October 6, 2024 • 12 mins
Unlock the secrets of your financial DNA and transform the way you think about money. How do our experiences and the time we grew up in shape our financial habits? We unravel these mysteries as we explore the psychology of money, drawing insights from the eye-opening video by Escaping Ordinary. Discover how the powerful forces of compounding can turn the tide of wealth in your favor, with legends like Warren Buffett and Jim Simons showing us the way. We’ll tackle the human tendency towards negativity bias and uncover strategies to maintain a balanced, long-term perspective amidst market chaos.
In this enlightening episode, we dive into the fascinating intersection of finance and human psychology, revealing the subtle biases that influence our financial decisions. We'll take you on a journey through luck and risk, urging you to reflect on your own financial path and identify the beliefs that may either hinder or propel your success. By embracing continuous exploration and learning, we challenge you to question conventional financial wisdom and embrace your unique financial journey. Join us as we explore what wealth truly means and how you can harness the power of your financial DNA to chart a more prosperous future.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Hey everyone, Welcome back.
You know we love to dig deepinto the stuff you're curious
about, and today's topic is noexception.
We're talking the psychology ofmoney and we're really excited
to unpack this one using afascinating video by Escaping
Ordinary, called the Psychologyof Money in 20 Minutes.
Speaker 2 (00:17):
Should be interesting .
Speaker 1 (00:18):
It really is, because it's not just about the numbers
, right, we're diving into thewhy behind our financial choices
, those sometimes irrational,always fascinating human
elements.
We're going way beyond thespreadsheets and formulas today
because, honestly, ourupbringing, our experiences,
they have a much bigger impacton our financial lives than we
might realize.
Speaker 2 (00:39):
Absolutely Like it's baked in from the start.
Speaker 1 (00:40):
Exactly.
The video calls it ourfinancial DNA, and it's a great
way to think about it.
It's like this blueprint wedevelop early on that shapes how
we view and handle money.
Speaker 2 (00:49):
And we don't even realize it most of the time.
Speaker 1 (00:51):
It's true.
So think back for a second.
What was it like for yougrowing up?
Did your family talk aboutmoney openly, or was it kind of
a taboo subject?
Speaker 2 (01:00):
Oh yeah, Mine never did subject.
Speaker 1 (01:05):
Oh yeah, mine never did Right.
It really varies.
And then think about what theoverall economic climate was
like when you were a kid.
Were you encouraged to save,spend, invest All those little
things they add up to thisfinancial DNA that influences us
even decades later.
Speaker 2 (01:17):
It's incredible when you start to connect those dots
right.
Someone who grew up during, say, the booming stock market of
the 70s they might be moreinclined to see investing as the
sure thing, while someone whocame of age during the 2008
recession their instincts mightbe completely different.
Speaker 1 (01:33):
Totally Like someone who lived through the Great
Depression might be clutchingtheir pennies even now.
Speaker 2 (01:37):
Yeah.
Speaker 1 (01:38):
You know, it makes perfect sense based on their
individual experiences, theirown financial DNA.
Speaker 2 (01:42):
Makes you wonder about your own financial DNA,
doesn't it?
Speaker 1 (01:45):
It really does.
It's like what are some of yourearliest memories about money?
Were there any sayings yourfamily always repeated about
money?
Speaker 2 (01:52):
Oh, I bet there are tons.
Speaker 1 (01:53):
my grandmother used to say See, it's all there
shaping our money mindset eventoday, and speaking of which,
this really blew my mind.
The video points out thatWarren Buffett you know the
Oracle of Omaha himself.
He earned most of his massivewealth after turning 60.
Wow really Isn't that wild.
And it's not that we should allwait until retirement to get
(02:14):
our finances in order, but ithighlights this incredibly
powerful concept the magic ofcompounding.
Speaker 2 (02:20):
Compounding yeah.
Speaker 1 (02:21):
We've all heard about it, but sometimes it feels like
financial jargon.
So let's break it down.
Imagine this you invest just$1,000, right, and you get a
decent return, say 8% annually.
Not bad right.
Speaker 2 (02:33):
Not bad at all.
Speaker 1 (02:33):
So the first year you earn $80 in interest Okay, cool
.
But here's where the magichappens.
The next year you're not justearning 8% on your original
thousand, you're earning it on$1,080 because that first $80
got added back in.
Speaker 2 (02:49):
Right, it keeps building on itself.
