the service

00:22:20.940 | or the financial planners generally tend to go after

00:22:25.300 | the people that probably don't necessarily need

00:22:28.060 | the help too much anyway, if that makes sense.

00:22:31.420 | I mean, that mostly higher net worth.

00:22:33.260 | My goal, serve the, probably the middle class families

00:22:40.420 | that might not be served, but be served now.

00:22:46.660 | If that makes sense.

00:22:47.500 | - Right, so let me clarify my opinion on the subject

00:22:49.860 | just to make sure that I'm accurately understood

00:22:53.900 | because I don't fully agree with the way

00:22:56.140 | that you characterized my opinion.

00:22:57.620 | So I'll clarify it and then we can talk

00:22:58.780 | about some solutions for you.

00:23:00.740 | Number one, I do not believe that it's not possible

00:23:04.740 | to serve the lower class or the middle class

00:23:08.060 | when it comes to financial advice.

00:23:10.460 | That is not an accurate understanding of what I believe.

00:23:14.700 | I do believe it's possible to serve the lower class

00:23:17.380 | and the middle class with good financial advice.

00:23:20.620 | I don't believe it's possible to do that

00:23:22.940 | with any kind of personal coaching model

00:23:26.440 | where you're working one-on-one,

00:23:28.500 | where you are sitting at a coffee shop,

00:23:30.540 | helping somebody with their finances

00:23:32.340 | and they make $30,000 a year,

00:23:35.020 | but they're willing to take out their checkbook

00:23:36.500 | and write you a couple hundred dollar check.

00:23:38.500 | It can't be done in that way.

00:23:40.820 | So what are the models where I think it can be done?

00:23:43.580 | Number one, I think it can be done in education

00:23:46.620 | if you're going from one to many.

00:23:49.620 | There are many good financial coaches and educators

00:23:54.340 | who have made a living and made a fortune

00:23:56.620 | helping the lower and middle class,

00:23:58.700 | but the only sustainable way that can be accomplished

00:24:01.660 | is in the context of a one to many relationship.

00:24:06.340 | You can sell a stadium full of tickets.

00:24:11.420 | You could sell a stadium worth of tickets

00:24:13.860 | to the lower and middle class at $20 a pop

00:24:17.020 | and have a $200,000 day for you

00:24:20.580 | if you can find a way to market

00:24:22.500 | to the lower and middle class.

00:24:23.980 | The best example here, Dave Ramsey does this.

00:24:26.240 | Many other financial educators do this.

00:24:28.340 | You can do this in many niches.

00:24:29.700 | You can do it in a religious niche.

00:24:31.460 | You can do it in an investing niche.

00:24:34.380 | You can do it in many ways.

00:24:35.780 | Many real estate investors have made a fortune

00:24:39.020 | selling 20, 30, $40 tickets to a real estate seminar

00:24:42.500 | to somebody who is in the lower and middle class.

00:24:46.780 | So you can do it that way.

00:24:48.300 | Another way that it can be done

00:24:49.940 | is where your payment that you're receiving

00:24:53.140 | for your services is related to the sale of a product.

00:24:58.140 | So the best example here

00:24:59.660 | would be selling something like life insurance.

00:25:01.660 | I used to sell life insurance policies.

00:25:03.500 | I sold a lot of term life insurance

00:25:05.780 | to lower and middle class families who really needed it.

00:25:09.180 | And as long as I can make my income from a commission,

00:25:12.620 | I could give as an accompaniment

00:25:14.940 | to the sale of that life insurance product,

00:25:17.220 | I could give some useful and helpful financial advice

00:25:20.340 | to somebody who ordinarily wouldn't pay for it.

00:25:22.740 | If I sold a simple term life insurance policy,

00:25:25.180 | let's say I sold a policy at $40 a month,

00:25:29.540 | million dollars a term life insurance

00:25:31.100 | to a young kind of just getting started family,

00:25:34.580 | lower or middle class family, $40 a month,

00:25:37.860 | that means the annual premiums are $480.

00:25:40.940 | And so let's call it $500 for easier math.

00:25:42.980 | Depending on the life insurance company,

00:25:44.820 | the commission rate that I would earn

00:25:46.460 | on the sale of that life insurance policy

00:25:48.920 | would be anywhere from 50 to 120%

00:25:51.820 | of the first year's commission,

00:25:53.140 | which means I could make an income

00:25:54.460 | of somewhere between 250 and $550 for that sale.

00:25:59.460 | Now, it's not that hard to sell term life insurance policies

00:26:04.160 | to lower and middle class income people.

00:26:06.660 | And as long as I can make three to $500 on the sale,

00:26:10.380 | then I can afford to do that.

00:26:12.560 | It's a little hard at those rates

00:26:14.260 | because you have to go through 10 potential buyers

00:26:17.460 | to wind up selling to one.

00:26:19.860 | And so it's not as simple for anyone

00:26:21.620 | who's never been in a business like that,

00:26:23.300 | it's not as simple as saying,

00:26:24.540 | I just make $500 for a one hour meeting.

00:26:26.500 | No, it's a $500 commission over the course of say,

00:26:29.900 | three hours of meetings with somebody

00:26:32.500 | by the time you go through all the different stages

00:26:34.660 | of the meeting process.

00:26:35.660 | And that $500 of commission has to also compensate you

00:26:38.860 | for the nine other people that you talk to

00:26:40.700 | but didn't wind up buying from you.

00:26:42.820 | So, but the point is you can afford to do it

00:26:44.780 | if you can sell life insurance,

00:26:46.520 | or if you can sell mortgages, or if you can sell something.

00:26:49.620 | Those are two very good business models

00:26:52.540 | where you can make a living working with the lower class

00:26:57.300 | and middle class people,

00:26:59.880 | either on a one to many approach,

00:27:01.580 | selling books, selling courses, selling seminars,

00:27:04.140 | selling education, selling a radio show,

00:27:06.060 | selling a podcast, you can do it on selling a blog, right?

00:27:10.000 | There are many bloggers who are making a living

00:27:12.580 | helping people who are in the lower or middle class.

00:27:16.100 | There are many people on YouTube

00:27:17.500 | that are helping people do it,

00:27:18.820 | but it has to be a one to many model

00:27:21.580 | because poor people and middle class people

00:27:23.780 | are not used to spending money on good financial advice.

00:27:27.340 | Now, if you're gonna do a one to one model

00:27:29.780 | and you're going to give financial advice or do coaching,

00:27:32.900 | the only people that are gonna be willing

00:27:34.620 | to pull out a checkbook or willing to pull out cash

00:27:36.660 | are gonna be people who are affluent.

00:27:38.620 | So if somebody's thinking about,

00:27:40.220 | where am I gonna make my car payment

00:27:42.020 | versus where am I,

00:27:43.380 | maybe I should think to talk to somebody about my future,

00:27:45.900 | the average person is gonna make their car payment

00:27:48.340 | 'cause that's the upfront problem.

00:27:50.300 | And so that's where, in my opinion,

00:27:52.500 | all of the coaching models break down

00:27:54.860 | if you're aiming it towards lower or middle income people.

00:27:58.500 | They're just on the whole not willing to pay the money

00:28:01.580 | for hourly consulting fees.

00:28:04.860 | I do a little bit of hourly consulting from time to time.

00:28:08.540 | I don't advertise it, it's not a major thing,

00:28:10.980 | but when people email me, I say, sure, I'll do it.

00:28:13.260 | I charge 300 bucks an hour for people who wanna do that

00:28:16.140 | and I charge by the minute,

00:28:17.340 | which makes it a tremendous deal.

00:28:19.360 | That is the best deal in the world.

00:28:20.980 | I should double or triple my rates.

00:28:22.740 | I have never received an inquiry by,

00:28:26.580 | I shouldn't have said never.

00:28:28.260 | I can't remember ever receiving,

00:28:30.900 | if I've received one, it's one or possibly one or two.

00:28:34.780 | I can't remember receiving an inquiry from somebody

00:28:37.620 | about coaching or advice if that person didn't make

00:28:40.380 | at least in excess of six figures.

00:28:42.260 | And it's much more common that the average person

00:28:44.500 | that writes to me is a multimillionaire.

00:28:46.880 | So that's the problem.

00:28:47.940 | I don't see any way to solve it.

00:28:49.060 | So that's my opinion of kind of the financial coaching model

00:28:53.000 | is simply that you can't do it one-on-one with poor people.

00:28:56.420 | If you think that you're gonna go out

00:28:57.660 | and do budget coaching with people who are in debt,

00:29:00.440 | they're not gonna pay.

00:29:01.460 | You can write a book and sell it for $10

00:29:03.980 | and make a lot of money if you can effectively market it,

00:29:06.360 | but you're not gonna do it with a coaching model.

00:29:08.060 | Does that help?

00:29:08.900 | - Yes, absolutely.

00:29:11.460 | - Okay. - Thank you.

00:29:12.380 | - So here's my answer to your question

00:29:14.980 | of financial independence.

00:29:16.620 | You have two to $300,000.

00:29:18.660 | Are you married?

00:29:19.500 | Do you have children?

00:29:20.320 | - Single. - Single.

00:29:22.660 | So as a single man with a two to $300,000 net worth,

00:29:27.220 | there is no life decision

00:29:31.300 | that you cannot pursue at this point in time.

00:29:35.620 | You're in your early 30s and you have a lot of money.

00:29:40.020 | You are already in the top few percent.

00:29:42.460 | I don't know if it's the 3%, the 4%,

00:29:44.100 | but you're within the top at least 5%.

00:29:46.980 | Maybe, I don't know.

00:29:47.880 | I should check these brackets so I can say this accurately.

00:29:50.000 | But you're in the top few percent of the American society

00:29:53.380 | in terms of wealth.

00:29:55.300 | And if you have an income

00:29:56.700 | that's a little less than six figures,

00:29:58.940 | you can expect your wealth to continue massively.

00:30:02.060 | So at this point in time,

00:30:03.380 | there's nothing that you couldn't do if you chose to.

00:30:06.780 | There's no job that you couldn't go and prepare for,

00:30:09.380 | even if it required massive amounts of retraining,

00:30:12.300 | or even if it required you to go to school

00:30:14.420 | to spend money on education or certification.

00:30:17.740 | There's nothing you couldn't pursue there.

00:30:19.940 | In addition, there's hardly any fun thing

00:30:22.920 | that you couldn't do.

00:30:23.900 | You could buy a truck and drive all around the world.

00:30:26.840 | You could buy a sailboat and sail the Caribbean.

00:30:28.820 | There's almost nothing you can't do.

00:30:30.700 | So at this point, you should be thinking

00:30:32.800 | like somebody who is financially free,

00:30:35.280 | and you should be seeking to optimize your future

00:30:38.560 | as best you can see right now.

00:30:40.640 | So if that means that if you had $5,000 to $10,000 a month

00:30:43.880 | coming in per month and you would do financial coaching,

00:30:46.560 | then work on a plan to start moving in that direction.

00:30:49.720 | You do have to solve the investment side of things,

00:30:52.520 | but you can solve that in a number of ways.

00:30:55.160 | But you need to be moving your career in the direction

00:30:58.200 | of what you would be doing,

00:30:59.520 | and then think about how you would make money from that.

00:31:01.980 | That's my simplest answer of how to think like somebody

00:31:04.780 | who is financially independent

00:31:06.320 | while you reach that fuller level

00:31:08.800 | of being able to live off of your investment income.

00:31:11.100 | But you're already financially free, in my opinion.

00:31:12.980 | - Thank you for the encouragement,

00:31:14.080 | and thank you for the,

00:31:17.680 | yeah, I mean, thank you for the assessment

00:31:19.680 | of my current situation.

00:31:23.080 | So my question is, how should I get started?

00:31:28.080 | I have gone through Financial Peace University.

00:31:31.000 | I can try to be a facilitator.

00:31:32.640 | And in my opinion, outside of a church

00:31:36.920 | and potentially a library, that's not very many places,

00:31:41.360 | like public places where you don't,

00:31:44.160 | where there's like a low-cost way

00:31:46.000 | of potentially hosting class on,

00:31:48.560 | I know I'm getting into the nuts and bolts here,

00:31:52.960 | and of getting started.

00:31:55.780 | How would, I guess, how would you go about it

00:32:00.160 | in terms of an actual plan,

00:32:03.280 | if I were to pursue that path?

00:32:06.640 | - So if I went broke today, and I wanted to start over,

00:32:09.840 | and I had no platform, and I had nothing set up,

00:32:13.240 | and I were facing a problem like that,

00:32:15.160 | and I was saying, you know what,

00:32:16.080 | I really would like to teach people about money

00:32:19.120 | in a way that I could make a living on it

00:32:22.560 | and share some of the things that I have learned.

00:32:25.280 | If I wanna, and if my goal were to reach the,

00:32:29.700 | reach the not-yet-wealthy,

00:32:34.520 | then I have to, I'm gonna begin with the presupposition

00:32:38.060 | that the not-yet-wealthy are not gonna pay money

00:32:40.360 | for my class.

00:32:42.000 | And I just think that's accurate.

00:32:44.540 | I hate it, I hate that it is that way.

00:32:46.480 | I just, in all my experience, that has been the case.

00:32:49.560 | There are plenty of books about money in your local library,

00:32:51.640 | there are plenty of books in your local bookstore.

00:32:53.680 | Poor people very rarely go and pursue those things.

00:32:56.840 | So I gotta figure out who's gonna pay me.

00:32:58.600 | So I'm gonna look at it and say,

00:32:59.980 | where's my paycheck gonna come from?

00:33:01.880 | My answer to that is going to be a corporation,

00:33:05.160 | a not-for-profit entity,

00:33:07.320 | it's like some kind of community organization,

00:33:10.080 | or possibly, like you said,

00:33:11.960 | possibly something like a church organization.

00:33:14.540 | And I would try to find some way

00:33:17.100 | where those organizations can host me and pay me

00:33:21.660 | so that I can afford to go and give a talk

00:33:24.140 | that their people would come to.

00:33:26.580 | So if you were to look at your town

00:33:28.580 | that's around, that's near where you are,

00:33:30.960 | you'll find that there are dozens and thousands

00:33:33.500 | of businesses in your town, wherever you live.

00:33:36.380 | And those thousands of businesses,

00:33:38.420 | probably depending on the type of business,

00:33:40.980 | from time to time do something like a lunch and learn.

00:33:43.580 | They come with good education.

00:33:45.780 | And so what I would do is I would try to find

00:33:48.020 | some interesting hook that would be really relevant

00:33:51.660 | to the people in my community or in a certain industry.

00:33:55.660 | I would research and think through some kind of strategy,

00:33:58.500 | and I would market that to the corporation.

