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Afford Anything | Get Smarter With Money
Q&A: The Scary Shift from Saving to — Gulp! — Actually Spending Your Money
01:05:06
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- [00:00]
Paula Pant
Joe, we've talked a lot about saving for retirement, accumulation. Do you think that we're not paying enough attention to decumulation?
- [00:08]
Joe Salcihai
I think that is a whole science that is unfolding as we now are at an age where fewer and fewer people have pensions. But, yes, we don't pay enough attention to how we take money out of our portfolios.
- [00:23]
Paula Pant
Well, we're going to deep dive into that in today's episode. Welcome to the Afford Anything podcast, the show that understands you can afford anything, but not everything. Every choice carries a trade off, and that applies to your money, time, focus, and energy. This show covers five pillars. Financial psychology, increasing your income, investing, real estate, and entrepreneurship. It's double I fire. I'm your host, Paula Pant. I trained in economic reporting at Columbia. Every other episode, I answer questions from you, and I do so with my buddy, the former financial planner Joe Sal Sehei. What's up, Joe?
- [00:55]
Joe Salcihai
Oh, man. I had something cool happen in the last couple days, which is I live in Texarkana, Texas, work out of mom's basement, as people that know me know, and they are laying fiber optic cable out in front of mom's house today.
- [01:11]
Paula Pant
Ooh.
- [01:12]
Joe Salcihai
I know, I know.
- [01:15]
Paula Pant
Wow.
- [01:17]
Joe Salcihai
I know.
- [01:18]
Paula Pant
Now you don't have to use Starlink to access the Internet. Yeah.
- [01:23]
Joe Salcihai
So all the scratchiness in my audio, you will find my face doesn't get any better when it's crystal clear.
- [01:30]
Paula Pant
But hey, honestly, with high resolution, you can really see everything, every vein.
- [01:36]
Joe Salcihai
Isn't that sad that we worry about the superficial stuff? I mean, don't get me wrong, it's to some degree we need to. If you look like you take care of yourself, I think you're a little more believable. And I don't think that has anything to do with anything besides the fact that you just look like you care, just show up like you care. But the fact that we're going to judge people based on these exterior things still kind of makes me a little sad.
- [02:02]
Paula Pant
Yeah, exactly. Unfortunately, we don't live in the world of should we live in the world of is? I've often thought about. A healthy society needs both idealists and pragmatists in the aggregate. A society does well by having both types of people.
- [02:19]
Joe Salcihai
But.
- [02:19]
Paula Pant
But there are consequences to which one you decide to be. And I've very much chosen to be a pragmatist.
- [02:27]
Joe Salcihai
Yeah, I've decided to live in my own little dream world.
- [02:29]
Paula Pant
So, all right. You're the idealist, I'm the pragmatist.
- [02:35]
Joe Salcihai
Of course.
- [02:36]
Paula Pant
No wonder we're such a good team.
- [02:38]
Joe Salcihai
You've known me for how long? The glass is always three quarters full, Paula. Always three quarters full.
- [02:43]
Paula Pant
Beautiful. Well then, as a team we will answer this first question which comes from Eva Hi Paula.
- [02:51]
Eva
Hi Jo. My name is Eva. I've been an avid listener since I first stumbled upon fire in 2018. The way you articulate complicated topics for laypeople like myself has been so life changing. I truly wouldn't be this far on the journey without your Q and A episodes where your logic and reasoning take the stage. That's my long winded way of saying thank you. I had the pleasure of meeting you both recently at a local event for a Purpose code book launch in New York City this December. A lot's been on my mind since that Q and A. That night when an audience member discussed reaching FI and how much cash to hold to ease sequence of return risk, it made me think. Given that so many longtime listeners learned about FIRE since your podcast launch, combined with the favorable market conditions in the years running up to today, I suspect a good chunk of us are nearing or crossing our FI goalposts figures and was wondering what you both would recommend for someone to transition their portfolio to when switching from accumulation to decumulation and when to do so. In my research, there's two concepts that pop up as you near the FI target the efficient frontier, which you recently did an episode on, where you lower your risk tolerance on the EF line. But there's also risk query models designed for decumulation, something frankly expands on in his Risk Parity Radio podcast. The latter I don't believe I've heard you do a deep dive into and would love to hear the two of you discuss both, especially as it relates to anyone looking to retire early or make work optional in decumulation. From my understanding, the two concepts work well in tandem as different means of reviewing asset allocations. While EF looks at the relationship of rate of return versus risk and volatility, while risk paring models add an added layer of evaluating with withdrawal rates, some of which can offer a permanent withdrawal rate of 5%, like the golden ratio model personal risk levels in the drawdown phase. Let's assume we're less worried about adding some level of complexity if it supports long term success. Already excited to tune into this episode. Thanks so much Eva.
- [05:02]
Joe Salcihai
Thank you so much for the question. Wasn't that a fun event? Paula?
- [05:06]
Paula Pant
That was so much fun.
- [05:08]
Joe Salcihai
So great. And Doc G being able to share the quote stage with him. It is big moment when you do something like birthing a book. It's so exciting. And the fact that we got my surly co host OG there as well.
- [05:23]
Paula Pant
Yeah.
