← How to Money
Loading summary
Transcript133 lines
- [00:00]
Jesse Kramer
This is an iHeart podcast.
- [00:02]
Joel
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. Plus there is an AI agent named Aria to help along the way. Try it for free@wix.com harmony that's wix.com
- [00:26]
America 250 Announcer
harmony.com this July 4th, come celebrate at America's Block Party. Hosted by America 250. America's Block Party is a can't miss 4th of July concert happening at the Los Angeles Memorial Coliseum. Experience music, performances from major artists, patriotic tributes, and the kickoff to giving 4th, helping to make July 4th the largest day of giving in American history. It's more than just fireworks. Learn more about this landmark celebration@america250.org
- [00:58]
Joel
Every business has an ambition. PayPal Open is the platform designed to help you grow into yours with access
- [01:04]
Jesse Kramer
to business loans so you can expand and hundreds of millions of PayPal customers worldwide. Your customers can pay all the ways they want today with PayPal, Venmo, pay later and all major cards so you can focus on the future when you need a partner trusted by millions. There's one platform for all business PayPal open grow today at PayPalOpen.com loans subject to approval in available locations.
- [01:28]
Joel
Welcome to how to Money. I'm Joel, and today I'm talking the Case for a Good Enough Financial Plan with Jesse Kramer. Okay, so optimism is everywhere in the personal finance world. If we just invest perfectly, we'll get where we want to go faster. What's not to love? Well, retirement planning might be a lot more like horseshoes and hand grenades. We're getting close enough is actually good enough. And chasing perfection, well, that can come with some real downsides. My guest today is one of my favorite humans in the personal finance space. He's a former engineer who designed satellite telescopes. He brings that same precision, plus a genuine desire to help people into the way he thinks about money. Jesse Kramer, thanks for coming back on how to Money.
- [02:27]
Jesse Kramer
Well, that's very nice of you, Joel. Very nice introduction. It's fun to be here. And I really like this, this topic, this idea for this episode that you put together because I've got some, I think I've got some good thoughts that hopefully the audience will like.
- [02:37]
Joel
I think so too. That's why I wanted to have you on to chat about this. But first question first. What's your craft beer equivalent these days? What are you spending More money on than most people think is is normal. But hey, it's okay because you're still being smart and thinking and investing for the future.
- [02:52]
Jesse Kramer
The truthful answer, there is stuff related to our two children. We've got a two year old, she'll be two in June and a one month old, both girls, two daughters.
- [03:02]
Joel
So just diapers, the craftier equivalent. Diapers.
- [03:04]
Jesse Kramer
Yeah. But the fun answer and maybe like the selfish answer if it's spending on me. Last time I talked about racket sports, I really like racquet sports. And this time I'm going to talk about hiking gear. I like hiking, I like the mountains, I like camping. So I've got a nice assortment of like more expensive than most people would ever spend on a tent. I've got that tent. So that's my answer today.
- [03:24]
Joel
So at one point we had John Mackey, the former CEO of Whole Foods on and he talked about the. And it's so true. Like when more backpacking you do the longer distances, the more the weight matters. Like if you're going for a short couple day hikes or whatever, it's not that big of a deal. But like if you're backpacking in the woods for weeks, you, you need lightweight stuff. And so he was like, man, I'll spend $100 to shave one ounce. And I thought that was impressive.
- [03:48]
Jesse Kramer
Isn't it incredible? You're it is that the Appalachian Trail starts near you in. That's right, it's in North Georgia. And if you look at the Appalachian Trail like subreddit, you will see people talking in grams.
- [04:01]
Joel
Yeah, it's really cool. You have to because otherwise you just like breaking your back for no reason. Right. Okay. So I saw you were chatting with Andy Hill, mutual friend recently and you we're talking about reaching coastfi. A lot of how to money listeners know what that means, but can you offer some details about what it looks like to achieve coastfi? And in your opinion, does it feel like just a ton of sacrifice in order to hit that goal?
- [04:26]
Jesse Kramer
Yeah. Okay, let me, let me take that question in two parts. So kind of what does it look like to reach Coast Fire? Maybe like how do I even know that I've reached reached Coast V? I guess the way that my wife and I looked at it was we looked at our investable assets today as we sit here in 2026 and I'm 36 years old, right. And so I say, well, if I assume a reasonable rate of return on what I already have and then I just take that rate of return out into the future until maybe I'm 50 or 55 or 60. Will I have enough money to retire two or three decades from now based on what I have today? Or is the only way I'm ever going to retire? Do I have to keep on investing more and more money? Do I have to keep on adding money into the pile that's already there? And I think the idea of coast fire, at least as I understand it, is we have enough money in our mainly retirement accounts, but we'll just call investment accounts. We have enough money in there today that I could probably never add another of my own dollars there and just let IT compound for 20, 25 years and be totally comfortable in retirement. So, again, almost like you can coast downhill in a car, you're not adding more gas into the engine, your foot's off the pedal. That's kind of how it is to
- [05:45]
Joel
be coast fi, which is a sweet place to be. That's a nice thing to accomplish, man. And you're still fairly young. I know you like your job, and it's interesting. I mean, like, the more I talk to you, the more irons you keep putting in the fire. So, I mean, are you. And you're also. You're just keen on investing like you have when you understand it. Like you. You don't necessarily want to completely take your foot off the gas, even though you can. So are you still saving, the investing, and are you doing so at the rate that you have been? And I'm curious, kind of, once you reach that point, what's your reaction?
- [06:19]
Jesse Kramer
Yeah, so still we are. We are still saving and investing. We're. We're trying to be prudent and, you know, making sure I'm getting the employer match every year, you know, as long as the monthly cash flow is there, adding money to my Roth IRA. Although, speaking of Roth IRA, what I'll say is that 2025 was the first year for us in probably over a decade where my wife and I, we didn't max out our Roth IRA contributions in 2025. Why? Well, we had two big home improvement projects last summer, and then we knew we were pregnant. As of last June, we were saving for a baby that was just born in March, a month before we're recording. This point is like, we had a lot of other important reasons to be spending money in our life. Didn't have enough extra money to put into the Roth IRA without me kind of dipping into the emergency fund too much. So, okay, we didn't put more money into the Roth IRA in 2025. But knowing that we'd achieved Coast Fi, like that's kind of okay.
- [07:20]
Joel
Yeah, right.
- [07:21]
Jesse Kramer
And I think that's the big thing that at least in our life it's allowed us to do is we say, like, we're in a season of life right now. You got two, we've got two little kids. Like, life is just naturally going to be more expensive when you have two little kids. And it's kind of nice knowing that we can deprioritize investing for the long run. We don't have to add more money there and we can divert that money to supporting our little kids and we'll be totally okay. So that's one of the. The real benefits. I think it's like a mental. It's a psychic benefit that you get
- [07:50]
Joel
from Coast Fire 100%. And I guess I thought too that when I had really young kids that that was going to be the most expensive time of my life. Childcare needs to be more expensive. I was like, once they get into like public school like that, hey, that's free. Now, like every day they're going off. And I don't have to pay for that except through my tax dollars indirectly. Right. But, um, that's not true. Like it's amazing how expensive kids continue to be. And I'm just really glad, and I'm sure you will be as well, that you can take your foot off the gas pedal because there are more things you want to spend money on, whether that's on like a cool summer camp or whether that's on a fun family vacation, a getaway, like together, like all of those things, they're just like, travel looks different. It costs more with. When you have older kids and it's exciting and fun, but like, it's nice to have that flexibility and not feel like you have to meet all these goals at once because you've already kind of met a goal, a big goal of yours, which is to save for future retirement. And one of the tough questions for great savers and investors is that when an action doesn't serve them well anymore, what do they do?
