Better Investing Using Horrible Investment Products (SB1662)

Summary

The Stacking Benjamins Show – Episode SB1662: Better Investing Using Horrible Investment Products

Release Date: March 28, 2025

In this engaging and insightful episode of The Stacking Benjamins Show, hosts Joe Saul-Sehy and OG delve deep into the world of questionable investment products. Titled "Better Investing Using Horrible Investment Products," this episode aims to shed light on why certain investment vehicles are often misleading, misused, and detrimental to the average investor's financial health. Joined by financial experts Don McDonald from Talking Real Money, Paula Pant of Afford Anything, and Jesse Kramer from Personal Finance for Long Term Investors, the discussion is both enlightening and cautionary for listeners navigating the complex landscape of personal finance.

1. Infinite Banking and Permanent Life Insurance

The episode kicks off with a critical examination of Infinite Banking and permanent life insurance products. Don McDonald passionately argues against their widespread use, highlighting their inherent flaws and the niche audience they truly serve.

Maxwell East (Don McDonald) [11:05]: “I believe that most financial life insurance products are devilish and dangerous and commissionish. They are loved by those who sell them. They are rarely, if ever, purchased actively by clients because they don't make much sense.”

Paula Pant adds to the skepticism, emphasizing the complexity and questionable benefits of Infinite Banking for the average investor.

Paula Pant [12:24]: “I went down the rabbit hole at that time and I was like, wow, this is complicated and stupid and no one should do this.”

Jesse Kramer attempts to present a counterpoint but is met with robust rebuttals from Don and Maxwell, reinforcing the notion that such products are predominantly beneficial only for a minuscule segment of high-net-worth individuals.

Maxwell East [15:54]: “Yeah, the infinite banking's a gimmick. It's just a sales gimmick.”

2. The Perils of Penny Stocks

Shifting focus, the discussion moves to penny stocks, another category of investments that often lure inexperienced investors with the promise of exorbitant returns. The hosts dismantle common misconceptions, comparing penny stocks to gambling due to their high volatility and lack of transparency.

Jesse Kramer [10:49]: “Penny stocks, I think are akin to just straight up gambling. Go play the roulette wheel.”

Maxwell East further deconstructs the illusion behind low-priced stocks, explaining the fundamental misunderstanding of share price versus market capitalization.

Maxwell East [21:26]: “It's the share price fallacy that so many investors have. If it's trading for a penny, it's a great deal—nothing could be further from the truth.”

The conversation underscores the dangers of pump and dump schemes prevalent in the penny stock market, highlighting the SEC's limited capacity to police these fraudulent activities.

Maxwell East [24:59]: “The SEC's ability to police penny stocks also is incredibly low. So the pump and dump schemes... pretty good.”

3. Equity Indexed Annuities: The Biggest Lie in Investment

In the latter half of the episode, the hosts tackle Equity Indexed Annuities (EIAs), branding them as some of the most misleading and financially harmful products available. Don McDonald passionately criticizes EIAs for their deceptive sales practices and exorbitant fees.

Maxwell East [38:02]: “Equity indexed annuities... are the most horribly sold product in all of the financial universe. They are the subject of almost every free steak dinner you get in the mail.”

Joe Saul-Sehy highlights the false promises made by annuity salespeople, particularly the claim of achieving stock market returns without any risk.

Joe Saul-Sehy [39:21]: “They're being pushed more often than they're being bought. They're being pushed onto people more than those people are actually seeking them out.”

Paula Pant points out the role of financial illiteracy in the widespread acceptance of EIAs, emphasizing how sales tactics exploit the lack of knowledge among investors.

Paula Pant [41:07]: “In a world with the lack of financial literacy, it's tempting to believe it because you want to believe it.”

4. Misleading Sales Tactics and the Importance of Financial Literacy

A recurring theme throughout the episode is the rampant use of misleading sales tactics employed to sell these inferior investment products. The hosts discuss how high commissions and enticing freebies, like steak dinners, are used to lure investors into making poor financial decisions.

Maxwell East [42:38]: “They're being pushed more often than they're being bought. They're being pushed onto people more than those people are actually seeking them out.”

Jesse Kramer provides practical advice for teachers navigating their 403B plans, warning against high-commission annuity providers that often overshadow low-fee, reputable firms like Fidelity and Vanguard.

Jesse Kramer [49:57]: “If they bring the donuts, they're automatically on the naughty list to some extent.”

5. Concluding Insights and Takeaways

As the episode wraps up, the hosts reinforce the critical need for investors to be vigilant and well-informed. They advocate for education and transparency, urging listeners to avoid products that promise unrealistic returns without corresponding risks.

Joe Saul-Sehy [45:05]: “Beware. Charts and graphs can show you whatever anybody wants to tell you.”

The episode concludes with a strong message: prioritize financial literacy, question high-commission products, and seek out investment options that align with long-term financial goals rather than succumbing to flashy but flawed investment schemes.

Notable Quotes

• Maxwell East (Don McDonald) [11:12]: “Infinite banking can work and all the math they're doing is not incorrect, but they're telling you three quarters of the story.”

• Paula Pant [12:28]: “I was like, wow, this is complicated and stupid and no one should do this.”

• Maxwell East [15:54]: “Infinite banking's a gimmick. It's just a sales gimmick.”

• Jesse Kramer [10:49]: “Penny stocks, I think are akin to just straight up gambling. Go play the roulette wheel.”

• Paula Pant [41:07]: “In a world with the lack of financial literacy, it's tempting to believe it because you want to believe it.”

• Maxwell East [38:02]: “Equity indexed annuities... are the most horribly sold product in all of the financial universe.”

Final Thoughts

This episode of The Stacking Benjamins Show serves as a crucial guide for investors, especially novices, to recognize and steer clear of investment traps that promise high returns with little to no risk. By dissecting Infinite Banking, Penny Stocks, and Equity Indexed Annuities, the hosts provide valuable insights into the pitfalls of these products, emphasizing the importance of informed and strategic investment decisions.

Listeners are left with a clear understanding of why skepticism toward certain investment products is warranted and the importance of building a diversified, transparent, and low-fee investment portfolio to secure long-term financial well-being.

Transcript

[Joe Saul-Sehy]

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[Doug]

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[Maxwell East]

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[Doug]

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[Maxwell East]

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[Joe Saul-Sehy]

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[Maxwell East]

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[Maxwell East]

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[Joe Saul-Sehy]

Visit progressive.com after this episode to see.

[Doug]

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[Maxwell East]

I, Maxwell East, Navely, being of sound mind and body, do hereby bequeath the following to my wife Rose, who spent money like there was no Tomorrow, I leave $100 and a calendar. To my sons Rodney and Victor, who spent every dime I ever gave them on fancy cars and fast women, I leave $50 in dimes. And to my other friends and relatives who also never learn the value of a dollar, I leave a dollar.

[Doug]

Live from the basement of the YouTube headquarters, it's the Stacking Benjamin Show. I'm Joe's mom's neighbor Doug, and let's talk horrible investments. Are they as horrible as you think or are you just using them horribly wrong? On today's show, we're diving into how misconceptions can hurt your investing game. But that's not all. We'll stop halfway through today's discussion to continue our year long trivia challenge. And now, a guy who tried to beat the market but just ended up singing Beat it in front of the mirror for hours. It's Joe Saul Sehi.

[Joe Saul-Sehy]

Where the hell did that come from? Hey everybody, welcome to Friday. I'm your surprised host Joe Salsihai from Stacky Benjamins from Nobody Goes Off Script.

[Doug]

Like I Do Joe.

[Joe Saul-Sehy]

I have no idea what we're doing already on a Friday, which means it's a normal Friday. And we've got a great band of contributors today. Let's meet them. The one in New York City joins us. The Paula Pant is here. How are you? The Paula Pant.

[Paula Pant]

The Paula Pant I am doing great how are you doing, Joe?

[Joe Saul-Sehy]

Well, not great. Everything here turned yellow and green. And so Doug said this backstage. He's like, so does that mean everything in your nose now is turning yellow and green? Which is kind of gross, but the answer is yes. So not. You know what, Paula? I'm happy though, because I'm here with you.

