EduCounting

Episode 68: Season of Charity

SHOW NOTES

G: Hey Mak. What a BEAUTIFUL day. Fresh and frosty, just how I like it. BRRR

M: I think you mean FREEZING COLD. Teeth chattering What’s put you in such a good mood? 

G: Whaddaya mean? I have a naturally sunny disposition Here comes the sun. 

M: Uh-huuuh…

G: What? I do! Ok. Except for the times I don’t, and I get a little mad, like whenever someone “tidies” my stuff and none of it is where it should be and makes it smell good. I’M GOING. TO. TOTALLY. LOSE IT!!!

M: That sounds a little more like you.

G: Ok, so I am a bit more chipper than usual…but it’s just that I already have ALL my Christmas gifts planned out.

M: You mean you’ve planned out the gifts you’re getting? 

G: Turn down the sass a notch there sis, I mean the gifts I’m GIVING. I’m a giver.

M: Sure (sarcastically)…

G: So, now that’s done, I can sit back, relax, and enjoooooy the Christmas vibes. Aaaaaaaah.

M: Welllll…not quite bro.

G: Huh…

M: You know as well as I do that there’s a LOT more to Christmas than gifts.

G: Yeah, right. Like turkey. (turkey at 5sec https://www.youtube.com/watch?v=XhxTyf5k1WM) 

M: Grant! No. That’s not what I mean.

G: Ok…so…the candy?

M: No! Not even close.

G: I gotcha. You mean the Boney M Christmas album (https://www.youtube.com/watch?v=W2KXvRyWyGc&list=PLkS4Dk9lG89Ce05-jMVbuukeNT2GX9Dht&index=2 from 48 to 51 seconds).

M: Nooo! Wow, that was interesting …But also, yes… a little bit. Can’t get enough of the Christmas music. (Singing) Feliz navidad….feliz navidad…I wanna wish you a Christmas…

G: Nice. I didn’t know you “hablo el español” so well “mi hermana”. (https://www.youtube.com/watch?v=vERn0cRO6M4 0:00 to 0:03)

M: That’s literally all I know. But anyway. This is a major side-track Grant.

G: Right. You were going to tell me whatever I’ve FORGOTTEN that’s so important about Christmas.

M: I was. And actually, you’re closer than you think. You said you’re a giver…

G: Because I am…

M: …which is great, because I’m talking about GIVING to charity during the holiday season.

G: Ohhh you’re so right. Now I feel bad. I was just thinking about food and gifts. 

M: Don’t feel bad! Those things are important too. But the beautiful thing about charity is, you get to share what you have, like food, gifts, money and other stuff with people who don’t have much. (https://www.youtube.com/watch?v=0mfJn604GT4)

G: Too true. And at Christmas time, charity is even more important than normal.

M: Sure is. There are a TON of ways to give to great causes. 

G: There sure are, but, before we get to that, what does Christmas mean to the charities themselves (time to give from the heart)?

M: Great question Grant. As you might expect, Christmas is pretty important.

G: Because people give more to charity at Christmas, right?

M: Well, almost . It’s not that people GIVE more, but that more PEOPLE give. Uuhhh…what now?

G: Wait…that sounds like the same thing. So, it’s not the same people giving more money, it’s actually that more, different people give similar amounts of money (Try saying that real fast a hundred times)

M: Exactly! On average, charitable giving goes up by around 5% at Christmas time. So it’s an important time of year for fundraising so they can make their budget to deliver to those in need. 

G: We’ve talked about giving should be in your budget.  But charities have budgets too? The “B” word…BUDGET?

M: Absolutely.  If they don’t receive the money donations they expected, they can’t do, and help everyone they planned to help.

G:  And, haven’t charities been hurt by COVID?

M: You’re so right, COVID has reduced donations to some charities by 30% or more.

G: And, I read that more people need help now too!! So, if we’re talking a 5% increase in donations during the holidays, that doesn’t sound like much. 

M: I thought the same thing. So, I did some research and you’ll never guess what?

G: Hit me.