- [09:00]
Jesse Kramer
Right.
- [09:00]
Joel
Like, how do you. I'm curious how you think about the trade off between optimization and living optimally. There's a tendency for. To desire, especially if you've gotten good at something, to continue to do that and continue to do it well. Almost like a perfectionist mindset.
- [09:15]
Jesse Kramer
Yeah. This is such a wonderful topic and kind of a deep, nuanced topic because when people hear financial planning optimization, it's probably Natural people are going to think like, okay, spreadsheets probably like math, technical knowledge about like tax codes and portfolio construction. Like, is that what we're talking about here? And a little bit, it's a little bit what we're talking about here. But I think there's almost this kind of like philosophical side to the conversation because something I've realized, diving into the weeds now for many, many years, like here's a, here's a good statement for you, Joel. How do you know if you're actually optimizing or not? I would contend that most of the quote unquote optimization moves that maybe you or I might want to make this year in 2026, we're not actually going to know how good it was until 2036 or 2046 or until we die. In other words, like so many of the decisions we make today, you have to make some assumption about the future. I think investment returns will be this. I think the tax rates are going to go up or they're going to go down or they're going to stay the same. I think that the 56 year old version of Jesse is going to resemble the 36 year old version of Jesse in these ways. And the more you live life, the more you realize it's really hard to predict the future. Five years in the future is hard to Predict, let alone 25. So anyway, I almost want to start the conversation there when it comes to optimization is because if you really think you're optimizing for this perfect ideal financial plan that exists if only you could find it, I would argue that none of us know what it looks like because we just can't know because so much of it has to do with how the future unfolds.
- [10:58]
Joel
And I think sometimes in this conversation we're optimizing so hard for perfect financial plan goals that were maybe it's really easy to miss out on current life goals. Like you just talked about taking off a couple of weeks, like to be at home with your new baby and then taking off Fridays for the foreseeable future to be home with your family too. And that's one of those things, things that like you might be leaving some money on the table that might be not be part of your optimized income generation plan. But we're all optimizing for a bunch of things at once or trying to. Right. And so do you think there's like maybe too much of a focus on financial optimization in the personal finance community in general? And how do we if if so, how do we Buck that system without doing big harm to our future.
- [11:46]
Jesse Kramer
Yeah, it depends on where you look, probably. But there's some corners where it's like, whoa, you know, it's off the deep end in term of optimization. You know, there are corners of. Call it like a Facebook retirement community or like a subreddit, something like that, or Twitter, some Twitter war where you will see people going, like, having these huge arguments about tenths of a percent and, you know, what assumptions go into the 4% safe withdrawal rate rule. And on one hand, it's like, yeah, it's. You know, from an academic sense, I'm sure we all want to be on the same page about, you know, what are the best ways to try to answer these problems. That's part of the reason why we're here.
- [12:20]
Joel
Right. And then there are some people who have wide influence who are like, you can take 8% out of here no matter what. And you're like, well, that's just ridiculous.
- [12:28]
Jesse Kramer
Exactly.
- [12:28]
Joel
And so it's.
- [12:29]
Jesse Kramer
It's. It almost gets back to that, like, philosophical. It's a spectrum. We can't just be making up, you know, baloney. We can't do that. We have to try to find systems to get these answers right. But if we. What's that one phrase of missing the forest for the trees? It's like, if you get so caught up in the details, right, which would be the trees, that you've kind of missed the whole forest, which is that bigger picture about, how do you want to live your life? Well, then what's the point? It's that funny quote from the office. I don't want to violate trademarks here, but Creed. Creed in the office has that one time. He goes, if I can't scuba, then what is this even for? What's this all about? Is that, like, if you can't live your life, then what's the point of optimizing the financial side? The financial plan should serve your life, not the other way around. So, again, there's that idea where I just think something went in your question, Joel, made me think of. Maybe it's the craft beer equivalent of, like, yeah, the next time you're out at the bar with your friends, Joel, and you want to pick up a round for everybody, like, what a nice thing to do. What a nice way. A way to give them a gift. A way to live your life that is also financially suboptimal, because why would you spend $38 on four pints of beer when you could save that $38 for the long Run. So, okay, it's a silly example, but like, that right there is, you know, money is meant to be spent in some way in pursuit of something bigger. And, yeah, a spreadsheet would technically tell you, yeah, don't spend that money on your friends. Why would you?
- [13:55]
Joel
So a lot of how to money listeners are. They're trying to live that balanced life, right. They're trying to institute their craft beer equivalent, make sure they spend meaningfully on something they care about right now while they're saving for the future. But what about when it comes to the money that they actually have set aside for their future and. And optimizing their asset allocation? I think sometimes there's a lot of pressure there as well to get it perfect. Right. And then there's some people who say, man, this simple one fund is good enough. And then others who think that you need a much more complicated setup in order to be fully optimized, to be diversified enough. Do you have thoughts on that?
- [14:38]
Jesse Kramer
I do. I very much do. I think that there are certainly. Well, first off, I think this is a problem certainly worth thinking about. We're talking about, for many people, five figures, six figures, seven figures of money, if not more. We're talking about your life's work. It's all the money that you've saved for years and years and years and years. And it's something you can point to and say, like, wow, all of my labor and thought and effort, a lot of it went into this thing, which is called my investing account, and look at how it's grown. And so if you're going to work that hard for it over time, you probably also want to put some thought into it to make sure that you've invested it in some sort of, you know, thoughtful, intelligent way. Now, that said, is there a perfect portfolio out there? I don't think so. I think it's. It's. Well, a. Again, I think it's going to be impossible to determine that until we're 10 years, 20 years, 30 years down the line and only looking backward. Can you really determine that? And then the other thing I think is that I almost imagine this spectrum. And one of the analogies I've used before is like a speed limit analogy. So it's like if the speed limit on your highway in Greater Atlanta, Joel, 65 miles an hour, and you're going 63 or you're going 66 or you're going 68, that's all about what the flow of traffic is going to be going. Now, if you're going 30 in a 65, that's different. If you're going 95 in a 65, that's different. But my point is, like, there are a lot of speeds right around the speed limit that are good. They're fine. There's nothing wrong with it. You're probably not going to get pulled over for a ticket. And to me, investing usually seems similar to that, where you say, well, okay, I'm going to look at your situation, Joel, and I would Recommend you invest 60% in stocks and 30% in bonds and 10% in real estate or whatever the numbers are. Maybe you look at it and Your numbers are 5% different here, 3% different there. Whatever. It's. It's close enough, it's good enough. And the end result is actually probably going to be pretty similar. Now, if I recommend that your portfolio is 60% stocks and you only want 10% stocks, that is like someone going 35 in a 65 where it actually might be an issue. But if you're really arguing, you know, should you go 65 miles an hour or 66 miles an hour, I don't know if that's an argument worth worth having.
