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Friday Flight - Trump’s Tariff Tussle, Paying Egg-stra, & Don’t Buy the Dip! #942
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- [00:00]
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By earning cash back rewards with Colgate Palmolive rewards available while supplies last. Limit supply US only January 1, 2025 through March 31, 2025 for full terms, visit cprewards.com welcome to how to Money. I'm Joel.
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B
I'm Matt.
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A
Today we're talking Trump's tariff tussle, paying extra and don't buy the dip.
- [02:11]
B
And you're not talking about not buying the dip as in the dip for the big game, which.
- [02:16]
A
No, buy that dip.
- [02:17]
B
Buy that dip. Buy the wings, buy the oh, the chips. Buy the companies that make the microchips. Just trying to tie it all together.
- [02:25]
A
When the stock price is down, we'll talk about why not buying the dip. Makes sense, but because I've seen a lot of headlines this week, Matt, about, oh, investors are buying the dip and I get the appeal, but we'll maybe like throw some shade on that.
- [02:37]
B
Sure.
- [02:38]
A
Okay. So are you you and I always talked about this where neither of us are super duper into Valentine's Day, right?
- [02:44]
B
Yeah. Not my favorite holiday in our household.
- [02:47]
A
You do like to dress up as a cupid, but that's different. That's a different thing.
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B
That's a whole nother. There's a reason that I like to do that.
- [02:53]
A
We won't talk about that, but. Yeah, our family. Same thing. But I want to. I know some people love the holiday and part of, I guess, our aversion to it. Yeah, it feels manufactured. And if you're gonna go out to dinner, it's more expensive that night. So, I don't know, go on the night before instead or the night after. And flowers typically get more expensive, too. Right.
- [03:15]
B
Cook something at home. There's ways of celebrating that don't invol breaking the bank. True. Is that what you're gonna do? You gonna.
- [03:21]
A
Well, we're not really. We don't really celebrate early in the week.
- [03:23]
B
Are you gonna go ahead and buy some flowers then? Just. Well ahead of time?
- [03:27]
A
I probably will, yes.
- [03:28]
B
Or wait on the sales afterwards.
- [03:30]
A
No, I think I will get flowers ahead of time. But basically my favorite places to get flowers are Trader Joe's. We don't have one close by. And then the other great place where you can get flowers. And I was thinking some people like to get their flowers delivered. Well, what they do, I've never done it before. Cause it's too expensive. Yeah.
- [03:46]
B
There's some wealthy folks I know.
- [03:48]
A
Freaks me out, the prices through the 1-800-flower-service and stuff like that. I'm like, no way. But I saw Costco same day. You can get the flowers that they sell at Costco and you can have those delivered. So maybe that for the person who likes to get flowers delivered, maybe that's the ideal way to go.
- [04:02]
B
Interesting.
- [04:02]
A
Yeah.
- [04:02]
B
Like, it's via the same grocery delivery service. It's not like they ship you flowers in a box that shows up via FedEx.
- [04:08]
A
No.
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B
Okay.
- [04:09]
A
Yeah. No, it's the same thing where a human actually brings them, drops them off at your door. So maybe they'll just pick up flowers.
- [04:15]
B
And, like, throw them onto your door stoop. Just like.
- [04:18]
A
Only if they're like groceries. Single and mad about it, I think.
- [04:21]
B
Okay. So you ready for my little soapbox on Valentine's Day? Specifically, I am of two minds. Because on one hand, I do want to be able to model the fact that I love and appreciate my wife. To be able to. And my kids as well. I've got three girls, you've got two. But to model that well for them, to demonstrate what that looks like even to my little dude as well. And so because of that I want to do a good job with it. But I also hate the path that our culture has taken, especially when it comes to the candy and like chocolate, specifically, the gross mass produced chocolates here in the United States, man, they. It drives me crazy. And ever since I'm going to ruin chocolate for everybody. But the butyric acid that the mass manufacturers add to our chocolates that make it taste a little gross, specifically, it makes it taste a little vom. A little vomi personally grosses me out. And so we've got these multiple holidays, like St. Patrick's Day, Easter even, and it just all revolves around candy. I guess for us it does, given the fact that we're kind of in that like, kids stage of life. And when you think about it like a hundred years ago, that was something special because candy was like this rare thing. But like the day and age that we live in now, it can be had for so cheap and it's just everywhere. It's just not special.
