Based Camp - November 13, 2023


Pragmatic Investing


Episode Stats

Length

36 minutes

Words per Minute

193.47348

Word Count

6,998

Sentence Count

372

Misogynist Sentences

5

Hate Speech Sentences

7


Summary

In this episode, we talk about the most important investment of all, and why you should have a diversified portfolio. We also talk about why Bitcoin is a great investment in the long term, but not everyone is so sure about it.


Transcript

00:00:00.000 This is boring, basic financial advice,
00:00:02.820 but I feel like everyone out there
00:00:04.280 is some sort of get what's quick guru.
00:00:06.260 When I look at financial advice,
00:00:07.880 it's people looking at all these charts
00:00:10.160 and making it really complicated
00:00:11.980 and they're way above my pay grade
00:00:14.540 or like way below my pay grade,
00:00:16.200 but pretending to be above, which is the worst.
00:00:18.600 Would you like to know more?
00:00:20.020 Hello, Simone.
00:00:21.280 It is exciting to be here with you today.
00:00:24.200 I'm so excited.
00:00:25.280 Yeah, we're going to talk today
00:00:26.560 about the most important investment of all,
00:00:29.220 your health.
00:00:29.540 No, just kidding.
00:00:30.460 We're constantly sick because we have kids in school.
00:00:32.480 So the most important investment of all is money?
00:00:34.840 Yeah, the most important investment of all, money.
00:00:37.260 Screw your health.
00:00:38.220 That's a good, that's a good, for your health.
00:00:40.180 Burn bright, die young, right?
00:00:42.000 Yeah, so it is true.
00:00:43.420 The most important investment is money.
00:00:46.640 After maybe kids, I guess, like, you know,
00:00:49.000 we are pernatalists,
00:00:49.900 so we've got to say that matters as well.
00:00:51.340 But I, you know, I don't know how much actual control
00:00:54.240 you have over the outcome of that.
00:00:56.100 I think it's-
00:00:56.360 That's why you need to have a diversified portfolio.
00:00:58.020 Shoot, that means a lot of kids.
00:01:02.680 Yes.
00:01:03.320 So this is actually a follow-up episode
00:01:05.120 to an episode that we did on how to get rich,
00:01:08.300 where we just went over, like, you know,
00:01:10.240 the basics of, like, the actual financial world,
00:01:12.520 starting companies, stuff like that.
00:01:14.020 And I think we'll do more topics on this
00:01:15.780 because the video did really, really well.
00:01:17.960 And I did not expect it to do well
00:01:20.020 because it's not our normal sort of a topic.
00:01:21.940 But obviously, it's something I know a lot about.
00:01:24.240 I should mention, you know, degree.
00:01:26.040 I've got my MBA from Stanford.
00:01:28.000 Simone has her graduate degree from Cambridge.
00:01:30.860 Both of us have worked in venture capital.
00:01:32.420 Both of us have worked in private equity.
00:01:34.940 And when it comes to investments,
00:01:38.040 Simone, you had a really interesting way of framing it
00:01:41.000 that you were going over with me earlier today about sort of-
00:01:43.040 Yeah, we were talking about the issue of many people we know
00:01:48.700 who've made a lot of money through investing,
00:01:50.820 doing it essentially by making bets, like all-in bets,
00:01:54.220 that tactically, strategically, statistically,
00:01:58.300 weren't very ill-advised, but then paid off.
00:02:01.680 And then they just assume, I'm a great investor.
00:02:04.320 And you actually saw a lot of this happen during the pandemic.
00:02:07.140 And I think a lot of poker players and coaches
00:02:11.600 who, like, teach Bayesian thinking now
00:02:13.940 who have really summed up this kind of thinking really well.
00:02:18.020 They talk about when they're coaching poker players
00:02:19.940 and they teach them to think in sort of a Bayesian way
00:02:23.600 to make very well-considered bets,
00:02:26.720 which are always calculated bets.
00:02:28.640 And a thing that constantly frustrates them
00:02:30.360 is the people they're coaching.
00:02:31.580 Like, they'll lose a hand.
00:02:32.820 And they'll be like, yeah, well, I made the wrong choice.
00:02:35.500 I messed up because I lost.
00:02:36.900 And they're like, no, no, no.
00:02:38.700 You didn't make the wrong choice because you lost.
00:02:40.780 You made the right choice, but you still lost.
00:02:43.060 Because in the end, there's some chance involved in these bets.
00:02:46.800 And the same case happens with investing.
00:02:49.420 Sometimes you make all the right choices and you lose money.
00:02:52.460 But also, sometimes you make all the wrong choices
00:02:54.900 and you make a ton of money.
00:02:56.640 That doesn't mean you're a good investor.
00:02:58.000 That doesn't mean you thought through things well
00:02:59.720 or had a very robust strategy.
00:03:01.500 And in the end, over the long run,
00:03:03.980 you're probably going to lose money
00:03:05.520 if you don't think in a more calculated
00:03:09.040 and statistically sound manner.
00:03:11.420 Which, you know, is what we've seen, right?
00:03:12.960 You were talking about all the people you know
00:03:14.500 who used to make tons of money.
00:03:16.800 Like, I mean, they put everything on Bitcoin.
00:03:18.620 And now, you know.
00:03:20.040 Yeah, no.
00:03:20.640 And I think that for a lot of people,
00:03:22.640 and this is a great, like, evoked set,
00:03:24.340 look at your friends who are bragging
00:03:25.760 about what great investors they were
00:03:27.300 during the last Bitcoin bull run.
00:03:29.520 And we're believers in Bitcoin.
00:03:31.980 But I think that a lot of people
00:03:33.340 overinvest in single assets
00:03:35.360 because it's an asset that they have built
00:03:37.220 a portion of their identity around.
00:03:39.380 And this is something we increasingly see in investing.
00:03:42.600 Whether it's in the crypto space
00:03:44.460 or whether it's in the, you know, like.
00:03:48.120 Or just a stock.
00:03:48.900 Like a stock people really identify with.
00:03:50.700 Or like an industry people really identify with.
00:03:53.500 Yeah.
00:03:54.180 And this is something that in the short term,
00:03:57.460 when I look at these people who were all bragging about this
00:04:00.140 in my, like, Facebook feed and stuff like that,
00:04:02.600 they are not bragging much anymore
00:04:04.200 because what ends up happening very frequently
00:04:07.380 is somebody makes one of these ill-advised bets.
00:04:10.780 It pays off.
00:04:12.340 They now think, oh, I can make, like, an income investing.
00:04:16.720 So then they start doing, like, really idiotic stuff,
00:04:19.940 like leveraged investing and stuff like that.
00:04:22.340 And hold on.
00:04:23.020 I'm going to explain what I mean
00:04:23.920 when I say leveraged investing is idiotic stuff.
00:04:26.160 Um, so during bull cycles,
00:04:29.960 this is something that always happens.
00:04:31.420 Somebody accidentally makes some money investing.
00:04:34.060 They think, well, if I make that amount of money investing
00:04:36.940 every month going forward,
