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4 Financial Signals that Can Distract You from Accumulating Wealth – Episode 251


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Are you confident you’re following the right financial indicators on your road to retirement? 

On this episode of the Dentist Money™ Show, Ryan and Matt examine some of the things dentists tend to look at that distract them from seeing the retirement signals which really matter. 

Do you spend time worrying about short term changes in the stock market? Are you fixated on figuring out how to open another location? Maybe you daydream about upping your income? When your long-term focus wavers, you may need to be reminded why slow and steady wins the retirement race.

 


 

Podcast Transcript

Ryan Isaac:
Hey, Dentist Money Show listeners. Thanks for tuning into another episode. Today, Matt and I will walk you through some of the signals people go through to determine how and when they’re going to retire and what it’s going to look like, about how some of those signals are actually false. Don’t [inaudible 00:00:00:14]. So, thanks for tuning in. If you have any questions for us, you can go to dentistadvisors.com, click on the book free consultation button, have a chat with one of our very friendly advisors today. Thanks for tuning in. Enjoy the show.

Announcer:
Consultant an advisor and 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 your host, Ryan Isaac, sometimes affectionately known as Sir Ryan Isaac.

Matt Mulcock:
Sir [crosstalk 00:00:51].

Ryan Isaac:
Here with Matt Mulcock today, hosting with the Dentist Money Show. Thanks for being here, Matt.

Matt Mulcock:
Oh, we snuck in the studio [crosstalk 00:00:00:59].

Ryan Isaac:
We did. We pulled that off the bench. You might be a starter, though. What was the last time that happened where it was… It’s like famous NFL quarterback-

Matt Mulcock:
Tom Brady.

Ryan Isaac:
Yeah.

Matt Mulcock:
Oh my gosh. Now it just [crosstalk 00:01:11].

Ryan Isaac:
No, no, no, even more recent than that. Got hurt. Who was the backup to Brett Favre? Isn’t that how it worked?

Matt Mulcock:
Aaron Rogers? Yeah.

Ryan Isaac:
Aaron Rogers. Isn’t that how that story worked?

Matt Mulcock:
Yeah, I mean, they drafted Aaron Rogers to like to take over for Brett Favre. The most famous one is Tom Brady.

Ryan Isaac:
That was Tom Brady.

Matt Mulcock:
Yeah. He-

Ryan Isaac:
I’m showing my…

Matt Mulcock:
That was a long time ago.

Ryan Isaac:
Yeah, it was a long time ago.

Matt Mulcock:
2001.

Ryan Isaac:
I’m just saying, I should know these stats.

Matt Mulcock:
That’s okay. Yeah.

Ryan Isaac:
I don’t really know these stats very well.

Matt Mulcock:
Yeah.

Ryan Isaac:
Okay. So, I found a story. Well, just a little teaser. We’re going to talk about the question you probably get from clients all the time, which is how do I know when I can actually be done? When is retirement? When is work optional? When does this stuff end?

Matt Mulcock:
When I walk away? Put up the hand, please.

Ryan Isaac:
Yeah.

Matt Mulcock:
[crosstalk 00:01:57] the hand, please.

Ryan Isaac:
When is this thing done? So, I was thinking about this, and I found this story inadvertently. I was looking for something else. But I found the most fascinating [crosstalk 00:02:06].

Matt Mulcock:
What were you looking for?

Ryan Isaac:
You can’t put me on the spot [crosstalk 00:02:11].

Matt Mulcock:
Okay. I’m sorry. [inaudible 00:02:12] sorry.

Ryan Isaac:
I cleared my browser history. I was looking for something else. It was actually related, something during World War II that we used to do to throw Russian spies off the trail. But I ended up finding this story, and it’s going to tell us a lot about the way people ask that question. What do I do? How do I know when retirement’s coming? What should I do? And some of the better questions they should be asking. So, here here’s the interesting story. So, starting back in 1982. Yeah, 1982. It’s been going for like almost 40 years. So, starting back in 1982, there is this radio channel being broadcast out of Russia. It’s something-

Matt Mulcock:
I’m going to love this.

Ryan Isaac:
Yeah. It’s amazing. So, it’s being broadcast out this building, although no one really knows how it’s happening. So it’s being broadcast out of this old building. And so, this channel, here’s what happens. It just plays a one pitch… It’s 24 hours a day, seven days a week, all year long. It plays a dull, monotonous tone.

Matt Mulcock:
Though Reese would be able to know exactly-

Ryan Isaac:
Reese would… If we had big [hoss 00:03:21] Reese Harper here-

Matt Mulcock:
He would know.

Ryan Isaac:
… he’d know it was like G sharp.

Matt Mulcock:
Yeah. He’d know [crosstalk 00:03:25] for sure.

Ryan Isaac:
He would harmonize with it. So, it plays this dull, monotonous tone, and then every few seconds is joined by another tone. They describe it, it sounds like a ghostly ship, like a fog horn.

Matt Mulcock:
Should I be creeped out by this because I kind of [crosstalk 00:03:42].

Ryan Isaac:
Yes, you should. No, it gets worse. It gets worse. It gets way scarier. So, once or twice a week, a man or a woman will read out some words in Russian, and the way they translate… For example, have been words like dinghy, like a boat, like a little dinghy. Or farming specialist. And that’s it. They’ll say these random words. Those words [crosstalk 00:04:04].

Matt Mulcock:
Like on the channel?

Ryan Isaac:
A voice will come over the top of those tones. Will come over the top of those tones, and it’ll say these random words.

Matt Mulcock:
Oh my gosh.

Ryan Isaac:
Super creepy. And no one knows who’s running it. Anyway. And anyone in the world can listen in. So, it’s called The Buzzer. That’s the nickname for it. It’s got a frequency. You can go tune into this. There’s a bunch of these, actually, around the world, and there’s amazing conspiracies theories [crosstalk 00:04:34].

Matt Mulcock:
Are they all Russian?

Ryan Isaac:
No, they’re not all Russian.

