Does winning at investing mean that you need more information, a better rule set to follow, or better connections? Our guest today says that while those can be advantages, it’s hard to “win” those games. However, there is one method which can help us easily increase our odds of becoming a better saver and investor. More good news? This method is available to us all. Our guest today says learning from the Stoics, philosophers from ancient times, we can easily beat the average investor and we can set ourselves up for life. If you’re listening to SB for that reason, you’re in a for a treat. Darius Foroux is not only one of our favorite bloggers (we’ve used his work several times as the centerpiece for our Friday roundtable chats between personal finance luminaries), he actually joins us today in the basement to help you become a wiser, stronger, and hopefully wealthier Stacker.
In our headline segment, one saver says that he saved too much money into his 401k retirement plan. Huh? How does that even make sense? We’ll chat about how to best save for retirement and also challenge you to think about how you save…and not just about the amount you’re saving.
We’ll hear from a Stacker in need as well AND of course, save time for Doug’s trivia question that you’ll be talking about all day long.
Deeper dives with curated links, topics, and discussions are in our newsletter, The 201, available at https://www.stackingbenjamins.com/201
Enjoy!
Our Headlines
Darius Foroux
Big thanks to Darius Foroux for joining us today. To learn more about Darius, visit Darius Foroux | Weekly ideas to become smarter and wealthier. Grab yourself a copy of the book The Stoic Path to Wealth: Ancient Wisdom for Enduring Prosperity
Doug’s Trivia
- What was Marcus Aruelius’ profession?
Better call Saul…Sehy & OG
- Stacker Jamo called in wanting to know if it’s possible to replicate Paul Merrimon’s 4-fund-portfolio in his wife’s TSP (Thrift Savings Plan).
Have a question for the show?
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- Check out The 201, our email that comes with every Monday and Wednesday episode, PLUS a list of more than 19 of the top money lessons Joe’s learned over his own life about money. From credit to cash reserves, and insurance to investing, we’ll tackle all of these. Head to StackingBenjamins.com/the201 to sign up (it’s free and we will never give away your email to others).
Join Us Wednesday
Tune in on Wednesday for a special community episode! We’re answering questions submitted by you, the Stacker Community, to us through our Facebook Group, The Basement!
Written by: Kevin Bailey
Miss our last show? Listen here: Cool Electric Vehicle! Can You Afford to Insure It? (SB1545)
Episode transcript
[00:00:00] OG: What’s happening America, Dougie Fresh. The big D as I like to call him. I [00:00:06] Doug: just rolled outta bed, man. Did you have a nice weekend? I had a great weekend. Uh, you know why? [00:00:10] OG: Nobody cares. You know why, [00:00:14] you know why you had a great weekend? Because you didn’t have to stand post. You didn’t have to. I didn’t pick up a firearm. I didn’t. Who’s gonna do it? You No, you Lieutenant Weinberg. No, no, no, no. I don’t think so. You know, you know who did it? [00:00:31] Doug: Jack Nicholson did it. [00:00:32] OG: Exactly. Well, kind of our servicemen and women across the globe taking care of us. [00:00:39] So we can just hang out and just do whatever you were gonna say that nobody cared about. So thank you. Thank you to all our service members, servicemen and Servicewomen. On behalf of Navy Federal Credit Union Credit Union, easy for me to say. Navy Federal Credit Union, simplify. Thank you for all you do to keep us safe, and here’s for another week. [00:00:59] Of the Doug and OG show. What do you think about that? [00:01:01] Doug: Wow. I couldn’t feel more heard and seen right now. Big [00:01:05] OG: D and og. Who knew? [00:01:09] Doug: Thanks everybody. [00:01:11] So you’ll pick me up tonight at 7 45? [00:01:14] bit: Oh, well, no. I got a few things to, to take care of first, but what, why don’t we make it quarter to eight? [00:01:20] Doug: Stop [00:01:20] bit: it. Okay. 7 45 [00:01:29] Doug: Live from Joe’s mom’s basement. It’s the Stacking Benjamin Show. [00:01:44] I am Joe’s mom’s neighbor, Duggan. Today you’ll learn about the intersection of money and philosophy with author Darius Farrow in our headlines, is it possible to have too much in your 401k account? Let’s see what OG has to say about that one. Plus we’ll answer a call from Jaymo who has a question about his TSP account, and he thought, you know what? [00:02:05] I’d better call Saul, see hi and og, and then I’ll share some ruling trivia. And now two guys who showed up to work today in togas, I already took mine off. It’s the big D and OG. Are we really going with that? Are we going with the big D? I think you need to [00:02:28] OG: change your name here on, uh, on YouTube from [00:02:30] Doug: Neighbor Doug to [00:02:31] OG: the [00:02:31] Doug: Big D. [00:02:32] The Big DI like it. Tell us about it. In the Basement fans, if you like the name change to the Big D [00:02:39] OG: Joe’s still away this week taking care of his family, taking care of his mom and his sister and himself. So we’re gonna give him another week off. And we’re just gonna again, Frankenstein this together. So last week, I don’t know why you say that. [00:02:50] Uh, you and I, [00:02:51] Doug: well, I mean, it’s, we’re not frank that this is a piece of art. It doesn’t have to, we’re not bolting anything on here. We’re not walking clumsily. We’re pros. [00:03:00] OG: Okay. All right. I mean, well definitely. Steve will make it sound like we’re pros, that’s for sure. Damn right. But, uh, you and I are gonna handle the front and the back end and then uh, we’ve got an interview in the middle with Joe and then Wednesday this week, just you and me. [00:03:16] That’s it Again, no, Joe, I mean the whole thing is [00:03:18] Doug: just, I’m looking forward to that one. Another big D and og, it’s a mailbox episode. [00:03:23] OG: This might be the penultimate Big D and OG show of [00:03:26] Doug: all time. You think the FCC might step in and say no more of that? I don’t know. [00:03:30] OG: I’m not sure. Well, what’s on the agenda for today? [00:03:32] What do you wanna do, [00:03:33] Doug: og? We got a couple of sponsor spots coming up. Stick around, listen to those and we’ll be right back. We’re back og. And it is time for, uh, your, as the British lady often says your favorite part of the show, the headlines. Isn’t that what she says? [00:03:49] OG: I don’t, don’t think so. [00:03:50] Doug: Yeah. You don’t know. [00:03:52] She’s not in your ear like she’s in mine. Nope. [00:03:55] bit: Hello, doling. And now it’s time for your favorite part of the show. Our Stacking Benjamin’s headlines. [00:04:02] Doug: Quite a nice voice reminds me of Helen Miran, who doesn’t have a crush on Helen Miran. Oh, uh, hey, a 50-year-old retiree says his biggest mistake was saving too much in his 401k. [00:04:13] Say what [00:04:14] Doug: I know, right? Eric Cooper retired at 48 with 2.4 million in his score, 401k score, but lacked liquidity. This comes to us from Kathleen Elkins and entrepreneur.com. He talks about how his workaround is an IRS rule that lets him withdraw $20,000 a year penalty free in his early twenties. Eric’s, uh, early boss gave him, uh, some sound money advice, contributed as much as you can to your 401k. [00:04:40] So he went all in on that and did that for 25 years. Ended up with a nice, healthy amount, but here was the problem. He didn’t have any liquidity. So, uh. Before we get to what Kathy Elkins had to say, what are your thoughts on that? Is that possible to do, to throw too much money in there and be a little cramped? [00:04:59] OG: This is not possible at all. It’s like saying I have too big of a house, or I have too many cars. My airplane goes too fast. I [00:05:07] Doug: have too many wives. Oh wait. [00:05:09] OG: Oh wait. Yeah, yeah. I have one too many wives. Uh, wait. No, that’s not true. I have the exact amount. That is correct. Look, if you’re looking at, uh, savings when you’re 25 and you’re starting your career, I. [00:05:23] You need to have things set up on auto invest and, and the easiest place to auto invest is into your 401k. Now, something that we have access to today that he may have had access to at the end of his career was a Roth 401k, a little bit more tax benefit, you know, and, and he said liquidity. I, I don’t agree with that word, but a little bit more favorable tax withdrawals opportunity there. [00:05:48] But I think early on, if you can get your systematic savings and investing into your 401k, that’s a great place to put it. Where I think he might’ve made the mistake here is as he got closer and closer to financial independence, he didn’t adjust. He didn’t say like, oh gosh, I’m doing pretty good. I’m 38 years old. [00:06:07] I’m, I might wanna get outta here in 10 years. Things are looking pretty great. Or, I’m 41, or I’m 43. How now can I structure my withdrawal strategy? All of financial planning talk, almost all the stuff that’s on podcasts and stuff like this is all about accumulation, right? Asset allocation, what stocks to buy, the five hottest ETFs to own the five worst ETFs, not to own, you know, like whatever, right? [00:06:31] It’s all about accumulation. There’s very little conversation about distribution or how to turn that big pot of money into an income stream and uh, where, where, if there’s anything that he might’ve wanted to adjust here, it might’ve happened five, 10 years ago where you could see this trajectory building and going, gosh, I’m on track to be an early retiree at, at 50, and I need to start thinking about how I’m gonna structure my paycheck from 50 to 60 and from 60 to 70, and how that’s gonna look. [00:07:04] The good news is this, he’s got two and a half million