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JL Collins: Why your house is a lifestyle, not an investment

How spending sets the financial-independence target, not income; Collins on why a mortgage is just the start, F.U. money beats panic, and debt steals freedom.

JL CollinsguestSteven Bartletthost
Jan 12, 20262h 15mWatch on YouTube ↗

EVERY SPOKEN WORD

  1. 0:00 – 3:14

    Intro

    1. JC

      If your goal is to become financially independent at a young age, this is a very controversial thing to say: You probably don't wanna go buy a house. Because people typically buy a house they can't possibly afford. The bank wants you to do that 'cause that's how they make the most money. So you're putting your capital into that house, and now it's not gonna be earning anything, it's gonna be sitting idly. And people say, "Well, you know, I can buy this house 'cause my mortgage is the same as my rent." Well, yeah, but your mortgage is just the starting point.

    2. SB

      So what comes to mind if I wanna be financially wealthy?

    3. JC

      Okay, so we've got a lot to go through.

    4. SB

      JL Collins is a renowned financial expert, known for his book, The Simple Path to Wealth. He's teaching millions a straightforward and realistic avenue for achieving wealth-

    5. JC

      -so that anyone can have financial security.

    6. SB

      What is the simple path to wealth?

    7. JC

      So first of all, avoid debt, because you can never be financially independent if you're carrying around debt. Next, live on less than you earn. But the problem is, the way our culture has taught us to think about money, is solely in terms of what can you buy with it? But the more must-haves you have in your life, the less likely you are to become wealthy. And then the final one, invest the surplus. So stocks are the single most effective, strongest wealth building tool that's ever been created. But the biggest pushback I get is from people who say, "Well, that's great. I mean, if you've got a big income, a hundred, two hundred, three hundred thousand dollars a year, then yeah, The Simple Path to Wealth will work for you." That's not the truth. For instance, a friend of mine, he was making a million dollars a year, and he was broke. Because people who have large incomes are much more likely to be drawn into the competing with the Joneses, whereas the people who make less money probably don't have those same social pressures and are more readily able to do it.

    8. SB

      So let's talk about investing then. Where do you think we should be investing our money at this moment of time? Should I buy Bitcoin? Do I need a financial advisor?

    9. JC

      So my advice, and this is a little different than the more common advice out there, would be...

    10. SB

      This has always blown my mind a little bit. Fifty-three percent of you that listen to this show regularly haven't yet subscribed to this show. So could I ask you for a favor before we start? If you like this show, and you like what we do here, and you wanna support us, the free, simple way that you can do just that is by hitting the subscribe button. And my commitment to you is if you do that, then I'll do everything in my power, me and my team, to make sure that this show is better for you every single week. We'll listen to your feedback, we'll find the guests that you want me to speak to, and we'll continue to do what we do. Thank you so much. [upbeat music] JL Collins, you wrote a book, a very iconic book that sold millions of copies, called The Simple Path to Wealth. Why did you write this book?

    11. JC

      I... Actually, that book was an outgrowth of my blog. I started the blog to archive information I wanted my daughter to have available, because if you get money right, your life is so much better. You have so many more options. And the world offers so much to people who have the resources with which to access it, and so little for those people who don't have the resources to access those things. And, and if you don't have it, it- life is just so much harder than it, than it needs to

  2. 3:14 – 4:57

    Common Misconceptions About Money

    1. JC

      be.

    2. SB

      When you think about the average person listening right now-

    3. JC

      Mm.

    4. SB

      -what, what is, what are some of the fundamental sort of misconceptions or misunderstandings, or what would you call it, blind spots that they have as it relates to money? The things they walk around assuming about money-

    5. JC

      Sure

    6. SB

      ... that are incorrect-

    7. JC

      Sure

    8. SB

      ... that, that you were maybe trying to get out of your daughter's mind.

    9. JC

      Right. So there's a chapter in the book called "How to Think About Money." And the fundamental way I think the vast majority of people think about money, because this is what our culture has taught us, the way our culture has taught us to think about money, is solely in terms of what can you buy with it? So if you go to the average person, the lottery, for instance, is, like, a billion dollars at the moment, so people are buying lottery tickets. And if you interviewed people standing in line to buy lottery tickets and said, "Okay, if you win this billion dollars, what are you gonna do with it?" Well, what you're typically gonna hear is, "Well, I'm gonna pay off my debts, and I'm gonna pay off my mortgage, and I'm gonna buy my parents a house, and I'm gonna buy myself a Lamborghini. I'm gonna buy, I'm gonna buy, I'm gonna buy." That's the way most people think about money, and that's certainly one of the things that money is very good at: It is a means of exchange. But the other thing your money can do for you is work for you. Your money can make you more money. So you can exchange your time, and effort, and labor to earn money, and that's what most of us do. But you can also divert some of the money you earn into investments, into what I call buying your freedom, and now your money is working for you. So instead of just thinking about what your money can buy, you can start thinking about what can your money

  3. 4:57 – 6:02

    Financial Freedom

    1. JC

      earn.

    2. SB

      You can buy your freedom?

    3. JC

      You can buy your freedom, your financial freedom.

    4. SB

      Why is that an important reframing of the role of money in your view? What does that do if I start thinking about it through that lens?

    5. JC

      Well, because as long as you are dependent on exchanging your effort, time, and labor for money, you are beholden to whoever is willing to pay you to do that. That's a limit of freedom. It's a, it's a form of, w- without being too dramatic, a form of slavery, if you are always living paycheck to paycheck to pay the mortgage or the rent or whatever. If, on the other hand, work is optional... You're a good example, man. You've been a very successful guy. You're not doing this podcast because you need the money. If you were still stuck at a job that paid you a wage, you wouldn't have the option to do this, because you'd have to devote all your time to that job so you could pay the mortgage, so you could pay the rent, so you could put food on the table. Money buys

  4. 6:02 – 12:58

    Successful People Often Have Trauma

    1. JC

      freedom.

    2. SB

      How does one get out of that situation?... you know, if I, I used to work in call centers, um, answering phones and selling people things.

    3. JC

      Sure.

    4. SB

      How does one, in your view, realistically get from that place where you are kind of beholden to the paycheck-

    5. JC

      Right.

    6. SB

      -and I was-- I'd spend my wage within the first week or so of the month.

    7. JC

      Sure.

    8. SB

      And then I'd just suffer for the next three weeks. In the UK, we have-

    9. JC

      [chuckles]

    10. SB

      -a four-week paying cycle. I think in the US, it's two weeks, typically. But I, I took a, I think, a reckless road out of that life. The thing that gave me the proclivity to take the risk is, like, some kind of insecurity and trauma, where, like, I couldn't-- I didn't have a plan B because I wanted to be... I wanted to, like, validate myself or something. And so I wonder [chuckles] if the, the skill or the thing that I was given that I'm most thankful for is, like, some kind of chip on my shoulder.

    11. JC

      Some kind of trauma. [laughing]

    12. SB

      Yeah. But, but, no, on a-- genuinely, 'cause I think, like, what would make you take a risk, like some of the risks that I took, to leave university-

    13. JC

      Right

    14. SB

      ... to then, like, be, be broke and... I was like, well, I just-- I was driven, I was dragged by some kind of trauma.

    15. JC

      Right. One of the things that I've observed, and I think to the extent that I've had some success in my life, this is true, that successful people do tend to have trauma in their background. At least, that's my observation. Now, I'm sure there are exceptions to that, but it does seem that people like us are striving to overcome those past traumas, to have that chip on the shoulder, to prove something. I've also met people who are very content to be completely lacking in ambition, and to have enough to have a comfortable life and kinda do what they want to do, to have financial independence maybe. But they don't have this drive to be successful, to, to make a mark on, on the world, and they tend to have had better [chuckles] childhoods. And, and, uh, and I think that there's... That wasn't me, that doesn't appear to be you, but I think there's a lot to be said for, for that, right?

    16. SB

      You, I mean, you open the book about talking about a parable of the monk-

    17. JC

      And the minister.

    18. SB

      -and the minister.

    19. JC

      Yeah.

    20. SB

      Can you, uh, tell me about that parable? 'Cause it seems to somewhat relate to what we're saying here. I think-

    21. JC

      Yeah, very, very much so, and that's the reason I opened the book with it. So the parable is, there are these, uh, two boys who grew up together. They're childhood friends. As frequently happens, they go their different directions in life as they become adults, and one becomes a very successful, powerful minister to the king, and the other becomes a humble monk in tattered robes with a begging bowl and what have you. And years later, they run into each other on the road, and they're getting reacquainted. And as they are, the minister to the king takes pity on, on his poverty-stricken friend in his tattered robes, and he says, "You know, if you could learn to cater to the king, you wouldn't have to live on rice and beans." To which the monk replies, "If you could learn to live on rice and beans, you wouldn't have to cater to the king." And for me, I've always been a little bit more towards the monk side. I'm, uh, I'm not a very materialistic person, and I'm comfortable and able to get along on, on very little, and I think there's something beautiful about needing less.

    22. SB

      I have, from my interviews, met people who are very wealthy, even, uh, actually off camera-

    23. JC

      Right

    24. SB

      ... who are very, very wealthy and appear to be happy.

    25. JC

      Yes.

    26. SB

      But I think, I, I think it's safe to say that the richest people I know are amongst the least happy people I know. So if I think about the very top, the, the billionaires that I know, off camera-

    27. JC

      Mm-hmm

    28. SB

      ... they are amongst the least happy, typically.

    29. JC

      Mm-hmm.

    30. SB

      Um, because I think whatever's taken them there is still haunting them while they're there. So it could be the chip on the shoulder, the insecurity.

  5. 12:58 – 14:10

    Mental Benefits of Financial Security

    1. JC

      thing.

    2. SB

      I think if I was listening to this, and I was broke, like I used to be very broke, I would still pursue wealth at all costs. Because I know I heard this phrase the other day, which was, "It is easier to get rich than it is to give up the idea that getting rich will make you happy." And I, [chuckles] I thought to myself-

    3. JC

      Right. Right.

    4. SB

      [chuckles] Probably true.

    5. JC

      And if you hadn't gotten rich, you would always think.

    6. SB

      A hundred percent.

    7. JC

      Yeah.

    8. SB

      You'd always wonder if that was... And do you know what? So much of the unhappiness or anxiety-

    9. JC

      Right

    10. SB

      ... that I had when I was, you know, in my early, early innings of my life and my career, came from looking down and seeing the bailiff letters or came from-

    11. JC

      Right

    12. SB

      ... the credit card debt, or how am I gonna eat today? Or, you know, can't go out and see my friends. So much of my mind was occupied by my inability to have freedom.

    13. JC

      Right.

    14. SB

      My lack of freedom, my need to get up at eight o'clock and walk for an hour and a half to a call center was, you know... So what I managed to remove was that. I wouldn't say I, I added happiness, but I removed the unhappiness.

    15. JC

      Well, and that's a, that's a key point. You know, money doesn't necessarily make you happy, but the lack of money-

    16. SB

      Oh, yeah

    17. JC

      ... can be a terrible challenge, especially in this modern culture we've created.

  6. 14:10 – 15:46

    What Is F.U. Money?

    1. SB

      Okay, so if you have kids listening right now, please cover their ears 'cause I'm gonna say a swear word. Parents always message me and ask me to stop swearing.

    2. JC

      [chuckles]

    3. SB

      So I'm gonna say a swear word. Um, a lot of people are obsessed with this idea of "fuck you" money.

    4. JC

      Right.

    5. SB

      Let me just give you a definition.

    6. JC

      Sure.

    7. SB

      So F-you money refers to a financial situation where a person has enough money to live comfortably without needing to work, and it gives you the freedom to say F you to anyone or anything you don't want to tolerate, such as a job, a boss, or a situation that doesn't align with your values. What does that mean to you?

    8. JC

      Yeah, so for me, so that's a good definition, but I would substitute in that definition, financial independence. F-you money, for me, is the money you accumulate on the way, right? So, for instance, if you're a bodybuilder, you know, financial independence is when you're on the stage and you're winning, you're at the elite level. But along the way, from the moment you start working out, you get a little bit stronger, a little bit stronger, a little bit stronger, right? Same thing financially. The moment you start setting aside money and investing it, you become a little bit financially stronger, and that builds over time. That, in my mind, is the F-you money, because long before you're financially independent, that money gives you enormous freedom. You might not be able to never work again, but if you need to, you could leave a toxic job knowing you could survive for months or even years while you looked for the better job because you have that F-you money. So it allows you to say F you, in that case, to an employer.

  7. 15:46 – 20:33

    Buying a House Isn’t Always a Good Financial Idea

    1. SB

      And if your daugh- daughter turned around... What's her name?

    2. JC

      Jessica.

    3. SB

      Jessica.

    4. JC

      Yeah.

    5. SB

      If Jessica turns around to you and says: "Dad, what are, what is something I should not do with my money if I, um, want to be wealthy?" What is it-- What are, like, the big-- what is the first thing that comes to mind to, as a no-no, if I want to be financially wealthy?

