← How to Money
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This is an iHeart podcast.
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Guaranteed, human AI is everywhere these days. But WIX Harmony stands out. It's an AI website builder that helps create any type of site while still allowing full freedom to edit everything manually. That means you're not limited to what AI generates.
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Plus there is an AI agent named Aria to help along the way. Try it for free@wix.com harmony that's wix.com
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harmony.com soy Edwin Castro del 1021 podcast Paraesta Copa Mundial de la FIFA Arma la como becam con la sistencia de the Home Depot Viste tu patio para locacion consesped verde y especo una sador phenomenal. Yun decres el mejor plan para que la fiesta futbollera siga hasta mucho despues del silvato final y con entregara rapida y gratuita sera lehendaria. The Home Depot promotorofficial de la Copa Mundial de la FIFA. Veinte ventisses sujeto a dis ponivilidad. This live check in is brought to you by State Farm. Por que elvinestarde tu familia ta mien merese protecion. When we had our first baby, I had it all planned out, right? Everything. Apps, books, todo. Now that baby number two is here, I'm definitely going more with the flow. Hi, I'm Wilmer Valderrama. And I've learned that with family, it's not about being perfect, it's about showing up every single day. Breathe respira. Change a diaper and I guess repeat like a good neighbor. State Farm is there. Welcome to how to Money. I'm Joel.
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C
And I am Matt.
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B
Today we're talking overblown AI portfolio powered wealth, and K shaped credit score.
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C
You know what, buddy? We will get to all those stories and more today during our Friday flight before we kick things off officially. You pumped about the World cup, so I'm so ready.
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B
Are you?
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C
I'm sorry, you mentioned it the other day and you were more. It seemed like you were more excited than I was expecting you to be.
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B
Well, I feel like March Madness, I used to get excited and I would like, turn off everything, like, you know, kind of start slip out of work early to catch a sweet March Madness 3:00pm Game clear.
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C
My calendar.
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B
Yeah, and less so. Unless that's what you say to your assistant, right?
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C
That you don't. That you don't have.
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B
Yeah, that's also like once a year, right? Which is. Which Is like, it's harder to do that every year, but World Cups once every four years. And so you're like, you could throw stuff to the side for some killer matches that you want to watch.
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C
And especially there's something different too about it being here in North America.
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B
Yes.
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C
Right.
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B
As opposed to in our time zone.
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C
As opposed to the other side of the world where you had to get up at 4 in the morning in order to watch a night game in
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B
Qatar or Qatar, which is apparently why the locals say it, some of the TV rights in some of those far flung countries have gone for less because the people, the broadcasters there are like, I'm not going to pay you like 300 million for the same world because,
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C
like, nobody's going to.
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B
People aren't going to watch it as much.
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C
I get it. Speaking.
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B
Okay. Speaking of like, pricing though, man, I mean, we talked about this too. Just how expensive it is to go to a World cup match. I was talking to a friend the other day. He bought tickets for his family. $3,000 for a family. Four.
- [03:24]
C
That's the dynamic pricing. Yeah. That FIFA's getting knocked for. But I also get it because, like, on one hand you got to do things legally. Right. And like, they're getting knocked because they're just like, oh, were they being honest? But I mean, bottom line, like that is it can lead to a more efficient market and the folks who are willing to pay, as opposed to there not being enough supply. Right. For those, because they get snatched up if they're, if they're underpriced.
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B
I was literally talking with another friend this morning about going to a concert and he was like, man, if you price them too low, they sell out real quick and then nobody. If I really want to go to the concert, I can't go now.
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C
And so is there a singular person that knows the perfect price? No. So a lot of times you rely on software to adjust accordingly. And so I don't know, there's a part of me that, that gets that.
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B
And it's a far cry from the 25 to $75 tickets that apparently happened back in the 90s when the world cup was here.
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C
Well, that's not.
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B
I mean, that's inflation, but that's also just soccer interest. Soccer is like booming.
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C
Yes.
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B
I guess a different ball.
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C
Well, even compared to the prices four years ago, because. Okay, do you remember we talked about this on the show, actually, let's rewind the clock a little bit. But when they announced the North America is going to be the host to the 2026 FIFA World Cup. I thought, this is back. I mean, we were in the midst of our, like, hooligan Atlanta United days. Like, we were season ticket holders, Kate and I, we were going all the time. You and I. Like, we were going all the time as well.
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B
Riding our bikes to the stadium.
