You cannot go through life doing okay without knowing anything about money. What seems like common sense to everybody is, how can I get rich the fastest? That's the cause of every financial failure.
My guest is Morgan Housel, bestselling author to the tune of millions and one of the smartest thinkers on the psychology of money. He has spent his career finding the financial lies we tell ourselves and getting us to the truth on how to become really wealthy. I'm so excited for this episode. I think you're going to be, too.
Nobody's thinking about you as much as you are. And that goes for your ugly stuff, for your insecurities, and what you might think other people will really admire you for. And so it's easy to tell ourselves, if I had this and that and this house and this car and these clothes, other people would give me a level of respect and admiration that they're not right now.
What are the habits of rich people versus poor people?
It's a combination of obsession and long-term thinking. They wake up thinking about their business. They go to bed thinking about their business. They've been doing the same thing for 30 years.
What have you found is the number one lie or untruth we are told about money?
You don't need intelligence and connections and education and experience to do well. All you need is like...
First I want to read a story from your new book, which I'm obsessed with. A story goes like this: A man notices his coworker drinking a latte and he asks, 'How often do you drink lattes?' 'Every day,' says the coworker. 'Wow, every day for 30 years of your professional career,' says the man. 'That's so much money.' He proceeds to talk about how much money that would be. 'It's like more than enough to buy a Ferrari.' The coworker looks puzzled. 'Do you buy lattes?' she asks the man. 'No,' he says. 'So where's your Ferrari?' And I love this story because your book is about saving in many ways and how to spend properly, just like your other book is about the psychology of money, but it's not boring advice about how to not buy $5 lattes.
I think so much of financial advice and financial media is based off of two things: A, lectures, and B, formulas. So, let me give you a lecture to tell you that what you're doing is wrong. And let me give you a formula for how to fix it. And nobody's interested in that. Nobody's interested in being told that they're living a wrong life. And nobody wants a formula that is indistinguishable from like algebra 1 in high school kind of thing. They don't want that. What people want is advice on how you can be yourself and be independent and live a life that is true to yourself and to learn about that. Tell them a story about somebody else and how they've done it wrong or how they've done it right. I think that's what's sorely lacking in all financial education.
Finance is one of very few topics that affects everybody. No matter who you are, where you're from, money will impact your life. Health is the other one. And because of that, like people have an obligation to learn about this stuff. You can go through life just fine knowing nothing about chemistry and have a great life. You cannot go through life doing okay without knowing anything about money.
It's so important. But the way that it tends to be taught, I think is completely broken.
And so that's why I just want to tell silly little stories like that.
You actually told a couple stories I really loved in the book. One about Ronald Reed and Richard Fuscone. Can you tell us about them?
Ronald Reed — I've never met either of these people. Ronald Reed was a guy who was a gas station janitor — no, I'm sorry, a gas station attendant and a janitor at a mall. Just as humble, low-key, or dare I say like low-ass poor kind of person that you would ever meet. And when he died, he ended up leaving millions and millions of dollars to charity. And people were like, 'What? Like this guy's mopping the floors and pumping gas. Like where in the world did he get all this money?' And it turned out that he took what tiny dollars he could save from his minimum wage job and he bought stocks that he held for like 50 years and turned into millions of dollars and gave it away. But he could not have been a more ordinary kind of person.
Richard could not be more polar opposite. He was born into wealth and went to Ivy League schools and worked on Wall Street and worked his way up to senior leadership on Wall Street, made tens of millions of dollars. And very soon, not that long after Ronald Reed died, he filed for personal bankruptcy and just blew himself up with debt and leverage. He had a house in Florida that had multiple elevators and like a swimming pool that you could stand on top. Like all these crazy things, all heavily levered. Financial crisis hits, boom, he's out. He's bankrupt. And I use that juxtaposition to be like, you don't need intelligence and connections and education and experience to do well. All you need is like a couple of behavioral attributes that Ronald Reed had: patience, low ego, that's all you need. And even if you have all of the intelligence in the world, you can go broke.
What I should have written, I kind of regret not writing because some people pointed this out. I don't think Ronald Reed is a role model. I think he had such a unique personality that he could have lived a much better life than he did than living in a trailer. So someone asked after he died one of his friends what his hobbies were and he said the only hobby he can think of was splitting firewood kind of thing. So someone who has millions of dollars in the bank and is just living like that, that's not a role model. I should point that out.
But he had the psychological attributes that you need to get wealthy of just low ego and patience even if he took it to an extreme that I think was detrimental.