- [16:59]
Joel
So. So you're getting it. It's at least somewhat individual, though. Like, part of it is timeline, part of it is risk tolerance. But then, like, there's some people. What would you say to someone who's like, hey, I've got a high risk tolerance, and I'm in the. I'm in the highly speculative investing camp. I'm down to trade stocks regularly on my phone. Would you try to sell them on a different investing plan? Or if they say, hey, this is. This feels good to me. This is what feels like the right choice. And I think I'm going to see outsized gains making bigger outsized gambles on individual stocks, cryptocurrency, whatever. How would you respond to somebody like that?
- [17:40]
Jesse Kramer
Yeah, again, in that particular case, I would say, well, hey, there is a lot of academic rigor behind the idea that your chosen tactic, your chosen strategy is probably not going to work out for you. Or if I had 100 versions of you, I bet you 90 versions of you would actually be worse off for doing what you're about to do, and only 10 versions of you would be better off. And I just don't like those odds. So that's where he'd say, if someone wants to kind of skirt the principle of diversification, I'm just going to buy all Berkshire Hathaway. It's like, hey, I love Warren Buffett. I Love Berkshire hathaway. But having 100% of your assets there, eh, might not be a good idea or a cryptocurrency or whatever like that. So there are some principles that I'd say, you know what, there probably is just too much evidence against you if you're going to try to circumvent this principle. But yeah, when it comes to like asset allocation itself, what percent stocks, what percent bonds, 1% cash, you know, et cetera, et cetera, in each asset class, that's where you would say, hey, on the one hand I do want to look at all the numbers, understand when in the future you're going to be spending money out of your portfolio. And then I want to make an asset allocation prescription based on those timelines. 100%. Like there is an objective numbers based approach there. But then you go to some people and you say, yeah, we're going to put 60% of your money in the stock market. And some people say, no way, that's not enough. Okay, you can massage the numbers there. And basically you're taking an objective starting point and you're adding some of the personal subjectivity onto that. And it's just kind of part of the process.
- [19:17]
Joel
So for you, as you've been investing now for at least 15 years is my guess, right? Yep. And you, but you have two young kids now. How. I'm like your financial goals, like you, you, you realize you lived different iterations of your life and sometimes you end up turning into someone that like 10 years ago you would have been like, huh, that's who you are now. Like, I didn't expect that. And I've, I've certainly felt some of that. But like, how has that changed your financial goals? Because you've changed over time since you started investing. I'm sure your initial goals, they're probably look, maybe not like ridiculously different than they are today, but I'm sure they're at least somewhat different. So how does that impact how you shift or change your investing strategy?
- [20:00]
Jesse Kramer
Yeah, I mean 10 years ago I hadn't yet met my wife, kids weren't even on the radar. I had discovered the FI movement a little bit enough to like put together those early spreadsheets that many of us have done. And I'm like, I bet you I could retire by like 45. And so at that time it was like that was kind of the goal, or at least that was like the, I don't know what else my goal should be. So it might as well be retire by 45. And I think part of that was informed by the fact that I didn't really love being an engineer. It was. It was good. It was fine. It was like a B minus, right, as far as a grade goes. And so I was like, yeah, I don't really see the need to do this forever. If I could retire at 45, I will. And then fast forward to today. So, as you alluded to, I think in the intro, like, I did change careers, and now I'm a financial planner. I work with clients. I love what I do. I get to talk to you, I get to write, I get to podcast myself. I love what I do every day. And so if you combine that with the fact that, yeah, now I've got two daughters at home who won't be done with college or at least won't be done with high school for 18 years, college would be 22 years. And I just don't see any personal need to, like, drive for that retirement date. I don't really have that same early retirement goal that I once did. So when am I going to retire now? Like, what are my retirement funds? What's the goal associated with them? I don't know. Kind of a normal retirement age of 55 or 60, probably. But then again, Joel, like, that could change again too, right? 10 years from now, I might look at the situation and say, you know what? I'm going to retire while the girls are in high school so that I can really become, like, the sports dad and follow them around the country, blah, blah, blah. I don't know. So maintaining some flexibility, I think, is really, really important. And I think comes back full circle almost to our idea of, like, optimization. If you're optimizing for this one thing, then almost by definition, you might not have that much flexibility for other things. And future, you might be interested in other things more than current.
- [22:03]
Joel
You realizes, I think retaining that flexibility is so clutch because you just, yeah, you don't know how you're going to want to spend your time. And if you love your work, that's. That's great. But it doesn't mean you want to work 60 hours a week necessarily either.
- [22:15]
Jesse Kramer
Right?
- [22:16]
Joel
And so what? Like, I love my job. I don't want to work 60 hours a week. And so, yeah, it's just. But having that flexibility, both financially and mentally, allows you to kind of be a little more fluid when you're making those choices about how you want to spend your time. And then money isn't necessarily. It's not even the number one consideration at that point. When You've made smart decisions over a long period of time. I'm curious. A lot of people, especially who listen to this show, their late 20s, early 30s. They're often in some of the most trying financial years. And you're kind of in the thick of it when you have young kids, child care costs, and you're trying to save and invest for the future. Most people in that position have not reached Coast Fire, so they are still having to be thoughtful about putting money into those retirement accounts. What advice do you have through them? Because I feel like I don't know of another time in life where you're just. You're trying to, like, fight battles on so many fronts, like, maintain your sanity in an era where maybe you're getting less sleep and you're also. You just got more financial goals that you want to simultaneously achieve. How would you help somebody think through that phase of their life?
- [23:32]
Jesse Kramer
Yeah, you're right. It is a phase. It's a season of life. And like, these different seasons of life absolutely put different stresses and strains on us personally and financially. And there's no doubt about it, like, if you're in this phase of life where you say, I've got a mortgage for the first time, or maybe I just have a bigger monthly housing payment than I had ever had before. We've got kids that we're dealing with. Maybe someone's taken a step back from work. I mean, that's the situation I'm in. You know, my wife has taken a step back from work to spend more time with her kids. And we love it. We chose that. We made that decision very thoughtfully, intentionally. But it's also a strain on us financially. And I think just the realistic conclusion is that maybe you just can't save as much as you hoped you would or as you once did. But like all seasons, eventually this one will come to an end. And you were talking earlier, Joel, that, like, yeah, you thought when the kids would go into public school that, you know, there's no more daycare bill, life gets cheaper. But maybe yes and maybe no, and sometimes yes and sometimes it doesn't because their kids are still plenty expensive. But the point is that slowly but surely, in many cases, you'll find that, okay, parts of life loosen up, you can save a little more. Maybe you're earning more at work, you can save a little more. Maybe the spouse who took a small step back to stay home with the kids, well, once the kids are off to school, maybe that spouse goes back to work, you can save a little more. These These times, Even in the CFP curriculum they talk about how like the 30s aren't exactly the time of life. The 20s and 30s aren't exactly the time of life where people are saving a ton of money. A lot of people do play catch up in their 40s and 50s. So the advice though would be it's like don't give yourself, you know, you don't have to be hard on yourself for the fact that maybe you aren't saving as much as you, you wish you could. But I think it is still really important just to try to save what you reasonably can. And it's, of course it's been said a million times before, but it's like that employer match on your 401k, there's a reason why everybody harps on it.
