Why Are You Investing? Defining Your Rich Life with Ramit Sethi
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Walking the money for the rest of us. This is a personal financial on money, how IT works, how to invest IT and how to live without worrying about IT. I'm your host, David stein.

Today is episode four thirty eight. It's title why are you investing, defining your rich life with the meat safe? This week we have a special episode.

It's a conversation that my sons, camden and bread held with rome's city, some of the things they discussed. What does that mean to live outside the spread sheet and have a rich life? The importance of learning how to spend, not just save and invest, approaching investing when you don't come from an investment background.

And what to do if you are feeling behind the meat safety is host of netflix how to get rich. And that I will teach you to be rich podcast. He is the author of the new york times, is best seller.

I will teach you to be rich and write for over a million monthly subscribers on his website. I will teach you to be rich dot com on the website. And his other worker covers psychology, personal finance, careers and entrepreneurship. We hope you enjoy this discussion between camden bread and remember.

right? So jumping right in our first question is, how should people define their rich life? And why is that important to do so?

Well, for me, one of the biggest tragedies is people who spend their entire lives going to work diligently, saving, investing. And when you start to ask them what you going to do with this money, they have no real answer. In fact, the answer that most of give a preregister answer.

When I ask people this question, I love to ask, what is your rich life? Over eighty five percent of people say the same thing. I want to do what I want when I want.

I OK not this again. I wow, that's resting. what? What do you want to do in an ages? Steam me. Think about that.

Most of us have spent our entire lives going to work, saving, investing, but never really thought about what's the purpose of IT all, what is our rich life. So I think it's incredibly important for a couple of reasons. Number one, we got to have a reason we're doing all this stuff. Otherwise, life is just one unending series of transactional decisions after another.

And second, a lot of more fun is a lot more fun if you decide my rich life is traveling two months a year, or my rich life is buying a beautiful cashmere coat, or my rich life is picking up my kids from school every afternoon, and all of these things can be supported with time and money. So that's how, that's why I get people thinking about a rich life. IT can totally change the contours of the decisions you're making of realizing, oh my gosh, maybe I already have saved enough or maybe I need to invest more and then you can actually start living your rich life today and living a rich your life tomorrow.

And so part of what I I really enjoy about having red your book and listen to some your pot, get you talk about defining your rich life and then enacting your rich life. You talk lot about spending and you talk a lot about how you we spend a lot of time, like he said, thinking about how to get Better at saving, how to get Better at investing, but we don't talk about how to get Better at spending as much.

Yeah, well, personal finance, think a lot about that after remember, in the personal finance world is like all let's talk about the trinity study is actually quite outdated. And what about this and tax implications? It's like OK, I think you ve got IT, I think you probably got most of what you need to get.

What I said he is everyone teaches us how to save, but nobody teaches us how to spend. And spending is a skill. Spending money meaningfully is a skill.

In fact, I bet you, right, others people listening to this role in their eyes, to spend money, everybody, to spends money, well, everybody does. Especially in america, we are consumers ous culture. But that doesn't mean we spend IT meaningful ly.

And part of a rich life is that you spend extravagant on the things you love as long as you cut cost versicles on the things you don't. And this really, if you dive into this concept, that really opens up lots of cultural values and Morris, that we have that are often taboo to talk about. I give you an example.

I go on this podcast recently. It's by a very successful woman, and I noticed beautiful back. Beautiful, I could tell, and and he was started talking about money and stuff.

And I said, what do you love to spend money on? And he smiled and he looked down and he said, well, I kind of spend money. I said, what was that word? What was that? And SHE said, it's a little frivolous.

I said, really, what is IT? And he said, well, that bag. I said, can I take a look at IT was absolutely stunning bag and I said, would you share how much this bag cost and he was very, very embarrassed.

I said, okay, you don't have to share the amount, but tell me, can you afford IT? SHE goes, yeah, I go to you love IT. SHE goes, yeah, I go then what's the problem? See, in america, we have certain things that are OK to spend money on.

It's socially acceptable. And what those things be, they would be anything for kids, anything for pets, totally acceptable. But there are things that are socially unacceptable. weddings.

Anytime anybody writes anything about weddings, all these cheap s come out of the woodwork talking about, I had my wedding for thirteen dollars and a bag jelly, and we've been married twenty five years. It's like a competition to see how little you can spend. Very interesting.

That's an interesting in cultural value. You can post a picture of your tesla, but not a picture of a rose rose. Why is that? You can post a picture at a certain hotel with your kids.

But if it's a little too high and you're not allowed to post, that is pretty fascinating, is that and so we never really examine these cultural values. And deep down, like this podcast host who are really like respect and he earns a tone of money, and if he wants to buy that beautiful bag, we should buy IT. We often rebel because society has told us it's frivolous or its pointless or it's wasteful to spend money on these things. But if they are actually part of your rich life, you can afford IT and you love IT.

