Financial Advisors React to Money Advice on TikTok! (Part 3)

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Max out your 401k could be the dumbest advice that i’ve ever heard for anyone that wants to take financial control of their future hey guys the team has put together a whole new list of tick tock videos to get our reaction can’t wait to see what they brewed up for us all right so here we go max out your 401k could be the dumbest advice that i’ve ever heard for

Anyone that wants to take financial control of their future why but chris it’s free money you do max because he’s watching when the company matches you it’s awesome like are you kidding me first of all i give you my money and i’m never going to see it for days it doesn’t like hundred percent rates over time that’s you even if you’re matching it it’s not there’s a

Lot of gratification i can’t use it i can’t invest it i can’t do anything with it and it’s on the roller coaster which means under his mouth on the money now by the way just so you know when inflation is three percent which is what you’re the the value of your dollar every year and you’re gaining four percent four minus three means that you’re netting one percent

Why is he only making four percent he doesn’t understand you know the next 30 years and you’re gonna be happy with it turning into a pile of nothing poof that was awful that’s that that may have been the single worst financial advice tick tock video that i’ve ever seen and i don’t want to be unkind but that that was that was bad it was a math crime it was a matter

Let me tell you why this was a math crime as he’s equating that typical employer retirement plans are going to give you three or four percent matching sure he’s getting confused because it’s three or four percent and then saying that’s the rate of return no that’s a hundred percent not three or four it’s a percentage of your income he’s just not good at math and he

Doesn’t understand that then he says inflation’s three percent it’s almost like he he opened up an investment term book he went to investopedia and said how do i shake it up let’s pull he created his own mad lib i know some of these words well here’s the deal no matter what inflation is 100 rate of return is going to outpace inflation and he did say one thing that

Was right hey i put this money in there and i can’t touch it for decades that’s true that’s what you want to be doing you want to put money into retirement accounts that can compound over the long term that’s why we always talk about how for a 20 year old one dollar can turn into 88 and one of the best ways to do it is inside of your employer sponsor retirement plan

You should be taking advantage of your 401k if you’re following a financial order of operations the right way this is actually one of the biggest money myths that will keep you broken debt free before you invest however i do recommend having your high interest debt paid off first looking at you credit cards why because you want to put your money where it’s going

To work hardest for you imagine every dollar you have as a little worker you want to put for you and that is on the highest rates so imagine you can get seven to 10 in the stock market but you have a credit card at 24.99 interest by paying off that credit card you are getting an automatic 24.99 return amen meaning you are making more money than you would have if

You had invested on the other hand if you have debt like a mortgage at 2 it likely makes more sense to invest your extra money instead of trying to pay down your house because your money is going to work harder for you in the stock market before you start investing though there are some other general rules of thumb like having an emergency fund saved and making

Sure you don’t need those funds within the next at least five years oh oh man it’s almost like the financial order operation literally she just walks through it through some of the key steps there and that’s the big distinction now i i want to go a step further credit card debt high interest debt is so just is predatory it does take you out but i think people get

So excited after they pay off the credit card debt that they then roll right into the low interest mortgage debt because it just felt so good to pay off the credit card debt just make sure you don’t you know forget to hit the brakes and roll right into the low interest debt instead of picking up the roth investing the hsa investing and really let those army of

Dollars that she was referencing start growing for you have to remember that you are the general of your army of dollar bills and how you deploy each one of your soldiers matters now there are tons of paths to wealth and there are a lot of folks who said yeah you know what i paid off my mortgage and i did it early and that worked out great and i’m doing just fine

And that likely can be true but if you’re trying to optimize if you’re trying to be a financial mutant you want every single soldier in your army of dollar bills to be as effective and efficient as it can be and i love that high interest debt is not efficient paying off low interest debt is not efficient i love what she did here’s how much wendy’s is really costing

You so my order costs 12 but there’s a hidden cost let’s say you’re in the habit of eating out at age 18 and i go there just once a week while everywhere the same amount of stock index funds that’s why i invest all right that that was not 12. the food i i was just at wendy’s and they had like a four for four deal maybe that’s only a tennessee thing but they have

All kind of did he feed his entire family at wendy’s because how do you get to a 12 dollar check this is the latte effect except for fast food edition which i will tell you if you don’t have basic discipline if you’re not budgeting your money maybe this is important but if you’re somebody who’s automatically created on autopilot investing 20 to 25 of your money

You you don’t have to worry about i would be more worried about your health for meeting wendy’s every day than what impact it’s having on your your financial aid yeah you can cut out wendy’s and perhaps that’s going to help you financially he’s right if you took that 12 and invested it would turn into something but i think for most folks when they get derailed it’s

Not those small decisions they’re making it’s the big decisions do i have credit card debt how much mortgage do i have how much rent am i paying what are my car payments i would focus more on those big areas than on if you’re eating out for 12 dollars i thought for sure but beau doesn’t say the latte effect he talks about the big thing the lambo effect you don’t