- [05:31]
A
Even if it being cheap means it's kind of nasty, especially because of that.
- [05:35]
B
But I would much rather, like, what we typically do is have like a nice fancy breakfast do like heart pancakes and make some bacon perfectly in the oven and like something healthy as well. Right. Like, that's the other thing. It's just like, are we gonna.
- [05:49]
A
I'll go with being healthy. I'm with you on that.
- [05:52]
B
Yeah. Probably get some pushback on that, but it's like with some, you know, some fruit and maybe some oatmeal, whatever. But there are ways to celebrate it without kind of going down the mass consumption, total consumeristic sort of path that I feel like our country has gone down.
- [06:05]
A
There are also ways to show your partner that you love them without doing the binding, the whole Valentine's Day thing. And if you are hearing this and you're like, yeah, maybe I should. Should buck the system a little bit. Well, now is the perfect time to kind of break that news to your partner and also do something special for them in advance of Valentine's Day. Right. So it's like, hey, guess what?
- [06:23]
B
Start thinking now. Start writing that letter now.
- [06:25]
A
Yeah, I ain't gonna do the thing next Friday, but I'm gonna do something this weekend that shows them that I care. And that way it feels less like you just cheaping out or not caring about them. So communication is key on that.
- [06:40]
B
Yeah. Just like we do around the holidays. If you're thinking about scaling back on the number of gifts you're given, that's not. You spring on them the Night before or Christmas mornings. You got to start talking about it ahead of time.
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A
I didn't tell you I wouldn't get you anything. That doesn't.
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B
Not going to fly.
- [06:53]
A
No, it doesn't. All right, Matt, let's get to the stories we found interesting this week and how they pertain to people's personal finances. And some of them do happen to be in the political arena, which is. I posted something on Facebook this week in the how to money Facebook group. We're trying to avoid the politics side of these economic realities, but there are changes afoot and we have to talk about them. So we are less than two weeks into the Trump presidency. It's been real quiet. Not much happening over there in the Oval Office. Matt, have you noted, like, what's going on? Nothing.
- [07:26]
B
I haven't heard anything from the White House.
- [07:27]
A
Nothing worth talking about. Just kidding. We got to talk about tariffs. Feels like a really, like a fire hose of kind of information. Policy changes going on right now. And again, we'll try to stick the facts as much as possible, but specifically on the tariff fronts. That's the big macroeconomic news that might have a meaningful impact on every single American if they come to pass, which it's still an if they've been delayed.
- [07:51]
B
I just realized we missed out on calling this terrifying tariffs. Joel. Dude. Yeah, I'm sorry. I'm sorry. They come to me. I need your help as we're talking about it.
- [08:00]
A
Yeah. All right. So the tariffs in the first Trump administration were targeted in nature, and then the Biden administration basically kept those tariffs around. But Trump's tariff thoughts in 2.0, Trump, Trump World, they seem to have differed. So initially they targeted China, you know, eight years ago, and now they're targeting our neighbors and friends and allies like Canada and Mexico if they come to pass. Right. Again, is this just a bargaining chip? What's going on on a broad level, Matt, as you and I have said before about tariffs, if these tariffs do come to pass, if it's not just a month delay, but they do become implemented, this is going to impact prices on a variety of goods and services that all of us use and love because tariffs get passed on to the consumer as essentially a tax, will we see tariffs on Canada and Mexico come to pass, which would definitely have an impact on our budgets? We don't know. But at least that threat scared a lot of businesses. It did change the way they act. Bloomberg had an article, Matt, and some business owners were saying this actually kind of feels like Covid. We're maybe Front load, some buying, maybe we're even changing our outlook on how we're approaching staffing. Like those kinds of things are coming into play as this tariff discussion unfolds.
- [09:21]
B
That's true. And I like that you said that we are attempting to take a more apolitical approach to these stories. Cuz I do think that folks on the left are gonna say, dude, Trump, he got lucky, he's trying to save face. This is why he hit pause on the terrorists. But then folks on the right I think are saying, well of course this is a negotiation tactic. He knew that from the beginning. He's smart. We gotta trust the. And we're not gonna say either way whether or not either of those opinions are correct. But I do think we can just look at what is the net result in four years. Let's have this conversation. But the day to day 24 hour news cycle makes it difficult to figure out what's going on.