I'm all for IT. That's also no, I really I really resonate with that because I know and I you definitely away away from things like retirement or having like a whole you whole lot of money but even as i've moved out of remember moving out of kind of that college stage when my you know how to eat budget was unlike, okay, I get fifteen dollars a to go out to eat total and you you .

calculate everything based on, like the number of loads of laundry that you could do. You like, that's three loads of laundry. Ry, yeah, yeah, I used to do the same thing.

Exactly how many quarters and now it's like and now like it's IT can be harder to start giving yourself that permission to be like, okay, I have money now like i'm saving for these these things and it's like and it's okay for me to go out for like this nice serial like let's go out with friends like, yeah I can afford to buy that musical instrument so it's it's definitely an an adjustment. And I think bright, you had A A question about that, that you wanted to ask.

Yeah, what advice do you have four people who are are transitioning out of that accumulation stage of wealth, saving up for retirement, moving into that sort of the retirement stage, maintaining. And I heard this comment from somebody the other day who had just retired and they were like, well, now we have to be so much more careful about how we spend money, right? We can't spend as much money.

And I ve been thinking a lot about that. So, so what advice you have? People that are transitioning.

making that leap? Well, first, while I don't give advice to anyone who doesn't ask, I learned that lesson. Know, in my early twenties, I was very overbearing, got to open up a rough I R A, and like anyone who starts to understand any topic, you know, you can become a little add, start to process tize for IT.

And I could see people's reactions, their eyes glaze over. They do not want someone telling them what to do with their money. So let me first to say, I don't give us, listen, advice about money.

That's why started my blog. I like you guys, can come to me if you want help, otherwise do whatever you want. That's totally cool. I do love hearing from people who are turning in their late fifties, sixties, and there are all different parts of the social economic spectrum. They have saved up pattana money or they don't have enough and they go, what are we supposed to do if we're speaking about the people who have accumulated, let's say, a considerable amount, they have actually a chAllenging phase in front of them.

Because if you have gone your entire life saving diligently, investing in low cost funds, and you've accumulated up a pretty good next tag, the dream that most of us have, this naive dream is that one day we're gona retire, and then we start retirement, we begin spending money. And I just flips. And what almost every retirement discovers is that that's not how works.

You cannot flip your entire world view one day over. In other words, if you worried about money for the last forty years, you're going to keep boring about money. This is why I insist you've got to live a rich life today and a richer life tomorrow.

Because if you don't build up the skill of spending money on something simple that you like, then you think you're gonna suddenly, magically be able to start dropping fifty thousand dollars on a vacation. No, it's possible. And I speak to lots of couples who do this.

I episode is, the guy's name is Tommy. So I bring couples on my podcast, and we talk about real issues, and I insist that all of them share their actual numbers. You hear their income.

They are debt, everything. And Tommy is sixty three years old. He comes on the podcast.

He has like, millions of dollars, and his wife is about to retire. He goes, I want to travel like that. He's healthy.

She's healthy. Let's go. We've got the money. We did IT and he is absolutely paralyzed because he says we need to save up more.

Tell me, i'm looking at your money. You ve got millions of dollars here. Houses paid off.

Take a trip to new zeal. He said, we need to save for IT. I said, save for your interest pays for IT alone.

Let's go. And what this really shows you is that most of us believe that we make decisions based on the spreading. I'm going to grocery storm and to calculate the number of cases and i'm going to buy IT wrong. We make decisions because of something that our parents said when we were six years old. We make decisions.

We've stuck with IT for twenty five or forty years, and that's why it's almost like building a new so for somebody who came to me like Tommy, I had a lot of different conversations I had with him and his wife. I point IT out that he's not getting any Younger. I point IT out that his investments are growing so fast that he will not be able to spend them.

He, we don't need to go to new zealand. I looked to get a beautiful Christmas tree is back, and we don't need that beautiful Christmas stripe. Why do you get IT? And he had a big smiles face. My family loves IT at a it's looking at the world through an entirely different set of land, which is very changing for people who are diligent with saving because what got them here is not really going to get them to the next phase of their life.

I like that a lot. Sort of that IT takes practice. You know, it's not it's not an overnight switch. And and so thinking about IT now gets you so much closer than thank you.

thinking and taking action. So like for example, there's this concept I have of a worry free number. And remember when we were like an early twenty years, you go to the grocery store, there's a packet gum.

You just okay, whatever i'm going to get this, it's like a dollar, right? IT makes no different in your life. Many still have that.

We see something. It's a dollar. Okay, great. The problem is that we don't adjust that number as we accumulate more. So our worry free number, the number below which we just don't worry, it's irrelevant to us, stays at a dollar or five dollars and then you end up sixty three years old and Tommy having millions for some folks. And they are still organizing over these three of our questions.

And you for me, there's once you have started to save and invest, you've actually earn the right to not focus on those questions anymore. And now you have a responsibility to focus on bigger questions. What type of memories do I want create? How can I make this easier for me, my family? How can I make IT safer or more fun? There's so many different money lenses that we can look at the world through.

I find that costs the primary money lens, particularly america. I also find that it's very lazy. It's very lazy to lean on IT solely, just like you can't play a symphony with one.

There are time you ve got to you know the violent you ve got to have different instruments, same and money cost matters. If i'm going to buy black pepper, I really don't care. It's a commodo me.