dollars, so Yeah. Right. It’s like. He’s not hurting from that, but he [00:07:10] Doug: is only taken out 2020 KA year. Which is, I mean, sounds like a lot of money, but that could be tough to live on at 48 ’cause I’m sure he is not just sitting in in his easy chair knitting. [00:07:20] OG: That’s the other thing that it says, right? He says the IRS law that allows him to take out 20,000 a year penalty free. What he’s talking about here is when you take money out of your workplace plan or when you take money out of a qualified plan before 59 and a half. So everybody knows a 59 and a half rule. [00:07:38] If you have IRAs or 4 0 1 Ks, you have to wait till 59 and a half. Why is it 59 and a half? Because that’s what the IRS put in there. They just said, if you’re not 59 and a half, you’re not retired. [00:07:46] Doug: Some senator was 59 and he wanted his money six months later. [00:07:51] OG: I, I think you’re probably right. So the IRS is trying to put a disincentive in there for you to take the money out when you’re 41 and buy a Mercedes or something, right? [00:07:59] So they, so they had a penalty. But if you retire and you are retired, you can waive that 10% penalty by doing what’s called substantially equal periodic payment. So you can, there’s a couple of calculations. This is not super complicated, but you want to get a CPA involved or a financial planner involved to make sure you’re doing the math right. [00:08:17] There’s three different calculations that you can do that will allow you to take out money from your qualified plans without that 10% penalty. The issue is, is that whatever calculation method you use, the IRS has three different ways to do it. You pick which method you want. You pick how much money’s going in, you do the calculation and go, boom, it’s gonna, you know, I can take 20,000. [00:08:36] You can’t change that 20, it’s 20 for five years or until you turn 59 and a half, whichever is later. So in this case, you know, this guy’s 50 years old. He’s gonna take 20 KA year out every year until he is 59 and a half. Even if all of a sudden this year he needs 30, to your point, or next year, he only wants 10. [00:08:52] Doug: Actually, he’s only 48, so it’s not gonna get him there. He’s gonna have a, a weird gap there at the end before he turns 49. [00:08:58] OG: No, no, no. It’s 10 years or 50. Nine and a half, whichever is later. Oh, I’m sorry. I’m sorry. Five years or 50? Nine and a half, sorry. Yeah. So if you retire at 56 and you say, well, I wanna do this, you’re doing it till 61. [00:09:08] Yeah. Even though you’re gonna cross over to the 59 and a half. [00:09:11] Doug: Yeah. Okay. As I read through this, one of the things that became apparent was. This guy never went out and got any help in his corner. Any good financial planning help? I mean, great to get started when he was super young. Like we’ve talked about it all the time. [00:09:26] Don’t worry about is this the right vehicle? Is this the right blend and mix and, and just get started. We’ll figure you got time to figure that out. Mm-Hmm. He never did. It sounds like it. He just, and who knows what mix of investments. That’s a whole different question that he chose to have in his 401k. [00:09:42] But nonetheless, he just, that was his only, he was a one trick pony. It sounds like that’s all he did was put money in there. Never got any advice from somebody like you who could say, Hey, we need to start figuring out what distribution looks like. You’re 38 now and in 10 years you can retire. We gotta change some things in the mix to get ready to do that. [00:10:01] So that’s one takeaway I had from this. But, uh, he made this quote, which kind of. Put a p under my mattress a little bit. He said, even though I would take a tax hit because I’m not maxing out my 401k, I probably should have done it just to the match and put the rest into a brokerage account. So the the, he’s saying, oh, I, I screwed up. [00:10:22] I should have, I put too much in the 401k. I should have just gone up and equaled what my employer was gonna match and put everything else in a brokerage account. I didn’t love that. But how do you feel about that? [00:10:32] OG: Well, I mean, the reality is, is that he would’ve probably less money, right? I mean, unless he had the, the forethought to sit down and do that calculation. [00:10:41] I mean, think of it this way. The average 401k match, I think we’ve done this on a, on a trivia show on the, uh, yeah, we did. Round table. Yep. I feel like it’s what, 3%? Is that the average match or something like that? It, so let’s say that you make a hundred thousand dollars, you get a 3% match. That’s three grand. [00:10:54] You put in three, they put in three. And he was maxing it out this year, which is $23,000. Right? So that’s $20,000. That’s not being invested in his 401k. Well, that $20,000, if it’s pre-tax, in your pre-tax, 401k, all of that 20 K gets invested. If you’re investing that after tax, you have to pay taxes on the 21st, right? [00:11:14] So your taxable investment amount is gonna be lower. Let’s say you pay 12% of that in taxes, that’s 2,500 bucks that is gonna go to Uncle Sam. So now your investment account is only gonna have 17 five in it. So I’d be curious if we did the math out, you know, using his actual numbers where you would be right. [00:11:33] Now, some people would say, doesn’t that even out because he’s got two and a half million dollars in a 401k that he has to pay taxes on versus pick a number, I don’t know, $2 million that he doesn’t? Mm-Hmm. Well, the reality is he still has to pay taxes on that. It’s just at a different rate. And if he’s only taking 20 K out of his 401k, and that’s his taxable income. [00:11:53] His tax rate’s practically zero there anyway. So I think if he kind of peels away the different layers here, I think even though he’s upset that all my money’s in my 401k, if his distribution is really as low as 20 KA year, must have income, other sources. That would be my guess. That tax bill is pretty low on that 20 k, probably close to what it would’ve been outside of it, but he has more money because of the tax deferral. [00:12:23] So all of that money has sat there for 25 years growing without paying taxes versus having to pay taxes every year on the growth and the rebalancing and all that other sort of stuff that would’ve happened over the years. So I don’t think it’s fair to say tomato, tomato, tomato. Is that how they say it? [00:12:38] That’s [00:12:38] Doug: exactly the phrase. Yeah. You nailed it. I see [00:12:40] OG: how it’s written and I read Tomato. Tomato. Yeah. So I don’t know what that means, but um, I don’t think it’s fair to look at that and say, well, I would have more money, you know, one way or the other. Like you said before, I think the biggest issue here was somewhere along this journey he could have noticed, oh my gosh, I’m 38 years old. [00:12:57] I got a million bucks. I’m doing pretty good. I’m 42 years old. I got a million bucks. I’m doing pretty good. Maybe I wanna be done with this in six years. Then start adjusting, you know, those different contributions at that point, you know. But, um, no, to be fair, maybe he got let go at 48 and you know, it was kind of a surprise. [00:13:13] And maybe he was planning on making some changes at 50. I don’t know. Who knows? But that’s, I think the importance of, it’s okay early on, like you said, just get money in. Don’t worry about being efficient. Don’t worry about that sort. ’cause you’re talking about a hundred bucks or a thousand bucks or $10,000. [00:13:29] The efficiency comes by putting the next 10,000 in when you have 10,000 mm-Hmm. Not by trying to optimize your 10,000, if that makes sense, get the next 10. But there’s some point I like to say, when your money starts making more money than you’re putting in, [00:13:43] Doug: ah, [00:13:43] OG: now you might look at that and go, wait a second, I put in 20 grand this year. [00:13:48] My account went up by 20 grand this year. This thing’s doing as much work as I’m doing now. I need to allocate a little bit more time to making sure that it’s behaving the way that I expect it to, whether it’s from an investment standpoint or looking at it from a planning perspective and saying, all right, the snowball’s starting to gain a little traction here. [00:14:06] Right? I’m starting to roll downhill. Am I still going in the direction that I want to go? [00:14:11] Doug: I like that notion of that being a good, uh, bellwether mark to say when I really have to start paying attention. But the flip side of that is if you pick wrong early on, it could take another five or 10 years for you to reach that point where your investments are making or doing as much work as you are. [00:14:29] And you could have accelerated that timeline a little bit. [00:14:32] OG: I’m talking about, yeah, I’m not talking about like investment selections or making mistakes there. I’m saying like in terms of starting to work on what that planning is gonna look like early on, 20 to 30. Your best efforts need to be on making more money and putting as much as you can away. [00:14:49] Okay. You know what I mean? Like if you look at your account and you’re like, oh, I’ve got $10,000. I need to put a lot of energy in managing that 10,000 versus go put a lot of energy in making another $10,000 bonus. Mm-Hmm. Or getting a pay raise or going to school where you can get another, a higher paying career, whatever. [00:15:06] You know what? Like whatever you can do to save the next 10,000. If you can accelerate that next 10,000 savings, that’s like having a hundred percent return on your 10 k. I like it, but eventually you’re like, well, I’ve got a million in my 401k. You know, I can really obsess over this $10,000 that I can work extra and get a bonus on. [00:15:25] Or my account’s gonna grow by 200,000 this year. I should probably put a little energy into my account because if that gets