Simply Money

Episode Transcript

(00:10):
Tonight a push for more choices foryou the investor. But hey, is
that even a good thing? You'relistening to? Simply Money presented my all
Worth Financial Amimi Wagner along with SteveRuby. No doubt, you've got lots
of options when it comes to investingyour money. You've got stocks, bonds,
gold, collectibles, and we've covereddozens of other things here throughout the

(00:32):
years that come in and come outright, and so tonight we're looking at
a number of products that might beavailable to you soon and we're going to
give you our take on them.Crypto nothing new here, Steve, as
far as something that you can investin, But our issue has always been
sort of a lack of regulation aroundthat. Congress is trying to change that.

(00:53):
Yeah, it might seem funny talkingabout regulation and wanting more regulation,
but yeah, through the lens ofthe finalancial sector, regulation is not necessarily
a bad thing because it protects theinvestor from from purchasing certain securities that can
where they can lose their shirt.You know, they don't fully understand what
they're getting into, and in asituation like that, it can really derail

(01:15):
your retirement and other financial goals.So yes, when it comes to crypto
and certain securities, we have alwaystalked about there being it being important to
have some level of regulation. Andcurrently the House of Representatives, so this
is just the House, by theway, yes, past landmark crypto legislation

(01:36):
with with actually strong bipartisan support.Now, that is a very rare,
very rare situation. That is avery rare situation. And you know,
obviously that shows that that Washington's attitudecould be changing when it comes to crypto.
For example, I see some goodand some bad in this. You
mentioned we're not usually fans of regulation, but when it comes to your investments,

(01:57):
we've seen historically over time, theseare just good protections to have in
place for you as an investor.And my number one concern about crypto has
always been just a lack of regulation. I mean, it's like the wild
wild West out there. There's nothingpreventing you from investing hard earned money that
is in I mean, it's likegoing to Las Vegas and taking a long

(02:20):
shot gamble. And so I likethe fact that Washington is taking a serious
look at Okay, how can weprotect investors from investing in cryptocurrency? This
law at least what the House ofRepresentatives is presenting at this point would create
kind of a tailored disclosure in registrationregime for digital asset companies. That sounds

(02:40):
on its face like a step inthe right direction. Here's the point that
I'm not so sure about. They'relooking at the Commodity Futures Trading Commission as
the ones who would regulate Excuse me, the what that's a thing? I
mean? The sec right, theSecurities in extantme Commission has always sort of
been in charge of regulating investments likethis. So it makes me a bit

(03:07):
nervous that this no name situation,not sure who is part of this is
now at least under this what Congressis or at least what the House of
Representatives is putting out, there wouldbe the ones that would regulate this when
they don't have this long history oflooking at investments and figuring out, okay,
what is the best way to tailorregulations in order to truly protect investors.

(03:30):
Yeah, that's what you bring up. A long history. The sec
was established in nineteen thirty three,and thirty four is when it actually came
to fruition because of the US SecuritiesAct of nineteen thirty three and the Securities
Exchange Act of nineteen thirty four,which was largely created in response to the
stock market crash of nineteen twenty nine. Yes, we're talking about the Great

(03:51):
Depression. So the SEC has along running history of putting forth regulations to
protect investors from those that investments.And I think it's interesting because people in
the crypto world are saying, well, listen, the SEC shouldn't be the
ones to regulate this. We're justtoo different. That's what really makes me

(04:12):
nervous. Yes, you're different.It's a different kind of something to be
investing in because the in value isinherently what you tell people that it is.
You're creating these kinds of digital coinsin buying and selling them at the
same time. It's nothing new.It's nothing new. The SEC has been
regulating new kinds of investment opportunities foryears and years and years, and has

(04:35):
a long history, to your point, going back to the nineteen thirties,
so almost one hundred years of protectinginvestors. Why can't they protect Why can't
they regulate digital currency? I don'tknow. It would make me feel a
little better about the situation if theywere the ones at the helm of this,
not some organization I've never heard of. I agree wholeheartedly, and in

(04:57):
fact, the chair of the SECthey usually we don't come out and speak
publicly and attempt to sway Congress,but they did forcibly come out against this
bill Wednesday morning last week, talkingabout it not being enough and essentially asking
why would it be regulated by someoneelse that isn't the SEC. Obviously.
The argument there is it would createregulatory gaps and undermine literally decades of precedent.