    6. JC

      The mo- more common advice that I think you should avoid, if your goal is to become financially independent at a young age, you probably don't want to go buy a house. It's a very controversial thing to say. The reason you don't want to buy a house is because houses dramatically inflates, inflate, by and large, your cost of living. You know, you're, you're putting your capital into that house, and now it's not gonna be earning anything. It's gonna be sitting idly. Along with owning a house, you have the expenses of maintaining it, paying the taxes on it, blah, blah, blah. If you stay in a apartment that is just enough to meet your needs, which, by the way, is what my daughter has done and continues to do, your costs will be lower, right?

    7. SB

      Explain that to me. Explain why my cost of living goes up if I buy a house.

    8. JC

      Sure. So people-- It doesn't have to, but people, people typically buy the most house they can possibly afford. The industry drives them that way. If you go to a real estate agent and you say, "I think I'm gonna-- I want to buy a house," right? First question they're gonna ask you is, "How much do you make? How much you want to spend?" You know, and, and then you go to the bank, and you say, "Okay, I want to buy a house. How much will you lend me?" And they'll say, "Well, how much do you make?" And then they'll come back with a large number of how much they're willing to lend you. If you follow those guidelines, you're gonna wind up with a house that's gonna be a burden. You are not buying it from a position of strength. You are stretching to buy it. You are borrowing the most money a bank's willing to give you. You probably don't want to do that. I mean, you can. That's-- The bank wants you to do that 'cause that's how they make the most money, but that's not the best thing for you to do. But that's what you get drawn into, and then when you buy that house, I don't know that I've ever known anybody, including me, by the way, and I've owned houses most of my adult life, who's owned a house without doing renovations on it. So you've got those costs. You're gonna furnish that house 'cause you're probably buying more square footage than you were renting before. You're gonna need new furniture, or maybe you just want better furniture for your new house. Maybe new appliances, landscaping, taxes, maintenance. I mean, the, the list is endless. And people say, "Well, you know, I can buy this house, and my mortgage is the same as my rent."... Well, yeah, but your mortgage is just the starting point. You've got all these other expenses with the house, and the other thing is they are variable expenses.

    9. SB

      Variable expenses.

    10. JC

      Yeah. With your rent, you know, if, if you're renting an apartment, you're paying twenty-five hundred dollars a month for your apartment, right? You know exactly what your housing costs are for the term of your lease, right? Five hundred dollars a month. If you own a house, maybe your mortgage is twenty-five hundred dollars a month, and then you need a new roof, now that's twenty grand. Or you need a new septic system, which by the way, I'm looking at having to put into my cottage, [chuckles] you know, well, that's another twenty-five grand, right? And so-- and you don't necessarily know when those things are gonna come at you.

    11. SB

      It is a bit of a trap, isn't it? It's a trap that, um, I didn't realize this until I bought a house, and I-

    12. JC

      Most people don't.

    13. SB

      Like, I even sit here on this podcast doing this for, for a living, and then I, I made this stupid mistake of buying a house. And I do think it was a stupid mistake because I-- I we'll talk about opportunity cost in a second, but it was, in hindsight, it was like a terrible decision. I spent all this money on this house. It was a house abroad. It was also like a holiday home, I guess.

    14. JC

      Right.

    15. SB

      And every time I come, all I see is things that I need to change.

    16. JC

      Yeah, it's... Looking at the United States, for instance, if twenty years ago, thirty years ago, you'd bought a house in San Francisco, well, you've done very, very well financially. If you bought a house in Detroit, not so much. So then the question becomes, and people will say, "Well, obviously, you don't buy a house in Detroit. You buy a house in San Francisco." Well, I'm not an expert in real estate, but I am reading more and more commonly that San Francisco is-- has a lot of very challenging problems at the moment. Detroit, on the other hand, where I was just visiting a couple of years ago, is enjoying a renaissance. Detroit's coming back. So who's to say in twenty, thirty years, people won't be saying, "If you bought in Detroit back in twenty twenty-five, you were golden, and if you bought in San Francisco, yeah, not so much." Sometimes real estate, buying a house can work out in a spectacular fashion, and that's the stories people tend to hear, but

  8. 20:33 – 21:47

    The Psychological Impact of Buying a House

    1. JC

      not always.

    2. SB

      And that's what I tend to see in the comment section when we talk about this issue of buying a house. I was just looking at the comment section, actually, and on a previous conversation where we talked about whether you should buy a house, someone said, "I bought a house, and it's the best thing I ever did."

    3. JC

      Right.

    4. SB

      "It's launched my mindset in new directions. Remember that having your own space has profound psychological impacts and can be life-changing for some of that don't live in a healthy environment." The psychological impact of buying a house.

    5. JC

      What that commenter just said is, is, can be, and for him, obviously, it's absolutely true. I am not anti-house. As I mentioned a moment ago, I've owned houses most of my adult life, but I've never bought them because I thought they were an investment. I bought them because I thought they would enhance my life in a way I wanted it enhanced. They would make my life better. They are, in my view, an expensive indulgence. I have nothing against expensive indulgences. That's one of the reasons we accumulate money, right? I like some expensive, and some I don't care about, some I like, um, but that's what they are. And if you can easily afford it, then by all means, buy the house.

  9. 21:47 – 25:20

    Why Younger Generations Could Benefit From Flexible Living

    1. SB

      Looking at some stats here, it says: Home buying was once a solid investment due to rising property values and lower mortgage rates. However, for younger generations, this is no longer the case because of skyrocketing home prices. Since nineteen eighty, US home prices have increased by over three hundred percent, outpacing inflation and wage growth. In twenty twenty-three, mortgage rates surged past seven percent, making monthly payments significantly higher than before, and median wages have only risen by about fifteen percent since year-- the year two thousand, while home prices have more than doubled, making homeownership less affordable. And lastly, the cost of renting is often cheaper than buying, especially in cities where prices have outpaced wage growth, leading many younger people to choose renting for flexibility. This point of flexibility as well is what we don't talk about-

    2. JC

      Right

    3. SB

      ... which is the ability to go do something else in another country.

    4. JC

      Exactly.

    5. SB

      And my brother said this to me when I was twenty-- My brother's very smart. He's a year older than me, financial genius, and has a m- much different brain to mine. And I remember when I was twenty... maybe twenty-four-

    6. JC

      Yeah

    7. SB

      ... and I was talking about, "Do I buy a house?"

    8. JC

      Yeah.

    9. SB

      And he both told me it was the worst investment I could ever make, but he also told me to think about flexibility and my ability to get up and move.

    10. JC

      Yes.

    11. SB

      And I was, "What do you mean?" And he said, "Well, listen, you're in a certain era of your career where you might be c-called by someone in San Francisco who offers you a great opportunity-

    12. JC

      Right

    13. SB

      - -and you might wanna go next week." And actually, when I look at how my career transpired, that's exactly what happened. I was in Plymouth, and then I went to Manchester for business, then I went to London for business, then I went around the world to San Francisco, to New York for business.

    14. JC

      Mm-hmm.

    15. SB

      And I'm, I'm moving with the opportunity. And if I was anchored somewhere because a, a mortgage does-

    16. JC

      You'd be dragging that along.

    17. SB

      Yeah. And a, and a mortgage does, like, psychologically anchor you.

    18. JC

      Mm-hmm.

    19. SB

      This is what people don't talk about. It creates a huge amount of guilt if you then wanna get up and go because you-

    20. JC

      Right

    21. SB

      ... in your head, you're going, "Well, I'm gonna be paying double."

    22. JC

      Well, the, yeah, so I agree with everything you said. I ag- I, I agree with you rather. Flexibility, especially when you're young and your career is in a dynamic, uh, phase, it is not to be underrated. For my daughter, I mean, she loves living in Savannah. They've been there for three years, but she has an adventuresome soul, and, you know, she said, "I don't know. I mean, maybe at some point I'll wanna go live in Europe or somewhere else." Well, if you have a house, that complicates that decision. And even if you are fortunate enough to buy in a market where your values are rising-... The cost associated with buying and selling of houses are enormous. The, you know, the real estate commission and the taxes and what have you. So getting in and out of a house is an expensive proposition. Getting in and out of an apartment doesn't cost anything. I mean, maybe your security deposit, right? But that's it. That's, that's very clean and simple. But if you're-- if you were to buy a house in Savannah and then to say, "You know, I think I wanna go live in, in Portugal," well, now you gotta sell that house, or maybe you have to rent it. Now you're a landlord. You're an accidental rent-- landlord, which was subject to my second book. You know, that's not optimal. I mean, if you set out to be a landlord, great, but if you become an accidental landlord because you can't sell your house that you don't wanna live in anymore, that's not so great. So flexibility is, is enormously important.

  10. 25:20 – 26:36

    The Easiest Path to Wealth

    1. SB

      If I, if I were to ask you, what is the simple path to wealth, and you had to respond in a sentence, what would that sentence be?

    2. JC

      Avoid debt, live on less than you earn, invest the surplus.

    3. SB

      So let's talk about debt then.

    4. JC

      Okay.

    5. SB

      Why did you say avoid debt?

    6. JC

      You can never be financially independent if you're carrying around debt. It's a ball and chain that you drag, drag along, especially consumer debt. Now, to be clear, if you're in business, and your business is, is carrying debt as a, as a function of, of running the operation for one reason or another, that's kind of a different thing. But in terms of personal debt, uh, if you're running up credit card debt, if you're leasing expensive cars or, or borrowing money to buy expensive cars or what have you, possibly a mortgage is in a slightly different category, but it has all the disadvantages we just talked about. Yeah, debt's a ball and chain. It's, it's like asking a swimmer to compete and, and strapping a weight around their waist. Uh, it just... Is it possible? Sure, I guess it is, but it's a whole lot, whole lot more difficult. So job one, if you have debt, is to blow it out.

  11. 26:36 – 29:19

    What’s Stopping You From Becoming Financially Independent

    1. SB

      And, I mean, blowing it out is a dream for many, but it's, uh, easier said than done, I guess.

    2. JC

      It simply means that you have to organize your life in such a fashion that you can divert some money to either buying your freedom, investments, or if you have debt, paying off that debt. You just-- you have to do that. And people say, "Well, I can't do that, you know. I, I need to have this, a, and the more-- you know, I need to have the, these, the two leased luxury cars, and we need to live in this neighborhood, and we need to send the kids to these schools, and we need to..." And I call that the tyranny of the must-haves. The more must-haves you have in your life, the less likely you are to become financially independent. Now, that's your choice. That's an individual's choice. It may very well be that those things are more important to you than buying your freedom, and it's your money. It's not for me to tell anybody, well, how they should spend their money or what's important to me or what's important to them. For me, there was nothing I could spend my money on that was more important than my freedom, which is why, from the beginning, I diverted half of my income to buying that thing. It was never deprivation, right? Most people say, "Oh, that's-- this is a path of deprivation. I can't spend my money." Well, not for me. I... You know, I spent every dime that ever came my way. It's just that I spent half of those dimes on the thing that I wanted to own the most, which was my freedom, and you own that by owning assets. So it wasn't-- I wasn't depriving myself any more than if somebody said, "You know, I'm looking at buying, uh, a Mercedes or a Volkswagen," right? "If I'm-- buy the Mercedes, I'm in this big, fancy car, and people will be impressed. If I buy the Volkswagen, yeah, I'm in this more modest car, but then I've got a whole bunch of money left over that I can spend on a wardrobe or going out to dinner or a more expensive apart..." It's just a matter of choosing where you spend your money on, right? So one of the choices that I, I do-- I am under no illusion that most people who read my book will actually follow the simple path, 'cause I, I think there's just way too much cultural influence to spend your money elsewhere. But at least the people who read the book and listen to this interview will be aware that there is something else they could buy with their money, and that's their personal freedom, and you do that by assets. And there was nothing more important to me, nothing I wanted more, so it was not deprivation at

  12. 29:19 – 31:17

    How Spending Habits Reflect Self-Esteem

    1. JC

      all.

    2. SB

      I am-- I reflect back on where I used to be in my life, and if I'd had this conversation then, I really, really struggled with, um, saving money because saving-- spending money was so closely linked to my sense of self and my self-esteem.

    3. JC

      A lot of people feel that way.

    4. SB

      I, I've sh- shared this story before, but when I-- I was working in those call centers at, uh, which one? Swinton, Swinton's Car Insurance, where I used to work. I would get my paycheck, and it might be, I don't know, one thousand five hundred pounds or two thousand pounds, whatever, and, like, on my way home on payday, I'd go buy a sixty-inch TV.

    5. JC

      [laughing]

    6. SB

      And I'd put it in the house, and then I'd try and see if I had enough money to buy a PlayStation.

    7. JC

      Yeah.

    8. SB

      And then about a week later, when I realized that I was broke, I would sell both. And I look at that behavior-

    9. JC

      Right

    10. SB

      ... as such absolute like, it's objectively like crazy behavior, like repeatedly. [chuckles]

    11. JC

      It really is. [chuckles]

    12. SB

      Crazy behavior.