right, that’s like 20 x what I’m able to save, or 10 x what I’m able to save. Focus on the outcomes that you can create based on the energy I think that you wanna spend. [00:15:43] Doug: So first early on is focus on the dollars and the pennies will take care of themselves, and then later it’s focused on the pennies and the dollars will take care of themselves. [00:15:52] I just made that up. I have no idea if that’s even right. [00:15:56] OG: Sounds like it should be on a T-shirt, but like on the back of a t-shirt, not on the front, you don’t want anybody to see that. It like six [00:16:01] Doug: point font over on the left sleeve. Really? [00:16:04] OG: Really Like maybe, you know, there’s like this fabric that hangs in the back of the shirt, like that’s only, only you can see that little white tag. [00:16:10] Yeah. Yeah. That tells you what size it is. Maybe that’s where it goes and you write it in those hieroglyphics that are like, here’s how you wash. I dunno if you’ve seen that. It’s like, you know, like a triangle? I have, yeah. With a circle in it. Symbols and a bullseye and a squiggly line. And that means. Wash cold and hang to dry. [00:16:27] You’re like, how the hell would I know that? [00:16:28] Doug: Nobody [00:16:28] OG: does that. [00:16:29] Doug: It’s everything gets washed on hot with as much detergent as it says, like fill line max every, and then you push one button and you walk away and the dryer is normal, max. It’s like how you cook in a microwave. Whoever uses the medium setting in a microwave, you [00:16:47] OG: don’t do 60% for your vegetables in the microwave. [00:16:51] Doug: I laugh at all of those other buttons. It’s add a minute, it Adam on it, add a minute, 1, [00:16:56] OG: 2, 3, go and stop. And you don’t even need to stop ’cause you can just open the door. Yeah, just take a little bit of a electric look in there [00:17:03] Doug: and see if anything’s splattering around the top. Okay. It’s probably hot enough now. [00:17:06] It’s probably hot enough. Uh, I you back to the labels. Have you ever, I mean occasionally look at the labels in the back of your shirts. You might find some funny stuff in there. I had a T-shirt once that said, seriously, if you don’t know how to wash a t-shirt by now you’ve got other issues or something like that. [00:17:20] It was funny. And so you might, you might find some good stuff in there. Kind of like our investing men advice. [00:17:27] OG: So I guess the moral of the story here is invest all you want in your 401k and uh, just wash your T-shirts on hot. It’ll be fine. They don’t shrink. And if they do, you got two and a half million dollars. [00:17:38] Just buy another T-shirt. [00:17:40] Joe: That’s right. [00:17:41] Doug: Wow. I wish you wrote the cliff notes I used in high school to get through English comp. ’cause you just, your summaries are perfect. Hey there, stackers. I’m Joe’s mom’s neighbor, Doug, the big D. Ask anyone who knows me and they’ll tell you. I’m a bit of a philosopher myself. [00:17:57] I’m always reflecting on life’s biggest unanswered questions. Like, why is there braille on the drive through ATM and how do they get the peanuts inside the m and ms? And why isn’t 11 pronounced one T one? I mean, these are, these are questions I need answers to. It’s too bad that philosopher isn’t really a job anymore. [00:18:18] I’d have been right up there with all the other greats, like so crates and, uh, Chipotle, I mean, Aristotle. Yoda, you know, Play-Doh once said, the unexamined life is not worth living, which is nearly identical to an original quote of mine, which is use it or lose it. [00:18:35] OG: I ate Play-Doh once. [00:18:37] Doug: Who among us hasn’t tested the blue Play-Doh, [00:18:39] OG: it’s gonna say, does not taste like blueberries, but, [00:18:45] Doug: but just think about it, og. [00:18:46] If I had lived back then when this Play-Doh dude was alive, I could have have a stone carving in my head in a museum somewhere, but I still can actually, one day I should collect all of my big thoughts and put ’em in a book like Marcus Aurelius did. His book isn’t even that long either. Must not have been much to think about back in the one hundreds. [00:19:06] Today’s trivia question is, what was Marcus Aurelius’s profession? I’ll be back right after I post on Nextdoor that I’ll allow an artist to make a sculpture of my head. That’d be great for someone’s portfolio, wouldn’t it? [00:19:26] Hey, there stackers on Deep Thinker and Guy with all the answers to life’s biggest questions. Joe’s mom’s neighbor, Doug, born in the year one twenty one, and I thought Joe was old. Marcus Aurelius was a big success in his lifetime, which probably made him great with the ladies. His stoicism inspired book meditations is still widely read today, selling more than a hundred thousand copies in 2019. [00:19:53] Not to brag, but I had a copy on my Amazon wishlist. I haven’t committed to it yet. Today’s trivia question is, what was Marcus Aurelius’s profession? The answer known as the last of the five greats. Marcus Aurelius served as the Emperor of Rome from 1 69 to 180, and now here to teach you how to approach money with stoicism. [00:20:18] It’s today’s mentor, Darius Farrow [00:20:23] Joe: and for long time stackers, you’ve heard us, uh, talk about this gentleman’s blog post often, but I’m super happy I finally get to meet him. Darius Farro is here. How are you? I’m great. Thank [00:20:34] Darius: you [00:20:34] Joe: for having [00:20:34] Darius: me. [00:20:35] Joe: Good. Now, did I pronounce your last name right? Because that’s the way I always imagine it being pronounced. [00:20:40] Darius: Yeah, it’s close. Farru [00:20:41] Joe: Farru. Well, you know, it’s even [00:20:43] Darius: easier. [00:20:44] Joe: Yeah. Well, you know, I got Saul Sea High, so compete with that brother. Yeah. Well, it’s interesting to me your really, your journey along this stoicism path, it seems to me, based on what I’ve read, is because you lost. What was to you at that time, A significant amount of money. [00:21:05] Can we talk about you going to work for the bank and how kind of your journey started toward this path towards stoicism? [00:21:12] Darius: Yeah, so it’s 2007 year before the great financial crash and uh, I’m in college and I want to earn some money on the side. So I find this job vacancy for working at a large international bank in the kind of personal banking department. [00:21:29] So [00:21:29] Joe: it was ING, right? I mean [00:21:31] Darius: huge bank. Yeah. ING director was, was huge. And they were on a there and I started working there in the evenings, um, basically just doing standard banking stuff, people asking for credit cards, processing their applications, et cetera. And after a while I got this opportunity to go to the investing side. [00:21:50] And this was still before the financial crash where you could. Get a few weeks worth of training and then you could become mutual fund advisor. And, and now [00:22:03] Joe: that’s, which is by the way, who among us, Darius does not wanna hire the person with like three weeks of training. Like, that’s who I wanna get my advice from. [00:22:11] Darius: Yeah, exactly. So I, I get on this training and I learn about how mutual funds work and I start calling high net worth individuals, offering them the latest mutual funds, et cetera. So I thought I was this hotshot and I always loved investing. I was obsessed with the stock markets. Since I watched Wall Street like so many other people, I thought to myself, well, the bank is doing great. [00:22:38] Everything is looking great in terms of the stock market at the time as well. So let me buy shares of ING and another financial services firm at the time in the Netherlands. So I bought the stocks and then within a year the crash happens. And before I know it, I’m down 60%. And that experience, it was like someone punching me in the gut and I never knew what I, I couldn’t even imagine that it would be so painful. [00:23:09] So that experience kind of put me off from investing because I thought to myself, I need to figure out how I can avoid this from happening again. Because thought to myself like, I’m investing all of my savings during this time, which is not a lot, but if I earn more in the future, imagine that happening to all of my money. [00:23:30] So that’s where this whole desire of managing my emotions, uh, came from. And it took me many years to really figure out the key to that. [00:23:41] Joe: But why was it Darius, your emotions that you were interested in managing? Because it seems to me that for a lot of people, the lesson they learn. Which you point out in your latest work is the wrong lesson. [00:23:52] They’re like, I’m just not gonna go near the stock market. You point out in a great graph that no, you can’t afford not to invest. You have to invest. How did you come across this idea that it wasn’t the stock market, but it was something internal that you really needed to change? It was your wiring. [00:24:09] Darius: Yeah. [00:24:09] I always knew that the way to wealth was through stock somehow because I just looked at the wealthiest people during that time, and if you look at it today, these are all folks who either are large shareholders of companies that they founded, or our investors like Warren Buffett for so many years. So that was also my example, and I thought to myself, if all of these folks have done it, it should be possible for me as a small investor to kind of profit from that as well. [00:24:42] I just need to figure out the key to earning. Getting returns in the in the market, so I always was determined to figure it out. In the beginning, I thought that more knowledge would get me more at ease to get over my emotions, because that was my initial thinking. I think most investors start out that way thinking that if they educate themselves more and getting degrees, and I ended up in business school and I