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C
So into it, by the way. Evidently, the bike valet is still there.
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B
Oh, good.
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C
Holding it down. I love that that's still going on.
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B
Yeah, it's wonderful.
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C
But that's when I said, wow, I'm looking. I thought it was literally like five years in the future. I was like, oh, in 2026, there's a good chance that we'll all want to go. My entire family, all six of us. And so I based. So essentially, I created a savings bucket or a sinking fund for the 2026 World cup, started putting money, basically automated it to go into there every single month. But I based those prices on some of the ticket prices over in Qatar,
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B
which wouldn't be enough because it wouldn't be enough 3x the prices from 4 years ago.
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C
Yeah. So bottom line, though, is what's interesting is that I still have that sinking fund and I've been paying it. Actually, towards the end of last year, I realized, oh, wait a minute, we're not quite into soccer like we were in the past. And so I stopped funding it, But I still have that chunk of money. So what are you going to do? I don't know. And so I wanted to highlight that as a little personal finance tie in because, A, I was planning ahead in case we did want to go, and I've got a few thousand dollars in there, but as we've gotten closer to the, you know, the summer, realizing, oh, wait a minute, we're not going to want to do that because we're not really into soccer, but that there's nothing wrong with that. The ability for you to shift your goals and to move your cheese a little bit, like, oh, what do I want to now spend this money on? Gives you options. And we're fortunate.
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B
Not mad that you saved the money.
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C
No, exactly. So we're fortunate enough to not have to, like, immediately tap that for something else. Watch me, like, get a hole in
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B
my roof or something.
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C
There goes. There's a portion of my home deductible.
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B
Just broke my arm. Guess it's going to that.
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C
But the ability for us to be able to, I don't know, maybe later this year, Kate and I just be like, hey, what do we want to spend this month Money on this unforeseen few thousand dollars that doesn't have. That's not necessarily earmarked anymore anyway. Just want to put that out there. Like that's how you do it. And we were able to set us like, I was only putting aside like 35 bucks a month or something like that.
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B
Yeah.
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C
Without really.
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B
When you do it that far in advance. Yeah. Well, it also makes me think that prices should dictate the choice that we make. And there's something. There are a lot of experiences that are worth it at one price point for, for me, for our family that aren't at another price point. Sure. And so if you said, hey, you can go to a World cup match for like 250 bucks, I'd be like, I'm in, let's go. But if you said it's actually $1250, I just don't value the experience quite that highly.
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C
Yeah, I would do the same. I would do the same thing. Because honestly, even though I'm not super into it, I'd spend a couple hundred bucks probably and go and check it out. But yeah, not at the prices where they are currently. It causes you to reevaluate.
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B
That's why there are a bunch of tickets left, even for the World cup final, apparently.
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C
And you know what will happen, assuming that the dynamic model holds is those prices will come down fine, and then maybe there'll be some folks like you and I at the last second who might swoop in and get some heavily discounted tickets. I don't know how it exactly works.
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B
And if you, if you can zig when others are zagging, if you can say, no, it's not worth it for me now. But you can keep watching prices. It's just like, you know, getting a ticket to a far flung destination. If you just wait and hold out for a good deal, eventually you'll find one or you'll travel somewhere else because you couldn't find a good deal, which does happen.
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C
Hey, that's a lot of little intro banter here. Should we. Let's go ahead and quickly move on.
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B
Let's talk about jobs. Because artificial intelligence. This is like, everyone's like, there's, I can't find a job because AI is taking all the entry level jobs.
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C
It's the latest boogeyman.
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It is in the economy.
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C
That's what it is.
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B
It is. AI gets kind of blamed for everything.
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C
It used to be offshoring and globalization. Yeah, that was before our time.
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B
Well, that was before I really cared. That was certainly like, true. I remember going to Janesville Wisconsin. At one point it's like, hey, guess what? The car manufacturing plant shut down and those jobs no longer exist. And this, this town's not the same anymore, right? That it was on a micro level, yeah, for sure. But I continue to be blamed for essentially mounting job losses.