Speaker 1 (02:51):
Exactly Year after year.
That snowball of money justgets bigger and bigger.
It's like this amazingfinancial chain reaction and the
longer it goes on the moredramatic the results.
Speaker 2 (03:01):
That's why starting early, even if it's with small
amounts, can make such a hugedifference in the long run.
Speaker 1 (03:07):
Totally.
And to really drive that pointhome, the video mentions that if
Warren Buffett had startedinvesting seriously at 30
instead of 10, his net worthtoday would be a staggering $72
billion less $72 billion.
Speaker 2 (03:19):
That's hard to even fathom.
Speaker 1 (03:20):
It really is, and it's not just about how much you
invest, but how long that moneyhas to grow.
Time really is your greatestally when it comes to building
wealth.
The video even uses the exampleof Jim Simons, who some argue
has even higher average returnsthan Buffett, but his overall
net worth is lower.
Speaker 2 (03:37):
Because he started later.
Speaker 1 (03:38):
Exactly.
He just hasn't had as much timefor that compounding magic to
work its wonders.
Speaker 2 (03:44):
It's mind-blowing when you think about how much
those early years of compoundingcan really snowball over a
lifetime.
Speaker 1 (03:51):
It really is.
But here's the catch right.
Even knowing all of this, itdoesn't always make it easy to
stay optimistic, especially whenthe markets get bumpy or we see
those scary headlines about theeconomy.
It's like we're almost wired toworry about money, even when
things seem to be going okay.
Speaker 2 (04:08):
Oh, absolutely.
Our brains are funny that way,aren't they?
We tend to have this negativitybias, especially when it comes
to finances.
It's like our brains arefixated on those potential
losses, those headlines aboutmarket crashes or companies
going under.
Speaker 1 (04:23):
And it's hard not to get sucked in, right, you see
those numbers going down and itfeels so real, so immediate.
Speaker 2 (04:28):
It makes sense from an evolutionary standpoint,
though, for most of humanhistory, those immediate threats
, they were the ones we had topay attention to to survive.
Speaker 1 (04:36):
Survival mode.
It's like our brains haven'tquite caught up to the fact that
we're not foraging for berriesanymore.
Speaker 2 (04:41):
Exactly.
But the thing is, while we'rebusy focusing on those potential
dangers, we often miss the slow, steady improvements happening
all around us.
Speaker 1 (04:51):
It's true.
Like medical advancements aremaking us live longer and
healthier lives, the overallstandard of living has been on
the rise for decades.
Speaker 2 (04:59):
Right.
But these positive trends,they're not as
attention-grabbing as a suddenloss or a scary headline.
Speaker 1 (05:05):
It's like that saying no news is good news, but try
telling that to our brains.
So how do we overcome thisnegativity bias, then?
How do we make smarterfinancial choices when our
instincts are telling us topanic?
Speaker 2 (05:18):
It's not about being naive or ignoring risks
altogether.
It's more about understandingthat our brains are wired this
way and we can adjust for it.
We don't have to be blindlyoptimistic, but having a more
balanced, long-term perspectivecan make a huge difference.
Speaker 1 (05:32):
A balanced perspective.
I like that.
And, speaking of perspective,the video shares some pretty
interesting stories that reallyhighlight the roles of luck and
risk in our financial lives.
Have you ever heard of KentEvans?
Speaker 2 (05:43):
Kent Evans?
I don't think so.
Speaker 1 (05:45):
He was a brilliant programmer, a close friend of
Bill Gates.
Back in their high school daysthey were both completely
obsessed with computers,practically inseparable.
And Kent well, he wasconsidered every bit as
brilliant as Gates.
Imagine if things had gonedifferently.
If he had lived a long, healthylife, he could have been right
there alongside Gates, aco-founder of Microsoft.
Speaker 2 (06:05):
Wow, that would have been something.
Speaker 1 (06:07):
Right, but tragically , that's not how the story goes.
Kent died in a mountainclimbing accident while they
were still in high school.
Speaker 2 (06:14):
Oh wow, that's incredibly sad.
Speaker 1 (06:16):
It is, and it really makes you think, doesn't it?
You have these two incrediblytalented individuals, both with
immense potential, but a singleunpredictable event dramatically
changed the course of theirlives and, arguably, the course
of tech history as we know it.
Speaker 2 (06:32):
It's humbling really.
