Pod Insights The Diary Of A CEO with Steven Bartlett Money Expert: Buying A House Is A Mistake! Becoming Rich is Simple But You Won’t Do It! About this episode Investing has been solved, but your brain is keeping you poor. Money Expert Ben Felix explains why most people make terrible financial decisions!
Ben Felix is a Portfolio Manager and Chief Investment Officer for PWL Capital, and evidence-based investing expert who translates academic finance research into practical decisions for everyday people. He is known for using data, behavioral science, and simple frameworks to help people build wealth without falling for the traps of the financial industry.
He explains:
◼️Why investing has already been “solved”
◼️How your brain quietly ruins your long-term financial decisions
◼️Why checking your portfolio too often can make you poorer
◼️Why buying a home is not always the smart investment people think it is
◼️Why young people may not need to save as aggressively as they’re told
◼️How to use money to build a better life, not just a bigger bank account
◼️The biggest financial mistakes that destroys your financial future
00:00 Intro
02:34 Why Most People Overcomplicate Finance
03:37 How Your Psychology Secretly Controls Your Investments
05:06 The Real Frameworks Behind Financial Freedom
06:54 Why You Don’t Need Much Money To Start Investing
09:20 The 10 Money Mistakes That Quietly Keep You Broke
12:57 How Monetizing Your Skills Can 10x Your Income
19:46 Why Most People Never Set Financial Goals
20:50 Are You Spending Money In Ways That Actually Improve Your Life?
21:26 Why Taking Investment Risks Matters More Than You Think
25:28 Is Buying A House Actually A Smart Investment Today?
40:48 Why Common Advice About Home Ownership Falls Apart
42:17 Will House Prices Keep Rising?
44:17 How The Wealthy Legally Pay Less Tax
45:09 The Real Tax Strategies The Rich Don’t Talk About
45:45 What Happens Next To Housing Prices?
47:15 Ads
49:18 The Hidden Problems With Financial Advisors
50:21 Why Ignoring Estate Planning Can Cost Your Family Everything
51:17 Do You Really Need A Will?
51:42 How Your Partner Choice Impacts Your Financial Future
52:58 Why Some Financial Advice May Be Working Against You
54:07 Should Everyone Get A Prenup?
56:21 What Your Spending Habits Reveal About Your Future Wealth
58:04 The Real Reason Prenups Matter More Than You Think
01:00:09 Why People Underestimate Catastrophic Financial Risks
01:00:59 Stocks Vs Bonds: Which Is Actually Safer Right Now?
01:07:20 The Financial Products You Should Avoid At All Costs
01:09:23 Why Cash Loses Value Faster Than You Realize
01:10:38 Ads
01:13:33 Do You Really Need A Retirement Plan?
01:15:05 Investments You Should Avoid
01:16:44 Should You Invest In AI?
01:19:36 Crypto: Opportunity Or Risk?
01:21:25 How War Changes Investing
01:24:16 Remortgage Or Invest: Which Move Builds More Wealth?
01:25:32 Will AI Replace Your Job?
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Transcript 20,403 words · 2 speakers
Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
0:00 Speaker 00 Renting versus owning a home is the biggest financial decision most people make in their life. So we're going to talk about all of the unrecoverable costs of owning a home, including property taxes, maintenance costs, which is the one that I think people underestimate the most. And then there's also emergency costs. I've got a whole stack of them, as well as a 5% rule to figure out if renting is a better financial decision.
0:18 Steven Bartlett? We'll go through that. What else have we got?
0:19 Speaker 00 So this is something that people just don't think enough about, which is the top 10 financial mistakes that I think people make. For example, tax planning opportunities. Like, there are simple things that people can do to minimize the amount of tax they're paying. We'll go through those.
0:31 Steven Bartlett? Ben Felix's firm manages the money of more than 3,000 people, ranging from people with huge amounts of money and not so much money. His whole thesis is giving people money advice that is based on academic research.
0:44 Speaker 00 Our brains, our psychology absolutely gets in the way of making good long-term financial decisions.
0:49 Steven Bartlett? And today, we're going to answer the big money questions, like, what should I invest in?
0:54 Speaker 00 A lot of people believe they need to have a lot of background information before they can start investing. But I would argue that people who know just a little bit, they will be better long-term investors. There's a ton of evidence supporting that this will outperform most other investment strategies.
1:07 Steven Bartlett? And also, what is the mentality, the mindset of people that end up making money over the long term?
1:13 Speaker 00 Psychology is important for determining what your financial goals are. So this is a framework that we developed to elicit higher quality goals.
1:19 Steven Bartlett? What would you say to young people that are thinking about their financial strategy?
1:23 Speaker 00 A lot of young people feel a lot of pressure to save, but there is research suggesting that it's probably suboptimal for young people to save, which we'll talk more about later.
1:31 Steven Bartlett? And then in a world of AI where everything is changing so quickly, what should I be doing with my money right now? Ben Felix has the answer.
1:40 Steven Bartlett? Guys, I've got a favor to ask before this episode begins. The algorithm, if you follow a show, will deliver you the best episodes from that show very prominently in your feed. So when we have our best episodes on this show, the most shared episodes, the most rated episodes, I would love you to know. And the simple way for you to know that is to hit that follow button. But also, it's the simple, easy, free thing that you can do to help us make the show better. I would be hugely grateful if you could take a minute on the app you're listening to this on right now and hit that follow button. Thank you so, so, so much.
2:18 Steven Bartlett? Ben, there are lots of people out in the world talking about personal finance and investing and all these adjacent subjects. What is the approach you take that you think is different to lots of the other sort of finance experts that are on YouTube that are giving people advice?
2:35 Speaker 00 What I think and the approach that I've always tried to take is what can we take from academic literature, very smart people who spent a lot of time thinking about these things? What can we take from them and apply to making good financial decisions for a typical person?
2:48 Steven Bartlett? And what are the key questions that you've sought to answer for the audiences that you have?
2:53 Speaker 00 Is renting versus owning a home. So that's always been big. Asset allocation is another big one. How much should you invest of your long-term money that you can afford to take some risk with? And another important question people wonder about is, why should I not do this other investment strategy that seems very attractive?
3:10 Steven Bartlett? And who are we appealing to with this conversation? Is it just people that have lots of money? Or is it?
3:15 Speaker 00 No, I think these questions need to be answered. I mean, the renting versus owning a home one is applicable to pretty much everyone, because that is the biggest financial decision most households will make in their lives, regardless of what their net worth is. But investing, what should you do with your long-term investments? That's applicable to anybody. Anybody that's going to be saving for their future, whether they have $10,000 or $10 million, the same principles apply.
3:37 Steven Bartlett? And how much of this game of investing, making money, is, comes back to psychology?
3:43 Speaker 00 So I like to say investing has been solved. We're going to use index funds. That's it. The hard part is actually doing that. Because our brains, our psychology absolutely gets in the way of making good long-term financial decisions. Our brains are designed for survival. They're not designed for thinking about long-term abstract concepts, like taking your money today, investing in the stock market, ignoring all the stuff that happens in between, and then having money left over later to fund your retirement.
4:12 Steven Bartlett? That's so interesting, because a lot of the time, people talk about tactics and strategies. But I guess underpinning your ability to execute on any of those tactics or strategies are one's own psychology. And is there academic research about the best sort of mental approach to take towards money and finance and investing?
4:27 Speaker 00 So one of the best approaches, and it's a little bit counterintuitive, is to not look at your investments. There is an academic paper showing that the more people look at their investments, the less risk they take, and the lower returns they earn. Because when you look at your investments every day, the stock market goes up and down. We know that. If you're looking every day at your portfolio and it's down 5%, up 6%, and going up and down all the time, that can be very stressful, and it makes it seem like the stock market is very risky. And so people will invest less in the stock market. In reality, for long-term investors who can invest in stocks, buy and hold for a very long period of time, that they're a lot safer than people think.
5:06 Steven Bartlett? So we've got some props here for some demonstrations we're going to do. Could you just give, explain to me the high level of what these things are on the table and the different frameworks we're going to go through?
5:16 Speaker 00 Sure. So we have a bunch of things here. This is one of my favorites that I bring up in a lot of my videos. So this is the the PERMA model, which comes from positive psychology. Psychology is important for investing well, but it's also important for figuring out what your long-term investing strategy should be.
5:34 Steven Bartlett? We'll go through that. What else have we got here?
5:36 Speaker 00 This is the top 10 financial mistakes that I think people make. This is the the three steps for investing your first $10,000.
5:44 Steven Bartlett? Okay. And we've got $10,000 there, so you're going to talk me through how we do that as well?
5:49 Speaker 00 We're going to talk about all of the unrecoverable costs, got a whole stack of them, that you incur when you own a home.
5:56 Steven Bartlett? Okay. And I guess this begs the question, who is Ben Felix? What is your background? And what is the education, the reference points, the experiences that you're drawing upon to give us this information today?
6:08 Speaker 00 Probably where it starts for being relevant is I did a degree in mechanical engineering at Northeastern University. And I say that's relevant because when I came into finance, I wanted to approach it like an engineer. And a lot of finance, a lot of financial services of investing and wealth management is not approached like an engineer. It's approached, like, I feel almost bad saying this, but it's approached like a car dealership, like selling, selling product. So I was disappointed in that and had to find my, find my own way.
6:41 Steven Bartlett? They haven't got my best interests at heart?
6:43 Speaker 00 In a lot of cases, I don't think so. I started spending a lot of time reading through academic literature so that I could be very confident and comfortable that the advice that I was giving to people was good, high-quality advice.
6:54 Steven Bartlett? And where is the best place to start? Is it in the psychology? Is it one of these frameworks? Is it somewhere else? Is there a background understanding of the economy one needs to, to get going?
7:04 Speaker 00 That is a great question. I don't think so. And I think that's where a lot of people get stuck, where they believe they need to have a lot of background information before they can start investing. They may do research on specific industries. They may look at like the energy sector, so they can build out an energy portfolio as one example. But investing the way that I would say is sensible for most people, which is just using low-cost index funds, capturing market returns. The market returns have been there, and they're going to continue to be there. They should continue to be there in the long run. Doing that doesn't require a lot of background knowledge. I would argue that people who know just a little bit, just enough, they just know that index funds are sensible, and they have enough conviction they can stick with that, they will be better long-term investors than someone who knows enough to hurt themselves.
7:49 Steven Bartlett? What would you say to young people that are thinking about their financial strategy? Would you say that someone in their early twenties, 21 years old, should adopt a completely different approach to money, based on what you've just shown me, versus someone that's 51 years old?
8:05 Speaker 00 It's going to be different for sure. I think, and this is a, it's a tricky subject, but a lot of young people feel a lot of pressure to save. And that might be saving for their retirement. It might be saving to buy a home. But they feel a lot of pressure from their parents and just from society in general, that they need to be saving money, that if they're not saving money, they're being irresponsible. But again, if we come back to academic research, there is research suggesting that it's probably suboptimal for young people to save. General point is that you should save more when you have a higher income, and save less when you have a lower income. And what that ends up meaning is that young people may not need to save, or may not need to save as much as they feel pressured to save. The reason this topic is tricky is that, well, what I just said
8:48 Speaker 00 is true, it can cause bad habits. Where if people spend all of their income, and then don't have that shift towards saving at some point, then they'll, they'll end up in a difficult position later on in life. Someone who's 50, it's going to depend on their situation. If they're the person who I just mentioned who never saved, they're in a tough position, and they are going to need to save a lot in order to have some wealth later on in life. But if they've already saved, and they have wealth, then they can focus more on some of these topics.
9:20 Steven Bartlett? And you've got the 10 money mistakes people make here. Can you run me through those ones? And just let me know if any of them is particularly pertinent or interesting that we should dive deeper into?
9:30 Speaker 00 So this, this one's controversial. It's not earning enough money. A lot of people feel like they don't have an option, that they're not earning enough money because that's just the way things are, and there's nothing that they can do about it. I don't think that's necessarily true. Investing in your human capital, and that can be formal education, it can be gaining skills, it can be becoming an entrepreneur. Those are all ways to make your, your own self a more valuable asset, to increase the value of your human capital, and allow you to earn more money. So that's, that's a big one. And I think people who get stuck in the, in the feeling or the thought that they do not have the ability to increase their income, and that this is just the way things are, I think that can be very problematic.
