February 10, 2025 • 42 mins
This episode of Monkey Business Radio explores the power of compound interest and how financial decisions made early in life can have a massive impact over time. The Rule of 72 shows how money doubles at a consistent rate, while the Rule of 64 highlights how financial choices in your 20s can multiply 64 times by retirement. These concepts illustrate why starting early is one of the most powerful wealth-building strategies, whether through investing, saving, or avoiding high-interest debt.
The podcast covers topics like debt management, long-term investing, and financial literacy, using real-world examples to break down how money grows—or disappears—over time. With a focus on practical, easy-to-understand insights, it explains how small, consistent financial habits can lead to long-term stability and wealth.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Chris (00:03):
Every once in a while someone comes along, shocks the
establishment with a newinnovation and a tired industry
From the movie Moneyball.
Here's how Boston Red Sox ownerJohn Henry put it.
Dennis (00:12):
Really, what it's threatening is their livelihoods
, their jobs.
It's threatening the way theydo things and every time that
happens whether it's thegovernment, a way of doing
business, or whatever the peoplewho are holding the reins they
have their hands on the switch.
They go batshit crazy.
Hello.
Chris (00:28):
I'm Chris Collins, your host.
In this podcast, we dive intostories of innovation,
resilience and what it takes toshake up an industry.
Joining me is my co-host andresident small business expert,
dennis Siggins, or, as he'sknown on the Cape and Islands,
bobby Downspout.
Dennis, along with his collegeroommate, andy Brennan, founded
the Cape Cod Gutter Monkeys andtransformed the humble task of
(00:48):
gutter cleaning into a thriving,multi-million dollar business
that redefined the game.
Together, we'll uncover thestrategies, lessons and
inspirations behind building andgrowing a successful business.
So, whether you're here forbusiness insights, inspiration
or just a great story, you're inthe right place.
Grab a cup of coffee, sit back,relax and welcome to Monkey
(01:10):
Business Radio.
Hello everyone, welcome toMonkey Business Radio.
Today we're talking aboutfinancial literacy 101, and it's
part one of a two-part serieswe're going to be doing, and
this is basically the stuff theyshould have taught us in school
, but for a lot of us, we had tolearn the hard way.
(01:30):
So here we go, little Dennishow are we doing?
Dennis (01:33):
I'm doing good, Chris.
How are?
Chris (01:34):
you Good good.
Today we're diving into some ofthe most important financial
principles you need to know.
Dennis (01:40):
One of my favorite topics financial literacy yeah,
and if you're in your 20s, thisepisode really could make a big
difference in your life.
Chris (01:51):
So starting early gives you a massive edge when it comes
to building wealth, and even ifyou're not 20, you're 25 to 55,
there's always time to getinvolved in your financial
education, and this is a goodshow to kind of learn the basic
rules if you haven't alreadyexperienced them in your life.
Dennis (02:04):
This is a good show to kind of learn the basic rules if
you haven't already experiencedthem in your life.
So you mentioned the earlier.
The younger you are, theearlier you get started, the
better.
So let's take a trip back tothe 1970s.
Chris and I grew up in the 70s.
We've known each other since wewere teenagers.
The 1970s was an interestingtime in this country Huge
recession, a 10-year recessionthat oftentimes gets ignored.
(02:28):
The 70s was a staple ofhyperinflation.
We impeached a president.
Our soldiers returning homefrom Vietnam were being
assaulted in airports.
52 Americans were taken hostagein Iran and it took us a year
and a quarter to get them out.
There were mile-long gas lines.
(02:49):
I remember those gas lines.
That was brutal All across thecountry.
Chris (02:53):
That's crazy.
Dennis (02:53):
Gas prices more than tripled over the decade.
In 1970, American average gasprices were $0.36.
By 1980, they were up to around$1.20, $1.22.
That was the Arabba, that wasoil embargo right, right, well,
and that's if you could get thegas, yep, right, our parents
would go down.
My dad had a, a friend, mrharrington, down on the four
(03:15):
corners, who had a gas stationand he had a hand-painted sign
if you're not on a first namebasis, you, you can't get gas
here.
And he took care of theneighborhood, no one else, and
he was open from like four tofive in the morning, regular
customers only, and my dad was asalesman, he lived in that car
(03:37):
and he would have to cover NewEngland and Mr Harrington would
gas them up and then he wouldfill two or three more of the
five-gallon canisters and capthem and put them in the trunk.
In case my dad found himself inLewiston, maine, or Trumbull,
connecticut or wherever, and hecan't get gas, he'd be able to
get home.
If you want to cripple aneconomy, remove the gas and the
(04:00):
economy will fold like a lawnchair and it did, yeah, it did,
and the economy will fold like alawn chair.
And it did.
Yeah, it did.
Personally, I grew up anaverage kid in a middle-income
family.
Both my parents workedfull-time.
We didn't take vacations, wetook family trips.
Disney was on TV on Sundaynight it wasn't a place where
anyone was going.
Chris (04:18):
That was the Magic Kingdom.
Dennis (04:19):
You remember?
Chris (04:20):
that Because I'd never been there.
It was magic.
It was magic.
Dennis (04:22):
I was like my parents have six kids, you're one of
seven, one of seven.
Between our two families, wehad 13 kids and everybody worked
.
Yeah, cut lawns.
Yeah, per order of my parents,I started delivering newspapers
at eight and then we werecutting lawns by 10, 11, and 12.
My parents had a rule Half ofall your money that you brought
(04:45):
in goes into the big bank andthe other half goes into the
small bank.
The big bank was for college,right, Wasn't that the goal?
Chris (04:53):
That was the main goal back then.
Yep, all the lawn cuttings thatI did everything else was
basically for college education.
Right, my dad got employed.
He actually brought a family ofseven from Detroit out to
Boston area, went to work forHoneywell, laid them off a year
later.
Seven kids Just moved brand newhouse.
Dennis (05:12):
It was a tough time old is that my parents recognized
that despite this crazy economyI mean we were insulated as kids
from the economy we had threemeals a day and a roof over the
head.
Life was good.
(05:33):
But CDs certificate of depositsat the bank were starting to
earn 10%, 12%, 14% interest, toearn 10, 12, 14% interest.
So by the time I was about 12or 13, all my brothers and
sisters and I started puttingour money into CDs instead of
regular bank accounts and Iremember my mom used to have us
(05:56):
doing 12-month CDs and it wouldturn over Christmas week and
we'd work all year long cuttinglawns, shoveling driveways
whatever we were doing, we werealways making money.
And Christmas week we would bereally excited because all that
money that was now in our bankaccount was going to go into the
CDs and we were checking outwhat the guaranteed interest
(06:19):
rate was and maybe last year itwas 13, and this year it's going
to be 14%.
Chris (06:25):
How many kids do you know spent their pre-Christmas
run-up?
Looking at bank CD rates.
Dennis (06:28):
Oh yeah, I mean, I was 12 years old, I was talking
strategy with the banks.
I was 13 years old, making bankdeposits and I was putting
money in CDs.
We didn't have access to WallStreet back then, mutual funds,
index funds they really weren'tavailable yet to the average
person, but CDs were In fact CDsby 1980, 81 peaked out at about
(06:53):
18%.
That's guaranteed, and that'swhere our money was going all
through our elementary, middle,high school years, even into
college.
Our money stayed in CDs andactually CDs were outperforming
the market back then.
Oh sure it was crushing it,right?
If you look at what the stockmarket produced, the Dow
averaged 3% 3.25% over thatdecade.
(07:15):
The NASDAQ, which was brand new, came in in more of the late
70s, was actually averagingabout 9% and the S&P was
averaging 5% and CDs werepushing anywhere from 12% to 18%
and our parents had us justputting all our money in CDs.
Chris (07:34):
And what a great opportunity to start our lives
All right, great lesson as wellas making some money on the side
.
And I'm kind of amazed by thosenumbers too, especially some of
the Dow and the NASDAQ numbers,because that would be if you
were fully invested through thatentire period.
Right, If you came in in someother areas in that period you
were wiped out.
Dennis (07:54):
You could lose your shirt Absolutely.
Chris (07:56):
Yeah, so that was a rough period.
Dennis (07:57):
There were a couple of years in the 70s where the
average of the Dow, NASDAQ, allof Wall Street, dropped 19% one
year and 26% another year.
I mean it was a hard decade.
Chris (08:10):
Actually we're going to touch on that later on, I guess
about being consistent in yourinvesting, staying the long term
, keeping the focus on long term.
That's a perfect example.
If you got in the wrong timeand during that period of time,
you could really have gottenwiped out or pulled out too
early, or vice versa.
Dennis (08:23):
Or bought too late.
Chris (08:24):
Yeah, that period of time you could really have gotten
wiped out, or pulled out tooearly, or vice versa, or bought
too late.
Yeah, absolutely.
Dennis (08:30):
Absolutely.
