Earn, Save Or Invest: Which Matters Most In Building Wealth? | Nick Maggiulli

Nick Maggulli 0:00
The earning muscle is actually a subset of the savings muscle. And that guy’s actually the core tenant of the book is like you can’t and one of the, they have a chapter with like called the biggest line personal finance. And basically, it’s like you can’t cut spending your way to wealth unless you already have a high income, you’re just like an insane spender, those people can cut spending and make their way to wealth, but like, the typical average American, you know, like, Oh, I’m gonna cut my lattes and make my way to wealth like, that could work if you do it for like seven years. But for most people, it’s just not, that’s not it’s not gonna move the needle, what moves? Yeah, it’s earning power. And if you look at it, like, of all the data I’ve seen, like the thing most correlated with a higher savings rate, like a percentage, like I save 30%, or 40, or 50, the higher the savings rate, generally, the higher the income, right, and so that is one of the most correlated data series out there. And that’s across time across space.

Adam Taggart 0:53
Welcome to Wealthion. I’m Wealthion founder Adam Taggart. Wealthion ‘s mission is to help its viewers fund their life goals. While we often interview a lot of experts on economics and the financial markets on this channel, we’re always on the lookout for experts on wealth building. And today, we’re launching the first of what we hope will be a recurring series that we’re calling the Wealthion book club, we’ve got the good fortune to sit down with author Nick Maggulli, to learn about the key insights from his recent best selling book, just keep buying proven ways to save money, and build your wealth. Nick, thanks so much for joining us today.

Nick Maggulli 1:32
Thanks for having me on. I appreciate it.

Adam Taggart 1:34
Hey, real pleasure, Nick, I’m sure love to have you back on in the future to talk about kind of your overall approach to analyze markets and the work you do in your day to day job. But today, we’re going to zero in on your book. And again, I just want to underscore that you’re the inaugural guinea pig here for this new series, which we’re calling to Wealthion Book Club, which will sort of surface both new and timeless books on wealth building, and try to help impart those insights to our audience here. So thank you for being willing to, to be the first volunteer to go through with this.

Nick Maggulli 2:09
Yeah, appreciate you having me on as the as the first inaugural book in the book club. So that’s really nice.

Adam Taggart 2:15
Well, thanks again, for that bravery. I got a lot of questions here about the book itself. Real quickly, quickly, though, just a level set, give people a sense of how you’re currently seeing the world. I’m going to ask you the question I asked all my guests at the beginning of these interviews, what’s your current assessment of the global economy and financial markets?

Nick Maggulli 2:34
I think the big thing to watch right now is obviously interest rates. And because that affects decisions that people are making around the globe, in terms of where capital is flowing, but the people are trying to buy to invest in stocks or to hold treasury bills in the case of the US or other debt, you know, globally. And I think that’s probably the biggest driver of everything right now is like, where’s the path of interest rates are kind of go right? Or is the Fed gonna keep raising? Are we gonna see a pause, we’re gonna see, you know, some cuts at some point, right. And that’s the big thing. And I try not to follow macro too much, because you start getting bogged down in the weeds of this unemployment number this That. I do think interest rates matter a lot, don’t they? And they change incentives a lot, especially over the long haul. So that’s probably the only thing I pay attention to. I mean, I think everything else is mostly, you know, noise. And I just say, hey, you know, focus on what you what you can do in the short run. And, you know, I think in the long term, you know, equities, global equities are going to build wealth. The question is, how much wealth and that’s debatable at this point, but I still believe in global equities, even developed markets Chairman done as well, I think they will have their day, you know, in the sun, so to speak, at some point, but we’re kind of waiting to see that, that that payoff come at some point.

Adam Taggart 3:44
So yeah, okay. Well, we’ll get to the book in just a second. But because you brought up interest rates and interest rates have moved so much in such a short period of time. What is your expectation of how that is impacting the markets and people’s ability to generate wealth here? How, how is that changing the game, if at all, and your your point of view?

Nick Maggulli 4:06
I think for for older people, especially, it’s very beneficial, because now you can have treasuries that like, actually produce yield. And, you know, I’ve just seen, you know, at our at our wealth management practice, you know, there’s so many plans, you know, you obviously, there’s projections for the future, and with rates where they are like a lot of plans that were like, Oh, we had to take more risk to get a higher expected return. Now, we don’t have to do that as much. And of course, rates could change in the next few years, and then it will change again, but the point is, like, there’s a lot more, you know, interest rates are paying now, our Treasuries are paying now, and that’s like, a huge benefit to retirees, obviously, for those that are still in the accumulation phase like that, it’s helpful, like in terms of, you know, dampening volatility in some ways by owning treasury bills and things of that sort. But I think generally, like, you know, obviously it’s it’s tougher for stocks, because why would I buy a stock, you know, that might earn 8% When I can get a treasury bill that’s going to earn 5% Right. So I think that The trade off that that a lot of people have to make. And so as as rates go higher, it gets even tougher for stocks. But you know, stocks tend to go up at least US stocks, even in rising rate environments. The question is how much and there’s a whole host of things that will happen. So I mean, it’s very complex, and there’s no way to know what the future holds. But I think that’s the main thing that people are kind of focused on right now is race. And that’s obviously impacting people in good ways. Obviously, if you have a lot of capital in bad ways, if you’re trying to borrow,

Adam Taggart 5:26
right, right. All right. I’m going to have to bite my tongue here, because I would love to chase this topic down further with you. It’s really close to my heart. Maybe we’ll get a little bit into it in some of the conversation here about the book. If not, we’ll just have you back on. Alright, so the book, your book is called just keep buying proven ways to save money, and build your wealth book came out about a year ago, it has been a best seller, as I said in the introduction, congratulations on that. Just starting off from a very high level, why did you choose to write this book? And why did you write it now?