Matt Mulcock:
Oh, okay, okay.

Ryan Isaac:
A lot of them are, though. Yeah, a lot of them are.

Matt Mulcock:
Make sense.

Ryan Isaac:
Yeah. So, there’s some really amazing conspiracy theories about what these might be and what they could be used for. And they’re, I mean, pretty logical. But here’s the paragraph that caught my mind, and I thought this is a financial planning topic. There’s this expert that they bring in. He’s an expert on signals intelligence out of London, and he says, “There’s absolutely no information in the signal.” But what’s crazy is the paragraph before it, it says that there are tens of thousands of people who listen to this.

Matt Mulcock:
Wow.

Ryan Isaac:
Every week. Tens of thousands of people tuned into The Buzzer, what it’s called.

Matt Mulcock:
And it has no meaning.

Ryan Isaac:
And the expert says there’s absolutely no information in the signal. So-

Matt Mulcock:
But you do want to know like what is going on?

Ryan Isaac:
I mean, you hear the story, now you’re just thrown because you’re like, “Dude, I want to know what it’s talking about.” I read this story while I’m thinking about this question that we get asked all the time as advisors. When do I know when I can retire? And what does that look like? And what are the markers? That’s what people are looking for. What’s the information I need to decipher along my career? What should I be paying attention to that’ll tell me like I’m ready or I’m close? And so, I read it, tens of thousands of people listening to the signal, then the expert says there’s no information in the signal. So, we’re going to take a break, but when we come back, we’re going to talk about the signals that people, that dentists listen to, that they think are giving them information about when retirement is going to happen and what it’s going to look like, but they’re the wrong signals. And then we’ll talk about some of the signals they should be paying attention to. So, let’s take a quick break.

Ryan Isaac:
As you’ve listened to our podcasts, maybe there’s a question about your finances you’ve wanted to ask. It’s easy to get an answer. All you do is just pick up that phone, give us a call at 833-DDS-plan to set up a consultation. Or if you don’t want to call us, you can just go to the website at dentistadvisors.com, click the book free consultation button, and set it up. It’s free. Do it today.

Ryan Isaac:
Okay. So, we’re talking about retirement signals that contain… We’re going to start first with retirement signals that don’t contain information. The quote was, “Absolutely no information in the signal.” That’s what the expert said about this radio frequency that’s going. So, let’s talk about some signals that contain… I don’t want to say no information. It’s a bit dramatic. Maybe some do, but don’t contain the right information. It’s not the right information you should be watching if you’re trying to find the retirement signal. Also, I’ve got a list. We pulled you in here, and we’re like, “Hey, Matt, you’re coming in.” It’s like a blind date for you. It’s like a blind date of recording [crosstalk 00:07:19].

Matt Mulcock:
Definitely a blind date. Yeah. Yep.

Ryan Isaac:
How’s it going so far, by the way? Are you enjoying yourself?

Matt Mulcock:
I mean, [Jason 00:07:22], I don’t know. We’ll see afterwards.

Ryan Isaac:
Are you enjoying yourself.

Matt Mulcock:
This is the best blind date I’ve ever had. I will say that. Yeah.

Ryan Isaac:
I get that a lot. Okay, so… Why don’t I get second dates? I guess that’s the real question. So, I’ve got a list here, but as they come to mind for you, just fire them out. So, one of them I thought about that is on our minds right now… So, we’re recording this in September of 2020. If you’re listening right now-

Matt Mulcock:
Kind of a crazy year, I will say.

Ryan Isaac:
Yeah. You know what the topic’s going to be. If you’re listening to this later down the road, if the world still exists and you’re hearing our voice-

Matt Mulcock:
Hopefully we’re alive.

Ryan Isaac:
… if we’re alive. If I’m alive then Matt’s alive.

Matt Mulcock:
Yeah. If not, we’re keeping carried on in our voice right now. So, we are alive. We are now immortal.

Ryan Isaac:
Maybe we’re on a signal, a radio signal in Russia-

Matt Mulcock:
Maybe we’re in Russia.

Ryan Isaac:
… somewhere.

Matt Mulcock:
Yeah.

Ryan Isaac:
And we just get on and say random words.

Matt Mulcock:
Exactly.

Ryan Isaac:
Which is actually our strategy for the podcast.

Matt Mulcock:
Absolutely.

Ryan Isaac:
[crosstalk 00:08:14] say random words.

Matt Mulcock:
Yep.

Ryan Isaac:
But this year is crazy, and there’s a lot of economic things, and the market’s been one of them. So, the first one that’s the obvious low hanging fruit here of signals that don’t carry the information people are really wanting to know, but they look for anyway, is short-term changes in the market.

Matt Mulcock:
The first thing I was going to say.

Ryan Isaac:
You were going to say that, too-

Matt Mulcock:
Oh yeah. Yep.

Ryan Isaac:
… when you came to mind? So, a scenario then. In March of 2020, the market… When I say the market, I’m just using the US market for reference, S&P 500. Were down like 37% within a couple of weeks after like-

Matt Mulcock:
16 trading days I think.

Ryan Isaac:
Was it? 16 trading days.

Matt Mulcock:
Fastest ever.

Ryan Isaac:
It was the fastest trade year. It was like one of the slowest months of my life.

Matt Mulcock:
Oh, yeah. Yeah.

Ryan Isaac:
I’m sure for you. So, what comes to mind when you think of that, that was the first one that hit your mind, too, as a signal that doesn’t contain the information… people think that’s the signal, right? Well, what is the market doing? And you get the question now, too, I’m sure. Ryan, I don’t know. What’s it going to do… The election and what’s going to do next year when some of the economic data catches up to it?

Matt Mulcock:
That was my next one, like 2020 election year coming. We’re in an election year. Same thing as like I get all the time, at least lately, what’s going on with the election? What should I be doing to position myself? That is a meaningless signal.