You can have all the talent anddrive in the world, but
sometimes Sometimes it comesdown to luck, or maybe bad luck
in this case.
It underscores this point that,while we often focus on things
like talent and hard work, luckand risk are always there, these
ever present forces in ourlives.
It's like sailing you know, youcan chart a course, adjust your
(06:53):
sails, but you can't controlthe wind or the waves.
Speaker 1 (06:57):
It's so true, we can't control everything, but we
can control how we respond tothose unpredictable elements,
those winds and waves.
Speaker 2 (07:04):
Exactly Acknowledging that helps us cultivate
gratitude for the good fortunethat comes our way and build
resilience for the inevitablechallenges we'll face.
Speaker 1 (07:12):
It's about making smart choices with the
understanding that there arealways going to be factors
outside of our control.
And that leads us to anotherpoint.
The video makes the true natureof wealth.
I think we often equate it withthose material things the
flashy cars, expensive homes,luxury vacations.
Speaker 2 (07:27):
The things we see in magazines and on social media.
Speaker 1 (07:29):
Exactly, but this video makes a really important
distinction between being rich,which is often about those
outward appearances.
Speaker 2 (07:39):
And being truly wealthy.
Speaker 1 (07:42):
Yes, and it's not always what we think.
Speaker 2 (07:44):
It's about what you don't see right.
It's about the financialsecurity you've built, the
investments you've made, thefreedom and options that come
with knowing you're financiallysecure.
It's about having the resourcesto live life on your own terms,
pursue your passions, allwithout constantly worrying
about money.
Speaker 1 (08:03):
It's about having options and peace of mind.
Speaker 2 (08:05):
Exactly.
Speaker 1 (08:06):
It's easy to get caught up in appearances, though
.
You see someone driving a fancycar and you think, wow, they've
made it.
But what we don't see is maybethey're drowning in debt or
they're working themselves tothe bone just to maintain that
lifestyle.
Speaker 2 (08:18):
It's like that, saying wealth is what you don't
spend.
Speaker 1 (08:20):
It really resonates, doesn't it?
Yeah?
It's like that saying wealth iswhat you don't spend.
It really resonates, doesn't it?
Yeah, because it's about havingthe freedom to choose how you
spend your time, your energy,your resources.
It's about having the freedomto pursue your passions, spend
time with loved ones, give backto your community things that
money can't buy.
Speaker 2 (08:36):
It's about true fulfillment, not just financial
abundance.
And that's where the concept ofthe hedonic treadmill comes in
right, this idea that weconstantly adapt to our
circumstances, so we're alwaysstriving for that next level,
that next big thing, thinking itwill finally make us happy.
We get that raise, buy thatbigger house, but then the
goalposts move, we adapt andsuddenly we need something even
(08:58):
bigger, even better, to feelthat same level of satisfaction.
Bigger, even better, to feelthat same level of satisfaction.
Speaker 1 (09:02):
It's like this never-ending cycle of wanting
more, and the video uses somepretty striking examples of this
.
Like Bernie, madoff or Gupta,they achieved incredible
financial success, but weredriven by this insatiable desire
for more, even if it meantresorting to illegal activities.
They had millions, evenbillions, but it was never
enough.
(09:22):
Makes you think about your ownrelationship with enough,
doesn't it?
When is it enough, and how dowe escape this trap of always
wanting more, especially when itcomes to something like
investing, where the potentialgains seem limitless?
Speaker 2 (09:35):
It's a tough one, right?
Because on the one hand, youwant to grow your wealth, but on
the other hand, you don't wantto get caught in that endless
cycle of always chasing the nextbig thing.
Speaker 1 (09:43):
It's a balancing act, for sure, and the video
actually uses a reallyinteresting analogy to
illustrate this comparing thestock market to stealing a car.
Speaker 2 (09:51):
Stealing a car.
Ok, I'm intrigued, tell me more.
So let's say you want a car,right, you could buy a brand new
one.
It's the most expensive optionup front, but it also comes with
the highest potential reward.
Speaker 1 (10:03):
Right, like going for those high growth stocks,
hoping for those double digitreturns.
You know there's going to bevolatility, but the potential
upside is huge.
Speaker 2 (10:11):
Exactly Now.
You could also buy a used car.
It's cheaper, less risky, butyou're probably not going to see
those same massive returns.
Speaker 1 (10:20):
Like choosing a more conservative investment strategy
, maybe aiming for slow andsteady growth, instead of trying
to time the market perfectly.