00:34:00.220 | And I would charge them, say, $500 to come in,

00:34:03.380 | give a lunch and learn.

00:34:05.500 | I would position it with the fact that,

00:34:07.140 | hey, I'm not selling any financial products,

00:34:09.620 | I don't have any insurance sales, et cetera,

00:34:12.100 | but I do have this curriculum.

00:34:13.600 | I would develop a curriculum,

00:34:15.060 | something that I thought was really gonna help them.

00:34:17.520 | I would pull together some of the research

00:34:19.220 | that shows that employees who are more financially,

00:34:21.920 | who are more financially stable are better employees,

00:34:27.820 | et cetera, and I would market that

00:34:29.740 | and figure out how to market that to corporations.

00:34:32.220 | You could do the same things

00:34:33.340 | with some kind of local not-for-profit entities.

00:34:35.940 | So if you wanted to help high school students

00:34:39.900 | from poor families, then you've gotta go

00:34:42.260 | and figure out how to get sponsored

00:34:44.220 | by the non-profit organizations

00:34:46.420 | that are already working in that community,

00:34:48.260 | and you gotta develop a program

00:34:49.760 | of something that's really, really useful there.

00:34:51.940 | So that's the best I got, that's what I would do,

00:34:53.980 | and that's how I would do it locally.

00:34:56.820 | I don't see any other way that it could be done

00:34:59.020 | profitably enough to keep you in the business.

00:35:01.960 | But I would say don't despise online.

00:35:03.580 | The competition is thick online,

00:35:05.580 | but the best way to reach the people

00:35:08.780 | is probably gonna be online

00:35:10.300 | with some interesting and unique hook.

00:35:15.300 | And I'm increasingly convinced

00:35:17.420 | that almost any person who's open and transparent

00:35:19.940 | and yet who has an interesting story

00:35:21.760 | can find a niche of people.

00:35:23.420 | So whatever that niche is that you would like to work in,

00:35:26.260 | the tighter the niche, the better,

00:35:28.420 | and it can still be done online.

00:35:29.740 | So that's how I would do it.

00:35:31.100 | - Okay, well, thank you very much for all your help.

00:35:33.980 | - Yeah, my pleasure.

00:35:34.980 | - Keep, go ahead, I'll finish.

00:35:39.140 | Just keep working at it,

00:35:40.660 | because I do love the thought of people being teachers.

00:35:43.100 | I think that is super, super valuable,

00:35:45.380 | but I do wanna be realistic about the challenges.

00:35:47.960 | We go now to Portland, Oregon.

00:35:49.380 | Welcome to the show, how can I serve you today?

00:35:51.140 | - Hi, thanks for doing this.

00:35:52.540 | I think it's a great platform.

00:35:54.640 | I really enjoyed your episode on moving out of the country,

00:35:59.640 | and I wanted to know if any more content

00:36:02.180 | in that regard was coming out.

00:36:04.540 | - Repeat, I couldn't quite understand.

00:36:05.940 | You've enjoyed my episode on what topic?

00:36:07.860 | - On moving outside of the country.

00:36:09.540 | - Moving outside of the country.

00:36:10.900 | Well, certainly, I mean, I don't really,

00:36:15.260 | there are two reasons, so I'm sure I'll do more on it.

00:36:19.180 | In fact, I have a show scheduled for the next few days,

00:36:22.660 | specifically about the cost of living

00:36:24.640 | versus the quality of life with an international flair.

00:36:27.080 | That's the title that'll be coming in the next few days.

00:36:29.460 | But I'm not planning to turn the show

00:36:32.160 | into the international living

00:36:33.360 | or the international radical personal finance platform.

00:36:36.600 | I'm not sure how long I'll be out of the United States.

00:36:39.060 | The United States is a wonderful place to live,

00:36:41.260 | and I don't know how, and I don't wanna lose

00:36:44.180 | all of my appeal to a broad stream US audience

00:36:47.220 | by turning the show entirely international.

00:36:49.940 | But let's start with what your interest is.

00:36:52.340 | Why are you interested in moving outside

00:36:54.140 | of the United States?

00:36:56.420 | - I just think it's something that hasn't been fully

00:36:59.380 | explored in the personal finance space,

00:37:01.460 | and I don't know whether we will or we won't,

00:37:04.560 | but it's something I'm interested

00:37:05.560 | in learning a little more about.

00:37:06.880 | - Sure.

00:37:07.760 | Well, I'll give you just a quick overview,

00:37:09.640 | a quick sneak peek, and then give you a chance

00:37:11.540 | to ask any questions that you personally have

00:37:14.180 | or in terms of your personal interests.

00:37:17.120 | Moving outside of the United States could be,

00:37:20.620 | for many people, a real solution to a set of problems.

00:37:23.920 | And the same thing could be said

00:37:24.820 | for moving outside of Canada or of Germany

00:37:27.400 | or of Brazil or any other place.

00:37:31.080 | My reasons for doing it aren't really financial,

00:37:34.800 | although there can be financial benefits.

00:37:37.320 | The biggest financial benefit of moving outside

00:37:40.880 | of your home country is most likely going to be tax savings.

00:37:45.240 | So, for example, as I laid out when I talked

00:37:47.760 | about the benefit of leaving the United States

00:37:50.120 | in terms of some of the tax savings

00:37:51.740 | or the foreign earned income exclusion,

00:37:53.880 | I mean, for somebody who is earning $100,000 a year

00:37:56.280 | from a location-independent business,

00:37:58.620 | saving $30,000 of taxes can make a huge difference

00:38:02.240 | in their overall financial plans.

00:38:04.380 | That's a really compelling reason for somebody like that

00:38:07.300 | to move outside of the country.

00:38:09.680 | And more and more, this can be done by people

00:38:13.360 | in unique and I would say relatively traditional,

00:38:16.860 | relatively traditional industries.

00:38:19.840 | I gave advice to a guy one time who was a mortgage broker,

00:38:23.940 | but as a mortgage broker,

00:38:25.080 | he did everything virtually already,

00:38:27.160 | and he moved to Panama.

00:38:28.400 | He was living in Florida and he moved to Panama,

00:38:30.360 | and I walked him through all the ways

00:38:31.840 | that he could set that up,

00:38:32.680 | and he could continue to do his business from Panama.

00:38:36.100 | Everything he needed was right there.

00:38:37.460 | He was a few hours away from Florida

00:38:38.920 | with a $200 round trip flight on Spirit Airlines

00:38:41.960 | if he needed to get back to Florida.

00:38:43.600 | And so for him, it could save him 30,000 bucks a year.

00:38:46.400 | And even if it's not a forever move,

00:38:48.500 | for somebody who's young and earning income,

00:38:51.640 | that's a big savings.

00:38:52.920 | And the savings are even more substantial

00:38:54.660 | for citizens of any other country,

00:38:56.080 | Canadians, Brits, Germans, Italians, et cetera,

00:39:00.360 | because for those citizens, you can 100% legally move

00:39:04.720 | and you can set up your circumstances

00:39:06.360 | where you legally owe no income tax whatsoever.

00:39:09.240 | And even for American citizens,

00:39:10.680 | I think that the benefits of renunciation of citizenship

00:39:14.520 | are really, can be significant for somebody

00:39:17.000 | who is earning a lot of money.

00:39:18.680 | It's entirely legal.

00:39:20.240 | You can set it up so that you can pay $0

00:39:22.480 | of capital gains tax if you're,

00:39:25.200 | and you can do that from other countries as well.

00:39:28.760 | So for each person, they have to analyze the benefits.

00:39:31.360 | So if somebody is a high income earner or a wealthy person,

00:39:34.780 | there can be major benefits

00:39:37.400 | of moving abroad and expatriating.

00:39:39.800 | I guess probably the best high profile example

00:39:42.480 | in the last few years from the American context

00:39:44.440 | was Eduardo Saverin,

00:39:45.600 | one of the early persons involved with Facebook,

00:39:49.040 | who he was born in Brazil, but he moved to Singapore.

00:39:51.800 | And along the way, he renounced his US citizenship.

00:39:53.960 | He had to pay millions of dollars of tax,

00:39:56.120 | but he still saved millions of dollars

00:39:57.920 | by renouncing his US citizenship.

00:40:00.720 | Now, that's the big savings that can be had.

00:40:03.720 | I'm unconvinced of the value of moving abroad

00:40:06.640 | with regard to saving money on expenses.

00:40:09.840 | I think in most cases, the United States

00:40:12.400 | is one of the cheapest places in the world to live.

00:40:14.680 | It often doesn't feel like that,

00:40:16.360 | especially with regard to housing costs,

00:40:19.040 | but I'm here to say it is,

00:40:20.440 | because overall, if you're not a high income earner,

00:40:23.840 | you can live pretty tax efficiently,

00:40:25.520 | pretty cost efficiently in the US American context.

00:40:28.800 | So I don't know, if I didn't make a lot of money,

00:40:32.040 | I don't know of a better place to live

00:40:33.760 | than the United States.

00:40:35.200 | So that's kind of the financial arm.

00:40:39.000 | I think there are other benefits though,

00:40:40.280 | with regard to the just basic lifestyle.

00:40:44.200 | Some people don't fit well in US American culture.

00:40:47.040 | I think it'd be better off for them to go somewhere

00:40:48.600 | where they did fit well, if they could find such a place.

00:40:51.440 | There are some things that people want

00:40:52.840 | in terms of a lifestyle,

00:40:54.320 | the certain things that they're looking for.

00:40:55.920 | And if they would open their eyes a little bit,

00:40:57.520 | they might find something different in another place.

00:41:01.120 | So those are just some general things.

00:41:03.480 | I'll keep talking more about it.

00:41:04.840 | It's certainly, I can't hide the fact that for me,

00:41:07.720 | having expatriated from the United States

00:41:10.640 | has certainly been a,

00:41:11.720 | I can't, I mean, I can't,

00:41:14.600 | the show is largely related to who I am and what I do.

00:41:16.880 | So I can't hide from that,

00:41:18.800 | but it's not without its costs.

00:41:22.000 | I miss a lot of things about the United States

00:41:24.120 | and I'm not sure I'll be gone forever.

00:41:26.680 | Any specific questions?

00:41:27.880 | - No, thank you.

00:41:30.040 | I just wanted to let you know,

00:41:30.880 | I was interested in that content

00:41:31.960 | and I appreciate your perspective.

00:41:33.120 | - Well, I will keep it going in the future

00:41:35.600 | as more, as I come up with more ideas, I will do that.

00:41:38.520 | So thank you for calling in.

00:41:39.920 | All right, we go next to Pennsylvania.

00:41:42.920 | Welcome to the show.

00:41:43.760 | How can I serve you today?

00:41:45.400 | - Yeah, hi there, Joshua.

00:41:46.800 | My name is Guy Smith.

00:41:47.640 | I've been listening for about four years

00:41:49.600 | and I've called in before too

00:41:51.240 | on some of these open calls.

00:41:52.480 | I just happened to pop in on Facebook and there you were.

00:41:54.800 | So I thought I'd give it a shot.

00:41:57.160 | First of all, I wanna thank you for a couple of callers back.

00:42:04.240 | I really kind of answered one of the questions

00:42:06.520 | I've been looking at.

00:42:07.360 | I have a personal finance podcast of my own

00:42:11.120 | and I've been trying to figure out what to offer

00:42:13.680 | and how to monetize and what courses look like for me.

00:42:17.480 | And that helped kind of guide me along the way

00:42:20.840 | a little bit with that.

00:42:21.680 | So I really appreciate that.

00:42:23.680 | - Good.

00:42:24.520 | - So my main question, when I saw it pop up,

00:42:30.000 | what I decided kind of to ask you about today

00:42:33.560 | is so when I think about investing,

00:42:36.880 | one of the things I've been transitioning a little bit

00:42:40.560 | or I guess studying my investing strategy

00:42:43.840 | a little bit more the last couple of years

00:42:45.200 | than I have before.

00:42:46.480 | In the past, I just had a financial advisor

00:42:49.560 | and started putting money away,

00:42:52.000 | filling up my Roth IRA in a managed fund.

00:42:55.920 | And then I started doing some research.

00:42:57.320 | I started doing a lot of index fund investing.

00:42:59.760 | So I'm investing in total stock market,

00:43:03.040 | things of that nature.

00:43:04.200 | And that's going well, I'm being consistent.

00:43:07.360 | I know that's a long-term strategy,

00:43:09.400 | but I recently had a relative who is an attorney,

00:43:16.880 | very successful, someone that I trust and respect,

00:43:20.280 | started discussing dividend investing with me.

00:43:23.880 | And he kind of invests in,

00:43:26.680 | he kind of has, he really kind of explained it.

00:43:29.680 | He's done this a long time, he's very successful at it.

00:43:32.560 | He just said, "Hey, I have 22 companies

00:43:35.960 | "that I invest in regularly.

00:43:37.940 | "My role is they have to put out a dividend

00:43:40.040 | "and the dividend has to be increasing yearly."

00:43:44.080 | And he kind of pitched it to me in a way

00:43:48.480 | that he said every month when he puts money in,

00:43:50.640 | whichever company is doing the worst

00:43:52.320 | is the company he invests in.

00:43:53.480 | So I've kind of been looking at that,

00:43:55.320 | but I'm studying the differences there.

00:43:58.120 | And I'd be interested to your take away.

00:44:00.920 | My main question with this is figuring out investing

00:44:05.920 | from a moral standpoint.

00:44:08.820 | And what I mean by that is as a Christian,

00:44:12.000 | and actually as a pastor,

00:44:14.840 | one of the things I tried to kind of figure out

00:44:18.400 | is understanding that my money is an asset

00:44:23.400 | that God's entrusting to me.

00:44:26.040 | And so I have this, he's not a Christian,

00:44:30.260 | so I have this, I think, I have this higher level

00:44:32.720 | of moral standard than he has.

00:44:34.320 | I, you know what I mean?

00:44:36.380 | I kind of take it a little bit more seriously

00:44:38.780 | in the fact, in the sense of where am I putting my money

00:44:43.500 | and what kind of business am I supporting?

00:44:47.340 | So to kind of just kind of shorten this up,

00:44:51.100 | I realize that by investing in an index fund,

00:44:56.100 | I'm investing in every company, essentially,

00:45:00.660 | publicly traded in the US,

00:45:02.820 | which that means I'm investing in companies

00:45:05.460 | that are actively supporting things

00:45:09.460 | that I wouldn't wanna support.

00:45:11.120 | But I kind of feel like,

00:45:14.580 | and you tell me what you think of this,

00:45:15.940 | tell me if I'm just completely wrong or off on this,

00:45:19.820 | or it's the same thing.