- [05:24]
Joe Salcihai
And all four of us in the same place. It was a super fun night and thanks to everybody like you, Eva, who came out that night and it was. Yes, it was so great. I want to be careful because it's going to be easy to misconstrue my answer to your question, Eva, because I'm going to start off by saying that your line of thinking, which is using the efficient frontier to start off with to make sure your assets are invested as efficiently as possible and then pairing that with a strategy called Risk Parity, which you mentioned, Frank Vasquez and Risk Parity Radio. And Frank is awesome and knows his stuff. Frank's research, by the way, is based on Ray Dalio's research. And Ray Dalio is the guy that kind of took this term risk parody, Paula, and made it a big thing. And then in this community, Frank talks about how you use the Ray Dalio principles to create portfolios as a do it yourself investor that are designed to allow you to take more money out. There is nothing I could ever say that will go against that research. There is nothing. There is zero. If you want to know how to create a portfolio that is dynamic enough to withstand the pressure of different market forces that's been well researched, then using the risk parity model is a good way to go. The risk parity model looks at is the fact that the longest stretch that you might have where your portfolio is underwater, it's not one year or two years or three years. Oh gee. My co host on Stacking Benjamin says you want like three years in cash so that you're able to withstand this downturn. And he is also known for if you can withstand the ups and downs, the roller coaster ride, even during retirement, staying as much in stocks as possible is the way you want to go. He always says it's much more about you than it is about the financial markets. Now you pair that with what Ray Dalio talks about and a 13 year downturn that we're protecting against three years of cash. Paula ain't gonna do it. And if you're on a roller coaster r side where you're looking for the most extreme withdrawal rate that I can take, let's use Eva's number, 5%. I'm taking 5% out every year my portfolio is underwater. I'm all in stocks. You can see that is a recipe for fripping disaster. Which is what Frank also talks about in the smaller community with his followers. And they are not wrong. Here is where the difference comes in. And it is the way we talk about maximum safe withdrawal rate. I can't stand the obsession with safe maximum withdrawal rate. And here's the reason why. I think it's fine to contemplate it. I think that Carsten, AKA Big Earn, doing all of his research on it is fine. I just see in the community this question all the time, what's a maximum? And I go, what's, what's max? What's a max? What's a max? What's max? I'm going to tell you this. If you are obsessing over the maximum safe withdrawal rate and you decide that the second I reach that number that I'm going to go risk parity. Ray Dalio, Frank Vasquez and I get on this model, you're going to live a life of freaking scarcity the rest of your life because you're going to be wondering, can I really continue to do this? It doesn't matter what the science says. It doesn't matter anything. You're going to be in the most scientific way you can get there and you're still going to be worried about it. I don't even worry so much, Paula, about that as I do about the research I've been diving into my entire career, which is what makes a successful retirement. And let me tell you what doesn't make a successful retirement. Basing my actions, basing my budget, basing my activities on what my budget says I can do is a bull way to plan your retirement. Because I'm letting the what can I do Wag the what is my purpose dog. And that doesn't compute. I don't like talking about safe withdrawal rates, not because they're not important, but because here is in my mind a better planning model. What is going to be my purpose? What's going to be my drive? What's the thing that I want to do? And then I want to compute, what is that going to cost me? Once I know what that costs me, then I set up a withdrawal strategy that matches what my purpose is, what my budget's going to be to make that happen, what the activities are that I want to do. And studies have shown this, this is a way for you to live longer, it's a way for you to live healthier. And truly, if that's what I'm going for is a meaningful retirement, I don't want to worry about safe withdrawal rate. I don't want to worry about the fact that I'm planning on the razor's edge. So when I hear people talk about retiring early because I just barely made it, think about this. If I'm able to have a portfolio that is more in stocks and I can get that long term bump, what does that mean? Well, that means that I might not have the safest quote withdrawal rate if I'm on the razor's edge, but I'm doing it from a bigger number. So instead of going all vtsax and having $1.9 million, what if I got closer to the efficient frontier and I had $6.4 million and my safe withdrawal rate's only 2% versus 5% on 1.9. I'm going for the 2% with a bigger number. This is the reason why I think it's so much more important to be a little bit more scientific while you're in the accumulation phase. If you're more scientific, then you're going to create a multiple by which that safe withdrawal rate is compounded, which means I got the ability to do whatever the f I want versus worrying about my grocery bill and the price of eggs every stinking day of my retirement. I don't want to live that way. That's not, I think, a healthy end game that gives us the ability to live a long time because we're living a life of purpose and meaning. So I want to begin with the end of mind, which is purpose and meaning. And then I want to go backward from there. Eva, this is not at all about your question. I think, listen, Frank's got it going on because Frank is proselytizing Ray Dalio. And if I have a rant where I'm like, ray Dalio is full of crap, that's probably not good, right? But even Ray Dalio with his retirement doesn't start with what's my safe withdrawal rate? There is no way Ray Dalio is thinking, you know, what if I can just get to the point where I can max out 5% instead of 4% of my minimal number, that that's going to give my life more. No, it's not. It isn't. This also, by the way, if I could continue for just a second, is why I can't stand when people start their job. The first thing the HR department does in many cases is they put a risk tolerance questionnaire in front of them before they pick their 401k choices. This, Paula, drives me craz. It drives me nuts. Because another Stephen Covey principle is the idea of the stick. When you pick up one end of the stick, you pick up the other end. And we got to think about what the other end of the stick is, meaning, AKA these decisions aren't made in a vacuum. You can't make a risk management decision in a vacuum. It has real, real outcomes. And so if I take a risk tolerance quiz and oh, I don't like the bumpiness, well, that's fine, but what does that mean? So here's where I like to start. What type of risk do I need to take to reach the goal that's going to give me purpose and meaning? And then I backtrack into, okay, I need to take this type of risk. And then I ask myself through whatever risk tolerance quiz I want to take, do I have it within me to withstand that onslaught, to withstand that risk? If I do, hallelujah. If I don't, then the question is, what do I have to do differently to make this happen? Do I have to save more money? Do I have to push the goal back? Do I have to lower the goal? Like, what are other levers do I have to have? But it drives me crazy when I would see these people all the time when I was a financial planner. Why are you in such conservative funds? Oh, I just don't like the bumpiness. Do you have any idea what that's going to give you on the end? Do you have any idea if you're going to end up anywhere? And you know what the answer always was, Paula? It was always, I have no idea where this is taking me. I'm going to ride this roller coaster to the end. This I don't like risk roller coaster and I have no idea what it gives me. Forget that. Begin with the end in mind and I think you're going to do a much better job.
- [14:34]
Paula Pant
So Jo, what I'm hearing from you, start with the life that you want to lead, figure out what that costs and work out your withdrawal rate from there. My follow up question to you though is let's say that the life you want to lead, the life of purpose and meaning, is going to cost you. Let's say for the sake of easy math, $80,000 a year. You've crunched the numbers, you've done the work. You're anticipating 80k a year in retirement in order to be fulfilled and meet your goals. There is still the question though of based on that withdrawal rate, how big does a portfolio have to be? How many more years do you stay at your job? The reason that people have this obsession with safe withdrawal rates is for that $80,000. Do I need a $2 million portfolio at a 4% rate, or do I need less than a $2 million portfolio because I'm tired of working for some employer?
- [15:31]
Joe Salcihai
Well, that's an easy answer, because that is where safe withdrawal rate comes in, right? I mean, then if my goal is now I know that my goal is going to cost $80,000. I just want to know what I could afford to hang it up. Well, then we know that your safe withdrawal rate can be 5, right? Can actually be 5%, not 4. And then I have to be really, really scientific about it. The thing that then I would ask is, do I then want to leave my job the second that I reach that, do I want to? And now the answer, by the way, because, like, what I just did with Eva's question was I said, I'm going to challenge the premise of the question, and I'm gonna even challenge the premise of the question that I just asked, which is, do I leave my job that second? Maybe the answer is no, but maybe the other answer is this. Maybe now I'm gonna take some chances on some things that I've been thinking about that still earn money that I wouldn't have taken chances, because if the chance doesn't work out, I have the comfort of knowing that I'm on the razor's edge. But I have reached that 5% number. And so I want to bring in more money, but I want to do something more closely aligned to my goals. I love with what this certified financial planner Benjamin Brandt's been talking about a lot lately, which is retirement begins today. Meaning if we think of ourselves as a lab rat pre retirement, Paula, we're going to then meld retirement better than if we think of it as this goal line, and all of a sudden there's unicorns and rainbows. I love the Adam Sandler skit where he is a travel agent and he's talking about going to Italy. And he says, if you're. Italy's not going to be wonderful. You're still going to go to Italy. No matter who you are. If you're miserable right now on a trip to Italy, you're going to still be miserable in Venice. It's still going to be the same you. So what I like is working on the me now, which means that rather than have today, I hate my life. And then there's going to be unicorns and rainbows. We already know that's not going to happen. So how can I meld the two of those together? Number one, when I take My vacations. Now if I'm going to geo arbitrage, I start looking for community in those places and if it's not there, that's great intel. If I think I'm going to move to Portugal and I go to Portugal and I hate everybody there, I'm like why am I doing this? But knowing that up front is phenomenal intel. By the way, people in Portugal are awesome. That would never happen.
