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Money Guy Show
Financial Advisors React to Money YouTubers
00:21:12
Financial Advisors React | Best YouTuber Advice
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- [00:00]
Brian Preston
This is why Humphrey is so much more popular than us.
- [00:02]
Brock Preston
I recently saw some scammer who we both know online promoting 20% returns. It said 20 in huge. I'm like how's this guy not incarcerated?
- [00:11]
Morgan
I think the most dangerous trait in money, whether it's saving or investing is fomo Feeling.
- [00:20]
Brian Preston
The team has been busy. They have set us up and said we have some fellow financial youtubers that we will be reacting to.
- [00:29]
Bo Hanson
Brian, I am so excited to see what the Internet has in store for us today. Let's dive in.
- [00:34]
Mackenzie
So you have a high yield savings account and a Roth ira. What if you're confused where to put your money or what to do next? I always recommend the money guys financial order of operations. They laid out understand step by step framework for what to do with your money. Number one Deductibles covered. This is essentially an emergency fund. They recommend at least having your deductibles saved before moving on to the next step. But I like to make even one month of expenses. Talking about employer Match. If your employer offers a 401k match, you're most likely getting a 50 to 100% return. So take advantage of it. Number three, high interest debt. The reason this is after employer match is because even credit card debt interest is much lower than the 50 to.
- [01:11]
Brian Preston
100% turn that compound interest upside down match.
- [01:14]
Mackenzie
Number four emergency fund. This is building out your full three to six months expenses in your high yield savings account. Number five, this is where your Roth IRA and HSA come in. I personally and HSA as I was saving for my emergency fund but that depends on your risk tolerance and comfort level. Number six max out your employer plans or invest 25% of your income, whichever comes first. Essentially increasing your 401k contribution above just the match. If you're able to max it out or you already hit 25% invested that is amazing and you can move on to the next step. But most likely you will either stay in this step for a very long time or you will never move on to the next step and that is 100% normal. Maxing out your Roth IRA alone is a huge financial accomplishment. But if you did manage to move on to the next step. Number seven is hyper accumulation. This is investing beyond 25% of your.
- [02:03]
Brian Preston
Income, also accounting for how you're going to use that money in retirement. What about steps 89 abundance goals, prepaid future expenses and prepaid low interest debt.
- [02:13]
Bo Hanson
She just nailed the financial order of operations and I love seeing there's someone out there saying hey this thing works. This thing makes sense. If you follow this, it will set you up for a great big beautiful tomorrow. It's why, Brian, you have the thing, you know, the form. It's why if you want your free copy, you can go to moneyguy.com resources and download your free nine steps.
- [02:34]
Brian Preston
Right now, the educator in me is just beaming the flavor. Flavor.
- [02:39]
Bo Hanson
He was beaming. Did you hear the stuff?
- [02:41]
Brian Preston
I was trying to. But to know that something we created warranted another creator to go out there and create something. Well done. And by the way, content team flattery will get you everywhere. So thank you for throwing this video in there.
- [02:56]
Bo Hanson
Mackenzie Mack, that was fantastic. Thank you so much for spreading the good news of the financial order of operations.
- [03:03]
Brian Preston
Do you know how much cooler that name is than Brock Preston?
- [03:07]
Bo Hanson
Way cool.
- [03:07]
Brian Preston
I mean, if my last name was Mac, I'd have already conquered the world.
- [03:11]
Ramit
Two signs that you're doing well financially, even if it doesn't feel like it. Coming from a qualified accountant and a former investment banker, number one, you're focused on the wealth game. Society often measures success by the status game. The size of your house, the brand of your car, the label on your clothes. But 40% of people don't have enough money put away to support themselves for one month in the world.
- [03:31]
Brian Preston
That's exactly right.