Chris (08:33):
You ready to kind of dive into your four rules and start
talking about the things youlearned early on in your career?
Dennis (08:36):
your investing career.
My whole life, my wholefinancial life, has been
centered around these four rulesthe rule of 72, the rule of 64,
the 80-20 rule and the20-minute rule.
And today we're going to startwith the first two the rule of
72 and the rule of 64.
The rule of 72, it's just asimple mathematical formula and
(08:59):
here's how it works.
If you take the number 72 andyou divide 72 by your
investment's annual return, theresult will produce the number
is 9.
At 8%, your money will doublein 9 years.
Chris (09:31):
And just for people who are listening along, we're going
to throw up some of thespreadsheet and the charts for
these different rules we'regoing through.
We're going to throw those upon our YouTube channel American
Gutter Monkeys on YouTube.
So if you want to come back andtake a look at those, we'll
have the actual charts up foryou, okay, I want to talk about
(09:52):
the rule of 72 and how itapplies yesterday, today and
tomorrow.
Dennis (09:57):
If you take the stock market the stock market that we
all invest in, that you watch onTV every day in any 25-year
segment of the history of thestock market, the lowest the
stock market has ever producedwas 10.2%.
The annual average typically is11 to 11.7.
(10:21):
The last 10 to 15 years it'sbeen up into the 13, 13.5% range
.
But money invested in the stockmarket is almost always likely
to produce roughly 11% and at11% your money is going to
double every six and a halfyears.
And that's been.
(10:41):
My rule of thumb is moneyinvested in the stock market, in
mutual funds, index funds notindividual stocks, but in mutual
funds and index funds isgenerally going to produce
roughly 11% minimum and it'svery likely your money is going
to double every seven years.
So let's talk about what is amutual fund.
(11:04):
Chris, do you invest in mutualfunds, index funds, that type of
thing?
Yep.
Chris (11:10):
All sorts of different things.
Yep, yep.
I'm not a stock picker by anymeans no, I'm not either Done a
few, dabbled in a few differentstocks and things like that, but
it's definitely not my strongsuit and I know my investing
style and I'm too emotionalabout investing, so I try to
keep an arm's length from myinvestments through a broker and
(11:33):
through a CFP, a financialplanner.
Dennis (11:37):
A stock represents ownership in a company.
So if you purchase stock inTesla, you actually own a small
piece of Tesla and if thatcompany does well, then your
stock will do well.
If that company doesn't do well, then your stock could lose
money.
That's a single stock.
(11:59):
That's a single stock.
But if you're not sure, likemost people are not overly
educated in the area of stocksso what we do is we invest in a
mutual fund.
A mutual fund is a group ofsimilar stocks.
So if you don't want to investin Tesla or Ford or GM, you can
(12:22):
invest in a mutual fund, a groupof stocks that represents all
automobiles or thetransportation industry in
general.
You're not investing in Ford.
You might be investing intransportation in general, in
(12:48):
general.
You may not want to invest inXfinity or other utilities, but
you may want to invest in theutilities.
So you can buy utility stock.
You can buy utility mutualfunds.
You can invest your money inPacific Rim stocks, technology
stocks, but these are in theform of mutual funds, a mutual
fund.
You're not betting on anindividual company.
You're betting on the industry,and the industries are less
(13:15):
likely to boom and less likelyto crash.
They're just going to earntheir steady hopefully 11% a
year and that's how a lot ofAmericans invest.
Yeah, and it's diversification.
Chris (13:27):
that's so important when you start getting into these
mutual funds, and you can evendiversify against across a broad
range S&P.
You can buy an S&P mutual fundand invest in all the S&P across
the board, so it gives you somediversification as well.
I think Warren Buffett said it,why diversification is only
required when investors do notunderstand what they're doing.
I would probably modify thatand say why diversification is
(13:51):
required by investors.
It's just a rule.
Dennis (13:55):
So, just to recap, investing in mutual funds is a
much more conservative and, Iview, as a safer way for the
average person to invest in WallStreet.
And the average stock marketgrowth in the last 10 years has
been 13.9%.
In the last 30 years has been10.7%, the last 50 years has
(14:22):
been 10.9% and the overallindustry average the Dow, s&p
and NASDAQ over their group oflifetimes is 11% 11.7%.
So 11 is the number that Igenerally go with and that can
vary a little bit one way or theother.
But at 11% growth, your moneyis going to double every seven
(14:42):
years.
So I can focus on my business,on my company, on my own
personal interests, while mymutual funds are protected by
the size and the diversity ofthem and I don't have to study
them like I would have to studystocks.
(15:02):
So the rule of 72 works thisway you take 72, divide it by 11
, we're at six and a half.
So money invested in mutualfunds will show a great
likelihood of doubling every sixand a half to seven years, as
long as you leave it there longenough, and typically we use a
(15:24):
sample of 25 years.
So if you start investing whenyou're 12 or 13 or 14,.
It's so dynamic.
It's so dynamic because by thetime you're 20, 21, 22, you not
only have money that you've putinto the bank and transferred it
(15:45):
into CDs and mutual funds, younot only have that money, you
also have the benefit ofinterest compounding over many
years.
But the other thing is you'vegained financial literacy.
The amount of financialknowledge that you have at 20
(16:05):
years old is so much greaterthan other people who've never
invested money.
And it's not like a video gamewhere you're just playing with
pretend money.
When you're out cutting lawns,shoveling driveways, working in
restaurants, you're investingyour own real money.
This is hard-earned money andas a 15, 16, 17-year-old kid,
(16:29):
you're going to follow thatmoney.
It's not play money, it's thereal deal and you're going to
track it and you're going to payattention to it and the stuff
that you're going to learn.
This is why, now, chris, youoften say, hey, they should
teach this stuff in school.
It's hard to teach that inschool because in school you're
reading a book or a pamphlet.
(16:51):
In real life, you've cut lawns.
My brothers and I used to cutanywhere from 25 to 30 lawns
every week.
So after cutting 8, 10, 12lawns, then you're on your bike,
riding down to the bank.
This is real.
You're in the bank.
You're depositing that moneythat you worked your fanny off
for.
That's why financial literacymust be learned, and yet it's
(17:14):
hard to teach.
My parents gave us the seedsthat grew into it, but my
parents can't monitor my everyactivity.
They can't teach me how to cuta lawn.
They can't be riding over myshoulder or helicoptering over
me and micromanaging myactivities.
No, they're sending me out thedoor to cut lawns and I take it
(17:35):
from there.
Chris (17:35):
Yeah, which is probably an important part of what's
happening today is that peoplearen't going out.
The kids of today, you know somuch, aren't actually ending up
working those jobs anymore, andI think part of it is because
costs, especially for colleges,so insurmountable.
They kind of throw their handsup in the air and say, well,
what's the point?
But you can see from this, youknow from what we're talking
about here, is the earlier youget started, it's not
(17:55):
insurmountable.
You know, if you start at 12and 13, starting, with money,
you can do it.
Dennis (18:00):
It's dynamic it does get insurmountable.
Chris (18:02):
the longer you wait, it gets tougher and tougher.
So, again, getting as early aspossible, getting involved in
this, getting involved, gettingyour financial literacy up and
then finding an avenue forinvesting.
Then there's some great onesout there today.
You don't have to be.
We talk about stocks and mutualfunds.
It might not be your thing, butthere's some really great apps
out there today.
I don't know, I'll talk aboutone.
(18:23):
It's called Wealthfront, whichis basically a robo-investor for
you and you just put your moneyin there and it invests it for
you Wide diversification, bonds,stocks based on your risk
appetite and my kids use it.
Very, very, very low fees fordoing it and you can check on
your stocks and check on yourbonds, but you don't actually
(18:43):
have to pick them.
It does it for you.
I highly recommend looking intothose sort of things if you're
interested in starting gettingstarted.
Dennis (18:48):
Well.
So to wrap up, the rule of 72,albert Einstein once said the
most powerful force in theuniverse is compound interest.
Over time is compound interestover time the earlier you start
investing, the greater growththat your money has, or the
(19:09):
greater potential for growththat your money has.
But it also works the other way.
And let's say, for example, youcarry a balance on your credit
card over to the next month andlet's say the interest that the
credit card company is chargingyou is 18%.
If you divide 18 into 72, therule of 72 says that credit card
(19:34):
company is going to doubletheir money at your expense over
four years.
So the rule of 72 can work inyour favor and it can also work
against you.
So anytime you're paying anylevel of interest, whether it's
a mortgage or a school loan orespecially credit cards, it
(19:55):
could be that the rule of 72 isworking against you.
So just be aware of that, justbe aware of that.
Chris (20:04):
Yeah, With a large number of people carrying over.
Nowadays I forget what thenumbers were, we kind of went
over them last week but a largenumber of people carrying over
debt month to month.
I think you made a good pointlast week.