specialized in finance and I still wasn’t able to invest. [00:25:20] I just couldn’t collect my emotions to get back into the market because I actually sold my initial stocks after a year and a half or two years, and I just couldn’t get back in. During all this time, I just kept studying and learning more and here and there I would see these hints from Benjamin Graham or Warren Buffet talking about you need to. [00:25:46] Master yourself or your emotions are your biggest, uh, enemy. But it, I never really found out a way to master these emotions because they, they’re telling you to master your emotions, but they’re not telling you how to do it. So I just kept on searching and searching. And it honestly wasn’t until 2015 when I finally discovered stoicism, when I realized that this is an ancient Greek philosophy. [00:26:17] It’s been around for 2300 years, and they’re talking about how you can deal with the ups and downs of life. And all I’m thinking when I’m reading these stoics, and one of the first stoics that I read was Marcus Aurelius. I’m constantly thinking ups and downs of the market. So from the beginning I started to connect stoicism with investing. [00:26:43] And I think that’s because I’ve always been obsessed with the market and always read about investing and always had this underlying desire to become a successful investor. So I think that’s how I kind of trained myself or put glasses on, like made my thinking very narrow, always thinking about how I could apply every piece of life advice to investing. [00:27:12] And, uh, when I finally discovered the stoics. I, I knew I was onto something. [00:27:18] Joe: It’s well that, that’s not unlike, I think all of us, Darius, that we think the answer to our question is external and the answer truly all the time was right inside of you and controlling the stuff that is inside of you. Let’s dive in a little bit to the stoics to give our stacker community that isn’t as familiar with the stoicism. [00:27:38] A little idea of this philosophy and where it comes from. People often don’t understand their philosophical upbringing. In fact, as a guy who’s taken a lot of philosophy classes, I’ve realized just how messed up what a messed up mix of philosophies, the life we lead, or heck we look at, we look at our political parties in America, as you know, and there’s a mess of philosophies where you’re like, I don’t, I don’t know what the hell these people believe, but stoicism is definitely a set point of view. [00:28:10] So can you talk a little bit about the stoics and really what this belief system entails? [00:28:16] Darius: Yeah, so stoicism is, I think, the most practical philosophy that exists because you can summarize it in one sentence, which is simply focus on what you control and ignore everything else. And in a way it’s like risk management because all that risk management is, is a focus on maximizing the things that are within your control and minimizing your efforts and focus on the things that are not within your control. [00:28:49] So it’s kind of a, a survival mechanism or a way to look at life, a way of life actually, where you’re always thinking about every type of situation that you are in and you’re thinking to yourself, what do I control when it comes to. My habits, what do I control when it comes to raising my kids? What do I control when it comes to my career? [00:29:17] And of course, what do I control when it comes to investing? That is really the foundation of stoicism. And one of the things that I’ve found in recent years since it’s become more popular and started to become a part of mainstream, um, ideas and also starting to reach mainstream media, is when some folks kind of related to bro and macho entrepreneurial culture where a lot of folks say that, oh, you know, stoicism helps me to ignore everything in life, right? [00:29:53] And my emotions, right, and just, you know, have this laser focus. And I don’t think that’s really true. I don’t think they really understand stoicism, because if you look at all of these famous stoics like Marcus Aurelius and Seneca and Epic. Smithsonian Rufuss, another famous stoic, all of them except for Epic Theater were wealthy and they had a lot of resources and they could do anything they wanted in life. [00:30:19] They could live extravagant lives, but they consciously decided to live a very barren, balanced, and in some cases even stringent life, where they would train themselves to become stronger and better and focus on doing the honorable thing. When it came to all of the important areas of life, like, you know, taking care of yourself and your loved ones and choosing a career, et cetera, [00:30:51] Joe: I felt like Darius in my own life that, um. [00:30:55] Practicing some stoicism has helped me become an observer of my feelings. So instead of just feeling the thing and then acting out on that feeling, I feel like there’s more of this shock absorber. You know what I mean? Mm-Hmm. About why am I feeling this and where am I? Am I truly like, I’m much more an observer of the present because of stoicism? [00:31:17] Would you find that to be true? [00:31:19] Darius: Yeah, a hundred percent. I totally agree with that. Since I discovered the philosophy, I also started journaling and that’s how I actually observe myself. And it’s shock absorber is, is a great way to, to look at it, because by applying STOs in your life, you kind of create this additional step for yourself before you respond to things because. [00:31:47] As we all know that life is not about what happens to us, it’s about how we respond. Everybody knows this, but everybody also knows how difficult it is to put that idea into practice. And stoicism is just a collection of reminders that you can use, uh, in daily life to just stay on the path and, and make sure that you don’t get swayed too much by the things that happen. [00:32:17] Joe: Let’s then go down that logic chain that you begin with when it comes to investing. ’cause you very logically take us to this place where we may have one of four advantages, right? And I’d love for you to talk about these different edges that we may have. First, you talk about we may have, when it comes to investing, we may have an information edge. [00:32:37] Tell me about how we get that. [00:32:39] Darius: Yeah, so I think that’s one of the most classic. Investment edges that investors focused on since the start of modern day investing that in my opinion, started with, um, Benjamin Graham and, uh, in the late 1920s, early 1930s, where they would look at the information they could collect as an investor that other people might not have. [00:33:06] And in that way, you could gain an edge over all the other investors when it came to individual stocks. The thing is, if you want to acquire an informational edge in today’s fast paced society where information is always available for everyone, even for free, uh, where a lot of online brokers even provide great analysis and access to information for free, where you would have to pay certain other services for in the past. [00:33:40] It’s very difficult to really gain an edge when it comes to information. We’re not gonna win that battle. Yeah, exactly. And even like Warren Buffet is famous for reading eight hours a day. You really have to be extremely passionate about analyzing individual stocks to that level. So gaining an information edge, I feel like sounds great in theory, but in practice is almost impossible for the average investor. [00:34:09] Joe: I was thinking about you, you know, you earlier talking about, uh, the movie Wall Street and of course Gordon Gecko saying, you know, it’s all about information, right? If you’re not bringing me something Bud Fox, then you’re no good to me. [00:34:21] Darius: Yeah. [00:34:21] Joe: Um, and of course, what’s the lesson there, Darius? He went to jail, right? [00:34:25] Darius: Yeah, [00:34:25] Joe: exactly. [00:34:26] Darius: Yeah. That type of information. It’s still illegal. Yeah. [00:34:30] Joe: Yeah. Unless stackers you like orange, you might wanna pursue something else. Next. You have the quant edge. What’s the quant edge? [00:34:39] Darius: The quant edge kind of started with, uh, quantitative analysis with the famous investor Edward Thorpe and also, uh, the late Jim Simons. [00:34:50] It’s an edge that is still working because the fund that Jim Simons ran for many years did even better than Warren Buffet. So he’s considered as one of the greatest investors of all time by many folks. The problem is that quantitative analysis and creating math formulas and econometrics, et cetera, is usually left for the geniuses of the world. [00:35:20] And Jim Simon’s Fund famously only hired PhDs and NASA scientists, et cetera. Are you saying we may not, we, [00:35:29] Joe: we may not win this battle either. [00:35:31] Darius: Yeah, I’d love to be part of that, but. It doesn’t require a lot of thinking to realize that that’s kind of out of reach for an average investor. [00:35:43] Joe: The third is the size edge, which of course is if we have enough money, enough resources, we can gain special favor, special deals that other people can’t get. [00:35:55] Which brings us to the fourth edge, which is the stoic edge. And this one is available to all of us. And kind of, if I, if I summarize it, tell me if I’ve got this right, Darius, the stoic edge kind of is just stop doing stupid. [00:36:12] Doug: Hmm. [00:36:13] Joe: Would you say that’s true? [00:36:15] Darius: I wish I wrote that in the book. [00:36:20] Joe: Oh, I gotta say TM then. [00:36:21] Darius: Yeah. [00:36:22] Joe: I don’t want Darius having that actually. Yeah, yeah, [00:36:25] Darius: exactly. And the, and the rest is basically, here’s how to do that. Or here’s how to stop doing stupid. But. It’s totally true when it comes to investing. If you have a stoic edge, you just pick an investment strategy and stick to it no matter what happens. [00:36:42] And