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C
They're blaming it for everything now, even
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B
though, of course, when you look at it, the unemployment rate is still incredibly low and things are fairly stable in the job market overall. That's not to say that, like, everybody who wants a job has one or that you're getting pay raises at the rate that you'd hope for, but AI is just getting, I think, too much blame and too much credit for a lot of things. And it turns out, Matt, that work from home and is hurting jobs more than artificial intelligence. This is according to a couple new papers, but specifically one by the New York Fed. And what they basically said is training and oversight for junior workers. It's more difficult and it's more expensive when they're not in the office. So, yeah, you landed the work from home gig, but that's costing the company more, which, and yeah, just. It makes total sense, right? Not not being rubbing shoulders with the, with your manager, with your coworkers, and is going to lead to inferior results, which leads employers to actually then prefer workers who have more experience so that they feel like they're maybe already trained up a little bit better. So work from home, like, man, it can be an awesome perk. I get why people want that. But it makes, I think, more sense for seasoned workers. It makes less sense for fresh college graduates. Younger workers are far more likely to retain a job to get raises and promotions if they spend those early working years in the office, especially in those early career years, being willing to go in at least a few days a week is going to be an asset. I think it's going to make you more appealing. And maybe we should just stop blaming AI for every little thing.
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C
I think that's probably wise. And I mean, bottom line, you got to be nimble. And I think most folks, especially folks who are already in the workforce prior to the pandemic, folks who entered into the workforce and graduated like, you know, 2020, I kind of get that they're thinking, oh, no, working from home is. That's a right. But like, no, it's a luxury. And I think, luckily, I think the majority of folks understand that you gotta be, yeah, you gotta be flexible, you gotta be nimble. Especially if there's like, a new initiative that your company's taking on and it's just like, hey, man, for the next six to nine months, you're gonna need to be here a lot more than what you're typically used to. I think that's what's necessary if you're wanting to get ahead when it comes to your career. And while we're talking about getting ahead in life, Joel, is education debt a thief, as Michelle Singletary says? Actually, I think she said, is education debt a time thief? She essentially called college a tax on your future net worth in a recent Washington Post article. Basically, you're taking on debt when you could be earning money, which would allow you to save and invest, getting that net worth snowball started. And many other folks, they consider the money that you spend on college and the debt that you take on as more of an investment, not a tax. But she's basically highlighting a growing viewpoint of college as being overrated in the current economic climate. And, you know, personally, I come down somewhere here in the middle because obviously, me too.
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B
Yeah.
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C
Okay. Because, like, obviously the right degree can still help you to outearn your peers over the decade, certainly over your lifetime. But how much you pay for it is incredibly crucial. And I still think the rule of thumb holds, man. The. The sort of standard advice has been, at least from our point of view, has been to only take on debt that is equal to or less than your likely starting salary after graduation. I think if it was less than that, that would be even better, as opposed to taking the route like the average American does. If you're taking on so much debt that's going to take you 20 years to pay it back. Well, I'm going to side with Michelle where I would say that, yeah, education debt is a thief of time because, yeah, you're basically beholden to that debt
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B
well beyond indentured servitude at that point.
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C
Yeah, well beyond that. I don't know what feels like the immediate period of time there right after college.
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B
Well, real quick, kind of like while we're talking about college, it just made me think about. There was an article in the Wall Street Journal about summer jobs. And one of my favorite economists, Roland Fryer, he wrote about kind of why summer work is declining for young people. And one of the things he highlighted is that for many of them who are going to college, their time is actually better spent instead of working some sort of minimum wage job. Even though, like, he talks about the benefits he had from. From doing work in high school, I feel like I learned a lot. It was really good for me, not only to like be making money and. But it was just kind of like showing up on time. The things I learned about interacting with my managers, that was important for me to work at that point in time.
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C
I remember learning how much the government takes out of my paycheck. Wait a minute, I thought I was gonna get paid this much, right. And then looking at my pay stub and realizing, oh, this doesn't quite feel the same, but it's like this, it's like I got bait and switch. Yeah.
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B
Yeah.
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C
As a 15 year old, it's this
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B
rite of passage that young people are taking part in less and less. And it's because what he boils it down to is one, it's less lucrative to work now than ever before in terms of like how much you're able to make from an hourly wage perspective. And you can, if you, you can use that time more effectively to, you know, do things to get ahead in for, for your upcoming college year. And so I think, like, even if it's just like applying for scholarships like we talked about right. With, with me recently on the show, like, there are a lot of things that you can do where your hours might be better spent. Maybe it's taking like an AP test. Right. Or studying more for the SAT if you're, let's say a junior in high school. So you get a higher score, so you get more, you know, more financial assistance from, from a school. I think there's, there's some, some truth there, man. I also just hate to see, though, young people say, oh, it's more important to fixate completely on my future in college and not think, not realize the benefits, even if they're not always monetary, not just dollars based.
