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Episode 110: Teenagers and Inflation

Why bike prices are going up and the best gift for the financially minded with Mak and G

SHOW NOTES

With Mak and G both about to turn 13, their minds are on one thing only, presents.

 

We talk about the new hot gadgets on the market, the benefits of financial gifts, and why the cost of bikes has been rising…

 

Gag gifts can be fun for a day but all too often we get given presents that end up in a cupboard gathering dust for years.

 

Saving for college through a 529 can be very helpful.

 

There are a couple great games about money, including The Game of Life, Charge Large, Payday and Cashflow.

 

Today, we look at different financial gifts you can give to your loved ones.

 

A birthday present that also helps entrepreneurs in need of money can be really cool.  You can make a microloan, and earn money. Check out Kiva. The popularity of microloans is exploding.

 

Why are bikes getting more and more expensive?  With COVID, demand has increased, and with challenges with less workers, lots of the parts are going up in price.

 

“In 2020 they predicted about 52 million people will use virtual reality each month, and that’s about 20% higher than the prior year. ” – Mak

 

“Our wants and desires change as we get older.” – G

 
Time Stamps:

00:20 – The Galapagos Islands, what makes them unique, and how they led to the discovery of natural selection.

02:06 – The rare Galapagos tortoises that can live for over 200 years.

04:21 – The market movements we’ve had this week.

05:17 – The rise in popularity of virtual reality devices.

06:28 – Why financial gifts are better than gag gifts.

08:47 – How microloans work and who they can help.

10:12 – Financially beneficial gifts and how inflation is affecting the cost of bikes.

 

Resources:

Rich Dad, Poor Dad

Kiva

 

Connect with Ben Jones:

 

TRANSCRIPT

DAD:  Welcome back to Money with Mak & G, don’t forget to LIKE, SUBSCRIBE and COMMENT on the podcast.  This episode is for the week ending June 4, 2021. Mak, I think you wanted to talk about something I may have missed this past week in the news. What’s up?

MAK: Well, it’s not about money, but I know you want to go to the Galapagos Islands to see the diverse animal and plant life that can only be seen there. You’re fascinated by the unique environment on the islands.  It really has created an ecosystem, which is the community of living and nonliving things that can only be found there.  Since it’s so close to the equator, it’s pretty warm, but it gets cool ocean currents.  That mix of tropical and temperate created a pretty awesome place.  If you add in its extreme isolation for most of its history it’s a very interesting laboratory to study it’s evolution of unusual plant and animal species.  Over 185 years ago, Charles Darwin went to the Galapagos on the HMS Beagle and it inspired him to write about “natural selection”, which is the idea that animals change to adapt to their environment in order to thrive. It’s very famous.

GRANT: WOW!! You crushed that! It sounds like you have been doing a LOT of research Mak, NOICE! I remember our prior podcast where we discussed the blue footed booby. The male bird takes great pride in their fabulous blue feed and they do a dance to attract a female.  It’s fun to watch on Youtube.  Can you imagine doing a dance with blue clown feet to get some attention?  The islands also have the marine iguana, which is the only iguana known to swim in the ocean.  The only penguin species to live in the northern hemisphere lives there as well.  Then you have the flightless cormorant bird that lost its ability to fly. How do you forget how to do that? Natural selection I guess, but still it sounds like a bummer.  It just goes to show what’s happened in this very unusual place. Oh, let’s not forget the famous Galapagos Tortoise. 

MAK: I’m glad you mentioned that. That’s what I want to tell dad. The islands had 15 different species of Galapagos tortoises, which lived on the different islands. Over long periods of time the tortoises slowly changed their body shells and their bodies to better fit their environment.   In 2015 they found turtle scat, which is poop and in 2019, they actually found what they thought to be a Fernandina tortoise on the island. That was amazing, because they hadn’t seen one in over 110 years. However, they couldn’t prove it. They’re big. Sailors and pirates loved stopping on the islands and used the giant tortoises for food which really reduced their numbers.  

GRANT: From what I read, it’s super hard to search for and find any tortoise on the island of Fernandina, even if they’re living there because 60% of its surface was formed by recent ah-ah lava fields which make it almost impossible to walk over. 

MAK: You just made “ah-ah” up?  Nice try Einstein.

