Dentist Money Reads the News – Episode #348

Can you really know what’s best for your financial health when the media skews the truth to improve ratings and generate more clicks?

On this Dentist Money™ Show, Ryan, Matt, and Jake introduce a new segment where they look into current financial news and uncover trends that can make a difference as you navigate financial decisions.

 

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Podcast Transcript

Ryan Isaac:
Hello everybody, welcome back to another episode of The Dentist Money Show brought to you by Dentist Advisors, a fee-only fiduciary, comprehensive financial advisor just for dentists all over the country. Check us out at dentistadvisors.com. Today on the show, we’re starting a new segment, and we would welcome and appreciate your feedback on how you felt about this. Was it helpful? Was it entertaining? Did you laugh? Did you cry? Did you just scream? Did you have opinions about it? This segment is going to be affectionately known as Dentist Money Reads the News. So today, Matt and Jake come on the show. And we each pick a headline and article from financial news and we’ll read it. Here’s the hope. Current Events and current news stories are always interesting because they’re current, but we pull some principles and some kind of teaching moments and some opinions out of these that if you’re listening to this years from now, you could still apply these principles to your decision making process in your financial life and hopefully, it leads you in a great direction.

Ryan Isaac:
So thanks for tuning in. We’re excited, we had fun recording this, and we just really had a good time. Thanks for being here and listening. If you have any questions or you wanna chat with us to get your financial life on track, go to dentistadvisors.com. Click the Book Free Consultation link, and we’ll have a friendly chat with you and point you in the right direction. Again, thanks for being here. Enjoy the show.

Announcer:
Consult an advisor conduct your own due diligence when making financial decisions. General principles discussed during this program do not constitute personal advice. This program is furnished by Dentist Advisors a registered investment advisor. This is Dentist Money. Now, here’s your host, Ryan Isaac.

Ryan Isaac:
Welcome to The Dentist Money Show, where we help dentists make smart financial decisions. I’m Ryan. I’m here with Matt. You know Matt, and we’re back again. We’re here with Jake, Jake Elm from Dentist Advisors financial advisor extraordinaire. Matt and Jake what’s up, guys? Thank you for joining us. What’s happening?

Matt Mulcock:
Yo, Ryan, good to be here. I love these panel discussions.

Ryan Isaac:
I like the panels…

Jake Elm:
Its great to be here.

Ryan Isaac:
We gotta get the… I mean, there were not anything to look at, but we should get the video. I feel like the video should come out.

Matt Mulcock:
Some of us are something to look at. I’ve always been told I have a face for radio, whatever that means.

[laughter]

Matt Mulcock:
I don’t know. I’m always like, “Thank you.”

Ryan Isaac:
I have a post-Top Gun mustache going a little bit. It’s not full on.

Matt Mulcock:
You do. It’s very Miles Teller.

Ryan Isaac:
It’s not full on, and I’ve been told mostly by my wife that you’re not supposed to grow a mustache with a bald head but…

Jake Elm:
I think it’s fine. I think that’s great.

Ryan Isaac:
It’s a little on the creepy side, apparently. [chuckle] But I just don’t drive by schools too much when I have one so…

Ryan Isaac:
Yeah. [laughter]

Ryan Isaac:
Thanks guys for being here. We are… [chuckle] We’re pilot testing a new Dentist Money Show format. And we’re… I’m excited for this. I think this is gonna be kinda fun. But for those of you who are joining us, join us in this journey of exploration and discovery. [laughter]

Matt Mulcock:
We haven’t even told, I don’t think anyone that edits this. Like we haven’t told…

Ryan Isaac:
No, they don’t know. No one knows.

Matt Mulcock:
The producer, we haven’t told anyone. We’re just like, “We’re just doing this. We’re just doing what we want.”

Ryan Isaac:
We’re just gonna do it, and if… Like, this would be a time where the feedback would be cool to hear. So here’s the thinking behind it. This episode, I mean, the intro is already gonna play before all this anyway, so you’re gonna have an idea, but this episode is gonna be…

Matt Mulcock:
They probably had to turn it off by now.

[chuckle]

Ryan Isaac:
It’s already gone. They skipped it. It’s gonna be called Dentist Money Show Reads the News. And so here’s the thinking, over six years as we’ve done this podcast, we tried really hard to create what’s called evergreen content, which is a fancy way I was told by other people, that just means like, you could listen to it three years later, and it’s still relevant to your financial decision making or education later in the future. Where that kind of leaves us a little bit unsatisfied sometimes is often, we want to talk about current events and the news because it’s fun and it’s relevant, but if you just talk about news headlines, and then it’s years later, it’s not as helpful of an episode for people to read a lot of times. So here’s the experiment for everyone listening, and thank you again. We are going to… We each pick… Dentist Money Show Reads the News, and we each picked a couple of articles out of financial news. We tried to find some headlines that… I mean, I would love if they were provocative. I would love if they were spicy. I think it would be…

Matt Mulcock:
We got Jake here. So you know it’s gonna be spicy. Come on now.

Ryan Isaac:
Jake’s… Yeah over under is here. He’s got some hot takes with us. I would love, over time to find blog posts and articles that are actually contrary to the things that we talk about and teach. I just think that’s fun to give the different opinion and perspective and then discuss it respectfully. Unless it doesn’t deserve respect, then you don’t have to give it respect. You can just bash it if you want… [chuckle]

Matt Mulcock:
Wait, and then we could post the title of our podcast could be like, Matt and Ryan and Jake destroy…

Ryan Isaac:Yeah.

Matt Mulcock:
Just all the crap that you always see on YouTube.

Ryan Isaac:
Destroy Yahoo News.

Matt Mulcock:
Yeah. Destroys Yahoo News.

Ryan Isaac:
Dentist Money Show destroys Yahoo News. Destroys the NBC.

Matt Mulcock:
I feel like those are always like the… They are always the headlines.