I feel like that’s the only edge the average investor can acquire because most folks don’t have a stoic edge because otherwise, everybody who started investing would just invest for an entire life, and we would never hear about problems with investing. Um, so the Stoic Edge really teaches you that if you wanna be successful as an investor, simply pick a strategy, stick to it through all the ups and downs, no matter what happens. [00:37:20] You just got to state, of course, as John Bogle famously said, um, but the problem is that I. It’s very difficult when new events happen in the market. Then we think to ourselves, well, I don’t have a playbook for this, but you have, you just need to manage your emotions and remind yourself that there’s nothing really new. [00:37:42] Okay? Certain things happen in a different way. And of course when the pandemic happened also that was new, but when it came to the underlying principles of the market, which is, you know, the stock market keeps going up, as long as the economy keeps going up, we quickly realized that the economy was going to adapt. [00:38:06] And as an investor, we should also quickly realize that, well, you know, the market will will survive and has survived for the. Since the start of the stock market, you know, famously one of the first or the first stock market started in the Netherlands 500 years ago. Um, so throughout these years we’ve been investing so it doesn’t require a genius to realize we’ll probably keep investing for the next 500 years. [00:38:38] Joe: So I think given this edge and I look around me and I haven’t been a financial planner in a long time, Darius. But I just remember how many stupid things people did. They would, to your point, let their emotions get in the way they’d follow the storyline. That happens to be current way too closely. I remember getting fired in in 1999 during the big web 1.0. [00:39:04] Right. Everything’s going online. And I had a client fire me because his portfolio did 49% because we were staying diversified and all of his friends were doubling their money and we only did 49. So I got canned for 49, which is following the story too closely and not controlling your emotions and looking at the bigger picture. [00:39:24] So I, I thought then me thinking ahead to where is Darius leading me? Where’s this funnel headed? Okay, we’re gonna talk about all these things that the vast majority of us mess up. You don’t start there. Then I turn the page and I laugh because you start with invest in you. Number one, invest in you. Why do you begin this stoic edge with investing in yourself? [00:39:53] Darius: When you interpret stoicism in the kind of the purest and simplest way, you can’t start anywhere else other than yourself. I think if you want to have a long career as an investor, it’s almost impossible without a foundation that’s built on skills and self-confidence, because ultimately, where does self-confidence come from? [00:40:19] Comes from learning skills, putting them into practice, getting feedback, and feeling good about that. So I feel like every investor should always. Acquire new skills just in general. Not necessarily that you can apply as an investor, but as a professional. Because most folks want to invest passively. They want to invest for their retirement, and we have full-time jobs. [00:40:50] And if we are good at what we do, we realize that, hey, I don’t have to have this scarcity mindset. Because when you have a scarcity mindset, then you always think of what you can lose. And if you become too attached to the little or quote unquote money that you earn, it’s very difficult to part ways with it. [00:41:15] Because what is investing? It’s basically parting ways with your money now until a future date, that who knows when that is. That’s the most important thing you can do for yourself if you want to have a long-term career as an investor. If you really focus on the foundation of capitalism and providing value in the economy, you realize that you can earn a living and then you can let go of that scarcity mindset of, okay, every dollar that I earn, I need to hold onto it and I need to put it under my pillow, or in a to a very safe savings account or in bonds, or any place where it’s quote unquote safe versus a stoic who invests in themselves and simply focuses on what they control and sees that they can provide value in the economy and in return can earn a decent or good living can say, well, okay, you know, 10, 20, 30% of my income. [00:42:26] I can just set aside and say goodbye to it, and then in 10 or 20 years, it’s maybe, uh, worth two times or whatever. How much I don’t even really care. As long as it’s worth more than it is today. I’m satisfied with it then. All right. Everybody says that the s and p 500 did 10% annualized returns over the past 50 years or post World War ii. [00:42:55] Great. If it does 11 or nine, I’m also great with that, you know, and, and I think that’s that confident state of mind that you can only acquire by investing in yourself. I’ve never really met a person who could really fake it because I. During those tough moments in the market, you think, oh, oh, I might need that money. [00:43:20] And that’s something that you can only, in my experience, avoid by really starting with the foundation. And that’s investing in yourself. [00:43:27] Joe: Yeah. The people that trade in and out of their index funds drive me crazy. Mm-Hmm. You think, you know, like what’s coming up next? Which by the way, is completely to your point from earlier Darius, to quote you. [00:43:42] You know, if stoic is focused on me and me alone, then that also presupposes. I can’t predict what’s going to happen next outside of what I’m going to do, which I think is, is, well, this is something that I saw back when I was a financial planner. The most underappreciated asset my client had was their ability to earn more money. [00:44:03] They would think a lot about clipping coupons. They’d think about cutting expenses. They would think about their investments far more, but themselves and their ability to bring home more way underappreciated. [00:44:16] Darius: Yeah. And the funny thing is that folks who generally hire a financial planner or a financial advisor are generally the most financially responsible people anyway. [00:44:30] Because if you are not financially responsible or you’re not thinking about building wealth, you’re not going to hire someone to help you do that. And I think those folks worry too much about their own ability to survive or to thrive. Their ability to retire comfortably because I feel like too many folks put a lot of pressure on themselves to save a lot and be very stringent while they can just invest in the market and let compounding due the work and just focus all of their energy on, on themselves. [00:45:08] Joe: Yeah. Yeah. You’ve got four pieces to this skill, springboard. I want to, I want to kind of end on this note because this will be incredibly helpful for our stackers. When you’re looking at gaining new skills, you talk first, and these may sound easy, but you see people, again, make huge mistakes in all of these areas. [00:45:26] Number one, you’ve got work with your natural abilities. Where do I start there, Darius? [00:45:32] Darius: Yeah. Like you were saying about stoicism, how it’s kind of about self-awareness and uh, helps you to put up a mirror when you start by. Doing a self-analysis and understanding what you are naturally good at, you have a lot more upside potential when it comes to earning a living. [00:45:57] Because one of the things that I’ve really subscribed to in my career is the idea, uh, that Peter Drucker, the famous management consultant, made popular, which is to focus on your strengths and ignore your weaknesses. Because I do think the idea of improving your weaknesses sounds good in theory, and I think is good when it comes to athletes or working out, but in our careers, it doesn’t make financial sense to think to ourselves. [00:46:35] Well, you know, for example, for me, I. I’m an introvert. I love spending time alone thinking writing, and this is why I became a full-time writer. But for me, it wouldn’t make sense to apply for a job or go after a career where there’s a lot of networking and events or lobbying involved. While another person would go absolutely insane if they spend one day alone in a room and they just love to connect with people. [00:47:11] So that’s what I mean when I talk about work with your natural abilities. But the problem is that we always want. To be something or someone based on what we see on TV or in movies or on social media, we think, oh, look at that person. They’re making a lot of money. That looks cool. Maybe I should try that. [00:47:32] Instead of putting up the mirror and looking at themselves and, Hey, what am I actually good at and what do I love to do? Let me just focus on that. [00:47:40] Joe: I saw a, a statistic last week at a conference. 