00:45:21.300 | Might be six of one and half a dozen of the other,

00:45:23.160 | but for me to hand pick a company,

00:45:26.820 | say, you know, a blue chip company,

00:45:30.560 | that someday, maybe not today, but maybe in the future,

00:45:34.820 | I find that they're actively sending money

00:45:38.540 | to say an LGBTQ organization.

00:45:43.320 | Is it fair to me, or how should I navigate,

00:45:47.740 | how would you navigate the fact that I'm now owner

00:45:52.260 | of a business that's supporting that,

00:45:54.960 | versus it's kind of the same thing to say,

00:45:57.980 | well, I'm already doing that with an index fund.

00:46:00.140 | But I kind of feel like in my,

00:46:02.300 | say if a business in my hometown

00:46:04.620 | was looking for local investors and I invested in them,

00:46:08.740 | but then found out that they were supporting

00:46:10.260 | an organization I didn't believe in,

00:46:12.100 | I kind of feel like I should handle that the same way.

00:46:15.740 | The piece of me that's like, yeah,

00:46:17.900 | but everything's kind of going in these certain directions.

00:46:20.820 | And I think, well, maybe it's just kind of the greed in me

00:46:25.420 | or what have you, where I'm kind of like,

00:46:27.180 | yeah, but those big successful companies,

00:46:29.380 | ah, you know, it all kind of comes out of the wash.

00:46:31.700 | I guess I'm just kind of wanting to,

00:46:33.540 | I always really appreciate your take on

00:46:37.020 | balancing Bible and business,

00:46:41.620 | and so I, and money in with all of that.

00:46:44.100 | So I kind of wanted to see what your take

00:46:45.900 | and how you would approach that kind of investing.

00:46:50.380 | Or am I kind of,

00:46:51.860 | am I kind of just kind of splitting hairs here,

00:46:56.320 | versus just if I'm gonna do dividend investing,

00:46:59.540 | I just need to be a little bit more vigilant

00:47:02.020 | about what company receives my money.

00:47:04.240 | - So there are two, you've touched on basically

00:47:08.300 | two questions that are radically different.

00:47:10.740 | I'll start with the dividend question,

00:47:12.420 | because that will be the shorter answer.

00:47:15.220 | But I'll just give you a few things to consider.

00:47:18.580 | If you're trying to compare dividend investing

00:47:21.420 | versus, let's just compare it to index fund investing,

00:47:24.420 | which is your alternative choice,

00:47:27.580 | basically, you,

00:47:30.940 | it's a hard comparison to make in some ways.

00:47:33.700 | I think dividend investing is a powerful way to invest.

00:47:38.340 | And what I like the most about dividend investing

00:47:41.220 | is because, is that,

00:47:43.660 | the practice of dividend investing gives somebody

00:47:46.980 | the appreciation that their companies generate income

00:47:50.700 | and profits and they receive that.

00:47:52.940 | And so for a dividend investor,

00:47:54.380 | it's a fairly simple thing for them to say,

00:47:56.060 | I wanna live on my dividends,

00:47:57.540 | I need $5,000 a month to live,

00:47:59.740 | so I'm gonna develop a portfolio

00:48:01.140 | that will pay me $5,000 in dividends.

00:48:03.940 | And that's a very powerful thing.

00:48:06.100 | It's one of the reasons why I think real estate

00:48:08.180 | is so powerful for ordinary people,

00:48:11.060 | because you can spend the rents that you get in.

00:48:14.620 | And so dividend investing is extremely powerful

00:48:17.660 | because of its simplicity and its intuitive nature.

00:48:21.640 | Second thing I would say is,

00:48:23.180 | when you put together a basket of anything more than,

00:48:26.380 | say, 10 companies,

00:48:27.980 | especially big, good companies

00:48:31.300 | that are publicly traded in the United States,

00:48:35.700 | it's very hard to go wrong.

00:48:37.260 | So don't think that your attorney buddy

00:48:40.540 | is somehow a genius because he has 22 or 26 companies

00:48:44.300 | and that they do well for him.

00:48:45.820 | The majority of companies on the United States

00:48:47.960 | face such intense pressure that they have to do well.

00:48:51.380 | They have to be productive.

00:48:53.140 | And when you think about all the different things

00:48:56.340 | that they have to be productive with,

00:48:58.900 | they have a team of thousands of people

00:49:00.740 | usually spread all around the world.

00:49:02.420 | They have global operations selling diverse products.

00:49:05.220 | They have teams inside where they're constantly

00:49:07.140 | trying to come up with new ways to make money.

00:49:08.800 | They have professional management, professional boards.

00:49:11.760 | It's pretty unusual for one of those companies

00:49:15.540 | to spectacularly fail.

00:49:17.780 | Now, it does happen,

00:49:18.740 | but it's unusual for one of those companies

00:49:20.860 | to spectacularly fail or to go bankrupt.

00:49:23.820 | And if a company starts to lag,

00:49:25.900 | especially a publicly traded company,

00:49:27.760 | remember all of the officers and directors of that company,

00:49:30.700 | the majority or at least a significant portion

00:49:32.940 | of their compensation is based upon

00:49:34.880 | their financial performance, their stock price, et cetera.

00:49:38.140 | And so everybody in that company has an incentive

00:49:40.860 | to generate more profits and to fix the problem.

00:49:43.780 | So the board will start swapping out management,

00:49:45.780 | things will happen.

00:49:46.600 | So if you just picked at random any 10 companies

00:49:50.340 | from the S&P 500,

00:49:53.740 | you could come up with a pretty good solid portfolio

00:49:57.740 | that would probably in the fullness of time,

00:50:00.040 | a few decades worth, would probably perform fairly well.

00:50:03.540 | Now, dividends are a mark of a company's health,

00:50:06.420 | a mark of their financial health.

00:50:07.800 | The fact that they're actually making money.

00:50:09.660 | They actually have customers.

00:50:12.280 | They actually do business.

00:50:14.740 | So that's a very good mark.

00:50:15.820 | So that takes it up even more

00:50:16.960 | from some of these speculative businesses

00:50:19.060 | that have a lot of customers,

00:50:20.220 | but they lose money every quarter.

00:50:21.740 | So you can make a very good case just simply for that,

00:50:26.140 | for dividend investing.

00:50:28.260 | And I like it.

00:50:29.260 | I don't have a problem with it.

00:50:30.700 | Here's one thing though that is important.

00:50:33.100 | Dividends are not magic.

00:50:35.580 | And some companies are oriented towards paying dividends

00:50:39.500 | and some companies are oriented towards growth.

00:50:42.340 | And both of these things can be spent.

00:50:45.180 | So you can spend growth and you can spend dividends.

00:50:48.180 | So let's use real estate to have a very intuitive example.

00:50:51.340 | If you buy a house that's worth $100,000

00:50:53.980 | and you rent that house out for $1,000 a month,

00:50:56.820 | you can spend the $1,000 a month.

00:50:59.060 | But if your house increases in market value

00:51:01.220 | from 100,000 to $150,000,

00:51:04.060 | you can also spend the $50,000.

00:51:06.820 | It's not unspendable just because it grew

00:51:09.740 | and you had your gain from the appreciation of the house

00:51:12.460 | and not just from the rents.

00:51:14.280 | Now in real estate, it's a little harder to access

00:51:16.500 | because you'd have to take it out in debt

00:51:18.420 | or sell the whole property.

00:51:19.940 | But in stocks, it's very easy to access.

00:51:21.700 | You just simply sell some shares.

00:51:23.420 | And you can go and you can look at,

00:51:25.420 | what would be, I guess the most famous example

00:51:27.060 | would be something like Berkshire Hathaway, right?

00:51:28.660 | No dividends, but their stock price is whatever,

00:51:31.580 | 100 and I have no idea what it is these days,

00:51:33.580 | but six figures.

00:51:35.140 | So both are valuable.

00:51:37.580 | And I would say that in some ways,

00:51:39.420 | you could make the argument

00:51:41.300 | that it's bad for a company to pay dividends,

00:51:44.180 | that I would much rather a company never pay dividends

00:51:47.580 | so that the money stayed in the hands of the director

00:51:49.920 | so that they could invest it effectively

00:51:53.500 | than that they pay dividends.

00:51:54.660 | I guess probably the textbook example here

00:51:56.500 | would be a company like Apple,

00:51:57.940 | which historically was allergic to paying dividends

00:52:00.500 | because somebody like Steve Jobs

00:52:02.180 | and their management team would say,

00:52:03.180 | listen, we can grow this thing so much bigger

00:52:05.500 | if we don't send out dividends.

00:52:06.980 | And so I'm cool with that story too.

00:52:11.140 | Just like I'm cool with the story of dividends,

00:52:12.860 | I'm cool with the story of a company saying,

00:52:14.900 | we're not gonna send dividends out.

00:52:16.100 | Don't you want us to invest your money?

00:52:17.740 | We've got a world full of opportunity.

00:52:20.660 | We've got tremendous ways where we can invest this money,

00:52:23.400 | and we'll just go ahead and invest it for you

00:52:25.940 | and grow the company bigger.

00:52:27.400 | And so then when you bring in tax considerations,

00:52:30.740 | you can make a good argument as well,

00:52:32.220 | because I'd a whole lot rather the companies that I own

00:52:35.400 | not send me any dividends, which I have to pay taxes on.

00:52:38.000 | I'd rather they just grow and keep everything stable,

00:52:40.540 | and I'll trigger the taxes

00:52:41.680 | when I want to actually sell the shares.

00:52:43.940 | So those are two very simplistic arguments

00:52:46.300 | on both sides of the dividend and investing thing.

00:52:48.660 | I would say in some ways,

00:52:50.280 | it is six, one, half dozen, the other.

00:52:53.540 | That different people will click with different things.

00:52:56.860 | The most important thing in my opinion

00:52:58.760 | is that an investor finds a strategy that they like,

00:53:02.120 | that they believe in, so that they'll stick with it,

00:53:04.680 | they understand it and are happy with it.

00:53:06.660 | And so then you can have decades of successful investing,

00:53:09.980 | and the investor will be satisfied

00:53:12.000 | because the investor's goals are being met.

00:53:14.940 | It's all academic nonsense to try to say,

00:53:17.060 | well, is growth investing better or is dividend investing?

00:53:19.780 | It's interesting, but it's academic nonsense,

00:53:22.140 | because at the end of the day,

00:53:23.100 | what we care about is having spendable money.

00:53:25.600 | That's why we're investing.

00:53:26.820 | And so if we're investing to have income,

00:53:28.860 | then we recognize that.

00:53:30.740 | And the goal is not to be the most productive investor

00:53:33.900 | on Wall Street, the goal is to have income

00:53:35.720 | that we can spend on cruises and on houses

00:53:38.740 | and on college for our kids or whatever the circumstance is.

00:53:42.140 | So those are my comments on dividend investing

00:53:44.500 | as compared to other forms of investing.

00:53:47.220 | It's perfectly fine.

00:53:48.180 | There are good investment newsletters.

00:53:49.340 | The best thing you should do is go down to your local library

00:53:52.440 | and read all the investment newsletters

00:53:54.220 | and be amazed at how good each of the strategies is,

00:53:57.120 | and you'll start to appreciate that many strategies can work.

00:54:00.120 | - Yeah, I appreciate that.

00:54:03.300 | I was listening to one of your older podcasts.

00:54:07.060 | I think it was 2014.

00:54:10.060 | You interviewed a guy who has a website

00:54:15.060 | all about dividend investing,

00:54:16.980 | and he made an interesting comment,

00:54:18.380 | and I don't think your opinion on it came out of that,

00:54:22.180 | where he talked about the difference

00:54:24.060 | where dividend investing, he doesn't have to,

00:54:27.060 | he compared it to cutting off branches from a tree

00:54:30.900 | versus just harvesting the fruit,

00:54:32.900 | where with dividend investing,

00:54:34.060 | you get the dividend and he still has

00:54:35.940 | the same amount of shares,

00:54:37.140 | whereas with an index fund or a mutual fund

00:54:40.180 | or maybe even with your growth investing that you mentioned,

00:54:45.060 | where you're actually cutting off a share,

00:54:47.940 | you're cutting off a branch.

00:54:49.340 | How does that play out in the real world

00:54:52.980 | once you start pulling money from this in retirement?

00:54:56.340 | - That was episode 96 of the podcast

00:54:59.980 | released November 5, 2014,

00:55:01.940 | called Financial Independence via Dividend Investing.

00:55:04.860 | It was an interview with Jason from Dividend Mantra.

00:55:07.460 | To me, it just doesn't matter.

00:55:11.660 | I recognize that he's got a point there

00:55:13.940 | that could make sense for some people,

00:55:15.980 | but for me, it doesn't really matter.

00:55:17.820 | For me, the stronger argument is a matter of saying,

00:55:23.700 | I want the company to invest it effectively.

00:55:25.780 | I mean, just imagine this.

00:55:27.420 | Pretend, let's go with real estate.

00:55:28.980 | Pretend I am a real estate investor,

00:55:32.180 | and I'm very good.

00:55:33.540 | Pretend I'm making 20% returns per year,

00:55:36.580 | year in, year out, all secured by a rock-solid portfolio,

00:55:40.380 | and you say, "I wanna invest with you, Joshua,"

00:55:42.460 | and you bring me your $300,000,

00:55:45.180 | and I say, "Do you need any money?"

00:55:46.500 | You say, "No, I'm investing this for retirement."

00:55:48.540 | And so you give me $300,000.

00:55:50.740 | Do you want me to send you a check every thousand,

00:55:53.620 | you know, a check for $5,000 per month,

00:55:56.420 | or do you want me to buy another property for you

00:55:58.700 | so that you can have a future bigger check?

00:56:00.900 | In my opinion, it doesn't, like, I'd rather,

00:56:02.900 | I want, if you find somebody

00:56:04.740 | who's investing money well for you,

00:56:06.380 | I want them to grow my money.

00:56:07.900 | I don't need the money back.

00:56:09.340 | Now, and that's why you usually will see dividends

00:56:11.420 | paid by companies that are longer in term,

00:56:14.220 | they're more stable,

00:56:15.220 | they're in more mature markets, et cetera,

00:56:18.060 | and in that case, they say,

00:56:19.180 | "Listen, we can do a good business here,

00:56:20.940 | "but we're happy to pay profits."

00:56:22.420 | So I don't have a problem.

00:56:24.980 | I could be a very happy dividend investor,

00:56:26.860 | and I could very happily receive no dividends.

00:56:28.820 | I'm not convinced that there's a right answer either way.

00:56:32.780 | - Okay, all right, thank you for that.

00:56:34.100 | - So let me pivot to your second question,

00:56:36.300 | which is, of course, much more difficult,

00:56:38.300 | but I would say very pertinent.

