(Ep. 87) How can you invest when everything is so expensive? | Student Loan Planner

Hey everybody, welcome to this week's podcast. We're gonna talk a lot about investing today. And I wanna let you know about something that is our flagship course, Six-Figure Debt to Six-Figure Net Worth. This is the best thing that we sell besides our consult service. So it's our consult service, which has got like a 4.97 out of five star rating on like 500 reviews. And then there's this. And that's it. And this course is only gonna be open July 28th, which is the day this episode's coming out. And tomorrow, July 29th, and we're gonna close it at 11.59 p.m. So this thing teaches everything you need to know to invest when you have a lot of student loan debt. It's the only thing like it that does this. And I'm gonna give you a preview of what you would learn in today's podcast episode, where we're gonna talk a lot about investing. So I just want you to know that studentloanplannercourse.com is the place where you can go to check out this course. And again, it closes literally in 48 hours after I release this episode. If you miss it, just know that we'll eventually open it again, but it's gonna be several months. Basically, this is the last opportunity in 2020. So studentloanplannercourse.com again is that website. And I wanna talk about investing right now because it is a crazy environment that we're living in. So I remember back in February, the stock market was about to hit 30,000 in the Dow Jones. So if you don't really know what that is, the Dow Jones is just the most commonly cited statistic with what the stock market did that day. Dow Jones, basically you include 30 of the largest companies and it's just kind of an average and they just report it out on the news media. It's not the most representative index at all. It's just one that everybody knows, right? Basically, the stock market was really, really high. And then obviously it crashed a ton. It crashed 30%. I think it was the fastest 30% fall possibly in history. And it's really fascinating that it fell that fast. And then it also had one of the fastest rebounds in history. And now, as I record this podcast, we're at like 26, 27,000 on the Dow Jones industrial average and that's really close to the all time highs. So what the heck happened? What the heck happened and how is the market so high when like this financial crisis or this economic crisis of the pandemic seems like it's not going away anytime soon. And if in fact, in some ways it could even be getting worse. I'm hearing all kinds of things from listeners, readers, like, hey, my contract wasn't renewed in my hospital. They have to give me a year notice. And so I'm not gonna get laid off until the middle of 2021. I'm hearing people getting widespread cuts to pay that are not going to be restored until hospitals are feeling flush again, which again could be a very long time. And then the 401k matches and a lot of places have been suspended. Who the heck knows when that comes back, right? And this all has huge impacts to your financial planning and your long-term financial security. And so what do you do to fight back? Say you do have some savings right now. How the heck do you put it into a market that's the same level it was almost back in February when none of this was a problem and did the worst thing in the world that we were mad about was from an airline perspective was like Delta Airlines was still charging a gazillion dollars in baggage fees, right? That was our biggest problem with travel back then. And now we're all wondering, are we ever gonna travel again? It's just so interesting how the world's changed so much yet the financial markets are very expensive right now. So bonds are super expensive because yields on bonds are super, super low among the lowest they've ever been. And we know that because the 30-year mortgage went below 3% last week. That's the first time that has ever happened. Imagine giving somebody money for less than 3% and the long-term rate of inflation is around 3%. So that's, historically at least, that's kind of almost like free money. The only scenario where it wouldn't be is if inflation's gonna only average 1% or 2%, right? So just kind of crazy, crazy world that we're living in here. So what does this all mean, right? How did this all happen? So I'm gonna give you a kind of a quick overview of what happened with the economy, with financial markets from the beginning of this pandemic until now. Back in March, we really kind of had a contraction in revenues and business activity with a financial crisis all at once. So it was like a 1918 plus 2008 combined. And it was just really terrifying and that's why the market fell so fast because we had a liquidity crisis. The Federal Reserve traditionally buys bonds sometimes, federal bonds, government bonds, to lower interest rates in the economy and try to stimulate the economy. They can also set the rate for short-term borrowing. So that's mainly traditionally what the Fed has mostly done. But in 2008, when I'm saying the Fed, that's the shorthand for the Federal Reserve, which is the central bank of the United States. So this is the institution that handles monetary policy, which is basically trying to figure out price levels in the economy and monetary supply. And then there's the Federal Congress and Executive Branch that sets fiscal policy, which is how much we're spending basically, right? How much we need to borrow, that kind of thing. Fiscal policy was enormously stimulative, not as big as a lot of people said it needed to be, but we passed the CARES Act, which is a $2 trillion bill that did all kinds of stuff to try to stimulate the economy to keep it from cratering into a Great Depression. And the thing is, is the Federal Reserve is not bound by political constraints really that much. So the Federal Reserve kind of just really came out with the bazooka right away and very fast and also did things that market participants have never seen before. So it was kind of like shock and awe, you know, that sort of military, I guess, slogan, shock and awe, where it's just like, they showed you such overwhelming force that it just surrenders kind of thing. It's kind of like, that's what happened with markets because the Federal Reserve came in and did things that they've never, ever done before. With this liquidity crisis that was happening in March and April, banks need time to get things in place, right? So a lot of times what a bank will do is they'll decide, I want to make 2% more than what the government borrows out on my loans. And so I'm going to go lock in my hedging bet so that I don't have to worry about whether interest rates go up and down. I'm going to lock that hedge in on a Monday and then I'm