Ryan Isaac:
Yeah, click the to find out the seven ways they destroyed Yahoo News. Yeah, so today we’re gonna kind of panel discuss some news topics that we think are gonna be relevant and what will keep this evergreen is to try to apply a principle to it. Pull a principle out of it, give some opinions and apply a principle to it, like something actionable that a dentist can think about or actually do in their lives to make better financial decisions. Let’s kick it off then. These are news articles from around… I don’t know where you guys found yours. I found mine… Honestly, I just pull up my finance app on my iPhone. And every day there’s articles that are catchy and headlines kinda grab your attention. And some of them are nuts and they contradict each other, like, “Today’s trades are… They’re terrible. They’re in the toilet.” And then like, the next one’s like, “Today’s the best day for trading.”

Jake Elm:
Yeah, well, it’s like the market is down this much, and this is why it’s down. And the next day, it’s like, “Oh, the market is up this much. And this is why it’s up.”

Ryan Isaac:
And this is why.

Jake Elm:
And it’s the exact…

Matt Mulcock:
They just apply a reason to it.

Jake Elm:
Yeah. It’s the exact opposite of what it was…

Matt Mulcock:
Totally that… Yeah.

Jake Elm:
Yesterday. Yeah.

Matt Mulcock:
Yep.

Ryan Isaac:
I’ll kick us off. This is the one I found. The unfair side of this is this has been in my head a little bit longer than Jake’s, for example. So I’ve got… [chuckle] I’ve got like, a whole browser full of these that I have been saving. So that’s not fair. Sorry Jake.

Matt Mulcock:
As opposed to Jake, where we’re like, “Hey, man, you wanna hop on today?”

Jake Elm:
I’m gonna give you something different. It’s great.

Ryan Isaac:
Yeah, thank you. So I’ll kick us off here. This is the one I found a few weeks ago. This, [chuckle] funny enough, it’s from Yahoo News, but they do a good job, Yahoo Finance. This one is titled The Democratization of Investing. Index Funds Officially Overtake Active Managers.

Ryan Isaac:
Here, let’s do this really fast. Any first impressions on title, headline, anything jump out or grab you from title or the headline?

Matt Mulcock:
I think it’s a pretty fair headline.

Ryan Isaac:
What do you think it’s gonna be about, or do you know, and is that surprising to you? Is that like a surprising headline or if you read that you’d be…

Jake Elm:
No, I’m just more intrigued on what it is, is this an anti index fund take or an active, or an anti active manager take, I’m just intrigued by what the content is here.

Ryan Isaac:
Okay.

Matt Mulcock:
Or is it just objective news? I also wanna know what are they factoring in when it comes to like, this always gets conflated, this whole idea of like indexing versus active. It’s like, are you talking about the funds themselves, the participants in the funds, or like, there’s a lot of nuance to that.

Ryan Isaac:
Cool. Okay. So this article, this is why I thought this was kind of fascinating for the first time in history… And this is from, it’s this year. This was May, this shows how long I’ve been thinking about this little format. Sorry, Jake. I’ve had time to prepare. [chuckle] So this is from May, 2022. For the first time in history, retail investors, index fund holdings exceed their holdings in actively manage funds according to new numbers from Morningstar direct. So what this means, for listeners out there, an index fund is a type of mutual fund or ETF, just a collection of stocks that just tries to mimic an index. So a famous example of an index is the S&P 500. 500 biggest companies in the United States. And you can’t buy the index. The index is like a, it’s not, it’s a private company. Like it’s a private research firm basically. It’s basically what it is that just says, here’s this basket of stocks that represents a chunk of this economy or stock market and…

Matt Mulcock:
And it’s always changing.

Ryan Isaac:
It’s always changing, we’re adding, we’re subtracting and taking things away from it, but it represents this chunk and we’ll just kind of like, here’s what it’s doing, but you can’t go to that company and buy it. You have to go to other companies and buy their products that mimic this index.

Ryan Isaac:
And I think that might be new for some, familiar for a lot of people, but for the first time in history, that type of mutual fund or ETF, which are basically the same thing, just traded a little differently, they outweigh actively managed funds in people’s portfolios. And an actively managed fund would be a fund where instead of mimicking an index of like the same 500 stocks, basically, they’re going through some formula that they’ve got and they’re trying to actively pick which ones they think will outperform. And some active funds are very active. Like they’re removing and adding funds like every day, like very active trading, and then some are a lot less active they’re…

Matt Mulcock:
And some are closet indexers, they are active and charge you a higher fee, and then just follow the S&P.

Ryan Isaac:
Some are closet… Some are closet active managed funds that say they’re indexing, but they’re like, kind of play…

Matt Mulcock:
Yeah.

Ryan Isaac:
There’s like that middle ground too. So you brought up a point, Matt, it would be interesting to know how they exactly ranked this Morningstar, but Morningstar probably has it right. So here’s a little bit data. And so this was just like for the first time ever this happened, so as of March 31st, retail investors had 8.53 trillion invested in index mutual funds while $8.34 trillion was in actively managed funds. Now this also makes me think they keep saying funds, like mutual funds. So this makes me wonder if they don’t also mean ETFs.

Matt Mulcock:
ETFs.

Ryan Isaac:
Maybe that’s not included for some reason, which I think might be a bigger world now.

Matt Mulcock:
And this isn’t even counting, I’m guessing like active people in individual stocks, right, just funds?

Ryan Isaac:
Yeah. This is funds. Yeah. And it’s probably mutual fund because I think mutual funded is probably bigger and more. But so check out some of this stuff. In 1993, when Morningstar first started tracking the active versus index kind of ratios, active funds had 60 times as much assets as index funds. That’s in ’93. It was $1.5 trillion versus $21 billion. That was like 1993. 10 years ago, index funds were a third of that. So they were kind of increasing, but then this year, by the end of last year, they were slightly under. And then by this year, 2022, index funds now outweigh actively managed funds. Here’s a question for you guys, when you get new clients that come to Dentist advisors as many do, and they say, Hey, I’ve got these portfolios in a bunch of random spots. And we take a look at them and like, what should we do? What’s our strategy moving forward with you as my new advisor? What have you guys noticed with the mix of people’s active versus passive or index funds? Like, what’s your observation from that, what’s your take?