Speaker 2 (10:27):
Right.
And then, of course, there'soption three stealing a car.
You get the car without payinganything up front, but the risks
are enormous.
Speaker 1 (10:35):
Yeah, getting caught facing serious consequences.
Not exactly a sound financialstrategy.
Speaker 2 (10:40):
Not at all.
But here's the thing when itcomes to the stock market, so
many people act like they canjust steal the car and get away
with it.
They're looking for shortcuts,those guaranteed wins, trying to
avoid any and all losses.
Speaker 1 (10:53):
They want the reward without the risk, which, as we
know, is pretty much impossiblein any area of life, let alone
the stock market.
Speaker 2 (11:01):
Exactly.
And what they often miss isthat volatility, those ups and
downs.
They're not some kind of flawin the system, they're the price
of admission.
Speaker 1 (11:10):
It's like an entry fee.
You pay for the opportunity topotentially build long term
wealth.
Speaker 2 (11:15):
Exactly.
You can't expect thosepotentially high returns without
accepting the fact that themarket's going to go up and down
along the way.
Speaker 1 (11:22):
So instead of seeing those market dips as some kind
of punishment or failure, we canreframe them as opportunities.
Speaker 2 (11:28):
Opportunities to buy low and ride the market back up.
Speaker 1 (11:31):
I love that perspective shift and you know
it's funny because so much ofwhat we've talked about today
it's not about complex formulasor investment strategies.
It's about understandingourselves, our own psychology,
our own relationship with money.
Speaker 2 (11:44):
It's about those deep-seated beliefs and biases
we've developed over time, thatfinancial DNA we were talking
about earlier.
Speaker 1 (11:51):
Absolutely.
And once we understand thosethings, we can start making more
conscious, intentional choiceswith our money, choices that
align with our values, our goalsand our own unique financial
DNA.
Well, this has been anincredibly insightful deep dive.
We've covered so much ground,from our financial DNA to the
power of compounding the sneakybiases our brains have, the
(12:11):
roles of luck and risk and thetrue meaning of wealth.
Speaker 2 (12:14):
It's a lot to think about, but it's all connected,
isn't it?
Speaker 1 (12:17):
It really is, because , ultimately, financial success
isn't just about knowing thenumbers.
It's about understanding thehuman side of money, the
psychology behind our choices.
So, as you go about your week,we encourage you to reflect on
what we've discussed today.
Think about your own financialjourney, your own financial DNA,
and see if you can identifythose patterns, those beliefs
that might be holding you backor propelling you forward.
(12:38):
That's all for today's DeepDive.
Until next time, keep exploring, keep learning and keep asking
those great questions.
Hey everyone, Welcome back.
You know we love to dig deepinto the stuff you're curious
about, and today's topic is noexception.
We're talking the psychology ofmoney and we're really excited
to unpack this one using afascinating video by Escaping
Ordinary, called the Psychologyof Money in 20 Minutes.
Speaker 2 (00:17):
Should be interesting .
Speaker 1 (00:18):
It really is, because it's not just about the numbers
, right, we're diving into thewhy behind our financial choices
, those sometimes irrational,always fascinating human
elements.
We're going way beyond thespreadsheets and formulas today
because, honestly, ourupbringing, our experiences,
they have a much bigger impacton our financial lives than we
might realize.
Speaker 2 (00:39):
Absolutely Like it's baked in from the start.
Speaker 1 (00:40):
Exactly.
The video calls it ourfinancial DNA, and it's a great
way to think about it.
It's like this blueprint wedevelop early on that shapes how
we view and handle money.
Speaker 2 (00:49):
And we don't even realize it most of the time.
Speaker 1 (00:51):
It's true.
So think back for a second.
What was it like for yougrowing up?
Did your family talk aboutmoney openly, or was it kind of
a taboo subject?
Speaker 2 (01:00):
Oh yeah, Mine never did subject.
Speaker 1 (01:05):
Oh yeah, mine never did Right.
It really varies.
And then think about what theoverall economic climate was
like when you were a kid.
Were you encouraged to save,spend, invest All those little
things they add up to thisfinancial DNA that influences us
even decades later.
Speaker 2 (01:17):
It's incredible when you start to connect those dots
right.
Someone who grew up during, say, the booming stock market of
the 70s they might be moreinclined to see investing as the
sure thing, while someone whocame of age during the 2008
recession their instincts mightbe completely different.
