Best of HMDK: Financial Literacy for Dummies (Like Me) with JL Collins

(soft piano music) Lemonade. - Thanks for listening to Hussam Minhaj Doesn't Know. Listen to and follow Hussam Minhaj Doesn't Know add free on Amazon Music or just ask Alexa. Alexa, play the podcast Hussam Minhaj Doesn't Know on Amazon Music. Also, with Amazon Music Unlimited, you can now listen to your favorite music, podcasts and audio books, all in the Amazon Music app. Listen to Hussam Minhaj Doesn't Know on Amazon Music. - Hey gang, we're going dark this week because your boy is on spraying break. I mean, my kids are. I'm still cold and very tired. But I don't want to leave you guys hanging. So here's a rerun of one of my most helpful episodes, talking money with internet dad, Jail Collins. Apparently, we should all be saving for retirement in the off-chance that were spared from mass nuclear destruction. Here's financial literacy for dummies, like me, with Jail Collins. - My feed is a constant stream of financial grifters. I'm talking crypto bros, NFT scammers, affiliate link farmers, and pump and dump in cells. Every flavor of overconfident fucking idiot is on my timeline. And I think I know why that happens. At a certain point in your life, after you've paid your rent and your Verizon bill, you're like, hmm, what do I do with all this extra money? What does TikTok have to say? And that's how you get set in. And one day, I stumbled on to this old white guy who gave the most boring Google talk I've ever seen in my life. And it changed my life. Because it turns out the best advice is also the most boring advice, delivered by the most boring people. And now I call one of those boring people, my friend. His name is Jail Collins, and his book is The Simple Path to Wealth. And he has three rules for money. They're very simple. Number one, spend less than you earn. Number two, invest the surplus in an index fund. And number three, avoid debt. As unsexy is all that sounds. For me and a lot of other people, it works. So Jail agreed to come all the way from Wisconsin to New York City to talk about The Simple Path to Wealth. Why so many people are bad with money and how to ignore all those overconfident posers in your Instagram meals. But not this overconfident poser, just the other ones. ♪ Hurry right away, don't be late, stop late ♪ ♪ Make your daddy pass ♪ ♪ I have a problem ♪ - When I was an up and coming comedian and open-micro, I moved to Los Angeles. And the way standard comedians make money is, the booker will either pay you in cash or you'll get a check. And because I did not have a good relationship with money, I would immediately cash the checks. And I would hold the cash. And I'm living with my roommate, Dan, in Los Angeles. We live in downtown Los Angeles. And one day he walks into my bedroom. We lived in a two bedroom apartment. And I would keep all of my cash in Nike shoe boxes. And so I had about $3,200 to my name. And he's like, "Are you selling drugs?" And I go, "I'm not selling drugs, I'm serious, I am a comedian, I'm not selling drugs out of this apartment." And he goes, "Do you have a checking account?" I go, "Yeah, I have a checking account." There's like some money in there. But like, this is the real money. And he starts saying things like, "Do you have a 401(k)?" "Do you have a Roth IRA?" "Do you have a retirement account?" He's using all these terms, but it started my Google journey into buying this book. And so the question that I wanted to ask you was, you basically got to become everyone's dad without having to give them the talk about sex. And so what's that like being everyone's dad without giving them the birds and the bees talk? - Wow, what a question. I'm debating my mind whether being able to talk about them, about sex would have be a better option. - No, no, no, no. - Because nobody wants to talk about money. - Sure. - Yeah, it's a weird thing, Hassan, because I wrote this book because I couldn't get my daughter to listen to me when she was young. I pushed this stuff way too hard, way too fast, turned her off to all things financial. And that concerned me because I knew that if you get a few key financial things, right, there's so many more opportunities that open up. Your life is so much better, so much easier. And if you don't, the road is so much harder. So as a parent, you know, I wanted that for her. - Why are so many people bad with money, myself included? - Well, I think when you look at the popular culture around money, you turn on the TV, you look at the news, it seems impossibly complicated. And there's a reason for that because Wall Street makes it very complicated. Wall Street is filled with genuinely complex investment products. Classically, it's filled with some things that the people created it don't quite understand how it works. So that's the bad news. So when people say, wow, this is really complex, they're absolutely right it is. The good news is you can sweep all of that off and onto the floor because you don't need any of it. And what you do need, what will make you wealthy over time is the soul of simplicity. But that's not a message you're ever gonna get on TV or in the papers because there's no money to be made in putting that message out there. - Or on the internet, the internet is filled with people that speak very confidently with all caps and their captions. And there's really bold music and there's complex ideas and complex graphs. And when I look at you in this book, you just wrote one book when there's so many courses you could have sold, there's so many subbooks you could have written about how to become rich. And my question, J.L. is, why aren't you a grifter? There's a great grift to get in on. And why just do one little book like this? - You know it's my mother's fault, really? - Yeah, she instilled a conscience in me. I've cursed her for that ever since I'd be so much wealthier if she hadn't given me a conscience, but she did. So here we are. When I knew you were for real is in 2018, you gave a Google talk at Google. And a Google employee asked you about investing in Google. Let's take a look. - What are your thoughts on holding the Google shares since we're all extremely invested in the success of Google? - Well, that's a political order question. (laughing) So far I think I should say, hold Google, (laughing) but that's actually not my opinion. - What was your opinion and what is your opinion? - So my opinion, I can't remember exactly how I said it, but what I said to those people is still my opinion today, is that you never want a whole day large portion of your wealth in any one company. And Google's a great company and it's still doing great today as far as I know. But all companies have a life cycle. And at some point, Google as all companies do will fade. It might happen sooner or later, but my classic example of that is Sears. Sears for 100 years was Amazon and Walmart combined. Sears was the company that said, "Hey, you know, there are