Motley Fool Money: Episode Summary – "2025 Goals: Invest Better, Budget Smarter"

Release Date: January 2, 2025
Hosts: Dylan Lewis, Ricky Mulvey, and Mary Long
Guests: Tim Byers, Allison Southwick, Robert Brokamp

1. Introduction and Financial Resolutions for 2025

Ricky Mulvey opens the episode by addressing the surge of new listeners motivated to improve their financial health in the new year. He highlights a significant survey finding: while 70% of Americans have financial resolutions for 2025, only 7% are focused on increasing their investments. The majority prefer paying down debt or saving for substantial financial goals.

[00:25] Ricky Mulvey: "Here's the kicker. But just 7% of folks want to invest more. It's a lot of paying down debt, saving for big financial goals, not a ton of action on the investing side."

Tim Byers concurs, explaining that investing inherently feels unnatural and intimidating to many, leading them to opt for safer financial resolutions rather than diving into the complexities of investing.

[01:16] Tim Byers: "Investing is really hard and it's unnatural. ... people don't really know what to do to get started. And so it becomes intimidating and they say, nah, I'm just gonna save more money."

2. Advice for New Investors

Ricky poses a thought-provoking scenario: if one could send advice back in time to their novice investing self, what wisdom would they impart? Tim shares his own strategy, emphasizing the importance of educational resources.

[02:21] Tim Byers: "I would go back and do what I did, which is I read two really important formative books... One Up on Wall Street by Peter Lynch and The Motley Fool Investment Guide. ... it just changed my life."

He advocates for continuous learning and leveraging Motley Fool's tools to build foundational investing skills. Ricky adds that observational insights from everyday life can provide unique investment advantages.

[04:05] Ricky Mulvey: "Your observations about the world are valuable to you as an investor... you get intensely valuable insights that may be not as apparent to the folks doing equity coverage for large institutional investment firms."

3. Market Sentiment and Analysis: Are "Animal Spirits" on the Loose?

Ricky references a CNBC article by Yun Li discussing "animal spirits" influencing the 2025 market, citing examples like Bitcoin, MicroStrategy, Coinbase, Robinhood, and meme stock trader Roaring Kitty. He questions whether these sentiments are overly exuberant.

[04:37] Ricky Mulvey: "... animal spirits are on the loose at the dawn of 2025 trading..."

Tim expresses skepticism about the term "animal spirits" and critiques companies like MicroStrategy for their pivot to being a Bitcoin holding company, suggesting certain market sectors are "crazily out of control."

[05:13] Tim Byers: "There's sections of the market that are crazily out of control, yes, that is absolutely correct."

When discussing the overall market's robust performance—its best two-year run since the late '90s—Ricky voices concern, drawing parallels to the dot-com crash era and questioning if market optimism might be misplaced.

[06:43] Ricky Mulvey: "What happened the last time is that you had a dot com crash... that’s a time to get a little concerned."

Tim elaborates that while certain market segments may be frothy, his investment approach remains grounded in the fundamentals of individual businesses rather than market sentiment.

[07:00] Tim Byers: "Every investment I make...is grounded in a belief that the underlying business can perform better for a longer period of time than the market price suggests."

He also touches on the necessity of market resets for high-growth stocks, emphasizing that corrections are essential for sustainable investment.

4. Deep Dive: Netflix’s Strategic Position and Future Prospects

The conversation transitions to a discussion about Netflix, prompted by its impressive viewership numbers for Squid Game Season 2. Tim analyzes Netflix's global scaling efficiency, especially post-writer strike, highlighting the platform's ability to generate global returns without the traditional distribution friction.

[09:38] Tim Byers: "Netflix is one of the world's most capital efficient entertainment businesses... I think those who think that streaming is going to kill Netflix have just got it wrong."

Ricky queries about the broader market's view on streaming's impact on Netflix, particularly referencing Netflix's ventures into live sports, such as securing US rights for the FIFA Women's World Cup.

[12:17] Ricky Mulvey: "Netflix secured the US rights for the FIFA Women's World Cup for 2027, 2031... Do you think it's a smart strategy shift?"

Tim responds positively, noting the strategic fit and potential for increased global engagement. He also discusses Netflix's move into advertising, suggesting it's a viable growth lever as the company matures.

[15:30] Tim Byers: "If you are looking for significant growth, then no. However, I don't think that's what anyone expects from Netflix... they can make the ad buys on that content more expensive and more expensive over time."

He emphasizes that Netflix is transitioning from a fixed growth business to incorporating variable growth through its ad platform, enhancing its revenue streams without compromising user experience significantly.

5. Budgeting Tools Overview: From Beginners to Advanced

Transitioning to budgeting, Allison Southwick and Robert Brokamp delve into various tools designed to help listeners manage their finances more effectively in 2025. They begin by outlining key questions to determine the best budgeting tool for an individual's needs, such as the desired focus (budgeting vs. investment tracking), account aggregation preferences, collaborative features for couples or families, platform compatibility, and budget constraints.

a. Tools for Beginners: YNAB and Good Budget

• YNAB (You Need A Budget):
  Robert explains YNAB's philosophy centered around zero-based budgeting and its four rules: give every dollar a job, embrace true expenses, roll with the punches, and age your money. While offering robust educational support, YNAB requires a time commitment for setup and maintenance.