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C
Right.
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B
Of having some sort of work history while you're in high school.
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C
Totally. I do think that there is the, like he talks about one of the benefits too though, was the fact that it provided a structure, like more than just the dollars that he earned, was the fact that he had somewhere to go, especially during the summers, that basically kept him out of trouble. This is sort of how I read it and I think literally what he
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B
said in the article.
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C
Yeah, trouble. Yeah. And I think there's a way to kind of like have both. Right. Like, I just think about, oh, there's a way. And he points this out as well, the fact that like, we're mostly talking about more affluent families and folks who have a bit more margin and can afford to not have a teenager who's literally working for dollars instead of like building up their savings account or Whatever. Like they're building up the resume, essentially. But I do think that there is a way that you can provide that structure, whether that's like an unpaid internship, if that is something that you can afford to do. Right. Like if you're a family that has that ability to. If you've got the margin and you can make that happen, that's a way that I think you can build towards something like college, where it's going to seem like your time is better well spent while also providing some sort of structure where you do have an immediate supervisor, where you are building towards something bigger and where you feel a sense of connectivity and community as opposed to just sitting there on your own, filling out scholarships or something that might.
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B
Something solitary.
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C
Yeah, exactly.
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B
Because I think it's a necessary thing to engage in. But I think you're right. Like internships, even the unpaid ones provide a ton of value. And I think they're kind of. Especially the unpaid ones are kind of frowned on these days. But I think there's just a lot from resume building, from character building and then also from kind of networking that those internships can provide.
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C
Exactly. Totally agree, man. So, Clippinger, they had a fun article about asking for lower prices, which of course we love the idea of shopping around, but on top of that, to just point blank, ask for a better price more often.
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B
Love this.
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C
Obviously you can't do it everywhere.
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B
Good guy or good gal discount. Yeah, Is that. Oh, I forgot about that.
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C
Yeah, we talked about. We talked about.
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B
That's an awkward way to ask for it. I think I'm a good guy. You're a good guy. Like, give me this. That's like an awkward way to ask. But I think. Why don't you like that way to ask? Because I just think that there's a better. There's just a better way to do it that doesn't feel like so value drip. Like, so makes you a good guy and the guy behind you not a good guy. Like just. I think it just gives me point blank.
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C
That was this American Life. It was Ira Glass and they did
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B
a segment on that.
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C
I remember that used to be like my favorite OG podcast back in the day.
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B
Still doing it, I don't know, because
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C
I don't listen to it anymore. Ever since I became the podcaster. I don't know, I loved. Oh my gosh, I loved Ira. I mean, I think he's still probably pretty great, but I do remember him saying that. And I. What feels. Yeah, it rubs me the wrong way. And I think it's because it just feels lazy.
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B
Yeah, right.
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C
Because why if you are going to ask for a discount, you, the reasons that you give shouldn't just be that like well I'm a good guy. It just feels so superficial and cheesy and shallow as opposed to okay, if I'm asking for a discount, do I have my own internally motivated reasons? Yeah, I'm trying to pay off some credit card debt. Yeah. I'm trying to like pay for my kids college. Like these are goals that I have and so I would like to pay less for this product or service that's fair. Or I think that's the best reason. But like even a more externally motivated reasoning could be like well your competitor over here is offering the same service for slightly less. So how about, you know, what do you think about matching that all both of those feel better than just being like because I'm a nice guy.
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B
Yeah. Well Susan, we live in a culture that's kind of averse to haggling but so much of the rest of the world. It is all. It's a normal part of everyday life.
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C
And I'm not saying like it's contrary to the, the, the polite nice, you know. Yeah. The polite nature or I don't know.
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B
And I'm not. Something about the culture. In the US you should haggle with everyone who comes in your life everywhere. Yeah, you can't do it everywhere. There's certain places like at the grocery store is probably not. You might actually, I mean that's not completely untrue. Like there when there's. Sometimes I look at the sell by date on certain things, Matt. And if it's like getting close or flowers are about to. I'll be like hey, these look like they're like past their sell by date tomorrow. Will you give me like I know you're going to mark them down tomorrow. Will you just give me the better price today? And so like that's a, that's an example where at the grocery store you can actually.
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C
That's a department that lends itself a little more to haggling because there, there, there's a value that there's a value call that someone has to make as opposed to just like a box of Triscuits.
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B
Yeah, yeah, yeah.
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C
It's just like you're probably not gonna get it.