all these people out in rural America who can't get the stores, but we could mail 'em catalogs." And then they could send us back orders and we could just mail the stuff to 'em, right? - Well, what's that? That's Amazon. That's exactly what Amazon does, you know? And we're gonna have these freaking mortar stores. - Yeah, and that was the worst catalog for those of you that don't know. Sears would print out the internet and staple it together. And it was like this thick. - Yeah, and it was filled with products and then they would staple that and mail it to you. And then you would circle what parts of the internet you wanted and mail it back to them. Then they would mail you those goods and search. - It was the print, even they would do houses. They had pre-fab houses they sold at one point. So, and they dominated for a hundred years. In 1973, they built what was then the tallest building in the world in the country. - It's down. - Sears tower, right? That was by the way, the beginning of the end. Now, you'd be hard-pressed to find a sear store open. In 1973, if you'd said that it was 20, 30 years later, sears would be gone, people would have laughed at you. But if you've been up in front of a bunch of sears employees and they asked you, gee, should I have all my net worth in sear stock, you'd have been pretty controversial saying now that's probably not a great idea. - When I watched that clip, I was like, bootleg John Goodman, is either a genius or he's the most genuinely sincere person on planet earth and I gotta go all in. So I bought the book, I bought the book. I was like, all right. - You know, I have to share with our audience. So that's not entirely true. - What's that? - I mean, you bought the book. But that you went all in at that point. - No. - Because when you and I got to know each other a little bit and we started it, 'cause I was very intrigued that you were following my work. We had some conversations and we probably talked for two different times and for at least four hours and you grilled me and I could tell the nature of the questions were, are you for real? Let me ask it another way, are you for real? And I guess I passed the test 'cause here we are. - We have friends. - Yeah, this is becoming more psychological jail because really, and my staff thinks this as well, I have an amazing team here but they oftentimes ask me, why are you doing this? What happened here? And really what you're looking at, J.L., is a broken toy. Someone who wasn't loved or hugged enough and wasn't given proper information. Now, as a trauma response to that, I found humor in the gift of gab and at times lying as a way to get around that. And unfortunately, what that did is it let someone susceptible like me go on. the internet and then fill that void with gurus, grifters, and charlatans. That's how I came upon your work. Here's a guru of drifter and charlatan all rolled up into one. And then you happen to be willing to give me your phone number and email and I got into congressional testimony, JL Collins style. But honestly, JL, the core jumping off point of even our initial conversations, was around the core principles and the simple path of love. Now, I'm not sure if you're aware of this, but it's 2025 and people don't read. So let's break down the basics of your book. What are the three rules that are the entire basis of the simple path to wealth? Three principles are real simple, void debt, live unless the new earn and invest the surplus. Let's talk about the first rule. Spend less than you earn. So you're saying, be cheap. No. What are you saying? I'm saying, you know, one of the things that I push back on is this idea of being cheap or that this path is one of deprivation, right? I don't see it that way. I never felt that I was depriving myself when I took money that I saved and invested it. What I was doing is spending my money on the single most important thing to me, which was my financial freedom. In my mind, this is not going to be true for everybody. It's not going to be true for everybody who's listening to us and that's fine. Everybody has their own decisions to make. But for me, there was nothing money could buy that was more important than my financial freedom than having of what I thought of at the time is FU money, which gave me the freedom to make bolder choices in my life. There was no car, there was no house, there was no wardrobe, there were no fancifications that were more important than that. Now I did some of those other things because I enjoy other parts of my life. But to me, it's no different. If you're sitting there saying, you know, should I buy a Chevy or a Cadillac? Well, if you buy the Cadillac, you've got a much fancier car and maybe people would be more impressed with you than if you buy the Chevy, but if you buy the Chevy, you're going to have a car, you're going to have perfectly adequate transportation and you're going to have a bunch of money left over to do other things with. It's a choice depends on what your values are. Just push back at this. You know, let's say, hypothetically, I'm making $46,000 a year and that's what I got and I have to pay my rent, but I also want to enjoy the life that I am living. I am only around for today. I don't know if tomorrow's promise. So let me have a little bit of discretionary spending to go on vacation with Bay, buy an ice coffee or two. Maybe take my kid to Disneyland. Why can't I just spend all of it? And why do I need to, for what? I save an extra 1,800 bucks to put it into some index fund? Why? Why can't I just let me live today? Well, first of all, you can. And that's what most people do. In fact, tragically, in my view, some people go into debt to do even more of that. All I'm saying is that there is another option. There is another thing you can do with your money. What if there's stuff that I want or need? Well, but that's the whole point is you have to decide what are the things you want and need that are most important to you? Okay, I want a Pokemon, the original Charizard card. That is authentic. That wasn't the fake one that Logan Paul bought during the pandemic. The real one and it is a original Pokemon. You have no idea how far out of my wheelhouse you're going, but go ahead. This is a big deal. You have no idea how real this is. Clearly, I have no idea. Yeah, and I want that. Right. And that's going to cost me quite a bit of money, but I want it. Okay. And it might be more than what I've earned. Okay. I'm already breaking rule number one. Well, if I spend, you know, you don't buy the Charizard. Again, these are not the 10 commandments down off Mausine. This is a simple path to wealth. And only you can decide whether that's where you want to go. If you want to buy a Pokemon card, Pokemon, whatever. It's not whatever. Well, I'm sorry. I clearly have missing the critical importance of this. But you can buy whatever you want with your money. It's your money. I would never presume to tell you or anybody