Matt Mulcock:
Yeah. I usually see some type of mix between the two. Like if I have, if I gave you like a general, just like a general profile of someone, of their portfolio and they show up and they’re like, Hey, what do you think? It’s usually gonna be some type of S&P 500 index in some form or fashion, most likely.

Ryan Isaac:
Yeah, almost always. Yeah.

Matt Mulcock:
And then they’re gonna have like random, like kind of like active funds intermix. That’s what I usually see.

Ryan Isaac:
Like laid on top of it, yeah.

Matt Mulcock:
Laid on top of it and then I’ll usually pull it up and you’ll see a lot of like parallels between the two. They’ll have like three or four funds that all do the same thing, basically.

Jake Elm:
Yeah. That’s the funny part too, is like, they’ll have a S&P 500 index fund, and then they’ll have these individual whole things like apple or Amazon or something.

Matt Mulcock:
Yeah. Amazon.

Jake Elm:
Which is basically what the S&P 500 is anyway. So it’s a lot of overlap in these.

Ryan Isaac:
It’s like double dipping on it.

Jake Elm:
Just because what’s outperformed these last couple of years are these big, large tech companies. And so everyone’s trying to chase the performance by having those overlapped in their account.

Ryan Isaac:
Okay. Another follow up question I’m just thinking of. When you do go through this exercise and those funds are always more expensive. How aware are people, how much more expensive they are? Like how aware are people of the expense ratios? Never?

Matt Mulcock:
Never.

Jake Elm:
Never.

Matt Mulcock:
Never. They don’t even know what that, what it really means. I’ve seen some, they don’t, you don’t see ’em as often, but I’ve seen some with loads, like with like backend loads, either like ABC share, like they’ve got either a, like 12b-1 fees. Like you’re not seeing these as much lately, but like, I still see ’em.

Ryan Isaac:
Oh yeah. Matt’s talking about commissions. That’s all this means.

Jake Elm:
Yeah.

Ryan Isaac:
It’s like our industry came up with a hundred different ways to charge commissions and call them fancy names that people don’t understand, so they can keep charging commissions. What’s the look on people’s faces when you’re doing a Zoom call and you’re going over their old portfolios and you say here’s a fund that costs 0.05%. And here’s the one you’ve been owning that costs 1.93%. Is there a reaction or…

Matt Mulcock:
Oh.

Ryan Isaac:
Yeah.

Matt Mulcock:
Go ahead, Jake, if you have any thoughts.

Jake Elm:
I don’t have any extreme stories. I think I just have the good, like, oh my gosh. I did not believe that that was a thing. Thank goodness I’m getting out of this. Thankfully I have not had any, oh my gosh. I’ve been in this for the past 20 years. Like how much money I have missed out on. I haven’t had a ton of those, thankfully. But usually just, the classic relief, let’s get out of that. I did not know what was happening.

Ryan Isaac:
Okay. What’s the invitation here then? What, like what would you say after reading this article and mixing that with the experience of interacting with Dentist portfolios, when they come to us for the first time, like what’s your call to action for people? What’s your bumper sticker?

Matt Mulcock:
Know what you own and why.

Ryan Isaac:
Okay. Yeah. And why. When you say that, I’m always like, yeah, that’s such good advice. I wonder who actually cares about…

[laughter]

Matt Mulcock:
Yeah.

Ryan Isaac:
Like who, like there’s a few people who are like, yeah, that’s a fun exercise. I’m gonna go figure out like what I own and why, but I don’t think a lot of people care enough. It’s not interesting enough to people to like go spend time on it for most people.

Matt Mulcock:
For sure. There’s one other aspect to this that came to my mind immediately when you brought this up, Brian, I want to just touch on it really quick. So Jack Bogle I think it was like 1976-ish, something like that.

Ryan Isaac:
That sounds right.

Matt Mulcock:
When he came out with his first, like when Vanguard was created, right?

Ryan Isaac:
Oh yeah.

Matt Mulcock:
When it came out like the first index fund. It was like the 1970s.

Ryan Isaac:
Yeah.

Matt Mulcock:
So like we’re talking like… And he was mocked by the way. He was mocked for like decades. Right. So I’m just sitting here thinking like, man, 50 years, RIP Jack Bogle, by the way. But 50 years it has now taken for it to what you just said, like overtake sort of, or like have full adoption.

Ryan Isaac:
Or 50 to… Yeah.

Matt Mulcock:
And it’s kind of amazing.

Ryan Isaac:
Half and yeah. I mean, it’s basically half and half this point, barely skewed for index funds, yeah.

Matt Mulcock:
But like, to be a point now where it’s like relatively mainstream.

Ryan Isaac:
Yeah.

Matt Mulcock:
To say you’re like a low cost indexer.

Ryan Isaac:
Yeah.

Matt Mulcock:
It’s taken 50 years.

Ryan Isaac:
Half a century.

Matt Mulcock:
To get to that point.

Ryan Isaac:
If you’re listening to this, the invitation is, go look at your portfolio. That’d be a fun exercise. Is your portfolio 50/50 passive to actively manage funds right now? Is it skewed one way or the other, go check it out and then ask yourself like why and should you change it. And I think that’d be a good exercise.

Jess Reynolds:
Hey everyone. This is Jess Reynolds with Dentist advisors. As you know, we are passionate about giving dentists the education and resources they need to make smart financial decisions. We’ve brought you the Dentist Money Show podcast, which has been downloaded over a million times. And we’ve been providing dentists with a premier private wealth management experience for 15 years. Honestly, it’s been great. And now we’re adding to our lineup to help even more dentists get the financial guidance they need. Now, not every dentist is looking for the Cadillac experience that comes with our private wealth management service. So we have introduced a self-paced subscription based planning service called the dentist money membership. For a monthly fee, dentist money members get access to a suite of planning tools, including the innovative elements app, an investing portal, CE approved content and a lot of other cool members only benefits. Plus, as a dentist money member, you can pay for one-on-one coaching sessions with a CFP advisor on an as needed basis. To learn more about these features, visit dentistadvisors.com. You can get started right from the website or book a 15 minute demo just to see how it all works. That’s dentistadvisors.com.