29% of American high schoolers, their number one career choice is to be an influencer. [00:47:50] Darius: Yeah. [00:47:51] Joe: And, and that says nothing about natural ability. [00:47:54] Says a lot about TikTok. Right? [00:47:56] Darius: Yeah. That’s unbelievable. [00:47:57] Joe: Yeah. I want to ask you about this next one. Which is learn from the best you write next. Mm-Hmm. I think what you might be saying is don’t buy mutual funds from the guy with three weeks of training [00:48:11] Darius: at ING Direct. Yeah, exactly. Yeah. I learned that by, by doing. [00:48:18] But yeah, when you want to improve your skills, it’s very tempting to look at what’s accessible to you in terms of teachers and information. So it’s very easy to ask a friend or a coworker if you don’t know something or you want to, let’s say you wanna start a business or you wanna get into real estate, you want to get started with stocks. [00:48:46] Most folks just ask their friends. Or another statistic that I also read recently is they go to TikTok for financial advice. And then, sorry, it’s basic. It’s basically a matter of. The blind leading the blind. They just don’t know what they’re doing. And I think that’s honestly one of the biggest mistakes that young folks make. [00:49:09] They just try to learn from their peers instead of learning from the absolute best who actually have done the things that you want to do. [00:49:18] Joe: And [00:49:18] Darius: their [00:49:18] Joe: advice is more accessible than ever Darius, because of the internet. Mm-Hmm. Like where, when, you know, when I was a kid, I might not have access to those people. [00:49:26] I had no way to get to them unless they were on one of the three television stations that I grew up with. But today it seems like you can go find out who the top person is. You know, you’ve been quoting Benjamin Graham and Warren Buffett today. I can go look up a ton about these people. [00:49:41] Darius: Yeah, exactly. And, and for investing especially, there is so much content from the best that it doesn’t make sense to read. [00:49:55] The 500 best book on investing or wealth building. It’s like the, another Warren Buffett quote, the, the LeBron James analogy that he made, which is the always bet on your best player or best stock or best company versus, uh, the 20th player. You can apply that to stocks, but also to knowledge. So if you have the opportunity to learn from the best, why would you settle for anything else? [00:50:26] Joe: I wanna ask you a question from the back of your new book, which you say that, uh, we should be like granite. What does that mean? [00:50:37] Darius: Yeah, so that’s a, uh, reference to something that I read post financial crisis. I think this was before the market started the to go up again. And at that time I was out of the market and I read this column online and I tried to find it again, but I couldn’t. [00:51:00] It always stuck with me because the writer said something like, if you are still in this market that is on the collapse of breaking down, and the financial system might not survive, et cetera, you must be made of granite. I thought maybe as a point because it’s looking really bad, but then as we all know, the market start to recover and a few years later we were back and since then, since the early 2000 tens, it’s been almost all the way up in a straight line with the exception of 2020 and of course 2022. [00:51:40] But still, we’ve experienced a few corrections and crashes. But even if you want to. Make sure that you can stay the course. You have to look at yourself as someone who can endure, as someone who is actually made of granite, who is the opposite of all of those naysayers and doomsday thinkers that always seem to jump out of the woods as soon as there is a hint of negativity or potential risks. [00:52:18] When the great inflation started a few years ago, there were so many people who said that, uh, for folks who are watching, there are somehow fireworks coming out out of my iOS. [00:52:32] Joe: I thought, I thought, I’m like, wow, Darius has got the great background going. Yeah, [00:52:36] Darius: yeah. But when all of these dooms, I think has come out, you have to be. [00:52:42] Made of granite. And you are, because it’s all about a mindset. If you look at yourself as someone who can endure, you will also endure as long as you follow the path and start from the bottom and invest in yourself and really do the right thing. And don’t take on risks that you just can’t handle. And ultimately, when you’re a long-term investor, all of these short-term crashes are short-term. [00:53:16] And that knowledge should give you a lot of peace. So you can just stay the course and just enjoy your life. And I think ultimately that’s why we all invest. [00:53:29] Joe: Tony Robbins had something, um, that I really appreciated. He said that if you hear one person say a thing, they have a point of view. Maybe it’s theirs, but you hear four or five or six people say it. [00:53:42] Maybe this is a universal truth and Darius to write a book that is ancient wisdom from enduring prosperity from person after person after person talks about stoicism and to bring it to money management truly was a fantastic read for me and just this idea that we can be great not by coming up with this big aha or this cool thing, but it’s refusing to give in to the same things that just kill investors over and over and over. [00:54:11] I thought was really powerful. The book is called The Stoic Path to Wealth and it comes out tomorrow. Pretty exciting, Darius. [00:54:19] Darius: Yeah, very exciting. Thanks Joe. Really appreciate it. [00:54:21] Joe: Darius, thank you so much for being a stoic mentor to our stacker community. I super appreciate you. [00:54:28] Darius: And likewise, appreciate it. [00:54:29] Thanks for having me on. [00:54:31] bit: Hey, I’m Rob Berger. When I’m not rolling in the dough. That’s right. I’m Stacking Benjamins. [00:54:37] Doug: How about that? og Uh, Darius Farrow telling us, focus on what we can control. [00:54:42] OG: Stop letting your emotions get in the way of being successful. Huh? [00:54:47] Doug: Stop letting your emotions get in the way. I like how you’ve actually learned how to put a little bit of intonation in your sentence structures. [00:54:55] It really makes you sound lifelike. [00:54:58] OG: I’m a cybernetic organism. [00:55:02] Doug: That was good stuff, but I like getting philosophical once in a while here on the show, we, we all tend to do it right? You’re drifting off to sleep or you’re sitting in the morning having your coffee and some big thought hits you and we all do it. [00:55:13] So why not apply it to your, uh, to your investment strategies in your retirement? [00:55:18] OG: You know what I think about when I lay down at every night other than me? I think of the word sleep, just the word that is my sleep hack. All sorts of combinations and permutations of the way that you could see the word sleep like on a billboard. [00:55:33] Doug: Really? [00:55:34] OG: LYYP [00:55:37] Doug: Are you kidding right now or are you making this up? Not kidding. Or do you really do this? Kidding. [00:55:40] OG: A hundred percent. And I go to sleep. This is fascinating to me, is 45 seconds. Yep. If you ask my daughter, if I dunno about the boys, remember this or not, but if you ask my daughter, I’ll say, all right, what are you thinking about? [00:55:50] And she’ll be like, sleep. Like if you just the word sleep, [00:55:53] Doug: do you close your eyes and you just picture the word sleep in various forms, like you said a billboard or Yeah, the letter’s just popping up. Yeah. Interesting. [00:56:02] OG: Yeah. Give it a whirl. Lemme know how it works. [00:56:03] Doug: I will. Because the other thing I’ve tried to do, it didn’t work last night, I’ll tell you that, but I know [00:56:08] OG: what you try to do to go to sleep. [00:56:09] But it’s, [00:56:10] Doug: well, I mean, you’ve gotta prep yourself. There’s a whole process. But eventually you went all face shave. I got it. Yeah. Right. And, uh, shave before, nobody shaves before bed moisturizer. That’s just weird moisturizer. But, uh, no, I think this is a kind of a. Buddhist approach to meditating, I think, but you try to count and have no other thoughts at all. [00:56:33] No extraneous thoughts other than the number. Hmm. Even most enlightened monks can’t get past like nine. The foreign extraneous thought shows. [00:56:42] OG: There’s a cool tech tool called a muse, MUSE, and I like gen one of this. I don’t wanna say I lost interest in it, but it’s, meditating is not kind of my thing, but, so it’s, uh, like doing five minutes of it. [00:56:56] It’s like, okay, this is torture. But anyways, it’s this device you put on your head, read your brain activity, EEG, whatever, it goes around your head and you wear headphones and it, it’s an app. And you have to get yourself calm. And the way that it helps you get calm is you have to like think of, there’s some intro stuff and then you just think about your breathing, right? [00:57:17] Like, breathe in, breathe out, breathe in, breathe out. But you don’t hear anything. Nobody’s telling you anything. You just listen. And if your mind starts to go wander from breathing, which it happens, right? You’re just like, oh, squirrel. You know? Then all of a sudden the wind starts just like, and then you’re like, oh, I have to start breathing again. [00:57:33] And it’s like, and then it’ll quiet down, and then it’ll be like a little water pebbles, you know? Like, like a little brook. And then little bird chirping. And the bird chirping is a really good thing. That means you’re like totally. Zoned out, and then like instantaneously you’ll be like, I’m breathing. Oh, that’s a bird. [00:57:49] I wonder if the bird is still building a nested by the house. You know, it’s like instantaneously I’m a bird hunter. [00:57:54] Doug: I wonder if I have a license to kill that bird. [00:57:57] OG: Yeah. It like, totally like it can respond like that. And so it can measure how, how quickly and Wow. It’s to practice getting calm anyways, so [00:58:07] Doug: And you lasted what, all of like 12 minutes on this thing and you threw it across the room. [00:58:12] OG: Hey, 12 minutes is a long time. I don’t care what anybody says. All right. Let’s listen to Jamo. You already do a question. [00:58:18] Doug: Yeah. We got a great call from Jamo who has, uh, who wants to know and get some advice about his TSP account. Let’s hear him. [00:58:27] caller: Hey Joe, og, neighbor Doug. This is Jamo, by the way. og. Yeah, yeah. [00:58:32] Devil dog. Dun Tavern, chest puller, rah. Long time listener. First time caller. And this could be the last time I’m call you based on your answer. Just kidding. So I was able to replicate Paul Merriman’s four fund combo in my Vanguard account and with how well it’s been going and