If you're going down toMcDonald's or something and
putting that on your credit card, you're paying the highest
interest allowed by law.
For a cheeseburger and fries Fora cheeseburger and fries For a
cheeseburger and fries.
Think of it that way.
(20:25):
I read another thing that wasreally kind of interesting too,
as you think about it,especially carrying debt not to
kind of get off topic a littlebit, but carrying debt over
month to month on your creditcard.
I don't know about you, butbasically we use our credit
cards all the time.
We kind of use it to trackexpenses and we pay them off at
the end of the month.
But we bank a lot of the pointsbecause we have a Southwest
card and so we do a lot offlying, so we basically bank it
(20:46):
to Southwest.
And the way the article put itis basically, if you're carrying
over your debt month to monthand paying these fees, you're
basically paying for my pointsto go flying, basically.
So what's happening is thosepoints that they give to for
racking up come out of thosefees, and so you can think of it
in that terms if it gives you alittle bit more impetus not to
carry your expenses over monthto month on your credit cards.
Dennis (21:10):
Keeping the rule of 72 in mind.
My next rule is the rule of 64.
And this is one that I've sortof created on my own over the
years.
The rule of 64 is a generalguideline that I've developed
and it looks something like thisEverything we do in our 20s is
(21:34):
magnified 64 times over in ourretirement years, in our 60s,
and it's based on the rule of 72and the low average
expectations of the mutual fundmarket 11%.
Money that's invested will beworth 64 times over 42 years
later.
Let's talk about that If you're18 years old and your
(21:58):
grandparents give you $10,000for your high school graduation,
If you put it in mutual fundsand it earns approximately 11%,
it's going to double every sevenyears.
So when you're 25, it's going tobe worth 20 grand.
Seven years later, at 32, it'sgoing to be worth $40,000.
(22:22):
Seven years later, at 39, that$40,000 doubles to $80,000.
$160,000, $320,000, and whenyou turn 60, that $10,000
investment that you made at theage of 18 is now worth
approximately $640,000.
Approximately 640,000.
(22:49):
Over 42 years it went from10,000 to 640,000.
It increased 64-fold, andthere's the reason for my rule
of 64.
Everything we do in our 20s ismagnified 64 times over in your
retirement years.
Chris (23:01):
So amazing.
I wish I had seen this or knownabout this when I was investing
.
It's just amazing.
Dennis (23:05):
I have a niece that one time just recently had a
conversation with her and shewas a travel nurse during COVID
and she made killer money.
And this is another thing aboutfinancial literacy is it's
always learned on your own outin the real world.
She began earning money and shehad to do something with it and
(23:30):
she obviously somehow set upwith a financial planner who got
her putting money into mutualfunds and she opened up IRAs and
SEPs and other such investmentprocesses.
And we were talking about a yearor two ago.
And she said you know, I'm atthe point where if I just make
(23:52):
two more years of contributions,at that point I'll be 34 years
old and if I crunch the numbers,I don't have to have to put any
more money in there and myfinancial portfolio will be
fully mature when I hit 62.
Wow.
So she knew that at the age of32, or however old she was at
(24:14):
the time, she could look at theand I didn't teach her this.
She just learned this on herown because she has her own
financial planner, she has herown people around her.
But she knew at the age of 32that if she just makes two more
years of contributions and I'massuming she's heavily
contributing to her IRAs, thenshe doesn't have to put any more
(24:38):
money in and that will grow tofull maturity what she wants at
62, and she will be able toretire comfortably at 62, and
she knows this at 32.
Chris (24:50):
So what kind of?
Dennis (24:51):
attitude.
Do you think she can go to workwith?
Chris (24:53):
Life is easy, it's good yeah, right, a lot of
opportunities now are availableto her, that's exactly right.
Maybe she works hard as atraveling nurse, maybe she wants
to change her job up, maybe godo a little more charity work or
something like that.
It gives her all thesedifferent options that she can
actually go and do.
And I think the other importantpoint of that whole thing was
also that you did seek out a CFP, a certified financial planner.
(25:14):
They're available all over now.
Your bank, your average bank,has them.
You can go online, find them.
The earlier you get one now isreally important.
Dennis (25:24):
You want to start early?
Get one at 20.
Chris (25:25):
Go down to your bank.
They have a CFP down there.
Sit across from your banker andyour CFP and find out.
Dennis (25:40):
Find out what your relationship is with your money
and how you think of money andget some advice.
Get advice as early as possible.
Continuing on with that samerule of 64, everything we do in
our 20s is magnified 64 timesover in our retirement years.
What if you start a simpleinvestment plan at 18 years old?
If you make continuous monthlycontributions of $250, it's
$3,000 a year and you make$3,000 a year contributions
(26:02):
towards your retirement at 11%over 42 years will result in
roughly a $2.5 millionretirement account.
It's 250 bucks a month.
Can you find that?
Are you able to find $250 amonth, 60 bucks a week that you
can invest?
And if you do, that's just onepiece to your retirement puzzle
(26:27):
and it's going to be worthseveral million dollars when you
get there.
It's that simple.
Everything we do in our 20s isgoing to be magnified 64 times
over.
Not to piss in your cornflakeshere, chris, but it works the
same way on the other side ofthe fence.
Conversely, the rule of 64 canwork against you.
(26:48):
A single $10 pack of cigarettesat 20 years old is $640.
That is not going to beavailable 42 years from now, and
I don't know how much docigarettes cost.
Chris (27:00):
I don't know, oh God, I don't know $30 a pack nowadays
how much.
Like $30?
Dennis (27:04):
No no, no, I think it's like $10.
I don't know though.
Chris (27:07):
I have no idea.
Dennis (27:07):
I don't smoke.
Chris (27:09):
So I walk into one of these convenience stores and
take a look at what's up on thescreen there.
Dennis (27:15):
Yeah, a $10 a day cigarette habit is about $70 a
week, $3,650 a year.
Over 42 years this becomesroughly $2.7 million that you do
not have available to you inyour retirement years.
That's amazing.
Remember this relates to alldiscretionary spending, all
(27:36):
discretionary income Dunkin'Donuts, coffee in the morning,
meals eaten out, meals orderedout and delivered in vacations,
anything, anything andeverything that falls under
disposable or discretionaryincome.
Disposable or discretionaryincome is the income, the money
left over after you've paid allyour bills and do you invest it.
I mean, you've got to have fun,you've got to do stuff, but
(27:59):
you've got to have that balance.
And if you get on a savings orinvesting plan, then that $10 a
day or that $250 a month, thatbecomes part of your monthly
process.
Chris (28:12):
And again, there's online things to do this, to track
these expenses, you know, highlyrecommend as early as possible
to get involved in them.
There's a program called Mintwhich is very popular.
Ties together all yourinvestments and your bank
accounts and things like that.
It categorizes your spending soit really gives you a good idea
where your money is going overtime and you can start visually
seeing.
You know the impact of thatDunkin' Donuts or that pack of
(28:37):
cigarettes or whatever you'vegot, also using a debit card
Also, some of these debit cardsare very good at categorizing
your expenses.
So when you use this debit cardand use it all the time, it
categorizes your expenses.
So at the end of the month youhave a really good view of what
you've been spending your moneyon.
And it's a great way tointroduce yourself to your
spending habits and find thatmoney that's in there to free up
(28:57):
to start funding some of yoursavings accounts and things like
that that we've been talkingabout.
And again, you can start asearly as you possibly can, the
earlier the better.
So there's some great thingsonline, like that Mint.
I highly recommend taking alook at Mint or any of those
other and we're not actuallysponsored by Mint or anything,
but yeah, I'd highly recommendlooking into those.
Dennis (29:17):
So, chris, let's take the example of the identical
twins at age 18.
Let's say one of the identicaltwins decides to invest $3,000
on his birthday when he's 18,and he does this continuously
for eight payments in a rowuntil he's 25.
(29:37):
So when he makes a $3,000contribution at 18, and then
again at 19 and 20, 21, 22,right to his 25th birthday, at
11% interest invested in mutualfunds or index funds invested in
(30:07):
mutual funds or index funds At25, his small portfolio is going
to be approximately $3,000 peryear into a very similar
platform.
But twin number one doesn't putany more money in.
And when the two turn 34 yearsold, twin number one has $84,000
(30:33):
and twin number two has $40,000.
So twin number one has a$44,000 lead.
Remember, twin number one is nolonger contributing money and
twin number two continues tocontribute every single year for
the rest of his life.
At 41 years old, twin numberone has $168,000 in there and
(30:57):
twin number two has $120,000.
Twin number one has a $48,000lead and seven years later that
lead has grown to $56,000.
And seven years after that twinnumber one, who's only invested
the initial $24,000 many yearsago, he has $672,000.
(31:19):
And twin number two, who's beencontributing steadily ever
since the age of 26, and nowhe's 55 years old, has $600,000.
