#550: Paul Merriman, a former wealth manager turned financial educator, joins us to share investing wisdom that could reshape how you think about your money.

We kick things off talking about portfolio diversification. Paul suggests a simple four-fund strategy that includes large cap, small cap, and value stocks. He says this mix has historically beaten the S&P 500 with lower risk.

We then dive into international investing. Paul explains that while adding international stocks doesn't necessarily boost returns, it can help smooth out the ride. He keeps half his equity portfolio in international stocks, even at age 81.

Got kids? Paul's got some advice for you too. He tells us about putting money aside for his new granddaughter, aiming to fund her Roth IRA as soon as she can earn income. He breaks down how investing just a dollar a day from birth to age 21 could turn into millions by retirement age. It's a powerful lesson in starting early and the magic of compound interest.

We also chat about some common investing mistakes. Paul stresses that young investors often underestimate the power of stocks over bonds for long-term growth. He shares some eye-opening numbers: $100 invested in bonds since 1928 would have grown to about $12,000, while the same amount in small cap value stocks would be worth nearly $15 million.

Paul wants you to think of investing as a partnership with businesses. When you buy a mutual fund, you're becoming a senior partner in thousands of companies. At first, your contributions drive most of the growth. But over time, market returns take over, and you become the junior partner to a much larger fortune.

We wrap up with Paul sharing his excitement about a 40-hour financial education program he helped create at Western Washington University. It's designed to teach students essential money skills throughout their college years, from budgeting as freshmen to understanding 401(k)s as seniors.

Throughout our chat, Paul's message is clear: start early, stay diversified, and think long-term. He believes that with the right education and mindset, anyone can build a solid financial future.

4 Fund Combo Guide

https://www.paulmerriman.com/4-fund-combo#gsc.tab=0

Table Numbers

https://soundinvesting.com/wp-content/uploads/2020/04/Table-Numbers.pdf

Quilt Charts

https://soundinvesting.com/wp-content/uploads/2021/01/2020-Year-End-Podcast-Charts.pdf

Historical Risk and Return Tables

https://www.paulmerriman.com/historical-risk-and-return-tables#gsc.tab=0

Portfolio Configurator

https://lookerstudio.google.com/u/0/reporting/a941a5d4-0929-45ea-b22e-3bb82dc334ff/page/99wxc?s=hqmha3-AK5k

Timestamps:

Note: Timestamps will vary on individual listening devices based on dynamic advertising run times.

0:00 Intro to Paul Merriman and podcast topic

0:57 Two-fund portfolio strategy

3:55 Four-fund portfolio strategy explained

5:31 Large cap performance concerns

7:06 S&P 500 vs Total Market Index

10:59 AI impact on large companies

14:43 Market trends and historical performance

20:41 International equity in portfolios

25:26 ETFs vs index funds

29:41 Non-US investor asset allocation

38:41 Setting up kids financially

43:57 Early investing importance

48:37 Common investor mistakes

50:25 Investing as business partnership

52:51 Evolving financial education landscape

For more information, visit the show notes at https://affordanything.com/episode550

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#549: Steven is stuck on the question of financial stability. How do you know if you have it? Is there an objective answer based on net worth? Or is it a calculation relative to your income and age?

Jack isn’t sure how to factor his house into his net worth. It’s an asset, but he has a mortgage against it, and there are transaction costs associated with selling it. How should he frame it?

Patricia and her husband are debt-free with a $2.2 million net worth, but she’s constantly stressed about their finances. Are her concerns valid? Or is she a financial hypochondriac?

Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.

Enjoy!

P.S. Got a question? Leave it at https://affordanything.com/voicemail

For more information, visit the show notes at https://affordanything.com/episode549

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#548: Economist Dr. Karsten Jeske talks with us about the current economic landscape. Karsten, who retired at 44, breaks down the Fed's recent decisions and how they might affect our finances.

He explains how markets often anticipate interest rate changes before they happen. Karsten challenges traditional views on inflation and unemployment, telling us that textbook models don't always match reality.

Karsten shares his personal investing experiences, covering both market highs and lows. He emphasizes the value of consistent investing regardless of market conditions.

For those eyeing retirement, Karsten dives into safe withdrawal rates. He advises paying close attention to current market valuations when planning. On the topic of mortgages, he offers clear guidance on when refinancing makes sense.

We also touch on economic history, discussing the Weimar Republic's hyperinflation. Karsten uses this to critique modern monetary theory, expressing skepticism about unrestricted money printing.

Throughout our conversation, Karsten explains complex economic concepts in accessible terms. He draws on his background as both an academic and a Wall Street professional to provide well-rounded insights.