10:14 Steven Bartlett? I've always thought of it across these sort of five buckets. The first two buckets that we attempt to fill when we're starting our careers are our knowledge and then our skills. And kind of like when knowledge is applied, it becomes a skill. And these two first buckets are so imperative, because they can almost never be unfilled. Whereas the other three buckets, which is your resources, your network and your reputation, you can have career fluctuations and earthquakes that cause those buckets to unfill. So as like you were saying earlier on about young people, one of the things I've always thought is like, when you're young, just like optimize fulfilling your knowledge and skills as much as you possibly can. And actually, I guess the level of nuance there is acquiring a rare but complementary stack of knowledge and skills that the market values. And I
10:57 Steven Bartlett? think over the long term, you know, this doesn't apply to everybody, because things happen in life and bad things can happen. But over the long term, I think life tends to land you pretty much in and around the value of, and the rarity and the complementarity of those knowledge and skills as it relates to the market's demands?
11:15 Speaker 00 That's absolutely true. There's data on this too, where we know that there is a mechanical relationship, at least historically. We can talk about the future, but historically, there's been a mechanical relationship between formal education or trade education and lifetime earnings. And we also know that certain degree types, like engineering, finance, business, some other sciences have higher lifetime earnings than other degrees. So it's, I think you're absolutely right. There are, and the hard part is, we don't know what exactly those degrees and skills that are going to be the highest paying in the future are going to be. 10 years ago, we might have said software developers. Today, we might not.
11:51 Steven Bartlett? But even you as an example. So you did engineering, and then you did finance. And now you've added this other string to your bow, which is you know how to make content on YouTube. And that makes you, as a finance expert and professional and CIO, so extremely rare. It almost makes you like one of, 100 on planet Earth, maybe. And this is what I mean by rare and complementary skills. You could have just learnt more finance. And I don't think that would have moved you up this sort of earning ladder. But because you added this really rare skill of being able to make content to your other skill stack, I'm guessing it made you money?
12:27 Speaker 00 It did. It has. And I continue to be paid well. And, you know, it was, please don't. But if you were to go back and watch my old videos, which are still up, I am so rigid and nervous. And I was. And it took probably years of recording. And we do a podcast too. So just being in front of the camera, for me to feel pretty good. I mean, it probably took me three years to smile on camera.
12:50 Steven Bartlett? Really?
12:52 Speaker 00 So yes, that was a skill that I acquired through just practice, I guess.
12:56 Steven Bartlett? So I say this because I really want people to think about how rare their skill stack is. It's not something we're taught. And then also, one of the things I know, I used to work in a biotech company for a little while, while I was in between things. And we were looking for a writer, a biotech writer. Now, the other writers that we hired at our other companies might have been paid, I don't know, $50,000, whatever it is. For a biotech writer, we would pay them a quarter of a million. And all, the only difference is, the biotech writer had like some base, they didn't have to go to medical school. They just needed experience in writing about biotech.
13:28 Speaker 00 Yep.
13:29 Steven Bartlett? And it 5Xed their earnings. So this other point is, you might have a skill stack, but are you selling them on the right market? And even me, first part of my career was marketing. I was helping Uber and fizzy drinks company and dress seller company sell their dresses. As I just said, the second little stop I took in my career was helping biotech companies with marketing that are about to IPO. My first contract with one of those companies was worth eight million, six months' work. And it was a real pivotal moment in my career where I go, it's not just the skills you have, it's like where you, the market and industry where you sell those skills can wildly change your, as you say on that card, your earning potential.
14:11 Speaker 00 Yeah. And as you say, this is something that you don't have full control over, because you could do all of those things and not find work as a biotech writer. But putting yourself in that position, I think, does increase the odds.
14:21 Steven Bartlett? What's the second one you've got there?
14:23 Speaker 00 Second one is not saving enough. Touch on this a little bit. Young people maybe don't need to save, but at some point, you do have to start saving. And the tricky thing about saving is that wealth compounds over time. And if you're not saving out enough, you're missing out on compounding, and it gets a lot harder to catch up with the amount of savings you would have otherwise had if you started earlier. So that's a big one. And some people will wake up when they're 50, 55, maybe even 60, and realize they haven't saved enough. But by that time, there's nothing that you can do about it, or very little that you can do about it. There's a lot of parallels with health here, where if you eat poorly and don't exercise, you can wake up when you're 55 and you can have
15:04 Speaker 00 heart disease. That is very difficult to reverse. And it's the same effect. It's compounding over time. I think health and wealth have a lot of parallels. Anyway, so not saving enough can be very problematic, because it is so hard to reverse the effects of it once you've realized it's a problem.
15:19 Steven Bartlett? Interesting. I read a book called The Slight Edge by, I think it's Jeff Olson, when I was 18, which talks exactly about that. I think it uses, one of the analogies it uses is like brushing your teeth. Don't brush them today, it's fine. Don't brush them every day this week, you're fine. Don't brush them every day this month, you're fine. But in five years, you're fucked.
15:34 Speaker 00 That's right.
15:35 Steven Bartlett? In five years' time, you can't like stop brushing them then.
15:38 Speaker 00 Yeah.
15:38 Steven Bartlett? You're in a dental chair having them ripped out. I guess finance is the same in this regard.
15:42 Speaker 00 Exactly. Yeah. Number three is not setting financial goals. And that's, we talked a little bit about this earlier as well. If people don't set goals, they will do things like think they need to earn more money, because, because, because that's what you do. Or they'll think they need to buy a house, because that's what you're supposed to do. But they won't step back and reflect on what are the components of a good life for them? What do they want their life to look like? And what would they need to do to achieve that? And if you don't go through that exercise, you can end up spending years or dollars achieving things that don't really matter to you. And again, because of compounding, by the time you realize those things didn't matter, that's time and money that you can't get back.
16:23 Steven Bartlett? So how do I go about setting good financial goals? What is the process there?
16:27 Speaker 00 So this is the process that we created is three steps. List your goals.
16:35 Steven Bartlett? Okay. So what does that look like?
16:37 Speaker 00 So you're going to sit down with a piece of paper, or we built an app for this that we use with, with clients. You just list out your goals.
16:46 Steven Bartlett? So I could say, I want to be a dad. I, you know, I want to buy a Ferrari.
16:50 Speaker 00 Yep.
16:50 Steven Bartlett? We want to go on holiday to Cancun.
16:52 Speaker 00 Yep.
16:53 Steven Bartlett? I want to be able to retire at 50. Those kinds of goals.
16:57 Speaker 00 Yep. Now, step two, so you've got your list of goals, you're going to double the list.
17:01 Steven Bartlett? Double it?
17:02 Speaker 00 Yep.
17:03 Steven Bartlett? Why?
17:03 Speaker 00 So you came up with, I think, four goals just now. You're going to write down eight goals. Because this forces you to think harder about what other, what other goals might be important to you. And research does show that this elicits more goals that people later identify as being at least as meaningful as the initial goals that they listed. And then the last thing, we're going to come back to the PERMA model. So the PERMA model is a five-factor model of human flourishing. If you have these components contributing to your life, there's a very good chance that you'll live a good, satisfying life. I think you've, you've lived through this experience, where you've seen that wealth does not lead to a good life. And so what does? Well, there's, there's a whole bunch
17:44 Speaker 00 of really good research on this, and it does suggest that positive emotion is one big piece of it. What does that mean? It's literally enjoying what you're doing and feeling good throughout the day. Engagement, you could probably argue that we're getting some of that right now, where you're doing something that you enjoy doing, that's maybe a little bit challenging, but it's at your skill level. It's the idea of getting into flow. I know I get that when I do podcast interviews. I want to do research when I'm sitting down and writing a video script. Relationships is having good, strong relationships with, with people who are close to you in your life, and that can be friends, it can be family members, it can be colleagues. Meaning is being part of something that is bigger than yourself. That can be a lot of different things. For some people, it's religion. For some people, it's community. For some people, it's their own business.
18:31 Speaker 00 And accomplishment is achieving hard things, setting goals and achieving them. You're going to look at the items of the Perma model, you're going to look at those as categories and think about what other goals you may have that fit into those categories. That's called a categorical prompt. And again, there's evidence behind that, helping people elicit more meaningful goals.
18:51 Steven Bartlett? So one of the things I said is buy a Ferrari. Again, these aren't my goals, I don't care about Ferraris, but in case they want to sponsor the podcast, then I care about Ferrari. But say the Ferrari thing, do I have to find where it sits in terms of positive emotion, engagement, relationships, meaning accomplishment?
19:04 Speaker 00 It would be wise to, and this is why I think this framework is so important, because you might realise that a Ferrari does not contribute to any of these things. It might though. Like maybe you take it to the track and you spend hours racing it.
19:15 Steven Bartlett? And that would be engagement.
19:16 Speaker 00 That would be engagement. Maybe you have a bunch of buddies who have Ferraris and you want to be part of that friend group.
19:22 Steven Bartlett? So that's relationships.
19:23 Speaker 00 Yeah.
19:23 Steven Bartlett? Okay. I mean, positive emotions, but they might only last a couple of days.
19:26 Speaker 00 Yeah, well, it's the hedonic treadmill idea, that's exactly it, yeah.
19:29 Steven Bartlett? And then accomplishment, I mean, it's not really an accomplishment.
19:32 Speaker 00 If it was a goal that you've had since you were five years old, maybe you could call that accomplishment, maybe.
19:37 Steven Bartlett? Okay, so I fit my, my financial goals, my life goals into the Perma model as a way to understand what my financial goals should be?
19:46 Speaker 00 Yeah.
19:47 Steven Bartlett? Okay. How many people in the general public do you think have actually thought about what a good life for them looks like?
19:52 Speaker 00 Not, not enough, not many. I think everyone's, people are so busy with their day to day lives. And I know this is true for me and my family too. It's really, really hard to step back and have this kind of thoughtful discussion about what you actually want your life to look like.
20:07 Steven Bartlett? Cause I was just thinking about that, I was thinking, I don't even know if I've got really clearly defined life goals for myself. I think most of us just kind of act on how we feel.
20:16 Speaker 00 Yeah.
20:17 Steven Bartlett? And that can somewhat drift us towards the short term. Like if I just, what's going to make me feel good today? And do that every day, I don't know. Some might argue that you have to be a bit more long term thinking.
20:29 Speaker 00 It can, it can help, right? Cause it can help you from making decisions that you might regret in the future.
20:36 Steven Bartlett? Yeah, cause when I look at this Perma model, there are some things on here that I've optimised for, which have sacrificed the other things.
20:40 Speaker 00 That's it, that's it, yeah.
20:42 Steven Bartlett? Like I might, I might have over indexed on this, like achieving things, but it might have cost me some relationships. So what's the fourth mistake people make?
20:50 Speaker 00 Yeah, so this is related to what we were just talking about, but it's, it's overspending on the wrong things.
20:55 Steven Bartlett? Okay.
20:57 Speaker 00 When you think about what is a good life for you and you realise, if you realise that you're spending on things that are not contributing to that, which is resulting in you not being able to save towards things that would contribute to what you want your life to look like, that's probably not a great position to find yourself in. So it could be spending $12 on an iced coffee every morning and not enjoying it. Cause you could get positive emotion out of that, but you're like rushing to work, chugging down the $12 coffee every day. That's probably not contributing to a good life.
21:27 Speaker 00 Number five might be one of the bigger ones,
21:33 Speaker 00 which is not taking investment risks. And that's really, the stock market has delivered these incredible long term returns. And on expectation, it should continue delivering strong returns for investors. Not participating in that is a huge mistake and it's a mistake that many, many people make. A lot of people don't invest in stocks at all. And a lot of people who do invest in the stock market don't invest enough in stocks. They have very conservative portfolios. And that has a very large implicit cost. By not participating in the stock market when you could be, you're giving up a huge amount of economic gain.
22:09 Steven Bartlett? How do you quantify that for the average person in terms of what kind of gain they're giving up? Or the size of the gain they're giving up?
22:15 Speaker 00 Well, you can look at the historical returns on stocks.
22:19 Speaker 00 And you can also look at the expected returns on stocks. So let's say it's, let's say it's 7%. We expect stocks to turn in the, in the long run. And if you could get 2% by sitting in cash, that 5% difference is your opportunity cost of not investing in the stock market when you otherwise could be. 5% compounded over the long term is enormous.
22:43 Steven Bartlett? So say I have $10,000 and I invest it in the stock market and I'm getting, what, did you say 8%?
22:52 Speaker 00 Seven, say 7%.
22:54 Steven Bartlett? How much money is that? Let's have a look. So I've done $10,000, which is what we have here. Invested in the stock market, 7% return over 40 years. That would be $150,000. Do you know what's, do you know what's quite scary when I think about that is, does that kind of means that today, if I spend $10,000, I'm actually spending $150,000?
23:21 Speaker 00 Yes.
23:23 Steven Bartlett? Which makes me not want to spend any money on anything.
23:25 Speaker 00 Yeah.
23:26 Steven Bartlett? Cause if you buy, I don't know what cost, what does, what costs $10,000, like a, a small car?
23:31 Speaker 00 Yeah, maybe, yeah.