[Paula Pant]

Well, yeah. April showers make May flowers. So maybe, maybe your nose will bloom.

[Joe Saul-Sehy]

But how many pilgrims do Mayflowers bring? Isn't that the way that ends?

[Paula Pant]

Is that really? I hadn't heard that. But that.

[Joe Saul-Sehy]

I. I don't know. I might have made that up. Should I say TM at the end of that?

[Paula Pant]

Yeah.

[Joe Saul-Sehy]

Jesse Kramer's here from the Personal Finance for Long Term Investors podcast.

[Jesse Kramer]

Gets smoother every time you say it.

[Joe Saul-Sehy]

I'm getting it, man. Only a slight delay. How are you?

[Jesse Kramer]

I'm doing well. I'm doing well. Hey, I've got a technical question for you, Joe. Doug, do you want me to close these blinds so that people don't get distracted by the automobiles outside? Is that important?

[Joe Saul-Sehy]

By all the stuff going on, by all the brilliance going on behind you?

[Jesse Kramer]

Right.

[Joe Saul-Sehy]

I think we're probably good. All the stuff we could have thought about before we hit record, we're just going to do it live.

[Maxwell East]

Absolutely.

[Joe Saul-Sehy]

And here to save the show already. We're only three minutes in and we need saving. Don McDonald from Talking Real Money joins us. How are you, brother?

[Maxwell East]

Good. But you know, sometimes things just can't be saved. I'll do the best I can, but I am well, sir. Thanks for having. Thanks for having me back on the stacking show. Did you get some duct tape with my duck? What?

[Joe Saul-Sehy]

A little duct tape, A little wire, a little, you know you can MacGyver.

[Maxwell East]

This thing I can fix. Yeah, actually that was back in the day when I was handy. I could do that, but no, not anymore.

[Joe Saul-Sehy]

Does Paula Pat know what it means to MacGyver a show?

[Paula Pant]

I've never seen MacGyver, but I know that MacGyver is a television character who is capable of fixing a lot of things in a creative manner.

[Joe Saul-Sehy]

This is incredible. This is already the best episode we've ever had. Today we are going to talk investments, which is one of Don's favorite things to do on talking Real Money with his co host, Tom. You guys dive into investments and people trying to fleece you. But you know what's funny, Don? Often, often what I see is people are told by well meaning people to get out of ex investment, only to do much, much worse in a fantastic investment which Drives me crazy. In fact, I was talking to a guy just last week who was with a commission only broker, Don.

[Maxwell East]

They still exist.

[Joe Saul-Sehy]

I know. Working with, you know those ones that are on everybody's corner. The people that go knock on your door? Yes.

[Maxwell East]

The ones who now only want $10 million plus accounts.

[Joe Saul-Sehy]

Do they really? Is it that big now?

[Maxwell East]

That's their new philosophy. They're going only for high net worth investors.

[Joe Saul-Sehy]

Well, that's in every neighborhood. I mean that's, that's in every neighborhood.

[Maxwell East]

But I think there are like three quarters of a million of them in the country. When you exclude home equity, it's not that many people.

[Joe Saul-Sehy]

Well, if they get one out of seven, I mean that'll be, that'll be big.

[Maxwell East]

Yeah.

[Joe Saul-Sehy]

So this gentleman had a well diversified portfolio of high fee mutual funds. He was convinced through online activities, right. Through online forums to dump that person. And then he goes, and then I was lost. So I just put everything in the s and P500 and he has lots and lots and lots of money. And now he's taking it on the chin. And he was actually talking to me about what do I do? I'm like, what? You were so efficient. You were high fee, but you were so efficient. Things were going very well for you. But the mutual funds you had might not have been ideal.

[Maxwell East]

Okay, so he went from actively managed expensive mutual funds to the standard imports 500. Was he getting guidance in this process or did he do it on his own?

[Joe Saul-Sehy]

No, he did it on his own because the Internet told him that's what he should do.

[Maxwell East]

Oh, the Internet is so foolish.

[Joe Saul-Sehy]

I know. So that was where I came up with this, guys. And the fact that we had Barry Ritholtz on, on Wednesday and he was talking about how not to invest. So is it worse to invest with high fee stuff but allocated correctly or to use fantastic stuff? That's stupid because you haven't allocated at all. What are some of these investment choices? We're going to ask all of you that. We've got Don, Jesse and Paula here. That is the mission, guys. So think about that for a second because we have a couple of great sponsors who make this free for all of you so that we can keep on keeping on and you get all this goodness and all you have to do is pinch yourself because you're so happy that you get this for free. We're going to hear from them and then we're going to talk about horrible investments or horrible decisions. Small business owners, state farms there with small business insurance to fit Your specific needs. Whether you're starting a new venture or growing an existing one, State Farm helps you choose the right coverage to protect what matters most. Working with a local State Farm agent helps you understand your coverage options. Offering local support to help you achieve your goals. Focused on turning your passion into a thriving business. Knowing your insurance can change as your business grows. Stay Farm here to help you succeed with your business. Like a good neighbor, Stay Farm is there. This episode is brought to you by Progressive Insurance.

[Paula Pant]

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[Joe Saul-Sehy]

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[Paula Pant]

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[Joe Saul-Sehy]

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[Paula Pant]

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[Joe Saul-Sehy]

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[Paula Pant]

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[Joe Saul-Sehy]

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[Paula Pant]

Available in all states or situations. Prices vary based on how you buy.

[Joe Saul-Sehy]

All right, Paula, you heard my preamble. Let's talk about a bad investment choice. Like one that makes you go, ugh. Like, what is a. What's a type of investment somebody's making a huge mistake with if they choose that type of investment?

[Paula Pant]

Trying really complicated things like what's the universal. What's that. What's it called? The universal, like, forever. The one that cycles. Do you know what I'm talking about?

[Joe Saul-Sehy]

The universal cycle. Reincarnation.

[Paula Pant]

No, the infinite reincarnation. Infinite banking.

[Maxwell East]

Infinite banking.

[Joe Saul-Sehy]

Infinite banking.

[Paula Pant]

Infinite banking.

[Maxwell East]

The life insurance deal.

[Paula Pant]

Yeah, the life insurance deal. With the insurance. Yeah, that one. And the people who I hear interested in it are. Are like the people who are 27, just opened up a 401k and. But then they're like, hey, I heard about this thing on TikTok called Infinite Bank. You know, like, yeah.

[Joe Saul-Sehy]

Which is the way all good sentences should start, Jesse. I heard about it on TikTok. So therefore, TikTok's where I get a.

[Jesse Kramer]

Lot of my dance moves and where I get a lot of my investment advice. It's usually those things do come in pairs, I've found. In my experience, it's a twofer.

[Joe Saul-Sehy]

Yes.

[Jesse Kramer]

Correct. It takes two. It takes two to tango, it takes two to TikTok, and it takes two to invest in penny stocks. Oh, I think that's one where. I mean, think about it, guys. If you buy it for a penny and it goes to a dollar, you've just 100x to your money. And I mean, look. I mean, look at Costco right now. Costco's what is Costco trading? We're going to do this live. We're going to do A. Bill O'Reilly. We're going to do this live. Costco is trading for $904. That's 90,400 pennies. If you had only gotten in when it was a penny, you would have.

[Joe Saul-Sehy]

Look where you would have been now.

[Jesse Kramer]

Oh, my gosh. So I think penny stocks are one of those things that people don't underestimate. They don't under understand any of the underlying mechanisms behind what drives a stock's price. And therefore, when they see it selling for a penny, they come with this false notion that it can only go up or that eventually it'll be in the realm of a Costco that's trading for $900 a share. And penny stocks, I think are akin to just straight up gambling. Go play the roulette wheel.

[Joe Saul-Sehy]

Well, let's dive into both of these. Don, I'm going to ask for yours in a second, but I want to go back to life insurance and then we'll cover penny stocks next. But life insurance, what Paul is talking about is using permanent life insurance. I often hear, and this is a great place, I think, to start this, that permanent life insurance is the devil. Do you believe permanent life insurance is the devil?