else what to do with their money. The only person ever presumed to tell that was my daughter. Right. But what I am telling people is there is another option. What I think is tragic is if you get to the end of your life and you have spent all of your money on things that are now gone and faded and haven't provided wealth for you and you're broke because you didn't know there was another option. That's tragic. And if I can let you know that there's another option, there is another thing of value that you could spend your money on. You don't have to do that. You might, in fact, most people, let's be honest, who listen to us today are not going to do this. That's why people who follow the simple path to wealth and become financially independent were unicorns. And we will always be unicorns. It's a rare path to walk. But at least you will know that at the end of your life, that's something you could have chosen. Just like I know, I could have bought a Porsche at some point. I've chosen not to for a variety of reasons. But it's not like I didn't know Porsche's existed, right? You know, what you just said was a little elitist, J.O. Well, I'm a pretty elitist guy. I haven't met my mother. Oh, really? What you basically said is, hey, I'm going to put you on to the game. I'm going to tell you the rules of how it all works. And I bet you're not even going to follow it. Yeah. I don't see how that's elitist. I think that's the way it is. I am under no illusions that, you know, in this FI community, the financial independent community, right or fire, which is financial independence for tire early. Financial independence for tire early, which is by the way, that is the wave. People are talking about this like, well, yeah. So that's that's the interesting thing. And it is what I first started writing about this stuff back in 2011. It was not the wave. And it just certainly has become the wave. But one of the questions that I got a lot in this community, because new people who discover it and for whom it resonates, they get really excited. And they can't it's like religion almost. They can't they can't believe that if there was anybody out there who was exposed to this truth that they wouldn't immediately embrace it. Why bit around long enough to know that that's not the case. It's not the case with religion. And it's also not the case with with the simple path to wealth. Right. So I'm under no illusions. I don't think unlike a lot of people, particularly newbies in in the space who think the whole world's going to go this way. I get questions like, well, Jay, what if everybody retires early and nobody's working, what's going to happen to the economy? Well, that might be a problem, but you know what? It's never going to happen. The the underlying underlying principle of of this, the ability to work for who you want to work for. Right. Is this idea of fuck you money? Right. What is financial independence and what is fuck you money? Okay. Understand. This is my definition. Okay. So I think a lot of people it's the same thing. It's just different different terms of the same concept. For me, financial independence is when you have enough money that it throws off enough money to cover all of your expenses, all of your living costs and then some little bit of a cushion. If you money is what you acquire slowly but surely over time as you take those steps to get to full FI where you're financially independent. A few money is important because you might not be able to quit your job forever at a certain stage, but if you have enough fuck you money, you can quit your job and take a sabbatical for a while while you look at other options. Maybe you're working in a company that you liked and for a boss for whom you respect it and then you got another boss and not so much. Well, now you've got the wherewithal and the economic power to step away. Got it. So fuck you as a cushion. Fuck you as a cushion. Fuck you. I don't get to deal with this shit. Right. I have a little bit of a cushion. Right. It's just like going to the gym, right? You get stronger and stronger. And that's not just for going to the gym, but that makes you more resilient in the real world. You know, if you're walking down and you slip on ice and fall down, well, if you're physically strong, you're less likely to get hurt. The more physically strong you are, the less likely you are to get hurt, right? But every little bit helps. Do you have fuck you money now and find full financial independence? Yes. And have for a long time. How much money do you have right now? Enough. What number with commas in it for you is enough. So my mother once said to me, never tell anybody how much you make or how much you have, because there's only two possible reactions. If they more than you and have more than you, like you do, then they don't care. If they have less, they're going to be envious. So I have enough. And by the way, I should make a comment about that. it's not a few money. and financial independence is not a set number. It's a different number for everybody. So I've known people who've made millions of dollars a year, and they will never be financially independent, because they have constructed lifestyles that cost every bit of that. They broke rule number one. They spend more than they are. Right. I mean, Mike Tyson. Mike Tyson made something on the order of one of the all-time great boxers, an incredible athlete. He made something of $400 million, and it just blooded through his fingers, because he didn't know how to handle it. He was surrounded by sharks taking bits and pieces out of it, tragic, tragic story. So Mike Tyson, and I think he's recovered quite a bit in fairness, but when he lost it, it wasn't because he didn't, it wasn't making enough money. The same token, I've known people who've never made more than $50,000 a year who have achieved it. I have another book called Pathfinders, which is a hundred stories of people who have found the simple path to wealth, read it, and have implemented it from all around the world. One of the things I love about that book is some of the stories in there are from people who started from incredibly humble beginnings. I mean, there's a guy in there who was a migrant fruit picker when he started, he was writing his story for us, he was worth half a million dollars. There was a woman in there who said, "You know, when I was a kid growing up, they were the ones who had flush toilets, right?" So I love those stories because there's a pushback in this country that, and you touched on it a little bit earlier, when you were talking about making, say, $46,000 a year, there's a pushback that says, "Oh, you know what? That sounds great, but that's only for people with really big incomes." That's only for tech people and that kind of stuff. That's not my experience. When I did the first Chautauqua, which were these events I put together back in 2012. Chautauqua was basically like, it's like a camp/cult gathering of people