00:56:40.420 | The question you have to ask yourself

00:56:43.100 | is how much moral responsibility do I personally bear

00:56:48.100 | for the way that my money is invested?

00:56:52.180 | Now, you said that you're coming

00:56:53.260 | from a Christian perspective,

00:56:54.300 | you're a Christian pastor,

00:56:55.700 | so here is my understanding of biblical theology

00:56:59.500 | as it relates to money.

00:57:00.580 | Number one, in the Bible,

00:57:02.900 | it's clearly taught that the money that we have

00:57:06.940 | is not our money, it's God's money,

00:57:09.740 | and we are stewards of that money.

00:57:12.340 | We're not owners, we're stewards.

00:57:14.600 | Now, as stewards, we're to be supported by that.

00:57:18.300 | God provides for us,

00:57:19.780 | it's fine to spend money for the things that we need,

00:57:21.960 | but we're not ultimately owners.

00:57:23.700 | So I think of it as a steward,

00:57:26.660 | and I say, "I'm a steward of these resources."

00:57:30.100 | Now, as a steward, what would please my master

00:57:34.180 | in the way that these resources are invested?

00:57:37.120 | How can I please my master with these resources?

00:57:42.820 | So if you look at an investment decision,

00:57:44.860 | the goal is to look at it and say,

00:57:46.500 | "Would my master be pleased

00:57:48.420 | "with my making this investment decision?"

00:57:51.280 | I think that's the best way to look at it.

00:57:54.060 | It's the very, very clearly true in your theology,

00:57:57.700 | and it's a very useful, useful way to look at it,

00:58:00.500 | because it keeps us in an appropriate position

00:58:02.940 | of being constrained and recognizing I'm a steward,

00:58:05.700 | and so this money needs to be invested for God's benefit.

00:58:08.300 | It needs to be invested into his kingdom.

00:58:09.880 | It needs to be invested for gain.

00:58:12.400 | Now, that can be challenging,

00:58:13.900 | because you look at it and say,

00:58:14.880 | "Does that mean that I give everything away?"

00:58:17.500 | Maybe.

00:58:18.820 | "Does it mean that I buy a stock?"

00:58:21.260 | Maybe.

00:58:22.280 | "Does it mean that I start a business?"

00:58:25.800 | Maybe.

00:58:26.640 | "Does it mean that I send myself

00:58:27.860 | "to out on the mission field?"

00:58:30.220 | Maybe.

00:58:31.180 | I don't know of a way that any of us

00:58:32.860 | could answer that for other people.

00:58:35.060 | If we go back to the most important stewardship parables

00:58:38.100 | as taught by Jesus, you see in some ways

00:58:40.860 | that there was a very wide degree of latitude

00:58:43.300 | between the master and his servants.

00:58:45.500 | When the master gave the money to his servants,

00:58:47.420 | he said, "Here's the money,"

00:58:48.900 | and then he went on a trip,

00:58:50.140 | and he didn't necessarily say,

00:58:51.200 | "Here's what you have to do with it."

00:58:53.020 | The only person that, in the parable of the talents,

00:58:56.540 | the only person who was condemned to outer darkness

00:59:00.640 | was the person who didn't at least take the money

00:59:02.820 | and go down and invest it with the money changers

00:59:05.140 | to make some interest.

00:59:06.380 | Everyone else was rewarded for that.

00:59:10.440 | Now, the challenge is, in the United States,

00:59:12.820 | most financial education is built upon

00:59:16.120 | a foundation of corporate financial management.

00:59:19.800 | We are taught that the way that we invest

00:59:22.740 | is through mutual funds.

00:59:24.760 | We're taught that the only rational way to invest

00:59:27.620 | is with an IRA.

00:59:29.420 | Well, why are we taught that?

00:59:30.860 | It's not a natural truth.

00:59:33.140 | It's not something that can be deduced

00:59:34.620 | by just simply looking around and saying,

00:59:36.180 | "Well, this is the way that it should be."

00:59:37.980 | It's something that's taught

00:59:39.260 | by the corporate financial industry.

00:59:42.140 | Now, I'm thankful for that industry.

00:59:44.340 | It's an amazing thing.

00:59:45.860 | The public stock market is an incredible thing.

00:59:49.180 | The mutual fund industry is an incredible thing.

00:59:52.060 | To have such a world of investments available to us

00:59:55.700 | is a really powerful and wonderful thing.

00:59:58.180 | And so I'm thankful that it exists.

01:00:00.540 | I don't say that it's a bad thing,

01:00:02.500 | but I do think it's important to recognize

01:00:04.620 | that it's a very corporatized model.

01:00:07.140 | And so the incentive that somebody has

01:00:09.700 | to come and sell you an investment

01:00:11.560 | is based upon their incentive to earn it.

01:00:14.060 | And even someone like Jack Bogle,

01:00:16.340 | he was certainly a humble, down-to-earth guy

01:00:19.820 | who really cared about people

01:00:21.560 | and cared about excellent investing.

01:00:23.980 | I think that's great.

01:00:24.900 | He was a capitalist, just like me.

01:00:27.140 | We're all in that, but we just gotta recognize

01:00:29.500 | that this is a very corporatized model.

01:00:31.340 | And it's very unusual.

01:00:32.780 | If we were to go through the span of history

01:00:34.780 | and look at our modern day,

01:00:36.260 | the modern corporatized financial management system

01:00:39.620 | basically is an invention of, what, the last century,

01:00:44.620 | I think would be a good statement to say,

01:00:47.700 | basically the last century.

01:00:49.060 | And what's more important is it's basically

01:00:51.680 | the mass involvement of people in the markets,

01:00:55.080 | the way that we have today,

01:00:56.140 | is basically an invention of the last 30 to 50 years.

01:01:00.100 | Because prior to the last 30 to 50 years

01:01:02.220 | with the 401(k) revolution,

01:01:04.080 | the average American and the average person in the world

01:01:06.340 | never owned stocks.

01:01:07.280 | Stock market was a rich man's game.

01:01:09.220 | Stock ownership and investment

01:01:11.460 | was something that the wealthy people did.

01:01:13.360 | So the average person really never considered going

01:01:15.760 | and buying a share of stocks.

01:01:17.400 | So this is a very, very new thing.

01:01:19.720 | Now, let's look at the question and say,

01:01:21.240 | is this a good thing?

01:01:22.920 | Has it been a force for good?

01:01:24.740 | Maybe, maybe not.

01:01:26.780 | We could analyze it in different ways.

01:01:28.620 | But I want to think carefully and recognize

01:01:33.140 | that taking money and buying a mutual fund from Vanguard,

01:01:36.840 | shares of a mutual fund from Vanguard

01:01:38.900 | is not the historical thing

01:01:40.640 | that should always be done with money.

01:01:42.520 | So is it the best thing for me to do with money?

01:01:45.460 | I'm not sure.

01:01:46.780 | I'm not sure.

01:01:47.980 | I see a lot of problems to lay at the feet

01:01:52.980 | of the corporatized financial investment schemes.

01:01:57.620 | I see a whole lot of things

01:01:59.020 | that really could be acknowledged by that industry.

01:02:03.260 | And I see a whole lot of harm that comes

01:02:06.540 | when people think that that's the only way

01:02:08.660 | that they can invest.

01:02:10.020 | Now, I used to be part of it.

01:02:11.220 | I used to sell mutual funds, I used to sell insurance,

01:02:13.180 | I used to have those licenses, et cetera, and I left it.

01:02:16.400 | When I left, I didn't leave for moral reasons.

01:02:20.780 | Although I had some misgivings

01:02:22.340 | about a number of different things,

01:02:23.820 | but there was nothing where I said,

01:02:24.900 | I just can't, I can't be associated with this anymore.

01:02:26.900 | That was never my own personal story.

01:02:29.200 | But as I left, I did start to gain increasing clarity.

01:02:32.500 | Now to the question of should I invest with this company?

01:02:36.360 | I would say that any person who is not wrestling with that

01:02:41.360 | is probably not thinking soberly about it.

01:02:44.300 | I don't think this is an area

01:02:45.940 | where any of us have the right to say to another person,

01:02:48.460 | you cannot do this,

01:02:49.620 | or for you to own an index fund is sin.

01:02:51.940 | I don't see any biblical warrant

01:02:53.520 | as to why we could make a statement that strong.

01:02:56.620 | However, it is a matter of conscience,

01:03:00.260 | and I think it is a matter where increasingly

01:03:02.720 | we should pay attention to it.

01:03:04.660 | I came to a point sometime after I left

01:03:07.340 | the financial industry where I could no longer do it.

01:03:10.740 | And I came to the point where I said,

01:03:12.380 | I was so disgusted with the actions

01:03:15.100 | of the large publicly traded companies

01:03:17.020 | in the United States, I was so disgusted with it,

01:03:19.660 | I came to a point where I said, I can't do it.

01:03:21.660 | I can't be complicit.

01:03:22.780 | I can't stand before God and say

01:03:24.780 | that I'm investing his money into this trash.

01:03:28.000 | Now whatever the issue,

01:03:28.840 | there are many good things to be concerned about.

01:03:31.880 | There are traditional concerns

01:03:33.340 | about the promotion of sin and immorality,

01:03:36.720 | whether it's alcohol companies

01:03:38.640 | or tobacco companies, things like that.

01:03:41.220 | I'm not personally as bothered by that stuff

01:03:43.120 | as many people are,

01:03:43.960 | although I recognize that there's an argument there.

01:03:47.540 | I have major moral misgivings

01:03:50.220 | about the engagement of American industry in war.

01:03:55.060 | If we go back and we trace the violence

01:03:57.020 | and the war that's been perpetrated

01:03:58.640 | over the last century by US American companies

01:04:02.320 | being primarily the supporters of that,

01:04:04.820 | the development of the military industrial complex,

01:04:07.220 | the funding of that, it's absolutely,

01:04:09.620 | utterly immoral what has done

01:04:12.020 | and what has been promoted by the leaders

01:04:14.700 | of these companies.

01:04:15.580 | And they've made their fortunes

01:04:17.660 | murdering people all around the world.

01:04:19.940 | And that gets very underappreciated in many parts.

01:04:24.680 | And yet it's a major function

01:04:26.180 | of American foreign diplomacy, et cetera.

01:04:29.800 | You can go back and trace it all the way through.

01:04:32.860 | Other more hot button current moral issues, abortion.

01:04:36.380 | Look at the, it's very hard for me

01:04:38.360 | when you see that the companies trying to,

01:04:41.260 | especially the media companies, et cetera,

01:04:42.940 | all the current hoopla over abortion,

01:04:45.020 | saying, well, we're not gonna film films in Georgia,

01:04:48.420 | we're not gonna do this,

01:04:49.260 | or we're gonna boycott this state and the other state.

01:04:51.420 | That's your money that you're funding that stuff

01:04:53.780 | for the murder of babies,

01:04:55.620 | the most helpless, indefensible creatures among us.

01:04:59.540 | How can I earn off of this company

01:05:02.260 | that is spending my money, God's money,

01:05:05.160 | on this kind of thing?

01:05:07.020 | And then it's become especially difficult,

01:05:09.420 | as you say, with the promotion of homosexuality.

01:05:11.940 | Right now, we're just finishing up Pride Month

01:05:15.180 | in the United States of America.

01:05:16.980 | And I can't think of, I mean, I'm sure they're out there,

01:05:20.460 | but almost anywhere you turn,

01:05:22.460 | every major company is actively promoting

01:05:25.740 | homosexual practice, which is utterly harmful to people,

01:05:29.760 | utterly a moral abomination.

01:05:31.820 | And then especially now you bring it on

01:05:34.140 | with transgenderism, which destroys people's lives.

01:05:37.500 | And yet that's the active thing.

01:05:39.300 | So you look at that,

01:05:40.120 | and it's increasingly hard for me to understand

01:05:41.980 | how any person with any moral thinking

01:05:44.660 | could be engaged in that.

01:05:46.180 | Now, I understand the people who promote it

01:05:47.940 | as a moral issue, but at this point in time,

01:05:51.580 | Jesus said you can't serve God and money.

01:05:54.020 | And I think that increasingly,

01:05:55.980 | if there's ever been a clearer point in time

01:05:58.620 | at which people have to look at things squarely and say,

01:06:01.540 | is this where I wanna invest my money?

01:06:03.620 | And I would say that the corporate financial industry

01:06:06.060 | has been a major cause in many of those problems,

01:06:09.340 | where every single month, billions of dollars

01:06:12.140 | just automatically get funneled into Vanguard,

01:06:14.260 | automatically get funneled into a 401k.

01:06:16.380 | And so there's not a pushback by those investors.

01:06:21.380 | They don't know what they're invested in.

01:06:23.380 | It's not like they own shares of Facebook,

01:06:26.100 | and then they look and see what Facebook is doing

01:06:27.940 | and censoring people and shutting people down

01:06:32.180 | and deplatforming, and they say,

01:06:33.300 | oh man, I should sell my Facebook stock.

01:06:35.100 | Nobody knows, you can't figure out what you own

01:06:37.260 | when you own an index fund.

01:06:38.300 | You can't figure out what you own

01:06:39.340 | when you own an actively managed fund.

01:06:41.540 | And so people just wash their hands of it,

01:06:43.460 | and they say, I'm not involved.

01:06:45.500 | So to your answer, I mean,

01:06:49.160 | I don't own any publicly traded companies.

01:06:51.820 | And at this point in time, I cannot, of good conscience,

01:06:56.380 | invest in a broad-based fund where somebody is going

01:07:00.740 | to engage in something that is harmful,

01:07:03.700 | and they're going to profit off of it.

01:07:06.020 | The utter hypocrisy that you see in corporate America,

01:07:09.660 | words fail to describe the absolute hypocrisy.

01:07:15.420 | But everybody worships at the almighty dollar,

01:07:18.860 | and it almost doesn't matter the harm

01:07:21.340 | that you inflict on people in terms of the businesses

01:07:24.840 | that are gonna be involved in.

01:07:26.860 | And so at this point in time, it's hard for me to see

01:07:30.160 | how a thoughtful person who cares about that

01:07:33.140 | can't at least wrestle with these things.

01:07:35.300 | So my answer is pretty clear.

01:07:37.260 | I mean, you've heard it, is that I'm not going

01:07:39.660 | to be complicit in that.

01:07:40.540 | Now, I've often wondered, am I wrong?

01:07:44.740 | And I've often wondered, could I go back into that world?

01:07:49.380 | Could I engage in that business again?

01:07:51.680 | Maybe someday you can, and I'm not gonna accuse

01:07:55.020 | somebody else of sin because they own an index fund.