GRANT: Hey, hey, It does sound like I did, but I didn’t, so get ready for me to drop some sick insights. Here it comes… “Ah-ah” is a hawaiin term for lava flows that have a rough rubbly surface made up of broken lava blocks called clinkers, which makes it really “prickly” and seriously difficult to walk across.

MAK: I stand corrected. Nice one big Bro. Well, they looked at the DNA from the last Fernandina tortoise collected around 1905 and this week proved it wasn’t extinct, and was a real one.  They said this tortoise was probably around back then, and can live to 200 years old and make babies throughout their life.

DAD: That’s soooo cool.  Like a birthday present early. That is some good news, and glad to hear it.

GRANT: Speaking of birthdays……

MAK: Do you remember anyone having a birthday in June.

DAD: Sure thing.  Mom.  Glad you reminded me.

MAK/GRANT: DAAAAADDDDD….

DAD: Ok, your birthdays are this week and I know you’ll be teenagers.  Ugh.

GRANT: Seriously dad?

DAD: Ok, before we get into that, how about we have Mak do the markets??

MAK: I’d be happy to dad. This is Mak, and these are the markets.  We have been trying all year to hit 35,000 with the Dow, and no luck, even though we got over a 200 point push this past week. Seems like we’re hitting a bit of a resistance, but it’s up almost 14% for the year while the S&P jumped a bit to almost 13% up. 

GRANT: The NASDAQ got a little extra push as well last week and is over 7% up for the year. Bitcoin is bouncing around and jumped almost 4% last week. Lots of action and fun to watch. Apple is still muddling around, even though it was up over 1% last week, but we’re not out of the woods as we’re still down for the year. Dads trading account got a bit of traction, but nothing to talk about. 

DAD: Thanks G!  I know this is a big birthday and there’s nothing more special than a freshly made birthday cake, or actually a store bought ICE CREAM cake, and lots of prezzies.

MAK: You got that right.  I’m hoping you and mom got that skateboard I’ve been eye-balling even though Amazon hasn’t delivered one box that’s the right shape for it….  I’m keeping my fingers and toes crossed and my eyes peeled.

GRANT: You can’t forget my VR goggles dad. Everybody’s got them. They’re only $300.

MAK: Grant, that’s a big ask. But, you’re kind of right. In 2020 they predicted about 52 million people will use Virtual Reality each month and that’s about 20% higher than the prior year.  Sony seems to make the most VR devices which would account for over 40% of all devices.  It is cool to use the goggles and your brain thinks you’re actually there.

GRANT: I’ve seen YouTube videos where people think they are either in a game or an actual place that makes them think they need to bend or turn, or just adjust.  Then, they fall over, as they lose their balance. I have to admit it’s kind of funny.

DAD: Hey, I get it.  That $300 is a big ask, and we might have to go a bit further down on your wishlist. I love giving a good game or gadget you may want, but we can’t forget some solid gifts that can help you with your future.

MAK: Absolutely, we get it. Our wants and desires change as we get older.  Ok, I did a bit of work on this one. Can I help?

GRANT: Me too. Financial gifts are easy to give no matter where you live.  Plus, you and mom know what we want.  If anybody wanted to give us gifts for our awesome 13th birthday, there’s no guessing with financial gifts and it adds a little rocket fuel to the future.

DAD: I love the attitude, because nowadays you sometimes get more than you want or need.  Remember when you got the singing bass fish.  We played with it a couple times and that was it. Definitely fun, but maybe not needed.

MAK: How about starting with an easy one dad.  Stone cold CASH.  Flexible, easy to use, can be used for anything from pedicures, to books, sushi, games and more. Plus, it matches my green outfit.

GRANT: Good one Mak, always a favorite, and it makes your eyes pop.  I think I’m going to recommend a 629 contribution for school. 

MAK: That was close G. It’s called a “5”29. I think it’s a great idea. Put the money in, let it grow tax free for educational expenses like college in the future. Depending on the rules, the person putting in the money usually pays less taxes in their state. That tax benefit is available in 30 or so states around the country.  So, a gift that is given AND received at the same time. 

GRANT: Here’s one financial gift I’ll take any day. STOCK! If I have to recommend one for those listening, how about a share of Berkshire Hathaway. That would be great, since it only costs about $440,000 right now. But, I’d be open to Tesla, Lemonade and Amazon, to name a few, but not in that order.