how well it has done. [00:58:49] Historically speaking, my spouse and I were wondering if it would be possible to replicate the four fund combo in her TSP. I like to call it a tsp. So is it possible utilizing the available TSP funds or have I had too many of Joe’s mom’s brownies? I look forward to your answer. By the way, Doug, should you need a running mate in 24? [00:59:09] I’ll be your huckleberry. [00:59:12] Doug: I’ll be your huckleberry. I love that [00:59:14] OG: he throw his voice a little bit. You think that’s his normal voice? Think that’s Jay Mo’s normal voice. I’ll be your hook, Barry. [00:59:21] Doug: It was pretty close to the way he started the whole, I think so. Either he put on the, he put on that down home, you know, good old boy voice the whole time, or that’s just him? [00:59:30] I think it’s just him. I like the guy. It [00:59:33] OG: seems like be a fun guy to. Have a pop width is, is that how you Yeah. A [00:59:37] Doug: Coca-Cola Just sit on the tailgate of a 74 F-150 with a cooler couple of pops fishing pole. [00:59:46] OG: Yeah. Paul Merriman blanket this four fund portfolio. Have you ever heard about this before? I’ve not teach me. [00:59:54] Paul Merriman Great investor, has, uh, created over time these different types of easy to invest in. Easy to think about investment portfolios, take the complexity out of it, just do it. You know, one fund just do two funds. Just do three fund. And so he’s got a four fund portfolios. Four fund portfolio is large blend stocks, so basically SP 500, large value, small blend and small value in pretty equal weightings. [01:00:25] Uh, you can Google that to see how that’s returned over the years, but basically the idea being that you’re getting. The best of the four categories. This is all United States based. So it’s all US based allocation. No international in the four fund portfolio. Although you could do a four fund international portfolio too, right? [01:00:42] You could have international, large and small and value growth. You could do that. But there’s a lot of investors that believe mid-size companies have the same correlation as small. So you don’t really pick up any value in terms of diversification benefit by having mid-size companies. So you can kind of eliminate that. [01:01:00] If you think about the Morningstar box that has nine, nine boxes in it, if you’ve seen that before. Yep. Basically saying Take the corners. Take the corners. Okay. You don’t need any of the middle stuff. So the question is, can we recreate that in the TSP? So the TSP is a government sponsored 401k plan. It’s for a government employees, military. [01:01:21] Employees, that sort of thing. The TSP has five major funds in it, and then a bunch of lifecycle funds, uh, or as we like to call ’em, the target date of TSP Ah, gross. Um, so the five funds that you can buy are the C fund, the S fund, the I fund, the F fund, not FU fund. Just F fund and the G fund. So what they represent, the C fund is the common stock fund. [01:01:47] This is gonna be just like the s and p 500. The S fund is the small cap stock fund. So this is like the Russell 2000. So these are your small companies. The I Fund, can you guess it? Doug Big, I’m sorry. Big DI [01:02:00] Doug: fund is International [01:02:01] OG: International Fund. The F Fund, not FU fund is fixed. So these are fixed, uh, bonds. [01:02:07] And the G fund is government bond funds or government, uh, bonds. So two fixed investments, three equity investments. And then you can also do a lifecycle fund. 20 40, 20 45. Right. Target date where they do that allocation for you automatically. So with those five funds, you can’t exactly recreate the four fund portfolio because you basically have large blend with the s and p and small company blend with the Russell 2000. [01:02:38] So you’re missing the value side of the equation for both large in value. But you can be pretty close. You could go 50 50 if you wanted. You can go 50% C 50% s pretty close. Yeah, it’s like a two fund portfolio. I think that it’s important to have a little bit of international waiting too. So I’d like to see a little sprinkled in there. [01:02:57] You dealer’s choice on that. If you’re trying to be completely agnostic around outcomes, you’d look at weightings of GDP weightings and so on and so forth. And you know, the most aggressive would be almost a 50 50 allocation US to international. But most people don’t do that. Most people kind of maybe sprinkle in 10, 15, 20, maybe as much as 25% international in their allocation. [01:03:21] So I’d like to see some of that. But otherwise, CS and I, I’m an equity investor. I don’t think that fixed income ever makes sense in a long-term investment portfolio. So I would completely get rid of f and g and, uh, certainly, certainly no, uh, target date funds. So the answer is kinda, but no. So, so, but kind. [01:03:46] Doug: Do you think that gives Jamo something like really concrete that he can work with? [01:03:50] OG: Well, I’m trying to decide if I should be, I, I’m trying to figure out what he needs for him to call back someday. ’cause he said he may not ever call back. Does he want a real definitive answer? Does he want the education around like, you know, I don’t know. [01:04:02] So you took [01:04:02] Doug: us [01:04:03] OG: through the [01:04:03] Doug: four [01:04:03] OG: corners. No, Jamo, you cannot, you only, you’re screwed. How’s that? [01:04:09] Doug: Go private sector Jmo, [01:04:11] OG: C, CS, and I heavy towards C. Sprinkle in s and i Life is good. Don’t touch it for 30 years [01:04:21] ?: and then be mad that you have two and a half million dollars. Oh, I got too much. I got too much money in my four oh k. [01:04:27] Got too much money in my TSP. Listen to this guy on a podcast. [01:04:31] OG: Uh, so yeah, CS and ICSI. Hey, there you go. CSI. Hey, hey, hey. Crime scene investigators make like a CBS franchise and C-S-I-C-S-I. That’s another T-shirt. [01:04:45] Doug: That’s actually really handy. That’s helpful. Jamo can use that. He’ll never forget it. [01:04:50] OG: Yeah, like, ah, there was something I was supposed to do with my funds and I can’t remember. [01:04:54] Maybe if I watch CSI Miami, I’ll figure it out. Why am I watching CSI Miami right now? This show sucks. It’s terrible reason. Maybe if I flip on CSI, Las Vegas, I. I will figure it out. Gosh, it’s like right on the tip of my tongue and I can’t figure out what I’m supposed to do. Something to do with a crime show on CBS. [01:05:11] I’ll just watch ’em all. Thanks Jimmo for calling. You get a free T-shirt, so, uh, to Gertrude will send you a code if she hasn’t already for, uh, for reaching out. Appreciate it. Anybody else got questions? You know, hit big D in OG with the digits and we will do our darnedest. [01:05:29] Doug: I think we know what t-shirt Jamo is gonna be picking up. [01:05:33] Shmedium. He sounds like a shmedium type of guy, doesn’t he? Oh, that dude sounds like a double xl. What? In the chest and in the biceps. Oh, I am totally jacked. [01:05:41] OG: Sched. [01:05:43] Doug: Really? Hmm. Yeah, I think he’s getting the, uh, the Doug 2024 shirt. He already is in the running to be my running mate. I like it. Hey, uh, now that I’m thinking about drinking a beer with Jamo, let’s head to the back porch. [01:05:56] You know what I wanna talk about today, OG on the back porch, is we’re kicking it. Summer travel. Summer travel. What do you, well, I bet you do. What, where have you been or where are you at? You’ve got a [01:06:06] OG: little dose of, you got a little dose of the Joe. Uh, I just wanna talk about summer travel. I have this little trip planned. [01:06:11] Uh, yeah. Yeah. Me and my family we’re doing this thing. Where have I been? I go to Northern Michigan. That’s my beginning, middle, and end of my summer vacation. Always now. Period. End of story hug. Why don’t you tell us about your summer vacation plans? [01:06:24] Doug: No, first, actually, I do want to, I’m excited to, to, because I, as we speak, as as stackers are listening to us, I’m in a pretty sweet place right now because we’re recording a little bit. [01:06:34] First [01:06:34] OG: class of air, whatever. [01:06:37] Doug: No, I will be on the ground. Oh. Doing a really cool thing. But before we get to that, I wanna reverse and maybe take issue with you saying you’re going to Northern Michigan. Okay. Because. I mean, you’re right on the border, Michiganders, where you go in Michigan, it’s right on the edge of where up north starts. [01:06:59] OG: You don’t count Holton Lake as northern Michigan. It’s hilly. [01:07:01] Doug: It’s the, it’s the gateway to Northern Michigan. I mean, it’s the, I haven’t you just crossed over the border. [01:07:08] OG: Oh, where is, where is the border in your mind? [01:07:11] Doug: It’s right there. It’s like Grayling West Branch. It’s like exit one 50, maybe West Branch, because it gets a little bit on I 75. [01:07:17] Uh, for those of you, uh, listening in the region, you’re going up I 75 exit two 12 West Branch. That’s where the good fast food is. It’s where most people stop and get, stop and get, uh, Culver’s and some gas. So yeah, you’re just getting there. But then, you know, really, we got a speeding [01:07:32] OG: ticket for doing 97. [01:07:33] Doug: There’s always a dude sitting right there, there is a sheriff sitting right before June 12. [01:07:39] OG: Oh, I was right after I was, I was going uphill at the, the one that’s on the left going up the hill. Yep. Uhhuh. Oh, I always look for a guy there. 97. 