00:04:38.960 then I don't need to work anymore.
00:04:40.700 How can I make more money investing?
00:04:43.040 And then, of course, they find out about leveraged investing.
00:04:45.620 And they go, oh, so this is just, like, a thing
00:04:47.900 where, like, if I'm really smart about my polls
00:04:50.880 and my puts and everything like that, right,
00:04:52.680 like, I can regularly, on average,
00:04:56.000 make money through this investing thing.
00:04:58.440 And that is true for some people.
00:05:00.100 We have some friends who just make astronomical amounts of money
00:05:03.480 through this kind of investing.
00:05:05.720 Yeah.
00:05:06.240 Every single one of them
00:05:07.820 is the type of person who did math for fun
00:05:11.660 before getting into this.
00:05:14.120 Yes.
00:05:14.620 They were all, like, theoretical math people
00:05:17.300 from, like, MIT or, like, programmers
00:05:20.340 who do a lot of programming or, like, AI stuff for fun.
00:05:24.220 The people who do this well,
00:05:26.500 who can actually make money
00:05:27.900 with this sort of investing as an income stream,
00:05:31.660 these are individuals who just have an enormous love
00:05:36.580 and talent for a specific kind of math.
00:05:39.880 If the reason you are going into leveraged investing
00:05:43.900 is because you want to make money,
00:05:46.820 you will fail.
00:05:48.480 Maybe not the first time,
00:05:50.060 but eventually you will fail.
00:05:51.800 It is not a good, reliable stream of income.
00:05:55.140 It is gambling.
00:05:56.780 It is just gambling.
00:05:58.340 And you can make money gambling,
00:06:00.340 but most of the people who make money gambling
00:06:02.120 are math nerds.
00:06:03.260 They're not, like, gambling nerds.
00:06:05.560 I mean, there's a few, you know,
00:06:07.680 obviously, like, people who are just, like,
00:06:09.720 uniquely good at gambling gambling.
00:06:11.520 But when you talk about the people
00:06:13.120 who the casinos are afraid of,
00:06:14.980 they're the math nerds, right?
00:06:16.720 And so if that's not your thing,
00:06:18.760 don't go into that field
00:06:20.300 as a safe source of income
00:06:23.720 for you and your family.
00:06:25.520 So we're starting with, like,
00:06:26.760 some of the things you shouldn't do.
00:06:28.080 And as Simone pointed out,
00:06:29.640 and I actually, you know,
00:06:30.660 I was talking with some of my friends
00:06:31.940 after they made a bunch of money on Bitcoin.
00:06:33.560 I was like, so you're going to balance
00:06:34.680 your portfolio now, right?
00:06:35.820 You made a big windfall.
00:06:36.840 You're going to balance your portfolio now.
00:06:38.740 And they're like, no,
00:06:40.320 my windfall has validated for me
00:06:42.640 that I need to further consolidate
00:06:44.100 my portfolio around the area of my windfall,
00:06:48.100 which is how they usually end up
00:06:49.940 losing more money than they made
00:06:51.340 during their lucky streak.
00:06:52.840 So let's talk about a balanced portfolio
00:06:55.140 and how you should be thinking about it
00:06:57.180 in the world that we're going into.
00:06:58.980 Oh, and before we go any further,
00:07:00.680 we are not investment advisors.
00:07:02.960 We're not giving you investment advice.
00:07:04.420 We're talking shit about other people, all right?
00:07:07.200 And we are talking about how we-
00:07:08.460 Oh, shit shit here.
00:07:09.140 The second investment advice.
00:07:10.480 Yeah, we are not.
00:07:11.420 Yes, this is not advice.
00:07:13.860 I just want to make that really, really clear.
00:07:16.740 So if, yeah, no, we're talking about how we do it
00:07:18.920 and we're talking shit about people, okay?
00:07:20.500 That's it.
00:07:21.260 Yeah.
00:07:21.480 So this is the way I would suggest
00:07:24.100 handling your investments.
00:07:26.640 I strongly suggest that you,
00:07:29.100 with your spouse or your family
00:07:31.320 or whoever, you know, is co-related to your assets.
00:07:34.840 And of course, once you intermingle your assets,
00:07:36.580 it makes divorces much harder.
00:07:38.380 So like this is for people
00:07:39.580 in like really aligned marriages,
00:07:41.340 but it does really help to be able
00:07:43.140 to bounce ideas off of another person
00:07:44.680 is I guess what I'm saying here.
00:07:46.300 So you talk through,
00:07:50.400 or I guess was yourself,
00:07:51.640 like on a long walk or something like that,
00:07:53.620 what you think is going to change about the world.
00:07:56.900 And I would generally develop
00:07:58.520 three sort of strategies, right?
00:08:01.660 One is, I call them short-term strategies.
00:08:04.420 One is mid-term strategies.
00:08:06.260 And one is long-term strategies.
00:08:09.320 Using what you predict to change about the world
00:08:12.920 in the near future,
00:08:14.280 make investments.
00:08:16.300 But whenever you make an investment,
00:08:18.060 and you can do this through like E-Trade
00:08:19.180 or something like that.
00:08:20.020 That's a good general site for beginners, I think.
00:08:23.000 Whenever you make one of these investments,
00:08:25.700 be aware that you need to set
00:08:27.460 sort of a clock for yourself
00:08:28.760 of when you're withdrawing that investment.
00:08:31.620 Unless it's in the like
00:08:32.720 ultra long-term investment strategy.
00:08:35.100 And when you withdraw the investment
00:08:37.240 is typically when an event resolves
00:08:40.200 or when, so for example,
00:08:42.560 we had a high confidence
00:08:44.640 that there was about to be an armed conflict
00:08:46.620 leading up to the Ukrainian war.
00:08:48.560 And so we invested in a lot of military companies
00:08:51.180 during that time period.
00:08:53.080 When the war started,
00:08:54.080 I go to Simone and I go,
00:08:55.220 withdraw all our military investments.
00:08:57.280 And a lot of people would be like,
00:08:58.420 wait, why aren't you investing
00:08:59.300 when the war is going, right?
00:09:01.860 Like that's when the companies are doing well.
00:09:03.380 No, that's when the market forces have said,
00:09:06.300 oh, they're unlikely to get
00:09:09.220 like additional cash flows going into them
00:09:12.820 once the war is already going on.
00:09:14.180 Like unpredicted cash flows.
00:09:16.000 It's once the unpredicted situation
00:09:18.000 that you predicted resolves
00:09:19.900 is when you withdraw your money from the market.
00:09:22.520 And this is really critical that you do this.
00:09:26.200 And then that you don't do the silly thing,
00:09:28.420 which is double down
00:09:29.380 because you made one right bet.
00:09:31.660 So for example, if you're like,
00:09:33.380 oh, this COVID thing,
00:09:34.240 other people don't see coming,
00:09:35.800 I am going to make bets
00:09:38.060 that assume it's going to be here.
00:09:40.420 And then you make some money on that.
00:09:42.100 Don't bet on the same thing
00:09:44.240 that you already just bet on happening further and more.
00:09:47.880 You can make money on that,