[Maxwell East]

I believe that most financial life insurance products are devilish and dangerous and commissionish. They are loved by those who sell them. They are rarely, if ever purchased actively by clients because they don't make much sense. The insurance company always wins, always. The odds are stacked in their favor. The client can't win. And it's all part of this desire for magical investment products that don't exist, never have, never will.

[Joe Saul-Sehy]

Well, let's talk about banking. Paula, do you know enough about infinite banking to be able to talk about why somebody would want to bank and have life insurance at the same time? Like use their banking for their life insurance?

[Paula Pant]

I, I haven't read up on it recently. Like, basically one of my readers, this is back when I was still a blogger. One of my readers reached out to me and asked me what I thought about infinite banking. And so I went down the rabbit hole at that time and I was like, wow, this is complicated and stupid and no one should do this. Since then, I have forgotten the details of how it operates.

[Jesse Kramer]

Isn't the idea that you have some sort of permanent life insurance, the cash value builds and then you can take rather than say in a traditional investing account where you have to sell your assets at a capital gain in order to get money out of that investment account. With infinite banking, you're allowed to take a loan against your cash value in your insurance product, which is not a taxable event. And then the cash value continues to build and eventually you repay the loan on your own terms. And when it's presented that way, it's like, where's the downside?

[Maxwell East]

Yeah, I mean, the downside. The downside is the fact that you gotta pay that loan back and you gotta keep paying your premiums.

[Jesse Kramer]

Correct. And what's the rate?

[Joe Saul-Sehy]

Hold on a second.

[Jesse Kramer]

What's the rate at which. Go ahead, Joe. I'll hold on.

[Joe Saul-Sehy]

Yeah. Cause there's some more upsides to this. Like, let's dive even more into the upsides that they will tell you about, which, by the way, are 100% true. Number one is that loan is at a 0% interest rate. So instead of going and borrowing money from somebody else, you can borrow it from your life insurance policy. And assuming. Don. We'll get to this in a second. Don. Is ready to go. Assuming you continue to put enough money in that the life insurance stays in force. Now, you don't owe anybody anything. You still have your life insurance and you have this cash. Like what. What could be wrong with a zero interest loan against your life insurance policy? Don McDonald's.

[Maxwell East]

Because you've just now lost any earning potential on that money that you've borrowed from yourself. So it's not making money. You're not making money on that money.

[Joe Saul-Sehy]

But that's why they call it banking, because the goal is not to make money, Don. The goal is to avoid banking someplace else.

[Maxwell East]

But the fact of the matter is, if you put money into a bank account at your bank and you take it out of your bank, you're not paying any interest on that because it was your money to begin with. It's not somebody's magic money that you're borrowing, it's your own money.

[Jesse Kramer]

I'm going to go borrow money from my wallet.

[Maxwell East]

Yeah, exactly, Jesse. Borrowing money from your wallet. And the other thing they don't tell you about is the fact that those life insurance premiums can rise over time. They must be kept in effect. If you fail to make a payment on the life insurance, the loan becomes immediately taxable.

[Joe Saul-Sehy]

Immediately. And that's where the difficulty comes in. And also, I mean, when you look at these permanent life insurance policies, Paula, I mean, there is a minuscule segment of the world. So where these actually work, though, I don't think infinite banking is where they work, but I do think that life Insurance for somebody that has a very, very high net worth, life insurance can be great for estate planning. Might be a good, much better tax shelter than annuity. I can't believe we haven't heard annuity yet. But I'm sure that's coming Mr. McDonald's. But Paula, for that 1% of the 1% that those work for banking, you.

[Paula Pant]

Know, I see a place for extremely, extremely high net worth individuals who are worried about estate taxes. I mean, extremely high net worth. I can see an argument for permanent life insurance in those very rare cases. Even in that regard, I don't see the issue. Infinite banking portion.

[Maxwell East]

Yeah, the infinite banking's a gimmick. It's just a sales gimmick.

[Paula Pant]

Right?

[Joe Saul-Sehy]

And here's what's frustrating, Don, is that infinite banking can work and all the math they're doing is not incorrect, but they're telling you three quarters of the story. The problem that I have with infinite banking is different than your bank account. Your bank account. If you overdraw your bank account, you might have a fee from bank of America or whatever bank you have, right? You're going to get an overdraft fee with this. You're going to unravel your entire life insurance strategy. It's like your life insurance goes bye bye when your banking goes bad. Like that's absolutely horrible. So frustrating. Permanent life insurance, though we talked about briefly using it high net worth individuals for estate planning. Don, is there any place else you see that permanent life insurance might make sense in a financial plan? Like if you saw it, you go, that's not too bad.

[Maxwell East]

I can't see. I really. Except for the case you stated and Paula discussed, there is no place for permanent life insurance in a portfolio. Life insurance is by any other name death insurance you are insuring against your untimely passing. Should someone be reliant upon your income or your wealth, you want to make sure they're taken care of. When you get to the point your family gets to the point where there is no longer a need for someone to get a windfall from your death, there should be no death insurance. None. That's why permanent insurance makes little or no sense to me except for those rare estate planning purposes and as Paula said, very high net worth individuals.

[Joe Saul-Sehy]

Jesse, any place you could see a permanent life insurance policy implemented in a financial plan?

[Jesse Kramer]

Well, I think if you are the type of person who enjoys pranking people in your life, especially people you don't like, you can sign them up for permanent life insurance policy.

[Joe Saul-Sehy]

We have the perfect gift for Don McDonald.

[Maxwell East]

Now it's locksing instead of doxxing.

[Jesse Kramer]

Well, it's funny, the whole estate planning, high net worth individual part, in case anyone's wondering, we're talking usually about taxable estates. The Federal exemption is $28 million for a couple right? Now, just when we're talking about high net worth, like those are the kind of numbers that we're talking about. The interesting thing I found in my experience is that that factoid is used as part of an insurance sales pitch. We might have heard it before because it's like, hey, I just helped a family with $50 million and they're using this strategy. Why do you think you shouldn't be? Right? And it's like, well, because a different tax rule applies to those people, dingus. So anyway, if any of you, if any of you listeners out there are, if you've heard that one before, you can ignore it, you know.

[Joe Saul-Sehy]

And it is funny because you do hear that all the time, right? Rich people are using this. How come you're not using it? Well, they, they have a whole different set of problems, which, by the way, Jack Schwager, the guy behind Stock Market Wizards, that whole series of fantastic books about these traders who actually beat the stock market. And pretty much I read these books and I'm like, I do not want to live these individuals life. That's pretty, pretty much what I learned is that I don't even. And I asked Jack, I said, studying all these people, it sounds like you're saying the stock market isn't efficient. And I love his, I love his phrase. He goes, the stock market is not efficient. But for 99.9% of us, we should pretend it is. We should just pretend it is. Because the things you have to do and the moat you have to swim across to get to the point, which is, by the way, is a lead into my caveat to what all of you said. I do think that stuffing a bunch of money, if you've looked at every other. If you've got cash flow for everything and you're looking for another tech shelter, stuffing it into a permanent life insurance policy can 100% work. The bad news is it has to work forever. You have to be right on the modified endowment contract line and you have to stay there. I think you have to use a policy that has very low fees and also has separate accounts that look like mutual funds on the inside. See, listen how technical I'm getting already. But with all of this, that's way.

[Maxwell East]

Too many caveats for the normal person.

[Joe Saul-Sehy]

Well, and exactly why outside of estate planning, I think somebody who's high, high, high, high, high net worth, working maybe in a private financial planning office with people implementing that tax shelter can be quite a boon.

[Maxwell East]

But none of them are my listeners.

[Joe Saul-Sehy]

Well, I just put everybody that listens to the show to sleep, too, with my explanation of how that thing works. All right, let's go into penny stocks. Jesse brought up penny stocks. Paul, is there any case to be made for penny stocks in your portfolio?

[Paula Pant]

No, no, there is not. No. I mean, I generally think that the case for individual stocks is fairly slim for the average person. Even in the individual stock world. I'm talking about the big blue chip individual stocks. I think even that for the average person, there's not much of a case.