01:07:58.780 | But for me, I just look at it, and when I compare it

01:08:01.460 | to the things that could be done,

01:08:03.620 | I don't want any involvement with it.

01:08:05.780 | It's a corrupt, morally bankrupt industry,

01:08:09.820 | and it's not helpful.

01:08:12.180 | Now, does that mean that you can't invest money profitably

01:08:14.580 | and become very wealthy?

01:08:15.920 | No, there's a world of investments out there.

01:08:18.620 | And I have no problem with owning publicly traded companies.

01:08:21.340 | I'm much more comfortable with it

01:08:22.740 | if you own individual companies that you can say,

01:08:24.900 | okay, they're not destroying the world.

01:08:27.700 | They're not raining bombs down on people

01:08:30.180 | 'cause they're brown.

01:08:31.300 | They're not trying to manipulate the public.

01:08:35.540 | They're not engaged in something that's immoral.

01:08:37.940 | But when you open up investing and bring it locally,

01:08:42.420 | which is, I'm convinced, probably the best solution,

01:08:46.300 | then all of a sudden, now you have much bigger options.

01:08:48.980 | Because here's the challenge, and this is where,

01:08:52.540 | whenever I speak about these things,

01:08:53.940 | I get an inbox full of people that say,

01:08:56.380 | call me a bigot and whatever other insult.

01:08:58.940 | But here's the reality.

01:09:00.620 | If I'm investing in a local business

01:09:04.660 | where I know the people and I know the industry,

01:09:07.620 | then I can do, I can assure that something is rightly done.

01:09:12.620 | For example, there's a big difference.

01:09:15.100 | When I used to, when I worked for a big company,

01:09:19.460 | let's talk about diversity and inclusion, right?

01:09:21.100 | You brought up how do we deal with LGBTQ questions,

01:09:25.180 | we finish up Pride Month, et cetera.

01:09:28.580 | It would not bother me in a business that I'm running.

01:09:31.220 | I would hire gay people all day long

01:09:33.580 | if they were qualified for the job.

01:09:35.780 | Because in my opinion, it's not right,

01:09:38.660 | I'm not trying to discriminate against a person

01:09:41.540 | for their sin in terms of hiring them in my company.

01:09:45.280 | Because if I'm gonna do that,

01:09:46.460 | I've got to have a very challenging road to hoe.

01:09:51.460 | How do I deal with somebody's adultery?

01:09:53.500 | How do I deal with somebody's lying?

01:09:55.300 | How do I deal with somebody's homosexuality, et cetera?

01:09:58.180 | There's a big difference between me running a business

01:10:01.580 | or being involved in that,

01:10:03.100 | where we can actively hire people

01:10:05.260 | without regard to things that we think should,

01:10:09.580 | without regard to lifestyle decisions

01:10:11.620 | that we believe are immoral.

01:10:13.740 | But there's a big difference between that

01:10:15.180 | versus a big publicly traded company

01:10:17.220 | having a diversity and inclusion committee

01:10:19.940 | saying our goal is to go out

01:10:22.240 | and hire a certain percentage of people

01:10:24.180 | who engage in homosexuality

01:10:25.620 | or a certain percentage of people

01:10:26.660 | who have a certain skin color, et cetera,

01:10:28.460 | so that we can reach the Human Rights Commission

01:10:32.300 | or whatever the ranking is,

01:10:35.820 | so that we can be well ranked for the Pride March.

01:10:40.820 | There's a major difference between those two things.

01:10:43.140 | And so that's what to me is probably under discussed

01:10:47.380 | is the key is to have control.

01:10:50.340 | And I support people's rights to discriminate.

01:10:53.280 | I think that all of us have the right to discriminate

01:10:55.260 | on any basis we want to,

01:10:57.300 | and I'll defend that left, right, and center.

01:11:00.000 | You have the right to discriminate in how you hire.

01:11:01.920 | You have the right to discriminate in who you hire.

01:11:04.220 | You have the right.

01:11:05.060 | I cannot come in and tell you

01:11:06.580 | who you should hire and what you should do.

01:11:10.160 | But that doesn't automatically mean

01:11:11.700 | that my goal is to say, to take a company and say,

01:11:13.820 | "How can I discriminate against this class of people

01:11:15.980 | "or this group of people," et cetera.

01:11:17.700 | So there's my answer to your question

01:11:18.940 | is I'm bothered by many of those same things,

01:11:22.040 | and I want very little part of it.

01:11:25.220 | I don't deny that.

01:11:26.940 | I'm not saying that's for everybody,

01:11:29.300 | but I can no longer participate in that world

01:11:32.100 | in clear conscience.

01:11:33.660 | - Well, I love it, Joshua.

01:11:37.060 | I appreciate that fabulous answer.

01:11:40.060 | I love the depth of your answer.

01:11:42.980 | And my follow-up question to that would have been,

01:11:47.020 | and I think you pretty well addressed it,

01:11:48.660 | would be if not the stock market

01:11:51.100 | and wanting to invest for long-term, say, retirement,

01:11:55.380 | if not for the stock market,

01:11:57.060 | knowing my money's gonna grow with the economy,

01:11:58.940 | then what?

01:12:01.220 | And you're kind of driving it towards local businesses

01:12:05.820 | and your own businesses.

01:12:07.180 | I know, I mean, my son is a small business owner,

01:12:10.580 | and he does do stock market mutual fund investing

01:12:13.740 | through an advisor,

01:12:15.160 | but he puts the vast majority of his money

01:12:19.100 | back into his business

01:12:20.540 | because he knows his profit margins,

01:12:23.660 | and he said, "I'm gonna make a lot more in my business

01:12:25.900 | "than I will in the stock market."

01:12:27.700 | So that's--

01:12:30.340 | - Yeah, and in addition-- - So it--

01:12:32.660 | - Yeah, I am, and just what I would say

01:12:34.940 | is if you're talking about it

01:12:36.340 | from the perspective of Christian ministry as well,

01:12:39.380 | which obviously you are,

01:12:41.260 | one of the major benefits that you have

01:12:45.820 | when you're involved in a business

01:12:47.340 | that actually hires people,

01:12:48.660 | when you're involved in something

01:12:50.180 | where you can actually make an impact,

01:12:51.980 | is you have the opportunity to provide work for people,

01:12:55.220 | and that's what, to me, has been a major change.

01:12:57.860 | I used to have thousands of dollars invested

01:12:59.780 | in publicly traded companies.

01:13:00.900 | They don't care what I say,

01:13:02.820 | they don't care what I do,

01:13:04.580 | they don't care about me,

01:13:05.740 | and I get no benefit from that company whatsoever

01:13:09.460 | except possible changes in share value

01:13:11.860 | and maybe a dividend if they pay me a dividend.

01:13:14.080 | But if we change that,

01:13:15.020 | if I start a bakery in my local community,

01:13:21.260 | and I'm running a local bakery,

01:13:22.980 | then I have the opportunity to hire

01:13:24.820 | the kid who just got expelled from school who needs a job.

01:13:29.580 | I have the opportunity to hire the person

01:13:31.660 | who can't get a job

01:13:32.660 | because their face is covered with tattoos.

01:13:34.680 | I have the opportunity to hire the person

01:13:36.540 | who went through a sex change surgery

01:13:39.380 | and nobody wants to give him a job now.

01:13:40.900 | I have the opportunity to employ those people.

01:13:43.460 | And when you look at the breakdown and the collapse

01:13:47.140 | in many of our communities,

01:13:49.700 | if more people stopped sending their money to Vanguard

01:13:53.900 | and started investing it in their local community,

01:13:57.220 | it's possible that that could make a big difference.

01:13:59.980 | I don't know if I'll do radical personal finance for,

01:14:03.340 | I don't know how long I'll do it.

01:14:05.060 | But the thing that frustrates me deeply about this business

01:14:08.160 | is although it has a whole long raft of opportunities,

01:14:11.660 | I can't hire anybody.

01:14:12.900 | I mean, I can hire people,

01:14:15.260 | but the work is so specialized

01:14:17.100 | that it's not something where I don't have the capacity

01:14:21.540 | to employ people.

01:14:23.260 | And I look around and I see so many people who need a job,

01:14:26.060 | who need training, who need instruction.

01:14:28.340 | And I think the best way to do that

01:14:29.900 | is often through a company.

01:14:31.980 | And so I can't tell other people

01:14:35.840 | what they can do with their time or their money,

01:14:37.900 | but I see many more opportunities

01:14:40.700 | of being involved in that kind of business

01:14:43.300 | where you have an opportunity

01:14:45.200 | to not only invest very profitably,

01:14:47.580 | but now you have something

01:14:48.540 | that I can actually do some good in the world.

01:14:50.820 | And unlike a company that makes their,

01:14:54.580 | their living building bombs,

01:14:58.580 | you can actually do something

01:14:59.700 | that helps your local community.

01:15:00.980 | So I don't know how to teach it all.

01:15:02.740 | I'm doing it privately,

01:15:03.860 | trying to do my very best to learn

01:15:05.860 | 'cause it's a skill set I wasn't prepared for.

01:15:07.340 | I spent a decade sowing myself

01:15:09.500 | to learning about the stock market.

01:15:11.260 | And at this point, I'm done with it.

01:15:12.460 | I don't care.

01:15:13.500 | I don't wanna be involved in it.

01:15:14.700 | I wanna be involved with people

01:15:16.100 | and I wanna be involved with my local community.

01:15:18.260 | So there's my answer.

01:15:20.180 | - Yeah, okay.

01:15:21.420 | Well, I love it.

01:15:22.260 | I appreciate it.

01:15:23.080 | And that's the thing I wanna,

01:15:23.920 | I wanna handle this well from a Christian moral standpoint,

01:15:27.180 | but then I also wanna be investing to get wealthy.

01:15:31.740 | I'm just investing to be able to,

01:15:33.540 | I don't really have,

01:15:34.720 | I'm just investing so that someday

01:15:37.980 | if I ever want to or have to quit working,

01:15:40.500 | then I'll be able to take care of my family

01:15:43.780 | and 'cause I mean, I'm in a,

01:15:46.200 | talk and think I'm gonna be okay, right?

01:15:53.020 | From a physical longevity standpoint.

01:15:55.320 | But hey, I really appreciate your time and your experience.

01:15:59.780 | - My pleasure, yeah.

01:16:00.620 | I don't see a reason not to be actively involved

01:16:04.540 | in the investment marketplace.

01:16:06.820 | And one of the problems I think about a lot,

01:16:09.380 | a godly man leaves an inheritance

01:16:10.780 | to his children's children.

01:16:12.780 | That inheritance might be morality

01:16:15.260 | and character and many things,

01:16:16.940 | but I think it also comes in big time into money.

01:16:20.940 | We go now, next caller.

01:16:22.220 | Welcome to Radical Personal Finance.

01:16:23.180 | How can I serve you today?

01:16:24.740 | - Hey, my name is Art Crimpon.

01:16:28.100 | I'm calling from, well, I'm calling from UK number.

01:16:31.180 | I'm actually based in Egypt.

01:16:33.780 | I'm listening to you from Egypt.

01:16:35.640 | I'm a long time listener.

01:16:38.500 | I used to listen from Angola.

01:16:42.620 | When I lived in Angola,

01:16:43.460 | we had a huge commute three, four hours every day.

01:16:46.700 | And I used to listen to your shows,

01:16:48.860 | literally three, four hours every day.

01:16:50.700 | I probably listened to 95% of Radical Personal Finance shows.

01:16:55.700 | I just skipped the ones that I completely,

01:16:59.260 | America centered.

01:17:00.760 | I have a short message or question.

01:17:04.780 | Message is that just enormous thanks for what you do,

01:17:10.580 | for the content that you put out.

01:17:12.860 | And I want you to know that even though

01:17:17.860 | a lot of the things that you've got

01:17:19.700 | and a lot of the examples that you use

01:17:21.740 | is related to the US,

01:17:24.020 | US stock market, 401k, Roth IRA, et cetera.

01:17:28.500 | 80% of it, 90% of it is very relevant at its core

01:17:33.220 | to any country, any situation, any culture,

01:17:39.340 | because personal finance,

01:17:40.780 | it really doesn't change from place to place.

01:17:43.300 | Some of the things might change,

01:17:46.100 | but the core message is the same.

01:17:48.700 | Doesn't matter if you're in Angola,

01:17:49.940 | if you're in Egypt, if you're in Portugal,

01:17:51.420 | it's the same.

01:17:52.380 | So it's been extremely useful, everything that you do.

01:17:57.380 | Now, in terms of the question,

01:18:00.160 | we had actually a couple of exchanges about this

01:18:05.100 | on Twitter before.

01:18:07.340 | And you answered one of my questions in the previous Q&A

01:18:10.060 | that I also submitted on Twitter.

01:18:12.300 | But I'm grappling with this situation.

01:18:16.820 | I have a high paying, a well paying job.

01:18:21.860 | I'm an expert.

01:18:24.500 | I'm not actually originally from Egypt or from Angola.

01:18:27.540 | I'm from Europe, but I've been living overseas

01:18:29.940 | for 80 years now, 70 years now.

01:18:34.500 | And as an expert, I've always been on a very good pay

01:18:38.420 | and package.

01:18:39.740 | And I've been able to save and invest.

01:18:42.340 | And I have just over a million dollars now

01:18:45.220 | in overall portfolio,

01:18:47.620 | which is invested in various things,

01:18:51.460 | stock market and dividend investing,

01:18:54.500 | which we'll discuss today,

01:18:55.780 | and some of the P2P loans and various things.

01:18:58.900 | It produces quite a lot of income.

01:19:01.540 | I'm targeting about $50,000 of investment income,

01:19:05.140 | passive income for this year, for 2019.

01:19:07.800 | My plan is, or better to say,

01:19:13.180 | my plan was to eventually retire

01:19:18.180 | and go and live overseas, probably in Asia for some time,

01:19:23.300 | a place where I can use not even all of my passive income,

01:19:28.700 | just all of my passive income to have a comfortable life.

01:19:31.380 | And then still be able to reinvest the rest of the income.

01:19:35.160 | And now when I get to a point where I feel like

01:19:40.020 | numbers make sense and I can actually do it,

01:19:43.540 | I can actually pull the trigger and fire, as they say,

01:19:47.260 | and actually retire.

01:19:49.020 | And I don't feel confident doing it.

01:19:54.020 | Not in a way that I'm afraid that numbers

01:19:59.340 | are gonna make sense, I'm afraid that numbers

01:20:00.780 | are not gonna work.

01:20:01.700 | I am confident numbers are gonna work.

01:20:03.220 | And even if they don't work, even if something happens,

01:20:06.020 | I've got enough runway to change my mind

01:20:09.700 | and do something else.