- [03:32]
Ramit
So if they lose their job one month later, they're insolvent. If you're looking at someone else feeling behind financial decision because you don't own the same things that they do. Remember, wealth is measured by the things you don't see rather than things. Yeah, that net worth comparing against the wrong people. Studies show that someone whose close associates earn 50,000 a year is going to feel bad about their own finances if they themselves earn 40,000. But that same person will feel good about their finances if their friends made not 50,000 but 30,000 a year. The issue here is that this is a never ending cycle. There will always be someone making more than you. So remember, finances is a personal journey, not a race against others.
- [04:10]
Brian Preston
That's why, you know, forever back in the real estate boom, pre, you know, the Great Recession, they were always like, go buy the cheapest house on the in the most expensive neighborhood because I'll.
- [04:23]
Bo Hanson
Go up in value.
- [04:25]
Brian Preston
That is a disaster. If you are the poorest person in your peer group or amongst your neighbors, you're always going to feel like you're struggling. So I love that she shared that because that's, that's something we all should be mindful of, is that if you surround Yourself with people. Now, look, I want you to put yourself with people who are making good decisions, going to be successful, because you should pace yourself to people that will make you a better version of yourself. However, if you're trying to just spend to keep up with the Joneses, you're gonna find comparison is really going to be the thief of all joy, happiness, and everything else that you think money can and cannot do for you.
- [05:04]
Bo Hanson
Yeah, I think the key there is recognizing that money is nothing more than a tool that allows us to accomplish the things that we ultimately want to accomplish. So it's not the status symbols. It's living the better life today and tomorrow that we really believe is capable of us living. So don't get caught up comparing or trying to be someone else. Be the absolute best version of yourself. Shout out to Nisha. That was an awesome video. You get the money guy stamp of approval.
- [05:30]
Brock Preston
This is how I would invest $10 if I were starting all over again. First, I'd invest $5,000 into an S&P 500.
- [05:37]
Brian Preston
There you go.
- [05:38]
Brock Preston
Like Voo or Spy. This is going to be the foundation of your portfolio. And it's up 83% in the past five years. Second, I'm adding another $3,000 into QQQ to the software and tech companies, and in the past five years it's up 135%. Third, I'm going to add $2,000 into a high yield savings account. And that way I always have some cash on hand in case there are any opportunities to buy up any dips. Let me know if you have any questions and I'll also have some free downloads in my profile.
- [06:06]
Brian Preston
This is why Humphrey is so much more popular than us. He has the same thought as us, but we would have been the nerds who said, hey, make sure you got some cash reserves first. But he came out with fire. First. He went with the S and P with the VOO for life, and then he went with the qqq. And then he came in with the. The reasonable cash. We could learn something from that.
- [06:25]
Bo Hanson
Yeah, Humphrey, I don't disagree with what you said. An 8020 portfolio is what you described. 8,000 of it being invested to 2,000 of it going into risk off or conservative. Here's the only thing I think that might be a little bit different. And I'd want you guys out there to recognize this. For a lot of folks, when you just start out on your financial journey, you may not understand what all the different ETFs and mutual funds and indices are that you can go buy into, like, you may have never heard of QQQ or know what that is or why you would invest in that if you are at the very beginning of your journey. The world has gotten so much easier for investors. We actually love target date index funds, where all you have to do is decide two things. How much can I save? And when do I think I'm going to need these dollars? That way you're not having to figure out what the overall allocation is. You can focus on your savings rate. So if you're someone starting out with just $10,000, don't sleep on using target retirement index funds.
- [07:13]
Brian Preston
Hey. And don't sleep on financial order of operations so you can get money funded in those emergency funds. But also loading up the Roth IRA and other things that are going to build your great big beautiful tomorrow.
- [07:24]
Brock Preston
I recently saw some scammer who we both know online promoting 20% returns. It said 20 in. I'm like, how's this guy not incarcerated? Anyone who knows the basics of personal finance, in fact, anyone who's watched this interview knows 7% is your good comparison. So if somebody's promising me 20% returns, I already know it's a lie. It cannot be true. Only credit card companies going and saying, I can promise you that you can run 40 miles an hour if you use my supplement. You're just like, I know this is a lie.