[Joe Saul-Sehy]

Procter and Gamble.

[Paula Pant]

Exactly. A Procter and Gamble. A Johnson and Johnson and Nike, A Coca Cola. I think even for MicroStrategy. Right. I was looking them up earlier today. The asset allocation for something like that for the average person should be a fairly slim portion of your portfolio. So generally, the stock picking game should be avoided. Then when you get into these further niches of, for example, penny stocks for the average person, you're asking for trouble. It can go down to literally zero. And there's just no space for that.

[Joe Saul-Sehy]

But I love what Jesse said, Don. I mean, look at Costco trading for, I think, Jesse, you said ninety bajillion dollars.

[Jesse Kramer]

It was 9,04 a share.

[Joe Saul-Sehy]

If I buy a stock that's only trading for $0.02 and this thing just. Don manages to get to 4 cents.

[Maxwell East]

Yeah.

[Joe Saul-Sehy]

I have doubled my flipping money.

[Maxwell East]

Yeah. Well, okay, then if a stock is a deal at $0.02 or let's say a penny, why doesn't Costco split 90,000 for one so they can get their. Or one for 90,000 so they can get their share price down to a penny. Because if it's a great deal at a penny, everybody's gonna be buying their stock. This all feeds into that stupid share price fallacy that so many investors.

[Joe Saul-Sehy]

The delusion. I was like, whoa, this is a family show, Dodd.

[Maxwell East]

The thing that they all live under, which is this belief that, well, if it's a great deal at 900, it's a better deal at 450 or it's a better deal at 250, the price makes no difference. And we should stop talking about little companies as being penny stocks. They're micro cap or, you know, they're even smaller. These are tiny little companies. Buy them based on market capitalization. And generally speaking, a smart Small cap stock that goes public does not go public at a penny. It goes public at $10 a share, because that is a more respectable number. Generally speaking, if you go public at a penny, you. You go public because you're getting ready to scam people.

[Joe Saul-Sehy]

Jesse, you were nodding your head.

[Jesse Kramer]

Yeah, I think Don's right on. Because I think the average person doesn't understand that a stock's price is only half the equation to figure out the value of a company. Right.

[Maxwell East]

The other half, that's arbitrary.

[Jesse Kramer]

Correct? Correct. The other half is how many shares are outstanding. Right. If stacking Benjamin's as a business is worth a million dollars and there's a million shares of it, well, it's going to be $1 a share. I could arbitrarily say, no, no, I don't want a million shares. I only want a thousand shares. Well, now the share price just went up to 1,000 per share. And again, the arbitrary amount of shares outstanding leads to the arbitrary value per share. And so it is. It's the average. I think that the penny stock illusion has to do with people not understanding that fact.

[Joe Saul-Sehy]

It is scary when people first get in, they're like that, $1,75. This one's 40. I'm buying the $41.

[Jesse Kramer]

Right.

[Joe Saul-Sehy]

Because that's what we do at the.

[Maxwell East]

Store, the stock split thing, where people say, well, I'm going to buy stocks when they split.

[Jesse Kramer]

Yeah.

[Maxwell East]

Because they always go up. Well, no, it's the same price. It was $100 and they split 10 for one. Now it's $10. Is it cheaper? No, it's the same hundred dollars.

[Joe Saul-Sehy]

It's the same number of shares.

[Doug]

Why is he so angry about this?

[Maxwell East]

Oh, it's just the way I live. It's the way I roll.

[Jesse Kramer]

Don, as you probably know, the funny thing is that for a lot of companies, when they do split, the valuation of the company does go up, which simply shows the irrationality and the inefficiency of the market. It's like, that's true. You know, this pizza, this eight slice pizza, it's. It's 20 bucks. Ah, but what if I took the same pizza and split it up into a hundred slices? Would you pay 30 bucks for it? Some investors, a lot of investors say yes, they would.

[Joe Saul-Sehy]

It's crazy. I absolutely love my spouse and she's brilliant, but whenever we go to that pizza, she asks that question every time. And it drives me crazy.

[Jesse Kramer]

For 30 years, how many slices, how.

[Joe Saul-Sehy]

Many slices are in this pizza? I'm like, that is so irrelevant.

[Maxwell East]

We'll get a knife and make more if you want more on it.

[Joe Saul-Sehy]

100% irrelevant. Oh, yeah. You know, there's something else going on with penny stocks too, that we haven't talked about. Was penny stocks most often, unless they just became penny stocks, which means they're falling like a rock. They are not listed on an exchange. And I learned a very, very hard way that it is. The SEC's ability to police penny stocks also is incredibly low. So the pump and dump schemes, Don, that you were talking about, if you think it's a deal, somebody's ability to fleece you when a stock is under a dollar, it's pretty good.

[Maxwell East]

That's where all the boiler room brokers were back in my day was. Was selling the pennies. Selling the pennies. Selling off the pink sheets.

[Joe Saul-Sehy]

Yeah.

[Maxwell East]

And they literally were pink sheets. Where they list such a good movie.

[Doug]

Boiler Room. If our listeners haven't seen that, you gotta watch Boiler Room. It's fantastic.

[Joe Saul-Sehy]

Paula, have you seen that one?

[Paula Pant]

I have not.

[Joe Saul-Sehy]

You would really like this movie.

[Doug]

Yeah. You would.

[Maxwell East]

A good movie.

[Joe Saul-Sehy]

Yep. Fantastic film. All right. In the second half, I bet we're going to talk about something that rhymes with schnuity when it's Don's turn. But before we get there, at the halfway point of every Friday show, we dive into our year long trivia challenge. And Don, today you'll be playing for OG which is.

[Maxwell East]

I love playing for OG it's good.

[Joe Saul-Sehy]

News and it's bad news. Don, you want to do it badly? Oh, no, no, no, no, my friend. The good news is the pressure's off. In fact, we'd love it if you just cooked the books with us and said some horrible, horrible.

[Maxwell East]

Oh, you want me to be wrong? Yeah. So you really. The fix is in.

[Joe Saul-Sehy]

Yeah.

[Doug]

The answer to our.

[Maxwell East]

Sorry, OG the peer pressure is ridiculous here.

[Doug]

The answer to our.

[Paula Pant]

Don, I'll send you ten bucks later. Sorry.

[Jesse Kramer]

Go for it, Doug.

[Maxwell East]

Go, Doug.

[Joe Saul-Sehy]

Come on, Doug.

[Doug]

No, I tried twice. I'm not going to strike out a third time.

[Joe Saul-Sehy]

You can. I think you can. I think, Doug.

[Maxwell East]

Nobody respects me.

[Joe Saul-Sehy]

I think Doug can.

[Doug]

Well, Don, you may recall that the question for our Friday trivia is always numbers based. It's always very difficult. We make sure that almost nobody is going to know this number and yet OG Seems to get remarkably close. So I'm just going to tell you right now, the answer is cheesecake. To today's. Make sure you say cheesecake and we'll all be really happy.

[Joe Saul-Sehy]

We've had seven editions so far as we're getting ready to close out the first quarter this year. Og has five, Paula has one, and Jesse last week finally got on the board, my friend with one. Will Don help Og pull further ahead? Will Paula go back into second place where she was for most of the first quarter, or will Jesse go to second and make a move? We need a trivia question though, Doug, to find out. I think today's trivia question's about science. It's about science, huh?

[Doug]

Pretty sciencey. Yeah. Hey there, stackers. I'm Joe's mom's neighbor, Doug, and on this day, way back in 1948, English astronomer Fred Hoyle coined the phrase big bang as he was describing the noise that Don's brain makes when he sees a listener with an annuity. Maybe it's the sound of both of our listeners heads hitting the floor when they find out Paula actually watched a movie at a theater that was made in the last two years. Nah, I'm just kidding. It was actually just old Fred calling the notion of a big bang ridiculous as he was trying to support his alternative universe origin story called the steady state theory.

[Joe Saul-Sehy]

Do you know what the steady state theory is, guys?

[Paula Pant]

No.

[Joe Saul-Sehy]

It's when a man universe loves a woman universe very much and they. No. Anyway. Continue, Doug.