Wanna you wanna make sure you’re focusing on those big things the cars the houses that’s where you’re really taking it off the tracks that’s exactly right all right here we go i wanted to introduce you to one of the little known secrets around buying bitcoin this a chart is essentially set up into zones which lets you know when you should buy and sell bitcoin

If it is read sell it if it’s yellow hold it if it’s green buy and if it goes into the blue buy a lot when you do it yellow at its peak that’s the fancy way of saying hold on territory but currently it’s in the yellow phase which is the hotel territory by the way this is the old tried and true buy low sell high and it’s like we’ve talked about before if this

Thing really was awesome he wouldn’t be sharing it he’d be using his rainbow method to make himself enriched and you know him and warren buffett would be having drinks and and potties in the evening instead of posting on tick tock look building wealth and investing is incredibly simple it’s not a hard concept you defer money into investments over long term and it

Ends up making you a lot of money that’s the way it happens if something is like a get rich quick or let me turn this into a lot of return very quickly and follow this method if it were that easy everybody would be doing it so i don’t know that a guy on tick tock is just randomly figured out the magic secret so always beware if something sounds too good to be true

Odds are it is do not pay off your student loan stats and here’s why why give all that money back to the government when you can hold on to that money invest in real estate or some other asset that can double triple your money for example take that forty that you have and go buy a fixer-upper like this then after you fix it up you go to the bank and do what’s

Called cash out refi so you can pull the 40 to 50 gs that you have invested in the property back out and go do it again so you basically turn that 40 to 50 gs into a couple hundred k and you never lost the 40 to 50 g’s and you have the asset that pays you every single month when they when they do in in the movie up when they have the dog that gets distracted by

The squirrel uh-huh that was me so based on me disney actually still has to pay me a while i get royalties for that off of that because i mean the first thing i think that i thought it was a cat or something but it was an ex shot across the screen the only thing that gets me on that type of stuff is that if you’re going to do fixer-upper real estate why’d you go

To college and get student loan debt yeah there’s glimmers of truth in what he talked about about how yeah you know levered money is valuable right if you go want to do real estate but you got to be pretty deep because it doesn’t always work out quite as easy as he said oh i just go buy a fixer-upper and i got to fix it up which takes capital takes money to fix

It up and then once it does that i’m assuming real estate values are really good so i can do a cash out refi which means i make my debt even larger and then i get a really good tenant that’s just going to pay me and i don’t have to worry about anything well what about when that tenant goes a few months and doesn’t pay you give me rent or what about when you’re fixing

It up there’s some other cost that comes in you’re gonna do the floors and there’s some plumbing issues or what happens when uh at two o’clock in the morning someone calls you and something raw i just i i get nervous when people want to pitch doing uh rental real estate it’s like this passive activity this thing it’s so easy follow these three steps and even you

Too can be a real estate investor i don’t know that i would concede it truly is a passive endeavor no nor endeavor someone should do at the very beginning of their financial journey hey guys so here’s something just to keep in mind anytime you see your stock starting to go down see when you see something like this it it sucks okay and then we go back five days and

We see wait a second oh crap that looks pretty bad right let’s go back a month yeah that’s still pretty bad and then what about six months ago yeah i do too it’s not really looking that bad but what about five years ago oh wait never mind and then what about max that that’s what you’re worried about well done graham listen short term it’s gonna suck but long

Term when you look at the big picture a drop like this is really not that big of a deal it’s not that scary just buy the dip graham gave it context so you don’t lose yourself and get caught up in the emotional side but i want to give you the context of a way to reprogram your brain when the market is going down especially if you’re 20 or 30 years from retirement

Get excited this is financial mutant excited because it means you can buy now at these discounted prices and you’re gonna make even more money if you want to get me really excited let’s talk about bear markets when the market starts losing 20 and 30 percent that is some of the best rates of return you’ll ever have in your life so instead of having despair and

Watching the nightly news get excited he looks like me pumpkin cream cold brew oh i’m drinking it’s like yeti he’s like a yeti in the woods oh that’s hilarious uh so i don’t know does i don’t think i don’t know this for sure does dave tell you that it’s a dumb idea to buy starbucks no i have not been to dave’s the ramsey solutions new campus right we have not

Been there we’ve been to the old campus and here’s a little known fact in the past like i said i’m having to give all these disclaimers because i haven’t been there in a while you get a free coffee mug and they actually have a barista mm-hmm they say that right barista barista in the in the lobby who will make fancy coffees for you so the only reason cookies the

Only reason dave would be lurking in the woods is he’s wondering why you’re not at the world headquarters for ramsay solutions take advantage of his free stuff that he’s giving you in the lobby now if you’re someone who has credit card debt right and you have a massive credit card debt and you’re still doing things like going out and getting five dollar lattes and

Just swiping doing that yeah then i think dave is going to be lurking in the woods as he should be because you should not be making those sort of consumption decisions if you have a debt problem but if you just happen to like starbucks and you’re following the financial order of operations and doing everything else uh you’re not gonna see the money guys coming