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B
Those don't ever expire, all that. Yeah, no, you can't get a discount on that.
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C
Uh, but in that article the author saved $420 a year on her home Internet by just making a call. Talk to the customer service rep. And we've got an article to help you know when and how that you can ask for a discount there up on the website. And I will link to that in the show notes. Essentially, where the lowest hanging fruit is. And I remember talking about how you gotta. It's like a muscle that you have to work. It's something that you get better at the more you do it. And so we want to make sure that folks are working that asking for a discount muscle.
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B
And if you've got any great examples of you working that muscle and saving some money because you just asked, then let me know. Like, we would be curious to Hear how to. Moneypodmail.com we'll share maybe some of those examples. But you know, whether you try something out new this week, this weekend, or whether it's something you did recently, like, let us know.
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C
Maybe all they can say is, now
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B
maybe a plumber gave you a quote and you were like, hey, I'm a good guy. Will you snake my drain for a little bit less? Like, I don't know, like, but those are the kind of. Those are the kind of situations where you might be like, listen, I'll pay you cash money right here. Can I. Can I save 50 bucks? Uh, but you just have to kind of be willing to make things a little bit awkward, I think, in order to save. And let's be honest, man, sometimes you don't even have to ask for a discount. You just have to shop for a lower price that's the better, easier way.
- [20:04]
C
That's right.
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B
I think ask for a discount is underrated, but it makes me think about, like, if you're with one of the big banks, right, don't ask the big banks to pay you more interest on your savings. Just switch to a bank that doesn't hate you and pays good money on your savings. We talk about, like, MVNOs, the mobile virtual network operators, the kind of upstart cell phone companies that offer good prices. Mint and US Mobile are two of our favorites on that front. The big guys, they're trying to compete, but they can't, right? Every attempt, it seems like they muster up. It's just lackluster by comparison. They can't save you quite as much or nearly as much money. AT&T, like, just launched a plane that I saw, Matt. It's a $15 cell phone plane. You're like, ooh, tell me more.
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C
That sounds like.
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B
Sounds low price.
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C
Yes, within reach of Mint Mobile, US Mobile.
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B
But it comes with one gig of data. And for most people that's insufficient at this point in time. Right. Even if you're on WI fi a bunch, it's just, it's not good enough.
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C
Even US mobile, their low cost plan is 2 gig, right.
- [20:59]
B
2 gig, $10 for less money. So you're like for less money?
- [21:03]
C
Yeah. It doesn't seem like you're getting ahead there.
- [21:05]
B
Yeah. So I mean just, just know that while asking for a discount is good, knowing where to get a better price without having to ask sometimes is better.
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C
There was an article recently talking about the K shaped credit score that we're seeing play out in the economy. K shaped is like another one of those things too that I feel like is getting tagged onto everything, which is basically describes that like some people are doing good, some people aren't.
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B
Yeah, like K shaped parenthood recently.
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C
Oh my gosh, please stop.
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B
I'm a K shaped dad. Which, which, which. Where am I?
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C
What does that even mean? But the recent article we came across was talking about that when it comes to credit scores and the share of folks with both super prime credit scores and subprime scores have both increased. And so basically we're seeing more extremes at both ends. There are a growing number of sub 600 scores and scores that are above 780. And it kind of feels like a, you know, Dr. Jekyll and Mr. Hyde sort of situation here. And of course we want to see folks on the upper side of that. We want to see folks improve their scores. But there's still clearly evidence here that more credit score education needs to be happening. Given this disparity between folks who seem like they totally understand how things are working and they're doing their best to achieve that higher score versus folks who may not have any clue at all as to what it is that they're doing with their credit scores.
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B
Yeah. And I think certainly part of what's leading to the K shaped credit score is student loans being a lot of people being behind on their student loans, which is, which is harming their credit scores. And Matt, the folks in the bottom half of the K are not just getting their scores dinged, which makes a lot of things harder and more expensive. Right. Having a bad credit score is a, really gets a tough thing to go through modern American life with a score in the 500s or low 600s, but they're also the people who are more likely to have an auto loan delinquency or to fall behind on credit card payments, which exacerbates the problem.
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C
Right.