M: Like, right between the eyes? (https://www.youtube.com/watch?v=QMJWEk9ww-s) 

G: No. I meant just tell me what you found out.

M: Oh. Ok. So charitable giving goes up by around 5%. But spending on gifts to family and friends goes up by close to ONE HUNDRED PER CENT!! (https://www.youtube.com/watch?v=Ruwoj_qzCLA)

G: WHAT?! Like, it DOUBLES? I guess that makes sense, it’s about the only time of year a lot of people exchange gifts, apart from birthdays.

M: Bro imagine if your birthday was on Christmas day. That would suck. (https://www.youtube.com/watch?v=LukyMYp2noo) 

G: It would…nobody would remember. Aunt Lori’s bday is near Christmas. She rarely gets bday presents.

M: That’s sad (baby crying). But, we’re getting sidetracked again. So, gift spending goes up by 100%, and spending on alcohol goes up by 40% (YIKES)!! And, that’s all compared to 5% for charities.

G: Wowzers. So I guess there’s room for a little MORE charity in all our lives. 

M: Sure seems that way, and actually, that’s one of the coolest ways to give I read about recently.

G: What’s that?

M: You can actually GIFT a charitable donation. For example, you can financially sponsor a child in a developing country.

G: You help by donating money, so they can get supplies for school, clothes and food because they may not have it?

M: Absolutely. You can do it for somebody else, and put their name on it, instead of giving them, something they may not need like slippers or a tie. (Awww, thanks)

G: Cool. And, there are even actual gifts that have a charitable side. Some shoe companies, like TOMS SHOES.  They donate one pair of shoes for every pair they sell. Stuff like that. 

M: Exactly. Lots of companies donate a percentage of their profits to charity all year round. We love “Newman’s Own” food brand. They have donated over $550 million since it started (SUPER AWESOME).

G:  We have to buy a little extra pineapple salsa for the holidays (https://www.youtube.com/watch?v=Ava45CrcDPQ from 5:00 to 5:04)!!! Other charities help people around the world sell their products so those in need can make money and earn what they need to live.  

M: So you could buy directly from them?

G: Yep.  The United Nations Children Fund, or UNICEF helps children around the world.  They actually have a marketplace with lots of unique options to choose from.

M: And, the profits help children in need (Applause)?

G: Sure does. You can support almost anything. “Cards for a Cause” donates 20% of sales of holiday cards. They’ve donated over $1.2 million (SUPER AWESOME). If we don’t make our own, it could be a  great new tradition!

M: And, they give their money to:

G: Make a wish Foundation

M: American Red Cross

G: Habitat for Humanity

M: The Alzheimer’s association

G: And, others..

M: So apart from Christmas gifts that are charitable, what other ways are there to give to charity?

G: Well, donating cash is the obvious one. And probably the easiest way of all.

M: Sure. That’s the one everyone will already know. BUT there’s a thing about giving cash which is GOOD to know. https://www.youtube.com/watch?v=9jj6cVqGfkc at 3 sec)

G: What’s that Mak?

M: That it can actually save you money (coins falling)!

G: What? Giving money can save you money…that sounds too good to be true.

M: Well, it’s not! Let me explain. When you donate money to charity, sometimes you can deduct that donation from your income on your tax return, which means you pay less tax!

G: That’s awesome! If your income tax is 25%…

M: So far so smart…GENIUS!

G: And, if you donate $1,000 to charity you might be able to save 25% which is $250. 

M: So you save $250 on your tax bill AND get to give to charity.  EVEN MORE GENIUS

G: Dad is the tax master and set up a Donor Advised Fund, when he needed a large tax deduction.

M: Super simple to set up. He made his contribution and invested it.  He’s given away over $30k and he…

G: Still has more than what he started with AND a big fat tax deduction.  He did a video on the EduCounting YouTube channel.

M: I know that’s how he’ll be giving to charities this year and for years to come.

G: Yep, that thing is cool, tax smart and it’s the gift that keeps on giving (Giving and giving and giving!).

M: So, how else can you give to charity at Christmas? 