[Doug]

Well, that was worth it.

[Maxwell East]

So very, very valuable. I'm still trying to figure it out.

[Doug]

Speaking of Joe's mom, I have it on good authority that the number one reason the universe was created was so she could watch Big Bang Theory reruns on television. This hit show's cast raked in tons of Benjamins over the life of the series. But Sheldon, played by Jim Parsons, was paid the most. Four years in a row, Parsons was the highest paid actor in television, culminating in 2018 when he made how much money over the course of that season? I'll be back right after I try to imagine Jim Parsons eating grocery store ramen with me and Joe's mom. What a hoot.

[Joe Saul-Sehy]

Oh, wouldn't that be fun sitting he probably golden chopsticks with all that money because I bet it's more than $4. I bet that Jim Parsons made more than $4.

[Maxwell East]

How many episodes in a season did you say that? Did we get that?

[Doug]

Not.

[Maxwell East]

Oh, we got to use your own.

[Doug]

Giant brain for that.

[Joe Saul-Sehy]

We did not. And with that giant brain, you get to go first, Don. So Jim Parsons, 2018, highest paid actor on television, how much did he make for the season?

[Maxwell East]

52 million.

[Joe Saul-Sehy]

$52 million. Sounds well reasoned. Little math applied to that number.

[Maxwell East]

A little, very little math.

[Joe Saul-Sehy]

Paula Pant. You're going next because you've been in second place longest.

[Paula Pant]

So strange to go second. Fundamentally, the question is, if you take Jim Parsons identity out of it, the question is how much would the highest paid television actor have received in the year 2018?

[Doug]

Well, well, it was him. He was the highest paid actor in 2018. So we don't need to take Jim Parsons out of it.

[Joe Saul-Sehy]

Leave Jim Parsons alone.

[Doug]

Why do you hate him?

[Paula Pant]

By not letting that bias the question, by asking the base question of if you take the profession of acting, specifically television acting, in the year 2018, what would have been the top end of their range in terms of compensation? That leaves me with I don't know. So I'm gonna say, how much do the people on Friends make per season? At the end of Friends?

[Joe Saul-Sehy]

We did that one.

[Paula Pant]

Yeah, we did that one a long time ago. And I don't remember the answer. I also read Matthew Perry's biography and I also don't remember the answer.

[Doug]

Joe, do we have a director offstage telling Paula to stretch for time? Is he getting that signal?

[Joe Saul-Sehy]

We gotta give Don's brain time to settle back down before he starts talking about annuities. It's gotta cool off.

[Maxwell East]

Oh, I'll be fine. I'll be fine. Go ahead.

[Joe Saul-Sehy]

Yeah.

[Paula Pant]

All right, so my objective is to keep the field goal wide. So I'm gonna go 21 million, $21 million.

[Joe Saul-Sehy]

Jersey, 52 on one end, 21 on the other. Where are you going?

[Jesse Kramer]

I'm going under 52. I texted Don offline, I said I'd give him 10,000 slices of pizza if he tanked this one, which in his.

[Maxwell East]

World is just one personal pan pizza. I need 100 calories, bite sized nuggets.

[Jesse Kramer]

Four pieces of pepperoni on that. This is a good one. This is a tough one. Do I believe, I mean, I, you know, for the sake of brevity guesses, we're 52 and 21. Yeah, I'll go 30.

[Joe Saul-Sehy]

30. $30 million. All right, we got Don at 52, Paul at 21, Jesse at 30 million. How much did Jim Parsons make in his highest paid year? We're going to find out in just a minute.

[Paula Pant]

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[Joe Saul-Sehy]

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[Paula Pant]

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[Joe Saul-Sehy]

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[Paula Pant]

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[Maxwell East]

Edu.

[Joe Saul-Sehy]

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[Jesse Kramer]

Ryan Reynolds here from Mint Mobile. I don't know if you knew this, but anyone can get the same Premium Wireless for $15 a month plan that I've been enjoying. It's not just for celebrities. So do like I did and have one of your assistant's assistants switch you to Mint Mobile today. I'm told it's super easy to [e-mail].

[Joe Saul-Sehy]

Switch upfront payment of $45 for 3 month plan equivalent to 15 per month required Intro rate first 3 months only, then full price plan options available, taxes and fees, extra fee, full [e-mail] Don, you started with $52 million and everybody thought that might be just a skosh outside. Looking at the other two answers, 21 and 30, but you feel pretty confident?

[Maxwell East]

No, not at all. I'm feeling about as confident as I would feel putting money into crypto.

[Joe Saul-Sehy]

I don't know, man. I don't know. Could be your day, Paula. 21 million, right?

[Paula Pant]

You know, I was mentally toggling between 21 or 27, so I'm actually a little bit nervous that Jesse took 30 because I was thinking the 21 to 27 range.

[Joe Saul-Sehy]

And so again, you went with your gut.

[Paula Pant]

I know. Why? Why, why do I do that?

[Joe Saul-Sehy]

I can't wait to find out what the answer is. But if you're wrong, I'm like, why do you trust your gut every time? And how is your gut wrong every single time?

[Doug]

She has to do the Costanza where you just do everything exactly opposite of your gut.

[Paula Pant]

It is the. The inverse gut.

[Maxwell East]

Gut theory.

[Joe Saul-Sehy]

Yeah, it's exactly what I'm thinking, Doug. I'm like, her gut has been wrong for three consecutive years, maybe five, maybe seven consecutive years. Like every time her gut is wrong. With rare exception. So number one, why you wouldn't as step two, say that's my gut reaction and go the opposite way? Paula, I. I have no idea. I have no idea. Jesse, you're at 30 million, you feeling good? Paula likes that territory.

[Jesse Kramer]

Yeah. I don't know. Again, I like the whole idea of, like, how many episodes were there and how much per episode? I don't know. 1.5 million times 20 episodes, maybe. I'm not sure. It's a lot of money either way for. I mean, what's the pulse on the show? Do you guys enjoy the show Big Bang Theory?

[Maxwell East]

It's a good show.

[Doug]

Yeah, I think it's a good show. It's easy to hate. It's like people went out there and started saying how bad the Office was or how bad Friends is. Any big giant show, it's easy to find a whole group of people that say it's horrible, but there's a reason it was on air for, like, 29 years.

[Joe Saul-Sehy]

Yeah.

[Maxwell East]

Massively inoffensive.

[Joe Saul-Sehy]

Yeah. I also heard, by the way, that the writing is purposefully backwards. Usually they make characters that are empathetic, and Sheldon is completely unempathetic on purpose, and it's just meant to rub you the wrong way every single time, which is very hard to pull off. So the fact that they were able to pull it off like we do with Doug every week, that's good stuff. All right. 52 million from Don. 21 million from Paula. 30 million from Jesse. Who's winning this thing, Doug?

[Doug]

Well, hey there, stackers. I'm Ramen lover and guy who always loves a big Bang. Joe's mom's neighbor. Doug say that?

[Maxwell East]

No, he did say it, though.

[Joe Saul-Sehy]

He did? Yes. Continue the Big Bang Theory.

[Doug]

I'm going to hire Don to just be my laugh track. That's awesome. The Big Bang Theory television show made the five main co stars millions. But how much did Jim Parsons, the actor who played character Sheldon, make over the course of his 2018 season? Well, I'm not going to tell you, but I will tell you that it was 25.6 million less than what Don guessed. 5.4 million more than what Paula guessed.

[Joe Saul-Sehy]

Unbelievable.

[Doug]

3.6 million less than what Jesse guessed because the correct answer is $26.4 million, making Jesse sole possessor of second place.

[Joe Saul-Sehy]

Wow.

[Maxwell East]

Sorry, OG see, my thinking was I thought somebody from Friends got a million an episode once.

[Doug]

They all did.

[Maxwell East]

Yeah. And I was thinking million an episode, then Jim Parsons, if. If it's that much later, must have gotten two. But I was wrong.

[Paula Pant]

I can't believe I was toggling between 21 and 27.

[Joe Saul-Sehy]

You put that on. Unbelievable.

[Paula Pant]

Wow.