- [09:58]
A
Yeah, I'm feeling some whiplash over here, Matt.
- [10:00]
B
The reality of what the threat of these terrorists would do is causing Canada and Mexico to change their tune a little bit. And in the case of both, what they have done is agree to help police the border in order to stop the inflow of drugs like Fentanyl. Regardless of motivation, that is what's happening. But from a financial standpoint and how this impacts us, like we said a couple weeks ago, tariffs are bad for free trade, they're bad for consumers. And if these tariffs do get implemented and if they stick around, well, we're all going to feel the pressure on our finances, we're all going to feel the differences in our expenses every single month. We'll see inflation tick back up. It remains to be seen if our neighbors will continue to cave to demands or if this just sets off a longer, honestly messier trade war. The trade war that the journal they called the dumbest trade war in history if it goes beyond these short term negotiations. That's likely true because global free trade is good for everyone to have these open free flowing markets.
- [10:58]
A
Can I say my favorite result Matt, of this sort of tariff kerfuffle? Is it Shein and Temu, those cheap Chinese websites? Well everything is actually going to cost more when you order for them from them. Now because of this loophole that was closed, the de minimis loophole which if.
- [11:16]
B
It was like fancy term.
- [11:18]
A
Yeah. Essentially a package sent directly from China under a certain dollar threshold, basically it's.
- [11:24]
B
Not an import because you're buying directly from the country, right? Yeah, because it's on the ship.
- [11:28]
A
And now that's gone, which means, yeah, the prices there are going to tick up. They're going to have to be more competitive. And other companies like it just, it just wasn't fair. They had an unfair exemption. And so I am glad to see that gone. And hopefully it just means fewer people buying those cheap items of clothing that now just got a little more expensive anyway, or more than clothing, all the stuff that those sites sell. And the truth is too, there's no such thing as American made anymore, at least to a certain degree. Right? Everything is made globally. Think about car companies from across the world. We have Hyundai and Kia manufacturing centers in the southeast. Mexico and Canada are instrumental to the manufacturing of American automobiles. And tariffs over time could create higher levels of unemployment as well. So there could be cascading effects in these industries. We're already seeing the car manufacturers saying, this ain't good for us. One industry that could be particularly hit hard by tariffs is homebuilding. New statistics revealed that home renovation spending is increasing quickly. This company house, it finds that the cost of renovations has doubled over the past 15 years, which makes sense, especially given what we saw during COVID Although some of those price increases have moderated. We've heard from listeners who would have moved, but paying for renovation and keeping that 3% mortgage intact made a lot more financial sense for them. And it's making more and more sense for a lot of people, even though the cost of lumber, concrete and labor have been going up and could be going up even more if tariffs are implemented. If you want to make some changes to your home, our advice is to save up.
- [13:04]
B
All right, Joel, let's touch on another policy change coming out of D.C. and another unsurprising effort. The CFPB, the consumer financial Protection Bureau. It might not be long for this world. The former Director was fired last week and the new Treasury Secretary has taken the helm. And his first order was to shut down all the work that's currently taking place.
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A
The treaty of Director isn't abnormal. That kind of happens often when a new administration takes place.
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B
But the shutdown of all litigation, essentially that was currently taking place.
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A
Like the different laws saying, kick back, put your feet up on the desk, don't do anything.
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B
The different lawsuits, enforcement of some of the items against some of the largest financial institutions in the country will now essentially cease. Like we just talked about. Capital One.
- [13:48]
A
Yeah, the.
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B
See, that was the CFPB who had filed that lawsuit against capital and breathing.
- [13:53]
A
A sign of relief.
- [13:54]
B
Right now, I think there is a good chance that that will never actually see the light of day. The ultimate reality for the CFPB might be that it just gets completely shuttered. It's unfortunate because it's helped a lot of consumers get results when being stymied by their banks over the years. That era of petitioning to a higher authority to get help is likely coming to an end. This is certainly something we'll be following and certainly a reason why we continue to talk about these topics. Because, Joel, you and I were journalists in a sense. We're podcasters, but like to be able to shine light on companies that are misbehaving, bringing attention to companies that have unfair policies. That's a small part of what we do here.