  [21:56] Robert Brokamp: "It will change your life."

• Good Budget:
  A digital take on the envelope system, Good Budget allows users to allocate funds to various categories digitally. It offers both free and premium versions, with the latter enabling bank synchronization and additional envelopes.

  [21:56] Robert Brokamp: "Good Budget is built on the same philosophy... the premium version gives you more envelopes and it allows you to sync with your bank."

b. Advanced Budgeting and Financial Tracking: Quicken, Empower, and Monarch Money

• Quicken:
  A veteran in personal finance software, Quicken offers comprehensive tools for budgeting, investment tracking, and customized reporting, suitable for users seeking an accountant-like approach.

  [24:25] Robert Brokamp: "Quicken really is designed to be a desktop solution."

• Empower (formerly Personal Capital):
  Known for its investment tracking capabilities, Empower integrates spending, debt management, and retirement planning, though it incorporates marketing for its wealth management services.

  [24:25] Robert Brokamp: "Empower helps you track your portfolio and even gives you some insights into how it's allocated."

• Monarch Money:
  Emerging as a favorite among former Mint users, Monarch Money offers sleek interfaces and robust budgeting, investment tracking, and financial forecasting tools.

  [24:25] Robert Brokamp: "Monarch Money lets you track your spending, your goals, your investments..."

c. Customization with Spreadsheets and Tiller

For those who prefer a highly customizable approach, spreadsheets (Excel or Google Sheets) present a flexible alternative. Robert recommends tools like Tiller, which integrates financial accounts with spreadsheets, allowing for tailored financial management.

[27:42] Robert Brokamp: "If you're looking for a free web-based service, Empower... monarch money... Or consider Tiller, which connects banks and brokerages to your spreadsheet."

6. Family and Partner Budgeting Tools: Honeydew and Greenlight

Allison and Robert explore tools tailored for couples and families:

• Honeydew:
  Designed specifically for couples, Honeydew facilitates synchronized management of joint finances, including bank accounts, loans, and investments, while offering communication features like messaging and reminders.

  [29:23] Robert Brokamp: "Honeydew... keeps a couple on the same page when it comes to bank accounts, loans, investments."

• Greenlight:
  Aimed at families with children, Greenlight provides kids with debit cards and an app to manage their finances under parental supervision, incorporating financial literacy and even driving habit monitoring features.

  [29:23] Robert Brokamp: "Greenlight is a debit card and an app for kids ages 8 to 22... it has a built-in financial literacy game."

7. Conclusion and Final Thoughts

The budgeting segment wraps up with Robert encouraging listeners to explore various tools, emphasizing that the best tool is one that aligns with their personal commitment and usability preferences. He advises trying multiple options to discover which system best facilitates financial management.

[30:28] Robert Brokamp: "The best tool is the one you actually stick with. And that really comes down to the system, the time commitment, and whether you'll look forward to using the tool on a regular basis."

Ricky concludes the episode by reflecting on current events, such as the recovery of New Orleans from a recent terror attack, and reiterates the importance of understanding personal finance content within the broader context of individual circumstances and Motley Fool's editorial standards.

[31:48] Ricky Mulvey: "... the freedoms we enjoy in America are rare and not to be taken for granted."

He also provides a customary disclaimer, advising listeners to make investment decisions based on comprehensive research rather than solely on podcast discussions.

Key Takeaways

• Investing in 2025: Despite widespread financial resolutions, only a small fraction prioritize investing. Overcoming the intimidation factor through education is crucial.

• Educational Resources: Foundational books like One Up on Wall Street and The Motley Fool Investment Guide are invaluable for novice investors.

• Market Sentiment: While certain market segments exhibit exuberant behavior, a fundamentals-based investment approach remains effective. Market corrections are viewed as necessary for sustainable growth.

• Netflix's Strategy: Netflix continues to demonstrate capital efficiency and strategic expansion into live sports, enhancing its revenue streams without compromising user experience.

• Budgeting Tools: A variety of tools cater to different needs, from beginners seeking structured systems like YNAB to advanced users leveraging Quicken or custom spreadsheets. Family-oriented tools like Honeydew and Greenlight offer specialized features for joint and youth financial management.

• Choosing the Right Tool: The best budgeting tool is one that aligns with personal preferences, ease of use, and financial goals, ensuring consistent engagement and effectiveness.

Notable Quotes:

• Tim Byers at [02:21]: "It just changed my life. So when I go on to say, like Motley Fool Live and we do Asa Sharma and I do a show called Mindset... it will change your life."

• Ricky Mulvey at [04:05]: "Your observations about the world are valuable to you as an investor."

• Tim Byers at [12:04]: "Meaning that streaming broadly, like where everybody can stream. And so there's just endless competition. I don't think that kills Netflix. I just think they are better at it than everybody."

• Robert Brokamp at [30:28]: "The best tool is the one you actually stick with."

This episode of Motley Fool Money offers a comprehensive exploration of both investment strategies and practical budgeting tools, equipping listeners with the knowledge to enhance their financial well-being in 2025 and beyond.