Speaker 1 (01:33):
Totally Like someone who lived through the Great
Depression might be clutchingtheir pennies even now.
Speaker 2 (01:37):
Yeah.
Speaker 1 (01:38):
You know, it makes perfect sense based on their
individual experiences, theirown financial DNA.
Speaker 2 (01:42):
Makes you wonder about your own financial DNA,
doesn't it?
Speaker 1 (01:45):
It really does.
It's like what are some of yourearliest memories about money?
Were there any sayings yourfamily always repeated about
money?
Speaker 2 (01:52):
Oh, I bet there are tons.
Speaker 1 (01:53):
my grandmother used to say See, it's all there
shaping our money mindset eventoday, and speaking of which,
this really blew my mind.
The video points out thatWarren Buffett you know the
Oracle of Omaha himself.
He earned most of his massivewealth after turning 60.
Wow really Isn't that wild.
And it's not that we should allwait until retirement to get
(02:14):
our finances in order, but ithighlights this incredibly
powerful concept the magic ofcompounding.
Speaker 2 (02:20):
Compounding yeah.
Speaker 1 (02:21):
We've all heard about it, but sometimes it feels like
financial jargon.
So let's break it down.
Imagine this you invest just$1,000, right, and you get a
decent return, say 8% annually.
Not bad right.
Speaker 2 (02:33):
Not bad at all.
Speaker 1 (02:33):
So the first year you earn $80 in interest Okay, cool
.
But here's where the magichappens.
The next year you're not justearning 8% on your original
thousand, you're earning it on$1,080 because that first $80
got added back in.
Speaker 2 (02:49):
Right, it keeps building on itself.
Speaker 1 (02:51):
Exactly Year after year.
That snowball of money justgets bigger and bigger.
It's like this amazingfinancial chain reaction and the
longer it goes on the moredramatic the results.
Speaker 2 (03:01):
That's why starting early, even if it's with small
amounts, can make such a hugedifference in the long run.
Speaker 1 (03:07):
Totally.
And to really drive that pointhome, the video mentions that if
Warren Buffett had startedinvesting seriously at 30
instead of 10, his net worthtoday would be a staggering $72
billion less $72 billion.
Speaker 2 (03:19):
That's hard to even fathom.
Speaker 1 (03:20):
It really is, and it's not just about how much you
invest, but how long that moneyhas to grow.
Time really is your greatestally when it comes to building
wealth.
The video even uses the exampleof Jim Simons, who some argue
has even higher average returnsthan Buffett, but his overall
net worth is lower.
Speaker 2 (03:37):
Because he started later.
Speaker 1 (03:38):
Exactly.
He just hasn't had as much timefor that compounding magic to
work its wonders.
Speaker 2 (03:44):
It's mind-blowing when you think about how much
those early years of compoundingcan really snowball over a
lifetime.
Speaker 1 (03:51):
It really is.
But here's the catch right.
Even knowing all of this, itdoesn't always make it easy to
stay optimistic, especially whenthe markets get bumpy or we see
those scary headlines about theeconomy.
It's like we're almost wired toworry about money, even when
things seem to be going okay.
Speaker 2 (04:08):
Oh, absolutely.
Our brains are funny that way,aren't they?
We tend to have this negativitybias, especially when it comes
to finances.
It's like our brains arefixated on those potential
losses, those headlines aboutmarket crashes or companies
going under.
Speaker 1 (04:23):
And it's hard not to get sucked in, right, you see
those numbers going down and itfeels so real, so immediate.
Speaker 2 (04:28):
It makes sense from an evolutionary standpoint,
though, for most of humanhistory, those immediate threats
, they were the ones we had topay attention to to survive.
Speaker 1 (04:36):
Survival mode.
It's like our brains haven'tquite caught up to the fact that
we're not foraging for berriesanymore.
Speaker 2 (04:41):
Exactly.
But the thing is, while we'rebusy focusing on those potential
dangers, we often miss the slow, steady improvements happening
all around us.
Speaker 1 (04:51):
It's true.
Like medical advancements aremaking us live longer and
healthier lives, the overallstandard of living has been on
the rise for decades.
Speaker 2 (04:59):
Right.
But these positive trends,they're not as
attention-grabbing as a suddenloss or a scary headline.
Speaker 1 (05:05):
It's like that saying no news is good news, but try
telling that to our brains.
