Financial Advisors Correct The Internet
5/4/202621 min
What happens when you mix internet chaos, misguided financial advice, and sports betting? We react to wild financial advice online from buying a Ferrari instead of the S&P 500 to learning how to acquire a $600,000-profit business with just $50,000 and a tired owner. An episode packed with both comedy and real financial education. Discover why buy-and-hold index investing still builds more millionaires than any Ferrari scheme, why a FICO score can be a valuable asset, and why real estate isn't as passive as some make it sound. Plus, we break down the kernel of truth in the "save $5 a day, then buy a business" strategy and where it can fall off the rails. Join us as we debate extreme takes on debt and investing, and highlight practical tools (the Financial Order of Operations) that can help you build a smarter path for financial independence. Jump start your journey with our FREE financial resources Reach your goals faster with our products Take the relationship to the next level: become a client Subscribe on YouTube for early access and go beyond the podcast Connect with us on social media for more content Bring confidence to your wealth building with simplified strategies from The Money Guy. Learn how to apply financial tactics that go beyond common sense and help you reach your money goals faster. Make your assets do the heavy lifting so you can quit worrying and start living a more fulfilled life. Learn more about your ad choices. Visit megaphone.fm/adchoices
Clips
Transcript preview
First 90 secondsBrian Preston· Host0:00
I hear it's time for some tough love, 'cause the internet needs to be set straight.
Bo Hanson· Host0:04
And Brent, I am so excited about this. But understand, if something is on the internet, it has to be right.
Brian Preston· Host0:10
True, right?
Bo Hanson· Host0:11
Let's see what we have today.
Speaker 2· Soundbite0:12
If you wanna get rich, don't buy the S&P.
Brian Preston· Host0:14
What?
Speaker 2· Soundbite0:15
Buy a Ferrari. [laughs] Let me explain. [laughs] Every time a supercar drives by, there is a cranky buy and hold investor saying, "If they only took that money and put it in the S&P 500 for 10 years, it would be worth millions." This investor, while he thinks he sounds smart, is using the internet's most favorite piece of fake data, the 12% annualized return in the S&P 500. The problem with this, and even if we cherry-picked, the real return is more like 7%. And that is backward-looking into an environment that looks nothing like the one we're in right now. Right now, multiples are trading around 21x. At high multiples, the forward return is more like 2 to 3%. In real terms, that's 0% or even negative. That means that the biggest myth of getting rich from buy and hold is officially dead, and you might as well just buy a Ferrari. Because the 458 Speciale returned 14% last year alone, according to Hagerty. In this scenario, at least you'd have something cool to brag about. [record scratch] All right, I have to admit something. Am I really telling you to buy a Ferrari and assuming that the Ferrari price will appreciate into infinity? Of course not. But what I am telling you is if you expect to get rich from lazy buy and hold investing in an environment with high multiples and enormous chaos in the market, you are going to be sorely disappointed. You will never have Ferrari money. And I dare you, go ask the guy in the Ferrari