that are like you, that like and have pursued the simple path to wealth, and so they come and they hang out together. Exactly. Now, I haven't been to one of these, but I imagine it's just a bunch of views. Well, no, that's kind of the point I was getting to. So when I was putting the first one together in 2012, it never even crossed my mind who would come, right? There was this trope out there about, you know, this was only for tech engineers kind of thing, and I was kind of vaguely aware of that. I was hoping somebody would come. You know, we said we were going to have 30 people and that would be, you know, that would be, and we'd take them somewhere cool for a week, and we sold it out. But when I went to the first one, one of the most stunning things to be, and can't believe one of the most gratifying and absolutely and most unexpected, was the incredible diversity of people showed up. When I say diversity, and you're only talking about 30 people, by the way, every possible measure, age, gender, race, religion, sexual orientation, it was, and I thought that was wonderful, but I didn't expect it. I was just hoping somebody would show up in level of wealth, occupations. This was not a group of tech pros who got together to spend a week in Ecuador with me. And again, I had no idea who was going to come. But that immediately, in my mind, put the light of this idea that this concept of pursuing FI is only for certain class of people. Is it bad to lease? That's at least what? Car. Financially, probably, no question. It depends on where you are in your life. You know, there are certain things that are not financially optimal, but if you're wealthy enough, it doesn't matter. So yeah, if you're trying to build your wealth, no, I wouldn't lease the car. I also wouldn't take a car payment. I've never had a car payment. You just bought outright. Yep. Yep. Go to the dealership. Yep. Yes, I will take the Toyota Corolla. Right. Full MSRP. Here's the money. Academy of shitbox. And then you're done. Yeah. Yeah. And that was something my dad taught me. So yeah, this is how it works. That's what he would do. You know, there's a lot of people that have made a lot of money that have said that with a depreciating asset, just lease it. And every two to three years, you'll get a brand new. And if you have a lot of money, that's probably not a bad thing to do. If you want a brand new car every few years, my dad bought a new car every five years, right? And what he would do is, the moment he bought that car, he would start making a car payment to himself, to his bank account. Same way as if he was paying it as low, right? Only now that payment is going into the bank and he's being paid interest by the bank instead of the other way around. And at the end of five years, he takes that money and he buys the next car and starts to cycle over again. Now, the question that is in everybody's mind at this point, well, that sounds great, but how do you buy the first one? Right. How do you get there? And the answer to that question is real simple. You buy some really cheap chip box and you drive a really shit piece of crap for five years while you're making those car payments. It's not hard. It's not rocket science. And then you never have a car payment again. I love that. I love the way you describe a Honda Civic. Why have nothing against Honda Civic? I mean, but I know exactly the type of car that you're talking about, but you're talking about a specific model of car that you can literally drive into the ground. Yeah. Until the wheels come off. That's the Honda Civic, the Toyota Corolla, the Toyota Camry. And if you're feeling really spicy, the Honda Accord. But that's your piece of shit, shit box that you have. Yeah. And there even more beyond that. Sure. Yeah. Hyundai at Lantra. Yeah. Let's get into the part. I hope Hyundai and Toyota at Honda are all sponsors of the program. I would love for them to be sponsors of the program. Yeah. I really embrace that of like, we will be the shit box that gets you to financial freedom. If they'll do that, you and I will make a commercial for them. Let's do it. Let's get into the heart of why we're here and why people are listening. Let's get into investing. Sure. Let's say hypothetically, I have $3,200 to my name. And I don't want to pay ice cube to sing me Happy Birthday on Cameo. What should I do with that $3,200 that I have saved up? Let's start the journey. Well, starting there clearly, you have no priorities. But if truly you don't want a higher ice cube, then the next best thing is it goes into VTSAX. What is VTSAX? It is Vanguard's total stock market index fund. It means that you now own a piece of every publicly traded company in the United States. And everybody in those companies from the factory, Florida and CEO is now working to make you richer. It's a broad based, every company, low cost because it's index fund investment. And that's all you need. You don't need all those complex stuff that Wall Street loves to talk about. Okay. But I have a boyfriend where I have a girlfriend and they're telling me I should get a financial advisor. I have a cousin that makes a lot of money on Wall Street. And they're saying I need to go to Morgan Stanley. What do I tell those people? You tell them that you're investing in the simple path to wealth which is low cost, broad based index funds. Okay. So I open up my laptop. I go to vanguard.com. Or fidelity. Okay. And then I just buy, I transfer money over in my bank and I just buy that index fund. Right. VTSAX. Absolutely. And that's how many companies? It's like 3,600 companies. About 3,600 companies. Right. It varies but it's every publicly traded company in the country. Okay. And it's about 3,600. Now why are index funds so popular? Well, first of all, they've become more and more popular and I don't know that they're so popular. They're not dominant in the market. But because this is something that Jack Mogel created in 1975, that's when he started vanguard. And he created the first index fund that retail investors, little people like us could actually buy. And the idea was that the research had indicated then and it's been confirmed over the 50 years since that active management, which is paying someone to try to pick the stocks that are going to outperform out of those 3,600, typically doesn't work. And especially doesn't work over the long term. So research says active managers in a given year, somewhere between 25 and 30% of them will outperform the index. But you got 5 years that drops to, I don't know, 10, 15% by 10, you got 30 years. It's less than 1% statistically zero. Okay. So let's talk about this idea. But I just want to double click on that a little bit real quick. So Jack Mogel, this guy in 1975 has this theory, hey, if you hold a large sum of these American publicly traded companies, you will see better returns than all those guys that you see in the big short and those fancy Wall Street Rose. You will actually