Nick Maggulli 6:04
Yeah, so it came out in April 2022. And I wrote it during the beginning of 2021. And one of the reasons I wrote I’ve been blogging, I started blogging in 2017. So I wrote one blog post a week. And so by the end of 2020, I had, you know, couple 100, blog posts, and I was like, You know what, I think I can organize this into an actual philosophy. And because of it really the reason I wrote it was because of COVID. I, you know, I was in New York City when COVID started. And you know, we had the first big wave in New York, and I was like, okay, like, Guys, it’s we did it, we flatten the curve, it’s over very naive, very wrong, obviously, in retrospect, then the rest of the crowd was like, Oh, the rest of the country had to get it. That’s why it was wrong, right? So I was like, Okay, I messed up, because you’re in New York, got it. And then it kind of went away a little. And then all of a sudden, after Memorial Day, the rest of the country got it. And I was like, Oh, that was my mistake. Now it’s over. So by like September, October of 2020, and like, this is over, like, markets had already come back. I’m like, Okay, we’re moving forward. And then we saw this huge wave in December 2020. And then I got like, super pessimistic. And I was like, we’re going to be trapped inside forever. So like, I was wrong on both sides. I just saw my emotions swinging back and forth. And I was like, were we trapped inside forever, like, I have to use like, there’s an opportunity, like the first couple, like, okay, we’re locked in whatever I was like, Okay, this will pass. But by December 2020, I’m like, we’re locked in forever, I have to use this. And I was like, I have enough material now where I feel like I could write a book. And I have like a philosophy but like, I need to spend the time and actually do it. And this was something I didn’t plan on doing. I never said I want to write a book. There’s even interviews with me in prior years saying, I’ll never write a book. So it’s very funny to actually write one. So I kind of just in that, in that environment, I was like, I think there’s something here and there’s a lot of data. And a lot of, I’m just proving stuff or disproving stuff that people have been discussing a long time. And some of the things are obvious, you know, buying over time, dollar cost averaging, as they call it, right? That stuff all works, and I’ve show why it works. And there’s certain things where I disprove things like, I’m like, Hey, like, actually, you know, maybe you shouldn’t max out your 401 K, and here’s why it may not be worth the benefit. So there’s a lot of little things, I go through a lot of different issues in the book where I kind of attack certain beliefs that are in the personal finance or investing community and or I support them, depending on what the data says, I try not to put my opinions in there, I kind of let the evidence speak for itself. And obviously I have opinions. But, you know, that’s kind of that’s the, that’s the premise of the book is like, what is the data saying all these issues?

Adam Taggart 8:15
Okay, so you divide the book into two main haves, saving and investing. And if we can, well, we’ll walk through both of those in some detail, hopefully, let me just ask you, because I’ve talked about this on this channel, where in relation to wealth building, compared it to physical fitness. And I sort of talked about muscles that you want to develop and I’ve talked about basically three muscles, two of which your your book mentions here, which is the saving muscle and the investing muscle. I also talked about the third which is the earning muscle, right, which is you get to generate the income, then you’ve got to save as much of it as you can and then you want to invest the difference, right? Is that just sort of a given as you approach this book that that yes, you actually have to you know, have some sort of engine there of hopefully developing higher and higher income streams if you’re able to

Nick Maggulli 9:17
Yeah, so the the earning muscle in your analogy, the earning muscle is actually a subset of the savings muscle and that guy’s actually the core tenant of the book is like you can’t and one of the I they have a chapter with like called the biggest line personal finance and basically it’s like you can’t cut spending your way to wealth unless you already have a high income you’re just like an insane spender those people can cut spending and make their way to wealth but like the typical average American, you know, like, Oh, I’m going to cut my lattes and make my way to wealth like that could work if you do it for like seven years, but for most people, it’s just not that’s not it’s not going to move the needle what moves them enough income? Yeah, it’s earning power. And if you look at it, like, of all the data I’ve seen, like the thing most correlated with a higher savings rate like a percentage like, oh, I save 30% or 40 or 50, the higher the savings rate, generally, the higher the income, right. And so that is one of the most correlated data series out there. And that’s across time across space, like, the only time where higher income didn’t have a higher savings rate is during the Great Depression, because those people were getting just eaten alive by their assets, were just going down, you’re at 90%. So besides that time, every other period in US history back to like the 1920s. And this was done by a couple of economist saisons up and they do some good work there. But every single period from 1920 Onward, like, higher income means higher savings rate. And so that’s the focus. So they’re earning muscle is the key muscle, I would argue the earning muscle is like 90% of the earning and saving, like the savings muscle small. Like once you get the earning, it’s so much easier to save, you don’t really need to do as much work, right? It’s like, it’s like imagine working your back all the time, by definition, you’re going to work your bicep just as a part of like doing back workouts, right? So it’s like, if you’d comes along with the territory. So if you get your back really developed, your biceps are going to get developed to I don’t know anyone that has a massive back and like really, really small biceps, it just doesn’t work that way. Right. So that’s the same thing. It’s much easier to save once you’re already earning a lot of money. And so obviously, that’s the hard part is like how do you earn more? How do we do that over the long haul and discussing and that’s, that’s the first part of the book gets into that a little bit.

Adam Taggart 11:15
Okay. I’m going to ask you a bunch of questions about saving, but But real quick, just staying on this topic. So you know, is there any key insights key bits of advice you want to share with folks here about how to earn more? Because it’s, yeah, it most people are like, great. Yeah. Thanks to Tom, thanks for telling me I need to earn more. I’m doing the best I can, right. But are there any key, you know, guidelines that you kind of recommend to people? I mean, some people say Get a side hustle. Some people say, you know, upgrade your skill set. So invest in your education, and then be able to charge a higher premium for your services. Again, just anything on the earning side, you want to say before we really dig deep into saving.

Nick Maggulli 11:59
Yeah, so those those all work, right? I mean, there’s no right answer. It’s like what works for you. So in my case, I have a side hustle, which is obviously my blog. And I didn’t make any money on it for three years. But it’s one of these things where like, I just love doing it. So there’s something you love to do. It depends what it is. But a lot of things can be monetized. And some I’ve heard about, there’s a guy, I think on YouTube, or maybe Twitch, he live streams, like, he has like these, like these zen gardens, and he just kind of cleans them. It’s just like, very peaceful and stuff. And people watch his stuff. And he’s been able to monetize. So you hear about these crazy things like, Oh, I can’t monetize that, you’d be surprised. So that’s the thing I’d say is like, yeah, figure out what works for you. I personally think side hustles are great. Or whether you’re doing something like tutoring your photographer or wedding photographer or something like there’s a bunch of little things you can do to earn more income. And I think the key is to really think long term like, well, once again, I did something for three years without getting paid. I’m not saying you need to wait that long. But like, it just takes time, like, what’s the sacrifice I had to give up? I can’t really watch TV shows, I don’t have time for it, right? Like, I can’t, if I did, I’d have to give up something else, either the time with my relationship or time seeing friends, like, there’s only so much time. So you have to give up something somewhere, you have to figure out where that is. And I’m not saying you know, you have to prioritize, obviously, at some way, at some point, but it’s just figuring out, you know, what you care about when and obviously, the other question is, how much income do you really want, if you’re trying to make everyone’s like, well, everyone wants more, I know that but there’s different sacrifices you have to make. If you want to make a million bucks a year, like, there are massive sacrifices you’re gonna have to make to get there, whether that means you have to have a super high skill that you can sell to a bunch of people or have to put out great content, or you have to start a business where you’re you have a lot of people working for you. And you’re kind of just leveraging the difference between the revenue that they generate and what you pay them like that spread. So there’s a lot of different ways to do this. And it’s about figuring out, okay, what type of lifestyle do you want, I say, solve, try and look for the end, like what’s your ideal lifestyle, and then solve backwards from that. And don’t be like, Well, I just want to be on a beach all day. Like, of course, if you do that, like you can’t, you know, unless you unless you put out a bunch of products that give you royalties, that’s that I talk about royalties in your own products as an income source. Like, if you want to do that build a bunch of products that give you royalties, and you go sit on the beach, all you want, but the hard part is creating the products, getting the marketing, etc. So there’s a lot to earnings, but you got to figure out what’s the best thing for you and there, it’s not right for everyone. Some people are great at business, some are good at working at a job, you know, corporate job and in various. So that’s my main takeaway there.