- [14:32]
A
Well, and we have over the years pointed a whole lot of people in the direction of CFPB.gov, consumerFinance.gov, takes you to the same place because the Consumer Financial Protection Bureau offers a place to turn when you're not getting anywhere trying to talk to the customer service arm of your financial institution, whether it's local or national. And they have the ability to kind of prod because they have kind of like a bully pulpit to a certain extent. And maybe it was used poorly in some ways, but it's been used to the benefit of consumers in other ways. So the loss of the cfpb, I would at least shed a tear. Matt, something else. I'm shedding a tear over egg prices. They're continuing to increase. Supplies are dwindling. There were none at Costco the other day.
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B
Really?
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A
When I went.
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B
That's. That's kind of like the Costco mentality of like stocking up, you know, loading up. Guess what? There's total. There's plenty of EG@ Aldi.
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A
Are they okay?
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B
Yes.
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A
I'm have to go by. I went into the grocery store the.
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B
Other day, regular and organic, and they.
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A
Were just, they were scattershot. You could tell it had been like rifled through and there was like an eighth of the normal amount there.
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B
Broken eggshells on the ground.
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A
Yeah, it's like what happened. It felt like a little post apocalyptic. The best restaurant on the planet, which I think you and I can agree, Matt, on this. Waffle House.
- [15:45]
B
I like Waffle House, but I'm not going to call it the best restaurant chain, which you're meaning to say, I'm sure.
- [15:51]
A
No, no, just best restaurant on the planet. Okay. Sorry, Noma. Waffle House wins. And you can shorten it to us as well, which is also four letters and kind of cool. Too, right?
- [16:01]
B
Waho. And noma.
- [16:02]
A
Yeah. Waffle House just announced a 50 cent per egg surcharge to all the items on the menu that contain eggs, which is the vast majority of menu items, because it's a breakfast joint. So I can't blame the good folks at Waffle House here. They're hoping, as are we all, that the impact of the avian flu will diminish in the coming months.
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B
Yeah.
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A
But for the time being, the increased cost of eggs has to be passed on to the consumer. And the truth is, get ready to pay more for all of your all star breakfasts. And there's no sign of this stopping either.
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B
Matt.
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A
The projections for egg price increases in the coming months are steep too.
- [16:39]
B
Yeah, I don't want to throw shade towards Waffle House. It's just that breakfast is like one of the things that everyone should know how to make. You know, there's a big part, there's a. When you're in college, Waffle House is great because, let's be honest, I barely knew how to fry an egg when I was in college. But like, as you get older, I appreciate Waffle House less and less. That's all I'm gonna say.
- [16:56]
A
But I like it. I don't go as often, nearly as often as I used to, but from.
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B
A nostalgia standpoint, is that why you think you're going more or whenever you do go?
- [17:05]
A
Maybe. I mean, I do like the food. It's just kind of your basic thing. I mean, yeah, there happens.
- [17:10]
B
But think about what you can make at home. Well, eater, they profiled a bunch of other restaurants that are considering raising prices as well on other dishes that contain eggs or even considering how many dishes to serve that have eggs all together. I think pretty soon we're gonna have like a. You know, like if you go to a fancy restaurant and like all the seafood, it's like catch of the day or it's got like market price.
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A
Yeah, yeah.
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B
Like, normally you see that when it comes to like the swordfish, but now I think it might be the case when it comes to eggs. But I do think we're gonna see this, the impact of this decrease over time because, well, for one, we have the ability to change our consumption habits. Right. Like eggs, they're still super nutritious. They're just not quite as affordable as they used to be. And so don't just keep grinning and burying it. Buy fewer eggs. Instead, buy the steel cut oatmeal and find other things to eat in the morning. I think there's ways we can modify our habits, but also I think I would just say sit tight because the farmers are having to cull their flocks because of the flu. And it's sad, it's terrible. But I think it only takes like three or four months before a chicken starts laying eggs again. And so just like hang in there. And I bet in like five or six months, I bet egg prices kind of resume, I don't know, back to normal.
- [18:19]
A
I hope you're right.
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B
That's my hope.
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A
I hope you're right. The thing is, when something like steak goes up in price, people can moderate their habits and say, I'm getting chicken instead with eggs. Eggs are kind of, they're kind of one of a kind. There's not anything that you can get that replaces it. You have to just say, I guess I'm going for this other thing that I don't like as much or whatever.