(05:23):
It would be like saying, here'sthe Stephen Amy Commission on crypto.
Yeah, we have no history.We've got lots of opinions about it.
We have no history and regulating investments. Let's throw us out there and see
what we can do with it.You know. That's my concern with this.
I do like that Washington's looking atthis now. Just a reminder,
right, this is just what theHouse is put out there. As we
know this Senate likes to come upwith their own version of events. We're

(05:46):
far from having a law, We'refar from having regulations in place to protect
you as an investor. I likethe fact that we're talking about this.
Not sure about the direction of thisone, of course, will continue to
keep you updated and let you knowwhat you need to know. You're listening
to Simply Money presented by all WorthFinancial I Memi Wagner along with Steve Ruby,
as we talk about just some majorheadlines that could impact you as an

(06:09):
investor. First of all, we'vegot Washington looking at regulating cryptocurrency, potentially
a step in the right direction dependingon how they decide to do that.
But at the same time, wehave State Street Global Advisors right there are
huge in the space of ETFs,exchange traded funds, which have always been
incredibly popular or recent years been incrediblypopular in the world of investing. In

(06:31):
IRA is saying hey, let's tryto take this to four a one case.
Yeah, and you know I haveseen this in four to one case
over the span of my career.It's not very common, but they're trying
to make it more of a mainstay. Remember ETFs, it's similar to a
mutual fund and that it invests ina bucket of securities that trades in an

(06:53):
exchange, but it trades like astock. So anytime throughout the day you
can trade an ETF. It's notjust when the markets closed. So there's
much more liquidity as far as tradingis concerned. They oftentimes do have lower
expense ratios as well. Es that'swhy we're big fans of ETFs right always
have been, for the fact thatthere's lower cost vehicles for investing. So

(07:15):
I think this is an interesting thingjust to push these more into the world
of four to one case. It'samazing how much four one ks have have
changed grown adapted over the years,from just a couple of options, some
of them not so great for investors, to a myriad of options. I
mean there's you know, talk ofin some places you can invest in crypto

(07:35):
in a lot of some of alot of these changes to four one k's
I would say, hmm, notso sure about this one. This one
I think could be a move inthe right direction. Absolutely, it's a
move in the direct in the rightdirection. Anything that brings down internal expenses
for a four to oh one Kis a win for investors because the four
to one K is the primary vehiclethat that folks these days are using,

(07:58):
to say, for retirement. Soif we can find a way to make
it more cost effective, then that'sa win. That's a big win and
I'm a huge advocate for this one. There is no reason that I can
think of why we wouldn't want tohave ETFs in your fund line up inside
of your four toh one K.Yeah, we're going to chalk this one
up right here, right now asa win for investors. We'll definitely see
how this one continues to pan out. Here's another interesting one. I'd like

(08:22):
to get your take on this one. Charles Schwab, Right, huge,
huge corporation in the world of investing, planning to roll out an alternative investments
platform. This is in phases forindividual investments. This individual investors this year.
Well let's be clear here, thisisn't all individual investors. This is

(08:43):
major caveat. Yeah, it's abig caveat. So the platform, it's
going to offer access to private equity, venture capital, private credit, long
short exchange funds, a lot ofmore sophisticated investment strategies that's going to be
available to get this individuals that havemore than five million dollars in assets.

(09:03):
So this isn't the everyday retail investorthat this is people that would already be
considered accredited or even sophisticated investors.You know, there's nothing wrong with this.
Different with what we're talking about hereis alternative investments to add a level
of diversification to a portfolio. Advisorsdo that frequently for the folks that they

(09:24):
work with these investments, when youknow what you're doing and you know how
they fit in with a long termfinancial plan and clients individual goals, it's
fine, but they are also morecomplex and risky, so for the individual
investor. Honestly, I'm glad tosee that there is kind of a limit

(09:45):
here because if everybody was to haveaccess to this, then a lot of
people could hurt themselves. Agreed.For those who are feeling a little fomo
right now, fear of missing out, like, don't what is this?
I want access to private equity,venture capital, these things, Listen,
This is not the foundation of astrong long term financial plan. You can