And so, but again, there's very few endeavors like that. You will never meet someone who is just an uneducated country bumpkin who can do open heart surgery better than a Harvard cardiologist. That will never happen. It's impossible. But not only does it happen with money, it happens pretty often where ordinary people with good behavior outperform extremely educated people who don't have control over their emotions. There's so much freedom in that and realizing that the game is not actually that stacked against you as long as you are willing to put your finger on the scale of patience.
Because a lot of people think like, why would I try investing? Like it's just a rigged game against me. And I think what's closer to the truth is that it's rigged against professionals who have to compete against each other on a 90-day clock. What were your returns last quarter and how do they rank next to your peers? That's what you live and die by. Like the game's rigged against them. But for ordinary people who are like, I'm just going to invest in my 401k and leave it alone for 30 years. I don't even know what my password is. I don't care. I don't know or care if somebody else outperformed me last quarter. I'm just going to do this and follow my goals. That's where the money's made. And so I think that's the irony is we think it's rigged against you when it's rigged against the pros.
Fascinating because you're right. I mean, I know a ton of hedge fund guys that have all — and not that have all — I have a few that I know that have had hedge funds for 28 years, 30 years plus, but most of them flame out.
Yeah. Pretty spectacularly.
I mean, the pressure that they have because some of the hedge funds, it's not how'd you perform last quarter, it's what you do literally last week.
Oh, yeah. I think like what were your returns last week and that lifestyle I think is nearly impossible. There's probably, you know, a dozen people in the world who can actually outperform under those terms and just unbelievably stressful at the same time.
Well, I mean, look at Carl Icahn today. I mean, which I think is a tragedy, but you know, supposedly almost bankrupt, you know, highly levered, potentially not going to make it, and arguably one of the best investors of all time in many instances.
Fascinating. One of the most interesting is Jesse Livermore. I wrote about him in Psychology of Money. He was the best stock trader of the 1910s, 1920s. And he was one of the only people who in the crash of 1929 was short the market and made a fortune. And actually after the crash of 1929, by most accounts, he was the richest man in the world. He made during the crash where everyone else was going bankrupt and literally jumping out of windows, the equivalent adjusted for inflation of like $3 billion in the crash. And he was already unbelievably wealthy. Just he was the best stock trader in the world and he made and lost several fortunes because after every big win when he'd make the equivalent of three billion, five billion, he would take more risk, more risk, more risk and blow himself up. And so he went effectively bankrupt like three times. He went from billionaire to bankrupt to billionaire to bankrupt over and over again and eventually took his own life the last time he went broke.
And so he's always so interesting to me of like nobody in the world was better at getting rich than Jesse Livermore. Literally the most talented person on earth at getting rich and he had no ability whatsoever to stay rich. He couldn't do it. And so I think back to like the Carl Icahn, there's lots of people like that who are very good at getting rich and much less skilled at staying rich. And to do well financially, you need an element of both. And they can be conflicting personalities of like a personality that says I'm going to take a risk and swing for the fences and try to get this done and I'm going to be a little bit scared and a little bit paranoid and be scared of debt. That you need both of those at the same time.
And I think a lot of times with entrepreneurs and traders, they have a lot of skill in the first bucket. Take enormous risks, very smart and intelligent. But the kind of personality that you need to be a billionaire hedge fund manager is not the kind of personality who also says that's enough. Maybe I should put a bunch of money in treasury bonds and take money off the table. Like they just don't — it's not the kind of person. That's why I think like Elon Musk will either be a trillionaire or bankrupt.
And at this point it's much closer to trillionaire at this point. But if you looked at him 10 years ago when he was not the richest man in the world, you could see that like this guy's either going to be the richest man in the world or he's going to go bankrupt very quickly here.
And there's a lot of that in the world.
You know, I was chuckling at some of your tweets because it was like Elon Musk is Warren Buffett richer than Jeff Bezos this week or something.
And that was — I wrote that probably years ago. Now I think Elon Musk is like multiple Jeff Bezos is richer than Bill Gates kind of thing. Like it's just a completely different universe.
That's so wild. Let's talk about this for the many. So, I was reading some updated statistics on Americans living paycheck to paycheck. You know, 62% of Americans live paycheck to paycheck. A couple that astounded me, though, was that 50% of Americans earning over 100K also do. And 36% of Americans earning over 200,000 annually say they're also living paycheck to paycheck, which kind of shocked me. What should you do every time you get your paycheck so you're not like apparently most of America?