going to go make the rest of those loans for that deal over two weeks. Think about bankers, right, financial people, right? You want to go to lunch and not have to pay attention to the markets, right? You want to go take Fridays off and not have, you know, keep banker hours, right? There's a reason that the term banker hours exists because it's kind of like, you want it to kind of be a sleepy thing. The problem is, is back in March and April, there was so much volatility. I don't know if you remember, it was normal to have like a 5% swing in a given day, 5% or more. Virus is ending the world, down 10%. New, you know, miracle cure discovered, up 7%, right? It was so volatile that companies and financial markets couldn't really even make any plans at all. So a lot of the really drastic stuff that happened, I got to see firsthand with some of the credit markets that I'm especially attuned to, particularly student loan refinancing, right? A lot of these companies just totally stopped making loans completely because they had no idea how to go in and even get a bond deal done in the middle of such volatility. Because again, you have to price something and one day price could change 5, 10%. I mean, that's really, really impossible to get anything actually done in that kind of environment. So the economy was falling apart. And also, you know, another thing that happened is the cruise lines. Hedge funds were talking about bailing out these cruise lines with like, I want to say double digit 15% type interest rates, incredible deals for these hedge funds. And then overnight, the Federal Reserve came in and sort of backstopped everything. They started buying corporate bonds. And what are corporate bonds? Corporate bonds are things that companies issue in exchange for regular debt payments. You know, and they eventually pay you back with interest in principle in full, right? And sometimes corporations default. Well, in a world where nobody's making any money and you've got these multi-billion dollar ships sitting in port with all these expenses and payroll. And so obviously a lot of these companies are going to default. And so you need to borrow money to pay your expenses. Maybe you only need it for, you know, a year or two, right? Maybe Carnival only needs to borrow for five years to be able to survive this crisis. Well, if they have to go to hedge funds and pay 15% interest with all these senior lines of credit where they can seize the ships the second they don't make their payments, then they're not going to be able to be in business very long. That's just an example of what was going on in the economy. So what happened is, is the Federal Reserve came into the market and they started buying trillions of dollars worth of assets that they've never bought before. So they started buying corporate bonds, like I mentioned, and that caused basically the borrowing costs for corporate bonds to plummet. You know, I think that Carnival eventually got a deal done for like a single digit interest rate or something. It was vastly cheaper for them to finance themselves. And the thing is, is when you have such a high interest rate, so much of your payment's going to interest, you can barely, you know, survive long enough to keep the business afloat. This helped out so many companies with the Federal Reserve coming in and lowering the cost of capital in March and April. So, and this is when the market was collapsing because everybody just didn't know what tomorrow was going to be. And people freaked out because they thought, well, I better seize back my money, right? They didn't just buy corporate bonds. They also started buying municipal bonds, which is the debt of cities and states and the New York City subway, for example, the toll authorities that, you know, have to pay for upkeeping bridges that people drive across, for example, in New York. All of these municipal bonds, these are really interesting because I used to be a municipal bond trader. So I used to be a municipal bond trader. That means I was a manager. I bought and sold municipal bonds for one of the world's largest investment companies. And municipal bonds are generally bought by individuals because they're tax exempt. And that means that they're not really that attractive to giant pension funds and universities that have all these tax exempt pools of capital that are trying to seek out the highest yield. So individuals that are wealthy, you know, millionaires, billionaires, in a lot of cases, will buy up all these city and state bonds that fund your local government and fund all of your local city services. And, you know, usually that's a great deal for cities because they get to have a lower cost of interest because Congress gives them a tax exemption for that kind of debt. And so they get lower borrowing costs. Investors are willing to accept lower yields because they get the tax exemption. Everybody's happy, right? Or at least, you know, this is kind of the way that municipal finance is done in America at this very decentralized kind of level. But then what happened is, is all at once, again, you had a revenue crisis, a disastrous drop in revenue where suddenly you're not able to get any transfer taxes for selling property. You're not able to get sales taxes because people can't go out to eat. You may not even be able to collect income taxes because maybe people's incomes fell off a cliff. Businesses might not be paying people that are able to pay for lunch in your downtown area, right? So there's all kinds of things that were happening. So a lot of these cities, their revenues just absolutely collapsed. And the expenses don't go away unless you fire people, right? The expenses were there. And so you have to borrow either short-term or long-term bonds to be able to pay your bills as a city or local government, or again, some of these random agencies you never thought about before, like the New York City subway has to pay to keep the subway lines going and not flooding, right? So what was in the process of happening is there was a fast-moving crisis in municipal paper where cities and states were gonna go bankrupt and they were gonna have to fire everybody or fire a huge portion of their staff, and it would have been a disaster. And there's a big fight right now in Congress over state and local aid. Part of the reason for this is because a lot of the places that are most in debt, think places like Illinois, have done a very poor job long-term of managing their finances. And this is also Kentucky, Mitch McConnell's home state, Connecticut to some degree. So it's not necessarily a clear pattern as to which states have done a poor job of managing their finances, but some of them have. The worry is that you bail a state out that has all these