I am going to get the cheapest one. But if i'm going to buy something that's meaningful, a vacation, beautiful anniversary dinner, and why would I want to spend less? Why would I want to only look at IT through the lens of cost?

yeah. And I think that that that IT reminded me of a recent experience I had. So like last year, because everyone, everyone has a different lands.

Everyone has a different, you know, what is what's IT worth you? I know that for you. You know, you talk about your are your money rules.

And one of years, you know, you fly business class for flight center like longer than than four hours. And I was recently in japan last year with my partner. And you know I i've started a lot of my travels in college so was always like, how can I do this? Like this tube possible?

And i'm like, work away programs and you know, i'm starting ed in the back of the airplane and and SHE flew out. SHE flew herself business class because she's like, this is a long flight and on the way back, SHE was like, I was like to buy. I don't want to sit in the back of the plane.

I would like to buy us an upgrade. And I remember red. That was a really hard. That was an interesting conversation for us because I for so long have been like, I don't know, i'm usually, you know, not like it's my favorite thing.

Be in the back of the plane but I I was seeking through that lands of I like that's a lot of money. I like that's like you know through my mind like that's a new ipad. That's you know a week's worth of of meals, you know on an other trip.

Um until we had an interesting conversation about the same thing to those those values and we did end up upgrading. And I was like, actually this is really nice, like these are nice seats I feel much more comfortable by for more arrested when I got off the plane. And I can understand that moving forward, you know, that is one of those things like, oh, he sees this through a different lens moving forward.

We're default going to probably be doing this more on long flights. If flying alone. And I want to save that money, I can put myself in the back of the plane.

But you know, i'm going to when i'm playing with her, we're going to be much more open and making sure that we are also living her rich life. And to me, that really brings to mind, you know, one of your other phrases that you use is living outside the spread sheet. You when I was looking at that and and my rich life, I was like, that was very much a spread sheet relation.

And he was like, no, that helps me feel Better. I feel less cluster phobic. I'm more arrested when I get off the plane. She's like, and you know I know it's money, but we can afford IT and you know that was IT was an interesting IT was an interesting experience that reading then later going through and reading on your stuff, I like, oh, I was like, that was very much one of those differences and kind of lenses and experiences that we've had and that was very fascinating. So yeah, I guess with with that out there, any other you know why do you think that that concept of living outside the spread sheet when IT comes to your rich life, like what does that mean to you and and why is that so empowering and popular? Well.

I think that um that is specifically advised to personal finance or to run ten thousand monte carlo simulations and they go the ten thousand and second is really gonna blow my mind and I go listen at a certain point, you've automated your money.

Your investments are automatically allocated their properly diversified, know exactly when your debt payoff data or when you're going to be a millionaire or whatever is your goal is there are deeply diminishing returns to continuing to visit the same sub redit and continuing to tweet your model. And often what you find is that people become quite addicted to the menu control over changing some little detail. You become comfortable with IT, and they think that that provides the meaning and done as they ve really lost the plot.

The plot is not to get the perfect financial model. The plot is not even to accumulate as much money as possible. That's not the point. The point is to live a rich life.

And so once you've got a cooking like making thanksgiving dinner, you put the turkey in the event you're not sitting in their fiddling with the opening and up and putting tropics. And it's like let IT cook and go and hang out with the family. And that's the point of living outside the preachy.

You actually do not need to tweet everything every single day. If anything, I encourage people spend less than one hour per month on your finances. That's what I do.

Check your investments every three to six months is really no reason for you to be doing IT more. In fact, if anything, you're going to destroy your returns by fiddy around with IT. And this is hard for people because they go what I suppose to do.

I go, you're supposed to live your rich life. That's actually the next chapter. Turn the page.

So what does that mean? That means I ask people, what do you love to spend money on? And and I start to get into their money. Does let me ask both of you guys, what do you love not like, but love to spend money .

on you to sure.

Yeah, I actually, i've been thinking about this reading through your material what is my rich life and i've actually thought about a lot. So I saw you speak a fin con in twenty twenty. And so it's been in my brain since then.

And for me that was actually a little different that so I only work part time, and that's my rich life, is that I have chosen to earn less money than I could, because that in powers me to you, manage my household, fix the car when he needs to be fixed, cooked dinner. And then when my partner comes home, we get to just hanging out with each other, right? Nothing else has to be done most of time.

And we just get to have that. How would you describe that?

In a word, quality time.

love IT. okay. Quality time, beautiful are right. And whatever for you came to me.

I think for me one word would be experiences, and whether that's with friends. Travel, I think, would be another word. I love to travel. I love to be able to go to japan, visit my friend's there, other parts of the world.

I love IT. So travel and quality time. Let's play this. Let's play this out.

So I ask people, what do you love to spend money on? The most common response is food. The next most common response is travel.

So we're in good company. The third most common responses, health and wellness. The fourth is mine convenience.

And then there's a variety of others. Okay, I call these money dials because you can turn them up or turn them down. So I have a second question for you guys.