00:09:49.300 but most of the people I know who keep doing that
00:09:51.460 end up getting burned more than resolved in their favor.
00:09:55.100 Well, you're saying that basically
00:09:56.760 once mainstream society,
00:09:59.120 or at least a large segment of people
00:10:00.980 have normalized to an idea,
00:10:02.420 you're not going to make money off of it anymore.
00:10:05.120 You're going to make money off of something
00:10:06.420 when you realize that there's a trend coming
00:10:08.380 that other people have not yet really realized
00:10:11.440 or acted upon.
00:10:12.640 But once it's a mainstream idea,
00:10:14.740 like during the pandemic, for example,
00:10:16.760 we knew a lot of people who like,
00:10:18.540 well into the pandemic,
00:10:19.540 were like, oh, I'm going to do mask production.
00:10:21.820 No, they all lost money
00:10:23.520 because it was too late.
00:10:24.980 It was too late already.
00:10:26.220 So you have to think way, way ahead of the curve.
00:10:28.540 Once everyone knows that something is needed,
00:10:30.260 that's priced into the market.
00:10:32.660 Yeah.
00:10:33.680 Okay.
00:10:34.060 So the next thing we're going to talk about
00:10:35.860 is like categories of investment, right?
00:10:37.880 So you want your specific company plays, right?
00:10:41.940 So this is just like,
00:10:42.800 I'm investing in this company
00:10:43.720 or this company or this company.
00:10:45.000 And then you want to invest in some,
00:10:47.960 either ETFs or mutual funds.
00:10:50.760 These are honestly,
00:10:52.740 from the perspective of your like lay investor,
00:10:54.960 you can basically think of them as the same thing.
00:10:57.500 They have different like tax implications
00:10:59.500 and different ways they distribute money
00:11:01.200 and different ways that you reach them as investments,
00:11:03.960 but they're basically collections of companies.
00:11:06.580 So suppose you have a thesis around like
00:11:08.460 some country in South America, for example.
00:11:11.860 Well, then what you do is you,
00:11:15.080 oh, by the way, Simone,
00:11:16.480 can you please withdraw all our South America investments
00:11:18.880 because a lot of them are really reliant on China
00:11:21.220 and I do not expect positive stuff from China
00:11:24.640 in the near future.
00:11:25.660 Making a note.
00:11:27.500 Ah, you see, this is how you handle investments, right?
00:11:32.740 Because I had forgotten that we hadn't withdrawn
00:11:34.240 all our South American plays.
00:11:35.600 This is how we handle investments
00:11:37.100 and we're not giving anyone advice.
00:11:38.640 Yeah, we're not giving anyone advice.
00:11:39.980 Yeah, I was saying,
00:11:40.580 so this is really useful if you're like,
00:11:42.120 oh, I think this country will do well,
00:11:43.400 then you can look up like ETFs or mutual funds
00:11:45.620 that are tied to that resource or country or play, right?
00:11:50.640 Like I think oil producers will do well.
00:11:53.740 And then you can look up like oil producer ETFs.
00:11:55.500 A recent one for us has been uranium, right?
00:11:59.540 We think uranium will do well.
00:12:01.100 It was really depressed in price after the Fukushima situation.
00:12:06.180 And it's been pretty depressed for a while now.
00:12:07.880 But I think after what's happening in Germany right now,
00:12:10.740 the world's waking up that nuclear reactors
00:12:12.860 were actually pretty high utility.
00:12:14.160 And we're going to get some more online.
00:12:16.420 And once people see that,
00:12:17.840 then we sell our uranium stocks
00:12:19.720 as soon as some country announces a plan
00:12:21.980 to build a bunch of nuclear reactors.
00:12:23.540 I don't wait till the nuclear reactors are there to withdraw.
00:12:26.540 In terms of real estate investment,
00:12:28.900 a lot of people will tell you,
00:12:30.100 oh, it's so easy.
00:12:31.140 Do real estate investment
00:12:32.260 and go into all this debt to do it.
00:12:33.940 And it's like,
00:12:34.960 that makes sense for a portion of your portfolio.
00:12:37.680 And when you do own real estate,
00:12:39.740 you should have debt on that real estate.
00:12:42.640 It's kind of stupid not to in a growing economy.
00:12:47.440 Right now, though, it's really screwing people over.
00:12:49.720 What?
00:12:50.380 Right now, it's not going up.
00:12:51.820 Yeah, right now, it's not going well.
00:12:53.440 But it is the financially responsible thing to do
00:12:56.060 in the way that the world economy has worked historically.
00:12:58.600 Yeah, yes.
00:12:59.120 Which may transform,
00:13:00.480 but I think it'll be about 30 years before it transforms.
00:13:03.000 Yeah.
00:13:03.320 I.e., an economy that's shrinking on average,
00:13:06.040 which is one thing we've talked a lot about
00:13:07.420 in terms of the way that things are going to resolve
00:13:10.240 in regards to demographic collapse.
00:13:12.060 Right.
00:13:12.620 Now, something to note with real estate is,
00:13:15.180 you know, with the world's population
00:13:16.680 not growing as much in developed countries anymore,
00:13:19.060 a lot of people can be like,
00:13:19.880 why are real estate prices continuing to go up?
00:13:22.580 I think this can be very confusing to a lot of people.
00:13:24.940 And it's important to understand what's going on here.
00:13:27.180 What's going on is that families
00:13:28.960 where you used to have like five people to a household,
00:13:31.580 now everybody wants their own house
00:13:32.900 because they're not finding partners anymore,
00:13:35.120 which is why you see this increase in price
00:13:37.940 in things like starter homes and stuff like that,
00:13:40.540 which is interesting.
00:13:41.580 You know, it provides for some economic opportunities,
00:13:44.020 but it is a short-term sort of like market unequilibrium
00:13:48.040 and not a long-term solution.
00:13:49.560 A good play that I would do
00:13:51.780 if I had some cash aside in real estate
00:13:54.060 is buying the types of assets that private equity firms,
00:13:57.960 and this is something that's really important to note.
00:13:59.660 We mentioned this with buying companies as well.
00:14:01.500 There are assets that you can buy and make money off of
00:14:05.320 in ways that a private equity firm
00:14:07.300 would make money off of something,
00:14:08.600 but that are too small to be worth it
00:14:10.780 for the effort of a private equity firm.
00:14:12.880 So if you're buying some like historic building
00:14:14.860 and you're transforming it
00:14:16.300 and dealing with, you know, coding and stuff like that
00:14:18.900 and turning it into like a five-bedroom,
00:14:20.920 like starter housing, right?
00:14:22.160 Like a five separate bedrooms.
00:14:24.320 What's the word I'm looking for?
00:14:25.220 Five singles apartment unit, right?
00:14:27.420 That can be really powerful
00:14:29.640 because that's just like too small
00:14:31.320 for most private equity firms to care about.