    13. JC

      It really is.

    14. SB

      But it shows the extent to which I got a dopamine hit from having a nice thing-

    15. JC

      Right

    16. SB

      ... and I was trapped in that cycle of, like-

    17. JC

      Right

    18. SB

      ... buy the nice thing, dopamine hit, feel-

    19. JC

      Yeah

    20. SB

      ... validated, feel like I'm a successful person, and then have to sell it a week later.

    21. JC

      Yeah.

    22. SB

      So I really have a huge amount of empathy for people that are stuck in this spending for self-esteem cycle.... and they hear these, you know, they hear people like me and you talk about these things now, and it feels easier said than done.

    23. JC

      That, to me, seems kind of insane, and, and, you know, one of the things that somebody pointed out one time is, if you're driving around in a Ferrari, you know, maybe you're thinking to yourself, if you're bought the Ferrari because you want to impress people, "Everybody's looking at me, and they're thinking, 'Wow, what a cool guy that is driving, driving that Ferrari.'" No, that's not what they're thinking. They're looking at you in that Ferrari, and what they're thinking is, "Wow, I would look cool if I was driving that Ferrari." They're not thinking about you at all. [chuckles]

    24. SB

      Mm-hmm.

    25. JC

      It doesn't-- it, you're making no impact on, on what their opinion

  13. 31:17 – 35:50

    Advice for Getting Out of Debt

    1. JC

      of you is.

    2. SB

      So on this point of debt, I, I did have some people contact me that were childhood friends of mine recently and asked, um, asked me for advice on getting out of debt.

    3. JC

      Mm-hmm.

    4. SB

      And one particular friend said that he had forty thousand dollars worth of debt and asked me for advice on it.

    5. JC

      Mm-hmm.

    6. SB

      And I, I really... I'm not an expert in this, so I kind of hesitated-

    7. JC

      Right

    8. SB

      ... to give any advice. But the advice I'm hearing from you is essentially, you have to make a concession. You have to pull back your spending and get things back under control. You have to, I don't know, sell your house.

    9. JC

      So here's some good news. So you're talking to your friend, he's carrying forty thousand dollars in debt, right? My advice would be, and this is a little different than the more common advice out there, but I would look at all my debts, and I would pick the one that was charging me the highest interest rate, and I would f- I'd pay the minimums on all the others, and I would focus on paying that one down as fast as I could because that's the biggest return on my investment. And when that one was gone, I'd go to the second until I worked my way through. It's gonna be hard, and the more quickly you do it, the harder it's gonna be, 'cause you're gonna have to make more dramatic adjustments to your life. That's the bad news. Here's the good news, is once you are out of debt, if you do this, you've developed a wonderful discipline of living on less than you earn and diverting the excess to something else that you want more, in this case, to something else you want more is being out of debt. If you continue with that discipline, you now have the cash flow to begin building those assets and becoming wealthy. You've already developed that lifestyle and that discipline. So that's the one ray of sunshine, if you will, in, in the process of getting out of debt.

    10. SB

      Okay, to play devil's advocate with me then on this one.

    11. JC

      Sure.

    12. SB

      So when I was eighteen, nineteen years old, my strategy, I was well aware that I'd fucked up my financial situation.

    13. JC

      [chuckles]

    14. SB

      Like I was-- it was plainly clear that I'd figured out what a credit score was-

    15. JC

      Right

    16. SB

      ... and I realized that I'd destroyed mine. And also had these letters that [laughing] all of these failure letters. And, and I had, I had mounting issues. I was avoiding finances, bills, envelopes, you name it. I just thought, "If I don't look at it, it doesn't exist," which I know a lot of people do.

    17. JC

      Right.

    18. SB

      Because when I was writing a, a previous book that I wrote, I looked into some of the stats about humans' ability to avoid-

    19. JC

      Mm-hmm

    20. SB

      ... whether it's health situations-

    21. JC

      Right

    22. SB

      ... if a friend of yours gets a bad diagnosis. I was reading a study that said some people are more likely to not go get checked, even if their friends had a, because they just-

    23. JC

      Right

    24. SB

      ... want to avoid it.

    25. JC

      Right.

    26. SB

      Um, and then with national finances, I was reading a study that said we're incurring billions and billions and billions and billions of debt as a society just because we don't look at our bank balance, we don't op- open envelopes. So I know I'm not the only one.

    27. JC

      No, not at all.

    28. SB

      My strategy was-

    29. JC

      [chuckles]

    30. SB

      ... my str-- my, this is such a dumb strategy.

  14. 35:50 – 38:30

    Should I Invest in Bitcoin?

    1. SB

      Bitcoin.

    2. JC

      Mm-hmm.

    3. SB

      You're not a fan of Bitcoin?

    4. JC

      No. And I'm not, I'm not opposed to Bitcoin existing in the world. Uh, but for me, it's a speculation, and I'm not a speculator.

    5. SB

      When you say spec, give me some color, 'cause I'm sure there's some people who-

    6. JC

      Sure

    7. SB

      ... you know, are listening now that are either thinking about Bitcoin or have invested in Bitcoin.

    8. JC

      I mean, if you want to speculate that Bitcoin... So I, I would recommend against it. So people, and they might push back and say, "Well, but JL, you know, you were recommending against, against it ten years ago," which I was, "and you, you've been wrong. I mean, absolutely wrong. It's been g- great ten years. It's blow-- it's done far better than the S&P 500." Well-... that's true. If you'd had a crystal ball, if I'd known that ten years ago, yeah, well, I would've been in Bitcoin, right? We don't have crystal balls, so the question isn't how has Bitcoin done in the last ten years, it's how, how is it gonna do in the next ten years? I don't know the answer to that, but that's the question: Is it worth a hundred thousand dollars a coin now? Is it gonna continue to grow at that pace that you regret that you missed over the last ten years? That's the question you have to ask yourself.

    9. SB

      But I could say its success is evidence that it's serving some kind of utility for some people somewhere. Its success means that there is demand for it, by very nature, that the price has increased so cra- crazily over the last fifteen years.

    10. JC

      Yeah, that-- and that's an argument that people make, and there's a lot of debate around that, right? Is, uh, you know, what is the function that it has or that it's going to develop? And you might well be right. I don't, I don't know the answer to that question. It's not currently, at least, a currency, because it's way too volatile to serve as a currency, unless you're doing illegal things that make it more attractive than the volatility makes it unattractive. So that's not necessarily good for society, but, but so it can't function as a currency. So right now, it's just a speculation. Is it gonna grow into something that's more functional? Well, now, listening to one of the other interviews, you, you, you did, um, uh, that woman absolutely believes that that's what's happening, and then Cathie Wood, so that's why she's in Bitcoin. And she may be right, but she's speculating. And again, I have nothing against speculating, as long as you understand, as I'm sure she does, that that's what

  15. 38:30 – 40:37

    Should I Rush to Pay Off My Mortgage?

    1. JC

      you're doing.

    2. SB

      You'd prefer investing?

    3. JC

      I prefer to have an engine creating wealth behind where I put my money.

    4. SB

      I had, um, a text message from a really good friend of mine, who, uh, my audience will know because they've been on the show before as a guest, and, uh, they're very well known in the UK. Um, they texted me and said: "Please, can I ask you a question? If you had mortgages, and you had a lump sum of money, thinking about the future of AI, potential market crashes, would you pay off chunks of the mortgage or would you invest? My feeling is that stocks aren't really safe. Am I being paranoid?"

    5. JC

      Well, there, that's-- there are a couple of questions embedded in that. So the first question is, would I pay off a mortgage? And the second question is, are stocks safe, right? So the mortgage one first to me is, is pretty easy. It kind of depends on your interest rate.

    6. SB

      What is an interest rate?

    7. JC

      So an interest rate is what you pay to borrow money. So when you, when you get a mortgage, you're borrowing money, right? You're borrowing it from a bank or a financial institution, and they, they want to be paid for letting you use their money. And three, three and a half percent or less, that's really cheap money. I would hold on to that. I, I would be in no hurry to pay that off. On the other side, if you have a mortgage rate that's, say, six percent or higher, well, when you pay off that mortgage, essentially, you're locking in a guaranteed return of that interest rate, right? So if you pay off an eight percent mortgage, you've locked in an eight percent return on that money effectively. And then, to finish the thought, is if your interest rate's between those, those two, like three and a half percent to five and a half, six percent, then I would say it would depend, would you pay it off or not, is what makes you emotionally more comfortable. And there's value in being emotionally comfortable. So if you are comfortable carrying the debt, you might say: "Well, I think I can do better in the stock market, so I'm gonna carry it." If emotionally, like me, you just would rather not have any debt at all, then you, then

  16. 40:37 – 41:15

    Interest Rates Explained

    1. JC

      you blow it off.

    2. SB

      Maybe we could use the coins as a, an example of what an interest rate is.

    3. JC

      Sure. Let's say I'm sitting on this pile of gold, and you wanna borrow some of my gold. I'm happy to loan you, Steven, these ten very valuable gold pieces, but I don't like you well enough to just let you borrow them for free. I want to be paid. I want to get a reward back for that. So when you return these gold pieces to me in a year, you're gonna return eleven gold pieces to me. You're gonna pay me ten percent, 'cause an extra gold piece is ten percent of these ten, right? Make sense?

  17. 41:15 – 42:23

    How Mortgages Work

    1. SB

      Yeah.

    2. JC

      That's what interest is.

    3. SB

      So I-- if I say, "Okay, well, I'm gonna buy a house-"

    4. JC

      Right, you're gonna take, you're gonna take those ten gold pieces. Go ahead and take them.

    5. SB

      So I, I'm buying a house-

    6. JC

      Right

    7. SB

      ... that costs ten gold pieces.

    8. JC

      Right.

    9. SB

      Right? So I'm gonna accept your ten percent interest rate.

    10. JC

      Okay.

    11. SB

      Am I paying ten percent a year-

    12. JC

      On-

    13. SB

      ... on the tot- on the total?

    14. JC

      On the balance. So the way a mortgage works is, in the-- let's say it's a thirty-year mortgage, you're gonna be sp- giving me a certain amount of money every month, right? That's your mortgage payment. And in the beginning, most of that payment is gonna be interest to me, and a very tiny sliver of it will be paying down the principal part of the ten gold pieces that you bought or that you, yeah, that you borrowed. A very tiny sliver. And then, over the course of thirty years, that ratio changes as you pay down the debt, and less and less of it is interest payments, and more and more of it is paying down the principal, until at the end of thirty years, you've paid all the principal, and you've paid me a fairly enormous amount of money in debt over that or in, uh, interest over that thirty years.

  18. 42:23 – 46:24

    How to Get a Good Interest Rate on Your Mortgage

    1. SB

      And how do I get a good interest rate? How do I get a very, very low interest rate?

    2. JC

      On-

    3. SB

      And what is a low interest rate?

    4. JC

      On a mortgage?

    5. SB

      Yeah.

    6. JC

      So-... uh, the only way you can get a-- So first of all, you're gonna pay basically whatever the current is, interest rates are.

    7. SB

      Who sets the current interest rates?

    8. JC

      So the Fed sets an overall interest rate. You've heard the Fed will raise or lower interest rates, and that will influence what lenders, like bank and mortgage companies, will charge. It doesn't require them to do a certain level, but it will influence up or down how much they're gonna expect in return for their money.

    9. SB

      The Fed is a government-

    10. JC

      Yeah, the Fed is a government agent, partially because the, the Fed is anticipating inflation by how they set interest rates. So if I'm lending you money, and I'm worried about inflation, if I lend you my ten gold pieces and say, "I want eleven back in a year," ten percent, but inflation is fifteen percent, well, I've just made a very, very bad deal. So if I think inflation is gonna be fifteen percent, I'm gonna want two gold pieces back, it's maybe or... You know, so I, so I'm, I'm making a profit above and beyond inflation. So going back to your question, how do you get a good mortgage rate? Well, you shop around to various lenders at the time you want the mortgage and see, you know, who's offering what, and there'll be some variation within a eighth of a percent or a quarter of a percent or something. But for the most part, they're all gonna be very tightly put together 'cause they're looking at the overall projection of what inflation's gonna be, what, uh, they can charge, what the cost of money is, what they can charge in interest, and then competitively, what they, what they have to do to get your business. So there's not gonna be a lot of variation. You're not gonna get a, a significantly better interest rate than somebody else, but if you shop around, you can probably do a little bit better.

    11. SB

      And interest rates have been fluctuating quite a lot over the last twenty odd years. In the early 2000s, interest rates in the US were relatively high, peaking at almost seven percent in two thousand and six due to efforts to curb inflation, and then after the financial crisis, um, they dropped a little bit. Um, and I was looking here, post two thousand and eight, central banks around the world adopted ultra-low interest rates to revive economies. US rates were slashed to near zero percent by two thousand and eight and remained there for nearly a decade.