MAK: Nice one G.  We could hold onto it, watch it grow, and save it for a rainy day, retirement, school, buy a house or just about anything. I wouldn’t even mind a board game about money.  I think The Game of Life is a great one, which we’ve played 100’s of times.  But, there are others that sound interesting, which I haven’t seen before like Charge Large, Payday and Cashflow 101 which is by that author who wrote “Rich Dad, Poor Dad”. Remember we did a podcast on him.

GRANT: I do, he had some interesting things to say. Nice one Mak, can’t forget Monopoly.  It’s a good one too. Here’s one for you. Doyou know that some people around the world need help financially. But, they don’t want handouts. They want to borrow money to make their lives better financially. You know, GOOD debt. One is called Kiva, spelled K-I-V-A. It makes micro loans, which are usually less than $50,000 but many are less than a couple thousand dollars. Kiva focuses on women because many don’t have access to bank loans, but need help to build a life.  These loans get funded in $25 increments. So, a $25 gift card would allow us to help make a loan with others. It also says that over 96% of loans are paid back.  So, when you get paid back, you can loan it out again, hold onto it or take your money back. It’s the gift that keeps on giving.

MAK: That’s a really cool one, G.  From what I’ve read, these microloans can REALLY help those who need it.  It may not seem like much to us if we join in and loan $25, but it’s a huge deal to them. You can read about each person or group asking for a loan. It can help someone get an education, buy inventory for a business, support their needs for farming, buy livestock and tools as well as many other items.  Plus, we can learn more about the world, different businesses and loaning money to name a few.

DAD: Those are great ideas, and bet you have some more:

GRANT: Bonds are good

MAK: Open a savings accounts

GRANT: How about setting up a virtual wallet

MAK: Or make contribution to Make A Wish, Habitat for Humanity or the Ronald McDonald House, or Kaboom which builds playgrounds

DAD: Those are all great. They can be financially beneficial, or can help others financially. I remember getting some special coins and savings bonds, when I was young, which were awesome.  As for a gift, one of my absolute favorites was getting a bike, which is a bit bizarre now.

GRANT: Are you talking about inflation? That’s how things cost more due to either increased demand or decreased supply?  There was an article in Bloomberg that talked about how the price of bikes is going up and some think it shows inflation is coming.

MAK: Dad, you were very lucky to buy your bike a couple months ago. With COVID, the popularity of biking really increased, for exercise as well as avoiding public transportation or to entertain kids at home. But, there’s a couple things which make it much worse. First, the price of the raw materials to make bikes has gone up, like the aluminum, plastic and other parts. We saw the consumer price index went up by over 4%.  But, people also have more money.

GRANT: So, that means more people can buy bikes, pushing demand higher.  People have had to cancel their trips to Disney World and the World’s Largest ball of twine in Cawker City, Kansas. It’s over 41 feet in circumference. I digress.  But, they didn’t spend that vacation money. Bikes are in short supply, prices are up 27% with sales up 77% through March and they’re closing in on $7 billion. With lower priced bikes not available, people are buying more expensive bikes.

MAK: Many of the parts came from China, and when COVID hit, some weird things happened, that made US companies reduce purchasing.  Even though they have huge orders in with their suppliers, they’re hesitant to expand due to the lower ordering early on.  So, that constricts supply.  Companies aren’t sending as many bikes to their stores, and when 800-1,200 bikes arrived at a Canyon Bicycles USA store, they go out the same week. The first three months of 2021 have shown HUGE profits up over 55%.

GRANT: Even Shimano, which is a well known bike part manufacturer in Japan is killing it with an increase of 169% in their operating income. Dad has Shimano brakes on his bike.  And, if you want to get an older bike fixed, it’s tough, since nobody has parts.  Dad’s friend Glenn has been hunting down a bike for months without luck, as most places are out of bikes. It’s a little weird walking into our local store and they got nothing. They’re ordering all the way out into 2023, so it probably won’t change any time soon.

DAD: We definitely have some unique things going on in the economy, with more dollars chasing less products, pushing prices higher, so we’ll keep an eye on things and have to explore what this means to us all.  But, it’s time to say goodbye and enjoy the last weekend prior to the kids 13th birthday.  We’ll be gone next week for the birthday festivities, so enjoy some warmer weather and we’ll see you soon for our next episode of Money with Mak & G.

GRANT/MAK/DAD: BYE!!!!!

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