So how do we overcome thisnegativity bias, then?
How do we make smarterfinancial choices when our
instincts are telling us topanic?
Speaker 2 (05:18):
It's not about being naive or ignoring risks
altogether.
It's more about understandingthat our brains are wired this
way and we can adjust for it.
We don't have to be blindlyoptimistic, but having a more
balanced, long-term perspectivecan make a huge difference.
Speaker 1 (05:32):
A balanced perspective.
I like that.
And, speaking of perspective,the video shares some pretty
interesting stories that reallyhighlight the roles of luck and
risk in our financial lives.
Have you ever heard of KentEvans?
Speaker 2 (05:43):
Kent Evans?
I don't think so.
Speaker 1 (05:45):
He was a brilliant programmer, a close friend of
Bill Gates.
Back in their high school daysthey were both completely
obsessed with computers,practically inseparable.
And Kent well, he wasconsidered every bit as
brilliant as Gates.
Imagine if things had gonedifferently.
If he had lived a long, healthylife, he could have been right
there alongside Gates, aco-founder of Microsoft.
Speaker 2 (06:05):
Wow, that would have been something.
Speaker 1 (06:07):
Right, but tragically , that's not how the story goes.
Kent died in a mountainclimbing accident while they
were still in high school.
Speaker 2 (06:14):
Oh wow, that's incredibly sad.
Speaker 1 (06:16):
It is, and it really makes you think, doesn't it?
You have these two incrediblytalented individuals, both with
immense potential, but a singleunpredictable event dramatically
changed the course of theirlives and, arguably, the course
of tech history as we know it.
Speaker 2 (06:32):
It's humbling really.
You can have all the talent anddrive in the world, but
sometimes Sometimes it comesdown to luck, or maybe bad luck
in this case.
It underscores this point that,while we often focus on things
like talent and hard work, luckand risk are always there, these
ever present forces in ourlives.
It's like sailing you know, youcan chart a course, adjust your
(06:53):
sails, but you can't controlthe wind or the waves.
Speaker 1 (06:57):
It's so true, we can't control everything, but we
can control how we respond tothose unpredictable elements,
those winds and waves.
Speaker 2 (07:04):
Exactly Acknowledging that helps us cultivate
gratitude for the good fortunethat comes our way and build
resilience for the inevitablechallenges we'll face.
Speaker 1 (07:12):
It's about making smart choices with the
understanding that there arealways going to be factors
outside of our control.
And that leads us to anotherpoint.
The video makes the true natureof wealth.
I think we often equate it withthose material things the
flashy cars, expensive homes,luxury vacations.
Speaker 2 (07:27):
The things we see in magazines and on social media.
Speaker 1 (07:29):
Exactly, but this video makes a really important
distinction between being rich,which is often about those
outward appearances.
Speaker 2 (07:39):
And being truly wealthy.
Speaker 1 (07:42):
Yes, and it's not always what we think.
Speaker 2 (07:44):
It's about what you don't see right.
It's about the financialsecurity you've built, the
investments you've made, thefreedom and options that come
with knowing you're financiallysecure.
It's about having the resourcesto live life on your own terms,
pursue your passions, allwithout constantly worrying
about money.
Speaker 1 (08:03):
It's about having options and peace of mind.
Speaker 2 (08:05):
Exactly.
Speaker 1 (08:06):
It's easy to get caught up in appearances, though
.
You see someone driving a fancycar and you think, wow, they've
made it.
But what we don't see is maybethey're drowning in debt or
they're working themselves tothe bone just to maintain that
lifestyle.
Speaker 2 (08:18):
It's like that, saying wealth is what you don't
spend.
Speaker 1 (08:20):
It really resonates, doesn't it?
Yeah?
It's like that saying wealth iswhat you don't spend.
It really resonates, doesn't it?
Yeah, because it's about havingthe freedom to choose how you
spend your time, your energy,your resources.
It's about having the freedomto pursue your passions, spend
time with loved ones, give backto your community things that
money can't buy.
Speaker 2 (08:36):
It's about true fulfillment, not just financial
abundance.
And that's where the concept ofthe hedonic treadmill comes in
right, this idea that weconstantly adapt to our
circumstances, so we're alwaysstriving for that next level,
that next big thing, thinking itwill finally make us happy.