- [07:53]
Bo Hanson
It's impossible.
- [07:54]
Brock Preston
And you and I both know that over the course of the long term, it is effectively impossible for 20% return.
- [07:59]
Bo Hanson
Yeah. I don't disagree. And I think a lot of people, this is what happened. If you rewind back to the Great Recession and you rewrote, rewind back to Bernie Madoff. This is exactly what was happening. He was telling people, you can have these returns and you can make this and you'll never go down. And it's year after year after year after year of something that defies all common sense. And if it seems too good to be true, I agree with Ramit. It likely is. That's why whenever we're doing projections and whenever we're thinking about how to plan forward, we want you to use a reasonable rate of return somewhere between 6 to 8% over the long term. And then if you happen to do better than that, because the market does better than that, then that's just all gravy.
- [08:33]
Brian Preston
Yeah. It just lets you have more flexibility, more options. That's why I love the art of planning using conservative assumptions. But also, this is another reason I'll flip it upside down and I meant it. Credit card companies are charging you 20 plus percent and you think that you're getting ahead because you're just paying the minimum payment, but you're still funding your Roth ira. That's a disaster. You've got to pay off anything that is charging you 20% is the equivalent of you not making good money on your investment. So you got to pay off that bad, compounding interest.
- [09:06]
Morgan
I think the most dangerous trait in money, whether it's saving or investing, is fomo, figuring out if you are susceptible to watching your neighbors or your friends or your co workers get rich. And that just makes you boil with envy. And even if it doesn't feel like envy, you want you see it, you say, I need that as well. Fake is probably the wrong word because I think it's innocent. But people put their best foot forward, so what they are showing you is not indicative of what it is. In college I was a valet here in Los Angeles, and it always stunned me that when people would come into the hotel, I work driving a Ferrari, a Lamborghini, a Bentley. When you get to know some of these people, some of them were actually not that successful. They were like a law firm associate who spent half their paycheck on a Porsche lease.
- [09:49]
Bo Hanson
Wow.
- [09:49]
Morgan
And so the fake it till you make it idea is so powerful in America that if you see, oh, that guy's driving a nice truck, I need to go get one too, because I'm just as smart as I work just as hard as that guy. That's really dangerous because you're not chasing their success, you're chasing their fakeness.
- [10:03]
Brian Preston
If you look at the trends, Bo, of how the typical car payment is now getting close to $800 a month. And then you look at the trait that now people are financing cars seven years and beyond the faking of life to impress people who probably really don't care. But it's all about the highlight reel of what you see in social media or what people see in your driveway. This is what robs people of being their best self financially as well as living their best life doing actually things that they want to do for happiness, for fulfillment. If you can make the small decisions today, you won't be trapped in that prison just because you thought you looked cool in that moment.
- [10:45]
Bo Hanson
So I agree with everything that Morgan just said right there. When it comes to making financial decisions, if you fake it until you make it, all you're really doing is robbing from your future self this idea of if I just believe that I'll be something Then I'll be it and I'll be it and I'll be it. All you're really doing is pushing off the inevitable reality that you're never making the decisions necessary today to have the life that you want to have in the future. So don't fake it till you make it. Live a different way today so that you get to live a different way tomorrow.
- [11:15]
Brian Preston
Bo, would you say make small decisions today so you can live your great big beautiful tomorrow?
- [11:20]
Bo Hanson
I love it.
- [11:21]
Tori
Three things with your goals, I need you to be specific, not just do I want to save money.
- [11:26]
Brian Preston
How much she gonna say smart, measurable.
- [11:28]
Tori
For me it was 100k. That was the goal. I want to save 100k.
- [11:31]
Brian Preston
The second thing Charlie Munger would agree.
- [11:33]
Tori
For me it was, I want to save 100k before I turn 26.
- [11:37]
Brian Preston
Wow.