G: Another cool way is by volunteering, so instead of giving money to a great charity, you give some of your time, for free, to help out.

M: This is such a great way to give because it doesn’t cost you ANY money. Even if things are a little tight- 

G: – like they are for a lot of people in this crazy year of COVID – 

M: – right, then you can still give something back to a good cause. Take THAT covid!

G: Exactly. There are LOTS of ways to do that. One of the most awesome is to volunteer at a food bank.

M: A what now? A bank? Sounds good so far!! But, it looks after your food for you? (get in my belly!!)

G: Ha. Not quite. A food bank is where you can make a deposit of food.  The food bank watches over the food, like a bank does for your money.  Then they’ll distribute it to families that need help.

M: It blows my mind (explosion) we even have these in America today. Aren’t we the richest country in the world? 

G: No kidding. So sad. 

M: But I guess that also shows why it’s so important to give at Christmas too. Including volunteering. 

G: So if you volunteer, you might help to organize the food, make sure it’s all good to eat, deliver it and more. https://www.youtube.com/watch?v=K7jPUJDmWa0 Express delivery!

M: Sounds like a pretty awesome way to give back and fun.

G: Sure does. What else could we do?

M: I like to make things, and  another cool idea is you can make crafts for charity. “Made 4 Aid” does that and has a shop on Etsy. It’s awesome.  You can also donate toys to a toy drive.

G: Love it! Some will take “gently used” toys, like our Razor Scooters that we’ve grown out of, or that Barbie doll I definitely never played with once or twice! 

M: Ha! You’re so busted on that big bro, ever since you dropped your Barbie bombshell on the video episode we did. (insert audio clip of Grant?)

G: Hey, I’m man enough to admit it. All the other guys are simply lying!!

M: And I admire that. 

G: And you know what? I feel pretty good about all our Christmas charity ideas we’ve had. (https://www.youtube.com/watch?v=d-diB65scQU 38-41 sec)

M: Me too. And guess what. SCIENCE can tell you why.

G: What? Science? Totally lost me there Mak.

M: Stay with me bro. Basically there have been a TON of studies that show that giving makes you…….HAPPY!! https://www.youtube.com/watch?v=d-diB65scQU 38-41 sec

G: Surely you mean GETTING something makes you happy.

M: Well, yeah it can, but the study shows that receiving a gift has a SHORT-TERM happy kick. 

G: Ok, but let me guess – giving makes you a big time happy kick, for a lot looooooonger?

M: You got it! the crazy thing is, it can even just be one thing you give. Doesn’t even need to be on a regular basis. 

G: Nuts. I’m gonna try that. What could I give away?

M: How about…a kidney? 

G: HUH?? Mak, I think you’ve gone crazy. The men in white coats will be here very soon. (Ma’am please come with us, we’ll make sure to bring your pet unicorn

M: Ok so maybe that is a little too much. But one of these studies focused on “organ donors”. Those are the people who DID give a kidney or body part, and saved someone’s life.

G: Didn’t Uncle Tony give his bone marrow to his daughter Sami?

M: He did, and I bet he feels amazing about that.

G: When you think about giving like that, I can see why it’d be a great feeling. For…. like… for…e…ver. 

M: Totally! Every year they celebrate the anniversary. But don’t worry, I’m not going to make you do that. 

G: Ok that’s a relief…PHEW

M: But any of the great ideas we’ve come up with today would give you the same little bit of lasting happiness, and it doesn’t have to cost you a single cent or your liver!

G: I’m so down for that (right on!!). 

M: Awesome. Because we haven’t even talked about the most important part.

G: Right. You mean the other side of all the giving.

M: Exactly. Meaning, all the people who need the stuff that charities provide and who get to have something resembling a normal Christmas thanks to everyone’s generosity. 

G: Total win-win. People give, it makes them feel great, people receive, it helps them out of a tough spot. 

M: Right on. 

G: Hey, where’s dad? He seems kind of quiet (crickets trilling).