- [18:37]
B
Typically in the mornings, have some yogurt with some granola like we talked about earlier. Maybe a little more bacon, perhaps. Yeah, there's other breakfast proteins that we can all enjoy.
- [18:46]
A
Joel, did you see that? $40,000 worth of eggs, literally a hundred thousand eggs were stolen off a truck.
- [18:51]
B
Off the trailer or whatever.
- [18:51]
A
We mentioned it at dinner last night. And then my daughter came down after we put her to bed and she, she was like, daddy, is someone gonna break into our house and steal our eggs?
- [19:00]
B
And you're like, yes, they are. That's why Daddy's packing heat. That's right.
- [19:04]
A
That's right. I just thought that was to guard the eggs. Hilarious that she thought someone was gonna come in and steal our eggs. And trying to reassure that's not going to be the case. Although if they keep going up in price, it might be.
- [19:15]
B
You never know.
- [19:16]
A
All right, Matt, we've got more to get to on this episode, including fee reductions on your favorite funds at one of our favorite low cost brokerages. We'll talk about that and more right after. This.
- [19:30]
B
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- [20:38]
B
A bolo? Yeah, you heard him right.
- [20:40]
A
And of course I had to congratulate him on his smart fashion sense. The truth is, you can tell a lot about a person just by the kind of suit they wear. Send the right message. With the perfect suit from Indochino, you can visit a showroom or go to Indochino.com and use code howtomoney for 20% off orders of $499 or more.
- [20:59]
B
That's right. And Joel, the Indochino process was totally legit. We're talking about a customized suit made to order for you. We both went in store, we got meas up which was, dude, it was a really cool process. This was totally new for me but it makes so much sense now. I'm wondering like maybe all my clothes should be custom fitted as opposed to something that's pre made off the rack. Now I've got a great looking suit with all the accents and customized details that I picked out. Look like a million bucks but at a fraction of the cost. I was able to pick out a super high quality fabric and it's no surprise that Indochino that they work with fabrics from some of the best mills in the world. You get these European fabrics for an incredible price.
- [21:39]
A
Yeah. Creates your next headlining look with a custom suit from Indochino. Visit Indochino.com and use code howtomoney to get 20% off any purchase of $499 or more. That's 20% off at Ind O C-H I N O.com promo code howtomoney. What does the future hold for business? Ask nine experts and you'll get 10 answers. Will we have another bull market in 2025 or we're gonna get a bear market, continue to calm or will higher prices remain sticky? Wouldn't it be cool if someone could invent a crystal ball that would give us some foresight?
- [22:13]
B
Well, until then, Joel, over 41,000 businesses have future proofed their business with NetSuite by Oracle, the number one cloud ERP bringing accounting, financial management, inventory, HR into one fluid platform with one unified business management suite. There's one source of truth giving you the visibility and control you need to make quick decisions. With real time insights and forecasting, you're peering into the future with actionable data. When you're closing the books out in days, not weeks, you are spending less time looking backwards and more time on what is next. Our business is really small, but if we needed netsuite, we would be pumped about the time the cost savings that it provides. Whether your company is earning millions or even hundreds of millions of dollars, NetSuite helps you to respond to immediate challenges and seize your biggest opportunities.
- [22:59]
A
Speaking of opportunity, download the CFO's Guide to AI and Machine Learning at netsuite.com the guide is free to you at netsuite.com howtomoney that's netsuite.com howtomone as every business owner knows, inefficiency will cost you time and money. Too many meetings, for instance, can be burdensome and ineffective. That's why we schedule a quick planning meeting every morning. It helps HTM run smoothly.
- [23:25]
B
It's a morning cuddle.
- [23:26]
A
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B
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- [24:38]
B
All right Joel, we are back from the break. We got More to get to on today's Friday flight.
- [24:42]
A
So much more.
- [24:43]
B
It is now time for the ludicrous headline of the week, which is from the Journal. The headline reads, individual investors buy the dip. Again, there is a decent chunk of individual investors out there who ended up buying the tariff Diplomatic on Monday.
- [24:58]
A
Stock market was freaking out Monday morning.
- [25:00]
B
This is before, obviously before the markets corrected, but basically on the platforms where individual traders, so not the big investors, where they're out there doing business buy orders, they far outweighed sell orders of stocks like Tesla, Nvidia specifically, as values were getting decimated and despite our lack of interest in single stocks in some way that's actually encouraging. It's better to be a buyer than a seller if you've got time to write it out as an investor. But we just hear so many folks parodying the buy the dip phrase, the mantra, and there are some flaws to that way of thinking that we would generally recommend folks to not buy the dip.