unfunded pensions that they never wanted to pay for over time because of political temptation of not paying nothing into your pension fund, and then suddenly you owe all this money and you don't have it, and you're like, hey, come rescue us, right? So that's why the fight was going on. And even if the right solution is to support states and local governments, which it probably is, that's a fight that's gonna take a lot longer to happen than what was happening in the municipal bond markets, right? Basically, the Federal Reserve came in and said, you know what, we're just gonna buy all this stuff. And the thing is, is the Fed doesn't have necessarily all these bond traders that they can go out and literally go purchase all of this. So they had to hire some investment managers to basically help them do that. And then when they kind of ran out of stuff to buy, then they started buying ETS. So exchange-traded funds are basically like mutual funds, but they are sort of a catch-all for the market overall. If you're buying an ETF, it's a lot more efficient way to just buy the whole basket of everything that you can invest in in a given market. So if you just put a couple billion dollars into an ETF, suddenly this ETF's gotta go out and buy every bond in the portfolio. So that's a fast way to inject capital. So basically, the Federal Reserve is the reason why stock and bond markets, and even real estate, have not only recovered, but they're doing really well right now in terms of the price. And so what does that mean for the future? Because, you know, can the Federal Reserve ever get beaten down by market participants freaking out? Like, is the Federal Reserve so big that there's nothing that can't flummox it? I would say that there really easily could be a situation where markets could fall, and they could fall a lot. And, you know, one kind of way this could happen is if you pump trillions of dollars into an economy that's not producing the goods to back it up, goods and services to back it up, you could have huge inflation. And if you had huge inflation, suddenly the value of stock markets would plummet in an enormous way, and there would be no way that the Federal Reserve could intervene to try to fix something like that. So, I mean, this policy is great in the short term. It might be great in the long term, but we just don't know until 10 years from now. And so that's what's kind of going on in the stock and bond markets right now. And then also simply because the corporate bond yields were kept low, banks looked to that to decide if they're gonna lend for mortgages. Banks looked at those corporate bond yields, basically the Federal Reserve, saying it's gonna be super cheap for you to borrow as much as you want. Now banks feel comfortable saying, you know what? We're gonna pass some of these savings along to consumers because we expect this is not gonna go away. And so that's why 30-year mortgages got super low in the yields for those mortgages, and that's why the value of real estate has been so high. Because if you have interest rates that go down, down, down on a 30-year mortgage, then virtually the monthly payment also goes down, down, down. And if your monthly payment for the same house is going lower, then if you assume the demand is the same, well, that's gonna increase demand, so that's gonna increase the price of the house, all things equal. So that's why you're seeing the price for houses, especially in suburban areas where there's lots of space, areas to move around. You don't have to live in a 1,000-square-foot apartment like I live in. There's also other demand that's increasing right now for specific kinds of houses. And then obviously in big cities that you do have those 1,000-square-foot, really nice apartments, that demand is falling at some level because these amenities in a big city where you're willing to live in a smaller place are worth less, and so that's why that real estate's going down a little bit. So if the price of bonds is super high because the Fed's buying everything, and the price of stocks is really high because when the Fed buys all this corporate bond, municipal bond, all of these quasi-risky assets that pushes yields down super low, what that does is it increases drastically the value of future profits for companies. So I'll come back to that idea later. It's kind of a complicated idea a little bit, but it's really fascinating because it really helps you understand really what's going on in the financial markets. If you think about what would have happened without any of the stimulus, you would have had a big crisis and you could have had a depression. And then the thing is is you probably would have seen an increase in income inequality in some level from that long-term because people could go and purchase assets at super cheap prices. I mean, that's kind of what happened in the Great Depression is dividend yields got to 15%. In a lot of cases, you could buy a stock for more than the cash it had in the bank, which is just crazy. But that's the level of panic that happened in the Great Depression, and so a lot of people like Benjamin Graham, who's the mentor for Warren Buffett, that's how those guys got rich is basically not having to compete with the Federal Reserve when they're purchasing and investing all their money. So what about you? How are you gonna get wealthy one day when the Federal Reserve gets in your way and purchase all these stocks and bonds and push the price up for everything? And also, how do you get rich too when, let's face it, like a lot of people that live in desirable areas, if you're living in California or New York, it's still ridiculously expensive just to be able to buy a house. Just to be able to have a single-family home in your name, you have to trade your firstborn for that because of just all kinds of reasons, because it's just so expensive to buy a house these days. So there's all kinds of these headwinds, and you can get over all of them. You can get over all of them easily, in fact, if you know what to do, because if you know what to do, you know the loopholes, you know the rules, you have a clear plan. I wanna give you an example of why, when interest rates are super low, the stock market would be super high, because this explains kind of why the stock market went back and snapped back so fast. So if you look at the value of a company, you're basically looking at all the future profits it's gonna have, and then you try to figure out what is that worth in today's dollars. So if the prevailing level of interest rates in the economy is 3%, then you're gonna take each one of those years of profits, and you're gonna divide it by basically the one plus the interest rate raised to the number of years into the future that