23:31 Steven Bartlett? You're actually spending $150,000 when you factor in the fact that if you put that $10,000 into the stock market, you could have made 7% a year and it would have turned into $150,000.
23:41 Speaker 00 Yeah, that's, that's one side of the coin. I think you also have to think about any enjoyment or utility that you get out of that car. If that car lets you drive to a job you couldn't have otherwise done, it may have a significant economic value to in the long run. As one example.
23:56 Steven Bartlett? You know, I've got a coffee here, some people spend $10 on a cup of coffee with frappa chappa toppings and all that stuff. Looking at that over the long term, in 40 years, if you had not bought that coffee and put it into the stock market and got just 7% return, you would have had $150. So when you buy that $10 coffee, you're actually theoretically spending $150 in 40 years' time.
24:21 Speaker 00 So you better really enjoy the coffee.
24:23 Steven Bartlett? Is there a bit of a fear that it makes us not want to spend money on anything and therefore we end up having a shitty life in the near term?
24:29 Speaker 00 No, I, I think that's why this, this framework, that's why the, the Perma framework for thinking about these decisions is so important. Because you do want to have positive emotion and engagement, relationships, meaning and accomplishment. Those are all really, really important. And yes, that money could be worth more in the future, but it can also be worth a lot today if you're optimising on the right things.
24:49 Steven Bartlett? What else? Number six.
24:51 Speaker 00 It's another big one. So not taking enough risk is, is important, taking the wrong risks with your investments. So we, we just ran some numbers about a 7% stock market return. You can basically get that using an index fund. The problem is a lot of people don't invest in index funds. They pick individual stocks, hoping to earn really high returns. They trade individual stock options, they trade crypto tokens and all that kind of stuff. And a lot of those types of risks have negative expected returns or they have high costs if you're doing a lot of trading. And that can really erode long term investment growth.
25:29 Steven Bartlett? What about buying a house? Is that a good investment?
25:34 Speaker 00 I wouldn't consider buying a house to live in an investment. It's sort, it's sort of is, you get an asset. But you're really, you're buying an asset that funds your housing consumption. It kind of pays you a dividend that's sort of like getting rent from the house that you own. When you do the side by side comparison, which I think is the only way to think about this. If you compare buying a house, so that means in, in, in Canada, you'd usually save up for a 20% down payment. You put 20% down on your house, you take out a mortgage to finance the rest. You're now living in the house, you're paying your mortgage payment, you're paying for some maintenance costs, you're paying for property taxes. Alternatively, you could have rented the house.
26:17 Speaker 00 That 20% that went into buying a home could have been invested in the stock market. So again, we're back to the idea of opportunity costs. And the other important thing here is that renting typically has lower cash flow costs than owning. So these are the unrecoverable costs of owning a home. Mortgage interest, so that's when you buy a house and you borrow to, to fund the purchase, you're paying interest to the bank. That's a, I call these unrecoverable costs. That's money that you're paying for the use of money in this case, and you're not going to get those dollars back, it's gone.
26:52 Speaker 00 Opportunity costs, so that's what I just mentioned. Whatever equity you have in a home is equity that you could have otherwise invested in the stock market. The capital portion, the principal, the, the price of homes has increased around inflation at the rate of inflation, maybe a little bit higher historically. Stocks have far outpaced inflation. So by having money sitting in a house as opposed to invested in the stock market, you have what is called an opportunity cost. You're not earning returns you could have otherwise been earning. So that opportunity cost is one of the largest costs of owning a home. So I've got mortgage interest, the opportunity cost of equity. Property taxes are another big unrecoverable cost.
27:36 Speaker 00 Property taxes vary depending on where you are, but it's say between 0.5% and 1%. Maybe sometimes a little bit higher. You get utilities and some services in exchange for it, but it's again, it's an unrecoverable cost. You pay that, you've got nothing left afterwards.
27:51 Speaker 00 And we've got maintenance costs.
27:53 Steven Bartlett? Oh, this is the annoying one.
27:54 Speaker 00 This is the, it's, it's the annoying one and it's the one that I think people underestimate the most. I started making content about renting versus owning a home years ago. I used to say 1% was a reasonable estimate of maintenance costs and people would push back and say that's way too high. There's a bunch of academic literature on this too, that's, it says it could well be over 2% and that's probably a more reasonable estimate. Having been a homeowner now for six years after renting prior to that, I'm fairly confident, at least in my case, that maintenance costs are far higher than 1% or 2% of the property value per year.
28:26 Steven Bartlett? Yeah, I mean, I, I bought my first home a while ago and fucking out, I didn't think about the gardening and the pool pump gets broken. And then there's a crack in the patio outside and then the heating system breaks and then everything just seems to break.
28:42 Speaker 00 And it's always breaking.
28:43 Steven Bartlett? It's always breaking. Every time I go back there, which is, it's in a different country. The first week I'm just spent looking at the things that have broken since I was last here, like making a list of the new expenses and it's never cheap.
28:54 Speaker 00 No.
28:55 Steven Bartlett? And if I was renting, that wouldn't be my problem.
28:57 Speaker 00 No.
28:58 Steven Bartlett? There's also like another cost here, which we don't talk about, which is like the time you waste on the maintenance. Like when we think of maintenance cost, I imagine people are thinking about the fees to fix things. But actually the time I spend having phone calls and speaking to people for me is, is worth a lot more than just the costs. But anyway, yeah, maintenance cost.
29:19 Speaker 00 Yeah, the coordination is huge and you could outsource that, but that would be expensive. And depending on how valuable your time is, it could make sense to outsource it, but I, I agree with you. I do the same thing. I spend time on the phone finding which contractor is going to come in and fix this thing. And then you have to wait for them and then maybe they're late. Yeah. So that's maintenance costs. We have emergency costs here, which is really a subset of maintenance costs. So you can have big things like the roof needs to be redone, the foundation cracks, whatever, those can be very significant. And one of the challenges with those types of big costs is that you kind of have to have liquidity available to fund them.
29:57 Speaker 00 And that means that you have to have cash sitting somewhere, or at least some liquid assets sitting somewhere. So probably not invested in the stock market, which also has an implied cost to it.
30:07 Steven Bartlett? Which is more opportunity cost, right?
30:08 Speaker 00 More, more opportunity cost, exactly. And then this one's, this one's interesting. And this is one that I don't think I appreciated until I owned my own home, which is renovation spending. We talked about maintenance, when you fix something in your house, you don't just fix it to get it back to the baseline level that it was at before.
30:24 Steven Bartlett? Yeah.
30:24 Speaker 00 You make it a little bit nicer.
30:25 Steven Bartlett? You're right, I never did that when I was renting. So the side by side.
30:29 Speaker 00 So you run the side by side comparison. You account for all of those unrecoverable costs the owner has. You account for the renter investing in the stock market and investing the cost difference, the cash flow cost difference between renting and owning each month or whatever frequency. And what you'll find, and I've done this with projections, so looking at expected stock returns and expected real estate appreciation, you can very easily show that there is unequivallance. There is a level of rent where you are indifferent between renting and owning. I did a video years ago that has millions of views now, where I, I came up with this idea called the 5% rule. So I took some of those costs, I took property taxes, maintenance costs and the cost of capital, which is the, the opportunity cost and the cost of, of borrowing.
31:15 Speaker 00 I wrapped all that up and said, we've got roughly 1% for property taxes, roughly 1% for maintenance costs, which is probably way too low, as we just talked about. And I said 3% for opportunity cost, which I think is also on the, on the low end. And you put all that together and you get 5%. So I said, okay, if you divide the price of a home by 5% and then divide that number by, by 12, you will get the monthly rent that has equivalent, that is equivalent to the unrecoverable costs of owning that home.
31:45 Steven Bartlett? Okay, so let's do that. So I'm thinking of buying a $300,000 house. What, what's the math that I need to do to figure out if it's better to rent?
31:53 Speaker 00 Multiply by 5% and then divide that, but divide that by 12.
31:57 Steven Bartlett? Divide it by 12, okay.
31:59 Speaker 00 You're brave, I usually have a rule to never do math live on a podcast.
32:02 Steven Bartlett? I can edit, so just in case.
32:05 Steven Bartlett? Okay, the result is 1,250.
32:08 Speaker 00 There you go. 1,250 is the equivalent rent where you're roughly break even between renting and owning.
32:15 Steven Bartlett? So if I could rent for 1,250 instead?
32:17 Speaker 00 Or less.
32:18 Steven Bartlett? Or less, I should rent?
32:20 Speaker 00 Renting is a better financial decision. So this is an important part of this topic. We can show financial equivalence and that just that is important. Like we can show that there is financial equivalence between renting and owning. I've done more robust versions of this analysis since then. We have, PWL has a calculator on our website where you can see the, the break even by putting specific numbers in, instead of just doing this rough rule of thumb. Cause things will change it. For example, if your asset allocation is more conservative or more aggressive, that opportunity cost number can be different. If you're a taxable investor, meaning that you're taxed on your investment gains by investing in the stock market or the bond market, your opportunity cost decreases because the after tax expected return on stocks and bonds decreases relative to homeownership.
33:03 Speaker 00 5% is a very rough rule of, rule of thumb.
33:07 Steven Bartlett? Do you think for the average young person, let's say someone's, I don't know, 25 years old, they should, and they're thinking about building their wealth over the long term. Do you think they should buy, be buying a house as an investment or should they be doing something else?
33:20 Speaker 00 I think for young people, it's really tough and it's tough for a couple of reasons. One is because home prices are high, you have to save up a lot of money to buy a house. Another one is that it can limit your mobility. We've seen in, in Toronto, in Canada, where I'm from, prices, condo prices in particular have plummeted, they've fallen off a cliff. If you bought a condo in Toronto and you get a job offer somewhere outside of Canada, what are you going to do with that condo that's, that's at a big loss? You're kind of stuck.
33:49 Steven Bartlett? Yeah.
33:50 Speaker 00 Or you have to try and rent it out and now you've got this, this just difficult situation to deal with. Plus there are big transaction costs if you're, if you're selling a place. So for young people, I do think that homeownership can be tricky because it can limit your mobility, your, your ability to go and find maybe higher paying work. It introduces a risk that you probably don't need in your life because you may end up moving somewhere else. And then people often move up where they want a condo today, but they're going to want a house later. For my family, I, I met my wife, I was renting a place, the first place we met in, a second place, a third place and a fourth place. We rented four different places as we were having our family, we have four kids. And so our needs were changing over time. We needed a bigger, a bigger condo and then we had a townhouse, then we had a house.
34:34 Speaker 00 But we just, the lease ended and we gave notice and we left. We found a better rental that was more suitable for our needs. If we had been homeowners, the amount we would have paid in transaction costs to do that would have been insane. Or we would have had to buy the house that we were going to have forever much earlier, which would have introduced significant opportunity costs.
34:51 Steven Bartlett? That's one of those things that's just impossible to measure and because it's so intangible, but like the psychology of feeling like you can't easily move. And I see this a lot actually with people that apply for jobs in our company is in the interview process, they'll say, well, I've just bought a house in, in certain city. And you can see this, their sort of psychology is, is holding them back from taking an opportunity because they've made an investment in a particular city. And so they might lose, as you said, like an opportunity in New York or LA or London, because mentally they feel committed to a place.
35:26 Speaker 00 Yeah. Now, the flip side of that is that if you're really sure that you want to stay in one place, one of the best ways to accomplish that is buying.
35:35 Steven Bartlett? Who can be sure?
35:35 Speaker 00 Yeah, you can't. But if, if someone was really sure, maybe someone has, maybe like me, I have four kids, they're all in the same school. It's very unlikely that we would move.
35:44 Steven Bartlett? The other big mistake I think I made is I bought a holiday home. That was a terrible, well, I shouldn't say terrible idea, but kind of a terrible idea, in part because of the same reason, in part because it means you only go, you only go on holiday to one place. Which is like defeats the point of a holiday.
35:59 Speaker 00 Yeah. And it's, I, I have not done that and the main reason is the mental overhead. I don't like having to think about one property. I can't imagine having to think about a second one that I'm not at.
36:10 Steven Bartlett? It's actually a dumb idea, I don't like it there. I don't know why I did it, especially when you're like young, it's like, the whole point is you can still walk up mountains and do things. So you don't want to be sitting in a, in the same house.
36:20 Speaker 00 Yeah.
36:21 Steven Bartlett? Are homeowners happier than renters?
36:26 Speaker 00 Depends how you slice the data. If you control for property types and neighbourhoods and all that kind of stuff, no, they're not. If you don't control for those things, I think owned homes do tend to be a little bit nicer and better maintained. They do tend to be in better neighbourhoods. So uncontrolled renters are a little bit less happy. There's a, there's multiple studies on this, Statistics Canada has a really good one that does exactly that. They have controlled and uncontrolled life satisfaction differences for renters and owners. If you're a professional who is thinking about buying a house in a nice neighbourhood or renting a nice house in a nice neighbourhood, it's unlikely that you'll be happier in either case. If you're forced to be a renter in a not very nice neighbourhood, because all you can afford, you may be less happy,
37:12 Speaker 00 but it's not necessarily the renting that's making you less happy.