Adam Taggart 14:18
Okay. And, you know, we’re talking about books, I wrote a book years and years ago, it’s a very thin little book. But it’s called Finding your way to your authentic career in and actually, it has a lot of guidance for how somebody can say, Well, I’m not really sure what I want to do yet, right. And it helps you kind of go through the process of identifying and mapping your natural abilities and talents to your interests and to market opportunity and whatnot. So, you know, for folks that are looking to try to answer that question for themselves. There are resources out there. One of the things I think can help is if you have a good career coach like somebody you can actually be bouncing these ideas off of giving you some of these extra sizes, giving you some of the tough love as well as some of the encouragement to really figure out what you want to do. If you want to uplevel big, right, you know, if you just want to make a couple extra bucks, and you can do something immediate, like, you know, mow lawns or whatever, fine, you know, but if you want to be dramatically up leveling, and you’re not exactly sure how to do that, yet, there are lots of resources out there to help you help you do that. One thing you mentioned that I just want to underscore for people, which I think is really important, because most people try to think, Okay, I need some extra money, what’s something I can do to just, you know, invest some hours in something and get some immediate money back. And there are things you can do that, no, I’ll use my mowing lawns example, right, if you can find someone to pay you to mow their lawn, great, you can make some extra money that way. But if you are trying to, you know, develop new skills that you don’t have yet, right, or you’re you want to invest in something that will sort of act as a flywheel that once you get going fast enough, and then start spinning up enough income that are gonna be meaningful for you, you really need to think of it as trading time for future income. And your your blog is a good example of that, where you put a number of years in it before it really started kicking off any meaningful revenue for you. Because you had to get your you to build your audience, you had to build your body of content, all that type of stuff. But another thing that you can do is let’s say you decide I want to go do you know, a different, different type of work that I’m doing right now, and I don’t yet have the credentials for it. One of the things I recommend people think about is approaching somebody in that field and saying, Look, I will work for free for you for some period of time. Because what you’re doing is is you’re basically getting, you know, in education, and you’re getting experience that you can then jujitsu at some point in the future, into paid work, because you can say, hey, I’ve got several months or several quarters or a year of doing this type of work, right? You don’t have that when you start off. And so thinking about actually working for free for some period of time, you are literally exchanging hours of your time for hopefully, a higher future income stream. I’m just curious for somebody, like yourself have thought a lot about this. Do you agree with that as an approach? Yeah,

Nick Maggulli 17:05
I mean, it works. I mean, obviously, it’s tough working for nothing. And sometimes you have bills to pay. It’s really tough. Not everybody can do it. Yeah. Yeah. So it’s like a, it could be a side thing or something you do at night or something like that. But like, it’s one of these things, if you’re good, like people are going to hire you. Like it’s I’ve I’ve never seen a scenario where an intern was really good. And we’re just like, yeah, we’re not going to hire them. I think there are exceptions, if like the budgets not there, or it’s like, oh, we can’t have an intern for that particular thing. We could have an intern for this, though. And if they’re not up to kind of change roles, that may not work, but generally like, it’s a good way to start. And that’s for a lot of people I don’t want to put down I know we talked a lot about side hustles and royalties on the stuff but like, for most people, it’s like a nine to five and like, a lot of times it’s you know, that’s the main way that most people build wealth. And so I don’t want to put that down. Actually, I talked about that, like climbing the corporate ladder. It does work. It’s just tough. And like, there’s a lot of you know, there can be it depends. Every company is different. Some companies are very merit meritocratic. Like if you’re good, you just get raises, everything works. For some it’s like very political. And so it’s really a differ so much like, Nick, I’ve been at my job for four years, they haven’t given me a raise, even with inflation, everything, like maybe you didn’t, or neither need to sit down and like how do I demonstrate value? So you can like, what do I need to do? So I get that raise and you haven’t like written down or something? If they haven’t, if you’ve done that, and they still haven’t done it, you need to get out because they’re obviously not valuing you. So that’s where like, it’s tough. But you have to like, every, every company is different. Every culture is different. And so just to be like, oh, yeah, this is all you have to do. And you’ll get a raise. Like, that doesn’t work. And I think the reality is, people will actually been in jobs, no, like, a lot of companies like, oh, that’s we’re not doing like, we don’t do raises like that. It’s just that we set a percentage, and everyone gets that, right. So you have to find a culture that fits better with your talents. And in that case,

Adam Taggart 18:42
good point, and probably along with that, I think is sort of having a true assessment of what your worth is, right? And knowing that, okay, if I want to get paid more in like, am I earning that right now? Like, am I deserving that right now? And if I’m not, well, then I need to, you know, go above and beyond and justify it for them to pay me or if I believe I am, the company is just not going to pay me given the culture or whatever, then I need to find an employer who’s going to pay me my true worth. Yeah. And sometimes

Nick Maggulli 19:07
that means like, what do you do? Like, what’s your minimum? Like, for example, I know some people like they make a lot of money in one job, but if they left, they couldn’t get that anywhere else. And so they’re kind of like very, like, you know, golden handcuffs, right? Very attached to that, right. And so, there’s nothing wrong with that. But just realize, like, if you can’t demonstrate your worth, like publicly to other people, if you have no way of showing that, like, it’s really tough. That’s kind of even why I also wrote a blog, I was at a different company. It wasn’t in my wealth management firm. And I was like, Hey, I wanna be able to show Hey, I have value and I got, you know, multiple people approached me actually work for you know, Shaughnessy Asset Management for a little bit as an intern, you know, temporarily before I joined Ritholtz, but like it was one of these things where like, I didn’t have to send them a resume. They just read my blog and you know, they saw my work and saw like, obviously, I know some stuff and they know a little bit what I’m talking about. So they gave me an internship, right. So that’s one of those things were like, obviously it took a it took a while for me to get there that didn’t take three years that happened after about a year of time you’re trying to get job off Herson hates people asking me questions and stuff like that. So, you know, and that’s, that’s the key. And you can even do it anonymously. There’s no like, oh, well, Nick, my employer won’t let me do that. Do it anonymously. Then I was anonymous for the first six months. And then I asked my employer and they said they were okay with it. So I was I kind of became public. So, but yeah, so So I would say like, there’s a lot of ways to do it that you know, you can you can find methods to get where you’re where you want to go.

Adam Taggart 20:22
Okay. All right. So let’s say somebody is doing the best they can on the income side, then. So we get now into your, your savings, half of your book. Let’s just start with the flow of the book, your the book is sort of structured in these, this question and answer format. So first question, how much should we be saving?