- [25:40]
A
Yeah, I like the optimism. Kind of like what you're hinting at here, Matt, is that people are saying, oh, buying the dip says, I believe that this company has room to run over the long haul. And that bodes well. But you're right.
- [25:52]
B
I would rather see folks doing that than folks freaking out and just selling essentially 100%.
- [25:58]
A
But still, buying the dip is overrated. And that's because what were you doing with the money before the dip came along? Was it just sitting there in your bank account? And for how long was that the case? Because it's just obviously hard to know when a market correction might occur. Impossible, actually. And that's particularly true when the news headlines and the policy changes are moving at lightning speed. A friend of the show, Ben Carlson, wrote about that this week, and he said this. He said, the problem is that although corrections are a normal part of a functioning stock market, there are environments where corrections don't occur for a very long time. So I think buy the dip. It's often this emotional strategy that makes people feel like they're, they're making smart moves, they're buying low, they're getting while the getting's good. But dollar cost averaging is better than buy the dip because it just takes less mental effort and it leads to better results. If your money was sitting in savings like for, for the last couple of months, well, you're waiting for the dip. Well, it would have been better being invested over the last couple months than waiting for a point and a half pullback on a single day.
- [26:59]
B
Totally. Yeah. And even better than Dollar cost averaging is lump sum investing. If you had that money to deploy. Because, yeah, like this is.
- [27:06]
A
It's at least better 75% of the time, right?
- [27:08]
B
Totally. And I could not agree any more with Ben Carlson than just how he wrote that up. Joel, you know, I'm into the numbers. And so as I closed out January last month, I was kind of going over some stuff with Kate and I noticed that the S and P, it was up 3%, basically just in January, which is crazy. And when you are invested in a diversified way in the stock market, and so you've got the vast majority of your wealth tied up, like that has a big impact on your overall wealth as opposed to if you want to dabble a little bit and do some single stock investing. If Nvidia wasn't a position that you held and you thought, okay, here's a way for me to get, you know, let me get a little bit of Nvidia, my overall portfolio. Sure, go for it. Hopefully that's the case. It's just a very small amount. But personally, guess what? I don't own any Nvidia.
- [27:51]
A
Well, you do own a lot of.
- [27:52]
B
It, I guess I do, actually. Yeah. Because it's in the S and P actually probably makes up a decent chunk of VU. I'm guessing around 5%.
- [28:00]
A
5%.
- [28:01]
B
Is it really?
- [28:01]
A
Yeah, something like that.
- [28:02]
B
And so I think that obviously that's the approach that we take when it comes to investing in individual companies like this. On the note, though, of investing Vanguard, man, they did what they do best this week. They cut fees. In what is actually the largest fee reduction in Vanguard history. The average expense ratio on a Vanguard fund is now just 0.07%. I think the industry average is sitting around 0.44%. So much better than the rest of the brokerages out there. And this isn't going to change the life of any single investor, but it will collectively save investors hundreds of millions of dollars. And it's just another display of Vanguard doing everything they can to minimize fees. And what's great too is it just puts some, some pressure on the competitors out there who are like, if the industry averages 0.44%, that means there's plenty of folks out there who are charging well above that. And I think this is kind of like a, to use Vanguard terminology, shot across the bow of some of those ships.
- [29:01]
A
Agreed. Yeah. And Matt, turns out investors like low fees. I think another example of that phenomenon is increasing outflows from ESG funds, funds that are prioritize environmental, sustainable, and governance social.
- [29:15]
B
That's right. So who even knows? Because it's been so long since we've talked about esg.
- [29:18]
A
We haven't talked about it in a while. They just haven't been in vogue. I don't think in the same way, and I don't think ESG funds are dead, but they might be on life support because conventional equity funds have also performed better. That was one of the biggest arguments for ESG was like, all right, hey, not only are you investing your dollars in companies that, I don't know, don't produce oil or don't sell things that are harmful, although harmful was kind of depending on the viewpoint that you had because they were still investing in companies that were stealing our attention. It really was in the eye of the beholder. Another argument for ESG was, hey, these are going to outperform just a traditional index fund. That hasn't been the case. I think for ESG funds to be successful, they have to prove that they do lead to increased returns and that that outweighs the increased fees that they charge. They haven't been able to prove that you and I have not been fans of ESG funds, not because we don't love when people do good things for the world, but because we don't want you. It just doesn't make sense to invest in that way, especially given the data we've seen about fees and returns.