Karsten, also known as Big ERN, is the author of EarlyRetirementNow.com, where he writes about safe withdrawal rates and personal finance while enjoying his retirement.

For more information, visit the show notes at https://affordanything.com/episode548

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#547: An anonymous caller and her husband have a $2 million net worth at 40, but they’re worried that the one-fund portfolio that got them there isn’t good enough anymore. Are they right? 

Jared feels frustrated that so much personal finance media is centered around tech and freelance workers. Does Paula and Joe have negotiation advice for someone in the union?

Sam owns two overseas properties in a country that’s experienced runaway inflation for the past decade. He’s worried he’ll lose $500,000 worth of assets. How does he control the bleeding?

Steve is calling back with an exciting update on his house-swapping journey from Episode 487. 

Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.

Enjoy!

P.S. Got a question? Leave it at https://affordanything.com/voicemail

For more information, visit the show notes at https://affordanything.com/episode547

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#546: The Federal Reserve slashed interest rates by half a percentage point. What does this mean for your mortgage, your savings account, and the economy at large?

In this First Friday economic episode, we dive deep into the Fed's decision. But that's just the beginning.

As the presidential election looms, we'll also unpack the economic proposals from both candidates, examining how their plans for housing, taxes, and more could shape your financial future.

We emphasize critical, non-partisan analysis of economic proposals. We want you to understand complex economic issues and their potential impacts, rather than advocating for specific political positions.

Here are more specifics about this episode:

The Federal Reserve's decision to cut interest rates by half a percentage point – the first rate reduction since the pandemic – is the biggest economic story of the month.

We start by exploring the implications of the Federal Reserve’s rate cut, from falling mortgage and auto loan rates to potential increases in home prices and a tightening housing inventory. We also touch on the flip side: declining yields on high-interest savings accounts and CDs.

We unpack the reasoning behind the Fed's decision, including shifting concerns from inflation to unemployment. We delve into economic indicators like the "dot plot" and "R-Star," explaining their significance in predicting future interest rates and economic trends.

Then we discuss the latest jobs report, with 254,000 new jobs added in September, surpassing expectations. We break down the unemployment rate's drop to 4.1 percent.

As the conversation shifts to the upcoming election, we take a nonpartisan approach to examining economic proposals from both presidential candidates. The episode focuses on policy rather than politics, encouraging critical thinking about each proposal's potential impacts.

One area of bipartisan agreement - a proposal for no tax on tips for service workers - is scrutinized. We explain why economists across the political spectrum view this idea skeptically, highlighting the lack of specificity in defining "service workers" and "tips."

Housing policy takes center stage, with both candidates proposing regulatory streamlining for home construction and opening federal lands for development. We discuss the limitations of federal intervention in what are often local zoning and regulatory issues.

The episode also examines proposals for first-time homebuyer assistance, explaining how subsidizing demand in a supply-constrained market could potentially lead to higher housing prices.

Throughout the discussion, we emphasize the importance of evaluating these policies based on their potential economic impacts rather than political affiliations.

This episode will help you make more informed decisions about personal finances and policy preferences.

Timestamps

Note: timestamps will vary on individual devices based on advertising length

0:00 Introduction to the Fed's recent interest rate cut

2:35 Unpacking the impact of rate cuts on mortgages and savings

5:12 Explanation of the dot plot and R-Star concepts

9:47 Analysis of September's job report and unemployment figures

15:23 Discussion on labor force participation trends

21:08 Introduction to election-related economic policies

25:40 Examination of bipartisan "no tax on tips" proposal

31:15 Analysis of housing policies from both candidates

37:22 Critique of down payment assistance for first-time homebuyers

42:56 Exploration of the Tax Reform Act of 1986 and its housing impact

48:03 Discussion on proposed acts to limit corporate housing investments

52:17 Case study of Argentina's recent housing market changes

For more information, visit the show notes at https://affordanything.com/episode546

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#545: Kat feels thrown off. She’s realizing that the simple investing strategy that nearly 5x’d her portfolio in six years might be unwise. Should she course correct? And how?

Ryan and his wife are torn between buying what they want (a single-family house) and what seems prudent (a multi-family house). How do they decide? Is there a third way?

At 30, Danielle has saved enough for a traditional retirement. But she’s confused about how this meshes with planning for an early retirement. How should she think about money buckets?

Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.

Enjoy!

P.S. Got a question? Leave it at https://affordanything.com/voicemail

For more information, visit the show notes at https://affordanything.com/episode545

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#544: Remember that time you found a $20 bill in an old jacket pocket? The rush of excitement, followed by the quick mental math of what you could buy with it?

That's your money mindset at work.

In this episode, we dive deep into the psychology behind our financial decisions.