Nick Maggulli 20:43
Yeah, so unfortunately, I don’t like a lot of the personal finance rules like, oh, save 10%, save 15, save 20. They’re easy, and they’re convenient. But what it does, it can create unless you’re in a, if you’re in a very stable, stable income, stable spending, if everything’s stable, those rules are great. The problem is, there’s a lot of volatility, right? We saw this with COVID, people had income and then lost their income, right? All of a sudden, or like, overnight, basically. And it’s like, you can’t have a fixed saving rule when your income and spending are so variable, that’s the problem, right? So and if you do that, you’re gonna beat yourself up mentally, right? Just like the example I give. I was in Boston, and I was making a decent income. And I was saving, like, 40% of my income, like, after tax was doing quite well. I moved to New York City, I went from living with a roommate to living by myself. So my rent went up. And on top of that, when I change industries, you know, I wasn’t as well known in finance, I had never worked in financial services. So I’d take a little bit of a pay cut initially, right? So I took the pay cut, and my so my income went down, my spending went up right? Now, I was saving 4%, I went from 40 to four, you know, I had a 90% drop in my savings rate. If I said, Oh, I need to save 20%, I would have to like not go out with friends. Not like I have to hate my life, just to hit some arbitrary number. And I think the key here is like, save what you can if you’re like, Nick, I’m finding hard to save money, then like, Okay, are you focusing your time to raise your income, right that like, that’s the only way like, of course, there’s little spending things you can do in the short run, but like that beats you up mentally, it’s not a way to live life to every to nickel and dime, every single thing because you end up living your whole mentality like that. And you’ll never get out of that. And you’ll never focus on the income side. And that’s the real, that’s the real tragedy. It’s not like, I’m not against people using coupons. No, that’s fine. But that’s a short term solution. If you keep using the short term solution, you’re never gonna get out of that hole, you have to get out of that hole, you have to focus on income, right? And so that’s where I kind of tell people to move. And that basically gets back to like, save what you can. And so once you have a super high income, it’s really easy to save, right? That’s the key, right? It’s like, how do you move your mentality from just clipping coupons and thinking that way to like, hey, why don’t we go in towards of like, what can I do to change my career in the next five years, so that I don’t have to worry as much about my spending. That’s, that’s where I come in on it.

Adam Taggart 22:50
Okay. So of course, the next question that book asks is, well, okay, how do I save more? Sounds like you’re saying a big strategy for that is, you know, yes, you want to be frugal, but earning more is going to make a bigger difference than, you know, clipping coupons. And there’s, there’s sort of a maximum level that you can get your lifestyle down to. And beyond that, it really is all about increasing the income.

Nick Maggulli 23:14
Yeah, cuz I mean, what I did in the book, I went to the Bureau of Labor Statistics, and I said, okay, here are the bottom 20% of income earners, right. I just took that group of people and said, How much are they spending on rent on food? And I look at it, they’re not people always say, Oh, the poor are just spend too much money. That’s their problem, right. And for some poor people, that is true, they have behavioral issues. But if you look at the averages, like it’s not there, they’re not expanding an exorbitant amount of rent, they’re not spending an exorbitant amount on medical care in anything. It’s just like, their basic necessities, eats their paycheck just completely gone, right. And so that’s the truth of the matter. It has nothing to do with their spending, they can’t cut any more like they’re at their minimum, right? So what’s going on is they just don’t have a high enough wage, right? So once you look at the data, it’s very obvious what the thing is. And it’s not like, Oh, poor people are poor, because they have bad choices. Like that’s true of some poor people. But most poor people just don’t have the income. Right. And that’s the fundamental issue. And that’s the fundamental lie that we’re told. And so I wanted to illustrate that and that’s why I’m like, Hey, you have to you have to shift your focus over to this other column, the income column, because everyone that focused on the spending just can’t make it there. And there are exceptions, like, Well, what about this guy is like, yeah, he reuses his dental floss, and he does this or that he makes his own dish soap at home and like, doesn’t like there are ways to do it, but they’re so extreme. It’s like, if that guy had spent half that time will focus on his income, he won’t have to do any of that stuff. He wouldn’t have to reuse his dental floss and you know, all that. I’ve heard so many crazy frugality stories, and it’s like, I just can’t deal with them. Like personally, like, that’s insane. So I’m like, if you spent half the time just focus on your income, you won’t have to worry about all these crazy like things you’re doing to save money, you know. Okay,

Adam Taggart 24:44
so I just want to clarify for folks, you read a lot of heard of time honored books about wealth building. Millionaire Next Door. I interviewed Bill Danko years ago, being one of the co authors of that book. And they do say that one of the core But actually the core the most shared attribute amongst all the Self Made Millionaires that they talked to was frugality was the sort of respect for money. I’m not going to be wasteful of it. It’s not necessarily reuse your dental floss. But it is this respective, you know, I’m earning $1 to save it not not to squander it. I don’t hear you saying, Don’t be frugal. I just hear you saying frugality has its limits, right at some point to really drive the needle, you’ve got to start increasing the earning much more than than trying to find the last nickel to save. Yeah, exactly.

Nick Maggulli 25:35
That’s exactly the point. Yeah, of course, I’m not against frugality. I’m just against extreme frugality. Because I don’t think it’s practical for most people. Like I’m trying to think like, what’s the solution? I could I could take to the average person say, Hey, this is if I had to get you from, from point A to point B, like, how are we going to do that? And the answer is not okay, we have to cut all your spending all the way down. For some people that will work. But I think that’s the minority of the population. I think for most people, it is not a spending issue. It is a income issue. And that once you change your thinking, to realize that that’s what starts opening the doors to to your future wealth building, in my opinion, and I even messed this up early when I was, you know, 23 years old. I was like, I can’t pay for an $8 beer at a music festival. That’s crazy. But like, now looking back at that was foolish, I shouldn’t have said, Who cares about that little $8 beer, I should be focusing on what can I do to raise my income and not focus so much on my spending? And that was just a mistake I made early on. But that’s that’s just kind of how I think about it.

Adam Taggart 26:31
Right? Yeah. And I think just to help people think about this, again, it’s not that cost cutting isn’t important. It isn’t a muscle that should be developed. But we’re talking about a sort of return of investment of your energies. Right? And if you’re just laser focused on okay, you know, how can I how can I shave another eight bucks off my budget this month? If you’re spending all your time focusing on those questions, where you could be devoting your time to be saying, well, wait a minute, how can I increase my income by $20,000? This year, you’re gonna have a much higher return on the latter than the former.

Nick Maggulli 27:03
Yeah, I mean, I wouldn’t say within a year, I would say within a few years, but that’s Yeah, I think if you have to push the income, the income stuff has to be pushed out a few more years, I think thinking like, oh, I can do it. 20,000 a year, some people can, it’s not impossible, I’m not gonna say that some people can raise their income even more than that. But I think to be realistic, you have to think multi year, and you have to say, Hey, I’m doing this thing, it’s gonna move in this direction, and it’s not going to work right away. But if you don’t do that, if you if you expect to $20,000 raise in a year, and you work on something for, you know, six months and see zero, you’re gonna be like, why am I doing this, and you’ll quit, right? And that’s the problem, you have to do something you love. So you can keep doing it over and over. And then even if you’re not seeing the money, and eventually, you can monetize, right? That’s, that’s the goal. Right?