(10:07):
still get to where you want checkoff all the boxes on your financial goals
without having any access to any ofthis. This is next level stuff for
people who have been incredibly successful atsaving and investing, and yeah, have
a little bit of leeway to sayI'm going to take on this investment if
I lose my shirt, well,and I'm assuming probably they wouldn't have enough

(10:28):
in this that they would lose theirshirt. But if I lose a lot
of money and I still have alot of money on the sideline, this
is not going to crash and burnsomeone's entire retirement because they would have a
lot of other money invested in otherplaces. So this is like next level
investing. The average investor doesn't necessarilyneed to have access to this. Yeah,
I agree with that. And again, if you are working with an
advisor, sometimes you will have exposureto these types of investments, and that's

(10:50):
fine because if they know what they'redoing and it adds a level of diversification,
then it is an opportunity to takeadvantage of these times of investments.
And you don't need to feel likeyou're missing out if you don't have five
million dollars and can't use schwabs newyou know plat retail platform to investment.
Well, and just to remember thiscan this kind of investment can sound incredibly

(11:11):
sexy, right, like, ooh, this is a get rich quick kind
of a situation, access to thingsthat I wouldn't normally have. That is
not the way that people who buildwealth by investing build wealth. I mean,
it just isn't you know, WarrenBuffett has said many many times in
many different ways, it's slow andsteady. It's investing in what you truly

(11:31):
know and what you truly understand.Here's the all Worth advice. If there
is ever an investment you are curiousabout but you don't fully understand, please
please reach out to a qualified financialprofessional to determine if this really makes sense
for you, your plan and yourportfolio. Coming up next, another important
reason to stay invested when times getreally tough. You're listening to Simply Money

(11:52):
presented by all Worth Financial. Herein fifty five KR see the talk station.
You're listening to Simply Money presented byall Worth Financial. I mean you
ignore along with Lee Ruby. Ifyou can't listen to our show every night,
you do not have to miss athing. We have a daily podcast

(12:13):
for you. Just search Simply Moneyon the iheartapp or wherever you get your
podcasts. Straight ahead, it's sixforty three. We're going to get into
the rule of seventy two. Forthose of you who like numbers, this
is a really fun one. We'lltell you why you should care about this.
So there's some new data tonight shininga light on americans struggles with the
high cost of home ownership. It'snot just that it's kind of hard to

(12:37):
get a foot in the door forfirst time home buyer, Steve, and
of course you've got interest rates highand so much competition, not a lot
of inventory on the market. Itgoes beyond that. There's a lot of
people who say, well, Ibought this house, now I regret it.
Yeah, there's a lot of regretsbank rates. Annual homeowners Regrets Survey
in fact, for twenty twenty fourcame out forty seven percent of current US

(13:00):
homeowners have a regret about their purchase. Forty seven percent. That is,
that's too high, that's unfortunate,But that's that's the people say, I
wish I had not bought this itwas amazing. I mean, it's it
speaks volumes that you know right now, inventories are so low, prices are
so high that it's a seller's market. When buyers want to get in and
they have a house available, theyare doing what they can to get into

(13:22):
that house. They're foregoing having inspectionsdone, so they don't exactly know what
they're getting into because they just wantedthat house, So of course regrets are
going to be higher in situations likethat. A lot of the regrets fall
to this is old news. Thisisn't anything new to me. Hidden costs
are higher than expected costs associated withhome ownership. Forty percent of people suffer

(13:46):
from that they bought a house toosmall, eighteen percent their house is in
a bad location fifteen percent. That'san interesting one because don't you research it
before you buy where the home is. I thought that was interesting too,
because I thought people often bought newhomes because of location based on location alone.
So is that because they have abad neighbor? I mean maybe?