00:14:33.600 And yet it can be, you know,
00:14:34.560 an enormous opportunity to make money
00:14:37.440 with a little bit of risk around zoning
00:14:39.240 and stuff like that, depending on how you handle it.
00:14:41.540 So that's real estate.
00:14:43.980 I would generally, I mean,
00:14:45.840 whether or not you own your house,
00:14:47.220 it just depends on how quickly you plan to move.
00:14:50.380 I guess I'd suggest anywhere you plan to stay
00:14:51.980 for over six years, you should probably own.
00:14:54.240 But it really depends, you know,
00:14:55.600 on the sort of like rent versus buy.
00:14:57.040 It depends on interest rates.
00:14:58.020 It depends on the market.
00:14:59.480 It also depends like on people's desired quality of life.
00:15:02.880 But often it's a really bad idea to own a house.
00:15:05.860 I think-
00:15:06.360 We need to do a whole video on buying houses
00:15:08.420 because we have documents and documents on buying houses.
00:15:11.400 It seems like in many cases, you know,
00:15:12.980 you spend so much money maintaining a house
00:15:14.940 that it can be really hard depending on the market
00:15:16.840 to even make a profit.
00:15:17.900 Anyway, so next, crypto assets.
00:15:22.160 Bitcoin, I'd say you always got to eat your broccoli.
00:15:25.600 It was crypto assets.
00:15:26.720 And by that, what I mean is we personally have a rule
00:15:29.780 that any money we deploy in any crypto asset
00:15:32.360 gets matched with a deployment in Bitcoin
00:15:34.300 because it is the, I think, long-term,
00:15:37.680 the safest crypto asset.
00:15:39.160 As to why Bitcoin is like, we're not,
00:15:41.500 I was thinking about doing a full video on Bitcoin,
00:15:43.300 but I don't really think I need to.
00:15:44.840 I can just sort of talk about it a bit here,
00:15:46.880 which is interesting
00:15:47.460 because there's a lot of smart people
00:15:48.480 who don't seem to get why Bitcoin is such a thing of value.
00:15:52.000 You know, you look at like Peter Zaihan,
00:15:53.800 like we agree with him on a lot of stuff
00:15:55.060 and he thinks Bitcoin is just sort of pointless.
00:15:57.000 And I'm like, how, what?
00:15:59.440 Okay, so let's go back a bit.
00:16:02.300 Why do things like art have a lot of value, right?
00:16:06.580 This is an important question
00:16:08.280 that individuals should be asking themselves, right?
00:16:10.240 They have a lot more value than like their actual value.
00:16:13.040 It's because there is a limited quantity of them
00:16:16.640 and a wealthy society can use them
00:16:19.960 as a very lightweight store of value
00:16:23.340 if they ever need to move or leave or flee a country.
00:16:27.260 They are very useful value stores.
00:16:30.220 You can think of them almost like
00:16:31.460 printing something on money.
00:16:32.300 Now, of course,
00:16:33.020 there's also a lot of market manipulation in art.
00:16:34.860 I would not suggest art investment personally,
00:16:37.440 unless you have an enormous knowledge of art.
00:16:39.420 If you're interested in something like art investment,
00:16:42.460 instead invest in an area that you actually care about
00:16:44.920 and have a passion for, like Magic the Gathering
00:16:47.480 or something like that.
00:16:48.740 We know people who've made a decent amount of money
00:16:50.620 in like literal, like collectible markets.
00:16:54.380 So this is not crazy.
00:16:56.960 Yeah, but again, that's the thing
00:16:58.320 was a fixed value that is easily movable, right?
00:17:01.780 Yeah, yeah.
00:17:02.260 This is why, you know, historically,
00:17:04.280 a lot of wealthy people,
00:17:05.280 they had lots of jewels on them all the time
00:17:07.160 and stuff like that.
00:17:08.160 It was so that if they ever needed to run,
00:17:10.300 they would have a large portion of their wealth on them
00:17:12.840 in a way that could be easily sold.
00:17:14.300 Now, this matters a lot.
00:17:16.680 Where this matters was Bitcoin,
00:17:18.400 is Bitcoin is literally the first time in human history
00:17:21.940 there has been an asset class that was divisible,
00:17:26.460 easily transferable, and had a known quantity.
00:17:30.060 Like if you're talking about gold or precious stones
00:17:32.320 or something like that,
00:17:33.000 they didn't have known quantities.
00:17:34.600 If you're talking about art, it wasn't divisible.
00:17:37.700 So-
00:17:38.180 Well, I mean, now with that company
00:17:39.820 that sells fractional pieces of like a Picasso,
00:17:42.540 so it's sort of divisible.
00:17:44.320 Oh yeah, well, I guess it's kind of divisible.
00:17:45.260 Yeah, that's a good point there.
00:17:47.560 So this matters a lot in a world
00:17:51.100 that is becoming increasingly hostile
00:17:54.180 to wealthy individuals, which it is.
00:17:56.660 It is becoming increasingly hostile
00:17:58.140 to wealthy individuals.
00:17:59.040 And in which wealthy individuals,
00:18:01.820 as we predict,
00:18:03.080 like if we're predicting one of the trends
00:18:04.420 we see in the distant, like long-term future,
00:18:07.460 wealth is going to become increasingly concentrated
00:18:09.700 among the top fraction of a percent of the population.
00:18:13.820 And that population disproportionately gains value
00:18:18.140 from Bitcoin as an asset.
00:18:20.820 If you're going to ask why,
00:18:23.180 okay, like who's probably the wealthiest person
00:18:24.860 in the world right now is probably Putin, right?
00:18:26.740 So think about it, you're Putin.
00:18:29.660 If you store even a small fraction of your wealth
00:18:31.880 in something like gold and things go tits up,
00:18:35.380 as they almost did for him recently,
00:18:37.440 was that coup, right?
00:18:38.720 Well, what are you doing?
00:18:39.600 Having a line of 500 trucks full of gold
00:18:43.520 on like Russian highways?
00:18:45.460 No, it's not going to go well.
00:18:47.200 No, and you try to take that into another country
00:18:49.420 and you're screwed.
00:18:51.040 It's insane.
00:18:51.960 And this is true for people all over the world, right?
00:18:56.580 It's just a very high utility asset
00:18:59.720 for corrupt individuals,
00:19:02.860 for ultra-wealthy individuals
00:19:03.960 who don't trust their population,
00:19:05.640 for all sorts of things like that.
00:19:07.560 And we actually saw this a lot firsthand.
00:19:10.500 I think what made us really excited about Bitcoin
00:19:12.860 is the travel agency that we run, Travelmax,
00:19:16.100 has a significant client base in Venezuela.
00:19:18.720 And when we discovered Venezuelans
00:19:23.080 who were really thriving outside the country,
00:19:25.220 like what were they getting into?
00:19:27.160 What were they using prolifically?
00:19:28.500 Bitcoin.
00:19:29.220 Like it is how they got their money out of the country.
00:19:31.300 It is how they transferred wealth.
00:19:33.480 So we also see like from a like future world
00:19:37.180 and stability perspective,
00:19:38.380 how tactically useful Bitcoin is
00:19:41.500 when nations go a little crazy.