    12. JC

      Right.

    13. SB

      Damn! Um, COVID-19 pandemic, uh, interest rates led to another record in cuts globally, with the US Fed lowering interest rates to zero percent to zero point two five percent to combat economic disruption. So does this mean I should really be waiting for a time when the interest rates are really, really low if I want to buy a house?

    14. JC

      Well, not necessarily, because you never know when that's gonna happen. I mean, pe-- some, some people have said predicting what the stock market is gonna do is very, very difficult. Predicting where interest rates are gonna go, even more so. So I think if you're gonna, if you're gonna buy a house, then, again, you buy it based on whether you can easily afford it, whether it meets your needs at a given time, and you deal with the interest rates you have to deal with. And of course, they'll be part of the equation in terms of how much you can afford, 'cause the interest rate on your mortgage is gonna have a lot to do with how much you have to pay every month.

    15. SB

      And it's quite high at the moment, interest rates.

    16. JC

      High compared to what? So the fir-- you know, right now, mortgage rates are six percent, seven percent, somewhere in there. The first mortgage I took out was eighteen percent. Eighteen percent. That would have been in nineteen seventy-nine, 'cause in the nineteen seventies, we had really high inflation. And when you have high inflation, you have high interest rates, right? So to me, I hear a six percent mortgage rate, and it's, doesn't sound bad to me, but for people who grew up where mortgage rates were two and a half, three percent, well, yeah, I mean, it's huge. It depends on your perspective.

  19. 46:24 – 49:05

    Is It Safe to Invest in Stocks in the AI Era?

    1. SB

      And the other half of the lady's question, who sent me that text message, was around: Is investing in stocks safe right now? And she did sort of preface it by saying the question's in the context of AI, all of this disruption that's going on in the world, people are gonna lose their jobs, et cetera, et cetera. Like, is it safe to invest in stocks right now?

    2. JC

      So depends on your time horizon. So stocks are, are the single most effective, strongest wealth-building tool that's ever been created, but they are also very, very volatile. So when she says, "Are stocks safe to invest in right now?" What I hear is very short-term thinking, and stocks are never safe to invest in for the short term because they're volatile. At any given moment, they can take a deep plunge, and that's a perfectly natural part of the process. People get all cra-- especially if you watch the news, they-- people go insane and panicked, but crashes and pullbacks in the stock market are a perfectly natural part of the process. They are very, very difficult, if not impossible, to predict when they're gonna happen. But that's the reason you never want to invest in stocks for money that you're gonna need in the nea- near term. If you zoom out for longer periods of time, which is I re-- is what I recommend, stocks are stunningly reliable. I mean, there are very few times over the course of ten years where stocks have not given you a good return, and you go out twenty years, and, I, I mean, it's very rare. So if you look long term, stocks are extremely safe and extremely powerful in building, in building wealth, but they are very volatile along the way. So you have to be willing and able to endure that volatility. If you're gonna panic and sell when the market drops, not if, because the market will drop, it's a perfectly natural part of the process. If you're gonna panic and sell when that happens, you do not want to invest in stocks, 'cause they will leave you bleeding on the side of the road. Following my advice will leave you bleeding on the side of the road if you panic and sell. It's a hundred percent dependent-... on tying yourself to the mast during the storm and ignoring the volatility and continuing to invest into it, because now you're actually accumulating shares on sale, because prices are down. Because the storm never lasts. It always blows over, and the sunshine comes back out, and prosperity returns.

  20. 49:05 – 52:20

    Emotional Impact of Investing Without Enough Money

    1. SB

      You're talking here about the emotional side of investing, which-

    2. JC

      Which is critical.

    3. SB

      Yeah.

    4. JC

      If you, if you can't control your emotions, you're, you're gonna be selling at the wrong time and buying at the wrong time.

    5. SB

      So this is such a huge part of it that people don't talk about enough. They talk about tactics, strategies, what to invest in, et cetera, but they don't talk about the emotional side, which is really like arguably an even bigger element of this. Because if you think about even how the brain is set up and what drives us most, it's, it's fear, it's, it's emotion.

    6. JC

      Fear and greed.

    7. SB

      And when the, when the prices drop, you know, I mean, we've all got a story. So many people listening-- I remember my first ever investment. I put ten thousand pounds into Facebook stock a long, long, long, long time ago, and then it went down, and I sold.

    8. JC

      Yeah.

    9. SB

      And I thought, "Fuck, I'm never investing again." [chuckles]

    10. JC

      [chuckles]

    11. SB

      And if I just left it-

    12. JC

      Yeah

    13. SB

      ... um, God, that'd be worth so much money. It'd probably be worth six figures now.

    14. JC

      Right.

    15. SB

      But I, I hadn't-- no one had ever taught me about the emotional side, and actually, part of the reason I sold it was because I needed that money.

    16. JC

      So there's two things w- there. One is the emotional side of selling it, the other thing is investing money that is not for the long term. 'Cause you turned out-- You should never invest in money in the stock market that is, you're not willing to commit for decades. This is a long-term horizon because that's what allows you to weather the storms. If you're saving for a house, for instance, well, you probably don't want to be in the stock market.

    17. SB

      The best investor I've ever met is my girlfriend, uh-

    18. JC

      [laughing]

    19. SB

      -because she, she loses the password [chuckles]

    20. JC

      [chuckles]

    21. SB

      ... to the investing app. And honestly, every, like, two years, I go, "Babe, do you rem--" I was like, "You bought loads of that index fund or Bitcoin or whatever it is."

    22. JC

      Mm-hmm.

    23. SB

      I was like: "Do you know the price of it?" And she's like: "No, I forgot. I've forgotten the password to the app." And we always, like, log back in-

    24. JC

      Right, right, right

    25. SB

      -once every two years and look at it, and I'm like: "Oh, my God, babe, you're rich!" And she's like: "Oh, okay." And then she loses the password again. She forgets it.

    26. JC

      This is an incredibly important point you just touched on. So Jack Bogle, the guy who created retail index funds that we can invest in now, created the Vanguard Group in nineteen seventy-five. Bogle once said: "You know, invest in the S&P Five Hundred, and don't even open your statements when they come. Just let them sta-- Don't even open them for twenty years, and then open the final one and have a cardiologist standing by because you will be stunned at the level of wealth that you've accumulated." One of the things that... I wrote this, this book for my daughter, right? My daughter is, sounds like she's kind of like your girlfriend. She's very smart, but she has zero interest in this financial stuff. That is a superpower because unlike me, and maybe a lot of people listening to us who are interested in this stuff and who are watching the market all the time, she and your girlfriend are never gonna be tempted to panic when the market drops, 'cause they're not gonna notice the market dropped, right?

    27. SB

      Mm.

    28. JC

      Because they're, they don't, they don't care. And the less you tinker with your investments-- Charlie Munger, who was Warren Buffett's partner, once said: "The worst thing you can do as an investor is get in the way of compounding," right? And that means dancing into the market, trying to sell and buy back in and what have you. Just let the compounding

  21. 52:20 – 53:56

    Do Men Take More Investment Risks Than Women?

    1. JC

      run. I get so many people who read my work, and they say: "Wow, JL, I, I, I, I really get it, and it's wonderful, and you're absolutely right about everything. But if we just did this one little thing differently, it would be even better." And they are-- I've come to think of them as the tinkerers, right?

    2. SB

      Are they men?

    3. JC

      They-- I think a lot of them are men. I think, I think women are a little less inclined to tinker because men put their masculinity on the line in doing these things, and that's not useful.

    4. SB

      I ask the question about men and women because I got some stats here from, actually from Vanguard, that says men are seventy percent more likely to invest in high-risk assets, like individual stocks, versus safer assets than women. Men's portfolio are fifty percent more volatile, which leads to higher potential returns, but also huge, greater losses. As it relates to men, again, despite having higher risk-taking, men underperform women in long-term returns annually due to overtrading, tinkering-

    5. JC

      Mm-hmm

    6. SB

      ... and timing mistakes, tinkering. And men trade forty-five percent more often than women, resulting in more fees, because every time they make a trade, they pay a fee, and lower gains. That's according to Berkshire Hathaway. The summary here is that men take more risks, but in the long term tend to earn less because of frequent mistakes and emotional trading, whereas women are more cautious, and their approach tends to yield better returns.

    7. JC

      So you know what we've learned here?

    8. SB

      Yeah.

    9. JC

      I have a very strong feminine side. [chuckles]

    10. SB

      [chuckles] Well, gosh, yeah. Damn.

    11. JC

      [chuckles]

    12. SB

      [page flipping]

  22. 53:56 – 55:00

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    1. SB

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  23. 55:00 – 1:03:22

    The Magic of Compounding Interest

    1. SB

      ... you talked about compounding. You talked about how one-

    2. JC

      Right

    3. SB

      -should maybe not open the envelope-

    4. JC

      Right

    5. SB

      -that has their statements in.

    6. JC

      Well, that's Jack Bogle who said that, but I agree with it, yeah.

    7. SB

      I, I don't have to explain the graph I've just passed you-

    8. JC

      Right

    9. SB

      -for you to know what that is.

    10. JC

      Right.

    11. SB

      On the, on the bottom, the red line is-

    12. JC

      Mm-hmm

    13. SB

      -eleven percent.

    14. JC

      Mm-hmm. Returns. So the blue line that's, that's running fairly flat is the contributions to this hypothetical investment, and the red line is the value that, that how it, how it grows. And what's striking, uh, and this is, this is what's striking about compounding in general, is that the two track each other almost exactly for a surprisingly long time, and then they begin to diverge. And then the compounding makes the value of the investment skyrocket. It hockey sticks. And I didn't know you were gonna show this to me, but what's interesting to me about this is I used to do these Chautauquas. They were events where we'd take a small group of people to some cool place in the world and hang out, and they were people who followed my work, and, and I would have one-on-one sessions with them, and we'd talk about whatever they wanted, but mostly it was their finances. And very commonly, these people would lay out their, their investments, their, their finances, and, and they would ask: "Am I financially independent?" And that's a v-- there's a very simple mathematical formula about that. "How much do you spend?" "I spend a hundred thousand dollars a year." "Okay, if you take the four percent guideline, what's the withdrawal?"

    15. SB

      Mm.

    16. JC

      So a guy named Bill Bengen came up with the idea that you could safely withdraw four percent of your portfolio, and it would continue to survive over time, and it would-- so you could, you could pull that out without depleting the portfolio. There was a woman who came to one of our Chautauquas. She was a banker, so obviously knows her way around basic math, right? She was-- at the end of Chautauqua, she was gonna take a new job starting that Monday, was gonna pay her a million dollars a year. And we're going over her finances, and she said, "You know, I've, I've got five million dollars invested." "Okay." "Am I financially independent?" "Well, I can't answer that question until I know how much you're spending." She said, "Well, I'm spending a hundred thousand dollars a year." "Okay. Well, a hundred thousand dollars a year, if you multiply it by twenty-five, you get two and a half million dollars. Four percent of two and a half million is, uh, a hundred thousand. Right? So that's how that math works. So if you need a hundred thousand to live on, you need two and a half million invested. Make sense?"

    17. SB

      Yeah.

    18. JC

      Okay, so you can look at it either way. You can say, "I've got two and a half million. If I take four percent of that a year, that's a hundred thousand," or, "I n- I w- I'm spending a hundred thousand. How much do I need?" You multiply that by twenty-five, two and a half.

    19. SB

      So just to make sure I'm clear-

    20. JC

      Yeah.

    21. SB

      -if I look at my investment portfolio, and I have a hundred dollars in there-

    22. JC

      Mm-hmm

    23. SB

      ... if I can live-- Are you saying that if I live on four dollars, which is four percent of my-

    24. JC

      Right

    25. SB

      -investment portfolio, then I'm financially independent?

    26. JC

      Right. That's a good-- Now, it's a good guideline. I mean, there's lots of variations, but this is a guidel- guideline this financial advisor, Bill Bengen, came up with. Um, and then there's a thing called the Trinity Study, which was done, I want to say, in the nineties, that looked at a lot of these scenarios and basically verified that this was a very good baseline. Um, so four percent is... I don't like the word rule because mmm that implies that it's hard and fast, but it's a great guideline. If you wanna have a, have an idea of whether or not you're financially independent or not, this is a good guideline. So anyway, this woman says she's spending a hundred thousand dollars a year, and she's got five million. She wants to know, "Am I financial independent, in-- financially independent?" And I said, "Times two. I mean, you have twice as much money as you need, given your level of spending." So the question that I always had, going back to this little chart, is how-- and I would get this question a lot, Steven. You know, they'd show me their numbers, and they would very clearly be financially independent on that, based on that math we just discussed, and these were smart people who can easily do basic arithmetic. I said, "How, how is it that they're asking me this, this question?" And suddenly, it dawned on me, this is how. Because compounding is a, is a hockey stick. It goes along and, and kind of doesn't appear to be happening, and then it slowly starts to happen, and then all of a sudden, it's way up here. It happens so quickly and so stunningly, they can't quite believe it. It turned out it's not that they couldn't do the basic math. They certainly could do the basic math. What it was is they couldn't quite believe what the math was telling them, and they wanted me to-- It's like, "You, you see what's on that wall over there? I mean, are, are you seeing what I'm seeing? 'Cause I can't quite believe that I'm seeing that. I need you to confirm that, yeah, you're seeing the same thing I'm seeing."