M: You’re right…a little TOO quiet…

M/G: DAAAAD

____________

D: Don’t come in! Don’t come in! (Arif, can you find an audio of “paper rustling”)

M: I don’t even wanna know what he’s doing in there…

G: I’m praying he’s wrapping gifts. The longer he’s taking the more he has to do.  Otherwise.. I don’t want to even think about it. 

D: Ok it’s safe now (All clear)!

M: Dad what on earth are you doing??

G: Please say it’s wrapping gifts.

D: You got it G-man! Tell me you guys didn’t peek.

M/G: We didn’t.

D: Good. Not a fan of “peekers”. It ruins all the magic of Christmas. NO PEEKING

G: Dad we’ve been talking about Christmas giving, charities, all the cool stuff you can do to give back to the world.

M: We wanted to know what YOU’RE going to do to give back this year.

D: Great question! I guess I hadn’t really thought about it yet. Maybe use my donor advised fund.

M: TOLD YOU!!

G: Well, if you don’t use that, there are tons of options, and we can make a plan and do our giving together.

M: Great idea Grant. After all, the best way to share Christmas cheer is singing loud for all to hear…

D: Sure is…you guys ready…?

D/M/G: We wish you a merry Christmas, we wish you a merry Christmas, we wish you a merry Christmaaaaaas….and a Happy New Year!!

D: We’ll be back next week with a VERY special edition Christmas episode! So make sure to join us.

M: Do NOT miss it!

G: We’ll see you next week…

M/G: BYE….

Transition

Ben’s 2 Cents

Last week we talked about how Christmas can be tough to afford. It’s an expensive time of year for sure. And trying to throw yet another expense in there is a big ask. But as we talked about today, giving doesn’t have to cost money! Giving time, or things you make, is as valuable if not more valuable to those in need. And there are so many ways to do it! Get online and do some research for places looking for volunteers in your area. Make sure you talk to an adult about what you have in mind, and stay safe. We promise you, and science backs us up on this! – it’ll make you feel GREAT! 

Until next time, thanks for being here and don’t forget to like, comment, subscribe, and review! Thanks!

 

Quiz

#1 Why is Christmas so important to charities?

A) Because more people give
B) Because people give more
C) Because you give more to people
D) Because people give you more

#2 What goes up by 100% around Christmas time?

A) Your body weight
B) Stress levels
C) Turkeys escaping from farms
D) Spending on gifts

#3 What charitable thing does TOMS shoe company do?

A) Give away 100 pairs of shoes every weekend
B) Donate one pair to good causes for every pair bought in a store
C) Upgrade your old sneakers to high heels for free
D) Give every customer a cookie

#4 “Cards for a Cause” have so far donated over $1.2million to good causes by doing what?

A) Holding an annual poker tournament
B) Staff karaoke nights
C) Christmas sweater competitions
D) Donating 20% of holiday sales revenue

#5 What can happen to your tax bill if you donate money to charity?

A) It goes up because obviously you had a great year and can afford to pay more
B) It stays the same
C) It goes down because you can write off a portion of the charitable donation
D) It’s cancelled because you’re such a good person

#6 What is a food bank?

A) A place to keep your food safe
B) A place you get paid for growing food
C) It’s where donations of food are stored and distributed to people in need
D) It’s just a giant pile of food

#7 Made4Aid is an example of what?

A) An iced beverage found only in Louisiana
B) An Etsy seller selling home-made crafts for charity
C) A charity telethon
D) A live music show raising money for charity

#8 What surprising side effect of giving has been identified by scientists?

A) It makes you happy
B) It makes you sad
C) It drives you crazy
D) It makes your hair turn green

#9 What kind of charitable giving is Dad going for this Christmas?

A) Running a marathon in a spandex onesie
B) Riding a bike to South America
C) Giving away $100 for every slice of turkey he eats on Christmas Day
D) Using his donor advised fund to make a tax-efficient charitable donation

#10 The best way to share Christmas cheer is...?