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B
And for a lot of people this can lead to like A downward spiral of personal finance circumstances, which lead leaves a lot to be concerned about. There is one concern, though, for people who have super prime scores as well, which is the temptation to overindulge. I think when you have a high credit score, maybe you're getting more offers in the mail. Handling credit well, in the past, it just means getting more enticing offers for more credit. And you're like, well, yeah, man, this is. This is what it's all about. I have got the great credit score. Let me use it. And it can lead to spending more than you should. Overdoing it, taking on new lines of credit, like, hey, guess what? You qualify for the best rate on a HELOC or a personal loan. That's the kind of mailers you're going to get in your mailbox. So just want to say, be aware of that. Just because you have a great credit score and you are getting that stuff in the mail, it doesn't mean you should take advantage of those offers. Most of that stuff should still go in the trash. Unless there's some sort of, like, realness. I don't know. But real there. Is there ever a real necessity for a personal loan in our minds, like, pretty close to number.
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C
Yeah. And certainly make sure you're evaluating the price that you're going to pay for these types of credit that are available to you. And I'm specifically thinking about cards that have high, high annual fees. You got to evaluate as to whether or not you're receiving the benefit from some of those different cards. Did you. Do you know how much. Do you know what the most expensive card is currently?
- [24:20]
B
Annual fee, right now, Annual fee, I'm gonna 50.
- [24:24]
C
This isn't a normal card. No, it's more than that.
- [24:26]
B
Okay. All right.
- [24:26]
C
I'm talking about the Centurion card. This is essentially. It's the Amex Black.
- [24:32]
B
Okay.
- [24:32]
C
Also known as the AMEX Black card. It has a $10,000 initiation fee, $10,000 and a $5,000 annual fee.
- [24:41]
B
What do you get for that?
- [24:42]
C
Just status. This is like conspicuous consumption at its utmost, which is so dumb. It's truly a way to signal that, oh, I've got more money than I know what to. You know, I got more money than cents, basically. This is how I'm gonna signal it. But, yeah, I. I think that's incredibly dumb. But as far as other cards, I mean, there is real benefit that you can gain from that, but you just have to make sure that you understand how it is that you're spending those dollars and whether or not you're making the most of it.
- [25:07]
B
When you got the good score, you're gonna get more offers for those great credit cards like, like with the higher annual fees. But they'll be worth it for some people and not worth it for others. You got to like, make up your mind based on how you spend money.
- [25:18]
C
Exactly.
- [25:19]
B
All right, we got more to get to. Matt, we're going to talk about the problem with investing based on your political affiliation. We're also, we're also going to talk about like one of our favorite accounts that is growing in prominence. People are young, people are falling in love with it. We'll talk about that and more right after this.
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all right buddy, we're back from the break and it is now time for the ludicrous headline of the week which is from Barron's. Headline reads politics and investing don't mix. Why your political affiliation could be hurting your returns. And it does seem like we're back in the silly season of politics. Joel Right, primaries are just finished across A lot of the country, a lot
- [27:32]
B
of mudslinging like on the podcast, like you see in the, in the newspaper.
- [27:36]
C
A lot of history being dug up in the ads. It's run off circuit runoffs are going to start soon. Then later this year we got midterms. Seems like it never ends.
- [27:46]
B
Can we be like, just aside, why can't we be like some of those other countries that have elections in like 35, 40 days just from start to finish. Let's just wrap it up quickly just so we're not in an interminable.
- [27:56]
C
Seems like a constant. Yeah, that's what it does seem like. But bottom line, this article referenced to the fact that how you view the current economy does depend on your political affiliation. So if you're a Republican, you might be thinking things are great, but if you're a Democrat, you likely think that the current economy is a total dumpster fire. As to statistically what's going on.
- [28:18]
B
When you look at the chart, Matt, like right as the election happens, the opposite happens as far as who's happy with the economy. Oh sure, Joe Biden was president because.
- [28:32]
C
Because you're politically heightened essentially is what you're pointing to.
- [28:34]
B
Yeah. Literally the day Donald Trump takes over, it's like that flips. Yeah, it's the exact opposite. It's amazing to see people.
- [28:41]
C
It essentially creates like a false reality. Right. Because you are looking at everything through the lens of your political affiliation. But these studies also show that these views impact of individuals investing decisions which tends to lead to inferior returns. So whether that means you are timing your purchases or whether it means you are not investing during a period of time because you expect things to go
- [29:05]
B
down and to the right or even selling right out of position because you're like, wait a second.
- [29:09]
C
Exactly. More international based on fear perhaps is not a great strategy. And you might love or you might hate or loathe the current administration and if so, great. You can vote and act accordingly. But do not let it impact how and how much you are investing. Essentially, don't discard your political beliefs, but don't allow that to diminish your financial intelligence as well as your future returns either. We don't want you to end up poor off in the future because of a political view that you held 10, 15, 20 years ago.