- [30:25]
B
Indeed, on a related note, investing app Robinhood attempted to blur the lines between investing and gambling as they attempted to partner with Kalshi in order to allow super bowl betting on their app. It was short lived though, as they had to pull the rug back on that one after government officials mentioned the likely illegal nature of the predictions markets and just how I guess Robinhood was implementing that from a high level. Everyone listening knows our take on sports gambling. Just in general, we don't like it. And too many folks are seeing the ads, they're signing up, they're saying, man, you're leaving money on the table if you're not going to claim that free offer. But what you're ending up doing is just forking over way too much money as you're in pursuit of this entertainment or the false idea of making more money. And the idea of combining sports gambling on the Robinhood app, where you invest for your future, where you have a retirement account, man, is a dangerous like crossing of the streams. In essence, like personally I'm not a fan. Does that mean that Robinhood should be barred from doing this? I'm not totally sure If I'm, if I would go that far. But it does start. It puts a lot of responsibility on the individual to decide what kind of limits am I going to place on this? You know, like, like when it comes to single stock investing, we've always said, hey, up to 5%. Same thing with crypto even. Like, hey, you want to, you want to dabble a little bit there? Okay, let's keep that siloed to 5%.
- [31:49]
A
That's a personal choice.
- [31:50]
B
That's a personal. Yeah. And beyond that, ooh, you are really playing with fire. We definitely would not advise for folks to do that. Which then makes me think, Joel. Okay, let's say that a lot of the apps included some future markets, predictions, betting on, you know, on their platforms. Do you think that that could fit within the 5% sort of window if folks had the itch, right, as that sort of pressure relief?
- [32:11]
A
I don't think so. I think, I think gambling is specifically entertainment budget. So if you want to dial back on what you're spending on Netflix or going out to concerts to spend on gambling, do your thing.
- [32:20]
B
That's where it should come out of your entertainment budget as opposed to feeling like it's an investment.
- [32:24]
A
That's right, 100%.
- [32:25]
B
I think I agree with that. Because inherently what, like, even if you're investing within a single stock, this is more like a Warren Buffett argument. You are investing within a company, a company that produces products, that does something good, that's putting out value in the world. But when you're betting on something, you're just making a wager that something either is going to happen or isn't going to happen. There is no value creation there.
- [32:46]
A
We have the downsides and the potential addiction that many people in our country are suffering now because of the widespread availability. You have to be careful in that regard too. So yeah, if you can handle it responsibly and you can do it in a way where, hey, it's just entertainment money. That's how I think of it and I've budgeted for it. That's great. I just think there's a lot of people who don't know how to stop themselves too.
- [33:06]
B
Totally agree.
- [33:07]
A
Alright, Matt, let's talk about credit scores for a second. They are an important part of our financial lives. The Atlantic had an article about parents gaming their kid's credit score. The author didn't seem to love the fact that parents can give their kids a leg up by adding them as an authorized user in order to get them started on the right foot. From a credit building perspective, the basic argument was it's not fair. And I get that.
- [33:33]
B
It's a weak argument, as my mom would say. I don't get that.
- [33:36]
A
Life's not always fair, honey. And my mom was right. I tell my kids the same thing sometimes. So yes, it is true. Like being able to help get your kids started on the right foot from a credit perspective, when other people don't have the know how. Like, yeah, maybe there is some unfairness to that. Kids with parents who are paying attention, jumping through the proper hoops can help their kids launch with a solid credit score, along with, hopefully, more importantly, the proper knowledge to know how to navigate the system. Kids who have parents who aren't credit savvy, well, they might have to learn the hard way. Still, incentives exist to help your kid establish a solid credit score. I don't see the harm in it. I think it's a good thing that people who wise up can help their kids do that.
- [34:21]
B
Them's the rules of the road. I mean, I think. Yeah, this might be a little off topic, but I actually dove in a little deeper. So the author of that article there on the Atlantic, and I was kind of reading some of his other articles that he had written, and you want to hear one that's super fascinating? There was one that was titled Learn to be Photogenic. Hollywood invented the idea that some people are more naturally beautiful on camera. Don't believe it. Which. Think about that for a second.