01:20:10.980 | Even if I retire and something happens

01:20:13.340 | three years down the line, that's okay.

01:20:15.380 | I still have five, 10, 15 years of runway

01:20:18.300 | to do something else.

01:20:21.120 | But I feel that,

01:20:26.900 | I feel that if I walk away from this career and job,

01:20:31.900 | I kind of completely lose my identity.

01:20:36.180 | I lose everything that I was working for for a long time.

01:20:39.820 | And I don't know how to,

01:20:41.060 | I don't know what am I going to do, essentially.

01:20:45.460 | And I just wanted to, I wanted you to talk about

01:20:48.460 | how, what is the best way to approach it?

01:20:50.740 | What kind of framework you would use

01:20:54.260 | to prepare yourself for this life

01:20:57.180 | after being financially independent?

01:20:59.660 | And I don't want to, I'm not saying I don't wanna work.

01:21:06.860 | I'm just saying I don't wanna work

01:21:08.660 | in a sort of corporate structure,

01:21:11.220 | which is very rigid, very limiting.

01:21:13.940 | I want to do something else.

01:21:15.380 | - Right.

01:21:18.900 | How old are you?

01:21:20.180 | - Excuse me?

01:21:23.140 | - How old are you?

01:21:24.720 | How old are you and do you, are you?

01:21:31.300 | - I'm 32.

01:21:35.660 | I have a family.

01:21:38.580 | I have a wife.

01:21:39.420 | She's a stay-at-home mom.

01:21:41.340 | We have four kids,

01:21:42.260 | from very little one to 16 year old.

01:21:46.860 | So we have kids.

01:21:51.460 | And I'm prepared to, if I would retire

01:21:55.940 | and I would go traveling,

01:21:57.220 | I'm prepared to live with the kids.

01:21:58.780 | I have a plan for that.

01:21:59.940 | I have a couple of kids actually in the border of Scotland,

01:22:03.140 | so that wouldn't be a problem.

01:22:04.580 | So from family-wise, it's not really a problem.

01:22:08.860 | I know it's a problem for a lot of people,

01:22:09.980 | but really not for me.

01:22:11.860 | My problem is more sort of, you know, mental issue.

01:22:15.900 | (phone ringing)

01:22:18.580 | - This call is being recorded.

01:22:28.300 | - That's it, I'm gonna quit making money.

01:22:30.020 | And then we just walk away because you can.

01:22:32.860 | There are a whole lot of worthy causes,

01:22:34.980 | a whole lot of worthy people that aren't gonna get supported

01:22:37.780 | because you don't have the money.

01:22:39.340 | So we shouldn't just walk away

01:22:41.620 | from one of the most powerful things we have,

01:22:43.780 | which is a substantial income that we don't need

01:22:45.700 | just because we can.

01:22:47.540 | But by being financially independent,

01:22:49.660 | you can now consider a whole breadth of options

01:22:53.020 | that might be compelling to you,

01:22:55.420 | even options that you couldn't do if you needed money.

01:22:59.340 | So on the orphanage example,

01:23:01.980 | maybe you recognize that you don't necessarily want to work

01:23:06.340 | to earn money to support an orphanage,

01:23:08.700 | but maybe that orphanage needs a father.

01:23:11.020 | And maybe because of the fact

01:23:12.220 | that you are financially independent,

01:23:15.500 | you can comfortably move to Angola

01:23:18.420 | or open an orphanage in Egypt

01:23:19.900 | or wherever you happen to be in the world.

01:23:21.980 | And you can, while you're raising your biological children,

01:23:26.540 | you can sow yourself in the lives

01:23:28.500 | of a dozen or two other children that need you.

01:23:31.340 | And you don't have to go and ask for support

01:23:34.020 | or solicit donations or funds.

01:23:35.900 | You can just simply go and do it.

01:23:38.020 | Or whatever else is appropriate to you.

01:23:41.300 | So I don't see any reason for somebody to quit their job

01:23:46.300 | if they don't have something more compelling.

01:23:49.260 | Now, if you need to make changes to your job,

01:23:51.100 | maybe you're working too much now,

01:23:52.980 | tell your boss, "I'm not gonna work this much.

01:23:54.820 | I've got young children, I'm gonna work less."

01:23:57.180 | If you're in a really bad job,

01:24:00.380 | you're doing something that's not good,

01:24:02.180 | by all means quit.

01:24:03.220 | Quit and take a sabbatical

01:24:04.380 | and go look for something better.

01:24:06.180 | That's one of the benefits of financial independence.

01:24:08.460 | But why stop working

01:24:10.620 | unless you have something more compelling?

01:24:14.100 | So that's my answer.

01:24:16.340 | I don't see any reason to just run away from work

01:24:19.460 | simply because you can.

01:24:20.780 | You're giving up a major part of your life.

01:24:23.620 | You're giving up a major part of your identity.

01:24:25.780 | And you're giving up one of the most powerful tools

01:24:28.140 | you have to make change and accomplish good in the world.

01:24:32.740 | Go ahead with your response.

01:24:34.100 | I know you've dropped off a couple of times,

01:24:35.580 | but go ahead with your response there.

01:24:39.100 | - Yes, thank you.

01:24:40.980 | And I do feel the same.

01:24:42.300 | I do feel that it's a great asset on its own.

01:24:47.300 | Having a good job and a good career

01:24:50.340 | and a reputation in the industry is an asset on itself.

01:24:53.420 | So by just walking away, you kind of give up this asset

01:24:56.700 | and there'll be nothing else that you have lined up

01:24:59.020 | or planned to jump to,

01:25:02.580 | then it doesn't really make sense.

01:25:05.260 | Maybe as a follow-up,

01:25:08.580 | moving from a sort of high-paying career or job

01:25:11.580 | to let's say, working in an orphanage,

01:25:14.100 | it requires also kind of a mindset change

01:25:18.340 | 'cause it's been drilled into me

01:25:20.740 | and I think a lot of people,

01:25:21.860 | a lot of people in corporate world,

01:25:23.580 | it's been drilled into you that

01:25:25.180 | your self-worth equals your net worth.

01:25:31.300 | And it's just very difficult to move away from,

01:25:37.420 | like one of the most difficult things for me

01:25:39.380 | thinking about financial independence

01:25:40.820 | is that my net worth is probably not going to grow

01:25:44.380 | that much anymore.

01:25:45.980 | So right now, I'm tracking it, I'm tracking it monthly,

01:25:48.900 | I'm tracking my investments,

01:25:49.980 | I'm tracking my dividends,

01:25:51.780 | when I get dividends, how I've already invested,

01:25:53.980 | it's just such a huge part of my life.

01:25:56.580 | Seeing that Excel spreadsheet with my net worth

01:26:01.140 | and how it goes up, it just validates what I do,

01:26:05.060 | it validates my effort, it validates all the late nights

01:26:08.060 | and all the hard work that you do.

01:26:10.820 | And not seeing it, I'm afraid of not seeing it in the future,

01:26:15.820 | I just gonna feel like a loser.

01:26:18.340 | That's what I'm afraid of.

01:26:20.220 | And I know that it's wrong,

01:26:21.180 | I know that you shouldn't be optimizing your life

01:26:24.260 | just for highest possible net worth

01:26:26.740 | because it doesn't make sense,

01:26:27.700 | you're gonna die anyway, you're not gonna take it with you,

01:26:29.860 | it just doesn't make sense.

01:26:31.100 | But somehow it's been drilled into you

01:26:33.220 | by IT, by the environment, by the company, by whatever,

01:26:38.220 | it's been drilled into you.

01:26:39.700 | And how do you begin to change your mindset

01:26:43.460 | from optimizing your life for growing the capital,

01:26:48.460 | from accumulating capital to changing this mindset

01:26:53.860 | and actually start with maybe even deaccumulating

01:26:56.180 | and focusing on other things.

01:26:57.860 | How do you make this step?

01:27:02.500 | - So first I would say, I'm not necessarily recommending

01:27:06.220 | that you do lower your income.

01:27:10.260 | I think that's a false choice.

01:27:13.100 | You don't have to lower your income.

01:27:15.100 | And that's what, to emphasize it,

01:27:17.540 | you don't have to go from having a high paying job,

01:27:20.860 | a great career, and then all of a sudden believe

01:27:23.900 | that the only moral choice available to you

01:27:27.300 | is to go and not earn any income

01:27:30.140 | and go and run an orphanage in Angola.

01:27:32.780 | That's not at all what I would say.

01:27:35.020 | I would not say that.

01:27:36.060 | My point in using an example like that was to say

01:27:40.180 | that it could be open, there could be opportunities

01:27:45.420 | open to you because of your financial independence

01:27:49.260 | that you wouldn't have felt previously were open to you.

01:27:52.340 | Especially as a father, if you're a father of four children

01:27:55.380 | it would be unusual that a father of four children,

01:27:57.780 | especially if they're young, would feel good

01:27:59.980 | about saying I'm gonna go from a life

01:28:02.380 | where I can support my children adequately

01:28:05.300 | and in comfort to a life of poverty

01:28:08.420 | and do that with a clear heart, unusual.

01:28:11.860 | So financial independence could be the opportunity

01:28:14.380 | where you could say I can provide for my children

01:28:16.740 | but I can also do something else

01:28:18.140 | that can't easily be paid for.

01:28:20.300 | But you shouldn't necessarily start with that.

01:28:22.300 | First, I would say just consider continuing to work

01:28:24.820 | in the career that you have.

01:28:26.420 | Why change if it's not causing problems to you?

01:28:30.540 | But if you are thinking about going to something else,

01:28:32.900 | is there somewhere else where your talents and skills

01:28:36.260 | can be useful where not only can you have a bigger impact

01:28:40.220 | but you can make more money?

01:28:41.860 | I think the best way to think about money and income

01:28:44.900 | is related to service.

01:28:46.900 | The way I answer every call on this show

01:28:49.060 | is how can I serve you today?

01:28:50.340 | And I do that intentionally because I want to be a servant.

01:28:54.580 | It comes down to Jesus said,

01:28:56.020 | "The greatest among you would be the servant of all."

01:28:58.300 | So those who serve the most people

01:29:00.700 | and who serve the most effectively

01:29:03.020 | are by definition the greatest.

01:29:05.820 | So the way up is not to say I'm going to lord over people

01:29:08.940 | or coerce people or force people

01:29:10.620 | or take advantage of people.

01:29:12.060 | The way up is to serve.

01:29:13.180 | That's how God designed the world.

01:29:14.780 | And you see that reflected when you see a healthy market,

01:29:18.100 | a healthy, even a healthy company.

01:29:20.780 | And so the way to earn more money is not to see that somehow

01:29:23.740 | if I earn more money, I have to do more evil.

01:29:27.420 | Certainly there are people

01:29:28.460 | who have made that bargain with the devil,

01:29:30.460 | but that's not necessarily the case.

01:29:32.060 | Generally, the people who serve more

01:29:34.500 | and who serve more effectively will often get paid more

01:29:37.780 | and get paid more handsomely.

01:29:40.820 | So I would look at it and say,

01:29:43.580 | what's the next rung on the career ladder?

01:29:46.460 | What's the next job?

01:29:47.540 | What's the next position that would fit in

01:29:50.180 | with the things that are important to me

01:29:52.180 | that would work with the skills that I personally have

01:29:55.220 | so that I can more effectively serve more people

01:29:57.380 | and make more money?

01:29:58.700 | Why sit around and stagnate?

01:30:00.300 | Why sit around and just say,

01:30:01.660 | well, I'm not going to make any more money

01:30:03.060 | or I'm going to walk away from earned income.

01:30:05.180 | Why not continue to embrace the thrill of the competition

01:30:08.100 | to continue to engage with the world and the market

01:30:11.860 | and move on to something bigger and better?

01:30:13.820 | I don't want my business to have the same profitability

01:30:16.140 | next year as it has this year.

01:30:17.900 | I want it to be far more profitable.

01:30:19.660 | I want it to be far more profitable 10 years from now

01:30:22.060 | as it is today.

01:30:23.140 | But the only way that's going to happen

01:30:25.180 | is if I serve more people effectively.

01:30:27.660 | That's how business works.

01:30:29.300 | So you look around and you say, who do I serve?

01:30:31.180 | Well, I serve my coworkers.

01:30:32.660 | I serve my boss.

01:30:33.900 | I serve the people who work under me.

01:30:35.620 | I serve the people who work over me.

01:30:37.420 | And all of us collectively are serving our customers.

01:30:40.140 | But as we do that more effectively, we make more money.

01:30:42.740 | As we make more money collectively, I make more money.

01:30:45.660 | As I make more money, I grow wealthier

01:30:48.100 | and I'm able to save more, to spend more, give more.

01:30:51.580 | So why not go the next stage up on the career ladder?

01:30:55.500 | Why not look for something that's bigger and better

01:30:57.940 | and more exciting?

01:30:58.860 | That's what I would say.

01:30:59.980 | And just make sure that it doesn't cause a problem

01:31:02.740 | with something else that's important to you.

01:31:04.660 | For example, I wouldn't take a job that paid me double

01:31:07.900 | if it meant that I had to be on an airplane every week away

01:31:10.540 | from my young children.

01:31:11.820 | That might be fine if I'm 60 and I don't

01:31:13.940 | have children in the house.

01:31:15.260 | But it's not OK for me as a young father.

01:31:17.180 | So that would be too big of a cost

01:31:18.620 | on something that's important to me

01:31:20.700 | that I can't compensate.

01:31:21.780 | I could buy my wife three maids, but that's still

01:31:24.500 | not going to compensate for my presence in the home.

01:31:27.060 | So I wouldn't take that job offer.

01:31:28.740 | I would wait till I was 60 to do that.

01:31:30.500 | But as long as you're not compromising something else

01:31:34.140 | that's important to you, why not take the job that's

01:31:36.660 | bigger and better?

01:31:37.460 | That's what I would say.

01:31:38.460 | OK, thank you.

01:31:43.980 | So yeah, what you kind of lead me to

01:31:47.020 | is that I can use the capital and the income

01:31:50.820 | as sort of a stepping stone for, let's say, a career change.

01:31:57.700 | And then initially, yes, it can cost money

01:31:59.900 | and it can cost some of the income because you're changing

01:32:03.420 | jobs, you're changing careers.

01:32:04.900 | But you do it with a view to find

01:32:09.020 | a better fit for your skills, personality, talent,

01:32:13.820 | and then potentially through serving more people,

01:32:15.900 | make more money in the future.

01:32:18.820 | So it doesn't need to be--

01:32:20.860 | finding a better fit does not necessarily

01:32:23.340 | need to be a step down.

01:32:26.620 | I understand.

01:32:27.260 | Thank you.

01:32:28.740 | All right.