(14:09):
Or I wonder whether it's not justthis kind of new world that we've lived
in during the pandemic and post pandemic, where it was kind of like wherever
you can get a house, you'regoing to get one. So maybe I
wonder if that one has changed alittle bit. Listen, this is the
kind of thing. So many emotionsplay into buying a home, and I
think many times you can overlook that. When you are going into buying a

(14:31):
home, have a lot of conversationsfirst, right with bankers, with lenders,
with your family, to figure outwhat you truly can afford. YEA,
what really makes sense, because whenyou get into one of these bidding
wars, or you walk into ahome and you fall in love with that
kitchen, or you can see yourkids getting married on the back deck,
whatever it is, right that wekind of picture when we buy these homes,
all of what makes sense, allof logic, can fly out the

(14:54):
window. But if you have thesethings buttoned down going into the process of
buying, then I think you're lesslikely to have regrets. On the other
side, it's also making sure thatyou have that emergency fund when and don't
spend it all down because if fortypercent of homeowners regret not understanding what the
expenses associated with ownership really are,then that shows the importance of making sure

(15:15):
that you have a pile of cashon the sidelines to support yourself in the
event that an unexpected expense comes yourway. Not so long ago, the
year I was born? Right,why not so long ago? I felt
like, I see what you did? There's impressed. It was that the
year I was born, the DellJones industrial average said at less than one
thousand nine to seventy five. Itis now hovering near forty thousand. So

(15:37):
if you have stayed in the marketright for a long time without a doubt
as an investor, you are lovinglife. And I think many times investors
say, oh, it's so high, now, how high could it possibly
go? Well, back in nineteenninety five, there's a mutual fund pioneer
that predicted the Dow Jones will getto one hundred and sixteen thousand, two

(16:00):
hundred, exactly exact numbers here inthe year twenty forty, it was laughable
with the Dow standing at forty fivehundred at that point. Warren Buffett took
it a step further in twenty seventeen. Get this, he said, when
the Dow was at twenty two thousand, he predicted that it would eventually reach
one million. Yes, Burger andBuffett right, they were just looking at

(16:21):
long term averages, expecting history torepeat itself and win out. It looked
like they were crazy at the timethat they made these just huge predictions,
But now as we continue to getcloser and closer to those years, it's
super realistic. Right. If theDow were to deliver an annualized gain of
about seven percent, both of thosepredictions would land up right in the realm

(16:45):
of a strong posibility coming to fruition. Yeah, so in twenty forty is
when we would be looking at onehundred and sixteen thy two hundred based on
Burger's prediction at the same seven percentrate, it would take about forty eight
years to have Buffets prediction come tofruition reaching the Dow reaching one million.

(17:07):
As an investor, it can soundcrazy sometimes when you hear these numbers,
to be like, how could thateven be possible? Andy Stouter, Chief
investment Officer, made a point lastweek on the show that I think bears
repeating time and time and time againbecause it is so simple, it is
so profound that it is so true, which is that the stock market is
based on corporate greed, companies whowere determined to make money, to drive

(17:30):
profits, to increase revenue. Andas long as that is the goal,
right and we know it is,and we know it will continue to be
in the future, then there's noway to bet against. If there's no
reason to bet against these numbers.Someone recently was making the point, I
think it was to you and IOkay, So during the pandemic, when
people weren't going into liquor stores anymore. There were some liquor producers, spirits

(17:52):
producers who were like, how canwe pivot? How can we pivot?
During this time, they used thealcohol to make hand sanitiz It was such
a pivot away from what they hadalways done, yet they found a way
to continue making money. I remembergoing into stores and getting the hand sanitizer
and smelling it and being like,oh my gosh, it smells like pure
alcohol, like pure vodka or whatever. Cuilla, Yes, why is it

(18:18):
extra lemony? Right? Because thisis the actual alcohol. And in just
a brilliant example though, of howthese companies are always always going to find
a way to make money. Yeah, and that's that's a brilliant example.
But you know, even when itcomes to a recession, for example,
now, one of the unfortunate impactsof that could be companies laying off employees
in a situation like that, they'redoing it to save money on their bottom

(18:40):
line, and ultimately that's going toaffect the share price of the stock that
that trades on the open market.So the recessions are cyclical. They're going
to come, they're going to go, but the markets are going to continue
to rise over the long term.And that's exactly what Burger and Buffett are
talking about here with their seemingly wildpredictions about where the Dow is going to
end up. But the stock marketsare like walking up the stairs of plane