- [25:40]
Joel
Don't miss that.
- [25:41]
Jesse Kramer
Right. If you can save 7% of your annual income and your employer matches 5% of that, well, you just turn 7% into 12%. And like that's really, really meaningful. If you compound it over many, many just being able to kind of get some of that low hanging fruit and you know, pat yourself on the back for it because you're doing a good job. Like that's, that's really important.
- [26:05]
Joel
I like that. I think, I think that's true because I think there are, yeah, a little bit of grace for yourself if you can't do what you were hoping to do or what you used to do. And then, hey, it's a season, you can get back to that. I mean my wife and I keep thinking like, wait a second, one of these days we're not going to have kids living in our house. That's crazy to think about because right now it feels all encompassing. But like one of these days it's going to be the two of us. It's crazy. Or one of these days we're going to have to just a little dude and the girls will be off at school and it's like, what are those years going to be like? I have no idea. Yeah. So know that those these days are not always what they're, you know, the way it's going to be. I've got more questions I want to get to with you. I want to talk about alternative investments which are kind of a hot topic right now. So we'll get to more questions with Jesse right after this. For business owners and entrepreneurs, there is a constant challenge getting things done fast or done well. Well, why not have both? That's why Wix Harmony stands out. It is an AI website builder that helps to create a website quickly without compromising your vision. A fully functional site can be built for any business just by describing the idea. Then you can choose to chat with AI or edit everything manually to get it exactly right. There's also Aria, an AI agent available to answer questions or help complete tasks. And here's what makes it even better. Aria doesn't just live in a chat box. You can click anywhere on your site and ask her to make changes instantly. It's these details that make creating with WIX Harmony feel seamless. That's right. Join millions of businesses already using Wix and try Wix Harmony for free at wix.com harmony that's wix.com harmony
- [27:43]
America 250 Announcer
this July 4th come celebrate at America's Block Party hosted by America 250, America's Block Party is a can't miss 4th of July concert happening at the Los Angeles Memorial Coliseum. Experience music, performances from major artists, patriotic tributes and the kickoff to giving 4th, helping to make July 4th the largest day of giving in American history. It's more than just fireworks. Learn more about this landmark celebration at america250.org
- [28:13]
Public Investing Announcer
support for the show comes from Public, the investing platform for those who take it seriously. On public you can build a multi asset portfolio of stocks, bonds, options, crypto and now generated assets which allow you to turn any idea into an investable index. With AI. It all starts with your prompt. From renewable energy companies with high free cash flow to semiconductor suppliers growing revenue over 20% year over year, you can literally type any prompt and put the AI to work. It screens thousands of stocks, builds a one of a kind index and lets you back test it against the S&P 500. Then you can invest in a few clicks. Generated assets are like ETFs with infinite possibilities, completely customizable and based on your thesis, not someone else's. Go to Public Podcast and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com podcast paid for by Public Investing Brokerage Services by Open to the Public Investing Inc. Member FINRA and SIPC Advisory Services by Public Advisors, llc. SEC Registered Advisor Generated Assets is an interactive analysis tool. Output is for informational purposes only and is not an investment recommendation or advice. Complete disclosures available@public.com disclosures
- [29:16]
Joel
all right, we're back from the break. Still talking with my buddy Jesse Gramer talking about good enough financial planning and there's this like push for perfection and maybe it's not possible and and but hey, we can still do a good enough job and get where we want to go. So, Jesse, sticking with the optimization theme for a second, true or false. You should always attempt to max out tax advantaged accounts first.
- [29:39]
Jesse Kramer
Oh, I'm going to say true.
- [29:41]
Joel
Okay.
- [29:42]
Jesse Kramer
Because it's going to be true for most listeners.
- [29:45]
Joel
Okay. But not true for everyone all the time. But it is true for most people most of the time.
- [29:51]
Jesse Kramer
I didn't want to be that annoying guy who has to hedge every single answer he gives. But yeah, I'd say for most people, most of the time that answer is true. If you focus on maxing out your tax advantaged accounts, you will be better off for it.
- [30:02]
Joel
Okay.
- [30:03]
Jesse Kramer
That answer might change eventually, but I'll stick with it.
- [30:07]
Joel
Okay. Get out your crystal ball for a second.
- [30:09]
Jesse Kramer
Yeah.
- [30:10]
Joel
If reversion. I know you have one. I've seen you, I've seen you read the tarot cards. If reversion to the mean is the iron law of investing. That's a Jack Bogle quote that I've, I've heard you reference before. What should our expectations for future returns look like? Because if you're banking on the next 15 years looking like the past 15 years, you might be sorely mistaken and you might not have as much in retirement as you thought. Right?
- [30:37]
Jesse Kramer
That is correct. That is correct. Yeah. So John Bogle and many others would say if you look over really long time periods and we're talking about the stock market here, I guess we're probably talking about any investment market, but the stock market is the specific one in question, tends to be a little more volatile than some other asset classes. What you will see is that you have these periods of amazing over performance and then you have periods of pretty depressing underperformance. And when you average them out over the long time, that's where you get the average. The mean, meaning, you know, the aver reversion to the mean. And so what happens is, if you find yourself in the middle of a period of over performance, I don't think that the answer is like, oh my God, Joel, there's a crash coming. It has to come. John Bogle said so. Reversion to the mean. Not necessarily. Not every stock market boom ends with a crash. Sometimes it just ends with like a slow fizzle.
- [31:30]
Joel
Right.
- [31:31]
Jesse Kramer
So it's like, okay, over, over this five year period, we had a couple years that were down 3%. We had this one year that was only up 1%. We had a couple, you know, we just had a couple mediocre. Just a mediocre. Right, exactly. So it's like, all right, if I average out 15 years of wonderful returns, which is basically what we've gotten since March of 2009 was the depths of the great financial crisis. And if you measure the, I guess we're on like 17 years now since March of 2009.
- [32:00]
Joel
That's crazy.
- [32:01]
Jesse Kramer
It's been a really, really good 17 year stretch.
- [32:04]
Joel
Yeah.
- [32:04]
Jesse Kramer
If you tack on five years of blech at the end of that, all of a sudden now you're at 22 total years and you're like, oh, it's actually kind of resembles the long term average. Or maybe it's a 30% crash. Okay, now it resembles the long term average. My point is that we don't know when, we don't know how severe it'll be. But more likely than not, I think the expectation that we at least ought to set with ourselves. Right. We don't have the crystal ball. We won't know if we're right or wrong until the future actually unfolds. But I think that internal expectation that we have to have is that no, I don't think my stock portfolio is going to continue compounding at 15% per year forever. That's probably unrealistic.