- [34:45]
A
Some people are more naturally beautiful.
- [34:47]
B
But what he's saying though, is that, like, you can overcome this thing, which is in total opposition to the idea that he's putting forth here. As far as the credit score, the fact that there are some people, then it's not fair and you should just accept that. Like, take that same idea of, like, being able to take a better selfie and apply that to your personal finances. Like, give the power to the people, the ability for us to make some changes in our lives to not only better our own financial situation, but our kids as well. Like, that's the kind of argument. I mean, that's the argument that we make every single day here on the show, here on the podcast. I will say the subheading of the parents gaming the credit score system was because of course they are.
- [35:23]
A
Yeah.
- [35:24]
B
Which I totally agree with that sentiment. Right. The fact that if there is something that you can measure via, like, numerically, that people are going to do that. And like, there is such an obsession with numbers, whether it's like our weight, our grades for Kids as well, SAT scores, or, in this case, credit scores. And if you are so focused on your kid's credit score that you're not paying attention to other things in life, like reading to them at night or connection, like, connecting with them emotionally, figuring out what they were scared about earlier in the day. Like, if you didn't have the patience to be like, oh, wait, you're concerned that someone's gonna break into our house and steal our eggs. Like, you're missing the boat. Like, you are. Like, there are more important things in life than focusing on this precious credit score. And if that's, like, what you're really spending a lot of your energy on, I will agree with the writer and say, I think you're doing it wrong.
- [36:15]
A
Yeah.
- [36:15]
B
But at the same time, if you're gonna add your kid as an authorized user, not give him the credit card in order to give them a leg up, a little boost to their credit score, I'm totally fine.
- [36:22]
A
It's just a minor thing to do.
- [36:24]
B
It's so minor.
- [36:24]
A
You're putting too much emphasis.
- [36:25]
B
It's not like a life philosophy. Right?
- [36:28]
A
Yeah. I mean, it really takes all of two minutes to add your kid as an authorized user. And if you handle your credit well, you can help them launch with a better credit score. I don't see any harm in that. But, yeah, if you. I don't know how many people are putting that much stake. We talked about, I guess, that one guy who's pursuing a perfect credit score, and it was like, dude, you're way overthinking this, Putting way too much time into it.
- [36:48]
B
There's some folks out there, man. They upset they're majoring in the minors.
- [36:51]
A
Yeah, don't do that. And, Matt, the truth is there are winners and losers in every area of personal finances, like credit card rewards. That's just another one of those areas where some folks win big. They rack up cash back, travel miles by using credit cards effectively. Other people end up paying the credit card companies like Visa and MasterCard thousands of dollars by not paying off their balance on time and in full, or by paying just the minimums. Like we talked about recently. The system's not perfect, but it's the system that we all have to navigate.
- [37:18]
B
Yeah.
- [37:18]
A
And I do think maybe the one area of agreement I have, too, with the author is that basically credit scores determine too much of our adult lives. I think that's particularly concerning given how badly the credit bureaus have behaved, how unresponsive they've been to.
- [37:31]
B
They've done a crappy job.
- [37:32]
A
Yeah, consumer complaints. So that that's a place I can agree with the author.
- [37:38]
B
Nice. And maybe that's why it wasn't our ludicrous headline of the week. Because in the Venn diagram of what we agree with and what he agrees with, there's some overlap.
- [37:45]
A
There is some.
- [37:46]
B
But that's going to be it for this Friday flight. We hope everyone has a fantastic weekend. We'll see you back here on Monday with a fresh Ask how to Money episode for you.
- [37:53]
A
Enjoy the super bowl, the Big Game. Don't do hard boiled eggs for the big game. It's going to be too expensive.
- [37:58]
B
Oh my gosh. Could you imagine if you're serving up deviled eggs.
- [38:00]
A
That's right.
- [38:01]
B
You're a baller.
- [38:02]
A
That's right. I guess.
- [38:03]
B
Unless if you want to brag to your friends. Yeah, yeah, just have like, like tons of devil decks out. Be insane. But buddy, that'll be it. Until next time.
- [38:11]
A
Best friends out.
- [38:11]
B
Best friends out.
- [38:28]
A
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