it is. And that's how you figure out what the value of all these profits is in today's dollars. So back in the day, my mom talks about how, when she got her first mortgage, I think the mortgage was at 15%. So if you have a mortgage that's that high, that's related to the prevailing level of interest rates in the economy. So back in the day, you might have had interest rates at like a 10% kind of level, let's say. And so if you have $1,000 profit 10 years from now, that would be worth about $380 in today's money. $1,000 profit in 10 years would be worth, in today's dollars, with a 10% interest rate. So about 38% of that future dollar of profit. Now, if that interest rate is 3% instead, then that same $1,000 is actually worth about $750. So that's almost double. In a high interest rate environment versus a low interest rate environment, the value of future profits in a low interest rate environment can be at least double, if not maybe even more, than it would be in a high interest rate environment. So that's just kind of nuts. And if you used a 1% interest rate, then the value of that $1,000 profit in today's dollars would be like $900. It's almost 90% of the value in 10 years, which is about 20 or 30% higher than what it would be with a 3% interest rate. So it's kind of like, basically, here's the takeaway. I don't want you to get too confused with this because it could easily get kind of technical, right? Why is Tesla up five times? Why did that happen? Because if you think about it, does it make sense that Tesla's worth more than every car company and worth, it's approaching the value of Walmart and it has never made a profit in its history? Does that make sense? So let's kind of talk about why that is. So Tesla fell a whole lot because it's a speculative stock. And then when the markets roared back, it came back a whole lot because, again, the interest rates got super low again. Everybody kind of calmed down and stopped freaking out. And the level that you would discount the future profits at is not gonna be just the government interest rate. It's gonna be the government interest rate plus credit risk, basically. So if you think that there's a lot of credit risk in the economy, basically credit risk means that a company might not pay you back. If there's a lot of credit risk in the economy, that discount rate that you would discount the future profits at would be a lot higher. And then that might cause the value of your company to be down 50%. And then if that risk of credit goes way lower and now you're thinking about those future profits with a way low interest rate, suddenly the value of your company could easily be double or triple just based off of what's going on with credit markets and interest rates. And usually that takes a long time to develop, but in March and April, it was happening day to day. And what else kind of was going on day to day during that time? Well, if you see the stock market going up and down like the casino and sports are completely shut down, so nobody has anywhere to put their sports bets and casinos are shut down, then what better place to put your money than the stock market? And the stock market's attracting a lot more bets now that it's recovered because people always have an inverse view of risk. They always think risk is less when the stock market is high and then whenever the stock market's low, they always think the risk is higher. That's also a problem and I kind of thought, yeah, right, it's not really that big of a story there. But did you know that gambling in the United States is at 250 billion a year market? That is massive. Now it's small compared to the $2 trillion or whatever the Fed purchased in securities, but you're still talking about hundreds of billions of dollars it has somewhere to go and people have got to get their fix in, so where's it going to go? Well, if you see Tesla up double in like five days, then maybe you'll put it in Tesla. And that's not investing, that's gambling. And that's a great way to end up with no money for retirement and that's a great way to end up working 10 years longer than you really need to at your job. So the thing is, is how do you pick the next Tesla? How do you pick the next Amazon? That's why you need a plan for investing that helps you not have to worry about any of that, okay? Because if you invest in a way that's completely focused on today's environment, so if you're putting all your money in Tesla and Amazon, you could miss what happens tomorrow. Tomorrow might not look like today, because holy cow, if we could go back to February and say all this was going to happen, would anybody have believed it? No way. So a lot of times we have no idea what the future is going to look like, even though everybody likes to say that they do. So the way to handle that is to use something called market capitalization weighted investing. Index finds is the shorthand for that. And we have only one module in the course about this. The course is really about figuring out exactly how to become wealthy when you have a lot of student loan debt. That's the goal, is to teach you within two weeks' time how to become a multimillionaire long-term. That's the goal. But the how matters, right? The how, the building blocks of how you build the house of your future wealth and security for your family, you need to know what the bricks are, right? The bricks are the foundational knowledge that you need. One of those bricks is market capitalization weighted index funds. So the way this works is, yeah, you're going to feel the pain of the losers, of the losing stocks, right? But what's going to happen is the next big thing, you're going to be a part of that. You're going to be invested in a proportional share of all the different companies in the economy. And when one company explodes out of nowhere, like Amazon did, you're going to participate in that growth. And when a large company shrinks, you're still going to be exposed to it, but you're not going to have only exposure to that one company. So even if tech stocks went down 50%, you would certainly get hit hard in index funds. But the thing is, is they could also go up 50%, because they completely eliminate all these brick and mortars once and for all, thanks to the pandemic accelerating it. And then how do you pick which side of the trade that's going to happen? So my wife says index funds. I ask her, how do you invest? And she says, oh, index funds. The problem is, is she would not know the index funds to choose. So a lot of people know, like index funds, it's a positive thing, it has good connotations. But the thing is, is index funds, I mean, there's bond index funds that go up and down 0.2% a day, and then there's stock index funds in merging markets that go up