[Joe Saul-Sehy]

So incredible. Your ability to be wrong is just amazing.

[Maxwell East]

Yeah, but she was Right. Somewhere in her mind.

[Paula Pant]

Exactly.

[Maxwell East]

Yeah. And she can take that with her after the show and feel good about herself.

[Joe Saul-Sehy]

I let other people win. It's so nice. In this case, Jesse. Nice to Jesse. Two weeks in a row.

[Jesse Kramer]

All right, Nice job. A little momentum, A little momentum.

[Joe Saul-Sehy]

All right, let's use that momentum to slide into the second half of this discussion. We are going to. Don. Don, what's an investment that you think might not be the world's best investment?

[Maxwell East]

There are so many good options. They're just so good. I could go crypto, I could go options. Speaking of good options. But I'm going to stick with the one that I think is the most horribly sold product in all of the financial universe, and that is a product, for some weird reason called an equity indexed annuity or Indexed Annuity. EIAs. These are hyper sold. They are the subject of almost every free steak dinner you get in the mail. Because the commissions paid are so high, and yet because the insurance industry so effectively lobbied to have these things unregulated, years ago, the SEC wanted to regulate equity indexed annuities, or indexed annuities as securities. The insurance industry spent, I believe it was $200 million lobbying to keep those under the control and the purview of state insurance regulators. So these people who could sell these things could, with impunity, tell you you're getting an investment that will give you the returns of the stock market with none of the risk. The biggest lie in the investment business, I believe.

[Joe Saul-Sehy]

But it's all true. It's all true, Paula. You get to participate in the stock market and you don't get anything.

[Maxwell East]

Stock market, the return. They claim the returns of the stock market with none of the risk. They don't. They don't say participate.

[Joe Saul-Sehy]

Never in writing.

[Maxwell East]

Never in writing. Right.

[Joe Saul-Sehy]

In writing, it's always, hey, you get to participate in the stock market.

[Maxwell East]

And have you ever read one of those disclosure documents?

[Joe Saul-Sehy]

It's incredible. It's so ugly. It's so, so, so ugly.

[Jesse Kramer]

One time I participated in the Victoria's Secret model fashion show.

[Joe Saul-Sehy]

You did See?

[Maxwell East]

We can see why just looking at you.

[Jesse Kramer]

Yeah, I watched at a bar. That was me participating. Participate. Sorry, Paula, go ahead.

[Joe Saul-Sehy]

You got all the upside. The audience got none of the downside. Jesse.

[Maxwell East]

Thank you, heaven.

[Joe Saul-Sehy]

Oh, my goodness. Paula, let's talk annuities. Equity index annuities. Why do we buy them?

[Paula Pant]

Why do we buy them? I think broadly, there's a lack of financial literacy. I was listening to this podcast yesterday. There was a guy, he was 41 and he talked about how he had just gotten into the market about five years prior. It was his first time ever buying into any type of putting money in a 401k, buying into any type of stock, buying into any type of bond. I think for most people it feels very overwhelming. And so when you get that free steak dinner that says, hey, you get all the benefit with none of the risk. In a world with the lack of financial literacy, it's tempting to believe it because you want to believe it. And in a world in which for a lot of people, it feels as though things get more and more expensive and it's hard to keep up. You know, we've now got like a younger generation that feels as though they might be doing worse than their parents. I think in that type of an environment, it's so tempting to want to believe the too good to be true sales lines.

[Joe Saul-Sehy]

But if I sell these things, Jesse, like, I know what's going on. I know what's going on. I've read the data. Like, I get it. Or do these people also not get it? So they can.

[Jesse Kramer]

On the sales side, you're saying, yeah, the sales people. Well, there's two interesting things there. I know Don's getting excited, so I do want to hear what Don has to say. The two things are, it's funny that we're using the verbs buy and sell. How, you know, how often. Why are so many people buying these? Well, again, I would say it's. They're being sold more often than they're being bought. They're being pushed more often than they're being pulled. Right. They're being pushed onto people more than those people are actually seeking them out. But then as for, do the salespeople know what's up? I'm sure many of them do. But there's a really good series a few years ago in the New York Times pertaining to about 403B programs. And a lot of 403 advisors push annuities on teachers, even though the teachers might be getting a pension and Social Security too, which acts as fixed income anyway. But it was very interesting in this interview series a lot of these younger advisors who were pushing annuities. We're talking like 24, 26, 28, 30. The training that they went through very much indoctrinated into them that they were doing a good thing by selling these annuities to their clients. And it might have taken them years of being in the business and eventually kind of seeing the bad results, having to unwire, like, you know, Remove themselves from the cult of annuities before they realize, oh, they weren't doing something good for their clients. So some salespeople know that they're not setting their clients up for success, But I'm sure many think that they're doing the right thing.

[Maxwell East]

Jesse nailed it. You absolutely nailed it. It's a lack of integrity, I believe, on the part of the industry because the sales tools that they give them and this is what they learn from which they learn are so misleading. I went. I've gone to several of these steak dinners.

[Joe Saul-Sehy]

He loves steak.

[Maxwell East]

I do. And rarely is it a really good one. But, you know, every once in a while, you get a Fleming's or a Ruth's Chris or something.

[Joe Saul-Sehy]

Oh, nice.

[Maxwell East]

But in every case, there is a chart that they show. And you can find this chart online. It's a chart of the stock market from 1929. And they show you this chart, and they go, look at what the stock market did from 1929 from here. And you did not recover until the 1970s from the loss in 1929. What they neglect to include on that chart are dividends.

[Jesse Kramer]

Dividends. Yep.

[Maxwell East]

They are just looking at if you bought 100% of your position in 1929, you didn't recover back until. I think, actually it was the 50s, if I'm correct. But it was a very long period of time. It's very misleading information. And the reason they mislead is because of greed. Ooh, that could be a song. I mean, 5, 6, 7, 8, 10% commissions.

[Joe Saul-Sehy]

Yeah. Early on in my career, I was even taught some math that I could use on whiteboards, and I was like, well, the math even proves that this stuff is great. Like the math from the sales trainer. Right. This is what, early 1990s and so, so amazing. It took me, Don, four years to realize that the math. And I stopped using the math. Well, well, before that, there were other reasons why I decided I did not like these tools. But it took me four years to realize one day I'm driving down the road, and I'm just going over. I'm like, well, why is this math equation right? If all this stuff is bad and I stopped selling this, why would. Why would the math be right? And then I realized the math was so sneaky bad. It was so, so sneaky bad. Like, it was.

[Maxwell East]

Well, it's the lies. Damn lies. And statistics. You can manipulate statistics to fit whatever story you want if you're clever enough on the front end.

[Joe Saul-Sehy]

Absolutely. Good mentor mindset. Beware. Charts and graphs Because a chart and a graph can show you whatever anybody wants to tell you. And yet, Paula, maybe equity index annuities are bad, but we hear from people, just annuities, like stay away from annuities altogether. Is that good advice? Just stay away from annuities and you solve the problem.

[Paula Pant]

I used to think that until I heard Dr. Wade Pfau talk about specific annuities that he recommends in very specific use cases. And again, I don't remember the details of precisely what Dr. Pfau recommended, but he made a compelling case that in some cases, for some people, some types of annuities will work.

[Maxwell East]

Beware of Dr. Pfau, though. Please check the credentials. He is endowed, his school is endowed by New York Life. So take what he says with a grain of salt. But what he's referring to are immediate annuities and they do serve an occasional useful purpose. The other ones though, fixed annuities, eh, they're not terrible. Variable annuities are horrid.

[Joe Saul-Sehy]

So just for people that don't know what these are, fixed annuities. Feel like you're in a long term CD is really what it feels like. You are in a long term cd. And often these come with a teaser rate. That's fantastic. The bad news is is after the teaser rate period is over, you drop to this rate. You always have to ask what's the guaranteed rate? What's the guaranteed lowest they will pay? Nobody ever asked that question. But that's a question you need to ask if you're going to go in because it's not going to be 7%, it's not going to be 8%, it's going to be 1.7% forever after you get done with that teaser rate.