- [11:37]
Tori
And then I need you to put a mission or a why behind it. Because especially with financial goals, what will happen is you get started paying off your debt, or you get started saving your emergency fund, or you get started saving for your retirement and then something happens, you get laid off, somebody invites you on this really cool trip to Cabo and like, you end up self sabotaging. Life has distractions, reason to care, and especially when things get hard, you have to remind yourself, why am I doing this? So for me, it was, I want to save 100k specific at 25 timely so that I can quit my job and run my company full time. I want to save $2,000 to go to Japan next year so I can eat authentic ramen, right? Like make it something you can taste or smell, right? Like something that feels very visceral. I think that's how we get one step closer to actually achieving our goals as opposed to just, I'm going to be better with money and then having no backup plan to that I love.
- [12:32]
Bo Hanson
Because I think so many people, this is why New Year's resolutions never work. People say, oh, I'm going to be better with money or oh, I want to be rich or I want to be wealthy. And they don't take it to that second, third, fourth level of actually giving you the staying power. Because we know on our financial journey we talk all the time about the financial order of operations and people think that it's just a little straight walk up the mountain, but that's not the way it actually manifests. What happens is, is you start going and then you fall off and then you reset and then you move again and it's a constant up and down, up and down. Well, if you lose track of what the finish line is, you lose track of the reason why you're making the decisions you're making, it's going to be very hard for you to continue making those decisions, especially when life gets tough.
- [13:09]
Brian Preston
I love what Tory did there with being specific, but I want to add a little different angle on it because I think about my own life. I always said when I was like 18 or 19 or 20 years old, that when I turned 25, I was going to buy a Corvette.
- [13:22]
Bo Hanson
Right.
- [13:22]
Brian Preston
That didn't happen. And then I think about when I started first investing heavily in my early 20s, when I got my first real job, it was all because I could quit working age 50. Those things, neither one of them. I never bought the Corvette. I didn't retire at 50 as I sit here right now. But here's the great thing about what Tori was sharing. Even if you set these measurable goals and they're good goals, and maybe you change your mind, the fact that you actually set those goals when you did and you made some type of action catch traction, you'll be better for it. You have more flexibility, you have more options, and you still get to live your best financial life.
- [13:57]
Bo Hanson
Yeah. Understanding and defining what the finish line is going to be is the thing that keeps you motivated to move towards the finish line, even when life throws these unknown unknowns at you. A lot of times clients will come to us and say, hey, I want to. I want my portfolio to hit $4 million. And we'll say, okay, great. Why? What does 4 million mean to you? Oh, I haven't really thought about that. Well, does it mean that you can stop working? Does it mean that you get to travel more? Does it mean that you can give more? Does it mean that you can do things for your kids that you haven't been able to do otherwise? If you can put a purpose and a reason behind the actual dollars that you're working towards, it's going to make the fulfillment of attaining that goal and hitting that number and making it to that mark that much more meaningful. And it will give you the motivation to stay on the course, moving towards those goals.
- [14:41]
Scott
I'd gone all in on this one company, Red Envelope, which went public in 2002 as an E commerce company. I started Scott Galway and had been taught by the VENT venture capital community that if you throw yourself at something and you're talented, and I thought, I'm a baller, I'm really good at what I do, you got to go all in. And I kept investing Every spare dollar I had and threw myself at this thing. And then a strike at the port, a software glitch, and the credit crisis in 2008. Our stock went from 7 bucks to chapter 11 in like three weeks.
- [15:08]
Brian Preston
Yeah, I've seen that happen a lot.
- [15:09]
Scott
Worth 10 or 12 million but being worth negative 2 million because I was one of those idiots that borrowed against their stock to buy more stock. And that's a lesson in the book. And that is the moment you aggregate anything resembling some sort of decent amount of capital, you want to look at it and you want to diversify like crazy. Because if I had just taken a little bit of money off the table and invested in index funds or in real life bonds, I would have been so much better off. So diversification, and that's one of the key components of my algebra of wealth diversification. People don't recognize how powerful it is because it sounds boring.