Twin number one has gainedanother $72,000 lead over his
brother because he did hisinvesting early.
That's the benefit of gettingout ahead of the pack and start
(31:44):
investing early.
His identical twin will nevercatch him.
He can't because he had theeight year lead.
He got an eight year headstart.
So wealth building has less todo with annual income and
everything to do with goodhabits and building your net
worth.
(32:05):
So, chris, let's take the nextset of twins.
One twin chooses college andthe other one goes to work.
If twin number one, at 18 yearsold, goes to work, lives at
home, he works hard and at 22years old, he banks $50,000 over
that previous four years and healso has a good job, maybe
(32:27):
making 60 grand a year.
Again, this is 2025.
I don't know what people aremaking out there.
So twin number one at 18 goesto work, he stays home, he's
diligent, saves his money and at22 years old, he has a car or a
truck that's bought and paidfor.
He's got 50 grand in the bankand a job making 60,000 a year.
(32:49):
Life is good.
His identical twin goes off tocollege and he lands on the
other end of the spectrum.
After four years he has acollege degree but he doesn't
have a car and he's stillinterviewing, looking for a job.
But he has $250,000 in collegeloan debt.
I know that's worst casescenario, but let's talk about
(33:10):
it.
A monthly payment on $250,000college loan and this is even at
3.6% Over 30 years is $1,900 amonth.
So twin number two has to beginpaying a loan at $1,900 a month
.
Twin number one has no suchpayment.
So if he chooses, he can invest$1,900 a month while his twin
(33:35):
brother is trying to pay off$1,900 a month.
Irregardless, twin number onehas a $300,000 lead over twin
number two because twin numbertwo has college debt of $250,000
and twin number one has $50,000in the bank.
So looking back at examplenumber one and the $40,000
lead000 and twin number one has$50,000 in the bank.
So looking back at examplenumber one and the $40,000 lead
(33:58):
that the twin number one hadthere and twin number two can
never catch him if he performsin that same platform.
In the second example highschool twin number one has a
$300,000 lead over hiscollege-educated brother.
How in the heck is college twinnumber two ever going to catch
his brother.
(34:18):
His brother has a $300,000 lead.
That is almost insurmountable.
And the reason I bring thisexample up is I want young kids
to know the full impact ofcollege and the full financial
impact.
If twin number two went tocollege and he didn't go to an
(34:40):
Ivy League school or anexpensive school, if he went to
a state school and he was ableto live at home for the first
two years and pay tuition onlyand then transfer, maybe he
could have got out of collegewith $20,000 or $30,000 or
$40,000 in debt.
That's manageable, that'sworkable.
But when you get into the sixfigures in debt it's so hard to
(35:05):
come back Right.
Chris (35:06):
So many kids do it nowadays and they have no idea
they're doing it.
They have no idea.
They don't know about it untilthey get that first bill from
their company.
It's rough.
Massachusetts actually has avery good.
I don't know if it until theyget that first bill from their
company, and it's rough.
Massachusetts actually has avery good.
I don't know if you're aware ofit, but Massachusetts Community
College is now free.
Yeah, tuition, that's hugeTuition's free.
yeah, it's huge to be able to goin there and get all your
standard courses out of the way.
Dennis (35:25):
Still got to buy your books, right?
Still got to buy your books andstuff, but the tuition is free.
That's huge Phenomenal, youknow.
Take advantage of that.
There's other ways to takeadvantage of that.
Chris (35:37):
So, yep, the lesson here is you know be financially aware
, Right yeah, we're not sayingyou know, don't go to college.
Dennis (35:40):
No, no, no, college isn't worth doing it.
Chris (35:42):
You know that's obviously not true.
But to be aware of what you'restepping into Again, talk to an
advisor, go down to your bank,you know, get the full picture
before you basically are buyinginto a $250,000, you know loan
and and do it with you know somesort of forethought.
Dennis (36:04):
You hear me say this a lot and I'm going to say it
again.
You know, some people go towhere the puck is.
I want to go to where the puckis going to be when I get there.
So, looking at college in thisexample, look five years ahead.
You know, you're 17 years old.
18 years old, You're a senior.
Take a look out there.
Look at all the options.
(36:24):
You know a high school seniorhas many.
He can go military, he or shecan go into the corporate world.
He or she could go to collegeor get a job.
There's a lot of options foryou.
Chris (36:35):
There's good online things, especially in the coding
world.
Now you can go on, get yourcoding degree.
A lot of companies now areusing online degrees like that
for hiring purposes.
Dennis (36:46):
Having great financial literacy is like being on
financial steroids.
As your financial literacygrows and your financial
platform grows, you havestrength that other people don't
have.
When you're buying a car, youjust have more options.
So many times I can look backat myself or people co-workers
(37:10):
or associates of mine looking atdecisions they made and then,
10 years later, looking wherethey are and seeing the positive
impact of good decisions made.
College is a huge one.
Today it's a huge, hugedecision, and I think that
Americans are finally sick andtired of six figures in debt.
Chris (37:34):
Yeah, I read an article the other day, I think the Wall
Street Journal was talking abouthow certain colleges are
dropping their expenses nowtheir tuitions and things
because people aren't showing upat their door.
Yeah, so maybe that's what willend up happening.
I know it's also kind ofcompounded by it.
There's a lot of the gurus outthere.
If you go on the internet andwhatever and look at them, these
(37:54):
guys are all saying your 20sand your college years, and even
after your college years, don'tgo to work right away, go find
yourself, explore, do all thissort of stuff which flies in the
face of everything that we'retalking about here.
Because when you come back toit, even if you come back to it
at 30 years old, you've lost 12years of investing potential.
And, as we've already talkedabout here, what happens when
(38:15):
you lose that 12 years?
You're going to struggle tocatch up with someone who didn't
, and that's just kind of thereality of it.
So, those gurus out theretelling you to travel and find
yourself yeah, don't listen.
Don't listen to them, becauseyou can see this is exactly what
your outcome is going to be.
Dennis (38:37):
It's pretty clear here what we're talking about today.
So you know, given everythingwe've talked about, let's
quickly go back and kind ofrevisit those 1970s years and,
as we look at that now, think ofthe value that we had back then
the opportunity to invest inCDs, which was very conservative
, producing anywhere from 12% to18%, whereas the stock market
(38:57):
during that decade was producingbetween 3% and 9%.
So it was just.
My parents were hard workersand they were really blessed
with good financial literacybecause they were both born in
the Depression.
They grew up poor.
They didn't have a whole lot ofmoney, so you learn to take
care of your money when youdon't have a whole lot of it.
(39:19):
And I'm going to kind of wrapup this topic for today.
We have two additional rulesthat we'll talk about in our
next show the 80-20 rule and the20-minute rule.
But just to kind of wrap thiswhole thing up for today, recent
income statistics from theworld GDP shows that the
(39:40):
wealthiest 20% of people andthis is in this country, the
wealthiest 20% own 83% of thewealth and the remaining 80% of
Americans own the rest of the17%.
A similar study featured onStatistacom and this was in 2016
(40:03):
, basically reiterated that, andthat is the wealthiest.
20% of Americans own 88% of theAmerican wealth, while the
remaining 80% own only 11.7%.
And one really shockingstatistic that was revealed in
that study is that the bottom50% of Americans own just 1.2%
(40:31):
of the wealth.
That's amazing own just 1.2% ofthe wealth.
Basically, the bottom 50% ownlittle to nothing and the top
50% own all the rest, but thetop 20% own virtually all of the
wealth in this country.
I don't think I know hardly anypeople that became wealthy
because they inherited it.
(40:51):
I just don't know that manywealthy families.
So you know, the choices thatwe make in our teens and
twenties will have a stronginfluence in determining which
of these categories we belong tothe top 50, the bottom 50, the
top 20, or the bottom 80.
Good decisions made at theright time early on in your life
(41:14):
have great, great potential.
So that's my story and I'msticking to it.
Chris (41:21):
Okay Well, that sounds good.
Okay Well, we're going to goout on that note.
We're coming back with a parttwo of this.
We're going to go through someother rules that we've got here,
but yeah, so that was FinancialLiteracy 101, part one.
We'll be back next week,hopefully, with another version
of the podcast.
Dennis (41:38):
All right, Chris, thank you much.
We'll see you next week.
Chris (41:41):
We're waiting for it.
Dennis (41:42):
No monkeys were harmed in the making of this podcast.
Chris (41:44):
All right, I shouldn't have to remind you of that.
All right, we'll see you guyslater.
Bye, thank you for tuning in toMonkey Business Radio.
If you enjoyed today's episode,please make sure to subscribe,
like and follow us wherever youget your podcasts.
It really helps us reach moreaspiring entrepreneurs like you,
and if you've got a question ortopic you'd like us to cover,
(42:07):
leave a comment or reach out tous on social media.