[Maxwell East]

Don? Yeah, and the variables, what I dislike so much about variables is the fact that they have very, very high internal fees to give because when you buy a variable, you're buying into of mutual funds. So you get to pick the funds you want in that group because the insurance company doesn't directly control the money in this case as they do with other annuities. They have to make money. And so they tack on all these fees and riders that can add up to 2 and a half, 3, 3.5% extra over and above the mutual fund fees, which makes them a terrible deal. And people in retirement plans need to remember you cannot get double tax deferral. If you're in a 403 and you have an annuity, the 403 is already tax deferred. The annuity Provides you with no benefit on the tax side.

[Joe Saul-Sehy]

I saw a statistic last year. The number one place where variable annuities exist is inside IRAs.

[Maxwell East]

Yeah, it's dumb place of all to put them.

[Joe Saul-Sehy]

Why do I have a tax shelter inside a tax shelter? Jesse, and you mentioned teachers. I mean, teachers really got it bad because for you, for a teacher, it's, you know, choose the annuity and you've got maybe three or four different choices. What do you tell the stacker teachers in our audience when they're trying to sift through annuity hell for their retirement?

[Jesse Kramer]

On Friday, I went out to my high school alma mater and taught 30 teachers what I would consider some financial basics, including 403B basics. And one thing I did for their 403B, their, their 403B plan had not yet been uploaded to this website called 403B wise.

[Maxwell East]

I was hoping you'd mention them. Great sites.

[Jesse Kramer]

Are you familiar with that, Joe or. Or Paula?

[Joe Saul-Sehy]

Yeah, it's a nice site.

[Maxwell East]

You need them on. That's a powerful tool.

[Jesse Kramer]

It's a really good nonprofit by former teachers to help current teachers figure out some better paths within their 4.3B program. And I'll just use my personal high school as an example. Shout out to Red Creek, New York. I think they had about 10 different custodians Andor insurance companies as potential vendors in their 403B program. The school district, this is kind of by law, it's not the district's fault, but. But they stay out of the conversation. It's up to each individual teacher to choose which of those 10 custodians they work with which.

[Joe Saul-Sehy]

Which, by the way. Can we, can we just pause there for a second?

[Jesse Kramer]

Yeah.

[Joe Saul-Sehy]

At General Motors, the HR department, because of ARISA rules, has to teach people how to use the 401k or they violate the law. With a 403B in our teachers, if a school district tries to educate you about your choices, you. You violate the law.

[Doug]

It's so, it's so crazy.

[Joe Saul-Sehy]

Jesse. Anyway, continue.

[Jesse Kramer]

Yeah, no, you're, you're, you're right on. And then the next question is, well, who do the teachers choose then? The way it's traditionally been done, and this kind of makes sense, is you'd say, well, is one of these people from one of these companies coming to talk to me at the school and get me to sign up? Usually someone is. Usually I call them the donut people because they often come with a couple dozen donuts. They sit in the break room and they ask Teachers. Hey, have you signed up for your 403B yet? The question then to ask is which companies have enough profits or which companies have a business model with high enough sales fees and commissions such that they can afford to send a human being into the break room with donuts. Right. It is the high commission annuity companies. And so so many teachers end up getting signed up for with one of those companies. They're not signing up with Fidelity and Vanguard even if they're on the list because Fidelity and Vanguard are low fee firms, they're not sending a human to the school.

[Maxwell East]

Oh, Jesse, that was so great.

[Jesse Kramer]

Thank you, Don.

[Maxwell East]

That's so powerful.

[Joe Saul-Sehy]

I just love the takeaway. If they bring the donuts, they're automatically.

[Jesse Kramer]

On the naughty list to some extent. Yeah.

[Maxwell East]

Because the commission makes it worthwhile for them to show up in person. Vanguard gets one basis point on some of their funds. It's not. There's not enough money in there to pay somebody to fly out to your school.

[Jesse Kramer]

Right, right. I mean, listen, I love to travel, but I've got something against the Danish. If you bring the Danish into the break room, don't sign the paper anyway.

[Joe Saul-Sehy]

403B, send your email to Jesse or.

[Maxwell East]

Send it to me. I love the hate mail, the crawlers.

[Jesse Kramer]

The fritters, 403 by's. You can look up your school's options and if your school isn't on there, you can upload your options to the website and they will do the research for you and they will give each custodian a grade. I think it's like A through folder and at so many schools it's almost all Ds and Fs with if you're lucky there'll be like one A or B vendor and that's the vendor that if you're a teacher you should really think about working with.

[Joe Saul-Sehy]

And what is their criteria by the way? Is it expenses, choices? All the above.

[Jesse Kramer]

All the above, right. It's mainly, I think, a function of fees and flexibility and essentially whether the company's trying to push you into an annuity or give you more of a 401k like experience where there are target date funds, low cost index funds. I'm sure there are probably some other criteria. I am not an employee for 403B wise, but I still think it's, it's. If you are a stacker teacher out there, that could be a resource that's really valuable to you.

[Joe Saul-Sehy]

That's fantastic. Let's do a quick lightning round. Any other horrible investments in honor of Barry Ritholtz being here on Wednesday. How not to invest. Or maybe let's just do that. Barry was here on Wednesday talking about how not to invest. Paula, what's a way you can think of that you see people invest, which is a model of how not to.

[Paula Pant]

Invest, how not to invest. I see a lot of spontaneous investment, you know, the proverbial water cooler in which a person, when there's a lot of hype around a given investment, people without having any kind of big long term strategy or plan or investor policy statement, will just start shifting their money towards the thing that's being hyped. So back in the, in the heady crypto days, I guess we're now kind of entering another heady crypto era. But like, especially like post pandemic, like right at the edge of the bleeding edge of the pandemic, when crypto was super hot, I would see a lot of people just like move a ton of their money into that. So that kind of spontaneous investing, unplanned, non strategic, following the hype.

[Joe Saul-Sehy]

I've totally done it. I've totally done it.

[Paula Pant]

Yeah, I have as well.

[Joe Saul-Sehy]

Just hype from online. Bought that Lumen stock, watch it go all the way up to 10 and now back down the dollar above where I bought it still. Huh?

[Maxwell East]

Well, they found out. They found out what that little chip does to you.

[Joe Saul-Sehy]

That's. It's so funny because now you say lumen and everybody thanks the TV show immediately. Yes. Don, What's a way not to invest? How not to invest?

[Maxwell East]

Putting your money in things that aren't really investments, but people call them investments because they're lying, trying to sell you something. Perfect example crypto. It's not an investment. It's a big bag of air. It's merely a pure speculation. All the things that are gambling, they're not investing. Playing the options market, trying to buy gold. I mean, gold can't grow. Gold has it better than crypto. It's a store of value in some way or another. Crypto is not a store of anything, but anything that involves gambling as opposed to putting money into something that is likely to grow or give you interest over a period of time.

[Joe Saul-Sehy]

I wish you'd tell us how you felt about crypto. I wish you come clean.

[Maxwell East]

I don't get. I still don't get it.

[Joe Saul-Sehy]

That's. That's another episode, Jesse.

[Maxwell East]

That's like 16 episodes.

[Joe Saul-Sehy]

It is 16 episodes, Jesse, how not to invest.

[Jesse Kramer]

I'm going to go with certain types of like off the book private investments. That your second cousin brings to you because, you know, he's renovating this apartment building and needs equity. I see some smiles here, but you'd be surprised. I mean, it happens every day. Hey, I'm starting up this business. Need some seed capital. We just bought this building. We're going to renovate it. We need some debt. Who can loan us some money? There's just always going to be some sort of castle in the sky argument associated with that. Well, like, just wait. You know, once the pizzeria gets going, we're going to do xyz and here's going to be our revenue and here's going to be your return.

[Maxwell East]

And Jesse's hungry.

[Paula Pant]

What's the pizzeria?

[Joe Saul-Sehy]

Their 12 inch pizzas have eight slices.

[Maxwell East]

Wait, pizza and donuts.

[Joe Saul-Sehy]

Ours is going to succeed because it is 16 slices.

[Maxwell East]

Right.