You'll hear about the three money mindsets: anxious, obsessed, and avoidant. Ever clutched onto every penny out of fear? That's the anxious mindset. Spent big to impress others? Money obsession. Ever thought "I'd rather be happy than rich" or felt uncomfortable talking about money? These could be signs of a money-avoidant mindset.

The episode shares a personal journey from being terrified of running out of money to developing a healthier relationship with finances. It's not just about saving or spending - it's about using money as a tool to express your values.

You'll learn why being "good with money" isn't as simple as “just don’t spend it!” Think about Ebenezer Scrooge - he had plenty of cash but lived like a pauper. Is that really good money management?

On the other end of the extreme, you have Montgomery Burns from The Simpsons as another example. He's loaded but obsessed with getting even richer, showing how the endless pursuit of wealth can leave you lonely and isolated.

The talk covers how your beliefs about money can become self-fulfilling prophecies. If you think you're bad with money, you might make poor financial decisions without realizing it.

You'll hear about the balance between time and money. Both are limited resources, and sometimes it's smart to spend money to buy back your time. After all, you can always make more money, but you can't make more time.

This episode tackles the myth that work is always a drag. It suggests finding work that gives you a sense of purpose can lead to both job satisfaction and financial success.

Investing comes up too. You'll learn why it's often simpler than the financial industry wants you to believe. Sometimes, doing less with your investments can lead to better results.

We wrap up by talking about imposter syndrome - that feeling that you don't deserve your financial success. If you've ever felt like a fraud because your bank account looks better than it used to, you're not alone.

Throughout the episode, you'll get insights into how your past experiences shape your current money habits. By the end, you'll have tools to start examining your own money mindset and working towards a healthier relationship with your finances.

For more information, visit the show notes at https://affordanything.com/episode544

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#543: Picture this: You're at a car dealership, trying to get the best price on your dream car. The salesperson hits you with a "take it or leave it" offer. Your palms are sweaty, your heart's racing. What do you do?

That's just one of the tricky situations we dive into in this episode. We're tackling seven types of hardball negotiation tactics that can trip you up in all sorts of situations - from asking for a raise to haggling at a flea market.

First up, we break down the "take it or leave it" tactic. We share a real-life story of Sarah, a software developer, facing this exact situation in a job interview. You'll hear how she turned it around and got what she wanted.

Next, we talk about psychological warfare. Sounds intense, right? It can be. We tell you about Emma, a graphic designer, who had to deal with a client trying to throw her off her game. You'll learn how she kept her cool and came out on top.

Ever heard of the "good cop, bad cop" routine? It's not just in movies. We share a story of how this played out in a business deal and give you tips on how to spot it and handle it like a pro.

Then there's the "snow job" - when someone dumps so much information on you that your head spins. We break down how to cut through the clutter and focus on what really matters.

We also cover what to do when someone's holding back important info, how to spot a fake-out (when someone pretends to care about one thing but really wants another), and the sneaky "nibbling" tactic where people ask for just one more small thing... and then another... and another.

For each tactic, we give you the lowdown on:

• What it looks like in action
• Why it works (yep, there's some psychology involved)
• How you can spot it
• What you can do to counter it

We wrap up with a handy checklist for each tactic. Think of it as your negotiation cheat sheet. By the end of the episode, you'll have a toolkit of strategies to help you navigate tough negotiations, whether you're buying a car, negotiating your salary, or just trying to decide where to go for dinner with your friends.

Remember, negotiation isn't about "winning" at all costs. It's about finding solutions that work for everyone. With the tips from this episode, you'll be better equipped to do just that, even when things get tricky.

For more information, visit the show notes at https://affordanything.com/episode543

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#542: Ever feel like you're never doing enough with your money, even when your finances look good on paper?

You're not alone.

Katie Gatti Tassin, host of the Money with Katie podcast, dives into a phenomenon called "money dysmorphia" in today’s interview.

She shares how she got flooded with responses when she asked her listeners about money dysmorphia. Folks with hefty savings and investments still worry they're not doing enough. It's like they're always waiting for the other shoe to drop.

Where does this come from? Katie points to a few culprits. Social media is an obvious scapegoat. But traditional media plays a role too. Think about all those TV shows where "normal" families live in massive houses and drive fancy cars. It skews our perception of what's average.

Location matters too. Katie talks about how moving from Dallas to Fort Collins changed her spending habits. Different cities have different vibes and social norms around money.

The conversation takes an interesting turn when Katie shares her own experience buying a Porsche. She felt conflicted, worried her FIRE (Financial Independence, Retire Early) community would judge her. It highlights how even personal finance experts grapple with these issues.

They also touch on how the pandemic shook up financial priorities. When faced with uncertainty, some people realized saving for a far-off future might not be the only goal worth pursuing.