- [32:45]
Joel
How should those tempered expectations one, just being thankful. Hey, I've been investing in this time period largely where I've experienced outside gains. That's a plus. But how should maybe more temperate expectations of future returns influence how we choose to invest? Or should it?
- [33:03]
Jesse Kramer
Yeah, I think that I'm not sure it should really change how we choose to invest because again, what we don't want to do is we don't want to let these assumptions or expect, even if they're good assumptions, good expectations. We don't want to time the market. We don't want to predict the market in that way. We just want to accept the fact that, you know what, at some point between now and when I retire, Joel, there are going to be, I don't know, two or three crashes of 25% or more. There's going to be, here's a great stat for listeners out there. The average year in the market has at least one 10% decline. Intra year. We almost just had one from the Iran war dip. I don't think technically it reached that 10% threshold, but it was really close. And now we're as we record this today, we're at an all time high. So like the average year has at least one of those periods where you're like, oh dang, stock market's down 10%. And then usually by the end of the year, it's recovered. Not always. But my point is that the expectation we need to set with ourselves is that we will go through volatility, we will go through bear markets. There will be periods of time that might even last. You might measure them in years where you're like, oh, my portfolio is still down. But if you don't need the money for 15 or 20 plus years, then it's totally fine to continue investing in something like a diversified stock portfolio. If you need the money in five years, well, that's where I would recommend you probably invest in a more conservative way. But that statement I just made, that should be true whether the stock market happens to be on a really good run or if the stock market happens to be on a rather bad run. It's still true that you don't want to invest short term money, most likely in the stock market, and you probably want to invest your long term money in some sort of growth asset like stocks.
- [34:52]
Joel
So you just mentioned when it makes sense to be more conservative with your investments. There are people, though, who have longer timelines who are too conservative out of fear. Right. And I even think about maybe some of the projections or that especially young, young people more in the how to Money listener segment are making they. There is, and I had Mike Piper on to talk about this recently about Social Security. Right. Because there's this fear that. And then people planing like, well, Social Security is not going to be there for me and that could be a meaningful chunk of retirement income. And being too conservative in your projection that there's no Social Security waiting for me at the time that I'm ready to stop working means that there's so much more of a burden on you to be investing significant sums now. So do you find that there are investors who are being too conservative and how is that impacting their lives?
- [35:50]
Jesse Kramer
100%. Yes. This is something that I've referred to as the crushing cost of conservative retirement planning. And I don't have many things go viral, Joel, but this article was one of the few things that like, oh, it caught some traction. The crushing cost of you and Kim
- [36:06]
Joel
Kardashian that one day man fighting for the headlines.
- [36:09]
Jesse Kramer
Exactly. I think it was because the, the COVID photo for the article was a butt shot. That's probably why Kim and I have that in common.
- [36:17]
Joel
You're a clickbait artist.
- [36:19]
Jesse Kramer
Jesse Kramer had nothing to do with the article. But no, but yes, there's a problem that I see and I'm not the only one who sees it. Where the problem is that a lot of different inputs go into long term financial planning, retirement planning. There's a lot of assumptions you have to make. And many of these assumptions multiply with one another. And the problem is that if you take multiple things that multiply with each other and you say, I'm going to be conservative on that one and on that one and on that one and that one. Now you've got the product, the multiplicative product. Right. Of four or five different things, all of which are conservative. And just like we want multiplication to work in our advantage when we're talking about compound interest. And like, you're like, how could it compound that quickly? That's great if it's working for you. But similarly, if you're really conservative, it kind of your assumptions compound against you. And what you, you end up in a situation where it's not just like you're like, oh, I was 10%, I added 10% conservatism onto all my assumptions. So I'm only, I'm only, my final answer is only 10% off. It does not work that way. If you're multiplying these things together, you are going to be 50% off. You're going to be 200% off your final answer because of that. It's just kind of a, a fact of math. It's the way math works. Okay, so what do we do instead? The best thing that I think you should do, there's this term base rate. And a base rate basically means it's an assumption you make that is as close to the truth as you possibly can. You know, for example, if I said, you know, what's the base rate for flipping a coin? It ought to be 50 50. Anything other than 5050 just means you don't really understand how coin flips go. Yeah, or, I don't know, I'm trying to think of a good one. Like a good example of what's the base rate for stock market returns?
- [38:07]
Joel
I mean, I would say 8%. Right.
- [38:10]
Jesse Kramer
Let's look at the data. That's what I would say, right? Like, let's look at the historical data. What's the average stock market return over time? That ought to be your base rate. So like, inflation maybe is an easy one. It's about 3%. 3% ought to be your base rate for inflation.
- [38:24]
Joel
So 10 years ago we might have said 2%, but we'll go with 3 now.
- [38:28]
Jesse Kramer
Exactly. So I'm digressing a little bit. I'll close this one out. The point is that you want to do your analysis with all the base rates as close to factual truth as you possibly can. So you're multiplying with the real numbers, the correct numbers, and then only at the very end, when you have this final answer, only then if you want to be conservative, that's where you tack on your conservatism at the very, very end. So, you know, your base rate analysis says, great, by the time I'm 60, I'm gonna have $2 million and I can retire. That's what the base rates all suggest. I want to be a little conservative, and I'm gonna add a 10% conservatism onto that and say I need to work two more years to 62. Okay, that's fine. At least you know kind of where your conservatism went in. Because I would wager that if you start messing with the base rates, it's not gonna say you can retire to 60. It's gonna say you retire at 75. And that's going back to your question where you were saying, like people, you paint yourself into a corner because you have to do all this extra work to achieve your goals. And it's really because you were so conservatism with your. Or so conservative with your. With your math.
- [39:30]
Joel
Yeah. If you're assuming 5% returns, no Social Security, then you're going to be working till you're 95. And so you have to make at least realistic. Put in all the realistic numbers, and then make a conservative decision at the end. That makes a lot of sense to me. Me. Okay, I want to talk about alternative investments for a second. Like, they're becoming more and more of a thing. And I have really disliked most alternative investments for a while. And part of it is there's just like this big marketing machine around many of them. And when you look into the details, most of them underperform, like just a regular stock market investment. Right. And then the fees are obviously significantly high. Some. Some are hidden, and the risks are just much more significant in some of these alternative investment. And so, yeah, I think as fees are falling, which isn't good for asset managers, we're starting to see alternative investments being looked at as more of a savior inside of retirement accounts. What's your take on the rise of alternative investments and then putting them inside of retirement accounts additionally?
- [40:41]
Jesse Kramer
Yeah, I mean, it's such a. It's a great question. It's a great topic. It's a. It's a deep, dark forest out there. And part of the reason why is just the name itself. Or the category itself. It's like, imagine if I were to tell you, Joel, that like, we've got three food groups out there. We got fruits, we've got vegetables, and then we have alternatives. And you're like, wait, so it's like, is meat an alternative? It is, by my definition, is milk, is dairy, is candy. Like, my point is that alternative is this catch all.