[Jesse Kramer]

The stackers are here to see how the sausage gets made. Right. That's what we said at the very beginning.

[Maxwell East]

Is it mealtime yet? I'm a little hungry.

[Jesse Kramer]

Clock is ticking. But yeah, there are just so many investments out there where you really have. No. Unless you have a lot of expertise to be able to evaluate the investment before you put your money into it, and then hopefully that you have transparency. Once your money's there, you need to have transparency and reporting to see how the investment is progressing over time. There's just so many black boxes out there people ought to avoid.

[Joe Saul-Sehy]

I think that's a great place to leave this discussion. Thanks to all of you for doing a great job on steering our stackers. Well, to wrap up, I think it was a great week of making sure that we don't step in the landmines while we're investing. I think that's. That's so important. Let's dive into what's going on where all you work because you're working on brilliant things. And we'll have our guest of honor go last. Paula, what's going on at the Afford.

[Paula Pant]

Anything show on the Afford Anything podcast? Well, so we are absolutely committed to getting you a raise. We know that life has gotten more expensive. Inflation is high. Car insurance is expensive. Groceries are expensive. Everything's expensive.

[Joe Saul-Sehy]

Your investments might have huge fees.

[Paula Pant]

Exactly, exactly. You followed your cousin's second cousin's third cousins into the pizzeria, which they funded by taking a leveraged annuity full of bitcoin. And just. Yeah, now you've lost everything. So anyway, you need a raise, and we're committed to teaching you how to get one because I think a lot of people could be making more money doing exactly the same work. So afford anything.comyournextraise we are offering a second beta round for people who want to become beta testers and help us put the refining polish on it. And then probably later this summer, we will be ready for our full alpha release. But if you join the beta round, you get it at a deep discount.

[Joe Saul-Sehy]

Yeah. If Paula would have followed her own advice, she could have gone from 21 million to 27 million.

[Paula Pant]

I know, right?

[Joe Saul-Sehy]

And she could have been paid like Jim Parsons.

[Paula Pant]

Should have given young Sheldon a raise. Or old Sheldon, I guess. Old Sheldon, Yeah, old Sheldon.

[Joe Saul-Sehy]

$26.4 million a year. You can't live on that, but it's a nice start. Jesse, what's going on at the Personal Finance for Long Term Investors?

[Jesse Kramer]

That's it. We recently had Christine Benz on the show from Morningstar. Recently published a book.

[Joe Saul-Sehy]

Never heard of her.

[Jesse Kramer]

How to Retire. I know, and it was really fun because I specifically wanted to understand not only what has kind of changed in the American retirement landscape over her 30 year career at Morningstar, but then also she's got 20 chapters from 20 experts in her book and some of them are really unique and kind of some interesting advice that people aren't used to hearing. So we talk about that. And then next, after Christine, we've got an ama. Our sixth Ask Me Anything episode is coming out, which are probably the most popular episodes I put out. So I'm excited for that.

[Joe Saul-Sehy]

What do they ask you? Like, what's your favorite soccer team?

[Jesse Kramer]

I will say it's not truly Ask Me Anything, It's Ask Me Anything financial planning related. So we have questions about the California fires, about annuities. I go deep on annuities. Have you ever looked at the irr of an annuity, Don? The internal rate of return. So it's like you wait 10 years and then it starts paying you 7% per year. It takes you like 18 or 20 years to get your money back. Anyway, we'll save that for the podcast, but some good financial planning questions.

[Joe Saul-Sehy]

That's fabulous. And that's it. The Personal Finance for Long Term Investors podcast where. Where finer podcasts are found. I just keep repeating it so it starts rolling off my tongue, that muscle memory. Speaking of roll it off my tongue, what's going on? Talking Real Money, Don.

[Maxwell East]

Same darn thing that's been going on at Talking Real Money since, like before the Internet. We've been around that long. Really? And one.

[Joe Saul-Sehy]

Did you, like, ride your horse and buggy to the radio station?

[Maxwell East]

No canned String. You remember that?

[Joe Saul-Sehy]

Oh, yeah, sure. Yeah.

[Maxwell East]

We use the latest technology. Talking real money. We're just trying to make this whole process of dealing with money, particularly the investing part, a whole lot more simple than it appears it is. Because it is a lot more simple. We want to put most of Wall street out of business so that you can do most of this yourself with the help of some really honest people who tell you the truth. So that's what we do. And we'll keep doing it for as long as they'll let us.

[Joe Saul-Sehy]

Are you doging Wall street, dude?

[Maxwell East]

Yeah. Is that what's going on without a Meme Coin to go with it?

[Joe Saul-Sehy]

Meme Coin is extra. I don't know.

[Maxwell East]

Yeah, Meme Coin sold separately.

[Joe Saul-Sehy]

All right, we'll link to Talking real Money, Personal Finance for Long term investors, and the Afford Anything podcast on our show [e-mail]. doug, wrap this thing up for us, man. Oh, by the way, I. I forgot to say earlier, Margaret was so hoping she was hanging out with us live. Was so hoping, Paula, that she was hoping you were going to do great.

[Paula Pant]

Oh, thank you. Thank you for the support, Margaret, because.

[Joe Saul-Sehy]

She was like, go, Paula.

[Maxwell East]

I need to add a thing. I need to add a thing. Joe, thank you so much for showing up at Retire meet in Seattle.

[Joe Saul-Sehy]

Oh, thanks.

[Maxwell East]

You did an incredible job. The audience loved you. He came out and spoke. He introduced Tom and me. Really appreciate you, you being a part of that event. It was a great event. Thank you.

[Joe Saul-Sehy]

Well, I'm so happy that you invited me. It was great to see our mutual fans there and so many people worried about retirement, which is great. It was. Man, that place was packed. You guys just packed the house.

[Maxwell East]

Been doing it for 11 years now.

[Joe Saul-Sehy]

So it was super, super fun. All right, let's end on that high note. Doug, what should we have learned today?

[Doug]

Well, Joe, first, take some advice from Don McDonald. Pretty sure Don said there's no better place for permanent life insurance than in your retirement portfolio.

[Maxwell East]

He was paying attention.

[Doug]

Got that right. Don't. Didn't I get that. Okay, cool. Second, Jesse said some pretty smart stuff about the 403 custodians at Red Creek High School. Seems like a lot of people pushing brooms to me. But, I mean, can you clarify, Jesse?

[Maxwell East]

He's not gonna do it. He's not even gonna.

[Doug]

He's gonna leave me hanging out there on that one. All right, I'll figure it out for myself. But the big lesson, if you wanna see how high a human can jump, sneak up behind Joe's mom with a firecracker. Now that's a big bang. We laughed and laughed. And because she was still holding onto a wrench when she landed, I get to go to the dentist. Thanks to former astronaut and teen heartthrob Don McDonald for joining us today. Want to find out what Don looked like when he was on the COVID of Tiger Beat magazine in the 70s? Sure you do. So head on over to Talking Real money. We'll also include links in our show notes@stacking benjamin.com thanks to Pop culture expert Paula Pant for hanging out with us today. Need answers to almost any trivia question? You'll find the opposite of that on her fabulous podcast Afford Anything Wherever you listen to you Piner Podcast. Jesse's terrified about what I'm about to say.

[Maxwell East]

We're all terrified.

[Doug]

And finally, thanks to this podcast, Chief Dingus Jesse Kramer searching for the tastiest darn snickerdoodle recipe in the world. You'll find that and more on his fabulous podcast Personal Finance for Long Term Investors. Wherever you listen to podcasts. This show is the property of SB Podcasts, LLC, Copyright 2025 and is created created by Joe Saul Sehive. Joe gets help from a few of our neighborhood friends. You'll find out about our awesome [e-mail] along with the show notes and how you can find us on YouTube and all the usual social media spots. Come say hello.

[Joe Saul-Sehy]

Oh yeah.

[Doug]

And before I go, not only should you not take advice from these nerds, don't take advice from people you don't know. This show is for entertainment purposes only. Before making any financial decisions, speak with a real financial advisor. I'm Joe's mom's neighbor, Doug, and we'll see you next time back here at the Stacking Benjamin Show.