Ryan Isaac:
Yeah. So, why? Okay, so expand on that. I guess two questions. Why do people look to that as a signal? Why are we conditioned to do that, in your opinion? And then, why does it not help?

Matt Mulcock:
I think, to me, this comes back to people… It’s a control thing, I think. I think people want to think that they can gain control from… or they want to know what’s going to happen. And those are the most salient things that are happening right now, the short-term market events. So, we come back to [crosstalk 00:09:57].

Ryan Isaac:
Because you can quantify it.

Matt Mulcock:
You quantify it. Yeah.

Ryan Isaac:
You can measure it.

Matt Mulcock:
Exactly.

Ryan Isaac:
Okay.

Matt Mulcock:
So, for the market would say is an example. I think this is the same reason why there’s a general draw to real estate, right? The transparency of the stock market works for it and against it. Right? We look at that as a positive, right? The transparency of pricing.

Ryan Isaac:
Yeah, it’s nice to know what’s going on.

Matt Mulcock:
Exactly. But I actually think it works against investor behavior because we always tell people, if you had a little price hovering over your home every day you pulled into your driveway-

Ryan Isaac:
You’d be mad.

Matt Mulcock:
… you’d be freaking out.

Ryan Isaac:
You’re like, “What do you mean the fridge is broken again?” And then the little stock drops on your house [crosstalk 00:10:31].

Matt Mulcock:
Exactly. But because you don’t have that, you’re more in it for the long-term. Right? Because that transparency is not there.

Ryan Isaac:
And the ease that you can get in and out of stocks, if you also could go to your phone after you walked home and got mad that the carpet flooded again and push a button-

Matt Mulcock:
It’s happened this year, by the way. It was the worst.

Ryan Isaac:
That’s what I’m talking about.

Matt Mulcock:
Yeah. I wanted to click the sell button right there. Again, coming back to your question of like, why do people look at that? I think there’s a sense of like, it’s an illusion that I can control this somehow or that I can time something with the presidential election. I think it does give them this sense of, “I can control this,” when really, in reality-

Ryan Isaac:
Yeah. It’s just human nature.

Matt Mulcock:
It is human nature, for sure.

Ryan Isaac:
We just want to grasp at things that we can control or change, even if we know it probably doesn’t do much. I guess you could call this like a subheading under that category, which is not only short term market fluctuations, but just returns in general. So, it’s not uncommon to hear someone tie what they think the outcome of their future is going to be… Like I want to retire at 55, and I need $5 million. What do I returns need to be? Or what returns can I get out of this investment? And that’s a piece of the equation, obviously like what your money’s going to returns is the total piece of the equation. But there’s so many other things that go along with that. For one is what is the risk trade off? What could you possibly lose? What kind of pain could you feel along the way? And is that tolerable? And then I always think, “Well, it doesn’t really matter what your portfolio is going to return if there’s no money in there.”

Matt Mulcock:
Right.

Ryan Isaac:
If there’s not enough money in there. Your savings rate is 5%, and you’re trying to chase down the highest returning stock or asset class in the public market, it’s the wrong train of thought. It’s backwards. So, it’s probably like a subheading. I don’t know if you have anything to say about pointing to just return specifically and try to get them as high as possible without considering other things as a signal.

Matt Mulcock:
Well, yeah, I mean, I think you just hit it. It’s people think that they want to focus on the investment returns when really it comes down to investor behavior. Talk about control. You can control your behavior, and I would argue that’s going to have a much bigger impact on your path to success in building wealth than investment returns. Charlie Munger, one of the greatest thinkers of our time, he’s Warren Buffett’s business partner, he said… I’m going to butcher this quote, I’m sure. But he said something-

Ryan Isaac:
Disclaimer. This is not the actual quote.

Matt Mulcock:
Yeah. I get ready to do this and it always sounds so good, and then I know I’m going to butcher it.

Ryan Isaac:
[crosstalk 00:13:02] find a clip? Right now we’ll just cut out, and we’ll find a clip of him actually saying it.

Matt Mulcock:
Yeah. Can we please do that? That would be great.

Ryan Isaac:
But you try. Go ahead.

Matt Mulcock:
I’m going to go for it. He said the biggest impact of compounding, or to have compounding have the biggest impact, the goal is to have the least amount of interruptions possible. So, I highlight that to say the only reason you’re really going to have interruptions, I shouldn’t say the only reason, the main reasons you’re going to have interruptions in that compounding effect is investor behavior. That’s the one that at least you can control.

Ryan Isaac:
I actually, every time I get asked, when we do a seminar or a webinar or something, what’s the biggest financial mistake dentists make? I would point to the single biggest mistake being that, this lack of organization and this random decision-making over years and years and decades and decades where you just don’t get traction anywhere.

Matt Mulcock:
Which leads to major inconsistency. Right?

Ryan Isaac:
Huge inconsistency. So, let’s go to one you were already kind of hitting it. I wrote this down as asset class worship. So, you were saying how times like this year, where the economy’s got a lot of question marks and we’ve already seen a big spike in volatility up and down in the stock market, people go to other things and then put these other assets on a pedestal as if that’s their saving retirement grace.

Matt Mulcock:
Yep. That’s it. That’s the key.

Ryan Isaac:
That’s the one.

Matt Mulcock:
That’s it. That’s what I’ve been looking for this whole time.

Ryan Isaac:
Yeah.

Matt Mulcock:
How did I know about that? Bitcoin.

Ryan Isaac:
Yeah.

Matt Mulcock:
Oh my gosh.

Ryan Isaac:
Yeah. No, there’s some on the level of speculation [crosstalk 00:14:32] please don’t ever do that.

Matt Mulcock:
Can we even call Bitcoin an asset class? I don’t know. Again, we’re going to get beat up.

Ryan Isaac:
Someone will throttle you in the comments for-

Matt Mulcock:
I’m going to get beat up, for sure.