- [18:00]
Paula Pant
Send your hate mail to joe stackingbenjamins.com.
- [18:05]
Joe Salcihai
But I think that the amount of disillusion you have when you think it's going to be one thing but you never play tested it and so you don't really know is incredibly difficult. So doing that. But my point is, is that let's say there are things that can bring in more money that also meld into that purpose and meeting but you're not sure if they're going to work or they're going to be for a reduced salary or they're a reduced number of hours or there's a way to slowly work your way into it where it melds the two. I'm not going from sucky job to doing quote, nothing. I don't think that works. Looking at Christine Ben's new book this fall, this idea of doing nothing doesn't work for a successful retirement anyway. So I think there still is a middle ground behaviorally that will also make the safe withdrawal rate safer. And I think this is the thing. I think we're obsessed with the science and we're not obsessed enough with the behaviors. Paula, I think the behavior piece is the part that really excites me. And this is the part we get so wrapped up in the numbers game of enough money, enough money, enough money, enough money. And yet when you take a look at what the happiest retirees are doing, it often doesn't have anything to do with the money. Don't get me wrong, I think more people need to be on our end of the nerdery piece where I'm backing people off of the science ledge and let's start looking at the behavior. If people would just get to the point like the eva's at, that's fantastic. We need to get to that point. But for our community, I think, hey, once we're at that, now let's, now that we've done that, the math, now let's look at what do happy people actually do.
- [19:41]
Paula Pant
What I'm hearing from you, Joe, is a model of a graduated or iterated retirement in which phase one of retirement is leaving. Perhaps A high paying but undesirable job that you have and then you enter phase 2 which is not for retirement in a binary 01 yes, no on off switch sense, but rather a graduated career step in which you're, you're making a well funded career change into something that's more aligned with what you want to be doing.
- [20:13]
Joe Salcihai
Well, quite possibly this is not a yes, no. So the answer is possibly. I would entertain it though. My point wasn't that it, it has to be graduated. My point is, is that it doesn't have to be an on off switch. There can be this cool middle ground and I know that I've used this woman as an example before. I will use it again because it is so compelling to me, which is I worked with this client who wanted to live along the western shore of Lake Michigan. Have I told you the story before?
- [20:43]
Paula Pant
Oh yes, yes you have.
- [20:44]
Joe Salcihai
Yeah. But I think it's been a long time and I think it's worth telling again because this is what I mean about graduated is that she wanted to live along the west shore of Michigan. Well, if for people that live along that shore visited it, you know how expensive those houses are along the bank of Lake Michigan because every day you get this beautiful sunset that's like you're looking out over an ocean, right? And there is a lot of Chicago money, a lot of the high paying Detroit money that buys houses, often second houses that are bigger than most of our listeners, houses that are along this coast. So when she and I started doing this work, she was initially really disappointed that this on off switch of I'm going to leave my job and then buy this house and move to the western shore of Michigan. That that wasn't going to work out. But then we said let's think creatively about this, let's get a little more creative and look at who she is and what kind of person she is. And she is way an extrovert. Like way, way, way an extrovert. So that knowing a little bit about herself was important. The second thing was when we looked at some of the areas away from the bigger towns and cities like St. Joseph or Ludington or even heck up around Glen Arbor, Traverse City. If we look between the spots, land got a little less expensive and she didn't mind that at all being more in a countryside so we could lower the cost of the land, but she still couldn't afford it. Then we looked at going across the street and there was this beautiful old Victorian house across the street that had a wonderful view of Lake Michigan over the trees, considerably less expensive, needed some work. She still couldn't afford it. But through this idea of it doesn't have to be an on off switch, she was able to remodel the house, turn it into a bed and breakfast. That gave her income, also gave her purpose. Because every day she's out there flying her extrovert flag with these brand new people that are coming in to visit her. And she treats new people like they're just her brand new friend. She's that type of person and she loves it. It gave her energy. And guess what? Every day she's serving breakfast to people that she loved doing, meeting new people. And she goes out on the porch of this beautiful house and she's looking out over Lake Michigan every single day. So by being a little more creative, she makes her retirement have purpose. She's in a job that she loves, doing things that she loves in the setting that she'd always dreamed about, which at first she didn't think she was going to get. Now, this is what I like about Benjamin's research that I mentioned earlier. You're talking about phase two. Benjamin's doing something really cool right now, Paula, with his research, which is even phase one, where Eva is today. Changing the way that you vacation today, changing the way you spend your free time today while you're working in this job that you hate, spending that free time to be a lab rat and start thinking about the possibilities and play testing the possibilities now is fantastic.
- [23:56]
Paula Pant
And that's what you mean by retirement begins today?
- [23:59]
Joe Salcihai
Yes. Well, that's what Benjamin means. But I love it because like most people, I didn't get it. When he was talking to me about this, at first I'm like, oh, that's cute. Retirement, okay. So I start thinking, no, no, no, no, no. I start changing my behavior today to begin modeling the stuff that's going to be that phase two for me.
- [24:17]
Paula Pant
Which makes sense, I can tell you, in my own life, if I think about how would I ideally want to spend a day in retirement. I would be at the gym every day. I'd be reading books, I'd be volunteering with animals, and I'd be making more frequent trips to Nepal and around the globe, but Nepal in particular. So those are all things that I can do now.
- [24:41]
Joe Salcihai
Yeah. And by the way, that gets you through these thankless hours easier when you go home, you're doing this wonderful stuff and you realize there's a means to the end of this job that you really don't love. There is a Purpose to that job, which is to feed these hours that I have today, not sometime in the future, these hours that I have today to do the things that I really want to do. And then I get really excited about my Saturday.
- [25:07]
Paula Pant
Right.
- [25:08]
Joe Salcihai
I found as I started practicing this after Benjamin and I were talking about it, like my Saturday is super fun. And the trips that I'm planning now, the trips are including spending more time with locals and exploring the local. Not just going to see the places.