Adam Taggart 27:41
All right. So be realistic, obviously, and expectations, but also, you know, approach is a marathon, not a sprint, know, that’s going to, it’s going to be more sort of exponential in the sense that lots of effort little little to show for it until you get further down the road, all that type of stuff, Don’t set yourself up for disappointment that you quit early. Exactly. So I imagine this this rule of you know, don’t focus, don’t put all your focus on the cost cutting, because you know, for a lot of people out there, like, as you said, they can’t even cut that much more. And yet, their essentials are taking the vast majority of their income, right? Leaving the very little leftover or nothing, right? I imagine that that’s gotta have gotten even worse, on average for society, since you started writing the book back in 2021. Because that was right when all the stimulus was unleashed, that basically has caused the cost of living to dramatically surge, you know, in the year and a half, since you’ve sat down and started writing the book, maybe two years, since you sat down and started writing, it just means, you know, in an inflationary world income because extra income becomes even more important, right? Because your cost set of your profit, personal profit and loss statement is just getting bigger and bigger and bigger. Correct?

Nick Maggulli 28:57
Yeah. And so it’s interesting, I think there’s been like a lag, like, initially at the beginning of COVID, like, once the first stimulus checks came out, remember, the money came in with inflation. And so a lot of those like lower income people, were actually doing really well. And there’s a lot of anecdotes showing this as well, people are like, Oh, my gosh, is the first time I’ve had you know, extra money, and I feel a little bit more relaxed and not worried about where I’m gonna get my next dollar. So I think a lot of people were in a better spot initially, but now that the inflation has come roaring back, I think you’re right, that the tables have turned, and now it’s getting really tough again, and so, of course, that, you know, I’m not saying every person that got a stimulus check was like all gravy, but I’m just saying it, it did help at least, I mean, there’s a lot of you know, we saw the biggest income gains from those at the bottom, you know, the bottom of because of the stimulus checks, right, the bottom of the income scale, so, that’s a good thing. But then obviously, now that the inflation and inflation is hitting, it’s bad. So I mean, we’re gonna have to wait and see kind of how things turn out. You know, that’s, that’s the big issue right now.

Adam Taggart 29:52
Okay. And I’m kind of curious to like, what are your thoughts on the fire movement, you know, financial independence, retire or Really, which is, you know, as I understand it sort of, you know, adopt a really low cost lifestyle, so that you can eject from the rat race early. You know, there’s, there’s nothing wrong with it. But to your point, if the secret sauce in that mix is getting a really low cost lifestyle that works as long as your lifestyle remains low cost, right. But you had these people that kind of objective, especially because they were getting checks, and they were able to advance their their date of objection early, and they went off and they did van life. And then all of a sudden the cost of their groceries and their gas and everything like that just, you know, started going up by double digits year after year, and they began realizing, oh, my gosh, like I can’t afford to stay retired anymore.

Nick Maggulli 30:40
Yeah, I think I think the issue is fire is not the FBI, not the financial independence. I think it’s the retire early and not because of any monetary thing. I think the issue is more of like a, it’s an existential issue. It’s not a financial issue. And what I mean by that is like, there, I mean, there are people that have retired early happy rode off into the sunset, but a lot of people that do that they end up finding, it’s really tough to adjust not because like, I mean, just because like they’re not doing anything with their time anymore, necessarily. And some people have figured out I’m going to do this, this and this. So it’s so funny. The The irony is like there’s so many fat people who hit fire that become fire bloggers, because they have nothing else to do with their time they’re not working nine to five is not doing this. And so I have nothing against that I have nothing against any of this stuff. It’s just, I’ve read, I’ve read horror stories from people that are like, I reached financial independence long ago, and I have nothing to do with my life. I had a guy actually write me this crazy long DM and Twitter actually put part of it in the book where he’s like, I’m basically just traveling from place to place waiting to die. And it’s like insane. The guy is like 45 years old. He’s not like super old or anything. And it’s like, what you just have a wife or kids, you know, and and you hear these horror stories about these different things people like, well, I made all this money, but I literally didn’t do anything in my 20s I had no experiences I didn’t live life. And so I think there’s a trade off between like, okay, yes, financial independence is great, like, oh, I can do whatever with my time, like, you know, and like, enjoying life and doing stuff you care about, right? Like, I don’t have any plans to like retire, I love working like after two weeks of vacation, I’m like, I start getting sick, I need to do something, whether that means blogging or doing working at my job, it doesn’t really matter what it is, I can’t tell you what I’m going to be working on in the future. But I just enjoy producing stuff. And like, there’s something to that. And I think there’s a lot of people that that get a kick out of that enjoy work, enjoy working with people, like imagine your whole social network is your coworkers, you leave, you know, you retire, then it’s like, oh my god, this is true of just standard retirees, let alone the fire retirees who have to see friends kind of keep making more money and advancing on getting bigger houses and this and that. And then you’re like, Oh, well, we can’t do that. Because we’ve set our spending to whatever some level that we predetermined, you know, 10 years ago. And so I think there’s a lot of weird downsides that people don’t think about. And I once again, I have nothing against the movement, but I think there just needs to be a lot more thinking that goes into it before you decide to pursue the RV part of fire.

Adam Taggart 32:50
Alright, that’s interesting. So you’re talking more about, you know, almost sort of like a loss of purpose, in the sense maybe of being chained to this ultra low cost lifestyle for the next 4050 years of your life if you retire in your 40s. But, you know, I also think, to your earlier comment about volatility, I wonder if if people are making the decision to retire early, sort of expecting, okay, because I think the status quo is going to continue for the rest of my life, but there’s a lot of volatility in there that can, you know, knock you out of this thing, right? You know, in other words, it could you could be assuming a certain amount of return in your portfolio and then you have another year like 2022, right? Or you know, we have a huge surge in cost of living like we’ve had here and you know, your your projections were made with a certain percent of your, your annual expenses of your income. All of a sudden, that increases by 22% You’re like, I can’t make ends meet this month anymore.

Nick Maggulli 33:52
Yeah, exactly. So I mean, there’s a lot of factors you have to think about like okay, if you’re retired and obviously most people have income sources in retirement, they’re they’re taking from a portfolio or they just have income coming in from a business or whatever it is, but like, there’s a host of things you have to think about, right? I mean, even like, I think 2020 was a great example this because like, imagine you you had a restaurant chain, you had like six different locations like well, I made more money than ever make my life let’s say you’re making $100,000 a month like I could retire now if I want I’m making so much money blah, blah, you retire something crazy, like COVID hits now all your income basic or most your incomes gone to zero, you’re like, how am I going to deal with this? Now you’re taking losses, like you could imagine like the pendulum shifting very quickly, because you just don’t We don’t understand risk. And like, we don’t know what types of receiving stuff like Social Security. I don’t think social security is going to like just disappear, but I could I could see them raising the retirement age or like, maybe not adjusting benefits inflation at some point or slowing it down to like make to make the math work, right. Because at some point, I mean, they’re gonna they’re still will have Social Security the future I’d be shocked if it went away. It’s just maybe like a lower pay or maybe, you know, even I think we can get to at least 2053 with 70% of the benefits paid out, given the current demographic shifts and everything so that’s See what the math says. But like, we can’t even assume that it’s going to be there, we have to assume something, but we don’t know what it is. And so that’s kind of another thing, you have to think about all these things. You’re like, Okay, I’m gonna have all these things, it’s gonna be perfectly perfectly linear. Like, that’s not how the world works, right? That’s the issue.