Ryan Isaac:
… for that. Yeah. But that’s the thing is that’s the behavior, right? Is there’s this uncertainty or this lack of control. And then we put other things on a pedestal that just, it makes us feel good. So, people will get mad at the market, and they’ll just be like, “I knew this thing was a scam. This is a casino anyway. It’s rigged. I should just-

Matt Mulcock:
Is my favorite one [crosstalk 00:15:03].

Ryan Isaac:
“I should just go buy real estate because that’s where everyone makes their money. Everyone rich I’ve ever known always has lots of real estate.” Or people will do that with dental practices. Let’s say they’re feeling insecure or out of control about their career decision. Maybe they’re in a single location, single producer situation. And they’re feeling insecure about, “Oh, my friend built 10 locations, and maybe… Oh, the DSO’s the answer.” Like, “Oh, if only I just did that, then everything would be fine and be happy. I’d have enough and I’d be on track.” I think there’s definitely a mistake in putting certain assets on a pedestal and saying like, “Oh, that’s my ticket.”

Ryan Isaac:
Because they all come with their own pains and their own downsides and their own costs. And it’s what we were just saying, if you don’t have consistency with any of them for long periods of time… And I would break them up, by the way, to keep it simple, I would say you have private business ownership, that’s your dental practice or any other private business you have; public markets, stocks, bonds, mutual funds; and you have real estate. Three asset classes. People make incredible amounts of wealth in all of those singularly or mixed.

Matt Mulcock:
Yeah. We don’t want to say there’s any right or wrong way.

Ryan Isaac:
I don’t believe in that.

Matt Mulcock:
Yeah. There’s no right or wrong way to do it.

Ryan Isaac:
No. The only right way is stick with one of them.

Matt Mulcock:
The most important part of any investment strategy is having one you can stick with. So, if it’s real estate, we could argue all day long about the details and like, is this the right or wrong way? Whatever. I’m not even going to say that. If it’s something you can stick with for 30 years, and that’s your answer, like if that’s what you’re going to do, great. You’re better off doing that than bouncing from one thing to the next and being inconsistent.

Ryan Isaac:
It’s like crash diets.

Matt Mulcock:
Yes. Don’t even get Ryan started on the crash diets.

Ryan Isaac:
Well, five years later, you’re just like, “Oh man, I look worse and I feel worse than they did when I started all this.”

Matt Mulcock:
For sure.

Ryan Isaac:
What gives?

Matt Mulcock:
Because you’re looking for a short term answer to a long term problem. Right?

Ryan Isaac:
Munger would quote you on that.

Matt Mulcock:
Oh no.

Ryan Isaac:
I think that’s true.

Matt Mulcock:
That’s the, well probably, the nicest thing you’ve ever said to me and mine. Charlie Munger is like one of my idols.

Ryan Isaac:
Okay. I believe that. All right.

Matt Mulcock:
Second to you.

Ryan Isaac:
Second to me.

Matt Mulcock:
I was going to say. Yep.

Ryan Isaac:
Yeah, this is getting good. Okay, let’s take another break. I’ve got a few more on my list.. And then after that we’ll hit what are the signals people should be looking for. So, we’ll come right back.

Ryan Isaac:
Hey Matt, what do you like to drink or snack on when we do our webinars every month?

Matt Mulcock:
Yeah, that’s a good question. I’m usually hitting a Red Bull, but it’s hard because it’s an evening webinar.

Ryan Isaac:
Yeah. These evenings webinar’s taking place 6:30 PM Mountain Standard Time.

Matt Mulcock:
Mountain Time.

Ryan Isaac:
Once a month.

Matt Mulcock:
Where do you find it?

Ryan Isaac:
Well, if you’d like to find the webinar, or you’d like to register for it, you go to dentistadvisors.com/webinar, or just go to the website and click on webinars under the education tab.

Matt Mulcock:
It’s a good time.

Ryan Isaac:
It’s a great time. What kind of things do we cover in our webinar, Matt?

Matt Mulcock:
So, each month we’re going to hit an element, right? So, it’s going to be some component of your financial life. We’re going to dive a little bit deeper than we would like on the Dentist Money Show. Right? We get to draw pictures. There’s live polls. You can ask questions.

Ryan Isaac:
Yeah, it’s great time.

Matt Mulcock:
Yeah. It’s a good time.

Ryan Isaac:
Well, we’d love to see you in attendance at one of our fantastic webinars. Just go to dentistadvisors.com. Sign up today for the next one. Thank you very much.

Ryan Isaac:
So, I’ve got a few more on my list. And I was just thinking about this, I don’t want this list to come across like, “You dummies.”

Matt Mulcock:
Yeah.

Ryan Isaac:
That’s not what this is about.

Matt Mulcock:
That’s what I was feeling. I thought that’s what you were-

Ryan Isaac:
You feel judged.

Matt Mulcock:
Yeah.

Ryan Isaac:
Please don’t feel judged. The purpose of knocking out this list and saying, “Hey, here’s some common things that people point to as signals that actually lack information.” People are saying, “Here’s the thing that’s going to tell me if I’m okay,” and we’re saying, these are common, we’re not judging you.

Matt Mulcock:
No, no judgment.

Ryan Isaac:
It’s all love.

Matt Mulcock:
So, it’s a judge free zone.

Ryan Isaac:
This is judgment free zone. This is all love. What do we say in brainstorming when we we’re… Like no edits. No edits. All right? Just everyone’s ideas [crosstalk 00:00:18:52].

Matt Mulcock:
Say live and let live. Right?

Ryan Isaac:
I believe that as a philosophy in life.

Matt Mulcock:
Yeah.

Ryan Isaac:
But the point is, if these are things that are on your mind, they’re very common, a, and B, they don’t lead to the place that you want them to lead to. They don’t give you the answer you’re looking for, which I know people feel. So, here’s another one for example. I wrote down arbitrary income targets. We’ve all done this. I’ve done this so many times in my own life. I mean, I probably was doing this last week talking to you about my own career. I mean, seriously, do we not all do this? Let’s say you’re making 250 and then you’re like, “If only I made 450.” And then you make-

Matt Mulcock:
Like that’s it. I’m done.