We'd love to hear your thoughtsand keep the conversation going
.
Don't forget to leave us afive-star review if you found
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We'll see you next time.
This podcast is produced byAmerican Gutter Monkeys LLC.
Build real wealth throughbusiness ownership.
(42:29):
For details, visit us atAmericanGutterMonkeyscom.
Every once in a while someone comes along, shocks the
establishment with a newinnovation and a tired industry
From the movie Moneyball.
Here's how Boston Red Sox ownerJohn Henry put it.
Dennis (00:12):
Really, what it's threatening is their livelihoods
, their jobs.
It's threatening the way theydo things and every time that
happens whether it's thegovernment, a way of doing
business, or whatever the peoplewho are holding the reins they
have their hands on the switch.
They go batshit crazy.
Hello.
Chris (00:28):
I'm Chris Collins, your host.
In this podcast, we dive intostories of innovation,
resilience and what it takes toshake up an industry.
Joining me is my co-host andresident small business expert,
dennis Siggins, or, as he'sknown on the Cape and Islands,
bobby Downspout.
Dennis, along with his collegeroommate, andy Brennan, founded
the Cape Cod Gutter Monkeys andtransformed the humble task of
(00:48):
gutter cleaning into a thriving,multi-million dollar business
that redefined the game.
Together, we'll uncover thestrategies, lessons and
inspirations behind building andgrowing a successful business.
So, whether you're here forbusiness insights, inspiration
or just a great story, you're inthe right place.
Grab a cup of coffee, sit back,relax and welcome to Monkey
(01:10):
Business Radio.
Hello everyone, welcome toMonkey Business Radio.
Today we're talking aboutfinancial literacy 101, and it's
part one of a two-part serieswe're going to be doing, and
this is basically the stuff theyshould have taught us in school
, but for a lot of us, we had tolearn the hard way.
(01:30):
So here we go, little Dennishow are we doing?
Dennis (01:33):
I'm doing good, Chris.
How are?
Chris (01:34):
you Good good.
Today we're diving into some ofthe most important financial
principles you need to know.
Dennis (01:40):
One of my favorite topics financial literacy yeah,
and if you're in your 20s, thisepisode really could make a big
difference in your life.
Chris (01:51):
So starting early gives you a massive edge when it comes
to building wealth, and even ifyou're not 20, you're 25 to 55,
there's always time to getinvolved in your financial
education, and this is a goodshow to kind of learn the basic
rules if you haven't alreadyexperienced them in your life.
Dennis (02:04):
This is a good show to kind of learn the basic rules if
you haven't already experiencedthem in your life.
So you mentioned the earlier.
The younger you are, theearlier you get started, the
better.
So let's take a trip back tothe 1970s.
Chris and I grew up in the 70s.
We've known each other since wewere teenagers.
The 1970s was an interestingtime in this country Huge
recession, a 10-year recessionthat oftentimes gets ignored.
(02:28):
The 70s was a staple ofhyperinflation.
We impeached a president.
Our soldiers returning homefrom Vietnam were being
assaulted in airports.
52 Americans were taken hostagein Iran and it took us a year
and a quarter to get them out.
There were mile-long gas lines.
(02:49):
I remember those gas lines.
That was brutal All across thecountry.
Chris (02:53):
That's crazy.
Dennis (02:53):
Gas prices more than tripled over the decade.
In 1970, American average gasprices were $0.36.
By 1980, they were up to around$1.20, $1.22.
That was the Arabba, that wasoil embargo right, right, well,
and that's if you could get thegas, yep, right, our parents
would go down.
My dad had a, a friend, mrharrington, down on the four
(03:15):
corners, who had a gas stationand he had a hand-painted sign
if you're not on a first namebasis, you, you can't get gas
here.
And he took care of theneighborhood, no one else, and
he was open from like four tofive in the morning, regular
customers only, and my dad was asalesman, he lived in that car
(03:37):
and he would have to cover NewEngland and Mr Harrington would
gas them up and then he wouldfill two or three more of the
five-gallon canisters and capthem and put them in the trunk.
In case my dad found himself inLewiston, maine, or Trumbull,
connecticut or wherever, and hecan't get gas, he'd be able to
get home.
If you want to cripple aneconomy, remove the gas and the
(04:00):
economy will fold like a lawnchair and it did, yeah, it did,
and the economy will fold like alawn chair.
And it did.
Yeah, it did.
Personally, I grew up anaverage kid in a middle-income
family.
Both my parents workedfull-time.
We didn't take vacations, wetook family trips.
Disney was on TV on Sundaynight it wasn't a place where
anyone was going.
Chris (04:18):
That was the Magic Kingdom.
Dennis (04:19):
You remember?
Chris (04:20):
that Because I'd never been there.
It was magic.
It was magic.
Dennis (04:22):
I was like my parents have six kids, you're one of
seven, one of seven.
Between our two families, wehad 13 kids and everybody worked
.
Yeah, cut lawns.
Yeah, per order of my parents,I started delivering newspapers
at eight and then we werecutting lawns by 10, 11, and 12.
My parents had a rule Half ofall your money that you brought
(04:45):
in goes into the big bank andthe other half goes into the
small bank.
The big bank was for college,right, Wasn't that the goal?
Chris (04:53):
That was the main goal back then.
Yep, all the lawn cuttings thatI did everything else was
basically for college education.
Right, my dad got employed.
He actually brought a family ofseven from Detroit out to
Boston area, went to work forHoneywell, laid them off a year
later.
Seven kids Just moved brand newhouse.
Dennis (05:12):
It was a tough time old is that my parents recognized
that despite this crazy economyI mean we were insulated as kids
from the economy we had threemeals a day and a roof over the
head.
Life was good.
(05:33):
But CDs certificate of depositsat the bank were starting to
earn 10%, 12%, 14% interest, toearn 10, 12, 14% interest.
So by the time I was about 12or 13, all my brothers and
sisters and I started puttingour money into CDs instead of
regular bank accounts and Iremember my mom used to have us
(05:56):
doing 12-month CDs and it wouldturn over Christmas week and
we'd work all year long cuttinglawns, shoveling driveways
whatever we were doing, we werealways making money.
And Christmas week we would bereally excited because all that
money that was now in our bankaccount was going to go into the
CDs and we were checking outwhat the guaranteed interest
(06:19):
rate was and maybe last year itwas 13, and this year it's going
to be 14%.
Chris (06:25):
How many kids do you know spent their pre-Christmas
run-up?
Looking at bank CD rates.
Dennis (06:28):
Oh yeah, I mean, I was 12 years old, I was talking
strategy with the banks.
I was 13 years old, making bankdeposits and I was putting
money in CDs.
We didn't have access to WallStreet back then, mutual funds,
index funds they really weren'tavailable yet to the average
person, but CDs were In fact CDsby 1980, 81 peaked out at about
(06:53):
18%.
That's guaranteed, and that'swhere our money was going all
through our elementary, middle,high school years, even into
college.
Our money stayed in CDs andactually CDs were outperforming
the market back then.
Oh sure it was crushing it,right?
If you look at what the stockmarket produced, the Dow
averaged 3% 3.25% over thatdecade.
(07:15):
The NASDAQ, which was brand new, came in in more of the late
70s, was actually averagingabout 9% and the S&P was
averaging 5% and CDs werepushing anywhere from 12% to 18%
and our parents had us justputting all our money in CDs.
Chris (07:34):
And what a great opportunity to start our lives
All right, great lesson as wellas making some money on the side
.
And I'm kind of amazed by thosenumbers too, especially some of
the Dow and the NASDAQ numbers,because that would be if you
were fully invested through thatentire period.
Right, If you came in in someother areas in that period you
were wiped out.
Dennis (07:54):
You could lose your shirt Absolutely.
Chris (07:56):
Yeah, so that was a rough period.
Dennis (07:57):
There were a couple of years in the 70s where the
average of the Dow, NASDAQ, allof Wall Street, dropped 19% one
year and 26% another year.
I mean it was a hard decade.
Chris (08:10):
Actually we're going to touch on that later on, I guess
about being consistent in yourinvesting, staying the long term
, keeping the focus on long term.
That's a perfect example.
If you got in the wrong timeand during that period of time,
you could really have gottenwiped out or pulled out too
early, or vice versa.
Dennis (08:23):
Or bought too late.
Chris (08:24):
Yeah, that period of time you could really have gotten
wiped out, or pulled out tooearly, or vice versa, or bought
too late.
Yeah, absolutely.
Dennis (08:30):
Absolutely.
Chris (08:33):
You ready to kind of dive into your four rules and start
talking about the things youlearned early on in your career?
Dennis (08:36):
your investing career.
My whole life, my wholefinancial life, has been
centered around these four rulesthe rule of 72, the rule of 64,
the 80-20 rule and the20-minute rule.
And today we're going to startwith the first two the rule of
72 and the rule of 64.