(19:02):
with the yoo. They're going togo up over the long term, reachingain
of those bumps along the way.And these are not people who ever thought,
okay, these are going to goup, just straight up. They
knew that these cycles were just anormal, healthy part of the process of
investing. They took those into account. And yet still as you then jump
forward to all these years from thesepredictions, you're saying, Okay, even
with some pullbacks the normal healthy partof the cycle, we're still likely on

(19:25):
track to hit these thresholds. Here'sthe all Worth advice. It's just pretty
simple. If you can stay calmduring the rough patches in the market and
watch those numbers rise and rise timeand time again, that's smart long term
investing. Coming up next, whatgetting hit in the face can teach you
about personal finance. You're listening toSimply Money presented by all Worth Financial here

(19:45):
in fifty five KRC. The talkstation. You're listening to Simply Money presented
by all Worth Financial, I meanWagonerre along with Steve Ruby. One of
the things I love about our guesttonight, Alred Egg from Game Time Budgeting,
is that he has all kinds ofinteresting ways to drive home incredibly important

(20:10):
points about our money. And tonightyou are gonna tell us how getting hit
in the face can actually teach ussomething about money. I don't know if
you should sign me up for thislesson, but here we go. So,
as always, you know, Ihave a story. So when I
wake up in the morning, Itypically do push ups because it helps me
start my day with a little exerciseand a quick win for the morning.

(20:34):
So, as with anything in life, doing the same thing over and over
can kind of get routine and boring. So I decided to make my pushups
a little bit more fun amy bydoing them in the dark. Right,
and let see our push ups fun? Ever? Can you make that more
fun? Yes? You can?Dark? Okay? So the other day,

(20:59):
you know, I'm doing I pushup so that everything is going going
according to plan. I'm in myhigh plank position, my feet are together,
my cores engaged, so as I'minhaling, of course I'm lowering myself
to the floor and then on exhale, I'm pushing myself back up. So
I begin to notice that push upsin the dark are very relaxing. So

(21:19):
I didn't realize it at the time, but my neck became very relaxed.
So the next time I went down, I smashed my face against the carpet.
So that was how I got hitin the face. But because my
mind works the way that it does, amy, of course, I started
thinking about how that could teach aperson financial lessons. So, if you

(21:41):
don't mind, let me throw outa couple right. So, yeah,
So, because you know, I'vebeen accustomed to do a push ups,
you know, in the light,I automatically assumed that doing push ups in
the dark would be no different.So I thought that I would just rise
to the occasion. Right, Butwhat most people do, as it relates

(22:04):
to push ups and with money,we don't rise to the occasion. We
fall back to the level of ourtraining and understand it. Okay, So
as it relates to money, ifyou want to create better practices or behaviors
with money, you really don't wantto set yourself up so far as rising

(22:26):
up to the occasion. What youreally want to do is practice the behavior
that you want to perfect. Youknow, a lot of people say practice
makes perfect, and I actually saidthat incorrectly. It doesn't. Practice does
not make things perfect. However,practice makes permanent. So the goal with
money is to just practice behaviors thatproduce specific results. If that makes sense.

(22:51):
Absolutely, that is so true,so true, And can I throw
out one more thing I learned,please? So another thing that I learned
was this, when any part ofa system changes, there is always a
consequence. So my consequence for doingpushups in the dark in contrast to the

(23:12):
light, we'll smashing my face againstthe carpet. Right. But just like
most people will get an annual willpay increase, what we typically do,
we allow lifestyle creep to set inwhere we aren't focusing on saving more for
the future or putting more money awayfrom retirement. We let our spending increase

(23:33):
along with our pay raise, andthen we set ourselves up for failure in
the future. So I always say, when any part of a system changes,
they just make sure you are fullyaware of the consequences. We're huge
advocates of what you just talked aboutthere being cognizant of lifestyle creep, because,
for example, if you're employed yourincome goes up, what you should

(23:56):
be doing is maybe exploring the autoincrease program that may exist in your four
one K contributions, for example,that you know that increases your contributions by
one or two percent each year,so that you're automatically saving more without having
to think about going in and proactivelymaking that change. That's also going to
remove some of the risk of fallinginto a pattern of lifestyle creep where you

(24:18):
just start spending that extra money ratherthan saving some of it. Exactly,
And just to expound upon that,I am a huge fan of anything that
is automated, whether there's automatic escalation, excuse me, automatic escalation, or
even auto payment of your bills.But one thing I'd always caution people about
as it relates to any type ofauto payment, just because something is automated,