There's two things to pick apart here. One is that we should not pretend in most parts of the country, particularly if you have kids, that $100,000 is a fortune. It's like the Austin Powers like $1 million thing. And he's like, 'No, no, you got to like update that.' It's not, of course, what it used to be. And particularly if you have kids in child care and a big mortgage for an inflated house that you bought in recent years, $100,000 in many parts of the country is not going to do it for a lot of people.
But to really answer your question, what should you do when you get a paycheck? I think when you're looking at your expenses, you got mortgage, car payment, whatever it might be, taking care of future you needs to be near the top of that pack. And I think a lot of finance is understanding and like being kind to your future self, having empathy with who you're going to be 30 days from now, 30 years from now, and being really kind to that person and taking care of that person.
And I think that's a big part of this. One part of saving too is that I've always been a big saver and I don't feel like I'm necessarily saving for the future. I don't feel like I'm saving money. I feel like I'm buying independence.
I feel like every time I save money, I'm buying a little bit of independence and I get benefit from that today. When I save money, it's not like, oh, this will help me 10 years from now, even though it will. That helps me tomorrow if I can wake up and be like, I have a level of independence that I didn't before. That's going to give me control over my life. And I think that's ultimately what people want out of money is freedom and independence and the ability to wake up and just say I can do what I want today and make my own choices and live my own life.
You have a thesis that I really believe which is you don't have to be smarter to make more money. You actually just have to know more and be more knowledgeable to make more money.
I think the key is that you actually just have to have the right behaviors. And this is where a lot of people get thrown off in finance where we associate people who do well financially with big brain intellectuals. Harvard MBA, worked at Goldman Sachs, hedge fund manager. We assume that's who's going to be the best. And I think that can be true. But there's also in a way that exists in almost no other field. You have a complete nobody living in the middle of nowhere, no education, no background, no connections, who does amazing financially because they have the right behaviors. They're calm. They're patient. They lack a big ego. They have a couple of behavioral traits even if they know nothing about money and that's all they need to do.
And on the flip side of that, you can have the Harvard MBA hedge fund manager who blows themselves up financially. Or even if they don't blow themselves up, they are actually living paycheck to paycheck. They have a lot of financial sophistication, but they have no control over their behaviors, their sense of greed and ego and patience and long-term thinking. I think you'd be surprised how many Wall Street pros fit that bill of like big brain intellectual, not a lot of the behavioral aspect that actually is needed to do well financially over time.
Oh yeah. I mean, I saw it all the time when I was on Wall Street, that was the norm. You know, I remember one of our sales managers when I was at a company off of Wall Street actually at this point, he said a line to me I'll never forget, which is with his sales guys. And so they're selling financial investments to like pensions, sovereign wealth funds, etc. And he said, 'Hey, you know, when you go to hire your team,' because I was a managing director. He was a managing director. He goes, 'You always want them to optimize for one thing.' I'm like, 'Okay, what?' He's like, 'As many spots in the garage as possible.' And I was like, 'Why? That seems sort of irrelevant.' He goes, 'Because if you get them hooked on cars, you'll also get them hooked on employment for the rest of their life.'
And I saw it firsthand. And it was like, you know, look at my Ferrari, my Lamborghini, my whatever. And then these guys were slaves to the paycheck and used to look at, you know, myself at the time, like a dual income, no kids. I think they called us dinks. And they were like, 'God, this is so great. You must like not have anything to spend on.' I go, 'Well, it's also because I don't give a fuck about like cars and huge houses and all of that stuff.' But how do you trick yourself into that? Because I think society tricks us into believing I can spend so that other people will like me or so that I can show off to other people. Do you have a trick that you use every day where you go, no, no, no, no, I actually trick my brain into thinking that saving and spending wisely is better.
I think it's a healthy selfish motivation with money to say like I want my money to benefit and be a tool for happiness for myself and my immediate family. And that's about where the goals end because I think we always overestimate how much other people are paying attention to us. And so it's easy to tell ourselves, if I had this and that and this house and this car and these clothes, other people would give me a level of respect and admiration that they're not right now. And you always overestimate how much those people are actually thinking about you.
There have been some incredible studies. One, I thought it was so ingenious how it was framed. These group of researchers put a woman in a very ugly sweater, like an objectively hideous sweater, and sent her into a party and she mingled about and she came out and they asked her, they said, 'How many people in the party do you think noticed your hideous sweater?' And she's like, 'All of them.' It was humiliating. And then they go in and ask people in the party, 'Did you notice the woman in the ugly sweater?' No. No. No. No. No. Nobody's thinking about you as much as you are. And that goes for your ugly stuff, for your insecurities, and what you might think other people will really admire you for.