- [25:25]
Paula Pant
Right.
- [25:26]
Joe Salcihai
But spending more time in the community. Say maybe this is a place I know already from my last being a nomad that I don't want to do that forever, but I do want to spend summer here's hot as hell. It's horrible.
- [25:35]
Paula Pant
Yeah.
- [25:35]
Joe Salcihai
I want to spend three months every year living somewhere. So going to Portugal. I'm going to spend time looking at what the community is like. We're going to Greece in a few months. I'm going to look at what heck, what's the expat community like in Greece.
- [25:47]
Paula Pant
Yep. When you went to Kathmandu, you hung out with my family there. I did.
- [25:51]
Joe Salcihai
That was so fun. Yeah, it was so, so fun. So, yeah. It changes the way that you even think about what you're going to do as you're planning your travel. Eva, to answer your question, directly following the efficient frontier into risk parity is a fine way to go. Is a beautiful way to go. And Frank and risk parity radio. Right on. Like, right, right, right on. I know enough about Frank and Frank's been in the community for so long and Frank's research and all the great science that is based on, if you decide that that's the way that you want to work your decumulation, that is a fine, fine, fine strategy that I have no problem with whatsoever. Wonderful stuff.
- [26:34]
Paula Pant
And since you bring up Ray Dalio, he has an amazing book, principles that came out in the last year or two and a new one that's coming out later this year. So there's a lot. For anybody who wants to get to know his ideas better, he is very prolific and I would encourage anyone to check out his work. So, Ava, thank you for the question and thank you for coming to our event in New York City. Because in this increasingly digital world, I think there's a very human hunger for face to face interaction and that's something that we at afford anything really want to prioritize as we plan for the years ahead. Well, Joe, speaking of Michigan.
- [27:16]
Joe Salcihai
Okay, that's a segue. Speaking of Michigan.
- [27:19]
Paula Pant
Well, we were just talking about Michigan.
- [27:21]
Joe Salcihai
We were.
- [27:21]
Paula Pant
Yes, Lake Michigan. Beautiful place. And on the topic of Michigan, our next caller is somebody who is moving away from Michigan.
- [27:29]
Joe Salcihai
Oh, why?
- [27:31]
Paula Pant
Because they're moving to my home state, Ohio.
- [27:34]
Joe Salcihai
Oh God no. God no.
- [27:38]
Paula Pant
And we are going to hear a question from that person next. Missions to Mars. Driverless cars, AI chatbots. Feels like we're already living in the future. Well, Robinhood is built for the future of trading Robinhood's intuitive design makes trading seamless. On Robinhood, traders have access to popular stocks and ETFs 24 hours a day, five days a week so you can keep up with today's fast paced markets, spot opportunities and take control of your trades. With tools like screeners, simulated returns and Strategy Builder, you can now even trade your favorite assets all in one place. Robinhood offers competitive pricing with commission, free trades on stock and ETF options and some of the lowest margin rates among leading brokerages. The future of trading is fast, powerful and precise. Experience it now on Robinhood. Sign up today. Investing is Risky Robinhood Financial LLC Member SIPC is a registered broker dealer. Trading during extended hours involves additional risks. Other fees may apply. Small Business Owners State Farm is there with small business insurance to fit your specific needs. Whether you're starting a new venture or growing an existing one, State Farm helps you choose the right coverage to protect what matters most. Working with a local State Farm agent helps you understand your coverage options, offering local support to help you achieve your goals. Focus on turning your passion into a thriving business, knowing your insurance can change as your business grows. State Farm Here to help you succeed with your business like a good neighbor. State Farm is there Picture a levy with a tiny crack every day that you're waiting to hire. That crack grows, systems start to strain, workflows begin to crumble, and pretty soon that little crack is going to become a flood. And no one wants to be standing there when everything breaks. That's why it's so important not just to hire, but to hire quickly. And when it comes to hiring, Indeed is all you need because Indeed's Sponsored Jobs helps you stand out and hire fast. With Sponsored Jobs, your post jumps to the top of the page for your relevant candidates. According to Indeed data, Sponsored Jobs posted directly on indeed have 45% more applications than non sponsored jobs. The last time we hired someone, it took months. Don't let that happen to you. You know. With Indeed Sponsored Jobs, there are no monthly subscriptions and no long term contracts. And in the minute I've been Talking to you, 23 hires were made on Indeed. There's no need to wait any longer. Speed up your hiring right now with Indeed and listeners of this show will get a $75 sponsored job credit to get your jobs more visibility@ Indeed.com Paula just go to Indeed.com Paula right now and support our show by saying you heard about Indeed on this podcast. Indeed.com Paula Terms and conditions apply. Hiring Indeed is all you need. Welcome back. Hey Joe, did you know that the only two states that have ever gone to war with each other are Michigan and Ohio.
- [30:56]
Joe Salcihai
Over Toledo.
- [30:57]
Paula Pant
Over Toledo. We went to war over Toledo and we won.
- [31:01]
Joe Salcihai
Yes. But as compensation, you know what? Michigan got?
- [31:06]
Paula Pant
The Upper Peninsula.
- [31:07]
Joe Salcihai
The whole Upper Peninsula.
- [31:09]
Paula Pant
Yeah.
- [31:09]
Joe Salcihai
So yes, you got Toledo, Paula. Good for you.
- [31:12]
Paula Pant
Yeah, we got Toledo. Ohio won the war.
- [31:16]
Joe Salcihai
Toledo is fantastic. But I will take all of that land. All that fantastic land. No offense to Toledo. Love me some Mud Hens baseball.
- [31:26]
Paula Pant
Well, our next caller is moving from Michigan to Ohio, which I endorse and I don't. Our next call comes from Anonymous.