37:14 Steven Bartlett? Is there any particular group of people that you think should be buying a house?
37:18 Speaker 00 Yeah, so people who are very risk averse, people who want to stay in one place for a very long time.
37:23 Steven Bartlett? Because they have a family or something.
37:24 Speaker 00 Yeah.
37:24 Steven Bartlett? Yeah.
37:25 Speaker 00 And you don't want to be priced out of, of the market that you live in. This did happen in, in some cities in Canada in recent history. It's now reversed, but there were people who were getting priced out of their market. They'd been renters for a long time and rents went up so quickly that they, they just couldn't keep pace. It depends on your rental market, some rental markets are controlled where that's less of an issue. So you do have to think about things like that. But yeah, if you want to stay in one place, owning your home is, is the way to do that. But it's a double edged sword, because if you realise you want to leave, you might be, you might be stuck. And then the other big one for who should own a home is taxable investors with, with high tax rates. And again, that comes back to the opportunity cost, where if you're paying a lot of tax on your investments,
38:08 Speaker 00 whereas real estate tends to be tax preferred and Canada gains on your primary residence are tax free. US has a, I believe, unamount. And so that's, that's another thing to think about, where the opportunity cost changes depending on your specific tax situation.
38:21 Steven Bartlett? When we have these conversations about buying a house or not buying a house, one of the things I see a lot in the comments section is people sharing their case studies of them buying a house 30 years ago and now it went from being worth $100,000 to $600,000. And they're, they're asserting that that's evidence that it's a good idea. You probably see this a lot.
38:40 Speaker 00 Oh, this is, this is the thing, this is the example. And if everyone has the family member that bought a house for $70,000 and sold it for a million.
38:49 Steven Bartlett? I'm just going to read you the top four comments and I'd like to get your response on them. And the first one is, the not buying a house does not work in the UK as 90% of rents are higher than a mortgage cost. Also, if you want to start a family, you need a stable place to raise your children. And with renting, you can be kicked out within a few months' notice and your whole life could be turned upside down.
39:10 Speaker 00 I personally think there are ways around that. And I, as I mentioned earlier, I did rent for six years of my life with a wife and an increasing number of kids. The two things that I always made sure to do were to rent from professional landlords. We did have one experience renting from a sort of mom and pop person who had bought a condo and rented it out. And that, that wasn't great, but after that, we, we were very careful about vetting our landlords and only renting from professionals. And then the other thing that we did, which addresses, at least in Canada, addresses one of the other points there, is we would sign long leases. If we want to stay in a house for a few years, we would sign a multi-year lease. And landlords do tend to, to like that. The other point that was, was in there that I think is really important is that rents
39:54 Speaker 00 are higher than mortgage payments. I think this is one of the biggest mistakes that people make when they're making the rent versus own comparison, is they'll say, this is my mortgage payment, this is my rent. If the mortgage payment is lower, owning must be better. But that's not the case. As we talked about a minute ago, you have property taxes, maintenance costs, potential renovation spending that you wouldn't do otherwise, and the opportunity cost of, of capital. When you add all that up, the cost of owning a home is far more than the mortgage payment.
40:24 Steven Bartlett? This guy here said, I bought a house, it's the best thing I ever did. It's launched my mindset in new directions. Remember that having your own space has profound psychological impact and can be life-changing for some of us that want to live in a healthy environment. What do you make of that point? Does it have profound psychological impact?
40:45 Speaker 00 If someone believes that it does, and they've really taken the time to reflect on their life and has decided that yes, it is in fact true that it has had a profound psychological impact, of course that person should own a home. Of course they should. Is it, is it true for everybody? I don't think so.
41:01 Steven Bartlett? Dawn said, my experience, I purchased a house in 2013 with 20% down payment deposit. My total payment, including taxes, insurance, HOA, which homeowners insurance, is $1,800 a month. As of today, the exact same house is renting for $4,000. The property value has also gone up three X. I'm glad I bought my house.
41:24 Speaker 00 Yes. So there are cases where real estate allows you to use leverage very easily, as, as Dawn mentioned. And if you end up buying in a market that goes up a lot in a short period of time, it can be really, really good. However, and this is what we've seen in Canada more recently, it hasn't touched other markets yet, although of course the US has had their own declines and so have their countries. But Canada's right now in one of the biggest real estate price drawdowns, when you adjust for inflation, going back to 1975. And so if you had bought, yes, seven years ago, and then, well, and then looked at the price in 2022, you'd think, wow, I'm a genius. Of course, everybody should buy. But if you had bought in, I think it's 2021 was the, was the kind of peak, and you look
42:07 Speaker 00 at it today, you're thinking like, wow, I've ruined my life. So yes, there are examples like that, for sure. But that, that is not what people should expect every time that they purchase a home.
42:17 Steven Bartlett? So are you saying that the future's not going to be as, like, as the past?
42:22 Speaker 00 For this, I know the Canadian market best, but I think these, it, it generalizes outside of Canada. We've seen record decreasing interest rates, so that's, that's changed a little bit now. But for a period of time, we had interest rates going down, down, down. In Canada, we had a ton of immigration. I have no problem with immigrants, but we had levels of immigration that were just not compatible with the amount of housing that we had in, in Canada, which was contributing to prices going up. We have a housing supply just not growing quickly enough, which are all things that Canada's addressing now. But all that causes price, caused prices to go crazy, which is, I think, why they've come down in such an extreme way. So I'm not, I'm not saying necessarily that we're never going to see high house prices again, or house prices going up at an extreme rate again.
43:04 Speaker 00 But in Canada, at least, that has now normalized, or at least started to normalize. I don't think it's reasonable to expect stock-like returns from real estate forever, even though we did see that for, for some years.
43:17 Steven Bartlett? So for most people, then, you think, if their goal is to make money and they care about mobility, being able to get up and go if opportunity arises, a better investment decision would probably be just investing in an index fund, which gives you exposure to the stock market.
43:31 Speaker 00 Yeah. Though I think the mobility piece is key there, because remember, just from a wealth perspective, we can show that, hey, these are pretty close to equivalent. But if mobility matters to you, yeah, I think that, that matters a lot. If you have unique investment opportunities, that, that can be another reason where your opportunity cost is really high. Like, I had an opportunity to buy equity in my company years ago. And if I had been a homeowner, I think I actually had just bought a house, and I think I even had to reduce the amount of equity I bought because our, I think our well pump broke, like around the same, anyway, it was a whole thing.
44:03 Steven Bartlett? Annoying, isn't it?
44:04 Speaker 00 But that's like, there's opportunity cost in the stock market, which is, you know, call it 7% or whatever. Then there's other opportunity costs that can be a lot higher, like in that specific situation.
44:14 Steven Bartlett? And the next one there is number seven?
44:17 Speaker 00 Yeah. Missing tax planning opportunities. This is something I think, I think people just don't think enough about, but it's not terribly complex, but there are simple things that people can do to minimize the amount of tax they're playing, paying. For most people, it's just optimally using things like, in Canada, we have the RSP and the TFSA. In the US, it's the, the Roth and traditional IRA and, and 401Ks. Using those things optimally make a lot of sense. So then the rest, other types of tax planning tend to get more country-specific. There tend to be lots of things, particularly for higher-income people, that you can do to pay a little bit less tax. And I think.
44:55 Steven Bartlett? What about for lower-income people?
44:57 Speaker 00 For lower-income people, the government accounts that are provided.
45:01 Steven Bartlett? Like the ISA in the UK?
45:02 Speaker 00 Yeah, exactly. Those are probably the best thing for people to be focusing on. But even then, I don't, like, people are often not using them optimally.
45:09 Steven Bartlett? One of the things people don't talk about enough is all the ways that rich people do things to avoid paying tax. They have like, they hire people so that they don't have to pay tax. I hear about all these crazy stories of like, I've started this business on the side here so I can get a real estate license. And if I get a real estate license, I don't have to pay the same tax on this thing here. And I move the money around here and I flip it around there and then I don't have to pay any tax. Most people, like the average people, don't have any loopholes that they can, they jump through.
45:34 Speaker 00 Yeah, it's true.
45:36 Steven Bartlett? And even one of the crazy ones I like about when I got some money was that you can take a loan against your stocks and there's no tax on the loan. So if I have a million dollars of Facebook stock, I can go to a bank and get 500K in cash, loaned against that stock without having to sell it. And then on that 500K, I have no tax to pay. And I can just hold that Facebook stock. And when it goes up to 2 million, I can go back to the bank and say, give me another 500K.
46:06 Speaker 00 You could, but if it goes down, you get margin called and they have to come up with the cash to.
46:10 Steven Bartlett? Don't they just sell? Don't they just sell the stock?
46:12 Speaker 00 They might, but then you're selling after it's come down. So it's not risk-free. But yeah, that is a thing that people do.
46:18 Steven Bartlett? I guess everybody could do that, right? Most people could, if they invested in the, the S and P 500, they could go and get a loan against that investment and that loan would be tax-free.
46:28 Speaker 00 Yep, same, same rules for everybody. But I would still say that you're, you're taking a lot of risk by borrowing money against risky assets like that.
46:36 Steven Bartlett? Okay, so tax planning, there's nothing else to cover there in terms of the average person?
46:41 Speaker 00 Yeah, I don't think so. But it is an important thing for people to think about, of thinking about what mistakes might I have been making in my financial plan? They should definitely be thinking about, are there tax planning opportunities that I'm, that I'm missing?
46:50 Steven Bartlett? How would they find out?
46:52 Speaker 00 It's a tough one. A, a good CPA.
46:55 Steven Bartlett? What's a CPA?
46:56 Speaker 00 An accountant, a good tax professional should be able to identify tax planning opportunities for you. Good financial planners similarly should be able to identify good tax planning opportunities for your situation. But as you said earlier, the reality is there aren't that many things that people can be doing. And it's really things that you could figure out how to optimize once, and then you're kind of set.
47:16 Steven Bartlett? Much of the reason most people haven't posted content or built their personal brand is because it's hard and it's time-consuming and we're all very, very busy. And if you've never posted something before, there's so many factors in your psychology that stop you wanting to post. What people will think of you, am I doing this right? Is the thing I'm saying absolutely stupid? All of these result in paralysis, which means you don't post and your feed goes bare. I'm an investor in a company called Stan Store, which you've probably heard me talk about. And what they've been building is this new tool called Stanley that uses AI, looks at your feed, looks at your tone of voice, looks at your history, looks at your best performing posts and tells you what you should post, makes those posts for you. You can also just use it for inspiration.
47:58 Steven Bartlett? And sometimes what we need when we're thinking about doing a post for our social media channels is inspiration. Building an audience has fundamentally changed my life and I think it could change yours too. So I'm inviting you to give this new tool a shot and let me know what you think. All you have to do is search coach.stan.store now to get started. I run multiple companies that have multiple sales teams. And one of the things as a founder of a company that's often confusing is you find it hard to figure out where sales are. So about 10 years ago, I started using Pipe Drive in my former company. And it's also the reason why I switched over all of my commercial teams in my current media company called Steven.com to use Pipe Drive as well. Not only do they sponsor the show, but they've been an incredibly effective way of scaling our sales engine over the years. Pipe Drive is an easy-to-use intelligent CRM.
48:42 Steven Bartlett? And at its very core, it makes your sales process visible through one dashboard, a visual pipeline showing every deal, what stage it's in, what needs to happen next. And it's all in real time with no delay. It doesn't magically close the deal for you, of course, but it does replace complexity with clarity. If you want to join over 100,000 companies already using Pipe Drive, you can use my link for a 30-day free trial with no credit card payment needed. Head to pipedrive.com/CEO to get started. That's pipedrive.com/CEO. I'll see you over there. Who does need a financial advisor?
49:20 Speaker 00 Probably a lot of people, but the financial advice profession has a lot of challenges. We were chatting about the, the, the sales nature of the financial services industry. And I do think that's a big problem. Because if someone has, here, here's Ben say, okay, Ben said I should have a financial advisor. And they go to a bank or they go even to some random firm, there's a good chance that they're going to be sold products that they don't need. And I don't have a solution for that. Like, that's a, it's, it's a difficult situation when that is the state of the financial advice industry.
49:56 Steven Bartlett? I guess to get around that, one might ask their friends and family who does their financial planning and then go with a trusted referral?