    27. SB

      And in this example, all it is, is someone has... you know, they've started with zero-

    28. JC

      Mm-hmm

    29. SB

      ... and they've paid in a small contribution-

    30. JC

      Mm-hmm

  24. 1:03:22 – 1:06:55

    Young People Don’t Care About Their Future Selves

    1. SB

      They did a study where they put people in a brain imaging scanner, and they asked them to think about themselves tomorrow. Then they asked them to think about themselves in a couple of years. Then they asked them s- to think about themselves in ten years' time, and they looked at the brain. And then they did another study, where they got the same people to think about a celebrity-

    2. JC

      Mm-hmm

    3. SB

      ... that they didn't know. I think it was Matt Damon or someone famous like that. And what the study proved was that we think about ourselves in ten years' time in the same way that we think about Matt Damon. The further away the time horizon-

    4. JC

      Right

    5. SB

      ... the more it becomes a total stranger.

    6. JC

      Right.

    7. SB

      And so I was writing, I was writing recently for a chapter in my upcoming book about this idea that our future self is a stranger to the brain.

    8. JC

      Right.

    9. SB

      Thinking about me when I'm sixty is like thinking about Matt Damon.

    10. JC

      Right.

    11. SB

      I don't know the fucking guy, so why do I care? Why do I care about protecting him? And I think this kind of speaks to what we were saying there is, young people, and even me as a young person, kind of didn't really give a fuck about sixty-year-old me.

    12. JC

      Right.

    13. SB

      Like, I, I... It, it's so far away that I, I don't really care about protecting his interests. I almost think that's a different person. He can figure that out.

    14. JC

      Right.

    15. SB

      And, you know, you are-- How, how old are you now?

    16. JC

      I'm seventy-five.

    17. SB

      So you have the, the wisdom of hindsight. So you can tell me, as a thirty-three-year-old, what it's like to be both thirty-three and seventy-five.

    18. JC

      When I was thirty-three, I didn't think about m- me at an older age at all. I mean, it never crossed my mind to do such a thing, right? So I was not doing what I was doing for the benefit of seventy-five-year-old JL. I was doing it for the benefit of twenty-five-year-old JL, thirty-year-old JL, right? Remember, going back to an early part of our conversation, what my definition of F.U. money. It's the money that you're accumulating before... That gets you ultimately to being financially independent, which is when you no longer need to trade your labor for money, right? Your money is doing all that. I wanted that right now. So when I was twenty-five, I'd saved the princely sum of five thousand dollars, which adjusted for inflation, would be about twenty-five, thirty thousand dollars today. Uh, and I wanted to go backpack around Europe, right? But that meant quitting my job, which I kind of liked. But the fact that I had that money gave me the financial strength to go in and negotiate that deal. If I was living paycheck to paycheck, I wouldn't have had that. I was far from being fully financially independent. So I wasn't doing this for seventy-five-year-old JL. I was doing this right now for twenty-five-year-old JL. And it's just like when you work out, and clearly you do, right? You don't go to the gym thinking, at least I'm making a presumption here, "I'm doing this for seventy-five-year-old Steven." You're doing this because you want to be stronger tomorrow than you are today, for thirty-three-year-old Steven. So that's my way of thinking about it. I, I never did this for future me. Maybe, maybe some people do, and that's probably not a bad exercise. There's probably a bit of wisdom in that. I wasn't that smart.

    19. SB

      So you would, you would save five thousand dollars a year?

    20. JC

      Well, in those days... So my first professional job paid me ten thousand dollars a year, and I saved five thousand. Yeah, I saved half of it.

  25. 1:06:55 – 1:10:15

    Why You Should Invest for Your Children

    1. SB

      Going back to this point of compounding-

    2. JC

      Mm-hmm

    3. SB

      ... and how, and how important it is to start investing in things that will offer you compounding returns.

    4. JC

      Mm-hmm.

    5. SB

      If you started investing five hundred dollars per month, and you got an annual return of eight percent, because you're investing in some of the things that we'll talk about in a second-

    6. JC

      Mm-hmm

    7. SB

      ... in thirty-five years-... you will be a millionaire. You'll have more than a million dollars.

    8. JC

      Mm-hmm.

    9. SB

      You'll have $1.043 million.

    10. JC

      Right.

    11. SB

      Over those thirty-five years, you would've invested about two hundred thousand dollars, but you would've made eight hundred and fifty thousand dollars from the interest over that period of time.

    12. JC

      Well, just to be clarified, not necessarily the interest, but the growth. 'Cause that eleven percent is not interest, it's, it's growth. Some of it might be, uh, dividends in the case of-- which is a kind of a form of interest you can think of, but it's not just, just to be technically correct, right?

    13. SB

      Which is, which is interesting. So if, if I was-- when I was born, if my parents had put five hundred dollars a month away in a investment that we'll talk about now-

    14. JC

      Mm-hmm

    15. SB

      ... by the, by the age I am now, I would've roughly been a millionaire just from them putting five hundred dollars a month away for me.

    16. JC

      Right. Right.

    17. SB

      It's pretty crazy.

    18. JC

      Yeah, but that's the power of compounding. I mean, the, you know, it's, it's very gratifying to me that twice a year, I, I'm a guest lecturer for a friend of mine who's a professor at, uh, University of Colorado in Boulder, and it's always fun to talk to her students 'cause they're exceedingly bright. They ask great, great questions, and it's just stimulating for me. But I think about these young people, I mean, these are eighteen, nineteen, twenty-year-olds, who are thinking about doing this stuff at that age, and the remarkable amount of time that they have for this compounding to work for them, it's, it's just incredible. They are gonna be so much better off than if not. Um, so, uh, uh, let me throw out a tip for, for you, if and when you ever have kids, and for anybody who's listening who has, has young children. You know, as your kids start to grow, and hopefully they get part-time jobs, right? They start, whether it's shoveling snow or bussing tables at a local restaurant or whatever it is, and they start earning some income. Well, you can take that income and up to, I think it's seven thousand dollars is the limit now, put that in a Roth IRA, which will never be taxed. It will grow tax-free forever, and they're gonna be, by definition, 'cause they're making almost no money, and, and they're not paying any income tax, so you don't need any, any deduction from that. And it doesn't have to be their money. So let's say your kid makes three thousand dollars during the course of a year. You can take three thousand dollars and fund a Roth IRA for them. Imagine just if they never added anything other than that, you know, you do that until they, they get out of college or whatever, you know, that baseline is gonna grow tax-free for an extended period of time. That's one of the great keys to wealth building, is just time.

    19. SB

      And,

  26. 1:10:15 – 1:12:41

    How Much of My Income Should I Be Saving?

    1. SB

      and is that advice that you still believe in, that people should be saving fifty percent of their income?

    2. JC

      Yeah, I think it's a good rule of thumb. It gets you to financial independence in a pretty reasonable, depending on what the market does, in, say, a ten- to fifteen-year time period. The pushback that you might anticipate is from people who say, "That's impossible. Nobody can save fifty percent of their money. Just that's, that's, that's silly." And I'm sorry, but I did it, and I've now, at this point, I've known countless people who've done it. So it's certainly... You may choose not to do it, but it's certainly possible.

    3. SB

      Let's say you're earning forty thousand dollars a year-

    4. JC

      Mm

    5. SB

      ... which is the low end, the average median house. So that'll be, let's say, three thousand dollars a month.

    6. JC

      Mm-hmm.

    7. SB

      So you're, you're earning three thousand dollars a month. You're then gonna pay tax on that. Uh, this is what my, my math says here. It says-

    8. JC

      Yeah

    9. SB

      ... very little tax would be, would be paid after all of your taxes.

    10. JC

      Yeah.

    11. SB

      And so you're still, you've still got roughly three thousand dollars a month, about two thousand nine hundred, um, which you, you would take home. I, so I would need to save one thousand four hundred of that, which means my total expenses need to be one thousand four hundred a month. So first thing I need to do is live somewhere very, very affordable.

    12. JC

      Mm-hmm.

    13. SB

      Depending on where I live and what city I live in. Then, I need to basically radically reduce my, my expenditure-

    14. JC

      Right

    15. SB

      ... to be able to save fifty percent a month. And I guess the question is, most people would assume they wouldn't like that lifestyle. They wouldn't like to prepare their own lunches-

    16. JC

      Right

    17. SB

      ... every day. They wouldn't like to not have a Starbucks coffee. They wouldn't like to live in a-

    18. JC

      Right

    19. SB

      ... small, small shoebox, and probably socialize a lot less. So I guess that's the key rebuttal is, I guess, yeah, it's possible.

    20. JC

      There's a chapter that talks about this with an even lower, uh, because when I was writing the book, um, I think I used a twenty-five thousand dollar annual income. So the math works. Is, is it easy? No, but it goes back to fundamentally, what is it that you want? You said, "Well, I may not want like that lifestyle. I might want to have lattes and all these other things." Well, it's your money, that's your prerogative, but time is gonna happen regardless of what you do, and if you say, "Instead of having those things now, I'm gonna spend my money on buying my freedom," you will get to the point where everything is free, including those lattes.

  27. 1:12:41 – 1:19:51

    Deferring Taxes With Retirement Savings Plans

    1. SB

      So let's talk about investing then.

    2. JC

      Mm.

    3. SB

      Um, we have two buckets here on the table-

    4. JC

      [chuckles]

    5. SB

      -for an analogy-

    6. JC

      Uh-huh

    7. SB

      ... around tax-advantaged investing. I'm gonna take your lead on this. [chuckles]

    8. JC

      Okay, so if you dump that bucket in there, I'll dump this bucket in here. [buckets rattling] Okay. The idea is that, and I'm gonna speak in terms of the United States, the government provides savings vehicles that are tax-advantaged to encourage people to acquire money for their, for their old age, right? So in the United States, there's things called a 401 [k] or a 403 [b] --... uh, and these are employer-related plans, where you can divert part of your income, and the government specifies how much you can divert, and they won't tax you on that. And you put it into an investment bucket, into an investment account of some sort. You get to choose how you want to invest it, but that would be the bucket. And that means that if you had however much money this represents, uh, went into your 401 (k) or your IRA, which is something you would do on your own privately, which is also tax-advantaged, right? So in the example that you've just hand- uh, handed me, they're saying that this would represent twenty thousand seven hundred and fifty dollars, which is, uh, before tax and with a match. So 401 (k) s, companies will frequently match part of your contribution. So you say, "I'm gonna do five percent," and they might say, "Okay, we're gonna match the first two percent or whatever," which you should always take advantage of, 'cause that's, that's free money. So this is not taxed immediately, and you invest this money. Let's say you invested in a total stock market index fund, which would be my recommendation. So you get to invest all this money in your total stock market index fund. If instead, you do it after you pay taxes on the same amount of money, well, by the time you pay taxes, you're gonna have about half of what it was before, which is ten thousand three hundred and forty dollars, which is what is represented in here, roughly half the number of, of gold coins. Now, both of these things grow at the same rate, 'cause we've invested them in the same thing, right? So they're making eleven percent a year, whatever it is. So this is obviously gonna grow into a much bigger pile at the end of thirty years or forty years or whatever it is, than this is, 'cause you're starting with a bigger pile. So that's the advantage of deferring taxes. Now, the thing that people tend not to think about or talk about that's incredibly important is that it is not avoiding taxes, it is deferring taxes, which means that ultimately, the government is gonna want their money. They're gonna want their cut. And typically, that happens, I think, in the United States, the age is seventy-three or something, when you're required to begin taking money out of these accounts. It's called an RMD, a required minimum distribution. So if you haven't started withdrawing money from these accounts by then, the government will s- require you to begin on a schedule based on your life expectancy, to start pulling that money out, because they figure they've waited long enough, and now they want their cut. Okay? So it's not tax-free, it's tax-deferred. Important thing to understand, if you start taking this money out before a certain age, and if memory serves me, it's fifty-nine and a half in the US, then you will pay tax on it, as you do whenever you withdraw the money, and also a penalty, right? So they want you to keep it in at least until you're fifty-nine and a half, but they want you to start taking it out at some point, in this case, I think when you're seventy-two or seventy-three or something like that, and that's when they collect their money. So you say, "Well, okay, if that's the case, then what am I doing here? Because I got to pay the taxes eventually anyway." And mathematically, if your tax rate is the same, it doesn't matter if you're tax-deferred or not. The end result of the amount of money that you have will be exactly the same. The speculation is, and it's true in the vast majority of cases, that when you retire and you start living on this money, you start pulling it out, you will be in a lower tax bracket. So you will have to pay some taxes, but you won't have to pay as much as when you were working, and you were in a higher tax bracket. So that's the gamble you're taking. Now, looking at me personally as an example, this didn't work out for me. So I did IRAs and 401 (k) s when I was working in my corporate career. Put aside a fair amount of money in them. Now, as it turns out, I'm in a higher tax bracket than I have ever been in because of the success of the activities that I do today. I had no idea [chuckles] that that was gonna happen, and now I'm at that age where I have to take RMDs. So RMDs are coming out at a higher tax rate for me than when I-- than the tax benefit I got deferring it. But that's unusual. Most people will benefit from doing this because in their retirement, they won't have an income, or their income will be very modest, and their tax rate will be equally modest, and it will work out very nicely for them. But that's basically how that works. Does that make sense?