- [41:11]
Joel
Yeah, yeah, yeah.
- [41:12]
Jesse Kramer
That defines like so much stuff. And I will say one person, you know, when some people say alternatives, what they really mean is private equity and venture capital. When other people say alternatives, what they mean are, I don't know, investing in infrastructure. Am I going to invest in a toll bridge? Something like that?
- [41:29]
Joel
Or the art commodities, wine platforms. Right.
- [41:32]
Jesse Kramer
Farmland, 100%. And these things are different. I think they're meaningfully different. But still, I think it's okay to lump them together in terms of like, it's a little esoteric. It's probably not something that the average investor, the average person has really been exposed to before. A lot of them are marketed as, and this is a pet peeve of mine, a lot of them are marketed as, here's this thing that only the top tenth of a percent used to have access to. And now we are democratizing it so now you can invest in it too. You want to invest in a Picasso? Here, here's 1,1000th of a Picasso. It'll cost you 800 bucks and you
- [42:10]
Joel
can't even put it on your wall, you know?
- [42:12]
Jesse Kramer
Correct, correct. It's not really yours.
- [42:14]
Joel
Yeah.
- [42:15]
Jesse Kramer
In general, and this is almost goes back, you asked me a question, you know where I answered a couple minutes ago where I said, yeah, for most people, most of the time they'd be better off investing in their tax advantaged accounts. Right Now I'm going to say for most people, most of the time they'd be better off just ignoring alternative investments to begin with. Right Again. There are many ways for people to achieve their financial goals. There are many ways for you to get to the finish line. You don't have to chase every single shiny object. Warren Buffett talks about. Investing is what he calls a no called strike game. Baseball is a called strike game. You sit there with your bat on your shoulders. In baseball, if you have three strikes called against you, you are out. So you can't just watch strikes go by in baseball, eventually you're going to lose. What Warren Buffett would say is that in investing you can sit with your bat on your shoulder all day and you can watch pitches go by. And some of Them might even end up being strikes. It doesn't mean you have to swing. And he would argue that what he wants to do is wait for, like, the fattest pitch he could imagine. He will watch a thousand pitches go by until he sees one that's slow, it's right down the middle, and he thinks he can hit a home run on it, and that's when he's going to swing. And I think we can take that lesson and think about it in our own lives and say, just because Instagram is pitching you to invest in wine, that's a pitch, do you have to swing at it? I don't think you do. And I would say that most listeners are better served most of the time by choosing not to swing at those kind of pitches.
- [43:46]
Joel
But it's harder than ever to resist. And there are so there are so many more floating by, and some of which are not even traditionally bad investments. Like, I think about just a few months ago, right? Just all of the questions coming in about investing in gold. Why? Because gold was on a ridiculous tear. And is gold like an awful, hideous investment, like one of those random made up cryptocurrencies that come along every other week? Like, no, it's not. But, like, why are you asking the question, what's going on with the timing behind that? So it just, it feels like it's harder than ever to resist because alternative investments are so in vogue and there are so many of them that we can choose from. And even somebody who listens to the show with like one ear, they might be like, oh, but Matt and Joel, they've talked about real estate investing and there's this platform that, man, it certainly makes it seem easy. And why don't I just drop 10, 10 grand in there and see what happens? And there are a few of those platforms out there that exist and you can become a real estate investor in mere minutes, right? Instead of going the slow path to building up a down payment, buying your first rental property, owning it close to where you live and managing it yourself. So I don't know, I guess the question in that is it's so hard. How do we resist?
- [45:09]
Jesse Kramer
Yeah, I mean, there's no, it's not just investing, right? There are no shortage of people out there who want your money. There's no shortage of corporations out there who are trying to sell you a product. And like, it's one of those funny, funny things, because on the one hand, I am happy to be living in a society where people are encouraged to go out, work hard, start a Business create a product or service that other people benefit from. I'm glad I live in that society. I really am. At the same time, are there sometimes perverse incentives where I am, you know, I'm trying to think of a good example. Like, I'm trying to learn something on Reddit. I'm trying to learn something on YouTube. How about that? And what was my craft beer equivalent? Camping supplies. So here I am watching a random video on YouTube, trying to make myself better, learn something new. And I'm bombarded with camping supply advertisements, investments. There are companies that want your money, and they're probably smarter than ever at trying to really get to you about how you would be interested in their money. And the investing world is no different. The investing world is absolutely no different. You're kind of right, where you're like, there's this perverse incentive that kind of. It's kind of like this little tide or this kind of energy behind the investment industry that pushes it forward, which is, you know, what are the ways we can charge the higher fees? Right. How can we do that if it's no longer stocks? Because too many people are aware of what index funds are. Maybe now it's alternatives.
- [46:36]
Joel
Yeah. Right now it's a target date fund with 10% alternatives. Because now, man, those target day funds, all we could charge was 0.1% on it because of Vanguard and Fidelity bringing down fees. But if we can include some alternative investments, now we have a new fund that we can market and we can charge a lot more for it.
- [46:55]
Jesse Kramer
That's a scary one. That's a scary one. What you're alluding to is just all this political lobbying going on right now that is hoping to inject some of these more exotic assets into target date funds. And now. Now, why? Well, because target date funds are the default option. The acronym is qdia, which, shame on me for not knowing what it stands for. Qualified something, Investment something. But basically, in a retirement account in a 401k, there are some default. Maybe the D stands for default, qualified, default, default investment, something. There are these default options that need to be there so that people who don't really know what they're doing have access to a quote, unquote, good option. That's why target date funds have ballooned as much as they have over the last 20 years. And for a lot of people, a lot of people, you know, not people listening right now, because we, we've. We're at least we've got our finger on the pulse. If you're listening right now. We're talking about your aunts and uncles and cousins who have never even really thought about money. If they have a retirement account, it's probably in a target date fund. Yeah. They didn't opt into it. It was chosen for them. And okay, that's. That's fine. And maybe it's not wonderful, but it's fine. And now here are these lobbyists, and I'm not saying this is a big conspiracy. It just kind of is what it is. But here's this investment industry, and here's this lobby for the investment industry saying, can we sneak some exotic assets into those default funds where people don't really have a choice.
- [48:18]
Joel
The ones with trillions of dollars.
- [48:20]
Jesse Kramer
Correct. Yeah, correct.
- [48:22]
Joel
Please give me access.
- [48:22]
Jesse Kramer
And. Right. And the term that you hear is like holding the bag, where basically maybe the exotic investment industry realizes, oh, we've got all these assets and we kind of need someone to buy them from us. Now. Who's going to buy them? Who has enough money? Well, the American citizen has enough money. If you combine 200 million of us in our target date funds, who has
- [48:43]
Joel
enough money and isn't quite paying enough attention?
- [48:45]
Jesse Kramer
Correct, Correct. And so, you know, again, I don't want to make this some grand conspiracy, but I think if you just look at the fact pattern, it's kind of easy to see how that's one possible explanation of what's going on right now.