00:19:44.680 And a final thing I'd say about Bitcoin,
00:19:46.240 which is useful for people to know,
00:19:47.640 is think about your successful friends.
00:19:51.500 Divide them into two categories.
00:19:53.860 Young successful friends and old successful friends.
00:19:57.800 Your young successful friends,
00:19:59.560 do they differentially care about Bitcoin
00:20:01.540 more than your old successful friends?
00:20:03.940 And I'm talking about people who have made money
00:20:05.300 in things other than Bitcoin.
00:20:07.340 If the answer is yes, which it almost certainly is,
00:20:10.180 that means that as they gain more money,
00:20:12.340 more assets will be stored in Bitcoin
00:20:14.540 so long as they maintain this interest over time,
00:20:16.760 which just seems so obvious to me.
00:20:19.480 Like when I look at my friend group
00:20:21.580 who is like Bitcoin is a scam,
00:20:23.320 they're old people.
00:20:24.100 When I look at my friend group
00:20:25.300 who is like still really doubling down in Bitcoin,
00:20:28.160 it's young people.
00:20:29.500 Young, successful people, mind you,
00:20:31.600 who are like high producers in the economy.
00:20:34.020 And so what that tells me
00:20:35.300 is that asset will increase in value over time.
00:20:39.440 And this is another thing I'd look at
00:20:40.620 if you're looking at your long-term investments.
00:20:42.460 What's something that like all of the smart,
00:20:44.480 young people you know are investing in,
00:20:46.580 but none of the old people you know are investing, right?
00:20:50.500 That can tell you which assets
00:20:52.300 are good sort of long-term bets.
00:20:55.600 Now, after all this,
00:20:56.660 I still wouldn't suggest having more than 20 to 30%
00:20:59.480 of your personal portfolio in crypto.
00:21:01.820 I mean, we've had more than that at times.
00:21:03.540 We've had like 51% at some time.
00:21:05.420 Yeah, because the price ballooned so much.
00:21:07.660 Yeah.
00:21:08.300 But this is what I'd suggest
00:21:09.600 is like the good amount, right?
00:21:11.780 What would you say real estate for a person's portfolio?
00:21:15.520 I mean, we're not giving advice.
00:21:18.060 We're probably over-deployed in real estate.
00:21:20.420 Maybe it's like 40% of our assets.
00:21:23.880 And it's a mixture of investment in real estate businesses
00:21:26.460 and actual real estate holdings.
00:21:29.820 I'm generally really against bonds and debt.
00:21:33.020 I mean, now it's a little different.
00:21:34.780 Right now, everyone's like,
00:21:35.760 oh, it's a great market for bonds,
00:21:37.300 blah, blah, blah, blah, blah, blah.
00:21:38.300 Look, I get it, Simone.
00:21:39.600 I do not think it is good enough.
00:21:40.980 I do not think in our lifetime
00:21:42.340 there will ever be a market
00:21:43.780 where bonds make sense in the way that they did
00:21:46.880 when the mathematical models were built
00:21:49.280 that people are using to suggest
00:21:52.040 how much of your portfolio should be bonds.
00:21:55.780 So I'll explain what I mean by this.
00:21:57.860 In the 80s, the US interest rate on bonds
00:22:00.600 went up to near 20% points, right?
00:22:04.060 And this made bonds a great thing to get
00:22:06.860 because, not just for the interest
00:22:10.060 that you were getting on them,
00:22:11.660 but if the economy ever tanked,
00:22:14.560 then what the Fed would do
00:22:16.300 is they would lower the interest rate, right?
00:22:19.340 Because this would boost the economy.
00:22:21.700 And in so doing, the new bonds
00:22:23.440 would generate lower interest rates.
00:22:24.800 It might go down to like 15%, 10% or something like that.
00:22:27.460 And then this increases the value of the old bonds
00:22:29.860 that people have,
00:22:30.600 these high interest rate bonds, right?
00:22:32.460 So not only are you getting the regular cash flow,
00:22:35.460 but if the cash flow is as counter cyclical
00:22:37.580 with market trends
00:22:38.700 because of what the Fed is doing.
00:22:40.960 Now, the problem is,
00:22:42.540 is that from the 80s till today,
00:22:44.420 the Fed never really hiked the interest rate
00:22:46.380 back up again in a significant way.
00:22:48.640 So now we're basically hovering
00:22:50.660 around a 0% interest rate,
00:22:52.520 which means that if the Fed is going to do the thing,
00:22:54.840 now it's gone up a bit since then,
00:22:56.140 which is good, I suppose.
00:22:57.780 But if the Fed is going to do the thing
00:22:59.420 that it needs to do
00:23:00.280 to really increase the value of bonds,
00:23:02.320 it needs to go to a negative interest rate,
00:23:04.020 which it has done in some European countries.
00:23:06.020 This means it's basically,
00:23:07.500 it's weird.
00:23:09.760 I'm not going to get into it.
00:23:11.560 The point being is you can only go so far
00:23:13.500 in a negative interest rate
00:23:14.620 before things get really wonky.
00:23:16.880 And what this means
00:23:18.100 is that the mathematical models
00:23:19.940 that people are using to show you
00:23:21.160 that bonds are good
00:23:22.280 are from a period
00:23:23.620 at which there was like
00:23:24.880 high economic momentum behind bonds
00:23:27.160 because of their starting high interest rates.
00:23:29.740 And then they went down
00:23:30.520 over a period of time
00:23:31.480 and that made bonds,
00:23:33.040 yeah,
00:23:33.740 seem like a good asset
00:23:35.020 in a lot of these economic models,
00:23:37.040 but I just do not believe they are.
00:23:38.900 Another thing that I would say
00:23:40.340 I think is a terrible asset
00:23:41.700 to own is precious metals.
00:23:43.360 Now,
00:23:43.700 I don't consider something like uranium
00:23:45.060 a precious metal.
00:23:45.780 I consider it more like gas or something.
00:23:48.180 But let's talk about
00:23:48.900 why precious metals
00:23:49.660 are such a bad asset
00:23:50.720 to hold going forwards.
00:23:52.260 Because a lot of people are like,
00:23:53.440 well, I don't know,
00:23:54.400 precious metals,
00:23:55.360 what does it seem?
00:23:56.420 Precious metals
00:23:57.180 directly compete with crypto.
00:23:58.660 That is why people
00:24:01.200 historically own things like gold.
00:24:02.700 And they can say,
00:24:03.280 well, gold has these other values.
00:24:05.280 It's used in industry purposes
00:24:07.180 and stuff like that.
00:24:08.020 And it's like,
00:24:08.440 yeah, that's true.
00:24:10.700 But that's not what gives it
00:24:12.500 its assigned value
00:24:13.500 in the marketplace right now.
00:24:15.260 And you know that
00:24:16.820 and I know that.
00:24:17.640 People get it
00:24:18.240 because it was a fungible,
00:24:20.880 divisible store of asset
00:24:22.140 that historically was used
00:24:23.460 by wealthy people
00:24:24.260 to quickly move their money.
00:24:26.100 The problem is
00:24:26.640 a lot of these assets
00:24:27.500 are just like stored in banks now,
00:24:29.120 right?
00:24:29.680 And you're trading slips of paper,
00:24:31.840 which defeats