(24:44):
that doesn't mean you should ignore it. So, just like you said,
so far as escalating how much moneyyou might want to contribute to your
four one K, if it's goingto go up automatically by one percent,
what if you get a three orfour percent pay raise, why not consider
two percent? You know, whynot have a stretch go life and al
as you're talking to us about kindof getting punched in the face financially,

(25:06):
I'm sure there's probably some other optionsthat you can think of that we should
be watching out for. Yeah,so when it comes to like people get
it punched in the face financially.Now, this may sound weird, but
I've encountered quite a few people thatactually give away too much money. And
you may be saying, well,how on the work can that be a
punch in the face. I'll tellyou why. I'm a big believer in

(25:27):
charitable giving and being a philanthropic.However, when you give away so much
of your money that you're inflicting financialpain on yourself, that is not a
good long term strategy for financial success. And even in addition to that,
some people, and hopefully you haven'trun across too many people like this,

(25:48):
but some people actually have a fearof investing. We'll invest like throughout full
one k, but if you reallywant to hit it, being who says
you can't do the full one ka and have some after tax investing as
well, because we all know aswe age our lifestyle, actually, let
me say it this way, ourretirement lives are just going to get more
and more expensive because not too manyprices tend to go down. Yeah,

(26:15):
having different buckets to pull from asfar as tax diversification and retirement is very
important and can be a huge wayto poke Uncle Sam and the eye with
a stick finding ways to pay lesstaxes. Definitely, And I like the
phrase you use different buckets to pullfrom. Unfortunately, a lot of people
have some holes in their buckets though, and they need to plug the leaks.

(26:37):
You know, that's very true.I also think taking on too much
debt, credit card debt, studentloan debt that's going to be difficult to
pay off is also a way tokind of financially punch yourself in the face.
Yes, definitely, Amy. Iwas just looking at some information from
the New York Federal Reserve Bank nottoo long ago, and I believe it
stated that credit card debt right nowis that at one point six trillion dollars.

(27:03):
So the thing that intrigues me aboutcredit card debt. You know,
we're taught in this society that creditcards are what you use when you don't
have cash, but that makes noabsolutely no sense, because most people use
credit cards like they're fake, likeit's fake income. But I always say
credit cards are what people use tobuy things they don't need to impress people
that they really don't like. Atthe end of the day, what are

(27:27):
a couple of things that you think, as we talk about, you know,
kind of getting punched in the facefinancially, what are things that we
can do or that you would suggestpeople can do to avoid this all together.
So when it comes to getting punchedin the face, I always like
to answer questions sometimes by asking aquestion. So for yourself, you know,

(27:48):
it's all about what behavior can youmodify today that would help you produce
better financial results. So that couldbe saving more for future planned expenses,
that could be saving more for retirement, or even doing something as small as
reviewing like your insurance policies just tomake sure that you have the coverage that
you need. Because the worst thingyou would ever want to do is get
punched in the face simply because ofthe fact that you were unprepared for the

(28:12):
little hiccups in life. I'll onlyyou could take a face punch and turn
it into something we can all learnfrom. When it comes to our money,
we always enjoy the stories that youbring to the show and the lessons
that you bring to us as well. You're listening to Simply Money presented by
all Worth Financial. Here in fiftyfive krs the talk station. You're listening

(28:37):
to Simply Money presented by all WorthFinancial. I mean you Wagner along with
Steve Rube. If you've got afinancial question you need a little help answering,
there's a red button you can clickthem while you're listening to the show.
It's right there on the iHeart app. Record your question. It's coming
straight to us straight ahead. Thefight to lower the insane amount you're being
asked to shell out for concert tickets. We'll get to that in a few

(28:59):
minutes. You know, there's afew numbers that are really good I think
to help you know and understand whenplanning your retirement. Right, there's a
rule of fifty five which allows penaltyfree withdrawals from certain four to one k's
depending on the rules fifty nine anda half when you can take penalty free
withdrawals. There is another number Ithink that is incredibly important to understand.