97. Damn. One 15 in the morning. [01:07:49] Doug: You’re maxing out that minivan’s engine. [01:07:53] OG: It was smoke everywhere. Now this was pre Pre kids? Yeah. Oh. We were cruising up and I looked and I go, yep, we’re getting pulled over. And I pulled over, but I was stopped on the side of the road before he pulled out. [01:08:06] Doug: Did you get any props for that? He is like, all right man, I’m gonna, I’ll write you up for five over ’cause you pulled over. [01:08:11] OG: I said to my wife, uh, I’m gonna do the whole thing of like, depends on how long you were following me. ’cause he’s gonna, you know, I stopped and she’s like, don’t be a jerk. I was like, this bean. That’s funny. It’s a funny line. He’s gonna laugh. It’ll be, it’ll be cool. And he came up to the window and I had the light on. [01:08:24] It’s dark. So I always look, I’m, I’m trying to be respectful. I have the window down, I turn the interior light on. I put my left hand outside the car and I put my right hand on the steering wheel. Perfect. I am don’t, because you’ve done this before, don’t I know exactly what’s gonna happen. Don’t tase me again. [01:08:41] You had your hands behind your back. Stop reaching like Z, you know, like I’m just trying to get my license. And he comes up and he shines his light. He goes, Hey, uh, did you see how fast you were going when you passed me? I was like, shoot, that’s not what I was thinking he was gonna say. So I don’t have a witty answer for that right away. [01:08:58] You ruined my joke. I know. And I was like, um, take two officer. I know, I know what I saw. I’m curious what you saw. You know, I also know not to incriminate myself. And he says, uh, I got you for 92. And I said, good thing I was going uphill. [01:09:18] He said something like, three days, where are you going at such a speed this hour. And I, you know, I, Hey, we’re live in Detroit. We’re, you know, just trying to get the cottage and you know, it’s got late start out of Detroit, so and so forth. He goes, do you wanna get there alive? He’s like, I would like to. [01:09:32] He’s like, okay, you gotta keep it under 80, man. And I was like, all right. And that was the end of that conversation. I was over [01:09:39] Doug: under 80 because back then the speed, the speed limit was 65, then [01:09:43] OG: 70 It was 70. [01:09:44] Doug: It was 70. Yeah. Now it’s 75 in that stretch north of, uh, mile marker 1 66. It’s 75 and mm-Hmm. I usually go nine over eight to nine over. [01:09:55] So 83, 84. And I’ve, as long as I’m there, I’ve passed. I’ve blown past. ’cause normally you’re just traveling with the pack at that point. Mm-Hmm. Yeah, it’s, so I’ve never gotten pulled over when I’m doing that. The time I got pulled over, I was accelerating to get out, you know, around somebody who was annoying me. [01:10:11] Right. The stupid state [01:10:12] OG: trooper. [01:10:13] Doug: It like, like a mile and a half before where you got tagged. And, uh, you know, you go in the left lane and you’re passing somebody, they’re, you’re gonna catch their, their eye. [01:10:23] OG: Can I say Northern Michigan? Is that is The judges have approved? [01:10:26] Doug: I’ll give you Northern Michigan, but I mean, just know that some people are gonna kind of tilt their head and go, really? [01:10:33] OG: It’s not mid-Michigan. [01:10:35] Doug: Okay. [01:10:35] OG: Everybody believes mid-Michigan is like Mount Pleasant, Saginaw Midland. [01:10:41] Doug: Yeah. Agreed. But I mean you’re not of, what do you call all gray? [01:10:44] OG: What’s all gray? That’s mid-Michigan. All gray is still mid-Michigan pink. Yeah, I think so. Pink. I think so. [01:10:50] Doug: I honestly, I used to think West Branch two 12 don’t have [01:10:54] OG: like hoity toity money like you that can go to northern, northern Michigan. [01:10:59] Doug: And you know what’s funny is that, and anybody who from the Midwest who’s thinking about the state of Michigan right now, they’re all thinking, dude, you’re not even in northern Michigan. ’cause there’s like a whole other state above us. There’s a whole nother state. [01:11:09] Yeah, [01:11:10] Doug: you betcha. That’s really northern Michigan. [01:11:12] Yeah. It’s crazy. Yeah. Yeah. Hey, so, um, it is time to transition to talk about what I really want to talk about, which is where I am right now. Where is you if I’m lucky? I am probably you’re lucky. [01:11:26] OG: Oh, [01:11:27] Doug: I’m probably on about the sixth hole of the Royal Aberdeen Golf Course in Aberdeen, Scotland right now. [01:11:34] OG: Good day, mate. [01:11:35] Right? [01:11:37] OG: Totally. You should do that the whole time. Put put a shrimp on the body. You should totally do that. [01:11:42] Do you have any fos? It’s Australian for beer [01:11:46] Doug: and they love it when in Scotland they love it when you try to do their accent. They just think it’s hilarious. They’re like, yeah, that’s what I’m saying. [01:11:52] Go with [01:11:52] OG: the normal Scottish accent like I was doing. They won’t even look just like the one you were doing. Just like that. Yeah. They won’t even know. So [01:11:58] Doug: I’m on, I should be on the trip of a lifetime right now with my oldest son. [01:12:04] OG: So you’re 11 over par. [01:12:07] Doug: Oh yeah. I’m easily already. What does your score right [01:12:09] OG: now? [01:12:09] Doug: I’ve got like a 36 already. I’m the sixth hole because I don’t know if you’ve heard about the rough over there, but it’s going eat some golf balls. [01:12:18] OG: Really? Yeah. I thought it was all like Linx courses up there. It’s just kind of [01:12:21] Doug: just hit it wherever the hell you are. Yeah, just they mow everything super short. [01:12:24] That’s what you think. [01:12:25] OG: I’ve seen the British open. It looks easy [01:12:27] Doug: as long as you can keep it straight. Yeah. But it’s a tad windy, it’s a wee bit breezy in Scotland on the coast. Might push my shot into a place I didn’t intend it to go. That’s, [01:12:40] OG: that’s not, the wind isn’t doing that. That’s the over the top swing. [01:12:44] Doug: That’s over the top with the, with the face wide open. With the close at impact, with [01:12:48] OG: the face closed at impact. That is, that’s the double cross that you’re looking for. [01:12:52] Doug: Yeah. Yeah. But this whole story that we may or may not be happening right now as listeners are listening is. Predicated on me and my left hip being functional. [01:13:02] Cortisone shot. I got the shot yesterday. That wasn’t as fun as it sounds like to get a needle all the way into your ball and socket of your hip. [01:13:12] OG: No, [01:13:12] Doug: and they did not go in where I, I [01:13:13] OG: try to, I try to keep as many needles as I can outta my ball and socket, if you know what I mean. [01:13:19] Doug: Well, funny you should make that joke because that was where they chose the entry point to be, or darn close to that. [01:13:25] I’m like, what are you doing? My hip? Wrong way. Wrong way, sir. Ma’am, ma’am, my hip’s all the way over here under my spare tire. What are you doing going here? Eyes up here. Eyes up here. Oh no. They wanted to access that thing. Gotta see what you’re [01:13:38] OG: working with [01:13:39] Doug: in a pretty tender spot. [01:13:41] OG: The old Big D. They didn’t have that for you there? [01:13:43] Doug: Not at that exact moment, no. No way. And cowering. Oh my God. I’m just talk about like meditating. I’m just laying there on the table. Eyes closed. Try. All I was thinking about was thinking of the word sleep. Thinking about the word sleep. Yeah. Yeah. It was an unusual experience to say the least. And then next week, still before the trip, ’cause we’re re recording this early. [01:14:07] Mm-Hmm. I’ve gotta get another one in my other hip. I’m assuming that one’s gonna be, I guess you’re looking forward to those too. A little different. [01:14:14] OG: Yeah. You walk in the doc’s like Doug. No. Pull your pants up. Like not, we’re not doing the same thing as last time. Sir. Sir, please. This is, this is a pediatrician’s office. [01:14:37] Doug: I wish you guys could see how hard OG is laughing right now. I think this is the favorite joke he’s ever said. There are tears in his eyes. [01:14:46] OG: I’m not, I’m not sure we can use it, but that was good. His mascara’s running. We’ll have to, to have the, uh, review board, review that one. I think that one’s gotta go. [01:14:53] Well. Enjoy your trip to Scotland. Um, take pictures, post ’em in Slack, and wherever the hell else you feel like posting them because I’m not on social. But, uh, send me some, maybe I’ll, maybe I’ll go next time. [01:15:05] Doug: Probably send you a few [01:15:06] OG: besides ordering a FOS on my behalf in Scotland. What’s on our to-Do list for today? [01:15:13] Big D. [01:15:14] Doug: Well, og. Here’s what’s stacked up on our to-do list for today. First, take some advice from Darius Farrow. Develop your own ways of managing your financial feelings of fear, uncertainty and doubt that’ll help prevent you from making any rash decisions. Second, have a TSP account. Consider diversifying your investments into the CSI funds that are available, but the biggest to do. [01:15:38] I gotta ask Joe’s mom to write down all my best thoughts for me. I can’t seem to remember any. There’s just too many of them. Thanks to Darius Farrow for joining us today. Wanna learn more about Darius? Head to darius farrow.com to get all the details. Alright, look, you got no chance of spelling this guy’s name right on the first try. [01:15:58] So we’ll include links in our show notes at Stacking Benjamins dot com. This show is the property of SB podcasts LLC, copyright 2024, and is created by Joe Saul-Sehy. Joe gets help from a few of our neighborhood friends. You’ll find out about our awesome team at Stacking Benjamins dot com, along with the show notes and how you can find us on YouTube and all the usual social media spot. [01:16:24] Come say hello. Oh yeah. And before I go, not only should you not take advice from these nerds, don’t take advice from people you don’t know. This show is for entertainment purposes only. Before making any financial decisions, speak with a real financial advisor. I’m Joe’s Mom’s Neighbor, Duggan. We’ll see you next time back here at the Stacking Benjamin Show.
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