- [48:59]
Joel
Yeah. All right, I got a few more questions I want to get to with you, and I want to talk about dying early if we retire early. That's something you tackled recently.
- [49:06]
Jesse Kramer
Oh, yeah, yeah, yeah.
- [49:07]
Joel
We'll get to that and more right after this. For business owners and entrepreneurs, there is a constant challenge getting things done fast or done well. Why not have both? That's why WIX Harmony stands out. It is an AI website builder that helps to create a website quickly without compromising your vision. A fully functional site can be built for any business just by describing the idea. Then you can choose to chat with AI or edit everything manually to get it exactly right. There's also Aria, an AI agent available to answer questions or help complete tasks. And here's what makes it even better. Aria doesn't just live in a chat box. You can click anywhere on your site and ask her to make changes instantly. It's these details that make creating with WIX Harmony feel seamless. That's right. Join millions of businesses already using WIX and try WIX Harmony for free@wix.com Harmony that's wix.com Harmony.
- [50:08]
America 250 Announcer
This July 4th come celebrate at America's Block Party hosted by America 250. America's Block Party is a can't miss 4th of July concert happening at the Los Angeles Memorial Coliseum. Experience music, performances from major artists, patriotic tributes and the kickoff to giving 4th, helping to make July 4th the largest day of giving in American history. It's more than just fireworks. Learn more about this landmark celebration at america250.org
- [50:37]
Public Investing Announcer
support for the show comes from Public, the investing platform for those who take it seriously. On Public you can build a multi asset portfolio of stocks, bonds, options, crypto and now generated assets which allow you to turn any idea into an investable index with AI. It all starts with your prompt. From renewable energy companies with high free cash flow to semiconductor suppliers growing revenue over 20% year over year, you can literally type any prompt and put the AI to work. It screens thousands of stocks, builds a one of a kind index and lets you back test it against the the S&P 500. Then you can invest in a few clicks. Generated assets are like ETFs with infinite possibilities, completely customizable and based on your thesis, not someone else's. Go to public.com podcast and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com podcast paid for by Public Investing Brokerage Services by Open to the Public Investing Inc. Member FINRA and SIPC Advisory Services by Public Advisors, llc, SEC Registered Advisor. Generated Assets is an interactive analysis tool. Output is for informational purposes only and is not an investment recommendation or advice. Complete disclosures available@public.com disclosures
- [51:40]
Jesse Kramer
all right, we're
- [51:40]
Joel
back from the break. Still talking with Jesse Kramer. Talking about hey, good enough is good for us and the pursuit of perfectionism might actually backfire. And Jesse, of course a lot of folks who listen to shows like this and they they have this desire to retire young. Maybe that's, maybe that's at 40, maybe that's at 55. Who knows. Or at least to have that sort of work option mindset, right? Like maybe I'm working less or taking the pay cut to do work that I love because hey, it's I've saved and invested to where I can make that happen. There was a study that concluded that if you retire earlier, you tend to die earlier. But I know you thought this was bogus. Talk to me about about this study. You kind of took it on head on on your blog.
- [52:25]
Jesse Kramer
Actually, I'm going to let me, let me think about this for a second because I think Joel, if I recall it's if you retire later, you die earlier.
- [52:33]
Joel
Oh, that's right. That's right. That's right.
- [52:34]
Jesse Kramer
Okay, so that's correct. The study, which we will come back to the study itself. But the conclusion for the study, which is kind of one of these things that's regurgitated every 24 months on different financial independence forums. The conclusion of the study was that basically, if you retire at 50, on average, you're going to die at 80, but if you retire at 65, on average, you're gonna die at like, 67. I mean, a really severe penalty, a longevity penalty.
- [53:05]
Joel
Never work. We'll live forever.
- [53:06]
Jesse Kramer
Exactly, exactly. And it begged a question to me because it's like, okay, if I retire at 65, I'm gonna die at 67. I mean, what happens if I die at. Or what happens if I retire at, like, 70? I think the answer is I hop in a time machine, I go back to 68, and I drop dead. I think that has you just die
- [53:23]
Joel
at work at your desk.
- [53:24]
Jesse Kramer
Right, right. And so if you look at the conclusion alone, and the scary thing is, I think there are some. There are some, whether you want to call them clickbait creators or people who just didn't know any better and maybe were just a little ignorant, I mean, a lot of people will share this study in the financial independence world and say, see, here's this reason you need to retire earlier. You're gonna live longer. Basically, the whole study is bunk. It's just. It was. If you look at kind of the. The birth, the birthplace of it, it was a physicist who didn't really understand actuarial science and longevity data. Misinterpreting a data set from Boeing about when people were claiming their pensions, and he drew just outright incorrect conclusions from it that were so bad that Boeing had to come out after the fact. I think this was in, like, the mid-90s. Boeing had to come out after the fact and be like, yeah, that study that's kind of being like, passed break rooms all around corporate America. It's totally wrong. The guy misinterpreted our data. And yet the incorrect conclusion lives on. Part of being on the Internet, I suppose, is that fake news lives on. And so anyway, the interesting takeaway there is that, yeah, there probably isn't a true physiological connection between retiring earlier, living longer. You could make some subjective conclusions, like, if I leave the stressful environment of work, I'll have less stress and I'll probably feel better for it, and I bet you I'll live Longer.
- [54:55]
Joel
But if I have a good work environment and I have relationships at my job that matter and I have purpose and I leave that, I think that also can have a job can be multiple things, different things to different people.
- [55:08]
Jesse Kramer
100%. That is so true. That's exactly right. And I really don't think there is a good connection there. At least I. How about this? Let me put it this way. Show me the data. Right. I guess I should say I don't know any better. I don't have any really strong reason to think that retiring early is going to help you live longer or not. I think I'll end with this one because if you go to. It's like the national association of Actuaries. I mean, these are the people who think about statistics and life and death more than anyone else on the planet. You can go to their website and I'm happy to throw you the link. I don't remember it off the top of my head, Joel, but I'm happy to throw you the link if you want to share it and you can. They will do decent job of letting you know what your personal longevity might look like. And the only surprising question, I mean, I think they ask you your gender, they ask you your current age, they ask you a question about your health. And it's just like, I'm of good health, I'm of average health, I'm of bad health. Those are your three options. And then the fourth question they ask you is, are you a smoker? Because that has a really outsized impact on your longevity.
- [56:13]
Joel
Yeah.
- [56:14]
Jesse Kramer
They do not ask you if you're part of the fire community and if you retired early. Because I think ultimately it's just, it's in the noise as to whether there's
- [56:21]
Joel
an impact or not, you know, bogus study. This makes me think of something that was published at the end of last year in the Wall Street Journal. I don't know if you saw this. And I just pulled it up so I could read the headline. The best way to do a Roth IRA conversion before retirement. And this says a one time transfer outperforms an equal installments method in most tax situations. Research finds. It was not very good research though, Jess. Like, and this was in the Wall Street Journal, right? And we talk about Roth conversion ladders and such in order to reduce taxation in a given year. It's amazing sometimes the stuff that's even in legitimate places that leads you to believe something. Oh yeah, I have a million dollars in a traditional ira. Let me convert it to a Roth this year. I guess because of what I just read in the Wall Street Journal. But you have to dig a level deeper to realize that, I don't know, most of that money being taxed at 37% isn't ideal.