Ryan Isaac:
Yeah.

Matt Mulcock:
Yeah.

Ryan Isaac:
Maybe they’re calculated, but usually, you hear people say this and it’s arbitrary. Or someone’s making 400, and they’re like, “If I made 750, “or, “If I made seven figures. I got to just make a million bucks.” Again, there’s truth to that. We’re big fans of telling people, “Hey, one of the best ways to change your financial situation is grow your income.” Of course. Make more money. So, you probably hear that a lot. Like clients or [inaudible 00:20:03] how arbitrary income targets, as if when I get to 400,000 of income, then my retirement’s on track. What goes through your head when you hear that?

Matt Mulcock:
Well, first of all, I’m with you. I’ve done this in my own life. I think all humans… It’s just human nature.

Ryan Isaac:
It’s human nature.

Matt Mulcock:
Right?

Ryan Isaac:
Yeah.

Matt Mulcock:
I remember when I was young, starting my career, I had a number in mind, and then you hit that number.

Ryan Isaac:
Do you remember thinking how great it would be to make 100 grand? Do you ever-

Matt Mulcock:
That was my first number.

Ryan Isaac:
Yeah. It’s such a good number. Such a good round number.

Matt Mulcock:
Yep.

Ryan Isaac:
Do you remember thinking that and then maybe getting there and being like, “Well, I’m kind of broke still.”

Matt Mulcock:
Honestly-

Ryan Isaac:
I need more.

Matt Mulcock:
Okay. So, it’s not just me, because this is exactly what happened to me. I started my career, and I was like, “Man, if I can just get to a six figure, I’m good. I’m set.”

Ryan Isaac:
It’s a good target.

Matt Mulcock:
And then you get there and then you realize, “Man, I need more money than this.” Right?

Ryan Isaac:
I spent it.

Matt Mulcock:
And then we were living in Southern California, and then you really need more money [crosstalk 00:20:58].

Ryan Isaac:
Then you need like 10 times that.

Matt Mulcock:
Exactly. So, yeah, I think the first question that I have for people, one I have right here, I mean, it’s maybe trite, but my first response is why? Just tell me like… That’s not, again, not coming from a judgmental place. It’s can you explain to me why that income level is so important?

Ryan Isaac:
Yeah. What’s the math behind it?

Matt Mulcock:
Is there a math behind it or does it just sound like a good number.

Ryan Isaac:
Yeah, because I’ve done that myself. I’ve backed into, “All right. What’s my spending?” And we’ll get to this. “What’s my spending? What’s a good multiple [inaudible 00:21:26] spending when I’m retired? All right, I need that much money. How do I back into this of 20% savings rate? And what income do I need to hit to [crosstalk 00:21:32].

Matt Mulcock:
Hey, and if a client came to me and said-

Ryan Isaac:
I did this equation.

Matt Mulcock:
I’d be like-

Ryan Isaac:
You’d be like, “Well, thank you because we’ve been teaching this forever and it’s on our website. So, that’s awesome.”

Matt Mulcock:
This is amazing. I’d be super pumped about it.

Ryan Isaac:
“Thanks for doing our math.”

Matt Mulcock:
Yes.

Ryan Isaac:
It makes me feel really good.

Matt Mulcock:
Yeah.

Ryan Isaac:
Yeah. So, if someone said that, “I did the math on it, and I need $475,000 of income. And I’m at 350 right now, so I know my target,” you’d be like, “Oh, that’s really respectable.” But when people point to it as an arbitrary hope, again, it goes back to what you’re saying. People are feeling a lack of control, which comes with a lack of organization and a lack of oversight. When you don’t know what things are doing and where they’re headed, you do, you feel a lack of control and you start grasping at things. And income numbers, income targets end up being one of them. Although, we’re big fans, like grow your income.

Matt Mulcock:
That’s one of the first things we tell people, like you said, growing your income is huge. I love the word arbitrary. If it’s an arbitrary number, if you can’t explain to yourself-

Ryan Isaac:
It just sounds big.

Matt Mulcock:
It sounds great. Like 500 grand sounds awesome.

Ryan Isaac:
Just like the 100 did one day.

Matt Mulcock:
Yeah.

Ryan Isaac:
And you’re like, “Well, when I wasn’t making that, I was willing to share an old car with my spouse and we didn’t ever eat anywhere and travel.”

Matt Mulcock:
So, I’d like to make more to get that-

Ryan Isaac:
Now I want another car. I want chicken in my freezer. Which is actually the life we used to live. I still remember the day we actually finally had chicken in the freezer, and I was like, “I’ll never take this for granted.” Spoiler alert, I take it for granted.

Matt Mulcock:
Yeah. Of course. And you celebrated that day with three breasts of chicken, right?

Ryan Isaac:
Yeah. Have my chicken in the fridge to barbecue, it was the coolest thing ever.

Matt Mulcock:
As opposed to what? Like Top Ramen?

Ryan Isaac:
Yeah. Well, I mean, there was just no protein in my life.

Matt Mulcock:
Yeah, yeah.

Ryan Isaac:
It’s a lot of powder.

Matt Mulcock:
It’s expensive

Ryan Isaac:
Protein’s hard to do. All right. Well, I’m going to hit a couple more. Do you have any, by the way, that I haven’t hit that’s on your mind?

Matt Mulcock:
Well, you hit one earlier that sparked.

Ryan Isaac:
Okay.

Matt Mulcock:
When you talked about the single location doc, right? It’s looking at the 10 location doc. This one just came to me when you were talking about that, is like, I don’t know what you would title this, but this idea of comparing to other people. I think having this… Oh, so you said again, arbitrary idea of what retirement should look like to you. Right? What lifestyle, arbitrary lifestyle selection based off of your peers? So, the keeping with the Joneses mentality. I think-

Ryan Isaac:
If I got to that point that he’s at or she’s at then-

Matt Mulcock:
Yeah. Exactly. I’m looking at this signal of, “Oh, he’s got 10 locations. He looks like he’s pretty happy. He’s got a good life. Maybe I want that.” It’s like, “Do you really want that? Or are you just like the idea of that?”