01:32:29.460 | Yeah, and I would say it doesn't need to be a step down.

01:32:31.820 | And oftentimes, the alternative as far as if you just

01:32:35.020 | take something that pays less money, oftentimes that

01:32:38.980 | isn't going to work out as well.

01:32:40.420 | Who has more personal freedom, the CEO of a company

01:32:44.140 | or the entry-level secretary?

01:32:47.140 | The CEO has unlimited freedom.

01:32:48.980 | He can come and go as he likes.

01:32:50.780 | He can come and he can travel the world.

01:32:53.580 | He can do anything.

01:32:55.100 | He's responsible for the big results, the big pictures.

01:32:57.860 | And yet, he has huge amounts of freedom.

01:33:00.180 | The new secretary that comes in, he's got all kinds of problems.

01:33:03.260 | He's got to be there at 9 o'clock, leave at 5 o'clock,

01:33:05.340 | and only makes a little bit of money,

01:33:06.460 | has almost no personal freedom.

01:33:08.380 | And so there doesn't have to be this connection where somehow,

01:33:12.980 | by definition, as you go up and earn more money,

01:33:15.980 | you lose freedom.

01:33:17.020 | Now, there is a component where, as you

01:33:19.820 | take on more responsibility, it will be more wearing to you.

01:33:23.180 | The CEO who's responsible for the jobs of hundreds

01:33:25.900 | of people, who's responsible to his board of directors,

01:33:28.220 | et cetera, will have more stress and has more responsibility

01:33:31.340 | than the secretary.

01:33:32.460 | The secretary simply has to come on time

01:33:34.380 | and do the job that they're given on time.

01:33:36.540 | But the CEO has many more responsibilities to do.

01:33:39.780 | So you do have to balance that.

01:33:41.780 | I'm not convinced that being CEO of a huge company

01:33:44.220 | is necessarily the best thing for everybody.

01:33:46.780 | But I don't think it should just be dismissed by definition.

01:33:50.660 | The bigger, better job, the higher paying job,

01:33:52.940 | is not by definition more constraining or more difficult

01:33:56.100 | or something not worth looking at.

01:33:58.540 | In fact, I think it's the opposite.

01:33:59.980 | If you're going to make an argument,

01:34:01.460 | I think the argument goes in the opposite direction.

01:34:03.900 | Good question.

01:34:04.460 | I thank you for listening to the show

01:34:06.000 | as you have traveled around the world.

01:34:07.940 | And I love-- that's what I love about podcasting,

01:34:10.860 | is from now on, I'll picture you or someone like you listening

01:34:14.260 | to my show as they sit through Angola traffic.

01:34:19.180 | So thank you very much for calling in.

01:34:21.460 | That's it for the live call-in questions for today's show.

01:34:24.780 | I'm going to take one more question, though,

01:34:26.700 | that a patron wrote in for the show who

01:34:29.460 | wasn't able to call in live.

01:34:31.340 | Patron writes in and says this.

01:34:32.980 | Hi, Joshua.

01:34:33.500 | My wife and I are having trouble deciding where

01:34:35.820 | to go next in our portfolio.

01:34:39.060 | We both max out our 401(k) accounts, both Roth and non-Roth

01:34:43.620 | contributions.

01:34:44.940 | Our modified adjusted gross income

01:34:46.740 | is above the amount allowed for Roth IRA

01:34:49.700 | and the traditional IRA deduction.

01:34:52.020 | We have two rental properties that have good cash flow.

01:34:55.100 | No doubt, no debt except mortgages

01:34:57.360 | on my primary and the two rentals.

01:34:59.420 | Ideally, I would like a place to access money easily in my 50s.

01:35:03.740 | I'm 34, and my wife is 31, to achieve

01:35:06.780 | early financial freedom.

01:35:08.300 | Not necessarily thinking of leaving the workforce,

01:35:10.820 | but would like to have greater control over my time.

01:35:14.020 | Any ideas?

01:35:15.140 | And I wrote back and asked him if he had any children.

01:35:18.140 | And he writes in and says, we have a baby on the way,

01:35:20.780 | our first, which is due late November,

01:35:23.220 | and we'll try to have one or possibly two more.

01:35:26.380 | Now, this question, my answer, will in some ways

01:35:29.820 | line up with one of the earlier questions.

01:35:32.340 | But in a way, I don't have any good solutions.

01:35:35.000 | As far as I can determine, there are really

01:35:37.820 | only three basic things that you can invest in.

01:35:42.500 | So one would be paper assets.

01:35:44.620 | So you can invest in some kind of paper asset or paper

01:35:47.700 | investment.

01:35:48.260 | That could include a stock.

01:35:50.260 | Could include a bond.

01:35:51.620 | Could include a mortgage.

01:35:53.060 | But any kind of paper asset.

01:35:54.980 | The second category of investments

01:35:57.100 | would be some sort of real property.

01:35:59.940 | So that could involve a small single family house.

01:36:03.120 | It could involve a ranch.

01:36:04.580 | It could involve raw timber.

01:36:07.180 | It could involve a condominium in Dubai.

01:36:11.620 | But some sort of real property investment.

01:36:14.060 | And then the third thing would basically

01:36:16.140 | be some sort of business that you

01:36:18.640 | have an active participation in.

01:36:20.940 | So that could be a local McDonald's franchise.

01:36:24.220 | That could be a local construction company.

01:36:29.020 | That could be a local farm.

01:36:30.660 | That could be a local medical office.

01:36:33.620 | That could be a local surgery center.

01:36:36.060 | I mean, there's no limit to what it could be.

01:36:40.460 | But as best I could tell--

01:36:41.780 | or I guess I should maybe add another third thing.

01:36:44.020 | It would almost fall into real property.

01:36:45.720 | Although real property would used to be real estate land

01:36:48.060 | and things attached to land.

01:36:49.460 | But perhaps there's some kind of personal or tangible property

01:36:53.740 | investment.

01:36:54.460 | So you could buy classic artwork.

01:36:57.500 | You could buy gold coins.

01:36:59.260 | You could buy diamonds.

01:37:00.700 | You could buy old tools and fix them up and sell them on eBay.

01:37:05.340 | You could buy old saddles or make saddles or something

01:37:08.580 | like that.

01:37:09.580 | So as far as I can tell, those are the basic categories

01:37:13.020 | of investments.

01:37:14.180 | Would be some sort of paper asset,

01:37:16.060 | some sort of real property--

01:37:17.740 | I guess I make it four-- some sort of personal property

01:37:20.900 | and/or some kind of business that you are involved in.

01:37:24.980 | And so when you're thinking about investment options,

01:37:28.140 | within any category, there's almost an unlimited range

01:37:31.740 | of things that could be invested in.

01:37:34.580 | You could say, well, I want to invest in coins.

01:37:36.780 | But then you could get deeper in and say,

01:37:38.860 | I want to invest in Austrian bullion,

01:37:42.940 | or I want to invest in the Buffalo nickels.

01:37:45.780 | There's almost no limit to the specifics

01:37:49.020 | that you can go into.

01:37:50.560 | And is one thing better than another?

01:37:53.180 | Well, I'm certainly not qualified

01:37:54.980 | to tell you every good investment

01:37:56.500 | asset that's out there.

01:37:57.940 | I think that comes down to what's available to you.

01:38:00.700 | You might have an interest in buying nickels.

01:38:02.980 | And so you buy nickels, and you stash them

01:38:05.380 | in a .30 caliber ammo box, and you stack them up

01:38:07.780 | in a secure storage somewhere because you'd

01:38:10.500 | like to have some of the benefits of investing

01:38:12.500 | in nickels.

01:38:13.340 | And I might look and say, I'd like

01:38:15.120 | to own this condo in Panama City.

01:38:17.460 | And so I'm going to buy a condo in Panama City

01:38:19.420 | because that makes sense to me.

01:38:20.940 | We all look at these different things.

01:38:22.540 | But those are the basic categories,

01:38:24.580 | as far as I can tell, that exist.

01:38:27.700 | Once you choose a category that's interesting to you,

01:38:30.300 | once you do your homework on it, once you're

01:38:32.300 | comfortable with it, I don't see any reason

01:38:34.620 | not to just stick with that category.

01:38:36.980 | So if you have a couple of rental properties,

01:38:38.980 | then why shouldn't you buy more?

01:38:41.940 | If two are good, then probably eight is probably better.

01:38:45.460 | Now, you do, as your portfolio expands,

01:38:48.700 | you do have to consider if there is something that

01:38:51.300 | is going to be problematic.

01:38:53.100 | So maybe you can manage two rental properties

01:38:55.260 | in your spare time.

01:38:56.300 | Maybe you can manage eight rental properties

01:38:58.100 | in your spare time.

01:38:58.900 | But you probably can't manage 80 in your spare time.

01:39:02.260 | And so you start to reach a point

01:39:03.780 | where this particular category of investment

01:39:06.980 | is not going to turn out well in the long run.

01:39:10.780 | That's what is so lovely about paper investments

01:39:13.100 | through broad stream mutual funds

01:39:15.020 | is that there's no limit to the amount of money

01:39:16.940 | you can put into them.

01:39:17.580 | You can put $100,000.

01:39:18.740 | You can put $1 million.

01:39:19.540 | You can put $10 million.

01:39:20.540 | And it's all the same.

01:39:21.460 | It doesn't change your time commitment whatsoever.

01:39:24.540 | So that is a major advantage of a paper asset

01:39:27.100 | that it's less complex.

01:39:30.900 | You can buy a few thousand dollars in nickels

01:39:32.780 | and stash them under your bed.

01:39:34.380 | A few million dollars in nickels is a little harder

01:39:36.580 | to figure out how to transport and store and deal with.

01:39:39.740 | And so each investment category is going

01:39:41.700 | to have its basic challenge.

01:39:45.180 | My answer to your question would go back to your life cycle,

01:39:49.660 | the phase of your life cycle.

01:39:51.820 | And it would relate to your non-financial goals.

01:39:56.220 | If we're just analyzing this financially,

01:39:58.740 | I think you just say, what do I know?

01:40:00.780 | What works?

01:40:01.420 | What's going to give me a good rate of return?

01:40:03.340 | And do more of that.

01:40:04.220 | And I don't think you should feel

01:40:05.220 | like you need to do anything other than buy rental houses

01:40:08.180 | and buy mutual funds.

01:40:10.860 | Why should you do any more than that?

01:40:12.740 | Unless you have some different vision.

01:40:14.940 | For me, what I find very compelling

01:40:17.860 | is thinking about my children, thinking about businesses

01:40:22.220 | that my children could be involved in,

01:40:24.460 | and thinking about how to impact the world for good

01:40:28.300 | through business.

01:40:29.300 | That's what came out in the question

01:40:30.980 | that the caller asked earlier, where we're talking about that.

01:40:34.060 | I see effectively run businesses as one of the keys

01:40:37.980 | of transforming the world.

01:40:41.060 | So if Facebook has its agenda that it's

01:40:44.500 | going to aggressively prosecute, or if GE has its agenda,

01:40:50.340 | or if Walmart has its agenda, or if Coca-Cola has its agenda,

01:40:54.660 | or if Apple has its agenda, and they're

01:40:57.180 | going to aggressively prosecute their agenda,

01:41:00.260 | then how am I going to counteract them?

01:41:03.100 | Well, I can stand and hold a sign in front

01:41:06.740 | of Apple's downtown headquarters.

01:41:10.660 | What's the point of that?

01:41:12.140 | Why bother?

01:41:13.460 | But what I can actually do, if I'm really interested in it,

01:41:16.460 | is I can say, how can I compete with Apple?

01:41:20.300 | Or how can I compete with Facebook?

01:41:22.660 | So if I'm frustrated with what a certain company is doing,

01:41:27.460 | then my answer is, how can I invest into something that's

01:41:32.100 | doing something different?

01:41:34.220 | So if I don't like what Apple is doing,

01:41:36.460 | then who is a competitor to Apple that I can invest in

01:41:40.340 | and that I can participate in?

01:41:42.060 | Or is there something that I can do to start?

01:41:44.300 | Now, I don't have the capacity to start a company that

01:41:47.500 | is going to compete with Apple.

01:41:48.900 | But you might.

01:41:51.060 | I don't have the ability to deal on that level.

01:41:53.620 | But I can look locally, and I can say, well,

01:41:56.020 | I don't like what Walmart is doing down the road.

01:41:58.460 | So why don't I do this?

01:42:00.060 | Or I see this need in my community.

01:42:02.220 | And I see that children have nothing

01:42:04.580 | to do except go home and play video games by themselves

01:42:06.900 | in the afternoon.

01:42:07.940 | So maybe I can start a maker space.

01:42:11.660 | You know what?

01:42:12.220 | I'll give you my ideas.

01:42:13.300 | These are mine.

01:42:15.340 | Here are some things that--

01:42:16.660 | I'm not going to give all of them,

01:42:17.660 | because I have some that are--

01:42:18.820 | but I'll give some that are a little bit lower on my list.

01:42:21.660 | If I close down Radical Personal Finance today,

01:42:25.860 | here are some things that I would pursue.

01:42:28.660 | Number one is I would consider starting a maker space.

01:42:32.740 | Because one of the--

01:42:35.220 | and so by way of description, a maker space

01:42:40.260 | is basically a facility, picture a warehouse or some sort

01:42:44.020 | of facility, where there is a community of people coming

01:42:48.700 | together who are interested in doing things

01:42:51.740 | and who are interested in developing things.

01:42:53.660 | And there's usually some equipment

01:42:55.380 | that is available for them, whether it's tools--

01:42:58.100 | could be woodworking tools, a table saw, chop saw, et cetera.

01:43:01.660 | Could be metalworking tools, a lathe, a welding kit.

01:43:04.900 | Could be a screen printing machine

01:43:08.340 | to screen print t-shirts or computer equipment or a 3D

01:43:12.740 | printer, et cetera.

01:43:13.780 | But usually some equipment.

01:43:15.540 | But one of the things that I would dearly love to do

01:43:17.900 | is I would dearly love to start and facilitate a maker space

01:43:22.260 | in a local community.

01:43:25.380 | Because I see it as one of the most productive ways

01:43:28.460 | of developing neighborhood community, especially

01:43:31.580 | with young men and women.

01:43:33.060 | Young men and women, I'm convinced, are wired to learn.

01:43:37.820 | And yet most of the schooling that they are exposed to

01:43:41.100 | is designed to destroy their desire to learn.

01:43:44.380 | But if you can give young men and women opportunities

01:43:47.500 | to engage with equipment, et cetera,

01:43:50.260 | then I think that you can have the ability to help

01:43:56.740 | and to impact.

01:43:57.740 | And that can incubate new businesses.