Adam Taggart 35:14
So my guess is you would say to somebody who’s maybe pursuing fire, or just looking at early retirement is to say, Hey, have some sort of big fudge factor in there as well. That’s a cushion. Right? So yes, have your have your status quo stash, but then have X amount, you know, above that just for this sort of stuff happens? Part of the equation? Yeah, exactly. I

Nick Maggulli 35:33
mean, you got to do that.

Adam Taggart 35:34
Okay. All right. I want to get to the investing part. But just real quick on the savings, you have a couple other big questions here, one of which is should you ever go into debt? So what are your thoughts about, you know, on the personal household level, how to use that?

Nick Maggulli 35:46
Yeah, so the research shows, and really, like the only type of debt that causes stress is like credit card debt and things that that sort of student loan debt doesn’t really seem to cause obviously, for some people it does, and mortgage debt doesn’t seem to cause it at all. And then once again, for some people it does, there’s some people that are just very debt averse. And they would rather pay off their entire mortgage early, even if they have like a 2% rate, which it’s like with, with rates of 5%. Now, you’d be better investing in that. But generally, I’m not against debt, I think there are certain types of debt that are worse for people than others. There’s obviously situational cases, like people, you should never have credit card debt. Of course, I agree with that. I don’t think you know, you should be paying 20% For money, but there are certain people who if you’re really liquidity constrained or have a lot of money, and all you have is your credit card, like and you need to buy groceries, you need to buy this or that, like, sometimes you have to do it. I don’t want to say never. But you know, obviously, you want to try to avoid it. But if you can’t, you can’t avoid you have to go through a tough period, you have to use it right. And so I don’t want to say never in those edge cases, but yeah, generally, I don’t think debt is good or bad. It’s just depends how you use it. And it depends like, what are the interest rates at the time? How much are you borrowing for, right? Like, I don’t think people would pay your mortgage at two or 3%. Like, there’s no one’s gonna like, wow, that’s terrible debt. No, that’s great debt to have right now. But if you have, you know, credit card at 20%, that’s where, you know, it’s obviously bad. And so the question is, like, where is that line of like, the debt is kind of good, or, you know, you have a good rate versus you have a bad rate? And where’s that middle ground? And we don’t know, I think anywhere between, let’s say, four or 5%, up to maybe eight or 9% is like, okay, there’s like that middle ground. But yeah, that’s kind of that’s my view on it.

Adam Taggart 37:20
Okay, well, right now, you are talking in an era where credit card debt and I’ve also believe, like auto loan debt is at its highest interest percentage in history, on an average basis, and mortgage rates are more than double where they were when you started writing your book. It’s amazing how, how tremendously mortgage rates have gotten expensive. So it is a relatively very expensive time to borrow right now. And in the rates aren’t low, like I said, Is this a period where you would basically tell people like kind of do everything you can to ride this out and wait for lower rates before you really lever up?

Nick Maggulli 38:01
Yeah, I get, I guess it depends on like, your lifestyle and what like what your plans are? I mean, you can’t wait forever, right? If you’re like, oh, I want to start a family get a house and all that, like, you can’t wait forever on that. And there’s no guaranteed like, what’s gonna mean for all we know, rates to go even higher, right? It’s like, it’s very easy to use recency bias. And like, look, rates were just say, two or 3%. It’s gotta go back. It’s like, not necessarily, right, like, for all we know, rates could be a percentage point higher or a year from now, right? We have no clue the future, right. And so I think trying to like time, it is really tough. And so you got to do what you got to do. And so if that means, hey, I’m going to have to take a, you know, a mortgage at seven, seven half percent, that maybe that’s what you have to do. And then at some point, you try to refi, but like, you just have to make sure you can afford whatever it is and like, there’s no easy answer. You want me to be like, Oh, hey, let’s let’s make this really tough problem, the 7% interest rate go away, and I can’t do that. And so I’m not saying you should rent forever. And like in the hopes it goes down, when if it goes up more like you can delay your life forever. So sometimes you just have to accept like, Hey, this is the world and like, good to realize it. In recent history. Yeah. 7% is high, but most like, in the last 50 years, you know, mortgage rates have been, I think, higher at this point or higher, for most of the last 50 years. It’s only in the last 20 to 25 years that mortgage rates have been lower, right. So people don’t realize it actually look at a longer term history, like mortgage rates and interest rates have generally been, at this point a little bit higher for the last 50 years, as I said, So, which is kind of crazy. It’s just the recency bias is what really bothers people because like, Oh, I could have got that deal. And now I have this really terrible deal. And so that really eats up people and I and I understand why you feel like you’re getting screwed over.

Adam Taggart 39:30
Well, and let me ask this, and then we’ll get to the investing part, which is, if you look at the cost of owning a home, it has dramatically surged in the past couple of years with these higher mortgage rates, right, because we had low mortgage rates, which led to high prices, right? It’s you know, unprecedented ly high prices, and then now mortgage rates got super expensive, and yet the prices haven’t really moderated much yet, right? So just the cost of ownership is a lot higher. And you can apply that to a lot of other cost of a lot of other things. And you’re right, we don’t know what’s going to happen from here. And maybe we’re at a new higher plateau for cost of capital or whatnot. But that then dramatically increases the required income, basically, to afford the house right, affordability has gotten a lot worse and relative years, recent years. So, you know, is there a message to people right now that like, hey, it may not be fair, we obviously aren’t gonna like it, but the world may have just changed. And it may actually be harder to afford stuff going forward than it was five years ago. Hopefully, that’s not the case. Hopefully, there’s some moderation, but if not, it kind of makes everything that you have here in your book. Even more important, because if you want to think of the process of wealth building is like climbing a mountain, you know, the mountain steeper right now than it’s been in past years. And maybe it’s gonna remain that steep for the next 10 years. 20 years? We don’t know. So, you know, I don’t wanna put words in your mouth. But is there a message here to tell people like, hey, it’s unfortunate, but we get to gird ourselves, and it’s just going to be harder SLOG and going forward from here. Yeah,

Nick Maggulli 41:14
it’s I agree, complete with your message, like it has gotten harder. In some ways. It’s gotten easier in some ways, and harder in some ways. And what I mean, by harder, it’s harder for home, it’s harder to like, inflation costs are going up. But the good part is, though, treasures are paying. So for people who have assets already, that’s a good thing. If you don’t have assets, obviously, it’s tough being an accumulator, it’s great being it’s much better being a retiree, right, all seek Well, I mean, of course, costs are going for retirees as well. So like, I don’t want to say like, okay, that’s no big deal. That doesn’t matter. But I mean, retirees that have portfolios that can invest money, they are doing better, if you don’t have any capital or any assets, obviously, you’re doing, you’re doing worse, because costs have just gone up. So yeah, that’s my take there. And I would just say, like, yeah, it gets tough, but like, that’s, that’s how life is, I mean, people had to deal with higher interest rates in the, you know, late 70s, early 80s, you know, and they got through it there. You know, that’s like people’s parents, grandparents, etc. Like, they got through, and we’re here today. So like, you know, there’s nothing, you know, quite like, we’ll get through this, whatever it is, we’re gonna get through this, it’s gonna be tough, but like, we’ll get through it, you know?