- [31:39]
Moses
Hi Paul and Joe, thanks for the podcast. I'm going to remain anonymous because I kind of like it when you give people names. It's fun. I'm going to caveat this question by saying that I really should have taken the your first rental property class. I missed the signup deadline. It was a mistake. And now my question is basically going to be straight out of that class. And I'm hoping you'll grace me with your expertise and I promise you I'll look for the sign up and I'll sign up next time. Big picture. My wife got a job in Cleveland. We're thrilled. And we're going to move from Michigan to Cleveland and we have to decide should we sell our house or should we convert the house into a rental property? I think if we were to sell, we would break even. No net gain to our net worth, no net loss. But I've been kind of wanting to dip my toe into the rental game for a while and it strikes me as a good opportunity to maybe do this and learn and grow from the experience. Although granted, I could also just do that in Cleveland. So there's that caveat as well to give you a few numbers to help you get a sense of where we're at. Our mortgage is 4.875%. It's a seven year ARM and it readjusts on June 1, 2030. We were $0 down. Oh, and I should say that that readjustment would be the one year treasury rate plus 2.75% up to a maximum of 9.875%. I said we were $0 down and at the time that we would sell the place or turn it into a rental property, our outstanding loan would be about 421,000. Now I've created an Excel sheet and like tried to fiddle around with this and I have all sorts of assumptions, right? I've got like a 1% repair cost assumption and a 4.2% vacancy assumption and all this sort of thing. But any which way I slice and dice it, it really works out that we're probably going to have a cash flow negative situation here, anywhere from 5k a year to 15k a year. So if we were to turn it into a rental property without doing anything else, we would probably need to make it up in appreciation if this were to be a positive investment for us. Now granted, the other option that I've given some thought to is selling some equities in order to recast. We have about 105,000 in cash, 520,000 in tax advantaged accounts and 578,000 in taxable accounts and we have no debt. So that's an option and I've given it some consideration. I think if I did that it really would work out to this place would be cash flow positive if I were to pay down like $200,000 in the mortgage, for example. But I'm nervous about that for a few reasons. Primarily two. Number one is I don't like capital gains taxes and I haven't really looked into how to optimize that. And then the second reason is my wife and I just hit our coast fire number with our invested equities and I really like that. So I want to kind of leave it where it is. Although I also wonder if maybe I'm missing an opportunity here. So I'm curious what you think.
- [34:31]
Paula Pant
Anonymous. Thank you for the question. Before I answer it, we've got to give you a name. And Joe, I've got the perfect one. Oh, you must, because Anonymous is moving to Cleveland. I thought it would be perfect to name him after General Moses Cleveland, the namesake of Cleveland, Ohio. General Moses Cleveland led the surveyors who established the city in 1796. So, anonymous, your name will be Moses. Moses.
- [35:02]
Joe Salcihai
How about that? I did not know that. Yeah, I did not know where that name came from.
- [35:06]
Paula Pant
You know, I didn't know either. I, I assumed actually that it was probably after Grover Cleveland, but.
- [35:12]
Joe Salcihai
Oh, it would have been around the way before Grover.
- [35:15]
Paula Pant
Yeah, and it would be. You know, we've never named a caller Grover.
- [35:18]
Joe Salcihai
No, but that'd be fun. That'd be the Sesame Street.
- [35:21]
Paula Pant
Yeah, that would be fun. Yeah, it's funny.
- [35:23]
Joe Salcihai
I wouldn't think president at all. So, anonymous, next time you call in, we're calling you Grover, but I will.
- [35:28]
Paula Pant
Say Ohio is known as the Mother of Presidents because seven US Presidents were born there. Grover Cleveland is not one of them.
- [35:35]
Joe Salcihai
Is that a brag? Are you bragging now about how many presidents born in Ohio?
- [35:38]
Paula Pant
We have produced more presidents than any other US State. Michigan produced Derek Jeter, we produced Grant Hayes, Garfield, Harrison, McKinley, Taft, Harding, and we're claiming William Henry Harrison.
- [35:51]
Joe Salcihai
Although what is that disputed? Well, is it the great Harrison dispute?
- [35:57]
Paula Pant
He was born in Virginia, but he settled in Ohio, so we're claiming him as well.
- [36:02]
Joe Salcihai
Gotcha. Well, so what does he do? Does he keep it? Does he rent it out?
- [36:08]
Paula Pant
Moses, of everything you suggested, I'll tell you the idea that I like the least. The idea that I like the least is selling off some of your stock investments, selling off some of your equities in order to pay down the mortgage. But I dislike that idea. And I could tell from your question you also dislike that idea. But I think we dislike that idea for different reasons. You mentioned that you dislike that idea because the capital gains tax would be cumbersome. That's not my reason. I get why you would think that way, but that's not my reason for disliking it. And that's the reason for that is because I don't want to let the tax tail wag the decision dog. Meaning, if selling those equities was the right thing to do, then even if you had to take a tax hit, pay some capital gains taxes, if it's the right thing to do, then it's the right thing to do. But in this case, it's not. In this case, selling those equities, I believe, is the wrong thing to do. And the reason for that is twofold. Number one, it's clear that you and your wife had a goal of reaching coastfi. No one reaches coastfi accidentally unless you're very, very lucky. People who reach coastfi have been working towards that for a while. So building that equities portfolio that you have is something done by design. It's something done with intentionality. Now that you've achieved that, I don't like the idea of undoing that. You had a goal. You achieve the goal. Let's celebrate that win. That's one of the reasons I don't like the idea of selling the equities. The other reason is because putting more Cash towards a property in order to get it to perform distorts the performance of the property itself. And here's what I mean by that. Hypothetically, if you had unlimited money and you could buy a bunch of properties in cash, it would be pretty easy to build a cash flowing rental portfolio. But that doesn't necessarily mean that you would have a great underlying selection of homes. It just means that you have a big bucket of cash. And when you're purchasing properties in cash, it's easy to make those properties cash flow. By contrast, let's imagine an extreme opposite end. Let's say that you had to borrow at a 25% interest rate on properties. Well, pretty much every property on the planet is going to look terrible under that set of conditions. So financing distorts our perception of whether or not a given property is a good underlying investment. Because if the financing was 0% or if it was non existent, a lot of things are going to look good. If the financing was 25%, a lot of things are going to look bad. And neither of those give you any type of answer about the underlying quality of the asset itself. And that's what we want to evaluate first and foremost. If you look at stocks as an analogy to real estate, let's say that you were in the business of selecting individual stocks. Tesla, Coca Cola, Nike. You would never select those stocks based on the amount of margin that was available to you. You would select those stocks based on their own intrinsic fundamental qualities. And then if you wanted to use margin to leverage further into that bet, well, I would tell you not to, but there are people who do that. But it isn't the margin itself that makes the purchase good or bad. Putting air quotes around good or bad. It isn't the margin itself that makes it a viable investment. It's the intrinsic qualities of the asset. And so that's what we want to answer when we're looking at this home that you own. And the way that we do that, the way that we figure out is this home