What if you could quite grup the amount of money you spend on your money dial? What would IT look and feel like for you? Think.

bread? I would love to be in a position where my wife could also work part time. Oh, and to enable us to have even more quality time together.

And and what would you do with that quality time? Like are are you still at home?

Tell me about that. I think we would travel more. absolutely.

We really like to travel like where we really like going to national parks has a big thing we like to do. We would both speak french. We'd love to spend more time in france. We've never actually been able to go together. We, like camden, is only about seven hours for me, and so I would be wonderful to go this and more.

Hold on a second. This is so interesting. First of all, that's call, I don't know you speak french.

That's awesome. Can we zoom and pick one national parts or france? Which one gets you more excited?

Mean, national parks. Love IT OK.

And would your partner feel the same .

way he would probably choose france?

Okay, that's okay. You know, one of the beautiful things, but a rich life is you actually don't have to agree on everything. And probably the two of you could probably both.

So solo, you're here. So let's go with you. National park. OK, what's one that you haven't gone to yet that you want to go to?

I really want to go to gay, your bay national park.

Where's that? It's in alaska. H, okay, cool. All right. beautiful. So you quite drupal, your spend that you're currently spending on quality time. What does that trip look and feel like?

So this this is what I thought about the trip would be. We get to go up to a glitter bay. Uh, you can do in bacio bay foward, there's all these yards and glorious fall straight to the ocean and hard to get to these glasses.

But you can do these kac trips, these three, four, five day kayak trips. We get a kac right next to these glaciers need to see and fall into the oceans. Sometimes you can see whales and you're just in this remote you know yards are guides there.

So we're not going to drowned because we're not super experienced caukins. That's what would be it's not a cheap experience, but I would be time together in places we love, experiencing something much more. Thirdly, than just taking a boat cruise right through.

I love IT beautiful, beautiful, beautiful vision. And I haven't ever heard someone described that exact experience for me. I get excited when I hear about someone's rich life, even if it's something I would never want to do myself.

I go, wow, you have clearly thought about this. It's so intentional. I can almost feel the cold air, you know, kaa king, I can feel IT.

And so that gets me excited. Okay, thank you for that. A camden coming back to you now, you mention travel. What if you could quite reply the amount you spend on travel? What would a look feel like .

one of the the dreams that i've harbored? So I guess going back to so before the pandemic had shut everything down, I was fortunate gh to be able to travel to japan basically every year. And I lived there for a year and a lot of friends, sir, and it's I really consider on my second homes.

And I think for me, I were really able to quite group that my plan some days to be able to spend you know several months a year there. And there's complications that might come with IT. But i'd love to own a house and i'd love to be kind of more out in a smaller town out in the world, world japan.

I love to be able to connect in with a smaller community and really become part of that. It's it's a very different experience to me than just tourists around the cities, which is fun. And I love doing that and I love trying all the food, but I love really being able to get out in the countryside and and meet people and connect with people.

And i've had a lot of beautiful opportunities to become part of that community. And I would love to find a place that I really sit down and be like, you know, even if i'm not maybe here full time because i'm not sure my partner, I am not sure he would want to live in japan full time. But it's like I have this place that I can go to for three months of the year, four months of the year at different times, and and be part of this community and and continue kind of my love of of expLoring this, this area that for me is a real concrete.

beautiful. So this is great. So you'll see how we are now, now really starting to design the rich life.

It's not just a dream. It's not something in the back of the head. What I do is I tried to bring into the forefront. Okay, you want to go to gerber.

What seat on the airline are you gonna sit in, how long is the trip? What time of the year? What guide are you getting? Oh, you want to make out a little more luxurious food is waiting for you when you get back home? No, you want to do IT on your own.

No guy. great. Talk to me about that. I want you to really get Crystal clear with what vision of a rich life is.

Too often people say, I want to travel. I go, great. Where do you want to go? europe.

I got what? That's not where. And by the end, working with them, you, i'm gentle.

Sometimes I get a little frustrated, but I do want them to articulate something like, you know, my partner, I are sitting um in rome watching the sun, drinking italian wine over the policy. Now that's a vision beautiful. Now we can start to reverse engineer that and use money for IT.

I need vivid specific details in order to help people. After rich life, you need IT too, because otherwise we live in this comfortable vagues. Oh, travel. Oh, I love food. Okay, great.

I'll tell me where you want to go and let's actually calculate because you might discover that you're rich life, which you've put IT off for twenty, is quite affordable. You could figure out in six months. I remember a podcast, guess who came on, and he told me that he was really frustrated because SHE and her husband about a house.

They are spending all this money on IT. But her dream was to buy a beaches is okay, beach house. He grew up on a beach, Charles at center.

I said, what do you love about A B. Charles? Want to create the memories.

Want to bring my new. And if you okay, great. But they just couldn't afford to do IT right now.

So he said, we need to pay the house off, fix all the stuff. And twenty years from now I can get this. I said, twenty years.

I'm not who the hell is going to wait twenty years for you to live your rich life? I'm not that patient. Let's get to IT right now.