outperform those people over time. Now all I got to say to you is this, you obviously were working in corporate America during the 80s, the 90s, the 2000s. This guy in 1975 has a theory. There's guys right now in 2025 that have a theory. So this Jack Mogel guy, he's your Messiah. What made him your Messiah? Okay. question. So 1975 just coincidentally happens to be the year that I first started investing. And I had never heard then of Jack Bogle or Vanguard or index funds. And I would not have been wise enough to embrace the idea if I had heard of them. And the reason I know that is because in 1985, 10 years later when I did, I wasn't wise enough then to embrace them. I was an active stock picker. I was pying actively manage mutual funds that were run by active stock pickers. I thought that was the way to go. Right. And it took me another active stock picker means guy in a certain tie and he's buying and trading based on what he sees on the little ticker thing. Or in a sweatpants in his in his mother's basement today. That's sure. Yeah. It's it's but he's a smart guy. You sometimes but they can be exceedingly smart. But it's a game that that is almost impossible win long term. And I played it for a number of years and pretty successfully one thing you need to understand is actually I achieved financial independence being a stock picker and by extension buying mutual fund me finished buying mutual funds that were run by stock pickers. So it's not like it doesn't work if you do it well. The problem is it takes a lot of effort index investing takes virtually zero and it doesn't work as well. So if I had embraced indexing in 1975 I would have saved myself a lot of effort, a lot of work and I would be much further ahead of the game than I am today even though it worked out pretty well for me. Look I need to grill you a little bit more. Let's just grill it. Let's just let's put you on skewers right now and let's grill it because if this is the moment to hold someone to the fire it's a man named Jail Collins who has been Wisconsin. I'm feeling I'm feeling toasty already. So Jail well I mean just give it to me straight up. What are the returns on VTSAX year-to-year? What are they? Oh what a question that is when I was doing the first edition of the Simple Path to Wealth in which came out in 2016 right so I'm doing the final touches on 2050. Nice round 40 year period of time since when I started investing in 1975 I then you know I had to go and look that very thing up and when I did I was a little bit horrified because the results said that on average it had returned over that 40 year period 11.9% that is a stunningly high number and it was not a number I was prepared to put in the book and suggest that anybody could rely on for their future planning but nevertheless that was what the market returned over that 40 year period and this by the way was not some golden age I actually wrote a blog post afterwards called Time Machine in the in the future return of stocks and the conceit of that blog post is I'm sitting around with some friends in 1975 around the campfire. I mean somebody says hey this guy Jack Bogle just brought out this index fund and I wonder how that's going to work and I'm like I'm just back from 19 or 2015 my time machine I could tell you exactly what happened and they go through all the wars the stagflation the market crashes you know black Monday and 87 the tech crash you know the 0809 debacle and everywhere on the campfire is like well glad you told us that there's no way we're going to be investing in this index fund let alone the stock market and of course the catch is that yeah but if you had almost 12% a year fast forward now with the new edition out 50 years good thing to look up again 10 years ago by the way everybody including Jack Bogle was saying you know returns have been so good you got to expect the next decade is going to revert to the mean and maybe expect like 4% exactly oh it was a great decade and most people listening to us are aware that it wasn't a smooth easy decade it had a lot of challenges and yet it was strong enough that it pulled that ever jump over 12% a year for that 50 years just 12.2% well you got to stop this is what I don't like you're just being so calm and you're telling me everything's going to be okay and if you don't get it every morning I check my phone and things are bad and you're not embracing that that's number one okay so this kind of like lullabidacy is not the energy I need this little this book over here with Christopher Robin going to the 100 acre wood you don't fucking get it democracy's at stake World War 3 is about to pop off and the world is about to fucking crumble that's number one and you're not embracing that number two you don't want me no I don't need you to push back because really what I'm doing is I'm channeling the energy of every heterosexual man that's in their 20s and 30s you want me to be happy with the measly 12% on average return when I need to come up now I need to come up now look at these returns if I if I was dumb and I invested in VTSA I actually get 12% but look if 10 years ago I go all in on the real stuff that makes the return I just all I do is I hold fang plus Nvidia meta Amazon Apple Netflix Google and Nvidia I would have gone up 713% 873% 633% 1,268% JL had I put my $3,000 into Nvidia I would have gone up 26,200 and 9% in 10 years so fuck your 12% JL that's amazing and if you had wings you could fly so what crystal ball did you have 10 years ago that told you that I don't I just oh oh oh oh I don't have one oh oh well yeah obviously if you knew that was going to happen if I knew the Bitcoin was going to go from a penny a coin to $100,000 I would have sold everything and gone into Bitcoin the thing is you don't know that's going to happen and there's a lot of stocks that looked every bit as promising as those that you put up 10 years ago that flamed out and went to nothing you would have wound up broke here's a quick story when I was dating my wife yes okay she'd never been to the horse races before okay my dad was taking me to horse races when I was five yeah and I was going with some clients and and their wives and girlfriends and so I invited her to come along I she didn't want to come you know I've never been they just come along it'll be fun nice people yeah you know well how do I bet on the horses I said I don't know bring $20 you're gonna lose it anyway you know and then pick the horse that looks good you like the colors you like they're whatever it is because you're gonna lose your money it doesn't matter yeah so we go she looks at the program and she picks this horse randomly very long odds you know like 30 to 100 but you've already established the premise right take 20 bucks you're gonna lose it but do it just for the fun it's got zero chance of winning this horse right and and your beautiful wife she is having a vibe she feels like that particular horse is right right I don't remember why