Ryan Isaac:
Jake, what article do you have on tap for us today?

Jake Elm:
Well, you guys pick, I have two here ready to go. I have one about millionaires and their habits and another about cryptocurrency. What do you guys prefer?

Matt Mulcock:
Let’s save the hot take crypto for the end. I wanna hit the millionaire one.

Ryan Isaac:
Yeah. The millionaire one sounded really fascinating.

Jake Elm:
So this was going around Twitter yesterday or a few days ago, which is how I get most of my news. Finance [0:16:37.6] ____ There’s good pros and cons.

Ryan Isaac:
Yeah.

Jake Elm:
Anyway, there was this article, it’s from CNBC, of a guy who spent, he says five years interviewing 225 millionaires apparently, about their habits.

Matt Mulcock:
It’s weird. He never called me. [laughter]

Jake Elm:
I know. Where was our call?

Matt Mulcock:
Oh, you said millionaires.

Ryan Isaac:
Yeah, yeah.

[overlapping conversation]

Jake Elm:
: The b. Yeah, I didn’t say billionaire, yeah.

Ryan Isaac:
And Matt, these weren’t NFT billionaires like you.

Matt Mulcock:
Oh yeah, yeah, yeah, yeah. I just never got a call. Yeah.

Ryan Isaac:
These were just like regular boring ones.

[laughter]

Jake Elm:
So I just wanna get, he outlined basically, he said here’s the three things that he says every millionaire, every single one did. Okay. So I just wanna see what your take on…

Matt Mulcock:
Every single one?

Jake Elm:
He said every single one. Yeah. Here’s your case on what they did. Honestly, like if you agree, disagree…

Ryan Isaac:
And real fast before you list them off, I’m curious. Have either of you guys read the millionaire next door book?

Jake Elm:
I have.

Matt Mulcock:
I’ve read it, but a long time ago.

Ryan Isaac:
A long time ago for me too. And I’m just trying to think of what was their list…

Matt Mulcock:
Yeah.

Ryan Isaac:
Of, from the research. ’cause I was doing research too.

Matt Mulcock:
It’s been so long.

Ryan Isaac:
It was like own a dry cleaner, and don’t live in an expensive neighborhood.

Matt Mulcock:
Drive a Honda civic.

Ryan Isaac:
And drive a Honda civic. [laughter]

Jake Elm:
I always remember this, like the most common, what I remember from that book says the most common car used by millionaires is F-150.

Ryan Isaac:
Oh. Okay.

Jake Elm:
And so I, that’s always stuck in my brain.

Matt Mulcock:
It’s also the number one selling car in America for 35 years. So I mean… [laughter]

Ryan Isaac:
Okay. Yeah, go ahead. All right. Let’s hear these.

Jake Elm:
Number one. They automated and saved 20% net pay.

Matt Mulcock:
Ah, love that.

Ryan Isaac:
Wait, say it again. Automated and save 20% of net pay.

Jake Elm:
20% of net pay.

Matt Mulcock:
Oh, net pay.

Ryan Isaac:
That’s a hefty savings rate if it’s net pay.

Matt Mulcock:
That’s like, depending on your tax rate, that’s 30, 40% gross pay.

Ryan Isaac:
I mean, for context, what do we, I mean, it’s a blanket statement, but we tell people like, let’s just, let’s try to save 20% of your gross income for a couple decades.

Matt Mulcock:
Yeah.

Ryan Isaac:
And you’ll be… That’s a good chunk of money. So this is 20% of net pay and automated.

Jake Elm:
Of net pay.

Matt Mulcock:
Am I thinking about that the right way?

[overlapping conversation]

Matt Mulcock:
I’m thinking about it opposite.

Jake Elm:
We prefer easier ways to understand.

Matt Mulcock:
Yes.

Jake Elm:
You could do 20% of gross, but net is still…

Matt Mulcock:
Net is still good, but okay. So they’re saying… Yeah. I thought about it opposite. I’m calling myself out. So 20% of net pay.

Ryan Isaac:
Oh, I was too. I was thinking about it opposite too.

Jake Elm:
We both were, Ryan. That’s less than what we recommend.

Ryan Isaac:
That is less than 20, less than 20% of gross pay.

Jake Elm:
Because I think I actually saw a…

Matt Mulcock:
Hashtag math is hard.

Jake Elm:
I actually saw a statistic the other day that the national average savings rate right now, what we’re recording this August is about 5%.

Ryan Isaac:
Yeah. And that’s probably among…

Matt Mulcock:
Is that of net pay?

Jake Elm:
I can’t remember if that’s net or gross.

Ryan Isaac:
It’s probably among 55-65 year olds too. It’s usually the later category of ages that have that savings rate. And because it’s the highest.

Matt Mulcock:
So 5% is about the national average, if you can do 20%, really good, you’re above average.

Ryan Isaac:
Well, and that kind of makes sense too, because that’s for a general audience, we’re encouraging dentists to save more because dentists spend more and they’re gonna have to accumulate more in order to keep up that spending, unless they want to cut back lifestyle after all those years of working. So maybe for someone who doesn’t have quite the same spending habits, taxes, or debt as the average dentist does, that 20% of net, well, I don’t know what that would be. Maybe that’s closer to a 12 to something 15%.

Matt Mulcock:
Yeah, 10, 12%.

Ryan Isaac:
10%-12%. Yeah. Savings rate. And that’s probably, I don’t know if it’s adequate, but that’s probably, that’s a big number, clearly. It’s double the national average right now.

Matt Mulcock:
Hey, I think if you start that at 20 or 25, and you’re gonna do it, you’re gonna work for 40 years. I think 10%-12% actually…

Ryan Isaac:
It’s a lot of money.

Matt Mulcock:
Actually works. Yeah.

Ryan Isaac:
Especially over that long, that period of time. And the other thing that you mentioned, Jake, in that, that is so crucial is automated. And that’s why you should start automating, even if it’s not that ideal percentage yet, you need to start automating and in order to start automating, you’re probably gonna need some outside friction agitation in your normal process of money making decisions to force you to do that, if you’re not currently doing that already.