Adam Taggart 42:15
All right. So, so we’re gonna keep digging on this with you. But I gotta move for sake of time. On your investing section, starts with a big key question, which is, why should you invest? I think, folks, you know, kind of get this, but you basically want to have your wealth working for you. So that it’s not just all you bringing in a primary income, your money starts creating, you know, income for you, you get to ride that, you know, compound interest, that exponential force of the universe. But specifically, you know, why should we invest? Or sorry, what should we be investing in? I think you’ve got some general sort of, you know, quasi timeless recommendations there. But also in this current world that we’re in right now, with higher interest rates, I’m sure there are certain investments that are more attractive now, again, than when you started writing the book, probably short term treasuries being near the top of that list. But you know, to people who say, Okay, now you got my attention here, what should I be investing in? What would your answer be?

Nick Maggulli 43:15
I mean, my general answer is a diverse set of income producing assets. And that can mean I mean, I don’t think there’s any right way to invest, like, Oh, you have to get real estate, you have to have stocks, you have to have bonds, I think there’s a lot of different ways to doing it. I mean, when we’re talking about risk assets, that obviously means some form of real estate, whether you’re owning an actual property, or you own a REITs, Real Estate Investment Trust, which owns a lot of properties, and they manage it for you, it’s kind of like a stock in that way. Or you’re getting equities of some sort of events, us or global equities, in some market or another and that’s just owning businesses, shares or businesses. There’s stuff like farmland out there, which you can get into obviously, it’s a little bit usually a higher investment amount, you need to get into that. There’s REITs that do that there’s also you can go and crowdsource and just buy, you know, buy a piece of a farm with like a bunch of other investors, you know, when you have to put up like, I don’t know, 510, grand, or whatever it is. There’s a lot of different ways of doing this. But I generally say you want to own income producing assets, things that actually produce income, right, and you want to own a diverse set of them. And obviously, all the things I just mentioned were risk assets. But then there’s like, things that I say aren’t as risky, which is like treasury bills, bonds of that sort. Of course, some bonds are more risky than others. So I don’t want to say all bonds are not risk assets. That would be foolish, but generally, I would say treasury bills have not been considered risk assets. So you can consider risk less now of course, we don’t know what’s gonna happen in the future. But, you know, I think for the most part, people agree that Treasury is unlikely to default Right? Or if or if they do default, they will have back pain pay people back whether it’s because they’re gonna inflate the currency and have to print more whatever it is, there’s a way to get that done. So yeah, that’s the those are the main assets I throw out there. Obviously, you can create your own assets create products, you can buy royalties, you can actually create a product that creates a royalty right? There’s all lot of different ways of doing this. But there’s just a handful, I would say out there, and I don’t want to give the exact percentage and recommendation cuz everyone’s different. Some people don’t like illiquidity, and they’re not going to want to own a house where they’re like, I can’t take me a long time to sell this versus like, some people just love having stocks, I can sell it anytime I want, right? So there’s trade offs with all of these things in terms of the the not just the, the volatility of the asset, but the time cost of the asset. And just thinking about, like, you know, how you want to like, how it’s gonna fit into your lifestyle as well. So for some people love real estate, they love being managing the property going out there, you know, finding tenants all that some people don’t hate that. I don’t personally like that. But it sticks around. So that’s why I say like, there is no right way to do this. It’s about figuring out what works for you. And I know, people, I think that’s a cop out. But Nick, just give me the answer. It’s like, I can’t do that. If I told you that. This is the right way to do it, I would be lying to you. And that’s what most I think personal finance gurus do. They say, this is how you have to build wealth. This is the only way and it’s just, it’s not true. I know. Because here’s the problem. I know rich people that did it with real estate, I never if people did in stocks, I never feel to start their own businesses. I know rich people that got into farmland, like you go through and like I know rich people owning many different income producing assets, which means there’s not one path, right. And so once we realize that we can say, Okay, if that’s true, then like, I just need to find the path that’s best for me and what fits into my lifestyle, what I want to deal with and not deal with. And so, as I said, Some people love real estate, some people hate it. And so figuring that out, and the earlier you figure that out, the better.

Adam Taggart 46:28
And it’s such a great point, you’re also really underscoring a huge part of what Wealthion tries to achieve, which is we educate people, but then we try to connect them with solutions that can help them put this information into action. And we have a network of financial advisors that we connect people with. Because to your point, everybody’s unique, everybody’s different. And so rather than just giving a one size fits all answer out there, we basically connect them with professionals who can go through the whole process of saying, Okay, tell me everything about you, your personal situation, your risk tolerance, your strengths, your concerns, your goals, all that stuff, and then work with them to come up with a plan to that’s bespoke to that user and leverages, you know, all their advantages and ideally tries to protect them from you know, their their self admitted weaknesses. Because you mentioned it a couple of times, I just want to make sure people understand what it is, can you give just the 22nd definition of what a royalty is.

Nick Maggulli 47:28
So royalty is just some form of income that’s paid to you if you own some form of media generally. So for example, on a book, every book I sell, I get some royalty amounts of the book sells for $10. And I had a 10% royalty, I would make $1 per book, that’s a simple example. Right? But that can be true on you know, like streaming music, like on Spotify, I think it’s like, half a cent per stream or something, maybe it’s or maybe it’s like a half of a half of a cent. It’s like a really small amount purse for every play that someone listens to your music. So every, like 1000 plays is like five cents or something. And so I don’t know, there’s like different ways of doing that. But that’s what a royalty is just something where you’re getting paid every time your your work your media, whether that’s art or, or some form of music or content is used, right, you get paid on that. So that’s what a royalty is. And you can buy roads. So for example, like you can go there’s a place called I think royalty exchange and member I’m not a full disclosure, I’m not affiliated with them, this is just I know about the site that exists. And I’m not get paid anything to like say this, there’s just a place but royalty exchange where you can be like, Oh, I know that there are certain songs that are up there, you can buy the rights to that song. And over the next, you know, 510 years indefinitely, you get paid and anytime that that song is played or anything, so you think like, oh my gosh, if this artist dies in the next year, like their royalties, and maybe a lot of people listen to it, I’ll get a huge royalty check. That’s an example of something like that. So hope that explains it.