We get that raise, buy thatbigger house, but then the
goalposts move, we adapt andsuddenly we need something even
(08:58):
bigger, even better, to feelthat same level of satisfaction.
Bigger, even better, to feelthat same level of satisfaction.
Speaker 1 (09:02):
It's like this never-ending cycle of wanting
more, and the video uses somepretty striking examples of this
.
Like Bernie, madoff or Gupta,they achieved incredible
financial success, but weredriven by this insatiable desire
for more, even if it meantresorting to illegal activities.
They had millions, evenbillions, but it was never
enough.
(09:22):
Makes you think about your ownrelationship with enough,
doesn't it?
When is it enough, and how dowe escape this trap of always
wanting more, especially when itcomes to something like
investing, where the potentialgains seem limitless?
Speaker 2 (09:35):
It's a tough one, right?
Because on the one hand, youwant to grow your wealth, but on
the other hand, you don't wantto get caught in that endless
cycle of always chasing the nextbig thing.
Speaker 1 (09:43):
It's a balancing act, for sure, and the video
actually uses a reallyinteresting analogy to
illustrate this comparing thestock market to stealing a car.
Speaker 2 (09:51):
Stealing a car.
Ok, I'm intrigued, tell me more.
So let's say you want a car,right, you could buy a brand new
one.
It's the most expensive optionup front, but it also comes with
the highest potential reward.
Speaker 1 (10:03):
Right, like going for those high growth stocks,
hoping for those double digitreturns.
You know there's going to bevolatility, but the potential
upside is huge.
Speaker 2 (10:11):
Exactly Now.
You could also buy a used car.
It's cheaper, less risky, butyou're probably not going to see
those same massive returns.
Speaker 1 (10:20):
Like choosing a more conservative investment strategy
, maybe aiming for slow andsteady growth, instead of trying
to time the market perfectly.
Speaker 2 (10:27):
Right.
And then, of course, there'soption three stealing a car.
You get the car without payinganything up front, but the risks
are enormous.
Speaker 1 (10:35):
Yeah, getting caught facing serious consequences.
Not exactly a sound financialstrategy.
Speaker 2 (10:40):
Not at all.
But here's the thing when itcomes to the stock market, so
many people act like they canjust steal the car and get away
with it.
They're looking for shortcuts,those guaranteed wins, trying to
avoid any and all losses.
Speaker 1 (10:53):
They want the reward without the risk, which, as we
know, is pretty much impossiblein any area of life, let alone
the stock market.
Speaker 2 (11:01):
Exactly.
And what they often miss isthat volatility, those ups and
downs.
They're not some kind of flawin the system, they're the price
of admission.
Speaker 1 (11:10):
It's like an entry fee.
You pay for the opportunity topotentially build long term
wealth.
Speaker 2 (11:15):
Exactly.
You can't expect thosepotentially high returns without
accepting the fact that themarket's going to go up and down
along the way.
Speaker 1 (11:22):
So instead of seeing those market dips as some kind
of punishment or failure, we canreframe them as opportunities.
Speaker 2 (11:28):
Opportunities to buy low and ride the market back up.
Speaker 1 (11:31):
I love that perspective shift and you know
it's funny because so much ofwhat we've talked about today
it's not about complex formulasor investment strategies.
It's about understandingourselves, our own psychology,
our own relationship with money.
Speaker 2 (11:44):
It's about those deep-seated beliefs and biases
we've developed over time, thatfinancial DNA we were talking
about earlier.
Speaker 1 (11:51):
Absolutely.
And once we understand thosethings, we can start making more
conscious, intentional choiceswith our money, choices that
align with our values, our goalsand our own unique financial
DNA.
Well, this has been anincredibly insightful deep dive.
We've covered so much ground,from our financial DNA to the
power of compounding the sneakybiases our brains have, the
(12:11):
roles of luck and risk and thetrue meaning of wealth.
Speaker 2 (12:14):
It's a lot to think about, but it's all connected,
isn't it?
Speaker 1 (12:17):
It really is, because , ultimately, financial success
isn't just about knowing thenumbers.
It's about understanding thehuman side of money, the
psychology behind our choices.
So, as you go about your week,we encourage you to reflect on
what we've discussed today.
Think about your own financialjourney, your own financial DNA,
and see if you can identifythose patterns, those beliefs
that might be holding you backor propelling you forward.
(12:38):
That's all for today's DeepDive.
Until next time, keep exploring, keep learning and keep asking
those great questions.
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