    9. SB

      It does, yes.

    10. JC

      Okay.

    11. SB

      And, and to try and summarize it, um, in a way that I, um, fully understand-

    12. JC

      Sure

    13. SB

      ... to check I understand, is every month when I'm paid, I have an opportunity, before that money comes to me, to invest some of it. And around the world, whether it's Japan, Switzerland, India, South Korea, Germany, Australia, UK, Canada, there's always some kind of system to do this.

    14. JC

      Yeah, some version of this, right.

    15. SB

      Yeah. So I can say, "Okay, I'm gonna get paid a thousand dollars this month. I'm gonna put a hundred dollars of that before I even get it, into one of these investment accounts." It's not gonna be taxed until-

    16. JC

      And your employer might match part of it or all of it.

    17. SB

      Yeah. So my employer might also add a hundred dollars to it or, or part of it. That's gonna compound over time. I can take it out whenever I want, but if I take it out early, I get a penalty.

    18. JC

      And you pay tax.

    19. SB

      And I pay tax. But assuming that I'm not gonna be earning as much as I do now when I'm older, when I take it out at sixty-five years old, I'm still gonna pay tax, but a lower rate of tax.

    20. JC

      There's no penalty at that point, but-- and presumably, you'll be at a lower tax rate, right?

    21. SB

      So it really only works if you're at a lower tax rate when you're older.

    22. JC

      Exactly.... so most people work, and then, and then they retire at a certain age, and that income from their job goes away. So by definition, they're in a much lower tax bracket. So for the vast majority of people, this works out very nicely.

  28. 1:19:51 – 1:27:26

    Index Funds vs Individual Stocks

    1. SB

      And you talk about w- w-- you know, 'cause people will, will still have to make a decision what they want to invest in.

    2. JC

      Right.

    3. SB

      What-- where do you think we should be investing our money at this moment of time? The, for the average person, what, what should they be putting their money into, with everything you see happening in the world?

    4. JC

      Yeah.

    5. SB

      You said not Bitcoin, but [laughing] what, where should we put it?

    6. JC

      I'm an advocate of investing in broad-based, low-cost stock index funds.

    7. SB

      What is that?

    8. JC

      That is... An example of that is VTSAX, which is Vanguard's total stock market index fund. It invests in virtually every publicly traded company in the United States of America. That's var- the number of those varies, but it's roughly thirty-six hundred companies.

    9. SB

      So you're basically investing in America.

    10. JC

      There are a lot of private companies that I, that I'm not invested in, but I'm in every publicly traded company in, in the country, and that means everybody from the factory floor to the CEO is working to make me richer. Now, some of those companies are gonna do extraordinarily well, and they're gonna succeed dramatically, and because this fund, as most funds like it are, is cap weighted, and I'll explain that in a minute, the more successful the company is, the more of it I will own. So cap weighted simply means that the largest-- larger the market capitalization of the company is-

    11. SB

      The valuation.

    12. JC

      The valuation, right. The market capital, uh, uh, the larger that is, the greater the percentage of the fund it will represent. So you may have heard people say that the top ten companies in the S&P 500 have an outsized representation, uh, percentage-wise, of what they... Well, that's the reason. It's, it's cap weighted. So I benefit from that success, right? Now, if one of those companies falters and starts failing on their execution, or a more aggressive, better organized competitor comes along and displaces them, then they will drift away. But I'm okay with that, because whatever that new competitor is, I don't have to predict who it is, I will own them, and that's a process that I refer to as self-cleansing. I'm very proud of that term that I, that I coined. So a great example of that is Sears. When I was a kid, Sears, company you may not even be aware of, but Sears was the Walmart and Amazon of its time combined. But Sears, at the turn of the last century, the turn of the 1800s, looked around and said, "You know, we have these brick-and-mortar stores, but there are all these people living out in rural areas who are never gonna get to our brick-and-mortar stores. We could send them catalogs" - does this begin to sound familiar? - "and then they could send us letters and money, ordering things from our catalog that we could then ship to them." So they became, you know, Walmart with the brick-and-mortar stores and then Amazon of its time, absolutely dominated for a hundred years. If you had said to somebody when I was first, uh, investing in the se- 1970s, that Sears-- Sears built the biggest building on the planet back in the '70s, uh, what was then known as the Sears Tower in Chicago. If you had said, "Sears, its days are numbered," uh, you would have been laughed at. But its days were numbered, because leaner, more aggressive competitors came along and ate its lunch. Nobody could have predicted that, certainly not me, but I didn't have to if I own the index, because then when Walmart came along, and then later Amazon, and Sears faded away, I own those as well. That's that self-cleansing process.

    13. SB

      And just for anyone that really doesn't understand this at all, you're not actually having to do anything because the index fund is just automatically making the decisions.

    14. JC

      Exactly. I don't have to do anything. I just have to own it, and I can own it forever. So if I went and I bought Sears stock, as an example, back in the day, well, whenever you own an individual stock, you're gonna be thinking about, okay, how long am I gonna own this? And what is gonna trigger my sale of this particular asset? And what, I mean, what has to happen to it that would make me not want to own it anymore? And then, if I want to get rid of it, and I want something in the same space, what do I buy? Do I buy this new upstart, Walmart? You know, do I buy this Amazon that back in the '90s, is run by this wacko guy, Jeff Bezos, who kept saying, "The profits don't matter. Profits don't matter"? What kind-- Who, who invests in a CEO that says profits don't matter? I mean, that's nuts. Uh, but those are the kinds of things you have to be, have to be thinking about if you own individual stocks. I don't have to think about any of that owning the index, because if Jeff Bezos turns out that his wackiness is brilliance, which it turns out it was, then he's gonna rise to the top, which it turns out Amazon did, and I benefited from that. If it turns out it was just wackiness, it would've just faded away, as a lot of companies have, but that wouldn't have mattered, 'cause whatever succeeds, I will, I will own and benefit from.

    15. SB

      I was asking, um, the research team beforehand-

    16. JC

      Mm-hmm.

    17. SB

      -in the last ten years, which index fund has performed the very, very best?

    18. JC

      Mm-hmm.

    19. SB

      And it said that the Nasdaq-100, which is very tech-heavy-

    20. JC

      Right

    21. SB

      ... has performed at almost twenty percent a year-

    22. JC

      Right

    23. SB

      ... for the last ten years.

    24. JC

      Right.

    25. SB

      And when I think about what's going on in the world at the moment and the advent of this new technology called AI, which is driving everything, it seems, and our lives are gonna become way more technological with robots and automation and full self-driving-... it appears to me, like if there was ever a great time to be investing in an index fund, one should aim at the very tech-heavy index funds like the Nasdaq one hundred.

    26. JC

      Mm-hmm.

    27. SB

      Is that, is, is that logical thinking or is that-

    28. JC

      It's, it's logical think-- Yes. So first of all, it's logical thinking, and actually, had you done that same analysis ten years ago, you would have done better than, than, uh, VTSAX, right? Because technology has absolutely dominated for the last ten years. It is a reasonable speculation that that will continue into the future-

    29. SB

      So why don't you invest in-

    30. JC

      -for some period of time? Well, because the truth is that technology has not always dominated. So-

  29. 1:27:26 – 1:33:27

    The Beer Analogy (Stocks)

    1. SB

      So you have an analogy you came up with that involves beer-

    2. JC

      [chuckles]

    3. SB

      -and a glass.

    4. JC

      Right. Pro- probably came up with a drinking beer, but go ahead.

    5. SB

      Well, show me-

    6. JC

      [chuckles]

    7. SB

      -show me the analogy.

    8. JC

      [chuckles] So thanks for not sh... Whoa!

    9. SB

      Oh, here we go.

    10. JC

      I was gonna say, thanks for not shaking up the can. [chuckles] So beer, right? So I'm pouring it right down the middle, so we get a nice, thick head. That's even a little thicker than I hoped for. [chuckles] Okay. So imagine for a second, right now, we have a glass, and we can see exactly how much foam there is and how much actual beer there is, right? But imagine this was, that I poured it into this vessel instead, where we couldn't see that. The analogy is the stock market. So when most people think of the stock market, and when most people turn on, uh, CNBC, they turn on, you know, they look at, at, at the investment news and what have you, it's all this churning and trading. You know, what stocks are hot now? What stocks are rising? What stocks are falling? Which... You know, it's all this trading. That's not the simple path to wealth. That's the foam, right? So the value in a stock, whatever the stock is, what makes up the price of that stock is a combination of two things: it is the beer, and it is the foam. And the problem is, unlike that glass, it's in a vessel like this, so it's hard to see exactly how much beer there is, as opposed to how much foam there is.

    11. SB

      And the beer is the value, the foam is the speculation.

    12. JC

      Exactly. The beer is the fundamental operating value of the company, right? The sales and the expenses and the money that's left over that you call profits, right?

    13. SB

      Yeah.

    14. JC

      So that's the beer. The foam is what the market determines that's worth at any given moment, based on emotion-

    15. SB

      And hype

    16. JC

      ... Based and hype and speculation and fear and greed.

    17. SB

      And so up here-

    18. JC

      Right

    19. SB

      -is the total value of the stock.

    20. JC

      Right, exactly, the total value of the stock, but this is all foam that can come and go very quickly, right? So let-- think about Tesla, for example, right? Tesla has a lot of foam, 'cause a lot of people are speculating about the great things Tesla's gonna do in the future. Robotic cars, humanoid robots, you know, all these kinds of things, which very may well come to pass. I mean, Elon Musk is a stunningly brilliant guy, so who knows? But that's the speculation, that's the foam. The underlying beer of Tesla, the actual operating company, does not justify the price of the stock. I mean, the, the P/E ratio of Tesla, you can look it up, is some huge number, right? So there's a lot of speculation, a lot of foam in Tesla. Now, if things go to plan, then that foam will become, as, as in our example, you notice the foam is dissipating, we're getting more and more beer. If things go to plan for Tesla, that's what will happen. The foam will, will eventually settle out into more and more beer, and Tesla will justify that high price and maybe then some.

    21. SB

      And I guess Warren Buffett's greatness, i- if I've interpreted his writing correctly, and why he was often considered as the greatest investor of all time, was he was able to pay for stocks where it was mainly beer, and he paid at the price of the beer, not for the foam.

    22. JC

      Or he, he looked for times where the sentiment was so negative that he was actually paying a little less than the price of the beer. Benjamin Graham, who, who wrote, uh, The Intelligent Investor, who was a mentor to Warren Buffett, uh, basically said: What you should do is look for value companies and try to determine where the beer is, and then try to see if you can get a buying opportunity, watch it, where you can buy it for less than the actual value of the operation. That's ideal.... and in those days, when there wasn't so much information freely available, that was probably a little easier to do. What Warren Buffett has said since then, and that's a great foundation if you're gonna pick individual stocks, but what Warren Buffett has said since then is he learned, and I think, and you don't quote me on this, but I think it was Charlie Munger who actually made this point to him, that it's gonna be very, very hard in this day and age, even when they started back in the '60s, to find companies where you can actually buy it for less than the actual beer value. So don't try to do that. Just try to find companies that you can pay a fair price for, that have a lot of beer in the mix, that are mostly beer. Because if you buy those companies, they are, by definition, very well-run companies, strong brands, big moats around them, which makes them hard to compete, compete with.

    23. SB

      I guess to, to do this, you're gonna have to have a framework for valuing a company.

    24. JC

      Exactly, and you're gonna have to have great discipline.

    25. SB

      Which is-

    26. JC

      Yeah

    27. SB

      ... hard.

    28. JC

      And that's what, you know, as Warren Buffett said, "I was blessed with an ability to allocate capital effectively," and that's basically what he has done. He's-- has capital, and he has got the ability to look at different companies and say, "Of all the different companies I could allocate capital to," he's pretty skilled at, at picking the ones that are, are the best bets.

    29. SB

      One of the things that I really admired about Warren Buffett was his ability to do nothing.

    30. JC

      Which is one of the key things, because that goes back to Charlie Munger's thing: "Don't get in the way of your compounding," right?