that you own worth holding onto, is by understanding what the unleveraged total return would be. And so here's how you calculate the unleveraged total return. Start with the purchase price of the property, the price that you yourself actually paid for it. Add to that any upfront repairs that were required, required for you to be able to inhabit the property, which for most owner occupants, there typically are not any. Generally speaking owner occupants. Retail home buyers tend to buy properties that are move in ready. But if that assumption does not hold true, for you. If you bought something that was an uninhabitable fixer upper, then take that purchase price plus upfront repairs, and those two factors together are your total acquisition cost. Now, you're going to hold that number in your back pocket, and then you're going to take a look at what the monthly rent is and multiply that by 12 to get your potential gross annual rent. Now, that is theoretically what you would collect from that home if it had 100% occupancy. And obviously it's never going to have 100% occupancy. But roll with me for this calculation. So you calculate your annual rent at 100% occupancy. Then you add in annually any other fees that you could collect from this property. Parking fees, pet fees, storage, laundry, any other supplemental income that the property can generate. Add that. All in that number is your potential gross rent. Once you have your potential gross rent, you then make an adjustment for vacancies. So you subtract that out, and what you are left with after making a reasonable vacancy estimate is a different number that's called your effective gross rent. So potential gross rent minus vacancy adjustment is effective gross rent. Then you add in any other income. So when you add in other income, that's pet fees, laundry fees, storage, parking fees, any supplemental income that that property can generate, you add that other income to your effective gross rent, and then that together turns into a number that's referred to as your gross operating income. So now that you have your gross operating income, the next step is to subtract out operating overhead. Now remember, operating overhead does not include financing costs. It includes expenses associated with running the property, such as utilities, water, trash, repairs, property management, maintenance. But it does not include the debt servicing. So the principal and interest portion on the mortgage. It does include homeowners, insurance and property taxes. You've got your gross operating income minus your operating overhead equals your net operating income. Now, that net operating income divided by the total acquisition price of the property, which, remember, is the purchase price, plus any upfront repairs needed to get it ready for its first inhabitants, which were you and your spouse, that net operating income divided by the total acquisition price, that's going to give you a percentage which represents the cap rate on the property, which is functionally the unleveraged dividend that you're collecting from the property. So take that cap rate and then add to it some reasonable appreciation assumption. Home prices nationwide over the past 40 years have appreciated at around a 5% rate. But of course, your mileage may vary depending on your specific location. But add that cap rate to some reasonable appreciation estimate and the number that you have now created is your unleveraged total return. And I want to know what that number is because that's how you assess the property itself, independent of any financing. And once we've done that, you can take a look at that property, what is the unleveraged total return on that property, and then ask yourself, is this even worth holding? Often, not always, but often. If you've selected a property for the sake of it being a primary residence, usually it's not. Because the decisions that go into purchasing a primary residence are very different than the decisions that go into buying an investment property. You're looking for a separate set of characteristics. But sometimes you get lucky, sometimes it is. But what I want to know first and foremost is what's the cap rate on that property and subsequently what is the total unleveraged return on that property? And that's going to tell me a lot.
- [44:42]
Joe Salcihai
It's interesting to me how no matter what investment you're using, there's a couple go to analytics that you will explore. Right. And cap rate comes up again and again and again when it comes to investment property.
- [44:59]
Paula Pant
Yeah. Now I will say generally speaking, I don't like things being negatively geared or negatively cash flowed simply because there's a limit to how many of those you can acquire.
- [45:10]
Joe Salcihai
Sure. Right.
- [45:10]
Paula Pant
But I also understand that he's interested in potentially regarding this first one as a learning experience so that he can learn the ropes around out of state management, which is a very, very valuable life skill. In addition to that, there are certainly years, there are certainly temporary periods where properties become negatively geared because you're doing big repairs on them or you're doing a lot of capex, Every long term landlord has had their negative cash flow years. That's like any type of entrepreneurship that's par for the course. In this case it's different because his negative cash flow would not be the result of major capital expenditures. It would be the result of the rent simply not being high enough to keep up with the basic bills. But given that he already owns the property and there are major transaction costs associated with selling the property, if he has a reasonable expectation that rental rates for that property are likely going to increase significantly in the coming years, maybe it's an area where there's huge population growth and there's insufficient new construction to keep up with that population growth. So if it's an area where he has a reasonable expectation that that rent is going to Rise pretty rapidly? Well, sure. Then it's worth holding onto the property because in two or three years, the rents will likely have risen so much that it will no longer be cash flow negative. So that's why all real estate is local. And that's why any analysis of a property needs to include not just one set of assumptions, but a range of possibilities, including what's the bottom and the top of the range of what it might rent for now and then what's the bottom and the top of the range of any rental increases that you anticipate in the next one, two, three years. And when we put all of that together, we arrive at a much more comprehensive look at what kind of returns he can expect from this particular asset.
- [47:13]
Joe Salcihai
It pains me to say this, that I love Cleveland.
- [47:18]
Paula Pant
Really I do.
- [47:20]
Joe Salcihai
My sister lives in Cleveland.
- [47:21]
Paula Pant
Wow.
- [47:22]
Joe Salcihai
Yes. And every time I visit there, we have a nice stacking Benjamin's community that gets together when I go there. So we had a couple meetups last year and super nice people in Cleveland. I like the downtown. I like the Playhouse district. It is so annoying how much I like that town.
- [47:37]
Paula Pant
Ah, Joe, I didn't expect to hear you say something nice about Ohio.
- [47:41]
Joe Salcihai
I know, it absolutely sucks.
- [47:43]
Paula Pant
Ah, well, I love Michigan as well. It's a beautiful state. Traverse City, Mackinac Island, Ann Arbor. There are so many just really fun places.
- [47:54]
Joe Salcihai
You had me until you said Ann Arbor and then you lost me.
- [47:58]
Paula Pant
Oh, that's right, you're a Spartan.
- [48:00]
Joe Salcihai
Yes. Now East Lansing, very beautiful.
- [48:03]
Paula Pant
What about Kalamazoo?
- [48:05]
Joe Salcihai
Kalamazoo is where I grew up.
- [48:06]
Paula Pant
Oh, nice.
- [48:08]
Joe Salcihai
So Kalamazoo's badass.
- [48:10]
Paula Pant
Western Michigan University. Yeah, yeah.
- [48:13]
Joe Salcihai
Go Broncos. Good stuff. Kalamazoo, Grand Rapids. Nice. Just there's that pit around Ann Arbor and actually, it pains me to say this too, but that's also. You write a beautiful town.
- [48:27]
Paula Pant
It is. It's a great town. I gotta go wash. Well, Moses, enjoy your move to Cleveland and congratulations.
- [48:38]
Joe Salcihai
As Drew Carey says, Cleveland rocks.