maybe, go up 15, or down 15 or 20% in a day, in a worst case scenario, right? So an index fund doesn't really tell you anything. You have to know what index fund. You have to know how. How would you put your money into the index fund? How do you optimize that investment for taxes so you pay a lot less in taxes than the person who didn't take our investment course? So there's situations with 401k plans where the employer chooses the investments for you. So a lot of people that don't know a lot about investing would not consider themselves investing experts. You know, they get some level of financial security from their employer having 401k or 403b plans. So eventually you end up at a place that offers one, maybe you change some jobs, but eventually you find a place you stick at a long time. And the employer has what's called the default option. And the default option is something usually called the target date retirement fund. So you put your money into this fund, and it's really just a mashup of a bunch of different kinds of investments that the investing experts hired by the company that you work for said to put it in. And a lot of times these default options can be pretty good if they charge low fees. But sometimes the companies that your company hired to manage the company's retirement plan, sometimes these companies offer the employers lower fees in exchange for getting to dangle more expensive investments out to all the captive employees that they have access to now. A lot of these higher fee investment managers really only exist still because they have all these sweetheart deals with employers where they get to push their higher cost, higher fee funds into people's retirement savings with no awareness on the part of employees. So that's something that should never happen to you because if that happens to you, it could cost you hundreds of thousands of dollars. And I'm not exaggerating, a typical fee on a retirement plan might be half a percent to 1%, but over 30 or 40 years, 1% could wipe out 20% of your net worth with that kind of a fee. And obviously there's a reason why investment companies tend to have really fancy buildings and pay high salaries, right? It's because they make things that look like they're not a big deal, a big deal to them for their revenues. The thing about Target 8 retirement funds is they're limited, they're capped. You can only put 19,500 into a 401k or 403b. And if you have access to something called a 457 because you work at a not-for-profit employer or government employer, maybe you can put in double that. But you have a limit as to how much you can put away. And if you're planning on having financial security with only 19,500 a year of investments, you're either a teacher that's super frugal, don't need a lot to be happy, and your budget for spending is pretty low, or you're gonna be working until 65 or 70, okay? That's because a lot of people only put the money away they need to into their 401k plans, and that's it. So middle-class people are good at buying houses. That's what middle-class people are good at, right? The dream is the house, you're paying the mortgage, eventually you own the house. Maybe you do, you know, have you heard of reverse mortgage? The reason the reverse mortgage exists is because the reverse mortgage basically pays you a monthly payment at a much higher interest rate that the investor is earning than what you would get, you know, with a 30-year mortgage at 3%, basically. So in other words, like, you know, an investor might give you $2,000 a month on your home that's worth $300,000, but they might charge you, you know, instead of 3% for a mortgage, they might charge you 5% or 8% or something. It's super profitable, and you would never, ever use this unless you just didn't have an alternative because you hadn't saved very much money. So that's the middle-class. The middle-class doesn't really do a great job of saving for retirement, right? They put, like, the 4% minimum into their 401ks, and they buy their houses and then live on Social Security. I mean, that's like 40% of Americans live exclusively, I think, on Social Security and retirement, right? Average 401k savings, I think it's like $50,000 or something. It's really horrifically low. And so that's the middle-class. The upper-middle class maxes their 401k. Why do they do that? Why do they max it? A lot of times it's not because of anything special besides them having a high income. So if you're a physician or a dentist and you're making $200,000 a year, if you just sign up to do 10% into your 401k plan, you're gonna hit that $19,500 maximum without having to do anything special. But the problem is, is if you want financial security before you're an AARP member, okay? If you want the flexibility to live your best life and to have freedom from having to work or else financially, if you want that freedom, then you have to use something called a brokerage account. A brokerage account is different from a retirement account because a retirement account, you get a tax-deferred growth and you get a deduction up front or when you pull the money out, but it's capped. You cannot put more than a certain dollar amount into those retirement accounts. Whereas brokerage accounts are unlimited. You can put as much in there as you want. The downside of them is you don't get any kind of tax deduction, but what you can do is you can do smart tax strategies to save you money on the sale of your future dental or physician or medical practice. So in other words, you can do tax-loss harvesting with your brokerage account, growing your wealth rapidly, way more than if you just use your retirement account. And at the same time, you can be saving taxes for the sale of your dental practice, which isn't gonna happen for 20 years. That's fantastic. And for your brokerage account, instead of putting away $19,500, when you really figure out what you're doing and you have confidence and you're not scared by the fact that the stock market's ridiculously high right now and it's way overpriced, maybe, your plan doesn't get derailed based off of whatever's happening in the economy, which is a big deal because then you can confidently say, you know what? Yeah, I know the stock market's overvalued or maybe it's overvalued, but me putting aside $2,000 a month is my plan and I don't need to deviate from that plan because as long as I don't lose my job, this is a great plan to stick to. And even if I do lose my job, then I can take the 2,000 a month contribution down to $500 a month or even $100 a month just to keep it active. And then I know that I have a six month to one year emergency fund where the hard decision that I'm gonna have to face as a highly educated professional is not, am I gonna get a job or not