A) Giving to charity
B) Singing loud for all to hear
C) Spending time with your loved ones
D) All of the above

TRANSCRIPT

MAK: The markets continue their drive upward, as the Dow is over 34,000. All three major indices ended up over 1% this week, and bitcoin shot up about 6%, even though it dropped pretty significantly over the weekend. Dad’s day trading account is now down almost 25%, and it was up almost 100% earlier this year. His experiment in day trading seems to be proving what he already thought he knew, which was that it’s highly probable you’ll LOSE money. As he’s told us, a good education sometimes costs money. Let’s continue on from last week.

GRANT: Nice wrap up Mak. Maybe we should call it “Mak and the Markets”. I like it 🙂 Hey, we talked about Mindset, Assessment and Doing the work. An easy acronym, which is M-A-D, MAD. Super simple. Getting into the mindset, and keeping it is a big part of the first step. From what dad has taught us, it doesn’t have to be super complicated with lots of formulas. It’s easy enough for us to understand it, and we won’t be 13 for another 7 weeks. Ok, I’ll let dad take it from here.

DAD: Thanks G. As we spoke last week, a big part of financial success is your money mindset. I was listening to a book this week called the Psychology of Money by Morgan Housel. It highlighted a couple interesting points. When you think about saving money and planning for retirement, it’s a relatively new concept to us. When people my age were kids we never really thought about our future. Unless we’re thinking about next week, when we wanted to buy some new clothes, a bike or something for ourselves. For kids nowadays, it’s an updated video game skin or some digital currency in their game to upgrade a weapon or something else. So, what does it mean to any of us if this whole retirement and wealth building isn’t new? Saving isn’t really new in the short term. All of us do it and if we can, we save money for a rainy day. But taking that to a whole new level of saving for instance, for a house, maybe a wedding, for having kids and even when we retire when we can’t earn a salary any more is TOTALLY different.

GRANT: So, saving for the long-term takes a very different view. In the Psychology of Money book, dad said it talks about the ways we save for retirement. It depends on how we grew up, along with where and when. If I think about my life, I have a ton of video games I get to play. I was born with computers, game systems and software that made all of this possible. The first iPhone came out the year before Mak & I were born. If we think about Fortnite, Tic Tok, YouTube and the internet, they were here for us to play all the fun games we wanted, and our experience with various apps is unlike what mom and dad had when they grew up. I think they got exposed to the video table tennis game called PONG. Two vertical lines on a screen that moved up and down, and the ball bounced between them. If they were a bit luckier, they got to play with the Atari game system in the early 70’s. That was 50 years ago.

MAK: However, after doing a bit of research, saving money or building wealth for the long-term, especially having money when you’re old and retired is really new. These savings accounts called the 401k and IRA really started in 1981 and are the primary accounts our parents use to save for retirement. They’re ONLY 40 year old. Hey, we’re called Homo Sapiens, which is the most recent version of a human being. We’ve changed over the years. Our current version has been around for about 300,000 years. And, some version of a human being has been around for MILLIONS of years. I can’t imagine how much they thought ahead and planned using investing and the stock market. I bet they got hungry and they would hunt. They would need clothes and they would hunt. It would get cold and they would build a fire. Yes, they were gathering food. But, it wasn’t until about 12,000 years ago, they were thinking far enough ahead to farm. That takes planning and thinking about the future. Plant today and harvest in the future, and save some for when it’s winter. Our ancestors could die of the common cold, being eaten by a Pterodactyl, or accidentally stepped on by a wooly mammoth. Ok, not the Pterodactyl, because that was about 150 million years ago. But, life was a day to day thing, for millions of years and there wasn’t any planning for the future.