Jake Elm:
Yep. It says here in the article that typically most of these millionaires that were interviewed, about 10% of those savings or half of those savings went to, this is a retirement plan, employee sponsored retirement plan that was automated. Then the other half was on their own…

Matt Mulcock:
Which makes it easy, yeah.

Jake Elm:
The other half us on their own automated savings…

[overlapping conversation]

Ryan Isaac:
Yeah. Well, think about that. If half of that is going to a plan of some kind, then we’re almost saying that there’s gonna be easily another three to maybe 6% of salary match on top of that. Which would be gross pay, match of gross pay if those are going into a company plans with matches. So now we’re probably talking about maybe a 25 to 26% savings rate. That’s probably. Anyway, it’s higher, it’s higher.

Jake Elm:
So let me get to number two.

Ryan Isaac:
It’s higher. It’s cool. Okay. I like that. Number two.

Jake Elm:
Yeah. Let me get to number two, which is similar to the first one. So I think we…

Matt Mulcock:
Don’t get us going Jake. Don’t get us going.

Jake Elm:
We kind of agree on that one, which is great. I think it’s all kind of like that’s a good, I think we agree there. So number two is, they regularly invested pretty much all of it. So all of that 20% savings all went towards a business, stock market, real estate, other place to grow that money. They did not have money sitting in cash very often.

Matt Mulcock:
I think this is a key distinction. I love that they broke that out into two separate points. ‘Cause savings does not mean investing, right?

Ryan Isaac:
Yeah.

Matt Mulcock:
I think a lot of times people will be like, “Oh, well I’m putting away X number of dollars to save for this boat I’m buying this year.” It’s like…

Ryan Isaac:
Yeah, that’s spending.

Matt Mulcock:
No, those are two different things.

Ryan Isaac:
Yeah.

Matt Mulcock:
So the saving, what comes after that is you got to invest that money for it to really have an impact. If you just put money away in cash, you’re not gonna be able to become a millionaire.

Ryan Isaac:
Well in what we’re recording August 2022, what were the last inflation numbers that came out? I know we’re waiting for more.

Jake Elm:
9%.

Matt Mulcock:
Like 9.1.

Ryan Isaac:
Cash is killing you right now. If you’re holding more than you need to, which is a whole other thing, but okay.

Jake Elm:
Yeah. They did not hold a lot of cash is basically what he found is their cash was not there. Okay. The third one and last one, which this is the one…

Matt Mulcock:
I thought there was four.

Ryan Isaac:
Thought there was four.

Jake Elm:
Oh, there’s only three.

Ryan Isaac:
Bait and switch sales, you switched, dude.

[overlapping conversation]

Ryan Isaac:
I would’ve picked crypto if it was only three.

Jake Elm:
This is an overpromise underdeliver situation. I promised four and I’m only giving you three.

Matt Mulcock:
You pulled the rug out from under us, but okay. Let’s go with the third one. The third and last one. Sure.

Jake Elm:
The third is, but I think is a little more controversial. It says they were extremely frugal in that they did not spend a lot.

Ryan Isaac:
That’s very subjective.

Jake Elm:
Yes.

Matt Mulcock:
Yeah.

Ryan Isaac:
That would have to be defined, Rees Harper would geek out on that for an hour about…

Jake Elm:
He does not have a lot of defining characteristics here. He just said that they, their spending habits were extremely…

Ryan Isaac:
Now, I remember that from The Millionaire Next Door book, he made a, the author made a very big point of saying people who lived in neighborhoods where they were the little fish in the big pond, even if they could afford it, tended to have higher lifestyle expenses, because that’s how we operate. That’s how we behave. And those who chose, ’cause you do, you make a deliberate choice where you live most of the time, those who chose to kind of be a bigger fish little pond situation, which means buying, basically it means buying a less expensive house than you could on purpose. Which, who does that? [laughter] Especially the last few years. But it has a direct impact, just the comparison. Environment. Me and Matt talked about that the other day on another episode.

Matt Mulcock:
Yeah.

Jake Elm:
Yeah, can I…

Ryan Isaac:
Environment’s everything.

Jake Elm: Yeah. The reason I say for me, this is a little, I guess, controversial, I would maybe argue with this point is of course keeping your spending in check is crucial. We advocate for that. Always tracking it. You need to know what your spending numbers are, right? But I’ve always thought, I think this is backed up by data. Is that you’re not frugal, your way…

Ryan Isaac:
No, totally.

Jake Elm:
This is like a lot of the personal finance articles, cut out on your $5 coffee and stop eating out and…

Ryan Isaac:
Yeah.

Jake Elm:
Don’t buy anything that makes you happy. And if you do that for 30 years, you will be rich. And what we’ve seen is it really is the, it’s what is your income? How much are you saving? How much you’re investing? Those things really lead to growing wealth more than cutting out each trip to the coffee store. That’s kind of what I say is…

Ryan Isaac:
Totally.

Jake Elm:
It’s almost like it’s a way to guilt people in. It’s almost like spend shame them a little bit when it’s like, that’s actually…

Ryan Isaac:
Spend shame them.

Matt Mulcock:
If you wouldn’t have bought that coffee this morning, you’d probably be closer to retirement. You want me to do a time value of money calculation on that coffee?

Ryan Isaac:
Time value of coffee. Part of the list of three things though, I guess their third point of being frugal is already part of number one.

Matt Mulcock:
I was literally just gonna say that.

Ryan Isaac:
You were just gonna say that. Okay. Finish the thought then Matt, finish the thought or how were you gonna explain it?

Matt Mulcock:
I was just gonna say, it’s built in.

Ryan Isaac:
It’s built in. Yeah.

Matt Mulcock:
You’re saying you’re frugal. Well, yeah, you’re saving 20% of your income and spending the rest. You don’t even need to reiterate that point. You’re spending 80% of your income.

Jake Elm:
Yeah. After taxes and things, you’re automatically going to have a lower spending rate.

Matt Mulcock:
Yeah.

Ryan Isaac:
You will.

Matt Mulcock:
And it’s exactly what we tell clients.

Ryan Isaac:
Yeah.