gonna get a job? The worst case scenario is I might have to leave this town and move to a different state because that state controlled coronavirus way better and they're able to bring back elected procedures, right? And they're hiring and my place is not. That's like the worst case scenario. I'll tell you that the difference in loan forgiveness happening and not happening is absolutely not important compared to saving and investing well for your future. So if you do a really good job of saving and investing for your future, you can shave off 20 to 25 years off of your required working career. I'm not talking about early retirement. That's something some people are into, some people aren't. What counts is do you have to do what you do because of financial reasons? If you are in that situation, everybody's in that situation at some point in their lives unless you come from money, right? But the goal is to not be in that situation for a really long period of time. You wanna reach a level of financial security, which I'm kind of defining for our investing course purposes is a six-figure net worth. Once you have a six-figure net worth, you're not gonna be worried about your student loans anymore. Do you know why I know that? Because I've advised thousands of people over the past four years on their student loans. And with a lot of the people that I've advised, what I often will do is just say, why do you have anxiety about this? And they'll say, well, it's because I log into my med.com account and I see 30,000 of savings and investments, negative 580,000 of student loans. And then furthermore, my interest took me even more negative than my assets grew in the past three months. So it's extremely anxiety-inducing. And I say, okay, so if you had that 500,000 of student loans, but you had 800,000 of assets and your net worth was six figures, six figures of $300,000, would you have anxiety about your loans? I would say 90% of the time, the answer is no. I wouldn't. But the problem is, is there's this huge gap. There's this huge gap from how do you go from having no knowledge of investing to suddenly having six figures of net worth? And I'll tell you that if you do it via your retirement account, it's gonna take way too long. You're not gonna reach that point. You're not gonna, furthermore, be able to access those funds until you're 60. And again, hopefully you have a lot of financial goals and exciting financial ideas that you wanna try out that you wanna do well before you're 60 years old. So the solution is to learn about investing and specifically to learn about the order everything needs to happen in. When do you do the emergency fund? When do you open the brokerage account? How much do you put in? Where do you put it in? What funds do you choose? How do you know how much money you could lose? And if you do lose 40% of your money in the short term, how do you avoid losing that long-term and then take that short-term loss and make sure you don't have to pay taxes as much in the future? Those are all things that, if you're an investment professional, you know how to do that. And I will say as a disclaimer, this shouldn't be construed as individual licensed financial planning. This is an investing course. It's gonna teach you how to be your financial planner. And you know what? Some people will take this course and they'll be super informed and they'll say, wow, now that I know what I'm doing, now that I know how to mop the floor and vacuum the carpet and do the dishes, now I can just hire somebody to do that and I understand it versus just having no clue and being at the mercy of my cleaning person to show up or else the house is destroyed, right? I mean, that's probably not the greatest example, but you get what I'm saying, right? If you have the knowledge, even if you hire a professional, if you have at least some level of knowledge, you're gonna negotiate a better deal with a much lower cost of financial planning or you're gonna be able to do it yourself and save that cost, which can be very substantial. You know, the typical financial planning arrangement is 1% of what you invest with somebody. And 1% of what you invest, if you have a couple million dollars, that's 20 grand a year. So $20,000 per year, our course is 399 and it's a one-time fee and you get it for the lifetime of the updates. And so far we've updated it four or five times since we've started it. And people get all kinds of access to new information, new investing strategies, new knowledge about investing. And one thing that we're gonna do next week, assuming you're listening to this the day or the day after it released, what we're gonna do is in the first week of August, we're gonna do a webinar for the investing core students, past and present. And we're gonna go over your questions, basically about investing. What's going on with my specific portfolio? What's happening with the markets right now? We're gonna do a webinar for people that, only for people that have purchased the course. So we're gonna do that as well. And I did that the last time we opened the investing course. So to go back to a point I made earlier about how the stock market's kind of gambling right now. So all these people are just throwing money in with no plan. I mean, you throw money away at something with no plan, you're gonna lose money. Maybe not short-term, but long-term, you're gonna lose a ton of money. I cannot tell you how many people, when volatility was off the charts, people were talking about buying put options. A lot of people became super interested in buying options when the market was super volatile. They had no clue what they were doing. They're not investment professionals. I mean, one thing that I learned from being an investment professional myself and being on a team that managed billions of dollars, and I personally traded billions of dollars in bonds working with the top Wall Street banks, negotiating with them, it's hard. It's really freaking hard. And to think that you're going to know how to pick the right stock or the right option contract as an individual, you're not. And if you do, you have to realize that's probability, that's luck, it's not skill. Because even the smartest investors a lot of times get the returns that they do because of luck and not skill. So you have to be humble when you invest. You have to know that you don't know a lot of things. And if you do say, yeah, I don't want to learn about investing at all, well, that's fine, but it's kind of like somebody that hires a plumber and you've got a disaster on your hands with your plumbing and your bathroom, and you don't even look to see what a reasonable price would be for the plumber that's going to come fix it. You should at least have a baseline level