50:04 Speaker 00 Yeah, but people often trust people that aren't giving them great advice. Like, it's just really, it's really problematic. I, I think a lot of people can benefit from financial advice, it's just finding the right person. And a lot of people don't need financial advice because you do pay fees for it.
50:19 Steven Bartlett? What's the next one, number eight?
50:21 Speaker 00 It is, it's kind of a similar discussion that we just talked about, but it's, it's missing out on estate planning.
50:27 Steven Bartlett? What does that mean?
50:28 Speaker 00 Figuring out how your assets are going to be distributed to the people that you want them to, or the entities that you want them to, when you die.
50:37 Steven Bartlett? This is an interesting one, because nobody's, well, most people aren't expecting to die anytime soon.
50:41 Speaker 00 Yeah.
50:42 Steven Bartlett? So they haven't really thought much about this.
50:44 Speaker 00 Yeah.
50:45 Steven Bartlett? And, you know, some might also say, listen, I'm, I'm not going to be here, so why should I care? Especially people that, I guess, that's my mindset of someone that doesn't have kids, but.
50:53 Speaker 00 Yeah. And it can cause a lot of problems. If you don't think through and plan for the way you want your estate to be distributed, you can pay a lot more tax than you otherwise would have. And your estate can go to people that you may not have wanted it to go to.
51:05 Steven Bartlett? You can pay more tax?
51:07 Speaker 00 If, if you don't have things set up properly, and again, this is going to be country-specific, but yeah, there, there's cases where you would pay more tax if things were not set up properly than if they were.
51:17 Steven Bartlett? Do you think everybody should write a will?
51:19 Speaker 00 Everybody that has any dependents should write a will. I've heard an estate planning lawyer joke that everybody has a will, but it's the government's default will, which you may not actually agree with.
51:30 Steven Bartlett? It's like prenups.
51:31 Speaker 00 Yeah, kind of like that, yeah. It's, it's exactly like that. You could say everybody should have a will because it can help from having a big mess for other people to clean up. But for sure, if you have kids, if you have dependents, I think having a will is really important.
51:42 Steven Bartlett? And on that point of prenups, number nine is about who you marry.
51:47 Speaker 00 Yeah, this is, this is a tough one. It's a tough one because.
51:52 Steven Bartlett? I mean, this is front of mind for me, because as you can see from these photos, I just, I just proposed to my fiance.
51:57 Speaker 00 Yeah.
51:58 Steven Bartlett? And, I mean, this is not the ring, but, because this is a bit extra, but.
52:02 Speaker 00 That's awesome.
52:03 Steven Bartlett? Oh my God, they put my face in, their team put my face in the box. That's a good P. But yeah, so why is this so important, who you decide to marry, as it relates to how rich you'll be or, or won't be?
52:13 Speaker 00 Well, it's not just how rich you'll be, it's how satisfied you'll be with your life and with your marriage. Academic research has identified two spending profiles that you can categorize people into. One is tightwads, it's people who don't like to spend money. And one is spendthrifts, that's people who do like to spend money. The names are kind of funny, but that's just, that's what the research calls them. And the crazy thing about this is that tightwads and spendthrifts are more likely to end up marrying each other than to marrying someone who has the same profile as them. So two, a, a tightwad and a spendthrift are more likely to get married than a tightwad and a tightwad, or a spendthrift and a spendthrift.
52:53 Steven Bartlett? What do you think that is?
52:55 Speaker 00 The, the, the research on this talks just about kind of opposites attracting, and there may be some sort of thrill to the, to the differences initially. But tightwads and spendthrifts, as they go through their marriages, do tend to be less satisfied in their marriages and have more marital conflict around money. And again, that's based on an academic paper.
53:15 Steven Bartlett? Now, that's the reasons why the marriage might not last, but in terms of how it might impact your financial success?
53:22 Speaker 00 If you really want to save, if you have, if you go through your goal-setting exercise and your perma-model, and you have a vision for the life that you want to live that requires saving, and you have a spouse that wants to spend a lot of money today, that can be very, very difficult. It can make it a lot harder for you to achieve your goals. I don't think it's insurmountable. I think a tightwad and a spendthrift can work. I mean, it's not like all of them end up getting divorced, but it does require a different level of coordination and communication and being on the same page.
53:52 Steven Bartlett? Do you have to speak to clients about this often?
53:55 Speaker 00 I, it, it comes up a lot. We have lots of clients who were single and end up getting in relationships and then getting married. And we have to all have all kinds of conversations about marriage contracts or prenups, estate planning.
54:07 Steven Bartlett? Do you think everybody should get a prenup? Going back to what you said earlier, where you said you, if you don't write your own, the government will give you theirs.
54:13 Speaker 00 Yeah.
54:14 Steven Bartlett? Which, just to simplify that, if you don't write your own prenup, then you are, the default position is the government will decide through the law how your assets are divided at a time when you get, when you break up. Problem is, people find prenups to be really unromantic.
54:30 Speaker 00 That's right.
54:31 Steven Bartlett? And they also think there's an implication that we're assuming we're going to break up, which is also not so sexy.
54:37 Speaker 00 Right.
54:38 Steven Bartlett? Do you think people should get them?
54:40 Speaker 00 If both partners are on the same page and comfortable with it, it's not going to cause a major rift. And if it does, maybe that's a red flag.
54:46 Steven Bartlett? Do you know what I mean? Why would it cause a rift?
54:47 Speaker 00 Yeah, yeah, yeah.
54:48 Steven Bartlett? Do you know what I mean? And it's not to say that I'm just keeping all my stuff and you're keeping yours. It's just to say, let's agree now what would happen in the like 50% probability that this doesn't work out.
54:58 Speaker 00 Yep. We've seen both. We've seen clients come up with very creative and interesting marriage contracts that have, you know, specific formulas for how things are going to work. And depending on how many kids they have, it's, you know, it's kind of an interesting exercise. And in that case, it was kind of fun and they, they were engaged in the process and didn't cause an issue. And we've also seen people who did not have anything in place and have had very bad divorce outcomes from a financial perspective.
55:23 Steven Bartlett? Oh, I had a friend go through a divorce recently and he's a very successful person. His wife was there from the beginning. She took, looked after the family while he was off gallivanting around the world, building his, his businesses all over the place. So obviously she, you know, they, she's contributed hugely to his success. What I noticed though, is it's destroyed what could have otherwise been a good relationship as they separated. They now really, really hate each other because lawyers have stood in between both sides.
55:52 Speaker 00 Yeah.
55:52 Steven Bartlett? And basically caused tension because that's their job. They're going to get paid more. And the, her lawyers are incentivized to squeeze every single penny they can out of this separation. And so I think he said it had been like six or seven years since they decided to divorce. And he's still in court, arguing with lawyers about how they separate. And it's destroyed their relationship and they've got two kids. You just think, gosh, like, if you had a prenup, this would have been quick and it could have saved the relationship. Okay. Anything else to say on this, this point of marriage and compatibility?
56:26 Speaker 00 The academic research on this does have a, a short quiz. I don't know if we have it kicking around anywhere here.
56:31 Steven Bartlett? I think this is it. It's called the Tightwad and Spendthrift Quiz, developed by researchers at Carnegie Mellon and the University of Michigan.
56:38 Speaker 00 Yeah.
56:39 Steven Bartlett? This scale measures the pain of paying, the emotional distress some people feel when spending money. And here's a quick DIY version of that quiz. Question number one is, you see a high-quality coat on sale for a hundred dollars, which is usually $300. You need a coat and you have the money. Do you buy it? Answer A, no, a hundred dollars is still a lot of money. I'll wait for a better deal. B, yes, it's a great value, I need something. C, yes, and I might buy a scarf to match since I save so much. Which one are you?
57:10 Speaker 00 I mean, if I need the coat, I'm B.
57:12 Steven Bartlett? I think I'm C. But actually, to be fair, I just don't buy stuff, so I don't even know if I'd buy it anyway. Question two. You are at a restaurant with friends. The bill is being split evenly, but you ordered the cheapest item. How do you feel? A, physically pained, I'll likely mention that I should pay less. B, a bit annoyed, but I'll pay it to keep the peace. Or C, fine, it all will even out in the end.
57:41 Speaker 00 I'm between B and C.
57:42 Steven Bartlett? Really?
57:42 Speaker 00 I might, I might feel a little bit annoyed.
57:44 Steven Bartlett? Really?
57:45 Speaker 00 But I wouldn't, I wouldn't cause a fuss about it.
57:46 Steven Bartlett? I'm C again. Fine, it'll even out in the end. Number three, which statement describes you best? A, I have trouble spending money even on things I actually need. B, I balance my spending and saving pretty well. Or C, I often spend more than I intended and regret it later.
58:04 Speaker 00 I can be.
58:06 Steven Bartlett? You said B, which is I balance my spending and savings pretty well.
58:12 Steven Bartlett? I would say I'm C again. But again, the caveat here is I actually don't, hmm, I don't spend money on stuff anymore. I don't buy stuff anymore.
58:21 Steven Bartlett? But I can spend it on like travel and experiences and stuff.
58:24 Speaker 00 Yeah.
58:25 Steven Bartlett? Last question, when you buy something expensive, your primary emotion is? A, anxiety or regret. B, satisfaction in the utility of the item. Or C, excitement and a rush.
58:37 Speaker 00 I think I'd be again.
58:38 Steven Bartlett? I, I reckon I'm B as well there. So scoring your results. If you're mostly A's, then you're a tightwad. If you're mostly B's, you are the unconflicted. And if you're mostly C's, you are the spendthrift. So I guess with that, you, you are a unconflicted. You're in the middle. You have a healthy relationship with money where you can save when necessary, but enjoy the fruits of your labour without guilt. And I am a C, which is you feel very little pain when spending. You enjoy the moment, but you might struggle with long-term saving goals or buyer's remorse. That's so fucking true. Everyone should do that at home. Okay, that makes sense.
59:13 Speaker 00 So we, we know that, that tightwads and spendthrifts are incompatible. Uh, I, I do think it's an interesting concept, like, how do you have that discussion with a potential partner? Or do you just observe it and kind of infer?
59:26 Steven Bartlett? On, on a date, you can say, say to your partner, say, oh, this is a great podcast on YouTube called The Diary of a CEO. We should listen to it. Then listen to this episode, they're listening with you now, right now, if this, you've done this. And then just play along, play along with your partner. Are you looking for your partner to be the opposite then? Because you said opposites attract.
59:42 Speaker 00 No, no, no. Opposites end up together, but then have conflict because of that.
59:48 Steven Bartlett? Oh, okay.
59:49 Speaker 00 Yeah.
59:50 Steven Bartlett? Interesting.
59:52 Speaker 00 Yeah. I think if you're, if you're a tightwad, being with the same is probably good. If you're a spendthrift and you end up another spendthrift, they'd be really careful about your like household finances.
1:00:02 Steven Bartlett? Yeah. I don't think my partner's a spendthrift. I think she's in the middle with like you.
1:00:06 Speaker 00 Yeah.
1:00:06 Steven Bartlett? Doesn't really care.
1:00:07 Speaker 00 Yeah.
1:00:08 Steven Bartlett? Which is useful.
1:00:09 Speaker 00 We, we do have one more.
1:00:10 Steven Bartlett? Okay.
1:00:10 Speaker 00 Card in the mistakes, uh, which is underinsuring catastrophic risks.
1:00:17 Speaker 00 And I think that's one, particularly for people who are not currently financially independent. It's really, really important. If, if your household income relies on your income to maintain the lifestyle of the household, it's really important to have sufficient life insurance. Where if you die, your, your human capital, your ability to earn income in the future is replaced by the insurance. And also disability insurance, where if you lose your ability to work, you have insurance to replace that income.
1:00:46 Steven Bartlett? Do many people think about this?
1:00:48 Speaker 00 Probably not enough. And it's cheap. Well, disability insurance is not always cheap. Life insurance is generally pretty cheap if you're buying low-cost term life insurance, which is what most people need.
1:00:59 Steven Bartlett? You made a video called the most controversial paper in finance.
1:01:02 Speaker 00 Yeah.
1:01:03 Steven Bartlett? What paper was that?
1:01:04 Speaker 00 That was a paper, we, we didn't have it out here, but that was a paper on, uh, life cycle asset allocation.
1:01:11 Steven Bartlett? What does that mean?
1:01:11 Speaker 00 So it's answering the question of how should your mix of stocks and bonds change throughout your lifestyle? Conventional wisdom says that you should start out riskier in stocks and then move towards safer bonds as you get older. This paper took a, a huge amount of data. They had data from 39 countries going back, uh, as far as 1890, I believe. They sampled from that large set of data to simulate a million potential sort of hypothetical lifetimes that you could live through. And then they asked the question of, in this simulated data, which asset allocation gives the best outcomes? And they tested target date funds, which increase the weight in bonds over time.