Adam Taggart 48:45
Okay,

Nick Maggulli 48:46
great. Little more than 20 seconds. Sorry about

Adam Taggart 48:47
that. No, no, no, it’s just very helpful. And I want to make sure that everybody following you know, when you when you recommend something, or you mentioned something worth exploring, they have a good sense of what your Richard was saying there. You know, it’s also really helpful about this, too, is, to your point about, you know, people can build wealth, many different ways, and when really important early decision to try to come to is is okay, what is going to be my primary way of building my wealth through investing, you know, am I going to, am I going to create businesses? Am I going to do it through the stock market? Am I going to be through real estate or whatever right? Is once you once you’ve made that decision, and you can start focusing and building a plan around it. And of course, the better you get, the more experience you have, you tend to get better and better and more successful at picking the right winners. So your track record as investor generally tends to improve. But you can also partner that with, you know, a good tax strategy because a lot of these different types of assets actually have tax benefits. So real estate’s a great example, right? There’s an awful lot of tax cuts that come in with real estates and there’s ways in which you can use accelerated depreciation in many cases to you know, get tax credit tax reductions very early on in the life of a project that can save you a lot of taxes early on. So anyways, it’s just once you kind of get the clarity you’re talking about, there’s a lot of different ways, both on the earning side and the saving side, that begin to kick in once you have, you know, kind of a clear line of sight on how you want to be spending your focus going forward. You’re nodding as I’m saying all this?

Nick Maggulli 50:24
Yes, yes,

Adam Taggart 50:25
I agree completely.

Nick Maggulli 50:26
I mean, especially with the tax up, taxes is tough, because every one is different situation. But I agree, like, figure out what works for you and then see, with your, you know, local state, you know, federal taxes and how you can kind of work that.

Adam Taggart 50:38
Okay, great. All right. We’re getting short on time here. So real quick, you have a couple of questions here that maybe I’ll combine into one mega question here. But you say, you shouldn’t wait to buy the dip in investing depends on luck. And you shouldn’t fear market volatility. So if I can just kind of throw all those into the mix here and say, you know, as an investor going forward and implementing your plan, how do you, you know, how do all those things come into play? Or if there are other more important elements? Feel free to add those into the mix as well? Yeah, so

Nick Maggulli 51:15
with market timing, there’s just no evidence that anyone can do it consistently, you might get lucky once or twice. But if you keep trying to do it, you know, you’ll probably get burned at some point, right. And I think the issue is, you know, most markets, most income producing assets tend to go up over time. Of course, there’s exceptions, there’s long decades where US stocks didn’t go up or develop stocks and cope, etc. But the main, the main point there is don’t try and time the market, because it just generally doesn’t work. And by the time you wait for a dip, usually that time you buy that dip the market is, you know, now much the dip point is much higher than when you could have bought it initially, right. So I, for example, 2017, people were like, you know, buy the dip, I was like, this is foolish, if you even if you had perfectly timed the march 2020 Dip and got the exact bottom and bought you sort of bought at prices 7% higher than 2017, which is insane to think like you have perfect foresight, you still, you know, lose money. But that’s the that’s the thing with buying the dip in terms of you know, market volatility and luck, like, there’s just a lot of luck there, there’s some things outside of your control, we were just talking about, you know, the mountain got steeper, we couldn’t have known about that, you know, ahead of time, that’s just something that’s going to happen. Things will change with the investment world, you know, I think set it and forget, it is not the best investment policy because things change, right? If you didn’t set it and forget it on a portfolio with stocks and bonds. And now interest rates just shot up just doubled. Like, you might have a very different portfolio when interest rates are 5% than when they’re two or 3%. Right. So I think set it and forget, it is not a great way of managing wealth. It’s, it’s better than nothing. If you’re not doing anything, I’d rather you set it and forget it. But I think some people have to think Oh, actually, maybe I should, you know, reconsider as market conditions change. I’m not saying you need to change your allocation every day, or you need to like make massive changes, but like, things change in the future, the future is going to change. And you might have to change your allocation, there’s nothing wrong with that. It’s just thinking about it not being do it based on evidence, not just based on like an emotional feeling. And, you know, and being manic or anything like that. So I hope that

Adam Taggart 53:04
clarifies all those it does. And this is the financial advisors that we endorse, they come on this channel regularly, and they sort of talk about this as gardening, right, which is looking at your positions, periodically adjusting your position sizes. And, you know, looking at the current environment and saying, okay, given that, you know, do I want to amend the strategy at all, high interest rates would be a really good example. You know, when it created this interest rates were low and other higher, that’s going to change the game. What adjustments should they make? All right. Well, look, Nick, this has been a great discussion. Thanks for giving us so much of your time. Where can people find this book? Is it is it Just wherever? Anywhere books are sold?

Nick Maggulli 53:38
Yeah, exactly. You find it Barnes and Noble amazon.com. Obviously, it’s probably most your most of your listeners will be finding it. But yeah, anywhere books are sold, you’ll be able to find it just keep buying. And yeah, and yeah. Also, if anyone has questions, feel free to DM me on Instagram. I’m at Nick moduli or on Twitter, which is just at dollars in data. So you can find me anywhere. And I answer every DM so if you have any questions about the book about anything I said here happy to chat or, you know, right back and forth on something so

Adam Taggart 54:04
great, Nick, thanks so much for telling folks where they can reach out to find out more about you and your work. That was gonna be my next question. But you anticipated it. Thank you for doing that. Real quick. And wrapping up here, folks. Just want to remind everybody that the Wealthion fall online conference is still available for sale to register for it at the current early bird discount price, which is going to expire pretty darn soon. I got to get the actual date for that. So I can tell folks when the last date to buy this, but I know it’s coming up relatively quickly. So to learn more about the conference, get your 30% discount on the ticket as an early bird registering or if you’re an alumnus, check your email, you should have a discount code for me. That will give you an additional 15% discount off of that 30% early bird price. But to to register for the conference. Just go to wealthion.com/conference has all the details there. And like I said you can register for that ticket. If you’ve enjoyed this conversation with Nick Definitely go get the book, read the book. But we’d like to see him come back on this channel again in the relatively near future. We can talk more about wealth building in general, but we can also dig specifically into Nick’s day job working@ritholtz.com. And, you know, analyzing the markets and where things are likely headed. Vote your support for that by hitting the like button, then clicking on the red subscribe button below, as well as that little bell icon right next to it. Nick is always great talking to you here. Thanks so much for joining. I look forward to having you back on the program again soon.

Nick Maggulli 55:32
Appreciate your guys time and appreciate your time as well, Adam for having me on Wealthion So hope the book club goes well.

Adam Taggart 55:37
Thanks. It was a real pleasure, Nick. Really appreciate it. Look forward to having you back on the channel against him. Thank you