okay but nevertheless that's what she put her $2 on I figured okay this is gonna be her first lesson in reality so we're down at the wire we're at the fence we're watching the horses come around into the final stretch and guess what old paint or whatever it was comes from the back up in the outside and wins say and she is beyond excited amazing she's jumping up and down and we shut us down just a little bit she turns to me and she says why didn't you tell me to put my whole $20 on that horse I said Jane because I didn't know it was gonna win if I known it was gonna win I'd have mortgaged the house you don't know which horse is gonna win but I do know that VTSAX will reliably make me wealthy and 12% a year compounded over time 8% a year let's be much more conservative compounded over time is an extraordinarily powerful thing what about you know all jokes aside the reason why I put up Facebook, Apple, Netflix, Google, Amazon and video is a gut feeling what about that gut feeling you know technology is something of the future so why not kind of spread it across the just the tech sector why hold it over 3600 companies when tech is kind of carrying the majority of it anyways yeah so that's a great question so an index fund today like VTSAX is well it's always capweight and that simply means that the larger the company the greater percentage of the fund it represents so right now as you point out tech tech companies have done great and so it is heavily loaded with those companies and one of the criticisms is that you know it's really just a tech fund now because the performance from VTSAX has been over the last I don't know how many years has just been because of these these magnificent seven that's absolutely true but that's a feature not a bug because one of the few advantages being an old guy like me is that I can remember it wasn't always tech companies at the top I can remember when it was financial companies I can remember when it was energy companies I can remember a time when it was consumer staples because that top sector rotates I have no idea how long tech is going to dominate just like I don't know how long Google is going to is going to be a powerful company but what I do and I don't have to worry about it because if and when it rotates out I will own whatever comes up to replace it because that's the beauty of an index fund it's a process that I call self cleansing it applies to the individual companies so when Sears fell on out to hard times and rotated out I didn't have to worry about it because I already owned the Amazon and and the Walmart and what have you they were coming up self cleansing means as the poor performing companies fall out of the top 100 and then the top companies now. Right. So you're always holding the leaders of the pack. And here's the rig part of the game, right? If you have a stock that fades like Sears, what's the worst, worst that can happen? Absolute worst is lose everything, 100% as Amazon comes up, what's the best that can happen? Can it go up 100%? Yeah. 200? Yeah. 300? A thousand, 10,000%. Or as we see within video, 26,000. Yeah. So it's and then you own those regardless, but the problem is you don't know which of those companies is going to is going to do that because you don't have that crystal ball we talked about earlier. But you don't have to know because if you're on the index, you're on the problems here, which is number one, I don't have the crystal ball. Nobody does. But number two is I also because of my internet addiction, I have the memory of an earthworm, but I do see a lot of news stories every day before I kiss my spouse. And one of the things that I've been heavy in in both my group chat and the news is crypto Bitcoin has had a 82% year over year for the past 10 years. We know what's going on with the US Federal Reserve and the United States. Why not start allocating some serious capital into Bitcoin? So it depends on whether you're a speculator or an investor. Well, in this case, I want to consider myself to be an investor and I'm asking you, is Bitcoin a good investment? No, it's a speculation. J.L., I don't, I mean, I love you, man, but you're going to get lit up on the internet. You need to not say this. Well, I'm sorry, but you asked me the question, I can only give you the answer I have. So let me explain to you what I mean, right? So Bitcoin, as I said earlier, if you bought Bitcoin 10, 15 years ago, you've just done magnificently, well, I mean, who wouldn't want that? I wish I'd done that. I, I didn't and still haven't, right, but that's not the question. The question is, where does it go from here? It's at a hundred thousand or somewhere. Right now we're talking to that a hundred thousand and when I was talking to Du Bois in the group chat, it was at 13,000. Yeah. And look at me. Yeah, but that was then. This is now. So where does it go from now? Where's it go from here? We're now getting in front of J.L., and that's what you're not understanding. When I live with regret and they're roasting me and they have laser eyes and like, you dumbass, you're out here podcasting and doing ad reads, when you could have gone all in on Bitcoin and 10x that. Yeah, I think you've confused me with your psychiatrist. I can't, I can't help you with the fact you're being made fun of all I can, all I can tell you is that when you look at Bitcoin, it's a speculation. So it's not a currency. It's way too volatile to be a currency, a currency requires stability. That's why inflation is such a bad thing and deflation for that matter. If you can't rely on a currency having a fairly consistent value, it doesn't work as the medium exchange for goods and services. And maybe crypto will get there at some point, but right now it's not. Okay. All right. So it may, let me finish the thought. So it's a speculation in the sense that like buying gold, like buying exotic cars, collector cars or artwork or anything like that. When you buy crypto, you are saying, I am hoping and expecting that somebody at some point in the future will pay me more for this than I paid for it. In the case of Bitcoin, that's been a pretty good bet. Although it's been a very wild ride, if anybody who's actually tracked it, you had endured some pretty dramatic drawdowns at various points. But nevertheless, that has worked out. Not all speculations work out, just like your list of companies up there, right? They don't all work out. You don't have a crystal ball. You don't know where it's going. That's a speculation and investment, something like BTSAX, which is in all those public graduated companies, those companies are all filled with people actively working to produce and provide products and services for people who want them. And if they do it well, they will make money doing that. And as part owners of those companies, we benefit from that. They are creating wealth. They're not relying on somebody saying, yeah, someday in the future, maybe somebody will pay me a little bit