- [57:14]
Jesse Kramer
Yeah, yeah, we are living in. I mean, again, this is almost like getting off of the finance topic. But yeah, we're living in an age of just questionable information. Right. At all times. It's hard. And it probably makes your life hard too. It makes my life hard sometimes as far as, like, I really want to try to get the answers right. Sometimes I get the answers wrong, I try to go back and correct the. But yeah, it's kind of a caveat emptor. That Latin phrase, buyer beware. And it's like listener beware. If you're reading something, if you're listening something, just like, you know, can you verify this with a few other sources to make sure that what you're hearing is actually correct?
- [57:48]
Joel
And even if it's from a good source or a person you trust and you're like, it doesn't seem to square with maybe a couple of the things I've read. Dig a little deeper because don't just necessarily knee jerk trust that person, whether it's you, whether it's me. Because we make mistakes too. I read that article like three times and I was like, still, spidey sense is off. I need to dig into this a little bit further. Okay, last question for you. What are the biggest non money questions? How do money listeners should be asking themselves to make sure their financial plan is aligned with their life goals?
- [58:18]
Jesse Kramer
Ooh, that's a hard one. I mean, do we go back to scuba if you can't scuba? What's this all about? No, I mean, the biggest, I think,
- [58:25]
Joel
I think that's good. I like that.
- [58:27]
Jesse Kramer
Yeah, it's a, it's a funny way of, I think, reminding yourself of the big things, which is like.
- [58:32]
Joel
Yeah.
- [58:32]
Jesse Kramer
I mean, I think that when people get so caught up in the numbers and the weeds and the optimization and they've convinced themselves that somehow their financial plan has failed, when it's like, well, wait a second, you said you wanted to be happy. You said you wanted to have a happy family. You said you wanted to take your family on these trips. You wanted to pay for your daughter's wedding, you wanted to do all these wonderful things in retirement, and you've done them. Like, what part of that is a failure? You know what I mean? It's like the financial plan needs to serve the life, not the other way around. So I really do think the important questions that the listeners need to ask themselves is just like those that personal goal setting, like where, where do I hope to be and where do I want my family to be? The people that you care about, the relationships that are meaningful to you, what do you want those to look like in 1, 3, 10, 25 years? And then you can maybe work backward from there to understand how your finances can play a role in achieving those goals. And I think back to that. It's the Harvard Grant study. It's that like, longitudinal Harvard study that tracked a group of young boys over like 90 years. Are familiar with this. They call it the happiness study. And it's like one of the primary, I mean, they talk about in that study that one of the two or three main outputs has to just do with relationships. Like, relationships are really, really important. And so I think maybe if there's one question to ask yourself, I would start with relationships in your life and how you can make sure they look the way you want them to look and feel the way that you want them to feel. And only then ask yourself, how do the finances support that goal?
- [60:15]
Joel
I dig it. Jesse, it's a pleasure, man. Thanks for joining me. Where can how do money listeners find more about you, your blog and your podcast?
- [60:22]
Jesse Kramer
Awesome. Thank you again. Thank you, Joel. Thanks for inviting me on. So my podcast, I'll mainly just talk about that. It's called Personal Finance for Long Term Investors. And candidly, I get a little nerdy, a little deep. And so I'd say is that if you're out there listening right now, you're a bit of a DIYer and you really like digging a little bit into the weeds, some of the numbers. Then I think you'll enjoy what I have to talk about. It tends to be a little bit retirement focused and you can find it wherever you're listening. Right now, I think we're available on pretty much all podcast players. Personal Finance for Long Term Investors.
- [60:56]
Joel
Awesome. We'll link to it in the show notes as well. Thank you, my friend.
- [60:59]
Jesse Kramer
Thank you.
- [61:01]
Joel
All right. That was such a good combo with my buddy Jesse. And man, I hope it was helpful to all the perfectionists in particular out there who want to get it just right. And man, there's just so many ways that you can make a mistake or that you can take a strategy that's less than ideal for yourself when it comes to investing for your future. And I think my big takeaway, the thing that I loved the most that Jesse said was his speed limit analogy. If the speed limit 65 and you're going 62, no harm, no foul and you're going 68, not that big of a deal. If you're going way under or way over, you really need to check yourself before you wreck yourself. And so man, do do that analysis. It's okay to deviate slightly into and to make investment choices that might not be the most ideal thing in the world, but if you're taking outsized risk or you're not taking enough risk, or you're getting a little too cozy with alternative investments no matter what stripe they are, then maybe need to consider again whether or not that's in your best financial future, or if you're being too conservative or if you're being too optimistic about future returns. Oh, the next 15 years are going to look like the last 15, that you're not putting yourself in a strong position to succeed or to meet your goals or you're harming your ability. If the case of being too conservative to enjoy the life you want now because you're so prioritizing the future because you haven't planned accurately either. And so being too conservative sounds like a smart thing, but ultimately it's not. So yeah, I hope you enjoyed this episode. I love talking with Jesse and there was a lot of wisdom from him here in this one, and I'll put links to his podcast and his blog in the show notes as well up on howtomoney.com until next time, best friend out.
- [63:07]
America 250 Announcer
This July 4th, come celebrate at America's Block Party. Hosted by America 250. America's Block Party is a can't miss 4th of July concert happening at the Los Angeles Memorial Coliseum. Experience music, performances from major artists, patriotic tributes and the kickoff to giving 4th, helping to make July 4th the largest day of giving in American history. It's more than just fireworks. Learn more about this landmark celebration@america250.org
- [63:36]
Joel
this
- [63:36]
Jesse Kramer
is Sophia Donner from OK Storytime this summer. Find your next obsession on Prime Video and listen. We're not saying you need another obsession,
- [63:44]
Joel
but there could be a lot worse ones. Steamy romance, addictive love stories and the book to screen favorites you've already read twice, so why not watch them a
- [63:53]
Jesse Kramer
third time off campus?
- [63:54]
Joel
L the Love Hypothesis and more Slow Burns Second Chances chemistry you can feel through the screen and it makes you wish you were actually in that movie. We've got binge worthy series. Can't miss movies. Perfect for when you're ignoring your own problems or procrastinating as one does. Your next obsession is waiting. Watch only on Prime.
- [64:12]
Public Investing Announcer
Here's the truth. You could literally be adored by everyone and then come home and still get completely ignored by your own cat. It's classic cat behavior, but new Sheba Premium Puree is a lickable treat that changes all that. They're protein rich, made with bone broth, and have the smooth, creamy texture cats go crazy for, especially when it's hand fed. Yeah, it's more than a treat, it's a fast pass to favorite human status. So feed your cat Sheba and go from totally ignored to truly adored in just 12 days. Guaranteed or your money back. Learn more@shiba.com this is an iHeart podcast.
- [64:49]
Jesse Kramer
Guaranteed human.