1:01:54 Speaker 00 And those are, a lot of people have those through their retirement accounts. So it's just one fund and it starts out when you're younger with more equities and then transitions to bonds over time. That's a target date fund. They tested, I believe, a 60, 40, 60% stock, 40% bond asset allocation. They might have put some other stuff in there too. They might have tested only domestic stocks. And what they find in this paper is that the optimal portfolio from the perspective of, of retirement, uh, consumption utility and, and, and bequest utility.
1:02:25 Steven Bartlett? What does that mean?
1:02:26 Speaker 00 It's like the satisfaction you get from retirement spending.
1:02:29 Steven Bartlett? Okay.
1:02:30 Speaker 00 Measured in a, with a formula, um, so that it can be studied. And then likewise for the amount of money that you have left over at, at death. Uh, they, they measure the probability of running out of money as well. There's a whole bunch of different metrics they look at. And they find that a 100% equity portfolio with, uh, a, a, a big chunk in international stocks is optimal. Uh, is a one-third domestic, two-thirds international stocks.
1:02:55 Steven Bartlett? When you say domestic, what does that mean?
1:02:57 Speaker 00 That's a great question. So the way they set up domestic in the paper is that it, it can be any country. So the way they do the simulations is that for each draw, so they're drawing, uh, it's on average 10 years of returns. Or say we're in the US. They'll draw the US returns measured in US dollars for a 10-year block. That's the domestic return. And then the international block is going to be 10 years on average of all the other countries' samples returns measured in US dollar. So I've got the domestic return, the international return. The next block might be 10 years from Italy, measured in, uh, whatever the Italian currency was at the time. And then the international portion is going to be all the other countries excluding Italy, measured in Italian currency.
1:03:42 Speaker 00 And so they're weaving together all these blocks. That's called bootstrap simulation. So domestic, to answer your question, is whatever country you live in.
1:03:51 Steven Bartlett? So the outcome or the conclusion from this should be that you should invest. I mean, if we're following this and if it was a hundred percent accurate, what, 60% in whatever country you live in? In the stocks of whatever country you live in?
1:04:02 Speaker 00 30%.
1:04:02 Steven Bartlett? 30%.
1:04:03 Speaker 00 Domestic. So yeah, one-third domestic, two-thirds international.
1:04:06 Steven Bartlett? Okay, so if I'm in the United States, one, so I get 30% of my capital and invest it in the American companies.
1:04:14 Speaker 00 Yeah.
1:04:15 Steven Bartlett? And then 60% in international stocks.
1:04:18 Speaker 00 Yeah, well, yeah, 67%. Yeah. Yeah. So that one important finding in the paper, uh, talk about this in the video, is that the, the curve for how optimal the domestic amount is, is pretty flat, if I remember correctly, between sort of 10% and 50%. So they do say in the paper that for a US investor, you, you don't necessarily have to be a third domestic. Even if you're 50 or, even if you're just market cap weighted, which is currently around 60 or 65%. That's probably fine. But for a Canadian investor or someone who's in a country other than the US, one-third in your domestic country ends up being a pretty big home country bias.
1:04:54 Steven Bartlett? In these simulations, are they saying that you need to invest in international stocks? Because sometimes in the simulations, your domestic country, your home country has problems.
1:05:03 Speaker 00 Yeah. High, high inflation tends to be bad for retirement consumption, that you're spending a lot more and for domestic stock returns. And international stocks protect against that.
1:05:13 Steven Bartlett? So it diversifies you a little bit.
1:05:14 Speaker 00 Yeah, well, it's exactly what it is, diversification. And that paper was, it was controversial. I mean, we had the co-author on our podcast twice to talk about it. But it, it was met with a lot of controversy from everybody, from a lot of professionals, uh, from other academics.
1:05:30 Steven Bartlett? Why?
1:05:32 Speaker 00 It's an extreme finding. The conventional wisdom that you should be allocating more toward bonds throughout the lifecycle is so ingrained in everyone's thinking that a finding like this that shows that that's basically wrong, uh, of course it's going to be met with controversy. But at the very least, I think it's an interesting paper. It's telling us that stocks are a little bit safer for long-term investors than we probably thought. And bonds, which are typically considered safe, are actually a little bit riskier than we may have thought for long-term investors. The reason being that during periods of high inflation, bonds get absolutely decimated.
1:06:05 Steven Bartlett? What's a bond?
1:06:06 Speaker 00 A bond is a debt instrument. So you're effectively lending money to a government and you're receiving interest payments over time. And then your principal back at the end.
1:06:15 Steven Bartlett? What is the, uh, the most important thing we haven't talked about that your audience come to you to understand?
1:06:20 Speaker 00 Oh, well, a lot of, a lot of the things that I talk about are financial products that you should not invest in.
1:06:26 Steven Bartlett? Okay, tell me some of those.
1:06:27 Speaker 00 Which I always think is fun. A, a, a big one that I spent quite a bit of time on last year, I did three videos on it, was on, on covered calls.
1:06:34 Steven Bartlett? What's that?
1:06:35 Speaker 00 So that's where you, you own a stock and then you sell a call option, which is the option to buy the stock. You're selling that option to somebody else, which gives you a, uh, an option premium. And so you get some income from having sold the call option. But it also means that if a stock that you own appreciates sufficiently, you are required to sell it to the person who bought the call option from you, uh, at a, at a preset price. So the stock's whatever, $40 and you, you sold a call at $50 and the stock goes to $60, you have to sell it at 50. So you're giving up a big chunk of your upside. And this plays on one of the big biases that investors have, which is a preference for income. Uh, it's the, the mental accounting bias where investors separate capital and income.
1:07:17 Speaker 00 And so there's a, a huge proliferation now of covered call products where they do that, that strategy that I just described inside of an ETF. And they charge usually a, a higher fee. Uh, and these are being marketed really heavily to investors on the premise that you're going to get appreciation, capital appreciation, and you're also going to get income. But I think my, my view on this and what I tried to explain in those videos is that you're giving up so much upside that I don't think most investors realise that they're giving up, that the implied cost of these products is enormous.
1:07:48 Steven Bartlett? On that point of fees, I've got this graph here, which I think is pretty pertinent to what you're saying. Because when we start investing in ETFs and various index funds, we often don't think about fees. It'll say, oh, 0.5%. You think, okay, whatever, 0.5% is fine, 1% fine, small numbers. But when you look at that graph, you see how that can impact your outcome over time.
1:08:10 Speaker 00 Yeah. Fees, fees compound. Any rate of return that compounds over long periods of time can be very impactful in dollar terms.
1:08:17 Steven Bartlett? And, and some people choose to keep their money in cash. Um, because most of us are never educated on this subject of inflation and what inflation means. So some of us, you know, we might keep $10,000 under the bed. What do you say to those people?
1:08:32 Speaker 00 Yeah, so inflation is, it's everywhere. It's, it's been around for, for, uh, throughout history and it's probably not going to go away. We have central bank policies in most developed countries that actually target a low but stable rate of inflation. And there's, there are reasons for that. But what it means is that if you have money sitting under your mattress, its purchasing power will decrease over time. And that can be very damaging to your wealth. You can maybe keep pace with inflation using short-term government debt instruments, which are going to pay you a little bit of an interest rate. Uh, but again, periods of high inflation can cause even that to, to deep decline in real value. So one of the best ways to fight, fight inflation for long-term investors, something we've been talking about, is just investing in low-cost index funds to avoid the fee issue
1:09:18 Speaker 00 and participate in the stock market, which throughout history has far outpaced inflation.
1:09:22 Steven Bartlett? One of the smartest things a business can do is build like a bigger company without actually hiring like one. But the problem we all face is that most companies don't have every skill in-house. So when I look at the businesses seeing real success today, the consistent pattern with all of them is how quickly they move. They bring in specialists with skills in emerging areas to keep themselves ahead. Even in our company, we spent the last year pulling in talent across areas like AI native strategy, no-code builds and product workflows. And we find this talent through our long-time partner, Fiverr Pro. Their premium service only shows you vetted talent. So you've always got the safeguard that anyone you pull in to help you with a complex project has the skills that you're after and will deliver to the same high standards as your internal team.
1:10:06 Steven Bartlett? And most importantly, they'll keep up with the pace. It's a simple strategy, but it lets us stay agile without compromising on quality. So if you need these kind of skills in your business, head to pro.fiverr.com to find pioneering talent to fill your business's gaps. That's pro.fiverr.com. This is something that I've made for you. I've realised that the Diary of a CEO audience are strivers, whether it's in business or health. We all have big goals that we want to accomplish. And one of the things I've learnt is that when you aim at the big, big, big goal, it can feel incredibly psychologically uncomfortable because it's kind of like being stood at the foot of Mount Everest and looking upwards. The way to accomplish your goals is by breaking them down into tiny, small steps. And we call this in our team, the 1%.
1:10:48 Steven Bartlett? And actually, this philosophy is highly responsible for much of our success here. So what we've done so that you at home can accomplish any big goal that you have is we've made these 1% diaries. And we released these last year and they all sold out. So I asked my team over and over again to bring the diaries back, but also to introduce some new colours and to make some minor tweaks to the diary. So now we have a better range for you. So if you have a big goal in mind and you need a framework and a process and some motivation, then I highly recommend you get one of these diaries before they all sell out once again. And you can get yours at thediary.com. And if you want the link, the link is in the description below.
1:11:30 Steven Bartlett? Is this broadly accurate? This graph here shows the impact of inflation on cash kept under the mattress over 30, over 20 years. And you start with $10,000 in terms of purchasing power. And 20 years later, if that cash is under the mattress, you have $5,336. It doesn't show me the inflation rate. Oh, um, that's that 3% inflation. You're losing half of your money effectively. And the source here is St. James Place. So a lot of people who are just holding on to cash don't really realise that over a 20-year period, assuming a 3% inflation rate, they're halving their money.
1:12:03 Speaker 00 Uh, it ties back to, I don't remember which number it was, but it ties back to one of those biggest mistakes in, in personal finance we talked about, which is, uh, yeah, not, not investing, not taking the right kinds of risk with your investments.
1:12:15 Steven Bartlett? And just hoarding cash.
1:12:16 Speaker 00 Hoarding cash is, is, it's in its own way, taking a type of risk. You, you, you don't have an expected return when you hold cash. You, in real terms, have a negative expected return.
1:12:27 Steven Bartlett? Do you think we should all be thinking about retirement planning?
1:12:31 Speaker 00 I think it ties into the perma-thinking and designing the life that you want to live. But at some point, it, it, I mean, at some point, we can't work anymore. It's rare for somebody to be able to work into their, you know, I don't know, 80s. I think that it's, it's sensible to plan for, for that. But beyond that, a, a lot of people don't want to have to work forever. People might choose to work forever, but they might choose to do lower paying work. Uh, but the idea that you will be forced to work forever, I don't think is very attractive to anyone. So from that perspective, building financial independence by saving and planning for retirement, yeah, I think it's important for everyone, everyone to think about.
1:13:05 Steven Bartlett? Is the, is the sort of social contract of retirement changing based on how the economy is changing? Cause I hear a lot of people saying, you're not going to be able to retire and get a pension because there's not enough money or you're going to have to work later than ever before.
1:13:18 Speaker 00 I think the onus has been put back on individuals. Pensions used to be much more common, uh, from companies and, and governments. So retirement's changed from that perspective for sure. But I, I don't know if we can say we're in a crisis. I think people have more personal responsibility now than they've had in the past. But they also have better tools than have historically been available. 30 years ago, we, we were just starting to get low-cost index funds proliferating and being readily available to everybody. Prior to that, you were paying 2% or more to invest in a mutual fund. So the tools people have available to them are, are better today than, than they've been in the past. But it's also, there, there's also a lot more responsibility that people have to take for their own personal finances.
1:14:00 Steven Bartlett? You, you're naming the things that people shouldn't invest in. The first is that call thing.
1:14:06 Speaker 00 Yeah, covered calls.
1:14:08 Steven Bartlett? Covered calls. What else?
1:14:09 Speaker 00 Another one that I think is really problematic is thematic ETFs. And so that's like an AI ETF or, I don't know, a space or energy, like any, any specific ETF that's targeting a specific theme.
1:14:22 Steven Bartlett? Why?
1:14:23 Speaker 00 What tends to happen with thematic ETFs is that something becomes really hot. So maybe it's AI, maybe it's cannabis, uh, electric vehicles was another one.
1:14:31 Steven Bartlett? Sustainable energy.
1:14:32 Speaker 00 Yeah, that was another good one, clean energy. And so what happens is asset prices in that theme go up because there's a lot of interest in it. Everybody wants to invest in that space. Asset prices go up, an index provider creates an index for that hot theme. And then an ETF gets launched, but it gets launched when the asset prices are up here.