The rule of 72, it's just asimple mathematical formula and
(08:59):
here's how it works.
If you take the number 72 andyou divide 72 by your
investment's annual return, theresult will produce the number
is 9.
At 8%, your money will doublein 9 years.
Chris (09:31):
And just for people who are listening along, we're going
to throw up some of thespreadsheet and the charts for
these different rules we'regoing through.
We're going to throw those upon our YouTube channel American
Gutter Monkeys on YouTube.
So if you want to come back andtake a look at those, we'll
have the actual charts up foryou, okay, I want to talk about
(09:52):
the rule of 72 and how itapplies yesterday, today and
tomorrow.
Dennis (09:57):
If you take the stock market the stock market that we
all invest in, that you watch onTV every day in any 25-year
segment of the history of thestock market, the lowest the
stock market has ever producedwas 10.2%.
The annual average typically is11 to 11.7.
(10:21):
The last 10 to 15 years it'sbeen up into the 13, 13.5% range
.
But money invested in the stockmarket is almost always likely
to produce roughly 11% and at11% your money is going to
double every six and a halfyears.
And that's been.
(10:41):
My rule of thumb is moneyinvested in the stock market, in
mutual funds, index funds notindividual stocks, but in mutual
funds and index funds isgenerally going to produce
roughly 11% minimum and it'svery likely your money is going
to double every seven years.
So let's talk about what is amutual fund.
(11:04):
Chris, do you invest in mutualfunds, index funds, that type of
thing?
Yep.
Chris (11:10):
All sorts of different things.
Yep, yep.
I'm not a stock picker by anymeans no, I'm not either Done a
few, dabbled in a few differentstocks and things like that, but
it's definitely not my strongsuit and I know my investing
style and I'm too emotionalabout investing, so I try to
keep an arm's length from myinvestments through a broker and
(11:33):
through a CFP, a financialplanner.
Dennis (11:37):
A stock represents ownership in a company.
So if you purchase stock inTesla, you actually own a small
piece of Tesla and if thatcompany does well, then your
stock will do well.
If that company doesn't do well, then your stock could lose
money.
That's a single stock.
(11:59):
That's a single stock.
But if you're not sure, likemost people are not overly
educated in the area of stocksso what we do is we invest in a
mutual fund.
A mutual fund is a group ofsimilar stocks.
So if you don't want to investin Tesla or Ford or GM, you can
(12:22):
invest in a mutual fund, a groupof stocks that represents all
automobiles or thetransportation industry in
general.
You're not investing in Ford.
You might be investing intransportation in general, in
(12:48):
general.
You may not want to invest inXfinity or other utilities, but
you may want to invest in theutilities.
So you can buy utility stock.
You can buy utility mutualfunds.
You can invest your money inPacific Rim stocks, technology
stocks, but these are in theform of mutual funds, a mutual
fund.
You're not betting on anindividual company.
You're betting on the industry,and the industries are less
(13:15):
likely to boom and less likelyto crash.
They're just going to earntheir steady hopefully 11% a
year and that's how a lot ofAmericans invest.
Yeah, and it's diversification.
Chris (13:27):
that's so important when you start getting into these
mutual funds, and you can evendiversify against across a broad
range S&P.
You can buy an S&P mutual fundand invest in all the S&P across
the board, so it gives you somediversification as well.
I think Warren Buffett said it,why diversification is only
required when investors do notunderstand what they're doing.
I would probably modify thatand say why diversification is
(13:51):
required by investors.
It's just a rule.
Dennis (13:55):
So, just to recap, investing in mutual funds is a
much more conservative and, Iview, as a safer way for the
average person to invest in WallStreet.
And the average stock marketgrowth in the last 10 years has
been 13.9%.
In the last 30 years has been10.7%, the last 50 years has
(14:22):
been 10.9% and the overallindustry average the Dow, s&p
and NASDAQ over their group oflifetimes is 11% 11.7%.
So 11 is the number that Igenerally go with and that can
vary a little bit one way or theother.
But at 11% growth, your moneyis going to double every seven
(14:42):
years.
So I can focus on my business,on my company, on my own
personal interests, while mymutual funds are protected by
the size and the diversity ofthem and I don't have to study
them like I would have to studystocks.
(15:02):
So the rule of 72 works thisway you take 72, divide it by 11
, we're at six and a half.
So money invested in mutualfunds will show a great
likelihood of doubling every sixand a half to seven years, as
long as you leave it there longenough, and typically we use a
(15:24):
sample of 25 years.
So if you start investing whenyou're 12 or 13 or 14,.
It's so dynamic.
It's so dynamic because by thetime you're 20, 21, 22, you not
only have money that you've putinto the bank and transferred it
(15:45):
into CDs and mutual funds, younot only have that money, you
also have the benefit ofinterest compounding over many
years.
But the other thing is you'vegained financial literacy.
The amount of financialknowledge that you have at 20
(16:05):
years old is so much greaterthan other people who've never
invested money.
And it's not like a video gamewhere you're just playing with
pretend money.
When you're out cutting lawns,shoveling driveways, working in
restaurants, you're investingyour own real money.
This is hard-earned money andas a 15, 16, 17-year-old kid,
(16:29):
you're going to follow thatmoney.
It's not play money, it's thereal deal and you're going to
track it and you're going to payattention to it and the stuff
that you're going to learn.
This is why, now, chris, youoften say, hey, they should
teach this stuff in school.
It's hard to teach that inschool because in school you're
reading a book or a pamphlet.
(16:51):
In real life, you've cut lawns.
My brothers and I used to cutanywhere from 25 to 30 lawns
every week.
So after cutting 8, 10, 12lawns, then you're on your bike,
riding down to the bank.
This is real.
You're in the bank.
You're depositing that moneythat you worked your fanny off
for.
That's why financial literacymust be learned, and yet it's
(17:14):
hard to teach.
My parents gave us the seedsthat grew into it, but my
parents can't monitor my everyactivity.
They can't teach me how to cuta lawn.
They can't be riding over myshoulder or helicoptering over
me and micromanaging myactivities.
No, they're sending me out thedoor to cut lawns and I take it
(17:35):
from there.
Chris (17:35):
Yeah, which is probably an important part of what's
happening today is that peoplearen't going out.
The kids of today, you know somuch, aren't actually ending up
working those jobs anymore, andI think part of it is because
costs, especially for colleges,so insurmountable.
They kind of throw their handsup in the air and say, well,
what's the point?
But you can see from this, youknow from what we're talking
about here, is the earlier youget started, it's not
(17:55):
insurmountable.
You know, if you start at 12and 13, starting, with money,
you can do it.
Dennis (18:00):
It's dynamic it does get insurmountable.
Chris (18:02):
the longer you wait, it gets tougher and tougher.
So, again, getting as early aspossible, getting involved in
this, getting involved, gettingyour financial literacy up and
then finding an avenue forinvesting.
Then there's some great onesout there today.
You don't have to be.
We talk about stocks and mutualfunds.
It might not be your thing, butthere's some really great apps
out there today.
I don't know, I'll talk aboutone.
(18:23):
It's called Wealthfront, whichis basically a robo-investor for
you and you just put your moneyin there and it invests it for
you Wide diversification, bonds,stocks based on your risk
appetite and my kids use it.
Very, very, very low fees fordoing it and you can check on
your stocks and check on yourbonds, but you don't actually
(18:43):
have to pick them.
It does it for you.
I highly recommend looking intothose sort of things if you're
interested in starting gettingstarted.
Dennis (18:48):
Well.
So to wrap up, the rule of 72,albert Einstein once said the
most powerful force in theuniverse is compound interest.
Over time is compound interestover time the earlier you start
investing, the greater growththat your money has, or the
(19:09):
greater potential for growththat your money has.
But it also works the other way.
And let's say, for example, youcarry a balance on your credit
card over to the next month andlet's say the interest that the
credit card company is chargingyou is 18%.
If you divide 18 into 72, therule of 72 says that credit card
(19:34):
company is going to doubletheir money at your expense over
four years.
So the rule of 72 can work inyour favor and it can also work
against you.
So anytime you're paying anylevel of interest, whether it's
a mortgage or a school loan orespecially credit cards, it
(19:55):
could be that the rule of 72 isworking against you.
So just be aware of that, justbe aware of that.
Chris (20:04):
Yeah, With a large number of people carrying over.
Nowadays I forget what thenumbers were, we kind of went
over them last week but a largenumber of people carrying over
debt month to month.
I think you made a good pointlast week.
If you're going down toMcDonald's or something and
putting that on your credit card, you're paying the highest
interest allowed by law.
For a cheeseburger and fries Fora cheeseburger and fries For a
cheeseburger and fries.
Think of it that way.
(20:25):
I read another thing that wasreally kind of interesting too,
as you think about it,especially carrying debt not to
kind of get off topic a littlebit, but carrying debt over
month to month on your creditcard.