- [29:42]
B
Yeah, yeah. And that like it's one thing to be fearful because of market movements and even in that. Right. There's a lot of kind of stay the course advice that we would want to offer and to look at history, but the same thing Is true. When you look at the history of when there's a Republican or a Democrat in the White House, Matt, like, the stock market tends to return roughly the same amount on average.
- [30:06]
C
There are some differences, but oftentimes economists chalk that up more to just changes, like larger global economic cycles, as opposed to, like, politically conservative or politically Democratic policies.
- [30:21]
B
You're also giving too much credence to one. Yeah. To like, one individual. Yeah.
- [30:27]
C
Which economist was just like, no, the president is basically like a flea on the back of an elephant.
- [30:30]
B
Yeah. Yeah.
- [30:32]
C
And that's totally the case.
- [30:32]
B
I think. I think that's. I think that's true. I think that's a wise way to say.
- [30:34]
C
Not to mention too, like, okay, last little policy political thing. It's just harder to distinguish what is actually a Democratic policy point versus a Republican.
- [30:43]
B
Like, harder number.
- [30:44]
C
These days, everything is kind of like merging and is just this murky, brownish purple. You know, like, you take the two colors and kind of mix them together, and it doesn't. Doesn't look very identifiably Republican or Democratic.
- [30:56]
B
It's so much easier to draw the lines on policy things 15, 20 years ago than it is now, where there's a lot more overlap, strong disagreement on certain things and a lot more overlap on other things. And you're just like.
- [31:08]
C
Makes it even more difficult.
- [31:09]
B
It'd be really hard to identify what certain officials, what certain, like, politicians believe versus if you were to ask me what Bill Clinton or George Bush believed like that. Those. Those would be easier to identify. But speaking of politics real quickly, Matt, I mean, politicians have been unable to, maybe more unwilling even to tackle the problem with Social Security. But a new report was released on Tuesday revealing that the Social Security trust fund is set to run dry a quarter sooner than previously thought. This is something we've been talking about on the show. The reasons given in the report are reduced immigration, which means fewer taxpaying humans, and then, you know, tax cuts that have been enacted under this current administration, which means less tax revenue for the
- [31:51]
C
federal government, not to mention demographics, fewer folks even having babies as well.
- [31:56]
B
Yeah, yeah.
- [31:56]
C
So it plays into a tax base.
- [31:58]
B
I think all those things are true. Right. And. But the same. It's also important to mention that we've been headed for this Social Security cliff for a long time. So even though maybe that. That cliff is coming just a tiny bit sooner than was predicted last time, no grownups seem to want to address it. Like you're just kind of pretending. La la, la. Covering our ears and we'll let Somebody else handle it down the road. So people are probably wondering, well, what happens in Q1, 2032? Well, benefits are going to be automatically cut by 22% unless political action is taken. Matt, this is just a prediction here, but Social Security is just, it's popular, right? It's a popular.
- [32:36]
C
People want their money.
- [32:37]
B
People. Yeah. And people are like, I've been paying into the system for even younger people, 8, 10, 15 years. People who are getting closer to retirement are like, I've been paying into this for my entire life. Don't screw me over now. And so I think even if it means adding to the debt and the deficit, Social Security is going to be around and this will be addressed. But the longer we wait, the harder it's going to be to create a meaningful fix for decades to come. Waiting until literally the last second to veer is, is not, is not wise. Makes me think like if you're concerned about Social Security, we, we addressed a bunch of this back in episode 1127 with Mike Piper and, and I think especially for younger folks, Matt, I guess what, what we would encourage them to do typically is to not eliminate Social Security from their future financial projections. But also, you know, realizing the state of kind of the Social Security system and our politics, it should cause us I think to be even more intentional with our own saving and investing, not relying or overly relying on Social Security,
- [33:35]
C
which luckily is actually happening. Right. So on a, on a, some good news here. Americans own more stock now than ever. So stocks make up about 33% of Americans household net worth, which is awesome. It was less than 10% back in 1995. That's crazy.
- [33:52]
B
Yeah.