of knowledge so that even if you don't want to do it yourself, you can still go in confidently to conversations and have informed conversations about what the treatment plan is for your finances. The reason I know there's a lot of gambling too, anecdotally, my youngest brother is a great bellwether for what the Gen Z kids are doing these days. He's a good deal younger than me. And apparently a big thing the kids are doing these days is investing their stimulus checks. So giddy up, right? So I mean, everybody's putting this money that they are supposed to be using for savings and preparing for the downturn in the economy. And some people are literally putting it into the stock market, which is, it kind of tells you just how frothy the financial markets are right now. And again, the exciting part is when you know everything, a lot of what there is to know about investing, you can still invest when the market's overvalued or really high. You don't have to make a call because you have a plan. You have a plan that works no matter what, no matter if there's a pandemic or a recession or a depression or a panic, regardless of what happens, you know what to do. So we're at this point where the Dow is super high, millions have lost their jobs, the pandemic shows no signs of going away anytime soon. So you gotta wait, right? Before you learn how to invest. Obviously the answer is no, you need to get started as soon as possible. When should you start thinking about investing? Figure out how to not spend more money than you earn every month. That's the first goal. And if you're at that point where you feel like you're not gonna lose your job in the next six months and you have an emergency fund, you're ready to really dive deep into this and learn how to invest. So here's a point that, you know, if I asked you, would you want to invest in October 2007, right before the Lehman Brothers crisis, would you say yes or no? A lot of people out there would probably say no way, no way, right? Because the stock market fell 54% from October 2007 to March 2009. I personally lost a lot of money on paper during that time. I was investing at that point. It's not a lot of money compared to what my portfolio is now, but it was a huge amount at the time where I was making my money mowing lawns, you know? And I was getting a little extra. You know, I actually worked a security job, believe it or not, at a church, and it was great because, you know, I got to do my homework at the desk for a lot of it. So, you know, I did all these creative, like, part-time $10 an hour type jobs, and that's what I was investing with back in the day in the last financial crisis. And it was a scary time, right? You had Lehman Brothers, you had the world financial markets collapsing, and everybody was saying, is this the next Great Depression? But if you had invested $1,000 at the market peak, the absolute peak of the peak in 2007, today you'd have about $2,000. And we've been through 9-11, we've been through the worst financial crisis over starting in 2007, I guess I should say. We went through the financial crisis, we've been through a huge amount of chaos, a horribly divisive time in America that's been so troubling, right? We've been through all of this, and yet somehow from the worst part of the peak, right before the housing bubble collapsed, to now, you doubled your money. Now you might say, well doubling the money over 13 years, that's not that great. Well, keep in mind, that's if you just put in one lump sum and that's it. So for example, if you put in $1,000 in 1929, a lot of people like to say, well it took you 25 years to regain that same price level of stocks, and that's a long time, 25 years. But that's not actually a truthful statement because that's excluding dividends. If you reinvested the dividends you got, which back in the 20s, dividends were way higher than they were today because mainly because of tax reasons that they've reduced dividends from what they are currently and done stock buybacks because of tax reasons. But if you reinvested those dividends, you would only had 10 years to wait. So that $1,000 would have become $1,000 again after 10 years of waiting. And furthermore, if you'd been able to invest $1,000 a year during this 10 year timeframe, then you would have about 50% more than what you invested at the end of the 10 year period. So if you'd invested $10,000 in $1,000 increments over those 10 years of the Great Depression, you'd have had $15,000 at the end of the 10 years. At that point, at the end of the 30s, World War II had already started. So you have the Great Depression and World War II, and with a consistent smart investing plan, you ended up with 50% more money at the end of that period. And that was the absolute worst period in the history of financial markets to be invested in ever, okay? And we're talking, again, Depression plus World War II, and with a regular investing plan, I don't know, $1,000 a month, you probably actually made all your money back more like in seven years in terms of just getting back to even. And is seven years a long time? Well, sure, but that's why you put money that you need for the future into investments and stocks and bonds, and you don't put it into the bank, because long-term, there's nothing that's gonna beat investing over a 10 plus year timeframe with regular contributions. There's really nothing that's gonna beat it. Maybe the only thing is if you have your human capital, your salary, what you get paid go way up, I guess you could, that's certainly a great thing to focus on too financially. But in terms of making a decision, do I put my money towards my debt, in the bank, in CDs, in my retirement savings, in stocks and bonds? Well, again, you need a plan. You need a way to think about how to invest, and you need to know the action steps. I can say, if you'd only put $1,000 back in 1929, well, how the heck would you have done that? What would you have used? What would you have put that money in, right? That's what the Six-Figure Debt to Six-Figure Net Worth Investing course that Suda Lone Planner does teaches you. It tells you exactly what accounts to use, what funds to choose, how to think about investing, how much you could lose. It tells you how to save money on taxes if you put a bunch of money in up front and the markets fall. It teaches you how to keep invested so you don't lose money on the swing back up, but it locks in the tax loss that you can apply towards your taxes and basically pay for the course in multiples. So, as a person in your 20s to 40s, the key is to have a system where you know what to do in any environment. You need to focus on growing your wealth, and your Suda Lone Forgiveness is not going to be what's gonna bail you out. The only