Let's live your rich life today and a richer life tomorrow. And what we discovered is that people often get fixated on a very c way that they have to do something. SHE believe he needed to buy a beach house.

SHE had to buy why americans are assessed with home ownership, even though IT often does not make any financial sense to buy. I said, you know, if you want to be chose, you want to take your niece enough. You, what if you just rented IT for a week? Want you to start there and you could watch the visible turmoil, because in her rich life, IT was always a given that he would own the speech house.

And he even admitted IT didn't have to be nice. IT could be damp dated. You would rather own a delated beach house than rent ted for a weekend or five weeks and begin creating those memories now.

And there was a beautiful turning point where he realized he had been living in the comfortable vaginas. But if he could get specific, I want to create memories with my nisson F. U.

And my husband, that SHE could short cut her way and save twenty five years. That is why i'm in such a rush to help people live their rich life. Because life is short, people die, people get sick, things happen. And I don't want people to wait until some magical day when they're ready to do IT. I want them to start doing that now and think of an even richer life over time.

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I love IT. yeah. I love how much more detail you can teese out of those as as you start to think about what are the specifics and and you get the division.

Thank you. I wanted to hug back, actually do something you were saying early. You were talking about investigation. Know you spent an hour month on your finances and and that reaches this I love the example of the turkey. You know, the more you fitted with IT like it's just let me be, why do you think there is so much power in simplicity when IT comes to investing?

Oh, well, there is this belief in america. We have this deep cultural belief that complexity is good. And it's really dichotomy st and fascinating.

We surround ourselves with complexity. We buy AV systems that have five remote controls. We have all kinds of gadgets.

We all have a junk drawer where we put our plugins and stuff like that. But at the same time, we all idea lizza lifestyle where we go live in the country. And, you know, life is simple.

We watch movies about that. But when IT, somebody came into your living room and said, let's get ready to half this junk. No, no, no. I need that special spatch. Lc, because once every six years we cooked that cheesecake, this a cheese cake cut, or remember I sad simplicity.

And so one of the messages that I want to share with people is that the more financially successful you get, the more you have to fight for simplicity. I fight for IT every day. I give you some examples.

I have two or three credit cards, really simple cash back a travel card. And I have one luxury card I just used because IT gets me some lounge access that's IT I am not buying. I don't have my amazon card and costco card and press card.

People go will so simple. Remember, you get five percent off groceries on tuesday, but then you get one percent off when you get retired, fixed the cost. Who they have wants to think about this.

Why are you spending all this cognitive energy e out next to fifty eight dollars a year? IT makes no sense. I, I have a few accounts there, the best accounts, and I keep them for years.

You see people rate chasing all the time. Remember, ally bank raised my interest rate by point two percent, and I compared over here, point three one. I go, can you actually calculate point one one percent times your baLance? The answer is, people are rate jumping and jumping savings accounts to make an extra four dollars a month.

That's literally a four dollar question. Why on earth would you do anything to get four dollars when instead you can focus on the thirty thousand dollar questions? What's my savings rate? What's my investment rate? Is my acid allocation correct? And then once you dial all your numbers in from my conscious spending plan and said, you go, okay, great.

done. Now i've earned the right to focus on more meaningful things that I spend time with my family today. Compliment them.

Am I generous enough? Am I having fun? These are the more meaningful parts of a rich life, less quantifiable. Because, again, in america, we value that, which is quantifiable.

But in my opinion, the most valuable things, the we can't quantify, how long did you hug your kids for? How many nice things did you say your spouse? Did you surprise them with some flowers? Can't quantify IT probably way more important than jumping alibaba.

Yeah, that's something that we do talk about a lot just on on the podcast on our membership side. Money for the rest of us passes this site. You know, in your book, you canna divide to favor your favorite investment. They talk about target date funds. Very simple, straight forward.

Oh yeah, people get, people get really mad. Can I tell? Can I tell you about this? So I love target date funds. You know, it's like they're awesome.

My family, if they asked me where should I invest, I could just pick this simple and it's one fund and it's automatically diversified eeta. And that the reasons people give to not do this are actually comical to me. They go, it's so expensive.

What you are you living twenty years in the past? Target date funds are extremely inexpensive. The fees are basically zero.

Well, the glide path I go. First of all, if you even know what a glide path is, that's amazing. But um you're fine.

You can get a longer out fund if you want two thousand and seventy if you really care. The fact is fund should probably get more conservative over time. Now if you have a stylistic disagreement with the gypt fun, change your fund.

But really deep down, we in this individual elastics culture believe that we need more control. We love that we love the ability to have more control. I need control over um where I going to put up my TV in my house.

I need control. I need ten different controls for my ac in my house. I need control control control.

And money is so counterintuitive because the more control you exert, the worst results you get. The more you pay, the worst results you get. This is unlike anything else in our culture.

If i'm in new york right now, if I go spend twenty dollars on sushi, i'll get a certain type of sushi. If I spent a thousand doors on sushi that will have been flown in from tokyo o the same day, I get a Better quality service, Better quality food. But you don't get that and money, do you? You actually pay more, and you often get less.