more for General Motors. What they're saying is General Motors, if they operate the company well, will continue to make products that people want to buy and they will continue to build value and make profits doing that. And that will cause the stock price to go up. And if they don't do that, then they fade away and they're replaced by Toyota or Tesla or whoever. Hey, it's Julia Louis-Dreyfus from The Wiser than Meat Podcast, among other things. And I've got a little holiday wisdom for you. This thing during the holidays means lots of cooking and that means your trash is going to be full of smelly, rotting food, yuck. So here's the wisdom. Get a mill food recycler. I did. We've had ours for years and it has totally transformed our kitchen. It's unbelievable how much cleaner everything is now, plus it's so easy to use. You toss in basically any food you don't eat, peels, pits, meat, dairy bones. Next year we put in a whole turkey carcass, really. While you sleep, mill automatically dries and grinds all your food waste down to about a fifth of its size. That means at night you can fill it after a big, elaborate dinner and by morning they'll be room for breakfast. Nothing rots, nothing stinks, no fruit flies. And my favorite part, no more of those gross, drippy, mid-dinner garbage runs. If you want a cleaner, calmer kitchen this holiday season, go to mill.com/wiser for an exclusive offer. That's mill.com/wiser. Happy hosting. I have a buddy, his name is Prashant and Prashant listens to a lot of podcasts and that means he has to be smart and you've met him. He sent you an article recently that the S&P 500 could be its own bubble. Check this out. This is pretty recent. Bank of America's as growth stocks are in a bubble exceeding the.com and nifty-fifty eras and warns they could take the S&P 500 down 40%. What should I say when he sends me and you articles like this that hey, the S&P 500, VTSAX, that could be a bubble and that could crash. So the first thing you should say to him is, have you read the simple path to wealth? Because if you had, you will understand that that is a, crashes like that are a perfectly normal part of the process. There to be expected. Since I've been investing and it's been 50 years, God help me. But there have been three of them that have gone down more than 50%. What are the three? That happened. There was 1974, which is actually the year before I started, but it bled over into 75. There was a tech crash in 2002 and there was the debacle in '08 or '09. The crash went down, I think 46% and 56% and '08 or '09. And of course, every way I thought the damn world was ending and it didn't. But if you're an invest in stocks for long term, you never know when those things are going to happen. We thought they were going to happen in COVID. Some people think they're going to happen triggered by the tariffs. It didn't happen with COVID, who knows about the tariffs. But you're never going to know for sure when they're going to happen or how long they're going to last. You have to tie yourself to the mast and use the opportunity while you have it to acquire shares at bargain prices. You'll warn Buffett said one time that every now and again, there's going to be really dark clouds out there and it's going to be raining gold. And you want to be out there filling your buckets. Because that's the opportunity to buy it at the best possible prices. But the thing is, we don't know exactly when that's going to happen or where those prices are. Really what I'm hearing from my friends, even though they've read the book, there is an underlying fear of the present moment. You don't get it. This time, it's different dot org. Right now, Donald Trump is president. He may become president for a third term. World War III may pop off. AI is going to take over. We're going to have even greater depression, the greatest depression of depressions, the greatest depression of all time. And that's why I need to maybe consider not putting my money into VTSAX or investing at all. What do you say to those people that say, this time, it's different right now. There's no scarier time to be alive than right now. So let's take a real life, very recent example of that, right? COVID. Yes. Just a few years ago, my social media, my blog was lit up when COVID hit. Yes, of course. And they were saying, pretty much what you just said, they were saying, jail, I've read this simple path of wealth, I accepted, I buy it 100%, but truly, truly jailed, this time is different. It is different. This time is people are dying. Airborne virus killing old people. Yeah. People, people are dying, right, and not only that, but countries are shutting down their economies completely. This time, surely it is different. Right. And what I said then, and I say now, is that yes and no. This time is different because anything that triggers a crash is by definition. different. It's especially tragic that people were dying, but it's not different in what the market is going to do. The market is going to react, it's going to panic, it's going to crash, and then, and sometimes this takes, well, in COVID case of COVID, it took a matter of weeks, but more often it takes months or sometimes even years. It turns around and it continues to set record highs. You can look at any chart of the market's performance over 100 years. You can see this. You can see it in the great depression. So the trigger is always different, but the pattern is always the same. Now, the next question is going to be, well, Jay, what if one day it's not? Yeah. All right. Well, let me finish. Let's suppose that, you know, COVID killed a million people in the US, tragic number, but they're 330 million people in the country. Very small percentage. But let's suppose COVID had been much worse. Let's suppose COVID had been like the black death in the Middle Ages. Let's suppose COVID has killed 50 or 60% of the population worldwide. Oh, my God. I mean, that would be crazy. That would be a civilization ending event. Right. And absolutely at that point, the simple path to where wealth no longer works, but neither does anything else. It's not going to matter at that point where your money is. Our problems will be so much beyond where we are invested. So you have to look at it. You say, do I structure my investment portfolio or try to against that Armageddon kind of event? Or do I structure it for the 99% chance that it's not going to happen? Okay. In 1963, I was 13 years old. It was Cuban Missile Crisis. Yes. As far as we know, the closest we've ever come to a nuclear war, civilization ending event, you know, the US and the Soviet Union start throwing nukes at each other. It's game over. Nothing financial is going to work at this point. At the time as young as I was, there were two commentators on TV. And the one guy was saying, you know, this really looks like it's going to happen. And I'm getting out of the damn market. It's going to be terrible. And the other guy said, you know