- [48:40]
Paula Pant
Our final question today is around one of my favorite topics, which is Roth iras. That's coming up next. What does the future hold for business? If you ask nine experts, you're going to get 10 different answers. Are we going to go into a bull market or a bear market? We don't know. But over 40,000 businesses have future proofed their business with NetSuite by Oracle, the number one cloud ERP, bringing accounting, financial management, inventory and HR into one unified business management suite. So there's the visibility and control. You need to make quick decisions with real time insights and forecasting so you can close the books in days, not weeks. If we needed something this robust, this is what we'd use. Because whether your company is earning millions or even hundreds of millions, NetSuite helps you respond to immediate challenges and seize your biggest opportunities. Speaking of opportunity, download the CFO's Guide to AI and Machine Learning at netsuite.com Paula this guide is free to you at netsuite.com Paula netsuite.com Paula P A U L A you know, the thing about life insurance is that it's not something that you buy for yourself. It's something that you buy for your loved ones. Because you want to make sure that if the worst were to happen, they would have some kind of safety net that they can use to pay off debts or cover big ticket items. And with policygenius, you can find life insurance policies that start at just $292 per year for $1 million of coverage. Some options are 100% online and let you avoid unnecessary medical exams. People will use life insurance to cover mortgage payments, or you can use it to cover college costs or even invest the money. And with policygenius you can compare quotes from America's top insurers side by side for free. There are no hidden fees. They have a licensed support team that will answer questions and handle paperwork, and they're the country's leading online insurance marketplace with thousands of 5 star reviews on Google and Trustpilot. Secure your families tomorrow so you have peace of mind today. Head to policygenius.com or click the link in the description to get your free life insurance quotes and see how much you could save. That's policygenius.com welcome to AutoZone. What are you working on today? My car is making this noise. Sometimes it's like and sometimes it's like.
- [51:06]
Joe Salcihai
Do you have a dash light on? Oh yeah.
- [51:08]
Paula Pant
And we don't have to listen for clues.
- [51:09]
Joe Salcihai
With the free Fix Finder service, we.
- [51:12]
Paula Pant
Can read a check engine, ABS or.
- [51:14]
Joe Salcihai
Maintenance light to find the likely fix.
- [51:16]
Paula Pant
And even recommend a local shop if you need one.
- [51:18]
Joe Salcihai
So you don't need to hear the not with Fix Finder free at every AutoZone.
- [51:23]
Paula Pant
Get in the zone.
- [51:24]
Joe Salcihai
Auto zone restrictions apply. Foreign.
- [51:35]
Paula Pant
Question today comes from John.
- [51:38]
John
I am John from Philadelphia. I have heard every podcast. I learned from them all. I especially enjoy the deep interaction between Joe and Paula on Caller's question that provokes my own thinking. I listened to several episodes on the pros and cons of traditional versus Roth IRAs. Joe is usually big on flexibility, such as bucket options and time. I was surprised that neither one of you, especially Joe, did not espouse on the Roth advantage to continue in time in near perpetuity versus the trad which comes to an abrupt drawdown beginning on the established day of reckoning as RMDs or required minimum distributions are reigned in. I converted my traditional to a Roth in 1997. I retired five years ago in 2020. I have well over a million in just my Roth that I've never touched nor have a foreseeable need to touch. As I near the age of 72 with my Roth, I can continue to let it run for years and decades, all growing tax free. If I would have left it as a trad investment, the tax free would all come to an unceremonious end about now with a piper to be paid. Is this not a significant Roth advantage for those who can extend the tax free growth to even multiples? Or am I missing something?
- [53:03]
Paula Pant
John, that is a fantastic question. You are spot on. It is absolutely one of the many, many many reasons that we love the Roth.
- [53:14]
Joe Salcihai
My favorite line around this is and John, I apologize maybe Paula, I haven't said this on afford anything, but when we talked about the Roth on stacking Benjamin's John, you nailed it. The fact that you are not sharing any of this growth. You're paying the tax once and you never pay it again. One of my favorite lines on this comes from Ed Slot, who's the IRA expert. Ed says the cool thing is Paula, you don't have to share any of it, any of the growth on a Roth with your uncle in Washington ever again. And then he always leans into the mic and Ed goes and he's not even your real uncle.
- [53:50]
Paula Pant
Well, and but it's not just that. It's also that you are not going to be required to tap it whether you want to or not.
- [54:00]
Joe Salcihai
Yeah, I love the idea of not having to interrupt your strategy, whatever your investment strategy is. When you've got to make that withdrawal, you got to interrupt it, move it out, and then redeploy it. And often mistakes get made. Then the strategy changes. You start doubting yourself. So even behaviorally the Roth in the spot where John's at is wonderful.
- [54:21]
Paula Pant
Well, and RMDs are annoying when you don't want to make them. When you're making an RMD for the just for the sake of obeying some arbitrary rule.
- [54:31]
Joe Salcihai
Can I also say just the fact that he had the foresight in the late 1990s, right. To convert it all?
- [54:40]
Paula Pant
I was Thinking that too.
- [54:41]
Joe Salcihai
Yeah, just take the plunge and do it, John. Holy moly. Not the first word I was thinking.
- [54:49]
Paula Pant
Was moly, but just as in guacamole.
- [54:54]
Joe Salcihai
Holy guacamole, Holy guac is just fantastic. That is some foresight. Yeah, that is a move that's paid huge dividends, John.
- [55:03]
Paula Pant
Absolutely. Because in the late 1990s, no one was really talking about the Rothschild.
- [55:08]
Joe Salcihai
Not that much. And if they were, it was, hey, you want to put a little there? You want to dabble in this thing?
- [55:13]
Paula Pant
Right.
- [55:13]
Joe Salcihai
Because the thing that was uncertain as a fairly new way to invest is, is the government going to keep this available? So the fact that he locked it in, trusting that at the very least he get grandfathered on those contributions was some foresight. But then the fact that that law hasn't changed and really we've seen the government double down on the Roth over time and it's really become a cornerstone of a lot of people's investment strateg. Been wonderful to John and anybody who did it.
- [55:43]
Paula Pant
Right. Well, actually, so I just looked it up. So the Roth IRA was created in 1997.
- [55:49]
Joe Salcihai
Right away just jumped on it.
- [55:51]
Paula Pant
Yeah. So he did it in the same year that the Roth IRA was created. It was introduced as part of the Taxpayer relief Act of 1997.
- [55:59]
Joe Salcihai
I remember even so many pros then that were doubting the Roth and go, and do you think the government's really never going to tax this again? They're going to change it. In fact, I've talked openly on this show, Paula, about a woman who helped me get my financial act together when I was surrounding myself with better people. A woman named sue who was a cpa. My CPA was like, I don't know if I would go full fledged into that Roth like Sue, brilliant human being. Even the good pros doubting it back when John said, nope, jump in with both feet.
- [56:29]
Paula Pant
Yeah, that's absolutely fantastic.
- [56:32]
Joe Salcihai
So I have nothing else there but I five you, John, and go. Fantastic work. Another reason why bias toward the Roth, said very succinctly by you.