- [33:53]
C
So we've, I feel like we've come a long way here and the message of owning stocks to build wealth is spreading. I love that. Tax advantage accounts, specifically access via your employer, they are gaining steam as well. So you know, the primary home, it's been the main source of American wealth for a really long time. That's not necessarily something I liked. Right. So the fact that more of individuals Americans wealth are tied up in their portfolio I think is great news. And as we're talking about different places to invest those dollars, Gen Z, they're getting the Roth message too. Fidelity says that 3/4 of folks age 35 and under are choosing Roths compared with less than half in that age group a decade ago. So basically not only are individual, not only are stocks getting steam, but specifically Roth IRAs are getting steam, which I love you. It's just one of the best investment accounts Overall and it is particularly beneficial for folks in their early earning years. When you are not in a higher tax bracket. Go ahead and pay the tax now, pay the piper. Never have to worry about tax within that account ever again. It's just one of the best deals out there.
- [34:59]
B
The people who benefit the most from Roths are people like, think about the teenager with the summer job we were talking about earlier. If you're that person and you are adding money to your Roth, your tax rate is almost non existent, right? The federal tax that you'll owe, you probably don't owe any. And the cool thing is you can stick money in a Roth, avoid tax, don't put it in a traditional, because you're not really getting much of a tax break anyway. So stick it in the Roth. And the same is true even if you're a young worker and you are paying some federal tax, it's probably minimal if you're in those earliest earning years, unless you're some sort of highly compensated individual, take advantage of the Roth. It's ultimately going to be in your best favor. You're going to pay a little bit more tax now, but you're going to avoid a lot of future tax down the road. And the ira, Matt, it's also just more appealing if you don't have a 401k match at all. And this is, this is the case for more and more workers right now the like, a lot more employers are deciding they're not going to offer a match maybe right now or maybe at all. The average employer match is 4.6% according to stats from Vanguard. But we're seeing an uptick in companies that are like pausing, reducing or even just eliminating their match entirely, which is just kind of frustrating. As someone you're like, oh, you're, you're taking away this benefit that I used to have. I, I could see like I would be frustrated by that if I was work for a company and they were like, you remember that 3% match we used to offer? Or 5% match, sorry about that. Next year it's not happening. And so as an employee, if you find yourself in that position, I think it's worth revisiting your order of operations, right? HSAs and Roth IRAs become even more appealing if you don't have access to a match anymore. And if you've maxed out those other accounts and you want to invest even more than maybe you do back over to the 401k, it just slides down the list of investment account favorites. If there's no match Attached to it.
- [36:47]
C
That's right. Yeah. And while we're talking about investing, Joe, we haven't heard much about gold recently. It's just crazy how interest and questions that we get, they tend to drop off significantly when the price of something goes down because it's like no longer that attractive thing.
- [37:01]
B
That's.
- [37:02]
C
It's no longer the light that the moth is flying towards, which is Peter
- [37:05]
B
Schiff on fewer podcasts talking about how
- [37:07]
C
great gold is when gold is not so much anymore. And the same with bitcoin as well. So Gold is down 22% from its peak. Bitcoin is down 50% from all time highs from last fall. More than half of bitcoin supply now is underwater given the current price. And man, that's, it's insane. Like if stocks were down this much as gold, bitcoin, we'd be talking about a bear market. And I know that I'm sort of cherry picking some recent returns here to drive him a point. But it is just, I think it's smart, it's wise and prudent to look back at short lived manias to see how it is they turned out. And gold has, I wouldn't call it like a. It's not short lived. It's been a solid investment for a long time. But The S&P 500, man, it has historically been a better option over the course of decades. And if you want to invest in gold or even bitcoin, do it for I would say reasons other than just seeing that everyone's jumping on the price is going up. Know that volatility is par for the course. That's true with stocks as well. But man, the volatility, especially when it comes to bitcoin and in the fact that there's. You're not actually buying anything other than the collective sort of trust of all the other investors that you are hodling with as opposed to actual companies that produce goods and services for individuals. That's. That's the biggest strike against, against bitcoin. Even with gold. You could say that like, well, it's an actual something physical metal that's historically
- [38:32]
B
had value over centuries as opposed to
- [38:36]
C
trust which could evaporate overnight. Yeah, yeah, go for it if you want no more than 5%, that's the rule of thumb. I think it still holds.
- [38:43]
B
I think that's always good advice, buddy.
- [38:44]
C
Yeah.
- [38:45]
B
All right, well that's going to do it. For this episode. We'll have links to a lot of the articles we referenced up in the show notes on our site. Howto money.com that's right, buddy.
- [38:53]
C
We'll see you back here on Monday with a fresh ask how to money. Until then, best friends out. Best friends out.
- [39:13]
B
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