- [15:42]
Brian Preston
Yeah, I think about the fact back when I first got into managing money in the late 90s, worked with a lot of lucent technology executives. Nobody's like, who's lucid technologies nowadays? But back in the day it was exactly what Scott was just sharing. This thing was a high flyer. These executives on paper were worth millions upon millions of dollars. But the thing is, it was all on paper. And that's what I love. Because a lot of us, you'll have your human capital and your financial capital all mixing in the same pot. You got to keep them separated. If you're not building some separation from how you make your income to what's actually going to support you in the future, you got a problem.
- [16:23]
Bo Hanson
Yeah, people think of diversification as some inhibitor or some governor on growth and it's actually the exact opposite. If you can combine different pieces and parts of your portfolio, you can diversify your financial life. What you're giving yourself permission to do is continue, continue on the course even if one of those ideas doesn't work out or one of those ideas doesn't manifest in the way that you thought it was going to. So diversification is actually a tool that allows you to build and accelerate and stack and build and accelerate and stack while protecting yourself from going back to where you started, which is what it sounds like happened to Scott.
- [16:56]
Brock Preston
Here are my top five most useful subreddits. And this is coming from someone who's achieved financial freedom in their twenties. Number five is R Buy for life. Because a lot of stuff is made with really bad quality nowadays. So whenever I make a big purchase, I like to check it out. First to see if it's going to break in a couple of years or in two days. Number four is R Supplements and this is something I just started getting into cuz health is wealth. Hey, setting up on a bunch of vitamins psychic take to help me improve my physical health and my mental one. Number three is R. Explain like I'm five. If you ever need something super complex.
- [17:29]
Brian Preston
Oh, that one's for you.
- [17:30]
Brock Preston
Just post the question here and people are going to break it down for you. Number two is R Life hacks. I love learning new, uncommon ways to do things, especially if they're more efficient. Some of the coolest tricks I've ever picked up are from this page. And number one is R Financial Independence. It's a great subreddit and is really what put me first on into achieving financial freedom. What's your top two subreddit? Let me know in the comments.
- [17:50]
Brian Preston
Moneyguy Show.
- [17:51]
Bo Hanson
I love that another subreddit that you ought to check out is the Money Guy show. Because what it is is it's people just like him who hey, I really love making sound financial decisions. I love being in a community of other people that view the same things that I view and think the same ways that I think. And it allows you to have that sense of community where oftentimes money in the world in which we live is taboo. Well, in our subreddit it's not taboo. You can actually talk about the decisions you're making, why you're making that decision, and you can learn from peers that are doing the exact same thing. I think if you could have done six, Moneygal's gonna be on the list.
- [18:21]
Brian Preston
That was cruel because, you know, the content team right out of the gates gave us a content creator that went over the financial order of operations. So when I see them talking about popular reddits, I'm like, oh, here it.
- [18:34]
Bo Hanson
Comes, here it comes, here it comes.
- [18:37]
Brian Preston
It's coming.
- [18:39]
Bo Hanson
Okay, I do love all of the ones he said. I do think life hacking. I do think health is wealth. I do think financial independence. I think all of those are fantastic things to dive into so that you can do your life better better.
- [18:52]
Brian Preston
Money Guy Show.
- [18:53]
Bo Hanson
It's Brian Preston, the Money Guy.
- [18:59]
Brian Preston
Well done, content team. Look, I gave you a lot of trouble. I picked on you, but those are actually great. I'll there's nothing more fun than seeing some knuckleheads come on there and say horrible stuff and for us to just to slap it out and tell them how horrible it is. It was also fun to actually see fellow content creators who are truly trying to make the world a better place by paying it forward, breaking through all the conspiracies, all the misinformation, so you can understand that money is just a tool, but there's a better way to do money so you can live your best financial life. I'm your host, Brian Preston. Mr. Bo Hanson. Money got team out.