  30. 1:33:27 – 1:34:56

    Don’t Sell When the Market Drops

    1. SB

      And there has been recent times where I think we can all think of where, using your beer analogy, something happens in the world, and the true value of a company is higher than the selling price, i.e, if you go back to March 2020, during the, the market sell-off when the pandemic happened and everybody panicked, Amazon, for example, the stock briefly dropped below, roughly to about one thousand five hundred dollars per share-

    2. JC

      Mm-hmm

    3. SB

      ... well below its intrinsic value, um, because people were panicking.

    4. JC

      Right.

    5. SB

      Uh, and then it quickly rebounded again, past three thousand dollars a share. So theoretically, if you had noticed that drop, you could have made a hundred percent return on your money, um, and-

    6. JC

      And by extension, the whole market did that.

    7. SB

      The whole market dropped, yeah.

    8. JC

      Right.

    9. SB

      Yeah.

    10. JC

      So you could have done that with your index fund. This is why if you panicked and sold-

    11. SB

      Yeah, you're screwed

    12. JC

      ... let's say you owned Amazon or you owned VTSAX, and you panicked and sold, well, you would've, you would've lost everything, and then it, it recovered. So it works both ways. That's why I said earlier in our conversation, you, you have to stay invested so that the dip doesn't matter, and if anything, take advantage of the dip and buy more. So you own Amazon, you see it dip. You say, "Well, I still believe in the company. I still think it's a good company, and it's got a good future." Well, then maybe you buy some more in the dip, and you do still better. But the important thing is you don't sell when it's down because there's panic in the air.

  31. 1:34:56 – 1:35:53

    Is Investing Just Gambling?

    1. SB

      And I think this is, um-- this speaks to a br- broader sentiment throughout this conversation, which is to do what others don't do. You know, and, and Warren Buffett-

    2. JC

      Right

    3. SB

      ... is famous for saying, "Be fearful when others are greedy, and greedy when others are fearful." But generally, the sentiment on social media, especially for younger generations and especially for men, which is supported by the data, is that the way to make money is by, like, trading crypto or by-

    4. JC

      Right.

    5. SB

      I, I mean, there's so many people that sell... Uh, this is such a-- We need to address this.

    6. JC

      Problem. You know, it's a platform-

    7. SB

      It's like gambling. It's just gambling in a different-

    8. JC

      Yeah, it's a, it's a gambling platform. It, so that's going... You know, people sometimes say to me, "You know, I'd never invest in the stock market. It's just gambling." I say, "Well, you're half right. It, our foam has all dissipated," but if there was still foam here, I would say, "Yes, if you're doing it short term and you're playing with the foam, absolutely. It's no different than going to Las Vegas. If you're investing for the beer, it's an entirely different story, and you're investing for the long term."

  32. 1:35:53 – 1:37:14

    Are Financial Courses a Scam?

    1. SB

      And there's lots of young people that are being tempted into buying a course that's gonna help them learn how to trade.

    2. JC

      That's great for the people selling the course.

    3. SB

      There's such a, there's such an incredible, uh, like ira-- obvious irony to the idea that I have some secret about trading that's really gonna make, you know, that is capable of making one wealthy-

    4. JC

      Right

    5. SB

      ... and I'm gonna give it to you.

    6. JC

      Or even sell it to you.

    7. SB

      Why would I need to if it worked?

    8. JC

      Right.

    9. SB

      Like, this is-

    10. JC

      I mean-

    11. SB

      ... such an obvious question to me. Like, why would I need to sell it if it worked?

    12. JC

      It i- it is the obvious question. I mean, you know-

    13. SB

      And I feel sorry. I have great empathy because the people that buy these things are people that are desperate to get out of their financial situation, and they've run out of options, and so it's very compelling to hear that there's some secret that you can predict the stock market. It's very compelling.

    14. JC

      You know, in another interview, I, I said one time, we were talking about the, the same line of conversation we're having, and I said, "You know, I blame my mother. I would be a lot richer if she hadn't instilled a conscience in me." You know?

    15. SB

      Mm.

    16. JC

      "She's cost me millions of dollars instilling this conscience. I, I could have courses, I could be..." You know, but no. I am saying that there is a path that will give you great results, and it's a pretty well-proven path at this point.

  33. 1:37:14 – 1:39:13

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    1. JC

      [page flipping]

    2. SB

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  34. 1:39:13 – 1:42:00

    Do I Need a Financial Advisor?

    1. SB

      the description below. [paper rustling] Do I need a financial advisor? Because a lot of people out there listening now will be thinking, "Yeah, I will figure out my money situation when I have enough money to pay a financial advisor."

    2. JC

      Yeah, I think, uh, my attitude is, by the time you know enough to choose a good financial advisor, which is no easy task, you probably know enough to do it on your own, at least on the investing part. Now, there are other life kinds of decisions where maybe advisors would be more useful, but again, you have to be careful, and, and, and it takes... You, you need to really educate yourself as to how advisors get paid, for instance. My attitudes, by the way, are colored by the fact that I, I hear so frequently from my followers about bad experiences with financial advisors. So I have a negative opinion. To be fair, I know there are good ones out there, and all due respect to those good ones. But let's suppose you have a, a financial advisor who gets paid based on the assets under management, right?

    3. SB

      The amount of, the amount that you've given them.

    4. JC

      Exactly. Right. So maybe if it's one percent, so you give them a million dollars, and they get one percent a year to manage that money for, for you. Let's suppose you go to that advisor, and you say, "You know, Steven, I've, I've been thinking about paying off my mortgage. I've got a half a million dollar mortgage on this house. It's six percent. Let's say it's five percent, so in that middle range, it's five percent, and I'm thinking about paying it off. What do you think?" Okay, well, now Steven has a bit of a dilemma because he can certainly give you the most accurate financial advice he is capable of giving you in answering that question. But if that leads him to say, "Yes, pay off the mortgage," he has just reduced his income by half, because when you pay off that mortgage, half a million dollars is gonna go out from his management and paying off the mortgage company. So you have just asked Steven to give you advice, potentially, that is bad for Steven. Now, if Steven's a honorable, capable, honest guy, then maybe Steven does that. But let's suppose Steven has two kids in college. Let's suppose Steven just bought a boat. Let's suppose Steven is going through a divorce. Let's think about that, and maybe Steven, as honest and capable and, and decent as he ordinarily is, has financial pressures that might play a role, right? There is a conflict of interest frequently, so you have to understand how your advisor is being paid.

  35. 1:42:00 – 1:43:07

    What Does Your Portfolio Look Like?

    1. SB

      How does your portfolio look? Where have you allocated your money in terms of percentages? How much money do you have in real estate versus cash versus index funds?

    2. JC

      Oh, I don't even think about, about the real estate. We have this, uh, cabin in Wisconsin on the lake, and then we have a condo in Florida. Um, they're both very modest, so pretty small part of our net worth. I like to buy things from a position of power. My stocks, I'm probably about eighty percent in, in, uh, VTSAX, Total Stock Market Index Fund, and probably fifteen percent in bonds, a Total Bond Market Index Fund, and then the other five percent in money market fund. I keep some money in, uh, the checking account to pay the bills. And to break it down a little further for you, my wife and I both have IRAs. We have a regular IRA and a Roth IRA, so there are four IR- IR- IRAs. All four of them hold VTSAX. We have taxable accounts, and part of that is VTSAX, part of it is the bonds.

  36. 1:43:07 – 1:45:11

    What Are Bonds?

    1. SB

      What is a bond?

    2. JC

      A bond is money that you have lent to a company or to the government. So when you buy a bond, you are essentially lending money to, uh, a company or a government en- entity. So they pay you interest, so y- you will-- They, companies and the government sell bonds of various maturities, so they can be very short. Like, a money market fund is basically very short-term bonds, you know, like thirty days or less, right? Which makes it the equivalent of cash. But you could buy a, a certificate of deposit as a kind of a bond, so you could buy one of those for three months or six months or a year, five years, ten years. Buy US Treasuries going out thirty years.

    3. SB

      Why would I do that instead of buying the index fund?

    4. JC

      So the index fund is stocks. It's, it's very... Stocks, as we talked about, big growth engine, great long term, very volatile.... So if you want something to smooth the ride, bonds are not very good for long-term growth, but they are not nearly as volatile.

    5. SB

      Are they-- So they're safer?

    6. JC

      Short term, yes, because they're less volatile. Long term, they tend to lose value to inflation. Stocks, on the other hand, are riskier short term because of the volatility, but long term, they outpace inflation, and so they are safer long term. So it depends on your time horizon as which is s- which is safer. But traditionally, people think of bonds as being safer, and really, the way you should hear that is less volatile, and stocks being riskier, you should hear that as more volatile.

    7. SB

      So is it broadly true to say that if we exclude your real estate, seventy percent of your assets are in stocks, twenty percent in bonds, and five percent in cash?

    8. JC

      Probably more eighty, fifteen, five.

    9. SB

      So eighty percent stocks-

    10. JC

      Probably, yeah

    11. SB

      ... fifteen bonds, five cash.

    12. JC

      Yeah.

    13. SB

      Okay. It's interesting because, um-

    14. JC

      Which would be considered very, very aggressive, and I n- wouldn't necessarily recommend that for most people my age.

  37. 1:45:11 – 1:46:14

    Asking ChatGPT the Ideal Path to Wealth

    1. SB

      I thought it would be curious, because we now have this new alien amongst us called AI. I thought it'd be curious if I went on ChatGPT, and I asked ChatGPT a question: I'm a normal person who earns fifty thousand dollars a year. I want to be financially free in the future. Give me a one-sentence answer based on all of the wisdom in the world, taken from every expert in investing ever.

    2. JC

      Well, the, the-- I know what the right answer is. I don't know what the answer...

    3. SB

      What do you think it's gonna say?

    4. JC

      Read The Simple Path to Wealth. I don't think that's what it's gonna say, but that's the right answer.

    5. SB

      And the, The Simple Path of Wealth talks about three principles, right?

    6. JC

      Right.

    7. SB

      What are those three? Three-- I'm gonna check it against what it says.

    8. JC

      Avoid debt.

    9. SB

      Yeah.

    10. JC

      Live on less than you earn. Invest the surplus.

    11. SB

      It said: "Focus on saving and consistently invest in low-cost, broad-based index funds like the S&P 500, while living below your means and allowing compounding to work over time." I then asked another question: How do I earn more?

    12. JC

      I should sue them for mining my book. [chuckles]

    13. SB

      [chuckles] Yeah, they probably did. [laughing]

  38. 1:46:14 – 1:47:01

    How Do I Earn More?

    1. SB

      I said, "How do I earn more?" What do you think? You know, if you, if you thought, if your daughter came to you and said-

    2. JC

      Earn more in a job, or?

    3. SB

      I just asked a very broad question-

    4. JC

      Yeah

    5. SB

      ... which is, I now-- "And now how do I earn more?" was my question.

    6. JC

      I would say develop, develop your skills.

    7. SB

      Okay.

    8. JC

      Yeah.

    9. SB

      It said: "To earn more, focus on developing high-demand skills-

    10. JC

      Well, there you go

    11. SB

      ... seek opportunities for career advancement, explore side hustles, or invest in assets that generate passive income, like real estate or dividends." But I really think that, you know, I really think there's a really important part there about developing high-demand skills.

    12. JC

      What are those gonna be in the future-

    13. SB

      Yeah

    14. JC

      ... with AI? Because programming, for instance, used to be a very high-demand skill, and people said, "Learn how to program."

    15. SB

      Yeah.

    16. JC

      From what I understand, in the age of AI, yeah, that's not so much.

  39. 1:47:01 – 1:49:20

    Why Failure Is Necessary for Growth

    1. SB

      I even think about my own life. Uh, at eighteen years old, I started learning about social media. I dropped out of university, doing my business management degree, after, uh, one lecture, and I started learning about social media because I was building a business in social media and technology. And although that first business failed, I, I was nineteen years old in two thousand and what? Fourteen or something, really understood this thing called social media, which led me to spend a year as a consultant, flying around the world to all these companies, doing social media. One of those companies turned around and said: "It's been so great. Could you turn this into a company?" I said: "No, I've been through the founder PTSD-

    2. JC

      Right

    3. SB

      ... of starting a startup. I don't want to do it." Three months later, I said yes, turned it into a company called Social Chain, and that changed my entire life.

    4. JC

      That worked out well.

    5. SB

      High-demand skill. I had-- even though I'd failed, I had this high-demand skill that was honestly, at the time, paying me seventy thousand pounds a month.

    6. JC

      You probably had it because you went through the process of failing.

    7. SB

      Yes.

    8. JC

      Failure is... You know, it used to be in some cultures that if you failed once, that was it. You're a pariah, nobody would even look at you anymore. Failure in our culture is just a stepping stone.

    9. SB

      Mm.

    10. JC

      I've heard venture capitalists say they won't even look at an entrepreneur in a fund if they haven't failed at least once.