00:24:32.920 most of the purpose
00:24:34.940 of that utility case
00:24:37.480 for the asset,
00:24:38.140 which were their primary utility case.
00:24:40.260 And this really matters
00:24:41.420 because when you're making
00:24:42.640 an investment
00:24:43.180 in something like gold
00:24:44.660 these days,
00:24:45.620 you are making a bet
00:24:47.740 not just that gold will do well,
00:24:50.260 but that Bitcoin
00:24:51.000 won't replace it
00:24:52.300 as the core store of value
00:24:54.420 outside of financial marketplaces,
00:24:56.900 which is a stupid bet to make.
00:24:59.260 Not because Bitcoin definitely will,
00:25:01.320 but because it's not
00:25:01.900 a fully priced in bet.
00:25:03.660 A lot of people
00:25:04.500 who are investing in gold
00:25:05.840 are old people
00:25:07.060 who don't fully understand
00:25:09.260 how much it has already
00:25:10.440 been replaced
00:25:11.180 by crypto assets
00:25:12.560 for the younger generation.
00:25:14.540 And therefore,
00:25:15.600 and this is why gold
00:25:16.620 and other precious metals
00:25:18.100 have not reacted
00:25:18.960 the way people expected
00:25:20.180 them to react
00:25:21.060 in market downturns
00:25:23.180 during periods
00:25:24.180 in which crypto
00:25:24.820 was widely used
00:25:25.800 because they are just
00:25:27.220 not that kind
00:25:28.280 of a counter-cyclical asset anymore
00:25:29.920 and therefore
00:25:30.720 shouldn't be used as one.
00:25:32.960 I'm sorry if I went
00:25:33.720 a little too hard
00:25:34.400 on precious metals
00:25:35.140 because I know
00:25:35.540 we've got some precious metal
00:25:36.580 fans probably in the show.
00:25:38.740 They're like,
00:25:39.080 well, if society collapses,
00:25:40.420 if society collapses,
00:25:41.640 you should have semiconductors
00:25:43.040 and bullets.
00:25:44.240 Okay?
00:25:44.660 You do not need gold.
00:25:46.820 Don't forget the guns, Malcolm.
00:25:48.320 But yes.
00:25:48.560 Well, obviously guns,
00:25:49.840 but who doesn't have
00:25:50.460 a pile of guns
00:25:51.200 in their house?
00:25:51.760 I guess normal people.
00:25:53.880 Normal people.
00:25:54.720 Fun aside though,
00:25:55.980 I'm reading a biography
00:25:58.260 of two women
00:25:59.420 who were like leaders
00:26:00.520 in the early makeup industry
00:26:02.120 called War Paint.
00:26:04.060 And interestingly,
00:26:05.140 the early, you know,
00:26:05.940 like twist lipstick cartridges
00:26:07.720 were originally built
00:26:09.520 in bullet casings
00:26:10.560 from the war.
00:26:11.840 Oh.
00:26:12.460 Cool, huh?
00:26:13.100 Anyway.
00:26:14.540 Because it was after World War I
00:26:15.760 and they were left over.
00:26:17.280 There was a bunch of,
00:26:17.960 you know, inventories.
00:26:18.780 It was cheap inventory
00:26:19.580 and it's a good delivery mechanism
00:26:21.040 for lipstick.
00:26:22.200 So there you go.
00:26:23.680 That is awesome.
00:26:24.860 Isn't that interesting?
00:26:25.700 Yeah.
00:26:26.100 War Paint.
00:26:26.780 Super interesting so far.
00:26:28.120 Yeah.
00:26:29.240 I'm trying to think
00:26:29.980 of other asset classes
00:26:31.160 which were deployed in.
00:26:32.340 Oh, yes.
00:26:32.740 Personal investments
00:26:33.640 with friends
00:26:34.160 and stuff like that.
00:26:36.300 I think a lot of people
00:26:37.400 undervalue these sorts
00:26:38.740 of debt
00:26:39.240 and equity investments
00:26:40.180 that you can make
00:26:41.020 in your local community.
00:26:42.380 But I actually think
00:26:43.300 it's an important part
00:26:44.220 of being a engaged citizen.
00:26:47.460 A lot of people are like
00:26:48.200 that can cause bad blood.
00:26:49.180 It can cause bad blood
00:26:50.180 if you go into these investments
00:26:51.620 assuming that they're always
00:26:52.680 going to pay out.
00:26:54.120 Yeah.
00:26:54.300 I would say
00:26:54.700 like we've invested
00:26:58.540 in the majority
00:27:00.180 of friend investments
00:27:00.920 we've made
00:27:01.500 have completely gone bust.
00:27:05.140 We've gotten nothing back.
00:27:06.740 And we're okay with that.
00:27:07.700 Yeah.
00:27:08.500 Because a lot of them
00:27:09.800 are two people
00:27:10.720 I know probably
00:27:11.640 couldn't raise money
00:27:12.560 from other people.
00:27:13.780 Yeah.
00:27:13.920 And we
00:27:15.080 I think to an extent
00:27:16.640 with any investment
00:27:17.540 you also buy social capital.
00:27:19.780 Yeah.
00:27:19.940 And social capital
00:27:20.680 You invest in people
00:27:21.860 and you invest in relationships.
00:27:24.020 Yeah.
00:27:24.220 It's an important thing
00:27:25.040 in being an active member
00:27:26.480 of I think a community
00:27:27.620 that has a skill set
00:27:29.620 around investing
00:27:30.420 or helping people
00:27:31.180 start companies
00:27:31.820 and that sort of thing.
00:27:33.340 But I think
00:27:33.680 our philosophy
00:27:34.880 around investing in people
00:27:36.020 is similar to our philosophy
00:27:37.320 around any sort
00:27:38.160 of risky investment
00:27:38.920 which is
00:27:40.780 we will never invest money
00:27:42.980 that we have to have.
00:27:44.740 Like we're like
00:27:45.200 if this is totally lost
00:27:46.380 that will not hurt us.
00:27:47.860 Like our life is fine.
00:27:49.560 Yeah.
00:27:50.040 And that's very important
00:27:51.260 when you're investing
00:27:51.880 in friend stuff.
00:27:52.840 It should never be
00:27:53.560 a major part of your portfolio
00:27:54.560 but it can make sense.
00:27:56.400 Anything risky.
00:27:57.820 And in addition to that
00:27:59.080 one type of investment
00:28:00.060 that we often make
00:28:00.940 that I think a lot of people
00:28:01.720 don't think about
00:28:02.540 is investments
00:28:04.260 that can pay off
00:28:05.340 with career opportunities.
00:28:07.060 So sometimes
00:28:08.000 when people are starting
00:28:08.740 a company
00:28:09.140 or something like that
00:28:09.880 that I think
00:28:10.600 could do really well
00:28:11.520 and become a good
00:28:12.120 career opportunity for us
00:28:13.680 I'll make an investment in it
00:28:15.440 and I make it
00:28:16.740 with the knowledge
00:28:17.520 that that holds
00:28:18.260 a door for me open
00:28:20.480 if the company
00:28:21.180 does really well
00:28:22.120 in terms of a recurring
00:28:23.100 stream of revenue
00:28:23.880 even outside of my investment.
00:28:25.980 And this is a weird thing
00:28:27.220 that I think a lot of people
00:28:27.920 don't think about
00:28:28.400 but it's actually
00:28:28.960 an important partial payoff
00:28:30.280 for an investment.
00:28:31.840 When you see
00:28:32.220 something analogous to this
00:28:33.440 with how people
00:28:34.500 end up on non-profit boards
00:28:35.820 and then eventually
00:28:36.460 paid boards
00:28:37.180 is when people
00:28:39.100 sort of decide
00:28:39.700 to become professional
00:28:40.740 board holders
00:28:41.620 what they often do
00:28:42.560 to start
00:28:43.100 and this is sort of like
00:28:43.960 I don't know