way Suda Lone Forgiveness bails you out is if your savings rate sucks. If your savings rate is like 5%, then Suda Lone Forgiveness can add or subtract 10 years to your retirement date. That's because so much of it depends on this multi-hundred thousand dollars of swing in your net worth, but if you have a good savings rate, and if you go above and beyond your retirement account where you're not just using just your 401k and that's it, then your future can be stunningly bright financially, and I don't care if you're making 50,000 a year and you have $400,000 from a chiropractic school followed by a nurse practitioner school followed by a return to chiropractic or something bizarre where you have a 10x debt-to-income ratio. I don't care how bad it is. Your finances are super, super high potential long-term by simply knowing how to invest and knowing what the rules and loopholes are. So if you like this podcast, what more are you gonna learn by taking the course? So we're gonna, again, show you the right mutual funds, how to minimize your taxes, which alone is gonna pay for the value of the course. We're gonna show you how to make sure you don't lose too much where you're gonna get out of investing completely, which is an even bigger disaster, and we're gonna show you the step-by-step process of how to invest, and you get to ask me questions. So that's another thing is I'm not allowed to reply back to email with specific investment stuff because of regulations. And one-on-one, I can't give you investment advice without being a licensed financial planner. But in the context of this course, where you can see questions that people have asked and my responses, and you can ask your own question that other people can see, and by the way, of course, you can anonymize it if you want, but this questions is basically a platform behind where all these questions lives in. So when you buy the course, you get access to the course and all the material within it is the premium material that you can't see unless you're logged in and you paid for the course, right? And all of those comments in each one of the sections, we have a couple dozen sections with basically five to 10-minute videos that go over detailed sections, like this is what bonds mean, this is what stocks mean, this is what mutual funds you can choose, this is how to know how much money you could lose. And then below this section, below the video, we have these comments where you can, like I said, ask whatever questions that you have, and then also you can show up for the webinar that we'll do and ask even more detailed, individualized questions, and we can look at charts and do screen sharing, and I can kind of go over different concepts. And this is a thing that I can do because it's an investment course, so it's kind of distributed to a group of people at once versus one-on-one where I'd have to be a licensed financial planner, which is an insane level of regulation that would make things less fun for me, so that's why I don't do it that way. You know that I know student loans because you listen to this podcast. I used to be a chartered financial analyst, managed billions of dollars on a team with the largest investment company in the world. I love investing, I love helping people with growing their wealth. I'm really passionate about it, but this is the way that I've been able to figure out how to do it without having to pay tens of thousands of dollars and make all the state regulators in the world happy if I was to be a financial planner. And it's also, again, a way that the reason I founded Student Loan Planner is because we can transform your life with a small amount of time and a small investment on your part. I love that. If I had to charge you $10,000 to transform your life, it might still be worth it, but you're not gonna like me as much. So that's the point of the course. I can promise you short-term that I can't promise you anything in terms of what returns are gonna be short-term, although the last time I opened it, I kinda had an emergency opening of the course because I thought it was so amazing what was going on in the markets. And then people that started investing when the last time I opened the course should be up around 30% right now, right? So that might not happen short-term, but long-term, anybody who takes this course that could be easily two to 10 times as wealthy long-term by simply understanding what we teach in it. So the cost is 399, which is a fraction of what it's gonna cost to hire a financial planner, which would probably be 10X that, and then that's gonna be a recurring every year expense. And that's an entry-level financial planning expense. Or you pay the 399, you learn how to do all the management yourself, you learn all the different steps, you learn how to invest, you reduce your anxiety about your loans because you figure out how to get yourself to that six-figure net worth and you visualize exactly how long it's gonna take. If you have the safety net already, you have the emergency fund set up, you're not deeply in credit card debt, right? I don't want you to spend $400 on a course if you have a bunch of credit card debt and you don't have a secure emergency fund just in case something happens with this crazy economy. But if you are secure, if you have that six months emergency fund and you haven't already learned this information, you need to take the six-figure debt to six-figure net worth investing course and you have until Wednesday, July 29th, which is two days after this gets released, at midnight to make up your mind. And anyone, I'm so confident in this, that anyone who says, hey, you know, I already knew this material or hey, I didn't really learn anything or hey, it wasn't as good as I thought it was gonna be. Seven days, no questions asked, money back guarantee. Around one in 20 students takes me up on that. 19 out of 20 people felt really great about paying 399 for this knowledge that's gonna transform their finances and transform their lives so they don't have to work forever or work until their 60s or 70s. And so that the student loans don't cause them so much anxiety that they feel like they can never get started with the process of investing and home ownership and career development, all these different things that people wanna do. So studentloanplannercourse.com, check it out. I promise you, you won't be sorry, I guarantee it. And thank you so much for listening today and learning about investing. Can't stress enough, take a risk on it. If you don't like it, it's no problem at all to give you a refund. It's super easy and I know you will like it. So that's why I'm just pushing this so hard. Studentloanplannercourse.com, you got two days to make up your mind. Thanks for listening.