- [56:43]
Paula Pant
Since John brings up freedom from RMDs as one of the many benefits of a Roth, I do want to take this moment to elaborate on that for the sake of everyone who's listening. Because John, I'm sure you already know this, but if anyone inherits a Roth, then you may need to take annual RMDs on that inherited Roth. So while the original owner of a Roth IRA is alive, you have total freedom from RMDs, but your beneficiaries will have to take RMDs. Unfortunately, it can't continue to remain a Roth account in infinite perpetuity if you have an inherited Roth ira. The amount of RMD that you will have to take is going to vary depending on a lot of factors, including the age of the original owner and the number of beneficiaries. So it's going to be a complicated equation for which you're going to need a financial professional. But it is good to know that you have an account in which, as the original owner, you are not mandated to take any money out of that account if you don't want to.
- [57:48]
Joe Salcihai
Which gets back to the flexibility that John was talking about that I like. Yeah, I can choose when, where and how.
- [57:55]
Paula Pant
Well, Joe, I think we've done it again.
- [57:58]
Joe Salcihai
We did. It was so fun.
- [58:00]
Paula Pant
It was fantastic. Joe, what are you working on these days?
- [58:04]
Joe Salcihai
We just released a week ago, great interview with Barry Ritholtz, who of course is the top person at Ritholtz Wealth Management, where our friend Nick Magiulli works and downtown Josh Brown from CNBC fame is a partner there many more people. Ben Carlson, this guy Barry attracts so much talent. And what we did the week before, we did a deep dive on Wednesday the 19th on Barry's strategies and then the following Monday we interview him. So if you want to hear a nice one two punch about everything Barry Ritholtz that we could possibly dig up all the investing goodness behind this guy so many people respect, listen to the Wednesday, March 19 episode and then follow it down with the interview of the man himself the following Monday.
- [58:55]
Paula Pant
Oh, wonderful. And Barry Ritholtz and what he has created. Ritholtz Wealth Management is in New York City. I can state as a local, very well known. Yeah, incredibly well known. The Ritholtz name commands a lot of respect.
- [59:11]
Joe Salcihai
He has maybe the number one financial conference for advisors in the nation as well where when people are wondering what the the future of financial advising is, they go to Barry's conference because he is very much the voice of reason in the community. What I love about Barry is he cautions you about all the junk, Paula. All the junk that Wall street firms create, all the junk people listen to. And the fact that I love his basic premise, nobody knows anything. That is his basic premise. And when you give up the fact that you might know something, that's when you become a really good investor.
- [59:51]
Paula Pant
When you let go not only of being right but of even having any idea in the first place, it's so powerful.
- [59:58]
Joe Salcihai
You're Buying something. And you go, yeah, I don't know. So Barry and I, we talk a lot about all the gurus over the ages who have been wrong. Michael Burry is one person we talk about who called the, the big short. Right. The 2007, 2008 stuff. Michael Burry hasn't called anything since then. He's called so many things. We also have a good time talking about the man, the myth, the junk that is Robert Kiyosaki. And one of the guys in Barry's firm, Barry relates his story is that it's not Rich dad, poor dad, it's rich Robert, poor reader. Is this is what one of the people that people talk about. It's Barry has no problem with calling out bs and Robert Kiyosaki has had a ton of bs.
- [60:47]
Paula Pant
Yeah, I will say it's unfortunate because the book Rich Dad, Poor dad was fantastic. The sequel to it, Cash Flow Quadrant, also fantastic. I love both of the books, but unfortunately Robert Kiyosaki since then has taken a turn and now.
- [61:05]
Joe Salcihai
Yeah. And the bad news, Paula, is that I even have interviewed his co author, Sharon Lecter. And when you hear about what Sharon says about Robert, you understand why that book was good. And my personal feeling is it might have had more to do with Sharon than it had to do with Robert. Because to your point, Robert left to his own devices since then has been pretty.
- [61:31]
Paula Pant
What was that, Joe?
- [61:33]
Joe Salcihai
You like the sound effect?
- [61:34]
Paula Pant
That's a great sound effect.
- [61:36]
Joe Salcihai
You're like, wait, what? What? When he talks, you're like, huh? Where do you get that?
- [61:41]
Paula Pant
Yeah, and I should say we're not gratuitously trash talking him, but we, we do want to warn this community if you ever hear interviews with him. It's sad to say because I really did love the books. But as a public service, you all should know that despite the fact that he wrote or at least his name is authored on some great books, if you hear any interviews with him, be very cautious about what Robert Kiyosaki talks.
- [62:08]
Joe Salcihai
Well, and that is specifically, I think Barry's point in this interview is think about what people are really selling. What is Robert really selling right now? When you start digging into that, you understand really some of the method behind that madness. And then you really have to ask yourself, do I want to follow this person on social media? Do I want to attend their stuff? Do I want to? Am I buying what they're selling? And Barry really parses between being a good investor, being somebody that just blindly follows some strategy which may or may not be in Your best interest.
- [62:42]
Paula Pant
Right.
- [62:43]
Joe Salcihai
It's also, by the way, the first interview I've ever done, I've ever done, where the second I meet this man, I'd never met Barry before, the second I meet him, I immediately love him, which is why, of course, he attracts so many. I'm sure I'm not the first person to say that, right. That he and I hit it off. I get the feeling he hits it off with everybody, Paula. But literally, we just get into it and I go and I hit record. And then I realize, and I tell our mutual editor Steve, I'm like, I just need you to fade into this interview. And what you'll hear is that I had to fade into the interview because we just got going and then I stopped and I go, barry, I was going to start the interview, but I think we already began because a couple money geeks sitting and talking about this stuff that we're so passionate about. I've never had an interview where I've just rolled into it. But that's the kind of man Barry is, which is, I think, why so many people are attracted to him. He just is very, very excited about the topic of personal finance and good financial planning.
- [63:44]
Paula Pant
Well, I look forward to listening to that interview, Joe.
- [63:46]
Joe Salcihai
Thank you.
- [63:48]
Paula Pant
And I am heading to Panama next week, so. But there will still be fresh episodes.
- [63:54]
Joe Salcihai
Panama.
- [63:55]
Paula Pant
Yeah, I'll be there for two weeks. I'm gonna do episode 600 is coming up. So episode 600 is going to be the one that I record from Panama.
- [64:05]
Joe Salcihai
Wow, I can hear that introduction live from Panama.
- [64:09]
Paula Pant
Yeah. You know, I was thinking that. Except it's not going to be live. It's going to be pre recorded. So it's going to be pre recorded from Panama.
- [64:15]
Joe Salcihai
From Panama doesn't have the same ring to it. Still really cool. Very cool. But not the same ring.
- [64:23]
Paula Pant
Yeah. So all of that is on the docket. So make sure that you are following both of our shows in your favorite podcast playing app so that you. You don't miss any of these amazing episodes. Thank you so much for tuning in. This is the Afford Anything podcast. I'm Paula Pant.
- [64:37]
Joe Salcihai
I'm Jos Olcihei and we will meet.
- [64:39]
Paula Pant
You in the next episode.