00:28:44.460 like a rich trust fund
00:28:45.480 person thing
00:28:46.080 but we've seen it happen
00:28:47.060 is first they use
00:28:48.340 like family foundation money
00:28:49.640 to buy their way
00:28:50.560 onto non-profit boards
00:28:51.880 and then they get
00:28:53.100 a bunch of those positions
00:28:54.080 sort of build up
00:28:54.820 their board career
00:28:55.700 and then eventually
00:28:56.800 get their way
00:28:57.960 through all the networking
00:28:58.980 they have with this
00:28:59.700 and with their resume
00:29:00.660 onto real paid
00:29:02.400 corporate boards
00:29:03.300 and that's sort of
00:29:04.740 like a very low effort
00:29:06.240 recurring revenue stream
00:29:07.620 for them.
00:29:08.720 It's similar
00:29:09.380 in what you're saying here
00:29:10.240 is that often
00:29:10.780 you have to invest
00:29:11.820 in someone
00:29:12.640 or something
00:29:13.320 or a company
00:29:14.000 to get a position
00:29:15.140 that ultimately
00:29:15.600 builds up your career
00:29:16.480 in a way that leads
00:29:17.380 to different revenue sources
00:29:18.480 never in the form of ROI
00:29:19.900 or rarely in the form of ROI
00:29:21.880 but often in other ways
00:29:23.760 through opportunities
00:29:24.480 and investing in opportunities
00:29:25.600 I think is an underrated
00:29:26.880 form of investment.
00:29:28.800 Some other
00:29:29.340 just financial health things
00:29:30.740 that I'd suggest
00:29:31.400 for our audience
00:29:32.240 just some of these
00:29:33.320 might be obvious to you.
00:29:34.400 You're not suggesting anything.
00:29:35.360 Other financial health things
00:29:36.900 we do for ourselves.
00:29:38.240 Well no,
00:29:38.740 so I'd say one is
00:29:39.660 insurance.
00:29:40.760 Life insurance.
00:29:41.540 If you have kids
00:29:42.400 you should have life insurance.
00:29:44.300 Just an important thing
00:29:45.440 to go out there and check.
00:29:46.700 For credit cards
00:29:47.800 you can make
00:29:48.820 like it can save
00:29:49.800 you a lot of money
00:29:50.440 in the long term
00:29:51.060 if you have the right
00:29:51.680 type of credit card.
00:29:52.900 Especially if you do
00:29:53.580 a lot of travel
00:29:54.140 you can get like
00:29:54.960 priority pass.
00:29:55.800 What Simone?
00:29:56.600 Never, never use
00:29:57.480 a credit card for debt.
00:29:59.200 Oh yeah,
00:29:59.760 never use a credit card
00:30:00.580 for debt.
00:30:00.940 I'm just talking about
00:30:01.760 like the privileges
00:30:03.240 a credit card can get you
00:30:04.400 or the cash back
00:30:05.280 and stuff like that
00:30:06.060 and I would suggest
00:30:07.600 everyone have
00:30:08.340 at least one credit card
00:30:09.420 that's for like
00:30:09.980 mainstream expenses.
00:30:11.500 One Amazon credit card
00:30:12.560 which can get you
00:30:13.080 5% cash back on Amazon.
00:30:14.440 You can do a lot of
00:30:14.860 shopping on Amazon.
00:30:15.920 Yeah.
00:30:16.460 In America is doing that
00:30:17.500 and then
00:30:18.160 one credit card
00:30:19.620 associated with
00:30:21.020 a, what do you call it?
00:30:22.720 A wholesale retailer.
00:30:24.380 So we would call that
00:30:25.500 like our BJ's card
00:30:26.400 but it could also be
00:30:27.180 you know,
00:30:27.500 if you're a little
00:30:27.980 fancier Costco card.
00:30:31.700 But no,
00:30:32.000 I'm just talking about
00:30:32.500 like the major
00:30:33.140 expense sources
00:30:34.340 in your life.
00:30:35.220 If you have credit cards
00:30:36.080 that are associated with them
00:30:36.940 you can often get better
00:30:38.060 cash back deals
00:30:39.220 through that.
00:30:40.800 Yeah.
00:30:40.900 for example
00:30:41.540 with our BJ's card
00:30:42.580 this year
00:30:43.220 and we don't spend
00:30:44.220 that much on gross
00:30:45.240 like we're pretty
00:30:45.900 careful about our food
00:30:47.400 spending
00:30:47.700 and we don't eat out
00:30:48.940 except for
00:30:49.560 when doing business meetings
00:30:51.040 our use of a credit card
00:30:53.360 with a like
00:30:54.440 bulk discount
00:30:55.280 grocery store
00:30:56.040 that's dedicated
00:30:56.640 to the brand
00:30:57.400 in this case BJ's
00:30:58.500 has saved us
00:30:59.500 or led to cash back
00:31:01.060 of over $3,000
00:31:02.500 now almost $4,000
00:31:03.700 which to us
00:31:05.080 is a really big deal.
00:31:06.580 Total?
00:31:07.040 Or this year?
00:31:07.800 This year.
00:31:08.660 This year?
00:31:09.500 This year.
00:31:10.680 Wow,
00:31:11.160 we spend a lot of money
00:31:11.940 at BJ's.
00:31:12.940 And speaking of
00:31:14.280 just like another
00:31:15.220 financial health thing
00:31:16.020 that people
00:31:16.520 who have families
00:31:17.720 should be doing
00:31:18.780 if you do not have
00:31:20.460 a what's the word again
00:31:22.040 chest freezer
00:31:22.660 you should.
00:31:23.560 You should have
00:31:23.740 a chest freezer.
00:31:25.420 Chest freezers
00:31:26.240 combined with
00:31:27.820 large box stores
00:31:29.280 like BJ's
00:31:30.320 and Costco
00:31:30.700 will save you
00:31:31.920 astronomical amounts
00:31:33.180 of money
00:31:33.440 if you have kids.
00:31:34.080 Yeah,
00:31:34.220 so if people
00:31:34.560 aren't familiar
00:31:34.940 with these
00:31:35.220 these are like
00:31:35.760 freezers
00:31:36.380 into which you can fit
00:31:37.260 probably three adult humans.
00:31:38.720 So they only work
00:31:40.120 if you have
00:31:40.700 a fairly large house
00:31:41.940 but they enable you
00:31:43.840 to buy a lot
00:31:44.520 of frozen foods
00:31:45.380 in bulk
00:31:45.940 you know
00:31:46.540 everything from
00:31:47.220 vegetables to meats
00:31:48.060 which is a lot
00:31:49.020 more affordable.
00:31:50.440 Yeah.
00:31:51.320 And what else
00:31:52.380 would you say
00:31:53.880 any other types
00:31:55.440 of insurance?
00:31:55.900 I mean there's
00:31:56.200 the regular types
00:31:56.960 of insurance
00:31:57.400 but I'm sure
00:31:57.780 a lot of people
00:31:58.280 are already
00:31:58.800 thinking about that.
00:32:00.180 Any other advice
00:32:01.560 you'd give?
00:32:02.080 this is how
00:32:05.760 we do investing
00:32:06.560 and I would say
00:32:07.000 we're not
00:32:07.280 sophisticated investors
00:32:08.160 there's a lot
00:32:08.720 of like
00:32:09.100 weird tax
00:32:10.380 implications
00:32:11.000 and you know
00:32:12.160 like
00:32:12.560 if you
00:32:13.340 take a loss
00:32:14.260 on something
00:32:14.800 like you know
00:32:15.480 and also
00:32:15.960 how you reinvest
00:32:16.880 money after
00:32:17.680 getting you know
00:32:19.220 a pig payout
00:32:20.040 like we're not
00:32:20.820 really not
00:32:21.640 sophisticated investors
00:32:22.580 there's a lot
00:32:23.080 of weird rules
00:32:23.960 and and
00:32:24.820 like
00:32:25.780 tax things
00:32:27.040 around investments
00:32:27.840 all we're doing
00:32:28.660 is sharing
00:32:29.060 this is practical
00:32:32.640 this isn't get rich
00:32:33.520 investing advice
00:32:34.500 this is basic
00:32:35.940 financial hygiene