Ryan Isaac:
Yeah. That signals something to you [crosstalk 00:24:01].

Matt Mulcock:
And I think that bleeds into a lot of aspects of life beyond business. It’s the home, it’s the car you drive.

Ryan Isaac:
Vacation.

Matt Mulcock:
Yeah. Again, is it this arbitrary lifestyle that you want, or is it a intentionally curated thing that you’ve actually talked to your spouse about, your family about-

Ryan Isaac:
And calculated.

Matt Mulcock:
… and calculated it? We love to travel, so we’re going to prioritize that, but I don’t need a super nice car. That kind of conversation where it is intentional and you’re focusing on a meaningful retirement. To me, you have to paint that picture before you start talking about the numbers aspect of it.

Ryan Isaac:
Yeah. You do. And I’m just sitting here wondering like, you know social media and the world that we live in on social media makes us so much worse. Be interesting to know, if there’s any science out there about that. Has social media made keeping up with the Joneses worse? We know, anecdotally, yes. That’s like completely true. I wonder if there’s any data yet out there.

Matt Mulcock:
So I-

Ryan Isaac:
Seen anything?

Matt Mulcock:
There’s a podcast that’s really great. It’s called The Happiness Lab.

Ryan Isaac:
Oh cool.

Matt Mulcock:
It’s a Yale professor that talks about this. So, quick thing, she talks about mainly the idea of pictures and sharing things on social media. There’s a lot of data out there now that, and again I’m probably butchering, this is off the cuff, but she talks about how the idea of taking a picture in a situation, just to like… If you’re out with your family, like let’s say Hawaii, and the idea of you taking a picture to keep for yourself for later on, that actually can enhance the experience because you’re taking a picture, you know you’re saving it for later.

Ryan Isaac:
It enhances it?

Matt Mulcock:
It enhances it.

Ryan Isaac:
So, mentally, emotionally-

Matt Mulcock:
The picture itself will enhance it. But the step further is if you’re taking that picture in order to share it. Right? Like you’re thinking, “I’m at a place, I have to manufacture this.”

Ryan Isaac:
You have the people in mind.

Matt Mulcock:
And you have people in mind. It’s all about your mindset. So, I think that’s the reverse side, as well.

Ryan Isaac:
Interesting.

Matt Mulcock:
So, there’s data that shows that. It actually decreases your happiness when the mindset is, “I’m taking this picture to share it with my followers,” as opposed to just be present in the moment.

Ryan Isaac:
That’s so fascinating. I have read studies that talk about taking so many pictures like we do now on our phones actually decreases our ability to hold that memory longer than we used to be able to pull that off.

Matt Mulcock:
For sure.

Ryan Isaac:
[crosstalk 00:26:21] really interesting. Okay.

Matt Mulcock:
We’re just throwing studies out left and right.

Ryan Isaac:
I mean, you’re just like a walking study barn.

Matt Mulcock:
But don’t question me on them because they’re all fake. Yeah.

Ryan Isaac:
Is that your new nickname?

Matt Mulcock:
Yeah.

Ryan Isaac:
The walking study barn.

Matt Mulcock:
Yeah. Let’s go with that.

Ryan Isaac:
I don’t even know what that means. Oh, I’ll spend less in the future.

Matt Mulcock:
Oh, I love that one.

Ryan Isaac:
It’s kind of a mindset. That that’s how I’ll know retirement going to be okay and then I’ll be fine, is that… I’ll just stop spending this much money. We won’t spend a lot of time on that. I mean, go to dentistadvisors.com and hit up the education library. It’s right at the top. Type in spending. And we talk about this all the time.

Matt Mulcock:
Can I just give a quick answer?

Ryan Isaac:
Yeah.

Matt Mulcock:
No, you won’t.

Ryan Isaac:
This has happened? No, you don’t.

Matt Mulcock:
That’s what I’m going to say. No, you won’t.

Ryan Isaac:
You don’t.

Matt Mulcock:
You won’t.

Ryan Isaac:
You don’t until you’re forced to, because there’s no money in the bank, and then you will.

Matt Mulcock:
I would actually say, again… Can we come back to studies for a second?

Ryan Isaac:
Yeah. The study barn.

Matt Mulcock:
This is actually legit.

Ryan Isaac:
We now turn the segment over to Matt [crosstalk 00:27:18] the study barn.

Matt Mulcock:
No, this is real. This one’s for sure. I’ve seen this a lot. Actually, when you first retire in your first five to eight years or 10 years of retirement, you actually most likely will spend more.

Ryan Isaac:
Yeah. But you have time now.

Matt Mulcock:
You’ve got time. Right? You’re traveling more. You’re-

Ryan Isaac:
Let’s go somewhere. [crosstalk 00:27:33] stuff.

Matt Mulcock:
Let’s go do… Exactly.

Ryan Isaac:
I mean, what do you on Saturdays and holidays when stores are open but you’re at home not working?

Matt Mulcock:
Yeah.

Ryan Isaac:
Like let’s go shop.

Matt Mulcock:
You’re spending money. You’re on Amazon.

Ryan Isaac:
Let’s go buy stuff.

Matt Mulcock:
Exactly. It does taper off mid-retirement, and then it increases normally. They call it a retirement smile. At the end of your life it’s because of healthcare usually increasing.

Ryan Isaac:
Yeah. Typically you get into the 80s, then your spending will start to decline. But I plan on having high vitality.

Matt Mulcock:
You’re going to have to rip you out of that chair. Both of us, I feel like.

Ryan Isaac:
That’s what I’m talking about.

Matt Mulcock:
Yeah.

Ryan Isaac:
All right, one more. We actually spent a whole episode on this recently. It’s episode 240. And it’s this idea, it’s this signal that when debt is gone, retirement’s ready. When I’m debt-free, I’m financially free.