Matt Mulcock:
Just save first and then spend everything else. And you can live whatever life you want.

Ryan Isaac:
That would be my bumper sticker from this is the reverse budgeting method of having a healthy savings rate is the only long-term sustainable thing that will actually help you save enough money and keep your spending in check. But the funny thing is how many clients do you guys have where you set a savings rate, they’re automating it. It’s a healthy percentage of their income. And then they’re kind of blown away by the amount of money that’s still left over that they don’t feel guilty about spending. And then it’s just like spending not only was healthy and fine and comfortable, but it was guilt free, which I think is the best part.

Matt Mulcock:
Yeah, exactly. It’s like what Jake said. You don’t have to feel shamed into saving on coffee. You’re not going on vacation. It’s like, “No, you should actually be enjoying your life ’cause… ” That’s the part that gets missed when it comes to the personal finance Twitter sphere and blog sphere. It’s like very rarely, I think this is changing a little bit, but with Ramit Sethi and people like that, but no one’s really talking about the other side of this, which is how to spend money and enjoy your life.

Ryan Isaac:
Yeah.

Matt Mulcock:
After you’ve taken care of the first two points that they talk about.

Ryan Isaac:
Waiting till 60 to be a millionaire is not maybe the reward for everybody. And increasingly it’s seeming like, and I think that’s a younger generation thing too. Which I can say as an old man and which I’m excited about. That I think there’s just different values coming into the marketplace of money in general and financial advice and investing in general.

Matt Mulcock:
Yeah. Don’t get me started on the fire generation, Ryan I’ll…

Ryan Isaac:
Okay.

Matt Mulcock:
It’s like passive income and then fire don’t even get me started.

Ryan Isaac:
Passive income, retire at 31 and a half. Hey, if you did it, that’s excellent.

Matt Mulcock:
Good for you.

Ryan Isaac:
But okay. That was a cool, where did that come from again? CNBC, Jake?

Jake Elm:
That was CNBC. Yeah, there was a guy…

Ryan Isaac:
What was the title of that? By the way.

Jake Elm:
It’s a long title, it’s like, I spent five years interviewing 225 millionaires. Here are the four types of rich people and their top habits. So here’s where the confusion came from. There are three takeaways, but he said there are four types of millionaires. Let me just quickly give it for the listeners.

Ryan Isaac:
Okay, yeah.

Matt Mulcock:
Oh, okay. Okay. We forgive you.

Jake Elm:
But here are types, these are the type of people who make it to that millionaire status, the saver investors, which are just no matter what their job is. Number two are the company climbers who just work for one large company for a very long time. And they usually get there. Three are the opposite. He calls them virtuosos, who are just really good at what they do either like in medicine or in law, they’re a good lawyer or a doctor, they’re just really good at one thing that make them millionaires. And then the fourth one are the dreamers, which are people who start bigger companies, bigger tech company or businesses. Those are the four types.

Matt Mulcock:
The Reese Harpers.

Jake Elm:
Yeah. Those are the how like income side of things. You either save a lot of your money no matter what your job is, you either climb the company ladder, you are really good at one thing, or you started a company.

Ryan Isaac:
Here’s what I would be willing to bet if I were a betting man in these statistics, actually I bet they do exist. I’ll bet there’s more of the first three categories easily or any one of them than the fourth one. The fourth one gets all the attention and it’s…

Matt Mulcock:
And probably throws off the averages.

Ryan Isaac:
Throws off the average.

Matt Mulcock:
Survivorship bias.

Ryan Isaac:
Yeah. And the disparity, I’m sure the businesses who become big businesses are so much wealthier than those who just save their way to having enough, obviously, because of the trade offs and the risk and reward. But I bet there’s so many more people who financially make it, who are boring saver investor people who just work hard at their jobs and save enough and do good in their professions. And then there are entrepreneurs who create the next big thing and sell it for millions and millions of dollars.

Jake Elm:
I just wanna tie a bow on this. I think one more thing from…

Matt Mulcock:
Tie that bow, tie it.

Ryan Isaac:
Tie a bow. But, before you tie a bow, can I make another comment about the four…

Jake Elm:
Do it, and then I’ll tie that up.

Ryan Isaac:
And then you tie it up.

Matt Mulcock:
And then you’re gonna tie the bow.

Ryan Isaac:
You tie the bow.

Matt Mulcock:
Keep wrapping the present. You gotta tape it up and then he’s gonna put the bow.

Ryan Isaac:
Well, I was just gonna say, I think it’s kind of interesting that a full, separate category was, wasn’t category three, like professional, like doctor dentist kind of category.

Jake Elm:
Yes. Yeah. Dentist would fall in that category. They’re good at one specific thing.

Ryan Isaac:
So think about this, that’s its own category of just being basically a dentist is different than just saving enough.

Jake Elm:
Yeah.

Ryan Isaac:
And we say this all the time, a dentist because of income ranges, really, all they really have to do is just not make a lot of, well, any too big of mistakes along the way. The path to being wealthy enough as a dentist because of income is it’s fairly basic. We know it gets boring. We know personality types come into the mix and can change it, make it better, make it worse. But we think, we say that all the time, just don’t screw it up. You can have very average investing return numbers. You can have a decent savings rate and just do it for 25 years, 30 years or something, and just by the nature of being a dentist and earning that much money. You’re kind of just don’t screw it up and you’re good.

Matt Mulcock:
Yeah. That’s the bumper sticker. Don’t screw it up.

Ryan Isaac:
Don’t screw it up. Okay. All right. Tie it up.

[overlapping conversation]

Jake Elm:
My bow on top of that, which I think is a great point, is this in here. No matter what the profession or what category you fell into, 88%, so almost 90% of them said that saving and investing was the most important thing to getting millionaire status. So basically nine out of 10 said saving and investing no matter what their profession was…

Ryan Isaac:
Cool.

Jake Elm:
The most important, factor.

Matt Mulcock:
Do a strategy.

Ryan Isaac:
I love that. And I’ve just made up a new segment in my head at the end of all these new shows. If we keep doing them, we all vote on who had the coolest article.