Out of the woods after you i wanna move in here should i rent or buy it buying usually makes sense if you’re going to stay in it for longer than five years otherwise rent okay but the asking rent is 1500 a month and the mortgage payments would only be 12.50 a month shouldn’t i buy it then yeah but that’s gonna require a down payment and you’ll have more monthly

Costs than just the mortgage payment for example property taxes insurance and maintenance i guess i didn’t think about that yeah with rent that’s the maximum you’ll pay to live somewhere with a mortgage that’s the minimum you’ll pay sounds like i need to always run the numbers before deciding that’s perfect um here’s one of the things because i fell into this trap

This is self-reflective i made this mistake early on in my financial life i said i don’t want to just throw away money in rent because it’s just throwing away i instead am going to buy a house i’m going to have the mortgage because the numbers are fairly close and it’s going to work out what i did not realize is that not only is the mortgage the minimum amount you

Will pay it’s a long-term commitment you may decide that you want to get married and have kids and change jobs and move but if you own a house you might not be able to change your circumstance especially if we go through something like we did back in 2008 when houses are illiquid they don’t always move off the shelf like they do during a bull market so i think one

Of the great benefits of renting is it allows you flexibility and freedom until you have a longer term viewpoint you’re going to want to watch this video till the end because i’m about to share a powerful money mantra that i promise has worked wonders after i read this mantra the first time within three days five thousand dollars came my way and the second time i

Got fifteen hundred dollars pyramid scheme you’re ready to save this video for the good of all and with harm to none five thousand dollars is on its way to me it belongs to me i will be surprised at the speed and ease at which it manifests into my life i expect the money to come to me within a few hours but no more than three days and so it is so this is a mantra

She’s just saying this she’s like speaking this into existence i’m gonna say this and it’s going to happen so do i need like some toad tongues or something like that to to put into the concoction she did not say that’s part of the recipe i don’t mind the positive because i’m a glass half full optimist we know from all of our research and all of our teachings

Being optimistic and controlling that inner voice is going to do wonders for you what i’m having the disconnect on is she said this made her like 6 800 bucks and 360 500 in three days the first time and then 1500 the second time that seems weird i have no other comments i have a great i have a money mantra that i think uh this is where you’re doing my mantra uh

I’m gonna come up with a really good idea and i’m gonna come up with an idea that can add value to the lives of other people and then i’m gonna find out a way to get that idea in the hands of other people and i’m gonna charge them for that so maybe i start writing a blog maybe i start creating videos maybe i start doing something on tick tock maybe i start doing

Those sorts of things and if i do that and i do it well and it’s valuable then perhaps people will pay me for that and money will start showing up i think that’s a better mantra than i’m just gonna speak it into existence i’m just confused i think there’s a long she’s playing chess i’m still playing checkers because there’s more to this that i’m obviously missing

So we’ll just let it roll all right here we go how to make a million dollars with very little effort you’re gonna want to sleep in your car outside of a marriott and go through the side door between six and eight a.m yeah and then find your way to the breakfast buffet you’re gonna want to grab as much what could go wrong but the key here is to make it look

Like you’re fitting yes don’t be too suspicious confidence is key i’m supposed to be here those are supposed to be in my pocket the average breakfast cost is between 15 and 20 dollars a day have you ever been to check over the course of a week that’s a hundred dollars in season average breakfast costs invested in the way you get the financial calculator to get to

The number you want 40 years should give you a nice retirement of over a million dollars it’s crazy what compound interest can do the the cost to benefit ratio is very i mean i don’t fail bail money uh will absolutely wipe off a lot of compounds i’m going to give him credit though i think this was just a creative way just say focus on the little stuff sure troll

Like eating out you know what a better video but it just wouldn’t have gotten as many clicks and probably wouldn’t have ended up on the money guy show if you just intermediate fast in the morning and not even get the exact same cost savings without convincing people to do you know grand theft larceny or something or if you are spending 15 to 20 on breakfast every

Morning perhaps find a less expensive bat breakfast take that difference invest that into low-cost index funds over the next 40 years and you too can do this without a warrant out for your arrest that’s tick-tock click bait because he was trying to get he was packaging up a true teachable concept with the clickbait of these gonna go rob and steal the local hotel

And i i hope you’re right i hope that that’s tick tock that’s true so here’s the deal guys we uh we love this there’s a lot again we love how technology has allowed financial information to be so easily disseminated out there to you but the problem that is that everybody can do it everybody can start putting information out in front of you telling you hey this is

What you should do this is how you should handle your finances make sure that you are very very careful with who you listen to and why you choose to listen to that person yeah don’t let this be like a horror flick that haunts you for years to come be careful what you let into your brain that’s why i love what we create over at the money guy show guys if you like

This type of stuff and you want to go deeper go check out moneyguy.com and even better we have a course called the financial order of operations all you have to do is go to learn.moneyguy.com and you will be hooked up with foundational knowledge on what to do with your next dollar you

Transcribed from video
Financial Advisors React to Money Advice on TikTok! (Part 3) By The Money Guy ShowliveBroadcastDetails{isLiveNowfalsestartTimestamp2021-12-31T140009+0000endTimestamp2021-12-31T142036+0000}