what? I don't know. But I'm buying. And the reason I'm buying is because prices are down. And if they start throwing the nukes, if that happens, then it doesn't matter. Got it. If they don't, the market's going to recover and go to great things. What's interesting is that I've felt that before too. Let's talk about that guy. The guy who goes, I'm buying the dip. So what if I just time my life that way? Oh, it's down. Let me dive in. Yeah. Then when it's up in sky high, I'm out. I'll sell. Yeah. Right. And then let it dip again. So almost play double Dutch. Oh wow. What a great idea. Why did I think of that? So here's the problem. How far is down? I just, I know when it says it's, it's crashed in dozens of percentage points on the news. Yeah. But when does it turn around? How high is up? Right. I mean, the problem is you don't know that. So let's look at COVID again, right? So COVID starts dropping. And it, it crashed pretty quickly. And it dropped as I recall, like 33% in a matter of days or a week anyway, right? Nobody, including me, saw that it was going to immediately turn around. Yeah. But so if you were planning on doing what you were just describing and you're watching that dip in COVID, do you pull the trigger at 30% or do you say, no, no, it's going to go lower. And if you wait too long, then you miss it and it goes back up. And if you miss the right in 2023, yes, you wrote a blog post called why your house is a terrible investment. And then you hit publish half the internet turned on you. Two questions. Number one, why do people get so worked up about this issue? And number two, why is my house a terrible investment? So actually, I wrote that post originally in 2015. And the team updated it in 2023, I guess. But your house is a terrible investment because it's basically is not an investment, right? You shouldn't think of your house's investment. Sometimes it works out, it goes up in value, but it's a place to live. It's a lifestyle choice, right? So you need to separate in your mind what an investment is and what a house is. So, you know, when you invest in a house, you're taking on enormous expenses, you've got your mortgage, which everybody thinks of and they say, oh, you know, I can buy this house and the mortgage is no more than my rent. And they're forgetting conveniently about, well, there's real estate taxes, right? And then there's all the maintenance and repairs on it and you're going to buy the house and not remodel the kitchen. You're never going to remodel the kitchen in your apartment, but you know, very few people buy a house and don't start immediately changing it. You're going to buy furniture for it. You're going to buy appliances for it. It's never ending. And all that's fine. You know, monies can be used for a lot of things. I've owned houses most of my little life. I'm not saying, don't own a house. Don't confuse yourself thinking it's an investment. Your house and my house are both actively trying to return to dust in the earth, right? And we have to spend copious amounts of time and money preventing that from happening. But what about, I'm building equity. Why should I give that money to a bank? And what about the idea that what are you telling millennials to do? Just own nothing. Millennials and Zoomers should own nothing and let BlackRock have all that money. Oh, I'm not saying you should own nothing. I'm the thing you should own asset. You should own VTSAX. You know, my daughter, you really believe you're telling everybody on the internet right now that's my age or younger VTSAX and rent. Yes. And that's why I tell my daughter. And that's what she's doing. She's in her early 30s. She just quit her corporate job last fall. I don't know if that's permanent or if it's just a temporary ice, but she at least has fuck you money the way we defined it earlier that she can make that kind of bold decision because she didn't make any silly decisions like buying a house and becoming house porn being dependent on the paycheck to pay for all of those things. So yeah, building wealth is your key goal. Then no, owning a house is not going to contribute to that. If on the other hand, you want to own a house because it'll provide a certain lifestyle that you're you find desirable, maybe a yard for your kids or whatever, then that's great. That's a lifestyle decision. It's not a financial decision. Don't confuse yourself. I want to close this out with a very simple story that you open the book with. It's the parable of the monk in the minister. Right. I think there's no better way to end this conversation than with that parable. Can you take me through that just to refresh me and the audience? What is the parable of the monk in the minister and why is that so important given everything we've talked about? Yeah, and given our conversation, I think it's a great great one to end on and I didn't know that's where you're going to go. So the parable basically says, you know, they're two boyhood friends. And years later, they they've lost touch and they they meet on the road. And one of them has become a humble monk and the other has become a very rich and powerful minister of the king. And they're catching up, you know, old times and what have you. And while they're they're having this conversation, the minister of the king is feeling kind of bad for his his humble monk friend and his tattered robes and his begging bowl. And at one point, trying to help he says to him, you know, if you could learn to cater to the king, you wouldn't have to live on rice and beans. To which the monk replies, if you could learn to live on rice and beans, you wouldn't have to cater to the king. And that's the spectrum. And I think there's a lot of life satisfaction and power, frankly, in being closer to the monk than the minister. Jail, money and finances have been something that were oftentimes fear inducing and very painful for me growing up. And I happened to learn about you through this amazing book. And it felt like when I was reading your book, you became my friend. And then I got to be your friend in real life. So I just wanted to say, thank you so much for writing this book and being my internet friend and not my real life friend. Well, thank you, Asun, for having me on the show. It's it's I've really looked forward to this. And I am honored to be your friend as well. It's it's it's wonderful to have you in my life. Thank you so much for doing this. Yeah. My pleasure anytime. Man, you're tough. Damn Collins, ladies and gentlemen. Holy shit, I feel like I've been beaten with sticks. Have you subscribed to Lemon Out of Premium yet? You can listen completely ad-free and get access to exclusive bonus content you won't hear anywhere else. Like my discussion with Malala on how therapy changed her life or my convo with Mel Robbins on how her let them theory applies to parenting. Tap subscribe on Apple Podcasts or head to LemonOutofPremium.com to sign up on any app that's LemonOutofPremium.com.