1:14:53 Steven Bartlett? Yeah.
1:14:54 Speaker 00 And what tends to happen is the asset prices come down and the returns on thematic funds tend to be very poor.
1:15:00 Steven Bartlett? Ah, okay. Yeah, I think I was guilty of that in my early career, was like, oh my God, sustainable energy ETF. I believe in sustainable energy, I should invest in that.
1:15:08 Speaker 00 Yeah.
1:15:08 Steven Bartlett? But you're right, they created that when it was hot. So you should have invested, I guess you're saying, just invest in the FTSE 100, the S and P 500 instead. Or technology, which is a broader basket?
1:15:21 Speaker 00 Technology is tough. Technology has performed so incredibly well, but it is still one sector.
1:15:26 Steven Bartlett? Okay.
1:15:27 Speaker 00 I have trouble saying you should invest in tech. If you had invested in tech for the last 20 years, well done. Should you choose to invest only in tech or have a big concentration in tech today? I think that's a lot less obvious.
1:15:40 Steven Bartlett? One would say, well, look at all this AI stuff. There's, how do I invest in all the AI stuff?
1:15:44 Speaker 00 A lot of it's private right now, although a lot of the public companies do own chunks of, of some of these private companies. Uh, we'll see how that plays out. But I, that's another one that's been tough recently, where a lot of investors are interested in investing in, in, in investing in some of these private companies. A lot of them AI related, but SpaceX is another one. And it's really hard for retail investors to get access to those types of things. But there are companies who are creating products that say that they can give you access to these, to these things. They're charging high fees. It's not obvious that they've been able to buy the underlying securities that they're saying they have access to at good prices. But it's just another example of financial companies preying on the, the desires and biases of investors.
1:16:28 Speaker 00 Financial firms are very good at seeing what investors want, even if that thing is not good for them. And then creating a product to fulfil that desire.
1:16:38 Steven Bartlett? So if, if someone listening now is, let's say they're 50 years old and they've got $20,000 in savings in cash and you had to be decisive. You don't know the nuance, the, the detail of their life. You don't know their perma framework necessarily, but your job was just to make the money in the next 10 years. What, how do you think you would allocate that? Let's say $10,000, that's easier, $10,000 in cash. How would you allocate it?
1:17:03 Speaker 00 That's a.
1:17:04 Steven Bartlett? It's a tough question.
1:17:05 Speaker 00 I don't know if it's answerable, especially over 10 years, it's tough.
1:17:09 Steven Bartlett? But about 20 years?
1:17:12 Speaker 00 If they have a long time horizon, so I, I can tell you personally, I, I like to invest in stocks. I, I have a globally diversified stock portfolio with a Canadian home country bias, kind of like what that, that paper, the controversial paper found. Uh, we were doing that prior to that paper coming out. Uh, but I think that general concept of a globally diversified portfolio, maybe with some home country bias, makes a lot of sense for most people, including for retirees. But there are so many, like, what's, what's his risk tolerance? If he's going to panic when the market goes down and sell everything, then it wasn't a very good idea. And he's not going to get the outcome, but the good long-term outcome they may have otherwise gotten.
1:17:52 Steven Bartlett? And would you go all in on stocks?
1:17:54 Speaker 00 All at once?
1:17:55 Steven Bartlett? Yeah.
1:17:56 Speaker 00 Like dollar-cost averaging versus love some?
1:17:58 Steven Bartlett? Yeah, like how would you invest? Would you go 100% in stocks or would you even diversify that?
1:18:03 Speaker 00 Yeah, that's what I'm saying. I, I think 100% stocks is personally a, a portfolio that I'm very comfortable with. And I, I'm not, I'm not old enough to be thinking about retirement, but it's a portfolio that I don't expect to change throughout my personal lifecycle.
1:18:18 Steven Bartlett? Is that how you allocate your personal finances now? You, you, I know you have a home, but otherwise the money you do invest is in the stock market.
1:18:25 Speaker 00 Yeah, so I've got my home, I have my stock market investments and I do have a pretty significant chunk of equity in the company that I work for.
1:18:34 Steven Bartlett? No crypto.
1:18:35 Speaker 00 No crypto.
1:18:36 Steven Bartlett? No crypto.
1:18:37 Speaker 00 I've never touched it.
1:18:38 Steven Bartlett? Never touched it.
1:18:38 Speaker 00 That's not true. I, I, when I was researching Ethereum and Bitcoin, I remember when that was, it was a few years ago, I bought a thousand dollars of each, just so I could feel like I was participating while I was learning about it.
1:18:52 Steven Bartlett? What do you think of Bitcoin and Ethereum and other cryptocurrencies?
1:18:55 Speaker 00 I, I think that they, they solved a really interesting problem. The, the premise of digital cash is something that the cypherpunk community, the kind of libertarian community of, of privacy focused computer nerds, where they were trying to solve this problem for, for many, many years of digital cash. How do you create digital cash that doesn't require a trusted third party to mediate transactions? And they, they solved that. Satoshi Nakamoto solved that. And, uh, and that was cool. And he used a bunch of different pieces. They can kind of see in the paper how he used Adam's, Adam Back's ideas that he had created to stop email spam. And it's just how it all came together. It's unbelievable. Fascinating story. The technology was really interesting.
1:19:36 Speaker 00 I think it has become an ideological vehicle where people who believe that the world should be a certain way, or believe that government's role in money should be a certain way, they can invest in Bitcoin and feel really good about it. I think it's, it's got that component to it. And then the other component that it has to it is that it's a speculative asset. People buy Bitcoin because they think it's going to go up.
1:20:03 Steven Bartlett? So it's not a good investment. Is that what you're saying?
1:20:06 Speaker 00 I, I, I personally wouldn't. We don't allocate to it for our clients at PWL. We manage quite a bit of money for quite a lot of people and we've decided not to touch it. And I personally don't touch it. So.
1:20:20 Steven Bartlett? I had a phone call actually from a friend of mine. She's, she's very well known in the UK. And she was, um, cause there's lots of wars going on everywhere. And there's the Strait of Hormuz is closed and there's Russia, Ukraine. There's all of this stuff going on. She was, she was asking me for financial advice on what she should do in such a moment. I don't know why she's calling me. I just thought I'll ask you when you come here. But it, but it's interesting because my, my team found this article from 1847, which was in a magazine, and it almost sounds like today. The article says this, "Things are bad all over. It is a gloomy moment in history. Not in the lifetime of any man who reads this paper has there ever been so much grave and deep apprehension. Never has the future seemed so dark and incalculable.
1:21:04 Steven Bartlett? In France, the political cauldron seethes and bubbles with uncertainty. England and the English Empire is being sorely tried and exhausted in a social and economic struggle. The United States is behest, with racial, industrial and commercial chaos drifting, we know not where. Russia hangs like a storm cloud on the horizon of Europe, dark and silent. It is a solemn moment, and no man can feel indifference. Of our own troubles, no man can see the end." An apt description of things, very apt. And that was on October the 10th, 1847, in our magazine. And it very much sounds like today.
1:21:42 Speaker 00 It could be today. Yeah.
1:21:44 Steven Bartlett? So as we zoom out on the cycles, the big sort of economic cycles, the geopolitical cycles, my friend that called me and said, listen, there's lots of stuff going on in the world. Should I be thinking about my money differently? My investing strategy? What the hell is going on? What would you say to those people?
1:21:58 Speaker 00 Yeah. Well, as, as the clip that you read suggests, or, or tells us, the world has been through a lot of crazy stuff, a lot of crazy times, a lot of wars, a lot of turmoil, a lot of political upheavals. And we've come out okay in general. There's, there's been pain and suffering and not everybody's had good outcomes. But generally speaking, here we are. And if we think about that from the perspective of financial markets, stock returns have been positive despite all the craziness going on in the world. There's lots of interesting charts that overlay news headlines about all the madness going on in the world on top of the stock chart that's just going up. Doesn't mean the stocks are always going to be up. They will go down when, when things get crazy, like when, when this war started.
1:22:44 Speaker 00 Stock returns did get a little bit negative for a while. They've since come back. But there will be volatility in financial markets, volatility up and down day to day. But in the long run, stock returns, they, they should continue to be expected to be positive. So for your friend, I, I don't know how the assets are set up. But someone who's globally diversified, exposed to the stock market, they don't have to make changes to their portfolios when the world's getting crazy.
1:23:11 Steven Bartlett? I remember what she said to me. She said that she was gonna remortgage her house because I think she'd paid it down and she was wondering what to do with that money. She was saying, do I just go buy another house or do I invest it in the stock market? Now, my, my bias is the stock market, but I don't know. What, what would you say to someone in that situation?
1:23:31 Speaker 00 I'd want to know why she's mortgaging her house, but given there's a good reason for that, I would, I would probably go in the stock market, not into real estate.
1:23:38 Steven Bartlett? Do you think people shouldn't remortgage their houses?
1:23:42 Speaker 00 This is a tough question. Leverage, kind of like how exposure to the stock market is good. Borrowing money to invest in positive expected return assets like, like the stock market is actually kind of a good thing on paper. Borrowing money generally improves long-term expected outcomes. But it's stressful. You can, you can have bad outcomes where you lose all of your money. So should people borrow money to invest? Should people mortgage their house to invest? That's, that's a very personal question. It's kind of like the stock bond question. Should you invest in stocks or bonds? Should you invest in stocks with leverage or not? It really depends on your goals and your situation. But generally speaking, if we just look at what, what, what do the data say about borrowing money to invest? It's not, it's not a terrible idea.
1:24:27 Steven Bartlett? One of the things we haven't talked about is AI. And does AI change any of this equation? A lot of people are worried at the moment about losing their jobs. Anthropic released a report, who are one of the big AI companies, saying that entry level people in particular are going to have a hard time. And I think they said they're already seeing 13% of entry level jobs being disrupted because of these new AI and AI agents.
1:24:50 Speaker 00 Since I'm, to be clear, not a labor economist, it's not my area of expertise. I do think though, that when we look back through history, I like looking at history, there have been lots of technological revolutions that have been major, major upheavals to the entire economy. Yes. So ATMs. ATMs are one of those fascinating examples. People thought that ATMs were going to wipe out bank tellers. Because ATMs could do everything that bank tellers do, but it was automated and you didn't have to pay a person to do it. So there was a lot of concern. And one, what ended up happening was very counterintuitive. It's that the cost of operating a bank branch decreased
1:25:34 Speaker 00 because you needed fewer people to do all the bank teller stuff because you had the ATMs. And banks opened more branches because it costs less and their customers liked that. And the end result was that there were actually more bank teller jobs at the end of the day. The cost of providing the service decreased, which caused it to proliferate more, provide that service to more people. And it expanded the market instead of shrinking it.
1:26:01 Steven Bartlett? Similar story with Jevon's paradox and.
1:26:04 Speaker 00 It's the same concept.
1:26:05 Steven Bartlett? What's that story? Where coal became cheaper at a time when they used coal to ship freight on trains? And the coal engine got more efficient with coal. Coal industry panics. We're screwed. But then what it meant is people use trains, not just for shipping freight, but also for other things like travel. And people started traveling on trains because it got cheaper. So the coal industry actually boomed in the end.
1:26:28 Speaker 00 That's it.
1:26:29 Steven Bartlett? I have thought a lot about this Jevon's paradox idea. And I think it's, I think it's going to be true for artificial intelligence for sure. I, there will be lots of other jobs created. And actually, companies like mine, if we save money, we invest it in something else, which then would, would probably create jobs, whatever that is. The part that I sometimes struggle with is the speed of adoption in AI. And then also when you factor in robotics, like my car in LA drives itself. And I think one of the biggest employers on earth is driving in all its forms. But then if you look at warehousing and supply chains, a lot of those are ran by people all over the world. And there was a video that I played the other day, we can throw it up on the screen, which shows that in factories in certain parts of the world now, they're having their labor force where cameras on their head, showing what they're doing with their hands.
1:27:14 Steven Bartlett? Because that robots are ultimately going to replace that labor force. And I just, I, I haven't, I guess this is maybe something that happens in history. I haven't been able to think about where those people go and what they then can go on to do, especially if it happens in short order.
1:27:30 Speaker 00 Yeah. So I, I've heard you, I've heard you ponder this in your other episodes. And I, I agree that the speed of this is likely to be different. As you've said, it's, we're, we're talking about the internet. So you can deploy these things at the snap of a finger. And that is different. But where do those people go? This is one of the interesting things. I don't know. We, we don't know.
1:27:49 Steven Bartlett? And through history, we didn't know.