So when I share little insights about the ultra a wealthy, a lot of people think they have access all these secret investments that get them crazy return. I go, listen, I know about these investments, okay, private equity VC, I know about them. I have access to a lot of them.

And while there may be a few investments that the average investor cannot get, that does not mean they are Better. And this infuriates people because deep down, we want to believe that the alter rich have access to some secret investments. But ultimately, a vanguard fund is actually fantastic and often outperforms what the ultra wealthy are investing in.

Now structurally, the ultra wealthy have access to tax advantages that I think they are totally ridiculous and they should have their taxes raised, including on me. But it's not that there is some secret dune where once you make a certain amount of money, you get to go in and pick up like inDiana Jones, some secret investments, just get you forty percent return. That's not how works.

And so again, fighting simplicity means acknowledging, wow, I only need a couple of credit cards. I only need a savings account and a checking account. I only need a simple investment portfolio, whether it's target date fund or a few in funds, and i'm good.

Then I automate my money. Chapter five of my book, contribute as much as possible every single months. Don't even think about IT anymore, and get on with my rich life.

Simple, not particularly entertaining. If you want entertainment, watch a netflix show, but that's the way that should be. Investment is not for entertainment.

is to make you money. And that we spent. So we definitely talk about target date funds. We spend a lot of time talking about, like he said, index funds.

We tend to be we have like a bit more control, but we like that simplicity, like you said, of of, of index funds fall Young. The market, you get to kind of ride that up and down. And we were very much in that we're investing for the long term.

We're not chasing the hot stocks. We're not looking for, you know what's what's the exciting script currency. We want people to understand this things just because they need to understand like, hey, if you're interested in this, if you're playing around at this for fun, great.

But like you need to understand that there's risks. You need to understand that ah the long there's long term effects that index funds and other things are very, very good at that it's going to be your primary wealth driver. One thing I wanted to ask was, no, when IT comes to the simplicity, one of the things that can be kind of hard is you looking at the different numbers and and different drivers of of index funds rates.

And following the S M P. Five hundred is you will sometimes notice that those rates will change you. You can look at historical rates and you look at rates going forward. And so you know with some of your work, and i'm not calling out on on anything, but it's like you have mentioned that a good rule of Thomas, maybe seventy percent follow S P five hundred when we've looked at are like we have A A product called asset camp.

When we look at some of the drivers and we're looking forward, we think that sometimes maybe five or six percent, uh, is maybe a more conservative or more reasonable thing. And I don't necessary get into hashing out the numbers. But when IT comes to that simplicity and thinking about, you know, your automating your spread utes and looking forward, what might change in your investment plan? So somebody setting up their investment plan, they may be set IT up with eight percent in mind.

But then they like, actually, what if it's more like five percent? What kind of thoughts might need to go through somebody's mind at that point does IT change radically. It's just, I just see, to put more money in is IT. I need to verify and worry about, you know, actually investing in other things. Because people, I think, have a lot of anxiety that when they see differences in numbers.

here is a good question. And I think that different people can choose different target numbers that they believe their investments will hit. I tried to be very conservative at seven percent.

Sounds like you want to be even more conservative at five percent, if that's what you prefer to put in your model. fantastic. Personally, I think that and you I said in chapter six some of the day on why I think seven percent or eight percent is quite reasonable.

But I think what is what is more important is that, first of all, most people are not doing this at all. They're not they don't even know what seven percent is. okay. So that's number one.

If I ask the average person who does not invest, what do you think what kind of return could you get? They might say like just as like going to say elephants as they are to say twenty four percent. We should remember where most people are starting with money, asking people what kind of return do expect.

They don't even know it's a percentage, have a lot of compassion for that, that we're not really taught this nor do we seek IT out. Second, I think that people mistake that a common mistake people make. People who are listening to this podcast, you tend be a little bit more financially savy.

Is they index or precision? They sit here at age forty, forty five, and they go, I need to create a model that accounts for every single thing that can happen in my life. What a waste of time.

You're not going to account for everything. Somebody he's going to get laid off, somebody who's going to a get sick. You're gonna move because you your spouse got a new job, never going to account for everything.

It's actually a fly to try to account for that. I'm much more focused on getting people eighty five percent in the way there. Do we have a path towards being financially comfortable and in fact, even living a rich life? great.

I personally like to build in a nice margin of safety because I never want to have a negative surprise, not at the end of the year, certain tly, not at the end of my life. I do that in a variety of ways. I assume seven percent, which in my opinion is conservative for my expenses.

I add on fifteen percent on top of everything because I know there are things that I forget. I know there are emergencies that come up. All of that.

I keep a little extra saved up just in case I don't mind the again, i'm optimizing for a long term. Ultimately, i'm not trying to perfectly predict when i'm going to have x dollars or y dollars. I think that's especially the longer you go.

It's like china launch a paper airplane that's gonna six miles and try to predict what's gonna land. Let's just worry about getting that thing flying. Let's worry about IT going a long way.

That's bad as far as we need to go in the early days. Now this changes as you become fifty five, fifty eight, sixty becomes much more important to die. Those things in particularly when IT comes to retire, you want to know, of course, if you've done, you're planning early.