(29:19):
It is a great tool. Thenumber seventy two. Yeah, the rule
of seventy two is it's a verystraightforward formula that you can use to understand
how long it would take to valueto double. The value in your investment
set is based on an assumed fixedrate of return. So what you do
is you divide seventy two by theannual rate of return expected to earn to

(29:41):
be earned by that investment. So, for example, if you're expecting an
eight percent annual rate to return,it would take approximately nine years for your
investment to double, because you divideseventy two by eight equals nine. It's
almost this magical formula. Years ago, when before Nathan Backgrack had retired,

(30:02):
he and I were doing the showtogether. It was take your daughter to
work day, and so my daughterGrace came along. She was maybe twelve
years old at the time, andNathan was explaining the rule of seventy two
to her, the importance of investingin the fact that that money can double
and double and double and how manyyears. And so he's like, you
know, if I gave you twentydollars, now you know, when you're

(30:22):
expecting an eight percent, you'd haveforty dollars and then eighty dollars, And
then you know, he's showing herand you just see this light bulb go
on in her head and it clicksand she was like, she looks at
him and she says, Nathan,this is really cool, and she said,
don't ever tell my brother about this. Yeah, she said, don't
tell him. I want to bethe only one who knows about this while

(30:42):
we are spreading the word, becauseeveryone should know about this. Right by
investing, there are times when you'reyou know, you can look at it
helps you make And this is notfull proof, right, I mean,
markets don't go up in a straightline, but it does give you kind
of a general guideline of Okay,by this time, this money in here
could double, and there's a wayto use it like kind of in the

(31:03):
inverse way to then figure out inflationand how that could affect your money and
essentially how long would it take tocut the purchasing power of your money in
half? Yeah, So the ruleof seventy two is it's really fascinating,
And I love how Nathan gave thisas an example to essentially a child.
Yes, how old was she twelvetwelve? And it clicked for her the

(31:26):
importance of compounding interest on your money. Yeah, via the rule of seventy
two. So if you look ata very specific example, like the SMP
five hundred, for example, onaverage over the long term, goes up
about ten percent per year seventy twodivided by ten seven point two. That
means the money if you had allyour money in the sm P five hundred,

(31:47):
which we do not recommend. Thisis just an example because the sm
P five hundred is just the fivehundred largest US based company stocks, it
would take seven point two years foryour money to double. So it's very
easy to make a sum about howlong it would take your money to double.
If we flip that on and said, like you said, the rule
of seventy two and inflation, sameformula. Let's say inflation is three percent,

(32:08):
you could divide seventy two by three. You get twenty four years.
That's how long it would take forthe value of a dollar to get chopped
in half. And using this formulain both ways can be incredibly beneficial as
you're starting to think about your retirementand planning for right, how much do
I have now? What rate ofreturn would I need for that money to

(32:30):
double? Would that would that giveme enough? Does it need to double?
And double again, how much moneyis that going to take? What
rate of return am I going toneed for that? And then on the
flip side in retirement, right,how much am I going to need when
you take into cost inflation? Whichwe have so many smart people who are
able to do a lot of thisthemselves, but they'll walk through our doors
when they get close to retirement andsay, I just want a second set

(32:52):
of eyes right on what I'm planninghere. I see many times either underestimating
or not taking into a count inflationwhatsoever. We're completely overestimating, like I'm
assuming I'm gonna get a fifteen percentrate return every year for the rest of
my life, right, and thenI don't bake inflation into this into the
into my spreadsheet that I built andeverything works fine, So I'm doing well

(33:13):
what do you think, Steve?And they really want you to just say,
yes, absolutely, that works,And unfortunately we have to tear that
apart in a good way. Iwould hate for someone to retire and think
all these numbers are going to workand we just know better. Yeah,
I mean financial planning software, whenwhen you're actually building out a financial plan
and running projections about investments, typicallyyou're running like a thousand different simulations to

(33:37):
understand sequence of return and the riskthat's associated with that. Because this rule
of seventy two, it's assuming almosta set rate of return. Yes,
in order for it to work,it's got to the S and P.
Five hundred and the example that wegave has to return ten percent of a
year or else it's not going totake seven point two years for your money
to double, and we know thathappen. Yeah, I could take more