Katie and Paula discuss the importance of balance. It's good to save, but not at the expense of living your life now. They suggest seeking out voices in the personal finance world to get a more rounded perspective.

Travel comes up as a way to gain financial perspective. Seeing how people live in other parts of the world can make you appreciate what you have or show you where your own country could improve.

Katie and Paula offer food for thought on how to navigate our complex relationship with money. It's a conversation that might make you think differently about your own financial mindset.

Timestamps

Note: Timestamps will vary on individual listening devices based on dynamic advertising run times.

01:13 - Define money dysmorphia concept

02:22 - Social media's influence on financial perceptions

03:57 - Traditional media's impact on financial normalcy

06:03 - Wealth displays in TV and movies

09:52 - Regional cultures affect spending habits

11:35 - Social engineering in consumer culture

14:36 - TV shows shape perceptions of normal lifestyles

17:19 - Lower-income portrayal in media

20:22 - Social circles influence financial habits

23:35 - Importance of balance in financial perspectives

26:34 - Travel's role in gaining financial perspective

29:12 - Key takeaways about money dysmorphia

31:30 - Media's influence on financial normalcy perception

33:46 - Balancing future planning with present enjoyment

For more information, visit the show notes at https://affordanything.com/episode542

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#541: Ever wondered if you're making the right choice between a Traditional and Roth 401(k)? You're not alone. 

In this episode, Katie Gatti Tassin, host of MorningBrew’s Money with Katie podcast, joins us to tackle this common retirement savings dilemma.

We deep-dive into the debate between using Traditional vs. Roth 401(k) accounts for retirement savings, in the context of:

1. Future tax rates 
2. Tax complexities for small business owners and high earners
3. Social Security uncertainty
4. Stock-based compensation 
5. Incentives for business owners vs. employees

Katie explains her strategy for maximizing retirement savings while minimizing taxes. She suggests that for some people in higher tax brackets, maxing out a traditional 401(k) and then investing the tax savings elsewhere might be the way to go. 

But as we dig deeper, it becomes clear that there's no one-size-fits-all answer.

We explore the Traditional vs Roth question, discussing how your current income and expected retirement spending can affect your choices. 

It's not just about the math, though. The unpredictability of future tax rates and policies adds another layer of complexity to the decision.

Social Security plays a major role, as well. We discuss its current funding situation and the challenges it might face in the future. 

This leads to a fascinating discussion about how AI might impact future costs and lifestyles. Could things actually get cheaper in the future? 

Taxes for high earners and small business owners is another focus. We break down some misconceptions about who falls into high tax brackets. It's not always as simple as it seems.

Stock-based compensation is another hot topic. We discuss how it affects corporate decision-making and the wider economy. This leads to an interesting comparison of the incentives for business owners versus employees.

Throughout the episode, we keep coming back to one key point: no matter which type of account you choose, the most important thing is to contribute as much as you can. 

Your contribution amount has a bigger impact on your retirement savings than the type of account you use.

By the end of this interview, you'll have a better understanding of the factors that go into choosing between a Traditional and Roth 401(k). More importantly, you'll see how this decision fits into the bigger picture of retirement planning and overall financial health.

Timestamps:

Note: Timestamps will vary on individual listening devices based on dynamic advertising run times.

Here are the condensed timestamps and descriptions:

0:00 Introduction

1:46 Katie explains strategy for maximizing retirement savings

3:19 Discuss assumptions behind traditional vs Roth 401(k) decisions

5:54 Compare scenarios of traditional and Roth contributions

8:54 Explore how income affects retirement account choice

13:51 Talk about media's impact on financial perceptions

15:20 Discuss unpredictability of future tax policies

18:03 Explain current state of Social Security funding

21:05 Explore AI's potential impact on future costs

24:41 Discuss how location influences spending habits

28:16 Examine tax implications for high earners

31:12 Talk about effects of stock-based compensation

33:55 Compare incentives for business owners vs employees

36:06 Emphasize importance of contribution amounts

For more information, visit the show notes at https://affordanything.com/episode541

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Originally aired August 2023: Stanford psychology professor Jamil Zaki shares his research and findings around the science of empathy – and how we can apply this to improving our relationships with colleagues, clients, customers, co-founders, and business and investing cohorts.

Zaki is the director of the Stanford Social Neuroscience Lab, and the author of “The War For Kindness.”

We'll break down the science. We talk about why empathy matters in business, investments, and in career growth, and we’ll discuss its digital age dynamics. How does AI impact the way in which we relate to others?

If you want to learn the science of emotional intelligence, and how to apply this to your career and business interactions, you’ll learn a lot from today’s episode.

Enjoy!

The original show notes can be found at https://affordanything.com/episode456

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