00:32:36.960 investing advice
00:32:37.820 yeah I mean
00:32:39.420 so yeah
00:32:39.920 aside from that
00:32:40.760 we basically
00:32:42.320 we have a very
00:32:43.080 strict budget
00:32:43.900 and we actually
00:32:45.040 do a version
00:32:45.640 of like
00:32:46.300 envelope based
00:32:47.980 budgeting
00:32:48.380 which I think
00:32:48.860 people are really
00:32:49.420 familiar with
00:32:50.020 and as I've alluded
00:32:50.640 to in other podcasts
00:32:51.660 there's like
00:32:52.160 an entire cottage
00:32:52.960 industry of you
00:32:53.600 on YouTube
00:32:54.180 and on Etsy
00:32:54.760 we do
00:32:56.400 we do
00:32:56.880 so every time
00:32:57.600 money comes in
00:32:58.420 like per month
00:32:59.200 like we have a
00:32:59.840 sort of like
00:33:00.240 this is how much
00:33:00.880 money we receive
00:33:01.540 everything goes
00:33:02.520 into actually
00:33:03.240 like separate
00:33:04.000 literally separate
00:33:04.900 bank accounts
00:33:05.540 for our top
00:33:06.540 expenses
00:33:06.940 so home bills
00:33:08.500 child care
00:33:09.700 pet expenses
00:33:10.880 your discretionary
00:33:12.240 income
00:33:12.620 my discretionary
00:33:13.640 income
00:33:14.180 we have a
00:33:15.120 like a
00:33:15.460 we have an
00:33:15.800 internal VC fund
00:33:16.800 which is sort of
00:33:17.480 like money
00:33:18.040 that we allocate
00:33:18.700 for risky bets
00:33:19.800 or weird investments
00:33:20.980 and like friends
00:33:21.700 or just like
00:33:23.000 stuff that might
00:33:23.900 so not stuff
00:33:25.560 that's fun
00:33:26.100 but things that
00:33:26.840 are an investment
00:33:28.000 that is risky
00:33:28.680 we have a fund
00:33:29.720 for that
00:33:30.080 we have a fund
00:33:30.640 for children's
00:33:31.500 education
00:33:32.380 we have a fund
00:33:33.100 for children's
00:33:33.740 side note here
00:33:34.480 for listeners
00:33:35.760 one of the things
00:33:36.640 that we do put a lot
00:33:37.420 of money into
00:33:37.940 is investments
00:33:39.460 that are meant
00:33:39.980 to lower
00:33:40.480 child care costs
00:33:41.460 for us
00:33:41.820 eventually
00:33:42.340 things like
00:33:43.840 you know
00:33:44.420 we put a lot
00:33:45.080 of money
00:33:45.480 towards our
00:33:46.020 non-profit
00:33:46.520 which is
00:33:46.920 developing
00:33:47.340 this educational
00:33:48.300 alternative
00:33:48.920 the Collins
00:33:49.420 Institute
00:33:49.800 and for us
00:33:50.980 that's an investment
00:33:51.880 in that
00:33:52.520 if it can
00:33:53.220 produce
00:33:53.760 this alternate
00:33:54.380 education system
00:33:55.220 and if it's
00:33:55.620 the quality
00:33:56.040 that we want
00:33:56.480 it to be
00:33:56.820 at
00:33:57.000 which we
00:33:57.700 have confidence
00:33:58.240 it will be
00:33:58.840 like I actually
00:33:59.420 think it's
00:34:00.160 taken so much
00:34:00.820 longer than I
00:34:01.300 wanted to
00:34:01.580 to get it live
00:34:02.240 but I think
00:34:02.860 it's going to be
00:34:03.160 so much higher
00:34:03.600 quality than
00:34:04.140 when I initially
00:34:04.700 expected
00:34:05.160 that it is
00:34:06.320 going to
00:34:07.180 really dramatically
00:34:08.460 cut child care
00:34:09.080 costs for our
00:34:09.560 kids
00:34:09.760 and it's the same
00:34:10.780 with you know
00:34:11.440 people who were
00:34:12.120 helping get their
00:34:12.620 businesses off the
00:34:13.340 ground
00:34:13.520 they help us
00:34:14.120 with child care
00:34:14.960 as an exchange
00:34:16.400 for that
00:34:16.740 and so that's
00:34:17.180 a long-term
00:34:17.720 investment in
00:34:18.300 reducing child care
00:34:19.000 expenses
00:34:19.760 yeah but basically
00:34:20.860 if we want to
00:34:22.160 spend money on
00:34:23.140 something and
00:34:23.660 there's not enough
00:34:24.280 money in the
00:34:24.840 account that we
00:34:25.700 have for that
00:34:26.360 thing like travel
00:34:27.300 or gifts we
00:34:28.580 have we have
00:34:29.020 an account for
00:34:29.400 gifts and for
00:34:29.880 travel and it's
00:34:30.740 not happening
00:34:31.220 we're not taking
00:34:32.220 our debt we're
00:34:32.740 not stealing from
00:34:33.360 other accounts and
00:34:34.000 we also have an
00:34:34.760 emergency fund that
00:34:35.640 will cover our
00:34:36.220 basic expenses as
00:34:37.300 a family for six
00:34:38.040 months and that
00:34:39.500 emergency fund is
00:34:40.320 really helpful like
00:34:41.480 when we've lost
00:34:42.040 our jobs or when
00:34:42.680 we stop paying
00:34:43.360 ourselves during
00:34:43.920 the pandemic while
00:34:44.840 still working that
00:34:47.060 was it was really
00:34:47.980 necessary so those
00:34:49.620 are the other things
00:34:50.280 that we do again
00:34:51.060 this is not advice but
00:34:52.100 this is this is how
00:34:53.040 we do and we're
00:34:53.980 not again sophisticated
00:34:54.920 but I so far this
00:34:56.280 has worked well for
00:34:56.800 us but I would say
00:34:57.720 that we don't we're
00:34:59.460 not we don't make a
00:35:00.840 ton of money we have
00:35:01.500 friends who make tons
00:35:02.320 and tons of money from
00:35:03.220 investments and they
00:35:03.940 are super pros and
00:35:04.860 it's all they do and
00:35:05.700 but we would we spend
00:35:07.200 less than two percent
00:35:09.340 of our mental bandwidth
00:35:10.340 on investing yeah so
00:35:12.760 this is this is what we
00:35:13.680 get but it's worked
00:35:14.240 out for us yeah all
00:35:16.100 right well I love you
00:35:17.060 to death Simone and who
00:35:18.680 knows if this does
00:35:19.500 well as well we might
00:35:20.200 be doing a lot more
00:35:20.920 financial stuff for
00:35:21.880 people oh no this
00:35:23.880 is boring basic
00:35:25.180 financial advice but I
00:35:26.880 feel like everyone out
00:35:27.860 there is some sort of
00:35:28.660 get what's quick
00:35:29.300 when I like look at
00:35:30.820 financial advice it's
00:35:31.780 people looking at all
00:35:32.540 these like charts and
00:35:34.480 making it really
00:35:35.120 complicated and they're
00:35:37.360 way above my pay
00:35:38.060 grade or like way
00:35:39.140 below my pay grade but
00:35:40.040 pretending to be above
00:35:40.940 which is the worst
00:35:42.040 all right love you to
00:35:43.760 death Simone and I
00:35:44.640 appreciate that we
00:35:45.680 have a sound
00:35:47.280 financial strategy where
00:35:48.960 I know that she
00:35:50.660 manages our investments
00:35:51.520 by the way because I
00:35:52.480 I'll tell her like what
00:35:53.300 I'm thinking but I am I
00:35:54.920 take too much like
00:35:55.980 emotional hit from
00:35:56.900 looking at investments
00:35:57.640 going up or down
00:35:58.540 she's she's the best
00:36:00.500 kind of wife the one
00:36:01.420 who holds your crypto
00:36:02.320 keys to make sure you
00:36:03.320 don't sell during market
00:36:04.400 crashes I love you to
00:36:07.000 death Simone I love you
00:36:08.340 too pizza night tonight
00:36:09.480 see you downstairs