(33:57):
or less. So you know,take these rules with a grain of salt,
because if you're running a financial planand you do a thousand different sequences
of return, then that gives youmore or less probabilities and the chance of
success, the chance of your moneyliving longer than you do based on those
probabilities. Not just the rule ofseventy two. This is helpful for understanding
some of the basics of compounding interest. It was eye opening for your daughter

(34:21):
and that's great, yes, Butusing this to build out your financial future,
I'm not so sure. For therecord, we will tell my son
about this as well. Everyone shouldknow about the rule of seventy two.
Here's the all Worth Advice practice usingthe rule of seventy two with your investments.
Teach your children about it as well. The more educated you are and
they are, the better decisions youwill make. Coming up next, the

(34:43):
costs for concert tickets. It's beyondcrazy. We're going to tell you about
an effort to bring those costs down. You're listening to Simply Money presented by
all Worth Financial here in fifty fiveKRC the talk station. You're listening to
Simply Money presented by all Worth Financial. I Memi Wagner along with Steve Ruby.
Summer's coming around summer concert season isalmost here. Does that even mean

(35:07):
anything anymore? Because who can evenafford to go to a concert? I
love actually concerts. I think there'snothing like just the collective experience of everyone
being in a place, enjoying thesame music, just a feel of it
that I think is hard to replicatein many other ways. Love going can
hardly afford it any Yeah, it'smore frustrating than it's ever been, and

(35:28):
it's reached a point of where theUS Department of Justice they're actually suing to
break up Live Nation Entertainment, whichis the parent company of Ticketmaster, for
allegedly cranking up fans cost by controllingthe concert industry from the chair I sit
in. Yeah, I mean itseems pretty obvious, doesn't it. Yeah,
well, we just came out ofa summer where if you were lucky

(35:50):
enough to get Taylor Swift tickets forunder one thousand dollars, it was like
the best thing ever, was likewinning the lottery. Step back from that
one night, one concert hundreds ofdollars. But it wasn't just that.
It was Beyonce, And if youlook at any other sort of rising musician
who's been on the music scene fora handful of years, you're still going

(36:10):
to pay an astronomical amount. Infact, I think the cost of life
shows is now climbing thirty four percentyear over year, from an average ninety
dollars cost in twenty eighteen to onehundred and twenty last year. Even last
week, my husband and I weretalking about it. There's an artist that
he really likes. They're coming totown, small venue, standing home only.

(36:31):
I was like, oh, twentyfive dollars per person. This is
amazing, right, These are likecollege concert costs back in the day.
So I get online, go tobuy these tickets. There are one hundred
dollars. When you add all thefees, it literally doubled the cost,
and I think that is absolute insanity. Of course, Live Nation is saying

(36:52):
that breaking up the breaking up thecompany isn't going to reduce prices, but
I show how it wouldn't come.It's a bit of a monopoly. It
is monopoly. And that's frustrating becauseyou know my wife and daughter that they
both really do enjoy Taylor Swift.Yes, they do, my daughter especially
and you know she just turned nineyears old, so that makes sense.
Yeah, and here we are lookingat concert tickets and we're not buying them

(37:15):
no matter whether or not I couldafford them, based on you know,
building a financial plan to save forthe next two years to ear mark the
money, you know, to buythe tickets. Whether or not I could
afford to is a moot point,because it is it's almost sickning because you
could do a European vacation, youcould go to Hawaii for two weeks.

(37:35):
You could change somebody's life with thatmoney in your family and like climb them
out of debt for the cost ofthese tickets. It's sicking out how high
those prices are right now? Orput people into some serious debt that that
that is certainly happening too. Andthat's just for one night, one concert.
I looked it up. It's cheaperto fly to Portugal and buy a
ticket there and then fly back andAirbnb's to stay there to go to these

(38:00):
concerts. I'm talking about Taylor Swift'sYeah Shows Live Nation through ticket Master,
controls about eighty percent of major concertvenues. Primary ticketing obviously an issue there.
We'll keep an eye on this onefor you. Thanks for listening.
Tune in tomorrow. We're talking toa man who's perspective on investing is second
to none. You're not going towant to miss this. You've been listening

(38:22):
to Simply Money, presented by allWorth Financial here on fifty five KRC,
the talk station