I don't know about you, butbasically we use our credit
cards all the time.
We kind of use it to trackexpenses and we pay them off at
the end of the month.
But we bank a lot of the pointsbecause we have a Southwest
card and so we do a lot offlying, so we basically bank it
(20:46):
to Southwest.
And the way the article put itis basically, if you're carrying
over your debt month to monthand paying these fees, you're
basically paying for my pointsto go flying, basically.
So what's happening is thosepoints that they give to for
racking up come out of thosefees, and so you can think of it
in that terms if it gives you alittle bit more impetus not to
carry your expenses over monthto month on your credit cards.
Dennis (21:10):
Keeping the rule of 72 in mind.
My next rule is the rule of 64.
And this is one that I've sortof created on my own over the
years.
The rule of 64 is a generalguideline that I've developed
and it looks something like thisEverything we do in our 20s is
(21:34):
magnified 64 times over in ourretirement years, in our 60s,
and it's based on the rule of 72and the low average
expectations of the mutual fundmarket 11%.
Money that's invested will beworth 64 times over 42 years
later.
Let's talk about that If you're18 years old and your
(21:58):
grandparents give you $10,000for your high school graduation,
If you put it in mutual fundsand it earns approximately 11%,
it's going to double every sevenyears.
So when you're 25, it's going tobe worth 20 grand.
Seven years later, at 32, it'sgoing to be worth $40,000.
(22:22):
Seven years later, at 39, that$40,000 doubles to $80,000.
$160,000, $320,000, and whenyou turn 60, that $10,000
investment that you made at theage of 18 is now worth
approximately $640,000.
Approximately 640,000.
(22:49):
Over 42 years it went from10,000 to 640,000.
It increased 64-fold, andthere's the reason for my rule
of 64.
Everything we do in our 20s ismagnified 64 times over in your
retirement years.
Chris (23:01):
So amazing.
I wish I had seen this or knownabout this when I was investing
.
It's just amazing.
Dennis (23:05):
I have a niece that one time just recently had a
conversation with her and shewas a travel nurse during COVID
and she made killer money.
And this is another thing aboutfinancial literacy is it's
always learned on your own outin the real world.
She began earning money and shehad to do something with it and
(23:30):
she obviously somehow set upwith a financial planner who got
her putting money into mutualfunds and she opened up IRAs and
SEPs and other such investmentprocesses.
And we were talking about a yearor two ago.
And she said you know, I'm atthe point where if I just make
(23:52):
two more years of contributions,at that point I'll be 34 years
old and if I crunch the numbers,I don't have to have to put any
more money in there and myfinancial portfolio will be
fully mature when I hit 62.
Wow.
So she knew that at the age of32, or however old she was at
(24:14):
the time, she could look at theand I didn't teach her this.
She just learned this on herown because she has her own
financial planner, she has herown people around her.
But she knew at the age of 32that if she just makes two more
years of contributions and I'massuming she's heavily
contributing to her IRAs, thenshe doesn't have to put any more
(24:38):
money in and that will grow tofull maturity what she wants at
62, and she will be able toretire comfortably at 62, and
she knows this at 32.
Chris (24:50):
So what kind of?
Dennis (24:51):
attitude.
Do you think she can go to workwith?
Chris (24:53):
Life is easy, it's good yeah, right, a lot of
opportunities now are availableto her, that's exactly right.
Maybe she works hard as atraveling nurse, maybe she wants
to change her job up, maybe godo a little more charity work or
something like that.
It gives her all thesedifferent options that she can
actually go and do.
And I think the other importantpoint of that whole thing was
also that you did seek out a CFP, a certified financial planner.
(25:14):
They're available all over now.
Your bank, your average bank,has them.
You can go online, find them.
The earlier you get one now isreally important.
Dennis (25:24):
You want to start early?
Get one at 20.
Chris (25:25):
Go down to your bank.
They have a CFP down there.
Sit across from your banker andyour CFP and find out.
Dennis (25:40):
Find out what your relationship is with your money
and how you think of money andget some advice.
Get advice as early as possible.
Continuing on with that samerule of 64, everything we do in
our 20s is magnified 64 timesover in our retirement years.
What if you start a simpleinvestment plan at 18 years old?
If you make continuous monthlycontributions of $250, it's
$3,000 a year and you make$3,000 a year contributions
(26:02):
towards your retirement at 11%over 42 years will result in
roughly a $2.5 millionretirement account.
It's 250 bucks a month.
Can you find that?
Are you able to find $250 amonth, 60 bucks a week that you
can invest?
And if you do, that's just onepiece to your retirement puzzle
(26:27):
and it's going to be worthseveral million dollars when you
get there.
It's that simple.
Everything we do in our 20s isgoing to be magnified 64 times
over.
Not to piss in your cornflakeshere, chris, but it works the
same way on the other side ofthe fence.
Conversely, the rule of 64 canwork against you.
(26:48):
A single $10 pack of cigarettesat 20 years old is $640.
That is not going to beavailable 42 years from now, and
I don't know how much docigarettes cost.
Chris (27:00):
I don't know, oh God, I don't know $30 a pack nowadays
how much.
Like $30?
Dennis (27:04):
No no, no, I think it's like $10.
I don't know though.
Chris (27:07):
I have no idea.
Dennis (27:07):
I don't smoke.
Chris (27:09):
So I walk into one of these convenience stores and
take a look at what's up on thescreen there.
Dennis (27:15):
Yeah, a $10 a day cigarette habit is about $70 a
week, $3,650 a year.
Over 42 years this becomesroughly $2.7 million that you do
not have available to you inyour retirement years.
That's amazing.
Remember this relates to alldiscretionary spending, all
(27:36):
discretionary income Dunkin'Donuts, coffee in the morning,
meals eaten out, meals orderedout and delivered in vacations,
anything, anything andeverything that falls under
disposable or discretionaryincome.
Disposable or discretionaryincome is the income, the money
left over after you've paid allyour bills and do you invest it.
I mean, you've got to have fun,you've got to do stuff, but
(27:59):
you've got to have that balance.
And if you get on a savings orinvesting plan, then that $10 a
day or that $250 a month, thatbecomes part of your monthly
process.
Chris (28:12):
And again, there's online things to do this, to track
these expenses, you know, highlyrecommend as early as possible
to get involved in them.
There's a program called Mintwhich is very popular.
Ties together all yourinvestments and your bank
accounts and things like that.
It categorizes your spending soit really gives you a good idea
where your money is going overtime and you can start visually
seeing.
You know the impact of thatDunkin' Donuts or that pack of
(28:37):
cigarettes or whatever you'vegot, also using a debit card
Also, some of these debit cardsare very good at categorizing
your expenses.
So when you use this debit cardand use it all the time, it
categorizes your expenses.
So at the end of the month youhave a really good view of what
you've been spending your moneyon.
And it's a great way tointroduce yourself to your
spending habits and find thatmoney that's in there to free up
(28:57):
to start funding some of yoursavings accounts and things like
that that we've been talkingabout.
And again, you can start asearly as you possibly can, the
earlier the better.
So there's some great thingsonline, like that Mint.
I highly recommend taking alook at Mint or any of those
other and we're not actuallysponsored by Mint or anything,
but yeah, I'd highly recommendlooking into those.
Dennis (29:17):
So, chris, let's take the example of the identical
twins at age 18.
Let's say one of the identicaltwins decides to invest $3,000
on his birthday when he's 18,and he does this continuously
for eight payments in a rowuntil he's 25.
(29:37):
So when he makes a $3,000contribution at 18, and then
again at 19 and 20, 21, 22,right to his 25th birthday, at
11% interest invested in mutualfunds or index funds invested in
(30:07):
mutual funds or index funds At25, his small portfolio is going
to be approximately $3,000 peryear into a very similar
platform.
But twin number one doesn't putany more money in.
And when the two turn 34 yearsold, twin number one has $84,000
(30:33):
and twin number two has $40,000.
So twin number one has a$44,000 lead.
Remember, twin number one is nolonger contributing money and
twin number two continues tocontribute every single year for
the rest of his life.
At 41 years old, twin numberone has $168,000 in there and
(30:57):
twin number two has $120,000.
Twin number one has a $48,000lead and seven years later that
lead has grown to $56,000.
And seven years after that twinnumber one, who's only invested
the initial $24,000 many yearsago, he has $672,000.
(31:19):
And twin number two, who's beencontributing steadily ever
since the age of 26, and nowhe's 55 years old, has $600,000.
Twin number one has gainedanother $72,000 lead over his
brother because he did hisinvesting early.
That's the benefit of gettingout ahead of the pack and start
(31:44):
investing early.
His identical twin will nevercatch him.
He can't because he had theeight year lead.
He got an eight year headstart.
So wealth building has less todo with annual income and
everything to do with goodhabits and building your net
worth.