If you're fortunately enough and you are no thoughtful enough to do IT and lucky enough, fantastic, you probably have more than you know what to do with. And that's a different conversation. But I think my main message is that people tend to over focus on precision early in their life. When I would say that a mistake, I would instead say, get eighty five percent away there and then move on with your life.

No, awesome. I like that eighty five .

good like you put, you put IT in the oven. Now get on with IT. That's exactly where people that especially optimizes, they love to continue optimizing the turkeys. I get out, get out of the kitchen and all that effort and energy and anxiety and focus on on the people you love, focus on on the things you love. That is a rich life today like that.

I definitely, with that I tend to try to go one hundred percent. And the reminder to be like eighty five, it's good. Like, just start, I love you and and you may have already sort of answered this next question, but what what would you say? The people who feel like they are behind or late to starting investing, I would say .

that it's never too late to start, but the later IT gets you have to be much more aggressive. Obviously, when you look at the levers, when IT comes to financial success, time is one of the most important levers. So if you started at age twenty for the fortune of you who did not gone to be in a really great position now, guess what? Not a lot of people started age twenty.

They don't know. They're not taught. They also don't want to.

Okay, I have a lot of compassion. I wish everybody started eight, fifteen that I wish. I started dead lifting when I was fifteen.

I didn't even know what dead lifting was, so I had to go through my own journey with physical fitness to be like, how do people do that? Oh, I need to undo all these preconceived ve notions I have in my head. now.

I need find people to teach me. And took me ten plus years to really start to understand how this stuff works. And so I have a lot of compassion for people who don't start early in life because we all have something in our lives that we're not doing.

The math is a powerful and provocative, and I think that what happens is particularly for people who don't start until later in life, they often don't even engage with the math is just a feeling. And really, that's what money is for most people are feeling. IT is not a spread sheet.

It's not return rates. It's not even how much they spend per month. Half of the people I talk, you don't even know how much they make player.

Fifty percent do not know how much they make per year, ninety percent do not know how much they okay, and ninety five percent of them do not know when their debt pay off date is. But all of them feel worried about money. Their feelings are the primary way that they engage with money.

And so when you have somebody who says, is that too late? I feel like it's too late. I'm so worried. First thing to do is say, look, we got, it's never too late, but we've got ta start now every day matters.

And the second is to start, you know, we start off asking them, what is your rich life? Tell us what that looks like. And a lot of them will have very fear based responses.

You know, I just don't want to run out of money. I'm really worried. And they spin people with problems love to tell you about their problems, and often you have to let them do that. That's okay.

It's become a primary way for them to grapple with the chAllenge, but I try to gently redirect them to something they do on what would that look like could be as simple as being able to go to grocery store and not have to compare CEO o but that feel good to you. That would feel so amazing. Let's start there.

That's two bucks. Okay, great. And over time, I do this on my podcast lives so you can hear how IT actually happens.

We talk about what is money like in their relationship. Often couples only talk about money when there's a problem. They're not proactive.

They're entirely reacted. We talk about what would feel like to be on a team. And you can just see them. You can see them because I put the the episodes on youtube.

You can see them starting to smile and starting to realize, oh my gosh, there could be a light at the end of the tunnel now, because know, based on some of the ways I ask you guys, like what is your rich life, know a lot of people, they give me these really vague. The truth is most people have really vae answers about their retirement. They don't really know what their retirements going to look like, but they know that they feel really behind. First I tackle their feelings, then I help them design the next chapter of their life. And that's the way I approached.

Really awesome. And I think really helpful. Thank you. bad. Did you have something? okay. So the next one is, is our last question and when they were also excited to ask. So I was so you have had a lot of really, you know, cool experiences. You spend a lot of time teaching people about finance, about investment, about money.

But looking back at your education, you got some really excEllent degrees, and in technology and psychology and sociology, and you like britain, myself, and like a lot of our listeners, people, a lot of people would say, maybe don't come from a tradition, finance, investment background and go to school for IT. We didn't go to school for IT. You know, our father went to school for IT, know, worked in investments for decades.

But a lot of people, like we didn't necessarily go to school for IT. And I think a lot of people feel idea about that when they start taking on their own or personal finances. They, like you said, they feel more comfortable in the tech.

I'll pay someone else there in expert, from your perspective, what would you say to people who are feeling that way or anything that they need to be careful of? But are there all starting strength you ve noticed from just coming finances, from your own personal experiences, from a more maybe holistic approach, rather than know being a negative that i'm quote, not a traditional finance expert, i'm my self. You know what? What would you say to people that are worried about, that are feeling anxious about.

that have a strong belief that most people can manage their money quite ably? Ly, and in our culture, money is seen as this technical thing, and it's about P, E ratios and step I R rays and diversification. People don't know what that means.

And so what do we do? Our natural responses that we ignore IT for longer and longer and longer until something happens. Usually people married, they have kids or they get divorced or there's retirement coming up.

And that's when they are finally forced to grapple with IT. And what do they nurse do? They ve got just going to pay someone to take care of this.