Jake Elm:
There we go.

Matt Mulcock:
Oh, I like that.

Ryan Isaac:
Yeah. Okay. Matt, so it turns out…

Matt Mulcock:
We’re gonna get one each.

Ryan Isaac:
We’re one each and that’s… This is an experiment and we’re learning as we go. So this is cool.

Matt Mulcock:
Yeah. It’s great.

Ryan Isaac:
All right. Which one are you picking?

Matt Mulcock:
I’m gonna shift gears a little.

Ryan Isaac:
Okay.

Matt Mulcock:
I picked one to shift gears. We’re gonna go to the market.

Ryan Isaac:
Okay.

Matt Mulcock:
I picked this one because of the, just the… I’m just gonna read the headline and you can tell me what you think.

Ryan Isaac:
Yeah. Okay.

Matt Mulcock:
So the headline is Bulls May Want to Back Off: Stocks Could Drop Again.

Ryan Isaac:
Oh.

Matt Mulcock:
Okay.

Ryan Isaac:
Oh, that’s loaded.

Matt Mulcock:
And then I’ll give you the subheading. I’ll give you the whole sub…

Ryan Isaac:
Oh, there’s more. [laughter]

Matt Mulcock:
There’s more.

Ryan Isaac:
Okay.

Matt Mulcock:
The S&P has surged 12% since June 16th amid hopes that the Fed’s interest rate hikes will end soon. Okay. So that’s the…

Ryan Isaac:
This is what I wish we had videos. So you get to see us laughing or rolling eyes or shaking heads or turning red or something. [laughter]

Matt Mulcock:
So, you got…

Ryan Isaac:
Hold on, hold on. Let me back this up. Say that again. Bulls may want to back…

Matt Mulcock:
Bulls may want to back off.

Ryan Isaac:
Okay.

Matt Mulcock:
Stocks could drop again.

Ryan Isaac:
They could drop again, subheading.

Matt Mulcock:
This is an actual article.

Jake Elm:
Never thought about that. I never thought that they could drop again. Never.

Ryan Isaac:
Okay. So they might wanna back off. Stocks could drop again, wow. That would be unprecedented.

Matt Mulcock:
Stocks guys. Stocks could drop again.

Jake Elm:
I did not know that.

Ryan Isaac:
Groundbreaking.

Matt Mulcock:
Groundbreaking.

Ryan Isaac:
Okay.

Matt Mulcock:
That literally from a decently legit… So it’s from The Street. That’s the publication. That made it to an editor’s desk.

Ryan Isaac:
Yeah. Yeah.

Matt Mulcock:
And they were like, “Yeah. Let’s post that.”

Ryan Isaac:
But this is short term human so… And then the subheading was, oh, the subheading was some data.

Matt Mulcock:
The S&P has surged 12% since June.

Ryan Isaac:
As if June 16th was the landmark date that we all benchmark everything against.

Matt Mulcock:
Exactly. Amid hopes that the Fed…

Ryan Isaac:
And not June 15th, not the 17th, but the 16th of June.

Matt Mulcock:
Exactly.

Ryan Isaac:
Yeah.

Matt Mulcock:
And this is what we were talking about earlier. This gives a reason, right?

Ryan Isaac:
Why?

Matt Mulcock:
So it’s saying that the Fed’s interest rate hikes will end soon, that’s why.

Ryan Isaac:
That’s why.

Matt Mulcock:
Obviously. It surge since 12%…

Ryan Isaac:
It’s not corporate earnings at all or anything else, right?

Matt Mulcock:
No. It’s clearly the Fed.

Ryan Isaac:
Just the Fed.

Matt Mulcock:
Yep. And if so, then it goes on to say the S&P is still down 14% year to date, gives reasons, it gives inflation numbers, all this kind of stuff. And then at the end, I think it’s… [laughter] It’s just, these articles are so great. It goes on to say, Bank of America and JP Morgan are giving their, basically their takes. They’re gonna give their projections.

Ryan Isaac:
As they do in every article.

Matt Mulcock:
They do in every article and they’re giving…

Ryan Isaac:
‘Cause they literally employ like, sorry, hundreds of analysts who pick up the phone and answer and give quotes for every phone call, CNBC interview and blog posts ever.

Matt Mulcock:
Yep. Exactly. So JP Morgan goes on to say August and September also have historically been the seasonally weakest months. Of course. We maintain our 3,600 year end target on the S&P 500. So they’re giving… Anyway, I’ll stop there. Get you guy’s thoughts. I have thoughts on this, thoughts on thoughts but…

Ryan Isaac:
Well, I want to tease about it like we are, because it’s, there’s just silliness to the way that news, financial news panders to the most base human instinct with money and investing, which is just short-term minute by minute, random acts of decision making and investing, right? That’s just, we love that, we eat it up or else they wouldn’t report on it and they wouldn’t make ad revenue from it. But what kind of sucks though, is these are the kind of articles that get forwarded to us by actually worried people.

Matt Mulcock:
Yes yep.

Ryan Isaac:
And especially maybe later in life people. Actually, that’s not even true. Everybody. Early career savers, later in life, early retirees, these are the articles that they’re going about their day, they’re having a good day. They got their morning coffee guilt free, they took a walk, they went into the office, they had some good patient team interaction. They’re having a good day, but they pulled up their phone. They saw this at noon on their lunch break. And now that soured their mood, and it was totally not even relevant. But there’s some levity here like, oh, this is so ridiculous. But also these are the articles that get forwarded to us. But that’s a good thing too, because if they didn’t come to us, that means, if there’s not a person that you’re forwarding these things to and saying, “What do you think? Should we change anything? Are we gonna do anything about this?” Then that means that you’re just gonna act on it by yourself. And that’s a scarier position for people to be in I think, anyway.

Matt Mulcock:
Yeah. Totally agree. Jake, do you have thoughts?