    11. SB

      Hundred percent. The advice I'd now give to my kids based on that is, I would ask-- if my kids came to me and said: "Dad, what should I go learn?" I would say, "Go and work for a start-up." I said start-up because you're gonna be very close to the CEO and founder, because there's gonna be less desks, so you're gonna be closer to, to the proximity that is failing at the cutting edge. So if it's AI, I'd say, "Go work for an AI start-up." I, I-- probably not gonna work out. You're probably gonna be-- the company will be bust in a couple of months' time, but you're gonna be so close to the failure.

    12. JC

      You will learn so much.

    13. SB

      Yes.

    14. JC

      I wish somebody had given me that advice.

    15. SB

      And that's, and that's, like, i- in a way, I guess, a roundabout way, what I did is I started a company that failed at the very forefront of a wave coming into shore.

    16. JC

      Mm-hmm.

    17. SB

      Which meant that as I hit, you know, as the wave crashed down, and I was left there on my surfboard, I now had this high-demand set of skills that people were, like, begging me for, which set m- myself up. And frankly-

    18. JC

      Yeah

    19. SB

      ... The Diary Of A CEO would not be successful had I not spent the previous ten years understanding how social media, content creation, growth worked.

  40. 1:49:20 – 1:59:40

    You Can Have a Small Income and Still Be Financially Free

    1. JC

      Mm-hmm.

    2. SB

      Is there a favorite story in this book of yours?

    3. JC

      Oh, there's so many great ones, so-

    4. SB

      Share some of them.

    5. JC

      I, I already, I already alluded to my favorite one, which is my friend Tom. You know, because he has-- I mean, Tom was a guy who got to the age of sixty-two. He'd been through multiple divorces, he lost his house to foreclosure, he lost his job, he was broke, he went bankrupt, and yet his life has turned out pretty well. He's an extraordinarily happy guy. That's my favorite story. But one of the reasons I like this book so much, and one of the reasons, candidly, I did it, is if you read through it, you will find there are some stories from people who were tech bros, right? Who made big incomes, and they read The Simple Path to Wealth and applied it, and it worked very well for them.... but there are many, many more stories of people who have accomplished this from much more humble beginnings.

    6. SB

      Give me an example of-

    7. JC

      I have a very good friend of mine, high school buddy. I don't think he's ever made more than forty thousand dollars a year. He is financially independent because he followed the basic principles that I talk about in that book. I have a different friend, and he was in the financial business. He was living in Chicago, and over lunch, he told me that his Christmas bonus had come in at eight hundred thousand dollars. That's back in the mid-nineties when that was real money, right? And he was already making, I don't know, a million dollars a year or whatever it was, big income, and he was broke. And you see, most people listening to this are gonna say, "What are you talking about? This guy got a bonus, right? If people paid me eight hundred thousand dollars per year, I'd be done forever, right? And th- th- that'd be my nut. I'm good. How can he be broke?" Well, when you listen to him talk about the house, the cars, the schools, and you start doing the math, you realize that, no, his income is not enough. He's barely, barely making it. So here's a guy with a big income who is, unless he changes his ways, is never gonna be financial independent, financially independent. Here's my guy with a tiny income, comparatively, who got there. I've come to believe that a large income actually can be an impediment to accomplishing it, and my reasoning for this is that I think people who have a large income are much more likely to be drawn into the competing with the Joneses scenario. 'Cause they associate with other people who have large incomes, and they're all driving a certain car, living in a certain neighborhood, sending their kids to certain schools, and that probably becomes very hard to disengage with, and making it perhaps even less likely that they are gonna decide to spend a large portion of their income on buying their freedom. Whereas the people who make less money probably don't have those same social pressures and are more readily able to do it. So starting from humble beginnings is no obstacle, and that's was the point of doing Pathfinders.

    8. SB

      Interesting. It does track that, I think, the goalposts continue to move in different ways, and-

    9. JC

      Yeah

    10. SB

      ... I guess you go from competing to the Joneses to competing with the size of someone else's yacht, which is all slippery slopes to bad places.

    11. JC

      Or your own, or, or your own demons, as we talked about earlier, right?

    12. SB

      Yeah, you mentioned a word in there as well. You mentioned... I think you were talking about your friend Tom. Tom had a divorce?

    13. JC

      Multiple divorces, yeah.

    14. SB

      I-

    15. JC

      Which is bad for your wealth. [chuckles]

    16. SB

      Yeah, I didn't re- I didn't, [chuckles] I didn't realize this 'cause I've never been through one before. Um, I spoke to James Sexton on the show, who's a divorce lawyer, who kind of opened my eyes to it, but actually, I had a private conversation with a friend here in New York City, I'd say a couple of months ago, who's going through a divorce, and he s- he sat me down, and he talked me through the specific consequences of, of divorce that he's going through.

    17. JC

      That's brutal.

    18. SB

      He said to me... He's a very successful person. I reckon he's probably worth five hundred million, right? He said, "The divorce proceedings have now dragged on for five or six years, so I'm, I'm having to go and see lawyers all the time." And he said to me as well that he is paying for her lawyer, which I was, I, I didn't really understand, but he was like, "No-

    19. JC

      Right

    20. SB

      ... I have to also cover her lawyer costs-

    21. JC

      Right

    22. SB

      -because, you know, I'm the, the breadwin- winner."

    23. JC

      Right.

    24. SB

      "She doesn't have money, so I'm covering her lawyer costs-

    25. JC

      Right

    26. SB

      -which is what I have to do." And he said the law firm have gone from being a very, very small practice in those six years, now they have a massive building.

    27. JC

      Right.

    28. SB

      And he goes, "I know. It's my money." [chuckles]

    29. JC

      I bought it.

    30. SB

      Yeah. [chuckles]

  41. 1:59:40 – 2:15:02

    What's Your Biggest Regret?

    1. SB

      My last question for you is about regret. You said you're seventy-five?

    2. JC

      I am.

    3. SB

      What are your biggest regrets?

    4. JC

      So I, I think regrets are, are tricky, and, and I will-- I'll answer your question directly, and it's a couple of things that or at least one thing that occurs to me that might be surprising. But the reason they're tricky is because there is an assumption, like, you re- you regret doing A, and you think, "If only I'd done B, things would be better." But you don't know that that's true. Well, you might say, "Boy, I regret starting that company that failed, 'cause it was a failure." Well, yeah, but it led to something much bigger. You learned so much.

    5. SB

      Mm.

    6. JC

      Now, maybe if you'd said, "Instead of starting that company that failed, maybe I took this high-paying job and, and I worked my way up through the corporate organization," and you'd be sitting there, you know, you'd be sitting at some high executive level in this corporation and looking back and saying, "Well, am I glad I didn't do that start-up that failed," right? And yet, you're so much further ahead now than if you... So who knows? Who knows what choice you made that appears to be the wrong choice as to whether it really was. Maybe it was exactly the... Maybe things would've turned out better, maybe they wouldn't. So I'm very hesitant to look back on-- There are many things I can look back on and say, "Gee, I do wonder, what if I'd gone down the right path instead of the left path? What would that have looked like?" But there's no guarantees it would look better, and my life has been pretty damn good. So in that sense, I have no regrets. Two regrets I do have, very personal regrets. I don't- I've never shared these publicly. When I was a kid, my father was a very handy guy. He loved building things, working on the house, that kind of stuff. I was not that kind of kid, and I don't know, I was eight or ten years old at one point, and for my birthday or Christmas, I don't remember, he brought me a-- bought me a jigsaw, which is a... For people who don't know, it's a, it's an electric saw. It's got a little blade that goes up and allows you to cut wood in very fine kinds of patterns. Last thing in the world this kid wanted. And I let my dad know, and he was crushed, because for him, it was the best gift he could possibly think of to give to an eight or ten-year-old or whatever it was. And so one of the regrets... And I give myself some grace, 'cause I was very young, and reasonably, you could expect that I didn't have the maturity to deal with it the way I would've. But I, I do regret, 'cause I could see the pain in his face when I, I kind of rejected that gift, right?... and maybe that taught me a good lesson in being more empathetic going forward. So again, do I really regret it? Well, I regret that I hurt my father, but I learned something pretty valuable.

    7. SB

      And you've let-- you've remembered that for seventy years?

    8. JC

      I've remembered that for seventy years, yeah. Yeah.

    9. SB

      I've got similar stories of thing-

    10. JC

      Yeah

    11. SB

      ... ways I reacted as a kid, and-

    12. JC

      I think, I think most people do.

    13. SB

      Um, yeah.

    14. JC

      You know?

    15. SB

      Yeah, it sucks.

    16. JC

      And then my second one, and this is even bigger, I was twenty-four when my dad died, and he died of emphysema, and slow, lingering death. He died in the hospital. And the night before he died... The day before he died, I was visiting him, and, um, he was sitting on the edge of the bed, and he said to me, uh, "I'm gonna die now. You know, I'm, I'm gonna die tonight." Turns out, of course, he was right. He did. That was the night he died. And instead of recognizing that this was a moment where he wanted to talk to his son about this, this probably the most momentous event that any of us will ever face, right? Instead of recognizing that, I went to the typical trope of, "Oh, Dad, don't, don't talk like that. You're, you're not gonna die. You got a long way to go. There-- You're gonna be fine." I went into all that bullshit instead of just recognizing whether he was right or wrong, th- that he was facing a momentous thing, and he didn't wanna hear, "Don't, don't think about that. Think more positively." He, he wanted to share with his son what he was facing, and I regret that I wasn't there for him in that moment, but I regret that I didn't get to experience that with him in that moment. So that's my biggest.

    17. SB

      I can still see it still in your face.

    18. JC

      Mm. That was fifty years ago.

    19. SB

      Is there a reason why you think in that moment you didn't want to go in that direction with him?

    20. JC

      Wasn't a matter of what I wanted, 'cause it's not like I considered I can either blow it off, which is what I did, or embrace it and go there with him. I, I didn't even think that way. It's not like, uh... It's not like I made the wrong choice. I wasn't mature enough to recognize there was a choice. I wasn't mature enough to recognize the real dynamic of what was happening.

    21. SB

      And for that, you deserve grace.

    22. JC

      Thank you, and I agree with that, but I still regret it, 'cause h- how much better for both of us would it have been if I had recognized it?

    23. SB

      JL, we have a closing tradition on this podcast where the last guest leaves a question for the next. What is something that you think is true that you haven't yet been able to validate?

    24. JC

      I think at, at this point in my life, I'm... I feel pretty comfortable about what I think is true, right? So I'm not sure this answers the question, but, uh, but a good example is, I am pretty sure that there is no afterlife, right? I, I have a high degree of confidence to that. But of course, as the song once said, "We'll never know by living, and only our dying will tell." And I am very curious about death. I am very curious as to what is on the other side, if anything. So in a perverse way, I guess, I'm s-- I am looking forward to my death, right? I, I don't wanna get there too soon. I mean, um, as long as I'm mentally and physically capable, I'm happy to continue living, thank you very much. But I do have a great curiosity about death, and I'm almost a hundred percent sure that when I'm dead, that's just it, it's over. But I'm curious, and it'll be interesting if I die, and it's like, "Whoops!" You know, uh, like, "Oh, there is a guy with a white beard, and... Okay, I'll just show myself out. Thank you very much." [chuckles]

    25. SB

      There was one last question I wanted to ask you, which is kind of just about the subject of happiness. Again, at seventy-five years old, you have a retrospective clarity that I don't yet have on what actually mattered. What actually matters?

    26. JC

      Nothing. Nothing really matters, ultimately.

    27. SB

      Nothing?

    28. JC

      Yeah. I think that's kind of like asking: What's the meaning of life, right? And I don't think there is a meaning to life. When you look at the scale of the universe, the scale of the cosmos, the concept that we as individuals bear some meaning, seems to me to be silly. Human beings have been around for, I don't know, two, three hundred thousand years, depending on when you define Homo sapiens. I mean, that's, that's a infinitesimally small smudge of time.... in, that has happened already and that will happen in the future. Even if humans last for another few million years, it will be an infinitely tiny bit of time against this huge cosmic universe, and our individuality within that is infinitesimally small. And I think there's some great meaning behind that seems to me to be the height of arrogance. So I think that if you go through life, and you treat people pretty well, and you have a, a pretty good, good run of it, I think you've done well. I don't- but I don't think there's something profound in that.

    29. SB

      So, so what is the point then? Is there a point? Is that the wrong question?

    30. JC

      There, there is no point. I mean, the, uh, the point is, we happen to be here, and it can be a good, fun ride. It can be a very difficult ride, depending on what you make of it, and in some cases, depending on your circumstances. There have certainly been people in history that have born, been born into circumstances that, you know, made it a, a miserable existence with no options out of it. I mean, what's the meaning of that? You know, you and I, and the vast majority of people listening to us, probably, I'd venture to say 100% of them, have a lot more autonomy over, over how we can make our life. And will it have great meaning? No, ultimately not, but it's the only life you have, and you may as well make the best of it.

Episode duration: 2:15:02

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