What I emphasized to people is that it's one thing to pay somebody to take care of your lawn care. It's another to pay somebody to wash your car, change the oil. I have no problem with that.

I have no problem paying premium Prices for premium providers. I have no problem with that at all. But you would never pay one percent of your investment portfolio to somebody to move your lawn.

never. And similarly, I hear a lot of couples who tell me, like, i'm not a money person. I just wanted have someone looking, handling at this what they do for a living.

And I go, okay, okay. But we often conflate the idea, like in a relationship, they'll one person who takes out the trash, the other person empty. Is the dishwasher again, Normal in couples, there are sort of these roles that we fall into.

But you would never say, oh, he is the one who does the parenting or she's the one who does the parenting. We don't really talk about parenting that both partners are involved if we're in a two partner relationship, and it's the same with money. Money has got to be a team effort.

IT is equivalent to parenting. IT cuts across everything in a relationship. IT is where you live, what you eat, what happens with your kids, in fact, even who you are to some extent.

And when IT comes to hiring, there are certain situations where IT can make sense to higher financial advisor. If you have a large portfolio, if you have a complex financial situation, such as step children inherited ants at seta, but the vast majority of people have actually pretty simple financial needs. You've all heard for a personal finance is personal.

A, it's a really popular rate. I actually don't love that phrase at all. I would much rathers say most of us are mostly the same, because I think this idea that were all such special snowflakes with individual circumstances is used as an excuse that there's no way I can get started reading a book or listening to a podcast, because I have a unique situation.

I have two weeks in my backyard, not one. Therefore, your acid allocation does not work for me. What does that have to do with the rakes? nothing.

So I have no problem paying for premium providers. I've actually paid for a financial advisor myself as a special project. I hired someone. I said, give me a second set of eyes on my acid allocation.

I want to make sure I don't have any blind spots, happy to pay his hourly rate rate, but I would never pay A U. Pay one percent, which many people do not realize, is essentially twenty eight percent of your lifetime returns out the window in fees, two percent over fifty five percent of your returns out the window. And fees.

People don't know this and is engineer that way that they don't know. I'm not a fan. I don't want people paying A U M. Or assets under management. I want them to take control of their money.

And if in the rare case they need to have a second set of eyes or an expert financial advisor, great, make sure you're paying them an hourly or per project fee. But most of us can do IT on our own. I think there was .

a great example there at the end of running the numbers, right? What is a one percent fee mean throughout the lifetime? I've never thought about that.

I think that, you know, I had had a Young woman who was thirty one years old, he wrote me on instagram and he had seen me you cautioning people about spending one percent A U which so innocent one percent its fine. Like us, somebody who's like, they track the numbers and they watch cnbc every day. I go, okay, let's play this out.

SHE made eighty thousand dollars a year, and I said, how much do you think over the course of your life you will pay in investment fees? Let's make a few assumptions. SHE had no idea.

No one, no one can have any ideas. A very complex question. I said, ball park for me. Are we thinking, like over the course of the next thirty four years of your life is going to be ten thousand, is going ten million?

Give me arrange SHE said, top of my head, I think I will be thirty thousand dollars total, so basically a thousand dollars a year in fees. I said, okay, how would you feel about that? He said, I feel fine.

Somebody's taking care of a great. I calculated for her, I made some assumptions, which I told her I was three hundred and fifteen thousand dollars in fees, literally ten times what he thought over her lifetime. And he was shocked.

He wrote, O, M, G, W, T, F. And he was like, is this for real? Think about IT, most of us gal entire lives agg's ized over the Price of cheese, cake or coffee, thinking that some five dollar expenses going to change our life.

It's not if you want the coffee, get IT IT changes nothing. Instead, he was being invisibly charged hundreds of thousands of dollars without ever knowing IT, and actually not even getting Better results than a simple vanguard or fidelity index. fine.

These are the kind of phantom costs that I want people to look out for, their phantom costs in investment fees, their phantom costs in home ownership, phantom costs in cars. If you just pay attention to those, those, those are thirty thousand or even three hundred thousand dollar questions. Nail those you can buy all the lot takes you want for the rest your life.

awesome. Well.

thank you so much. We appreciate a meat taking the time to share his insights on living a rich life. One point of clarification in the discussion, remet and cambon were talking about rates of return or expected rates return for stocks said seven percent versus five percent. Those were real rates return net of inflation.

And so a seven percent real return would be equivalent, potentially a ten percent Normal return for stocks, whether camden mentioned money for the rest of us were more comfortable with a five percent real return, which equates to seven to eight return for stocks for a globally diversified equity portfolio. We can go through the numbers, but we wanted to clarify that because I wasn't specified that these were real native inflation returns in the discussion, the end of the day, didn't matter because we are focusing on the principles underlying that. And remember, a great job discussing the principles I have throughly enjoy teaching you about invested on this podcast for almost nine years now, but some topics are just Better explained in writing or with a chart.

That's why we have a weekly email newsletter, the insiders guide, in that news letter. I share charge graphs and other materials that can help you Better understand investing. It's some of the most important writing I do each week.

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