DAD: So, we don’t have a million years of having it built into our DNA to save, plan and invest for the future. AND, we’re all affected by the way we view the world. Our past experiences are a huge reason for the way we run our own finances. My grandmother lived through the great depression and would’ve told you the stock market is horrible. NEVER invest your money in it. It was horrible for many. But, not for everyone. Jesse Livermore was a well known stock trader at that time. He was worth about $100 million in today’s money. But, he actually “shorted” the market, which means he thought prices were way too high and bet they would drop. The more they dropped the more money he would make. When the market crashed, he made an equivalent of $3 Billion in today’s dollars, in ONE DAY. His family was actually scared he lost everything like many others. They were thinking he might hurt himself like many others. But, HIS experience was much different from the many who lost everything. After the crash, many didn’t have enough to eat. Almost one in four people didn’t have a job and 2 million people were homeless. My grandmother, who made it through the depression, wouldn’t throw anything away after her experience. I always remember her famous “Bacon grease sandwiches”. Yes, that’s the grease left in the skillet after frying bacon. It would cool down and look a cloudy gray with bits of bacon that would fall off when it cooked. She’d scoop it out and spread it on bread, just like butter and eat it. She said it tasted great and it filled you up when you were hungry. Her actions were based on her experience of living through the depression. So, what are your experiences and feelings about money?

MAK: Now, the author of dad’s book had a comment on his favorite wikipedia page that began like this: “Ronald James Read was an American Philanthropist, investor, janitor and gas station attendant”. Not exactly what you’d think about when thinking about a Philanthropist, who gives away large amounts of money. Does a janitor or gas station attendant make that kind of money to donate a large sum to their favorite charity? Can you really call him a philanthropist? Well, he was the first to graduate from highschool in his family. And, it’s even more impressive that he had to hitchhike every day to and from school. He fixed cars for 25 years, then swept the floors at JCPenney for 17 years. As the author explained, over 2.8 million Americans died in 2014, and fewer than 4,000 were worth over $8 million and our friend Ronald did just that. He saved and invested, and when he died, he gave $2 million to his step kids and over $6 million to the local hospital and library. That’s over $8 million. Kind of sounds like the “Millionaire Next Door”.

GRANT: Then you have a guy named Richard Fuscone from the same book. If Ronald Read was considered Batman, this guy would be the opposite, and possibly named the Joker. He was Harvard educated. He got a Master’s of Business Administration. So, that’s 6 years of college, which was 6 more years of formal education than Ronald. He was an Executive at the well known financial company, Merrill Lynch. Richard probably never fixed a car or swept a floor. He was one of the 40 people under 40 years old who were on the Forbes list of successful business people. That’s impressive. It seems like everything he did was simply impressive and made money. But, in the mid-2000’s he built a huge house. It was 18,000 square feet, which is about the size of 6 of our houses put together. It also had 11 bathrooms. Ok,I have to ask how many places do you need in your home to go to “do your business”? It also had 2 elevators, 2 pools, 7 garages and it cost…..get this….just to maintain ….$90,000/month, and that’s 15 years ago. Then, in 2008 everything fell apart financially in the US. We called it the financial crisis. He wasn’t making any money, and when he couldn’t afford his Palm Beach house, house #2, the bank took it. Then, took his mansion and they sold it in an auction for about 75% less than it was worth. This happened just 5 months before our friend Ronald Read left his $8 million to his family and charities.

DAD: So, I’m an expert, by almost every measure. But, what does that mean? Does that mean I will always beat every non-expert when it comes to investing? No, it doesn’t. Finance and investing are taught as being a complicated exact science, full of math which would be hard for people to understand. But, you don’t have to know everything to invest and a lot of times it gets in the way. A friend of my sister’s once told me they invested in Apple because their kids came home one day from school and said how awesome Apple products were. He had a nice little chunk of money over 15 years ago and decided to invest it and now it’s worth several million dollars. So, what does this all mean? Unlike becoming a doctor, engineer, an NBA, MLB, NFL player, investing isn’t something only for those who are 7 foot tall, or you throw a 100 mile per hour fast ball or run a 4.2 second 40. It also doesn’t mean you have to study 10 years in med school so you can do it. Some of this is honestly luck.