Jake Elm:
Yes. My main thought is, yeah. I agree with what Ryan said, it really is listening to you go through the headline. I’m just thinking in my mind, this is just for entertainment and clicks more than anything. It’s not even, it is sad because people do look to these news outlets for, I’m trying to get some information. I am worried, I’m looking for info. And it’s almost, that’s not even the objective of this article or this headline. It really is just, I’m trying to get clicks. We have to publish something today. This is entertainment. We’re almost laughing at entertainment purposes more than even actual information because everything in there is we think maybe, possibly, there’s a chance that this could happen.

Ryan Isaac:
It could.

Jake Elm:
And it could also happen tomorrow. It’s just, it’s like a whole lot of nothing, but it does the headlines here.

Ryan Isaac:
Well it’s like a headline that says it could snow in December somewhere in this country and there’s also, and what makes it seem smart though, is when they throw in the dates and some data.

Matt Mulcock:
That’s exactly right.

Ryan Isaac:
July 16th or whatever, as if that’s some industry recognized, academia recognized benchmark that you’re supposed to… Who cares about the 16th? What about the month before? It’s irrelevant, but that’s the thing in the headline that makes it solidify a little bit of credibility, unfortunately. But it’s such a good point Jake, it’s pure entertainment, and it’s a… Their business is not education. Their business is ad revenue and we gotta…

Jake Elm:
And their business is they need to pump out these articles every…

Ryan Isaac:
So many.

Matt Mulcock:
Yeah. And they get clicks and then they get ads on their site. They get, they pump ads along the way.

Ryan Isaac:
Do either of you guys know? Jake, you’re really plugged into this, the Twitter financial landscape. Do you guys know? I’m just curious, how many writers sit on like The Street, for example, how many writers are there? How many articles do they have to pump out? If you go refresh your financial, your stocks app on your iPhone, there’s a new article that’s hitting every time you refresh, then throughout the day, based on the time of day. The 10:00 AM blog post are now different because it’s 2:00 PM and there’s fresh new articles at 2:00 PM, it’s kinda nuts.

[overlapping conversation]

Jake Elm:
I was prepping for this. I was on CNBC and they have a list. Here’s all the articles. And there were seven articles in the last hour, seven things that had come out in an hour.

Ryan Isaac:
Gosh.

Matt Mulcock:
I think a lot of these places just have independent contractors that they just pump article. They just send articles in and then the editors decide which one gets posted. I think that’s how a lot of these work.

Ryan Isaac:
It’s gotta be because that’s mind-blowing man, seven articles in an hour.

Jake Elm:
Like every 10 minutes, there’s an article.

Ryan Isaac:
And it’s based on that hour’s activity too. That’s the crazy thing, but that just shows, that kind of volume just shows it’s not here to educate, it’s entertaining.

Matt Mulcock:
No, I’m just sitting here thinking of the quote from Morgan Housel, we’ve talked about before in webinars and in the podcast, which is the part of it is, pessimism sounds like you’re trying to help. Optimism sounds like you’re trying to sell something. And kind of goes like, this is just one little teeny piece of evidence to show, coming back to Ryan what you and I talked about on the last podcast of the environment, the dentist, and all of us are in, when it comes to the 24-hour news cycle. And Jake, you said it, this is not meant… This type of article is a dime a dozen, and it’s not meant to help, it’s not meant to educate, it’s not…

Ryan Isaac:
It’s like, not even for us, that’s the crazy thing.

Matt Mulcock:
And if you really read it, it’s garbage. It doesn’t even say anything.

Ryan Isaac:
Yeah, totally true.

Matt Mulcock:
But they suck you in with that title, someone who doesn’t do this on a regular basis, or doesn’t know necessarily, doesn’t really know what’s going on with investing, they just see that title.

Ryan Isaac:
It’s frightening.

Matt Mulcock:
And they’re like, “Oh my gosh, it’s gotta… ”

Ryan Isaac:
Should we stop investing? It could drop again.

Matt Mulcock:
Yes, ’cause this is an article, like you said, that someone would send to us and then say, “What do you think? Should we stop investing?”

Ryan Isaac:
Should we stop investing? Which when, if this isn’t your day to day or you don’t consume a lot of this stuff and have some context to decipher it, that I would have the same reaction too. I also wanna invent off the top of my head, another segment where we rename the titles if we feel so inclined. And Matt’s, I would rename to something like, S&P with…

Matt Mulcock:
This is…

Ryan Isaac:
S&P as it always does, was down this year, keep investing anyway. [laughter]

Matt Mulcock:
Exactly.

Ryan Isaac:
Thumbs up emoji.

Matt Mulcock:
Mine, no mine would be something like, stocks might go down or up [laughter] in the short term.

Ryan Isaac:
Or not.

[overlapping conversation]

Matt Mulcock:
Whatever, keep investing.

Ryan Isaac:
And then the shrug emoji, I don’t know.

Matt Mulcock:
Just, whatever.

Ryan Isaac:
Guys, I thought this was kind of fun. I hope the audience… I did ’cause I entertained myself and which is usually the most important thing that we entertain ourselves. [laughter]

Matt Mulcock:
We’re only here to entertain Ryan. Come on.

Ryan Isaac:
So, give us some feedback, shoot us an email. If we know you, text us, email us, go to our website and while…

Matt Mulcock:
And you save space. You can tell us it was terrible, we are fine with that.

Ryan Isaac:
Yeah. Again, the hope with this is to decipher the things that we’re all reading on a daily basis, articles that are getting forwarded to us and give some commentary, but hopefully, some principles with it that will still matter a year from now. And I think we accomplished that. I think we did. We accomplished that. Thanks folks for tuning in. If you have any questions or you want to talk to an advisor, ask questions about any of these subjects or anything else and get some advice and get pointed in the right direction. Go to dentistadvisors.com, click the book free consultation link. And you can maybe get Matt or Jake on the phone and it would be a miracle.

Matt Mulcock:
If you’re lucky, you get Ryan.

Ryan Isaac:
Would love it.

Matt Mulcock:
Or Jake.

Ryan Isaac:
Or Jake.

Matt Mulcock:
Actually. Both.

Ryan Isaac:
Yeah. Thanks for being here guys. Thanks for everyone tuning in. We’ll catch you next time in another episode of The Dentist Money Show, take care now. Bye.

Behavioral Finance