01:44:00.220 | It can incubate a new business for a 14-year-old who

01:44:03.220 | has an idea and starts designing t-shirts and selling t-shirts.

01:44:06.420 | And that can be a way for a 14-year-old

01:44:08.660 | to earn thousands and thousands of dollars

01:44:10.540 | that they can't earn if they go and take some dead-end job

01:44:13.700 | working in a retail establishment.

01:44:16.460 | Or it can be a way to incubate a new business for somebody

01:44:22.020 | who's struggling.

01:44:23.380 | Joe Smith just got out of jail, and he

01:44:25.340 | can't find anyone who will give him a job.

01:44:27.700 | But he can come in and pay $50 a month

01:44:29.820 | to rent a membership, to get a membership in the maker space,

01:44:33.380 | and can start building cabinets.

01:44:35.060 | And Joe Smith can get away from the difficulty

01:44:39.140 | of getting a job after getting out of prison,

01:44:41.460 | but can now engage in productive work

01:44:44.100 | to actually do something interesting.

01:44:49.060 | And so-- sorry, to do something that serves people,

01:44:51.860 | building cabinets.

01:44:52.620 | He doesn't have to go and buy all the woodworking tools

01:44:54.540 | himself and go into debt.

01:44:55.580 | He just needs to buy the membership.

01:44:57.460 | And so I think a maker space is one of the most powerful ways

01:45:01.180 | that you can provide tools that could help a community.

01:45:04.900 | So why did I ask about family?

01:45:06.180 | Well, what stage are you at with your family?

01:45:08.340 | I think about my children, and I think,

01:45:09.700 | well, I'd like for my children to have access

01:45:11.580 | to all of these things.

01:45:12.860 | After all, wouldn't it be great if my children

01:45:14.740 | had a couple of 3D printers, and computers, and CNC machines,

01:45:21.660 | and woodworking tools, et cetera?

01:45:23.420 | Well, if I'm going to start writing checks and stashing

01:45:25.800 | all that stuff in my garage, I have

01:45:27.900 | the problem of that being a very expensive endeavor

01:45:31.460 | and basically having no help.

01:45:33.900 | But if I start a maker space, I can equip that maker space

01:45:38.180 | with dozens and dozens and dozens of tools.

01:45:41.860 | And the development of that maker space,

01:45:43.540 | with a properly accompanied business plan, et cetera,

01:45:45.780 | the purchase of all those tools are now

01:45:47.580 | going to be on the business side of the ledger

01:45:50.060 | instead of the consumption side of the ledger.

01:45:52.380 | And now I can equip this, and my children can have memberships.

01:45:55.940 | And so this is the kind of thing,

01:45:57.380 | this is the kind of business that I would look at.

01:45:59.460 | And I would say, this allows me to have the opportunity

01:46:03.140 | to solve some pressing needs.

01:46:05.620 | What are these young men and women

01:46:07.120 | going to do with their time?

01:46:08.300 | Instead of sitting around and getting depressed,

01:46:10.300 | staring at a screen, let's harness that productive energy.

01:46:13.540 | Let's facilitate the growth of businesses.

01:46:15.780 | Let's facilitate the growth of entrepreneurship.

01:46:18.340 | And then by developing a community around that,

01:46:20.440 | now we have a platform that could be used

01:46:22.980 | to accomplish other good things.

01:46:25.740 | So now we can provide lectures.

01:46:27.140 | Now we can provide personal finance lectures and budgeting

01:46:30.220 | lectures.

01:46:30.740 | And now I have a facility where instead of me trying to go out

01:46:33.320 | and figure out how to rent a hotel room to give my budgeting

01:46:36.420 | lectures to help poor people in my town,

01:46:38.780 | I can invite people into my maker space.

01:46:41.380 | And now, in addition to the budgeting lecture,

01:46:43.300 | I can say, listen, we'll help you start a business.

01:46:45.420 | And I can provide entrepreneurship coaching.

01:46:47.340 | And I can find all of those retirees

01:46:49.100 | in the community who are just sitting around doing nothing,

01:46:53.180 | playing golf all day.

01:46:54.180 | And I can say, why don't you come in?

01:46:55.680 | And would you come in and help mentor

01:46:57.260 | some of the new aspiring entrepreneurs?

01:47:00.740 | And I can bring in people like that.

01:47:05.420 | And they can volunteer their time.

01:47:06.900 | And they can help.

01:47:07.660 | And we can start to create a business culture.

01:47:09.740 | And in the same way, I can facilitate.

01:47:12.460 | We can use the facility for religious meetings

01:47:16.980 | on the weekend.

01:47:17.900 | We can host seminars to help people on everything.

01:47:20.740 | And now I have a space that can serve as a community hub.

01:47:23.780 | And so I get the benefits of having a place for my children

01:47:27.380 | to be with their friends, to build community

01:47:30.120 | in the local area, to preach the gospel,

01:47:31.940 | to help people build wealth.

01:47:33.820 | I can do seminars.

01:47:34.980 | I can have a library of books that are just not going

01:47:37.740 | to be available at the library.

01:47:39.540 | And so that's the kind of business

01:47:41.340 | that I would pursue that I think is one of those where you

01:47:45.340 | can tick multiple boxes off.

01:47:48.380 | You can have a lot of opportunities.

01:47:50.500 | And it's good for me.

01:47:51.700 | It can be very--

01:47:52.660 | it could be very profitable.

01:47:54.300 | You'd have to run it.

01:47:55.780 | And I think that depending on--

01:47:57.740 | to see what kind of profit margin there is with it.

01:48:00.140 | But there could be ways to be very profitable.

01:48:02.140 | And then I would leverage that type of thing

01:48:03.980 | with my own personal investing.

01:48:05.900 | So I would seek to be an investor

01:48:07.620 | in any kind of business that was incubated there

01:48:10.420 | in the local community.

01:48:12.780 | So just like-- what's his name out in California?

01:48:15.420 | Just like the people do when they incubate tech businesses,

01:48:18.500 | Russell Graham or whomever, when they incubate a tech business,

01:48:21.120 | they're trying to invest and advise.

01:48:23.620 | I want to do the same thing in my local community.

01:48:26.140 | I can't-- I don't--

01:48:27.140 | the tech business-- like, that's not me.

01:48:30.300 | I don't care about that.

01:48:31.460 | Maybe you do, in which case you can go do that.

01:48:33.420 | But I can incubate the cabinet maker.

01:48:36.100 | I can incubate the new real estate investors.

01:48:39.460 | I can help them.

01:48:40.580 | I can help the 14-year-old with a screen printing business.

01:48:43.100 | That's within my circle of competence.

01:48:45.700 | And so if I'm looking and saying, well, how do I start--

01:48:48.740 | how do I invest my money?

01:48:50.500 | I would look at something like that.

01:48:52.060 | And I would say, OK, what do I need?

01:48:53.860 | $100,000, a couple hundred thousand dollars.

01:48:56.260 | And there's no reason why the whole thing can't be a win-win

01:49:01.140 | across the board.

01:49:02.180 | So I'll buy a warehouse.

01:49:03.620 | And I'll make sure there's an office building next to that.

01:49:06.120 | Well, those can be good real estate investments.

01:49:08.220 | And I'll open a co-working space in the office building.

01:49:11.100 | And then I'll set up the maker space in the warehouse.

01:49:13.700 | And it's the kind of investment that gives multiple benefits.

01:49:16.580 | It can be profitable, can lead to community building.

01:49:19.940 | It has huge opportunities.

01:49:23.460 | Another example of something that I personally would do

01:49:26.140 | is I would try to find a business that

01:49:28.060 | has a lot of low-level employees specifically

01:49:34.420 | with an appeal towards men.

01:49:36.620 | One of the biggest groups of people

01:49:39.180 | that are being left behind, as I record this,

01:49:42.620 | is groups of men, especially men without high school degrees

01:49:47.900 | or who just aren't academically oriented.

01:49:51.720 | And I think one of the best things that could happen

01:49:53.860 | is for somebody to get involved and to start

01:49:56.100 | investing in building businesses and that kind of thing.

01:49:58.460 | So here, you need to think of something that's physically

01:50:00.780 | demanding, something that is basic.

01:50:04.460 | Think of just basic labor types of things.

01:50:11.140 | You can do this in a construction business.

01:50:14.060 | You can do this in something like a landscaping business.

01:50:18.220 | You can do this in something like a tire shop,

01:50:22.140 | this type of business.

01:50:23.620 | But I would try to develop a business

01:50:25.660 | and invest in a business that has a lot of young men

01:50:29.740 | as employees because then it gives me the chance

01:50:32.540 | to do very well financially.

01:50:33.940 | Some of these businesses can be incredibly profitable.

01:50:36.180 | By going into these kinds of unpopular businesses,

01:50:39.540 | you have--

01:50:40.300 | I mean, what's your competition?

01:50:42.820 | You don't have-- if you go into the tech business,

01:50:46.140 | you've got cutthroat, very smart people competing with you.

01:50:49.060 | You go and you start a tire shop,

01:50:51.660 | you don't have cutthroat competition generally.

01:50:55.300 | But you have the opportunity to do well financially.

01:50:58.140 | Some of these things can be very profitable.

01:51:00.300 | I've worked with people in the industry

01:51:01.940 | that can be very profitable.

01:51:03.340 | But yet, you have the opportunity

01:51:04.720 | to hire dozens and dozens of men.

01:51:06.620 | Now, think about the impact now when you're going to work.

01:51:09.660 | And let's say that you've got 20 young men who work for you,

01:51:12.660 | who you can now structure your business,

01:51:17.460 | opening a range of pizza franchises.

01:51:19.900 | Now you have the opportunity to, in addition

01:51:22.180 | to having the basics of the job, but you have the opportunity

01:51:25.060 | to teach life skills.

01:51:26.380 | You have the opportunity to hire somebody

01:51:28.080 | who's failing in life, who has no future, no possibility,

01:51:31.980 | and bring them in.

01:51:32.780 | And through work, they can develop character.

01:51:34.720 | They can learn knowledge.

01:51:35.760 | You can facilitate education for them.

01:51:37.820 | And that can be done through business.

01:51:40.740 | I would also pursue things in the world of education

01:51:45.140 | and schooling.

01:51:46.380 | I'm convinced that the market is wide open

01:51:49.700 | for new opportunities and new approaches

01:51:51.900 | towards education for young people.

01:51:54.460 | We're stuck with all of these models from the 1300s,

01:51:58.900 | the 1500s, these insane models of factory schooling,

01:52:02.860 | which are destroying people.

01:52:04.500 | But although there is a huge opportunity

01:52:07.380 | available in the world of homeschooling,

01:52:10.580 | most parents aren't taking the time,

01:52:12.980 | aren't going to have the ability or the resources

01:52:16.700 | or the self-confidence or the vision to actually homeschool.

01:52:21.580 | But yet there is an opportunity for new and innovative methods

01:52:24.620 | of schooling that aren't traditional factory schooling,

01:52:27.700 | that aren't traditional government sweatshops,

01:52:31.060 | but that actually help people to learn and develop

01:52:33.740 | skills for the new world that we're going into.

01:52:37.400 | And then I think there are some ways that

01:52:39.100 | could be a hybrid model where they could be done very, very

01:52:41.600 | profitably, where it's not homeschooling,

01:52:43.300 | but it's not expensive private schooling

01:52:46.180 | that you pay teachers tens of thousands of dollars.

01:52:49.260 | There's a bunch of interesting things.

01:52:51.100 | So those are just a few that I'm not likely to pursue right now.

01:52:53.660 | I'm going to keep a couple of my other ones close to the vest.

01:52:55.900 | But those are the kinds of things

01:52:56.860 | that I would personally look at.

01:52:58.140 | But it's not a financial thing.

01:52:59.700 | It's a matter of looking at it and saying,

01:53:01.660 | how do I actually do something and invest my money profitably

01:53:06.300 | so in addition to the financial return,

01:53:09.020 | we also get a people return?

01:53:10.740 | Because at the end of the day, who cares about the money?

01:53:13.140 | What we should care about is the people.

01:53:15.020 | And yet, that doesn't mean that the money is not important.

01:53:17.500 | It just means that we've got to get out of just measuring

01:53:19.880 | everything by virtue of finances and think about how do we

01:53:23.860 | establish productive systems that will make a difference.

01:53:30.100 | Is the difference between a business or an industry

01:53:32.420 | that's renewable versus one that's just destructive?

01:53:35.140 | You can go in and you can slice the top of a mountain off

01:53:38.120 | and you can pull a bunch of natural resources

01:53:41.100 | out of that mountain.

01:53:42.300 | Well, that's fine for a time.

01:53:44.140 | But is there a way where instead of just simply going in

01:53:46.700 | and destroying something without a plan to make it better,

01:53:49.100 | is there a way that you can farm something and develop something

01:53:52.580 | where it's actually going to grow and be productive?

01:53:58.020 | That's the best I got.

01:53:59.940 | I don't have any more answers.

01:54:03.100 | I never intended to start a series of shows on this

01:54:05.100 | because I've just been busy working on it in my own life,

01:54:08.580 | trying to find ways to actually do it.

01:54:10.500 | And it's tough.

01:54:11.140 | It's not easy.

01:54:12.060 | But if more of us who have money would actually

01:54:14.820 | start to work on it and start to develop opportunities,

01:54:17.940 | and more of us would actually start

01:54:19.500 | to think broader than just how much money

01:54:23.380 | can I put in the 401(k), I think we

01:54:25.580 | can make some major changes.

01:54:27.060 | And that would be the type of thing

01:54:30.080 | that I would like to see more and more of.

01:54:33.060 | It's one thing to sit around and whine and belly

01:54:35.300 | ache about what other people should do

01:54:37.400 | and why the government is all wrong.

01:54:39.300 | It's another thing to actually roll up your sleeves and say,

01:54:41.820 | I've got this money.

01:54:42.980 | I've saved a few hundred thousand dollars.

01:54:44.860 | I'm going to go ahead and do this.

01:54:46.780 | And I'm going to make this happen.

01:54:48.340 | And when more of us start doing that,

01:54:51.060 | then I think there'd be a lot less need

01:54:52.660 | to belly ache about what the government is doing or not

01:54:54.940 | doing and trying to coerce people.

01:54:57.660 | It's our responsibility to take action.

01:54:59.540 | Thank you for listening to today's show.

01:55:01.220 | If you'd like to join in access to next week's Q&A,

01:55:03.940 | go to patreon.com/radicalpersonalfinance,

01:55:06.660 | patreon.com/radicalpersonalfinance.

01:55:08.940 | Sign up to support the show there.

01:55:10.340 | And I would be happy to speak with you next week on anything

01:55:13.460 | you would like to talk about.

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