MAK: You know who had luck, it was Bill Gates. We think he was brilliant, and he did it on his own because he was smart, knew computers were going to be big and learned all the right “formulas”. But, his story may not be like you imagined. Just as we may imagine investing is super complicated. I’m not talking about him as an investor, but it shows that what you think and reality may be a bit different. Bill was extremely lucky, and yes investing is part luck. I’m not sure you know this, but in 1968 there were about 303 million highschool students. 18 million lived in the United states. 270,000 lived in the same state as Bill, which was Washington. About 100,000 lived in the Seattle area at the time, and only about 300 went to Lakeside school where Bill went. The computer that he had access to was due to one retired Navy pilot who was the math and science teacher. He pushed to get a computer in the school, and at that time kids didn’t have access to computers like that. But, it happened. Out of 303 million students, only 300 students had access, and only 3 took it crazy serious. The odds of him being exposed to a computer like that were less than 1 in a million. Even Bill said “If there would have been no Lakeside, there would have been no Microsoft.”

GRANT: So, investing is NOT a science, it doesn’t have these absolute rules like gravity. And, you don’t have to spend years learning mathematical equations. And, there is some luck involved. It’s about how you behave. Let me say that again, since Dad would if I didn’t. It’s how you behave. Do you spend everything you earn? Do you go over the top like our friend Richard Fuscone, or do you live under your means like Ronald Read and have $8 million saved. Dad tells us that there is NEVER a good time to save money and invest. You might hear “the market is too high” or “it’s too scary” or “it’s too low” or “the economy isn’t going well”. There could be lots of reasons or excuses. But, starting early is such a huge key. That’s why we wanted to start money with Mak & G, because starting early is such a HUGE part of investing. I know Dad’s dying to tell you some stuff about Warren Buffet that he just learned and starting early. Warren Buffet is thought by many to be the best investor of all time. But, his partner Charlie Munger even said that out of the 450 or so investments they made, they were lucky and most of their growth in their investment returns came from only about 10 of those investments.

DAD: What Warren Buffet and Charlie Munger have done are incredible. You can’t take that away fro them. Simply put, Warren Buffet is amazing. But, do you know the reason that he’s so amazing? His age. Let me say that again. His age. He’s now 90 years old and he’s worth over $100 Billion. But, did you know that he didn’t hit $1billion until he was 50, and he wasn’t worth $3 Billion until he was 65? That’s a ton of money by anyone’s standard. But the point is that over 99% of his wealth occurred after he was 50, but he’s still going 40 years later. And, that’s how compounding works. So, when did Warren start saving and investing. Anyone? Bueller? Bueller? He was seriously saving and investing by the age of 10. He’s got 80 years of compounding and investing under his belt. But, do you know the arguably best investor in history is Jim Simons, who ran Renaissance Technologies, and since 1988 he compounded his money at 66% annually, while Warren was about ⅓ of that amount at 22%. Simons has about ⅓ of what Warren had at the time, because he didn’t hit his stride until Jim hit 50. If he had hit his stride for as long as Warren, he would’ve been worth Quintillions of dollars, which is past a trillion and past a quadrillion. Almost made up words…

MAK: When we speak about Ronald Read who saved $8 million versus Richard Fuscone who lost everything, you have to stop moving the goalpost. That just means, every time you make more money you increase how much you spend. You get a 10% increase in your pay, so you buy a nicer car. There has to be a point where it’s “enough”. And, this is where the money mindset also comes in.

GRANT: We may introduce something mathematical to highlight a point. Understanding the concept is much more important than how the math works. Dad says most people don’t know that an index fund, which will mimic the Dow, the S&P or the Nasdaq, is only 50 years old. And, many people talk about Hedge Funds, and those are only 25 years old. This whole thing is really brand new, and it continues to change. Benjamin Graham, who is one of the founders of analyzing stocks revised his formulas often, because things changed.

DAD: I personally had to get through college, pay off my school debt and start to build my wealth in my 30’s which was 20 years after Warren Buffet started. Having parents who are interested in teaching their kids about money is a great first step. But, if I would have started when Warren did at the age of 10, I would be about 8 times more wealthy. It’s all about your behavior, time and a little luck. To get that right, you have to know yourself a bit, and how to help your children with their behavior. But, starting early is a huge key to helping your kids reach their goals. Thanks for being here, and don’t forget to like, subscribe and comment on the podcast. We’ll see you next week. Bye!!!

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