Matt Mulcock:
Yeah, we just did this.

Ryan Isaac:
We just did this.

Matt Mulcock:
Yeah, yeah.

Ryan Isaac:
So, we’ve got a whole other 45 minutes on this, episode 240, dentistadvisors.com. Click on the podcast link and find it on there. But that’s another signal. Here’s what’s going to be helpful. If you are listening to this and you push pause real quick and you go to your nearest web browser. Okay? Which could be a tablet, a laptop, a desktop-

Matt Mulcock:
I love where this is going.

Ryan Isaac:
… or a phone. Just go to the web. Okay? Go to dentistadvisors.com, click on the element section. You’ll see something that we’re talking about here. There’s a lot of resources on there, but this will give you some visual.Okay? Here’s two things that you can point to that will give you a little bit more of an indicator on where you’re headed and a better signal with more information in it. Number one, we’ve talked about this but in the reverse. Number one is… And I’m just going to tease this a little bit. We’re going to draw this out. This is the least sexy, most boring piece of financial planning that no one ever wants to pay attention to, but it is one of the most important things that you possibly can. And that is your spending.

Matt Mulcock:
Yep. I knew you were going to go to spending.

Ryan Isaac:
You know what I was going to say.

Matt Mulcock:
I was like, “He’s either going savings or spending here.”

Ryan Isaac:
Yeah. At least savings is a little sexy because money piles up somewhere. You’re like investing in something. It’s a little sexy, little less boring.

Matt Mulcock:
Yes.

Ryan Isaac:
Right? But spending number. If you-

Matt Mulcock:
People don’t avoid it as much. People avoid the spending conversation.

Ryan Isaac:
No one wants to budget, no one sticks to a budget. What I’m saying about this is, instead of having the mentality that, “I will spend less money when I retire, therefore that’s how I know I’m going to be okay,” start today tracking your spending. I say this is the least sexy thing no one wants to do because don’t hold the expectation that you are going to track your spending, slash it by 25, 30% with your spouse, and then hold to this micromanagement system of budgeting for the rest of your life.

Matt Mulcock:
This is like the definition of diet starts on Monday, right?

Ryan Isaac:
This is diet starts on Monday, and in 30 days, it’ll be so far off the rails you won’t… But knowing what that number is and being honest with yourself… Here’s what I mean by honest with yourself. If you look at some history of your bank records and you go, “Okay, we spend $10,000 a month,” but you’re just counting your payments and your groceries and your gas and utilities and you skipped over the Bora Bora trip that you weren’t going to take and you probably won’t do it again anytime soon-

Matt Mulcock:
You’ll never do that again.

Ryan Isaac:
Right. And if you skipped over the landscaping project in the backyard and the repairs to the car and you skipped over the part about the kids’ schooling, but you were just helping them out. They’ll probably take care of it themselves next year.

Matt Mulcock:
The $200 haircuts.

Ryan Isaac:
You can’t skip over these things. We’re not asking what is your bare minimum maintenance if you never left your house or had an emergency.

Matt Mulcock:
Yeah. Just sat in bed all day and watched Netflix.

Ryan Isaac:
No. We’re seeing what did you honestly, candidly, spend over the last 12 months? What did you really spend in your life? In our practice, the way that we help hold people accountable to this is we track their spending for them, for our clients, and once a year, we report a list to them of every month in the last 12 early months, we say, “Here’s the list. Here’s the four months with anomalies. What were these transactions?”

Matt Mulcock:
Yeah. Well, don’t do this right now.

Ryan Isaac:
We’re doing it literally this month. And sometimes they’ll come back, “Oh, that was a tax payment. Oh, that was a transfer. Oh, this is a credit card payment.” Cool. We’re not going to double count that, those aren’t spending items. But when it’s that was the trip, and that was the pool, and that was the down payment for the cabin… This was we spent money, and you didn’t spend 10 grand a month, you spent 12,750 on average every month. And we’re going to base how much money you need to save and plan for and accumulate in the future on that number. So, tip number one, after the long list of false signals, is go to this signal, and this is probably why it’s last on the list, is because no one really wants to do it.

Matt Mulcock:
No. Nobody wants to do it.

Ryan Isaac:
It’s more fun to track the stock market right now. And you debate about it.

Matt Mulcock:
It’s way more fun to pop on CNBC and see what Jim Cramer’s talking about.

Ryan Isaac:
Yeah, it’s way-

Matt Mulcock:
Get on Twitter.

Ryan Isaac:
I went to a neighbor’s house last night for dinner, and they meet homemade pizzas. And they’re just great people and was awesome. But we got on this conversation about what do you think the market’s going to do? And hey, I heard that if everyone keeps investing in index funds and buying the market, that eventually it’ll ruin the way the market works.

Matt Mulcock:
Love that.

Ryan Isaac:
And I’m like, that’s more fascinating to talk about than when’s the last time you checked what you spent? Which is where the conversation went, and then it kind of died because of that. I was a lame party guest by bringing up-

Matt Mulcock:
Yeah. They’re like, “We are never inviting Ryan over again.”

Ryan Isaac:
He was trying to have an intellectual discussion.

Matt Mulcock:
You left that conversation, and you were like, “Man, what a great conversation.” They left, like you walked out, and they were just like, “Honey, don’t ever call Ryan ever again.”

Ryan Isaac:
“That guy’s so awkward. He’s a freaking jerk. And why didn’t he just have a conversation like a normal person about the stock market. He started asking me [crosstalk 00:33:09].

Matt Mulcock:
Why is he judging me?

Ryan Isaac:
What are you spending? Why would you even go there? Look, that’s tip number one. On our website, dentistadvisors.com, under elements, that’s a little box under there that looks like one of the periodic table chemistry elements called burn rate. And click on that, and you’ll see resources. Number two is net worth. Okay? And this is another simple thing that you have control over, because this is what we’re looking for. What do we have control over? You can track your spending, and you can track your net worth. If you do nothing else and you just build a spreadsheet and every quarter… It’s just twice a year. Please. Add up all the stuff you own, subtract all the stuff you owe, and then you’ll have a net worth at the bottom. And just see how that changes over time. And these are big parts of what we do on… Lots of things go into this. Tracking and net worth and making sure it grows is dozens of [crosstalk 00:33:57].