(32:05):
So, chris, let's take the nextset of twins.
One twin chooses college andthe other one goes to work.
If twin number one, at 18 yearsold, goes to work, lives at
home, he works hard and at 22years old, he banks $50,000 over
that previous four years and healso has a good job, maybe
(32:27):
making 60 grand a year.
Again, this is 2025.
I don't know what people aremaking out there.
So twin number one at 18 goesto work, he stays home, he's
diligent, saves his money and at22 years old, he has a car or a
truck that's bought and paidfor.
He's got 50 grand in the bankand a job making 60,000 a year.
(32:49):
Life is good.
His identical twin goes off tocollege and he lands on the
other end of the spectrum.
After four years he has acollege degree but he doesn't
have a car and he's stillinterviewing, looking for a job.
But he has $250,000 in collegeloan debt.
I know that's worst casescenario, but let's talk about
(33:10):
it.
A monthly payment on $250,000college loan and this is even at
3.6% Over 30 years is $1,900 amonth.
So twin number two has to beginpaying a loan at $1,900 a month
.
Twin number one has no suchpayment.
So if he chooses, he can invest$1,900 a month while his twin
(33:35):
brother is trying to pay off$1,900 a month.
Irregardless, twin number onehas a $300,000 lead over twin
number two because twin numbertwo has college debt of $250,000
and twin number one has $50,000in the bank.
So looking back at examplenumber one and the $40,000
lead000 and twin number one has$50,000 in the bank.
So looking back at examplenumber one and the $40,000 lead
(33:58):
that the twin number one hadthere and twin number two can
never catch him if he performsin that same platform.
In the second example highschool twin number one has a
$300,000 lead over hiscollege-educated brother.
How in the heck is college twinnumber two ever going to catch
his brother.
(34:18):
His brother has a $300,000 lead.
That is almost insurmountable.
And the reason I bring thisexample up is I want young kids
to know the full impact ofcollege and the full financial
impact.
If twin number two went tocollege and he didn't go to an
(34:40):
Ivy League school or anexpensive school, if he went to
a state school and he was ableto live at home for the first
two years and pay tuition onlyand then transfer, maybe he
could have got out of collegewith $20,000 or $30,000 or
$40,000 in debt.
That's manageable, that'sworkable.
But when you get into the sixfigures in debt it's so hard to
(35:05):
come back Right.
Chris (35:06):
So many kids do it nowadays and they have no idea
they're doing it.
They have no idea.
They don't know about it untilthey get that first bill from
their company.
It's rough.
Massachusetts actually has avery good.
I don't know if it until theyget that first bill from their
company, and it's rough.
Massachusetts actually has avery good.
I don't know if you're aware ofit, but Massachusetts Community
College is now free.
Yeah, tuition, that's hugeTuition's free.
yeah, it's huge to be able to goin there and get all your
standard courses out of the way.
Dennis (35:25):
Still got to buy your books, right?
Still got to buy your books andstuff, but the tuition is free.
That's huge Phenomenal, youknow.
Take advantage of that.
There's other ways to takeadvantage of that.
Chris (35:37):
So, yep, the lesson here is you know be financially aware
, Right yeah, we're not sayingyou know, don't go to college.
Dennis (35:40):
No, no, no, college isn't worth doing it.
Chris (35:42):
You know that's obviously not true.
But to be aware of what you'restepping into Again, talk to an
advisor, go down to your bank,you know, get the full picture
before you basically are buyinginto a $250,000, you know loan
and and do it with you know somesort of forethought.
Dennis (36:04):
You hear me say this a lot and I'm going to say it
again.
You know, some people go towhere the puck is.
I want to go to where the puckis going to be when I get there.
So, looking at college in thisexample, look five years ahead.
You know, you're 17 years old.
18 years old, You're a senior.
Take a look out there.
Look at all the options.
(36:24):
You know a high school seniorhas many.
He can go military, he or shecan go into the corporate world.
He or she could go to collegeor get a job.
There's a lot of options foryou.
Chris (36:35):
There's good online things, especially in the coding
world.
Now you can go on, get yourcoding degree.
A lot of companies now areusing online degrees like that
for hiring purposes.
Dennis (36:46):
Having great financial literacy is like being on
financial steroids.
As your financial literacygrows and your financial
platform grows, you havestrength that other people don't
have.
When you're buying a car, youjust have more options.
So many times I can look backat myself or people co-workers
(37:10):
or associates of mine looking atdecisions they made and then,
10 years later, looking wherethey are and seeing the positive
impact of good decisions made.
College is a huge one.
Today it's a huge, hugedecision, and I think that
Americans are finally sick andtired of six figures in debt.
Chris (37:34):
Yeah, I read an article the other day, I think the Wall
Street Journal was talking abouthow certain colleges are
dropping their expenses nowtheir tuitions and things
because people aren't showing upat their door.
Yeah, so maybe that's what willend up happening.
I know it's also kind ofcompounded by it.
There's a lot of the gurus outthere.
If you go on the internet andwhatever and look at them, these
(37:54):
guys are all saying your 20sand your college years, and even
after your college years, don'tgo to work right away, go find
yourself, explore, do all thissort of stuff which flies in the
face of everything that we'retalking about here.
Because when you come back toit, even if you come back to it
at 30 years old, you've lost 12years of investing potential.
And, as we've already talkedabout here, what happens when
(38:15):
you lose that 12 years?
You're going to struggle tocatch up with someone who didn't
, and that's just kind of thereality of it.
So, those gurus out theretelling you to travel and find
yourself yeah, don't listen.
Don't listen to them, becauseyou can see this is exactly what
your outcome is going to be.
Dennis (38:37):
It's pretty clear here what we're talking about today.
So you know, given everythingwe've talked about, let's
quickly go back and kind ofrevisit those 1970s years and,
as we look at that now, think ofthe value that we had back then
the opportunity to invest inCDs, which was very conservative
, producing anywhere from 12% to18%, whereas the stock market
(38:57):
during that decade was producingbetween 3% and 9%.
So it was just.
My parents were hard workersand they were really blessed
with good financial literacybecause they were both born in
the Depression.
They grew up poor.
They didn't have a whole lot ofmoney, so you learn to take
care of your money when youdon't have a whole lot of it.
(39:19):
And I'm going to kind of wrapup this topic for today.
We have two additional rulesthat we'll talk about in our
next show the 80-20 rule and the20-minute rule.
But just to kind of wrap thiswhole thing up for today, recent
income statistics from theworld GDP shows that the
(39:40):
wealthiest 20% of people andthis is in this country, the
wealthiest 20% own 83% of thewealth and the remaining 80% of
Americans own the rest of the17%.
A similar study featured onStatistacom and this was in 2016
(40:03):
, basically reiterated that, andthat is the wealthiest.
20% of Americans own 88% of theAmerican wealth, while the
remaining 80% own only 11.7%.
And one really shockingstatistic that was revealed in
that study is that the bottom50% of Americans own just 1.2%
(40:31):
of the wealth.
That's amazing own just 1.2% ofthe wealth.
Basically, the bottom 50% ownlittle to nothing and the top
50% own all the rest, but thetop 20% own virtually all of the
wealth in this country.
I don't think I know hardly anypeople that became wealthy
because they inherited it.
(40:51):
I just don't know that manywealthy families.
So you know, the choices thatwe make in our teens and
twenties will have a stronginfluence in determining which
of these categories we belong tothe top 50, the bottom 50, the
top 20, or the bottom 80.
Good decisions made at theright time early on in your life
(41:14):
have great, great potential.
So that's my story and I'msticking to it.
Chris (41:21):
Okay Well, that sounds good.
Okay Well, we're going to goout on that note.
We're coming back with a parttwo of this.
We're going to go through someother rules that we've got here,
but yeah, so that was FinancialLiteracy 101, part one.
We'll be back next week,hopefully, with another version
of the podcast.
Dennis (41:38):
All right, Chris, thank you much.
We'll see you next week.
Chris (41:41):
We're waiting for it.
Dennis (41:42):
No monkeys were harmed in the making of this podcast.
Chris (41:44):
All right, I shouldn't have to remind you of that.
All right, we'll see you guyslater.
Bye, thank you for tuning in toMonkey Business Radio.
If you enjoyed today's episode,please make sure to subscribe,
like and follow us wherever youget your podcasts.
It really helps us reach moreaspiring entrepreneurs like you,
and if you've got a question ortopic you'd like us to cover,
(42:07):
leave a comment or reach out tous on social media.
We'd love to hear your thoughtsand keep the conversation going
.
Don't forget to leave us afive-star review if you found
the episode valuable, and makesure to share it with anyone who
might benefit from our tips andstories.
We'll see you next time.
This podcast is produced byAmerican Gutter Monkeys LLC.
Build real wealth throughbusiness ownership.
(42:29):
For details, visit us atAmericanGutterMonkeyscom.
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