1:27:50 Speaker 00 Exactly. Through history, it's been the same sentiment where people worry about where are these people going to go? And they might be unemployed for a while and there might be hard times, but things have worked out. And so two ways to think about it. One, one way is as a, as an individual, what should you be doing? We talked about earlier, having complementary skills that make you very unique, I think is important. Personally, content, as you mentioned, has been a big part of that for, for me. Not everybody can necessarily do that, but finding those things that you can do when combined better than anybody else in the world, I think is very valuable. And then the other perspective is as an investor, how should we think about this? And there I would come back to again, we have seen many technological revolutions that have changed
1:28:33 Speaker 00 the world. They've changed financial markets. They've changed our culture. They've changed the way we interact with each other. The world has changed so many times due to technology and the same cycle has repeated itself. There, there has been unemployment. There has been social unrest. There has been wealth inequality, but this happens every time.
1:28:52 Steven Bartlett? Are you expecting the stock market to collapse because there's been a huge over investment in artificial intelligence? And at some point, the investors that put their money into these sort of speculative AI startups that raised tremendous amounts of capital at crazy valuations, at some point through history, doesn't the market always contract at some point?
1:29:12 Speaker 00 There's a great book by an economist named Carlotta Perez. The book is "Technological Revolutions and Financial Capital." And she documents this exact cycle throughout history. And yes, that's part of it. Part of it is asset prices getting really high and then coming back down. Now, am I worried about a catastrophic market collapse? I think that's always a concern. I think that's part of the risk of investing in stocks. We never know when it's going to happen or what the trigger is going to be. So it's not something that you can do anything about. You need to have an asset allocation that you can stick with, even if that outcome is going to materialize.
1:29:46 Steven Bartlett? And in that book is, does it suggest that the writing is on the wall for the current economy and the way that we're heavily investing in AI and data centers? And, you know, a couple of years ago, everyone was investing in crypto and Web three and NFTs and all this stuff. And all of the money seems to have been sucked out of that industry, really honestly sucked out of almost every industry and into AI.
1:30:10 Speaker 00 I remember when DeFi was going to kill banking and finance.
1:30:15 Steven Bartlett? And that was only a couple of years ago. In fact, a lot of the developers have moved from my industry to the AI industry. But I, but I think, I do think about this a lot. And I've got a few startup friends who are getting a little bit nervous and are raising a lot of money now because they think that in the next couple of years, maybe in the next 24 months, there's going to be a big market contraction when investors who invested in some startup idea that had a hundred million dollar valuation, realize that they're losing their money. And some domino usually falls in the market. Some catalyst moment means that there's a contraction. Stock markets go down. It gets really hard to raise money.
1:30:47 Speaker 00 Yeah.
1:30:47 Steven Bartlett? Clients who you might be relying on now to pay your advertising budget start to lower their budgets. And in such a scenario, you're going to want to wish you'd prepared a little bit. Some people are.
1:30:58 Speaker 00 This is part of the cycle. The, the cost of capital for bubble companies, we'll call them. I don't love the term bubble. But for companies who are in the industry that becomes the focus of a technological revolution. So now we're talking about AI, the cost of capital gets really low, which means asset prices get really high. And a lot of people want to invest in that space. But those asset prices are not typically sustainable. And they do tend to come down. Does that mean a total market collapse or catastrophe or, or, or panic for diversified investors? No.
1:31:27 Steven Bartlett? Oh, is the writing on the wall?
1:31:29 Speaker 00 I don't think we can say that. If the writing were on the wall, the, the way that I view financial markets is that if the writing were on the wall, prices would reflect that today.
1:31:37 Steven Bartlett? Okay.
1:31:38 Speaker 00 If we thought market prices were going to drop in the future, they would drop today.
1:31:42 Steven Bartlett? So, so it happens at a time when no one is expecting it?
1:31:45 Speaker 00 That's exactly right. You mentioned.
1:31:47 Steven Bartlett? So the writing is never on the wall?
1:31:49 Speaker 00 That's right. Some, some new piece of information, something changes and that's what causes prices to come down.
1:31:55 Steven Bartlett? My brother said something to me. He's a very smart person. He, he's worked in sort of investing for the last 15 years. He said something to me earlier in my career. He said, Stephen, when you go to invest in something, assume that the price you're paying for that investment, so say I'm investing in Facebook stock at $10, is the total accumulation of everything everybody on the planet knows about that company. And they've priced in everything the world knows about that company today. And he was like, so even if you think it's going to go up, that's also, by the way, priced into today's price. So you better know something that no one else knows when you're thinking about buying an investment. I've totally butchered what he said.
1:32:37 Speaker 00 No, you, you didn't, you didn't. He, he is describing the concept of an efficient market. An efficient market is a market where prices always, and this is a sort of a theoretical concept, it's not actually true. But in theory, an efficient market, a perfectly efficient market is a market where prices always fully reflect all available information, including your thoughts about what the price.
1:32:57 Steven Bartlett? Yeah.
1:32:57 Speaker 00 Might do, really, if you trade on those thoughts.
1:32:59 Steven Bartlett? So what are you investing in then? If it's, if the future's already priced in and all the information about the company is already priced in, what are you investing in?
1:33:06 Speaker 00 You're investing in discounted future cash flows. Companies produce cash flows. They earn, they earn profits. When you invest in a company, you're buying those expected future profits at a discount. And that, that's called the discount rate. It's getting pretty nerdy again, but that's, that's how it works in finance. What is, what is the value of a stock? It's, it's discounted future cash flows. Riskier stocks will tend to have higher discount rates. But you buy this asset and now you've got this discounted bundle of cash flows, which you then hold. And you've received the discount rate as a rate of return as you continue to hold the asset.
1:33:37 Steven Bartlett? So a lot of people will invest in Tesla. They'll go, listen, I've, I've got a Tesla. It's amazing. I'm going to buy some stock. What is the fault in my thinking there?
1:33:45 Speaker 00 In buying Tesla stock?
1:33:47 Steven Bartlett? Because I, I've got a Tesla. I think it's a great car and I think they'll do well in the future. So I buy the stock.
1:33:52 Speaker 00 They, it's what we just talked about. That information is already included in the price. Every, everybody knows that it's a pretty good company, making pretty good cars that are selling really well.
1:34:00 Steven Bartlett? And that's why it costs $10 today.
1:34:02 Speaker 00 Right.
1:34:03 Steven Bartlett? Whatever it costs today.
1:34:03 Speaker 00 Whatever the price is. Yeah. If you look at the, the data on professional money managers who are trying to beat the market, most of them don't. And the ones that do, this is the crazy part, the managers who do beat the market over a period of time don't tend to go on to beat the market in the future. And these are professional investors who are, you know, and then you can look at this before or after fees, the data are actually pretty similar. It's worse after fees, but the distribution is, is pretty similar.
1:34:32 Steven Bartlett? So what's the point in a money manager?
1:34:34 Speaker 00 Well, ones that are trying to beat the market by picking stocks and timing the market, I don't think that there is one.
1:34:40 Speaker 00 That's why I talk about just, just buy index funds, buy, buy the market. Let, give, take the market's return, accept the market's return, which has been very good.
1:34:48 Steven Bartlett? And then don't do anything. Don't check the fucking thing.
1:34:51 Speaker 00 Don't check it.
1:34:51 Steven Bartlett? Don't, don't open the app, lose the password. I said this about my, my fiance. I said, she's really good at investing because she always forgets the password. And then we, well, four years later, we'll be like, babe, you should check your investment. And she goes, I don't know the password. I go fucking. And then we have to do the whole password reset thing every, and then we open it. We go, baby, rich.
1:35:08 Speaker 00 That's probably good.
1:35:09 Steven Bartlett? And she goes, oh, amazing. And then she forgets the password again. And then four years later, we take a look again at her investments.
1:35:14 Speaker 00 I, I like to say you, you want to focus on the things that you can control. You can't control markets. You can't control your performance relative to the market. And trying to outperform tends to make you worse off rather than better. But the things that you can control are a lot of the things we talked about. Having, having an appropriate financial plan, having, having the right goals set, having an asset allocation that makes sense for you, even if markets do decline. Having emergency savings, tax planning, those are things that you can control. That's what people should focus on.
1:35:41 Steven Bartlett? Do you think women are better investors than men?
1:35:44 Speaker 00 I'm, I'm not super good on these data, but I believe what the data say are that women tend to be a little bit more risk averse. But they tend to be a little bit less overconfident.
1:35:55 Steven Bartlett? Which I assume gets better results, no?
1:35:57 Speaker 00 Yeah. I, I think women are probably better investors. I'm just going to give, I'm going to give the simple answer right there.
1:36:01 Steven Bartlett? I've just got some numbers here. Fidelity said that across 5.2 million accounts, women beat men with their investments. Warwick Business School, women outperformed men by 1.8% per year over a three year period. UC Berkeley, men traded 45% more often than women, leading to annual returns that were 1.4% lower than women's. And Revolut, which is a, a big bank founded out in the UK, is, says that women's investments in the UK outperformed men's by 4%.
1:36:35 Speaker 00 Incredible. I believe it.
1:36:37 Steven Bartlett? Give your money to your wife.
1:36:39 Speaker 00 Well, one of those data points is specified, but I would assume that a lot of that is related to overtrading.
1:36:45 Steven Bartlett? Yeah.
1:36:45 Speaker 00 Men, men tend to be overconfident. They tend to trade more. They try to pick stocks. They think Tesla stock's going to go up because they like the car.
1:36:52 Steven Bartlett? And we're also the, the biggest gambling addicts in the world and men as well. So it's kind of correlates.
1:36:56 Speaker 00 For sure it is. Yeah.
1:36:58 Steven Bartlett? Ben, we have a closing tradition on this podcast where the last guest leaves a question for the next, not knowing who they're leaving it for in the diary of the CEO. And the question that has been left for you is, what experiment can you propose whose outcome could completely contradict your current beliefs?
1:37:17 Speaker 00 Oh, man.
1:37:23 Speaker 00 An experiment that I could run. If I take my current beliefs as one of the big things that we talked about is markets being efficient and it being quite hard to outperform the market. I mean, the best, the best experiment that we can run is, is trying to beat it.
1:37:39 Steven Bartlett? People have done that.
1:37:39 Speaker 00 But it's being run all the time.
1:37:41 Steven Bartlett? Isn't there a story in the Psychology of Money by Morgan Housel? Where like, was it Warren Buffett bet someone?
1:37:47 Speaker 00 Yeah. Warren Buffett bet Ted, Ted Seides, who we've actually had on our podcast. He, he bet him that his index fund portfolio, which I believe was just the S and P 500, could outperform any hedge fund portfolio that Ted picked. And they had a specific timeline.
1:38:05 Steven Bartlett? It was 10 years, wasn't it?
1:38:06 Speaker 00 Yeah. And then they were going to donate the, the, an amount of money at the end of the period. And Ted lost the bet. Warren, Warren won. But that, that was one of those instances where the world kind of got to see, hey, this, this index fund thing, Buffett has been a big advocate for index funds. But that was a big example where I, I think a lot of people were exposed to that idea.
1:38:29 Steven Bartlett? Where do people find you? You know, I've got your YouTube channel here, Ben Felix, which I'll, I'll link below for anyone that wants to continue to follow you on YouTube. Is there anywhere, any, any other resources that we should direct people to?
1:38:41 Speaker 00 Yeah. And another place where I post actually a little bit more frequently with longer form stuff is the Rational Reminder podcast. People can check me out there. And then I do have some interesting tools for the rent versus buy calculation. We have a goal setting app. I don't think it's up yet though. And we, we've got some other really interesting tools on the PWL Capital website.
1:39:01 Steven Bartlett? PWLcapital.com. I'll link all of that below for anyone that's interested. And the Rational Reminder podcast, rationalreminder.ca/podcast. And your YouTube channel will be linked below as well.
1:39:12 Speaker 00 Awesome.
1:39:13 Steven Bartlett? Thank you so much, Ben. Thank you for doing what you do because finance is such an important part of our life. And I think a huge percentage of the population, for whatever reason, choose to avoid the subject altogether because it causes a little bit of anxiety. But also we just don't get taught about finance in school, which I think is a great shame. And in, in my case, you know, it wasn't until I destroyed my credit rating, my credit score, that I started to figure out what finance was. And by then, kind of like brushing your teeth, I'd done a lot of damage. And so since then, from doing this podcast and speaking to smart people like you that are good at demystifying complex things. And but also in your case, that you use academic research as the basis for the claims they're making, it has helped to turn the lights on for me. And in this domain, I think control or like, understanding and information is power, really like knowledge is power.
1:39:56 Steven Bartlett? And a lot of people are disempowered because they don't have the knowledge and they kind of, they're on that sort of roller coaster of their life circumstance. And they don't feel like they have control, especially considering that the world feels so uncertain right now. So thank you for doing what you do, Ben. Really, really appreciate it and hope to meet you again sometime soon.
1:40:11 Speaker 00 Thanks so much.
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