Matt Mulcock:
Yeah. So, this is taking house, all your investment accounts-

Ryan Isaac:
Everything.

Matt Mulcock:
Your retirement accounts, your cash-

Ryan Isaac:
Your practice.

Matt Mulcock:
… practice.

Ryan Isaac:
Billing, the boat, everything, and then subtract all the stuff you owe out of that. Right? And just track what your net worth is. Okay? And this is the thing on our website, if you’re following along, for playing at home on this game, if you’re playing along-

Matt Mulcock:
If you’re playing at home.

Ryan Isaac:
Yeah. This is the thing called total term on the website. It’s the bottom right-hand corner box. I think it’s green.

Matt Mulcock:
It is green.

Ryan Isaac:
Or do I have a shirt on?

Matt Mulcock:
You do. Right there

Ryan Isaac:
I have a T-shirt. And my beard probably just rubbed on my microphone and made a sound. I’m sorry. I had to look down at my shirt. It’s total term. It’s green. Click on that, and you’ll see that these two numbers, your net worth and your spending, are the thing that tell us when can you retire? That’s the signal. That’s the signal. And how those breakdown is what am I spending? And is my net worth growing? That’s the information, and that’s the signal that will actually be helpful. So, to recap this, if you’re listening to this… Look, do you want to say anything, Matt, before… I’ve got to recap here and then we’ll let people go on their way. You want to throw anything [crosstalk 00:34:58]?

Matt Mulcock:
You’re letting me get something in before-

Ryan Isaac:
This is the-

Matt Mulcock:
Well, I like this.

Ryan Isaac:
Can I call you the study barn?

Matt Mulcock:
No. We’ve got to think of a different-

Ryan Isaac:
That’s the dumbest thing ever, but [crosstalk 00:35:06].

Matt Mulcock:
I like it.

Ryan Isaac:
What do you want to say about this as we wrap up?

Matt Mulcock:
The last thing I’d say on the spending part is the great hoss Reese Harper has talked about how-

Ryan Isaac:
Shout out to Reese.

Matt Mulcock:
Shout our to Reese. How budgeting is not required but tracking is. That’s what we talk about, right? You don’t have to budget-

Ryan Isaac:
Say that again. Say that again. Explain. I like that.

Matt Mulcock:
Yeah. Now you’re putting me on the spot to do it again and sound all [crosstalk 00:35:29].

Ryan Isaac:
Clear your voice, sit up straight, and say it. Okay.

Matt Mulcock:
So, budgeting is not required but tracking is. So, you have to be able to be aware of your spending. It doesn’t mean you have to have every category filled out, and one category’s in green, ones in red. “Oh, I got to stop eating out this month.” You just have to know and be, like what you said, be honest about your spending, and don’t justify the future by saying, “I’m not ready, but I’m going to cut out this and that in retirement.” Just be honest. If you’re spending 12 grand a month three years straight, you’re going to most likely do that [crosstalk 00:36:07].

Ryan Isaac:
In retirement.

Matt Mulcock:
You’re going to keep doing it. The last thing I’d say on the overall just like total term, and I think also, and the signals, is understanding the levers that you can pull that move this, move the needle for you. So, we talked about these already, like some of the investor behaviors, saving, investing, being consistent, controlling debt, and again, spending, like we already said. Just understanding what these levers are that you can pull to move that to… What signals you have to look at and to what you can control to move that total term number.

Ryan Isaac:
You have to make it work. And again, to recap, the whole list that we went through in the beginning, those are levers. They’re not the end signal that you’re looking for. We think they’re the end signal, but they’re not. So, that’s what I was saying. If you relate to that, if you hear that list and you’re like, “Oh yeah, I watch the stock market incessantly because I feel like that’ what’s really going to drive my retirement,” or, “I do believe that I’ll cut my spending by 50% and then I’ll be okay one day,” or that, “The moment I’m debt free, that’s retirement.” Episode 240 shout out.

Matt Mulcock:
Shout out to us.

Ryan Isaac:
Yeah. Shout out to us for going over that on episode 240. If you’re listening to that and you’re relating to that and you’re going, “Oh yeah, I need different indicators. I need different signals. I need more information,” then give us a call because that’s what we do. It feels like telephone. That’s what people say, like [crosstalk 00:37:28].

Matt Mulcock:
Yeah. Call us right now. We’re not dressed nice enough for a telephone.

Ryan Isaac:
What do they say? Like people are standing by?

Matt Mulcock:
Yeah, yeah. People are standing by for your-

Ryan Isaac:
But we are.

Matt Mulcock:
We are.

Ryan Isaac:
[crosstalk 00:37:34] standing by.

Matt Mulcock:
Absolutely.

Ryan Isaac:
When you go to dentistadvisors.com, someone’s on the chat. If you go to dentistadvisors.com and you click on book free consultation, you’ve got open calendars.

Matt Mulcock:
Here’s a better thing. If you do that, you will talk to future us.

Ryan Isaac:
You might talk to me or Matt in the future.

Matt Mulcock:
In the future. From where we are right now.

Ryan Isaac:
That’s [crosstalk 00:37:50] possibility. So, if you find yourself listening to this, you’re like, “Man, I tend to follow those signals, but I’m not getting anything out of it, there’s no information in the signal,” like the expert told us from the Russian signal, give us a call. We’ll help show you how you can formulate better signals and get better information.

Matt Mulcock:
And don’t trust Russian signals, for sure.

Ryan Isaac:
And don’t trust Russian signals. That’s the end story. So, thanks for tuning in. Thanks for listening. We really appreciate it. We’ll catch you next time. And carry on.

 

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