And so I desperately want the attention and the admiration from like seven people in life, right? Whose love and attention are actually a big part of my life, my family, a handful of very, very close friends. And you should not pretend that the other people walking down the street, driving past you care whatsoever. It's not quite black and white. Like I want to fit into the social group that I choose and to do that I need to talk a certain way, dress a certain way. It's not to just ignore everybody and do your own thing, but we overestimate the benefit that we get from it.
And I first started thinking about this when I was about 19. I was a valet at a five-star hotel in Los Angeles. And when somebody drove into the hotel in a Ferrari or a Lamborghini, I would stop and stare in admiration, but I never thought about the driver. What I would do is I would look at the car and I would say if I was the driver one day, people will admire me, but I didn't care about the actual driver. And one day I was like, do you see the irony here? Like nobody cares about the driver, but they want to be the driver because then they think people will care about them. And it was just like no one's — and I think that was a big revelation for me of like I see how this game is played now. We just overestimate the number of eyeballs that are on us.
And once you come to terms with that game, you can be like, 'Okay, well, how can I then use money rather than as a useless tool to show off for other people who aren't paying attention, but as a tool to selfishly in a good way improve the circumstances and the happiness and the independence of life for myself and my family and a small group of friends around me.'
I've never thought about the Ferrari that way. But you're absolutely right.
Nobody cares about the driver.
No. In fact, I negatively affect the driver. Where I go, that guy's probably, you know, or he doesn't have a lot of cash and so he wants to show it off this way or he's like scamming people, so he's got to project that he's XYZ. That's what I think when I see it on the internet.
And it's not just cars, but even clothes. By and large, if someone looks at you and says, 'Wow, really great jacket.' By and large, what happens is they're not actually admiring you. They're thinking, 'If I had that jacket, people would admire me.'
You know what's interesting, though? I think there's one area where I've realized there's pushback differential and I've even seen it in myself, which is physical fitness. So, like if you're fit or if you're physically good-looking or well-styled, but you're right, it's not 'I have a hot Gucci jacket' or something. It's like if I am a type of person that is able to style myself and I am attractive, that actually has real reciprocal effects and probably is worth spending money on, which to me is bizarre because I never cared about any of that before. But a lot of science seems to show that.
But I think it's attractive to people who either want to be part of your social group or you want them to be part of your social group. But that's a minority of people. And I feel like a lot of spending is this big broad trying to get the attention of people who don't necessarily care about you. And to your point, what do my wife and kids and close friends hopefully admire about me? It's not the square footage of my house or the horsepower of my car. It's like, am I a good dad? Do I play football in the driveway with my son? Do I sit and play with toys with my daughter? Am I responsive and receptive to my friends and go out and have dinner and laugh for a couple hours? That's what they care about.
And I wrote about this in the book. I have a very good friend. I've known him for 20 years. One of my favorite people in the world. He's just — I love spending time with him. And of our social group, he earns the least amount of money by far. And it bothers him. And he talks about how much it bothers him. And I told him one day, I was like, if you are a good friend, a good listener, a funny joke teller, and you're hardworking and taking care of your family, you've earned like 90% of the points that I'm capable of giving you as a friend. And if you also happen to be rich and successful, maybe it would go up to like 92%.
But don't pretend like I like people because they make money. Some people will like — 'I only want to be friends with rich people.' And those are the fakest, shallowest, shortest living friendships that will exist.
That's such a good point. What do you think about — I mean now you've sold millions of copies of your first book and I'm sure you will of this one as well. You've talked to some of the richest people in the world. You've talked to some of the most successful people in the world. What have you found is the number one lie or untruth we are told about money?
I don't know if it's told so much as just expected, but there is a very clear expectation that if you wake up in the morning and you feel a little bit empty or diminished or anxious or in pain that you can tell yourself, if only I had more money, those problems would go away. And I think to some extent it can be true. Money can give you a comfortable life and solve a lot of your problems. But what you see with a lot of rich people is that once they gain the money, they still had a lot of problems in their life. And that can be such a jarring feeling because you told yourself, 'If only my net worth is X dollars, then I'll be good.' And you get there and you're like, 'Wait a minute. My friendships still aren't that great. My health is still not great. My marriage is still not that great. I still don't sleep that well at night. I still have all these anxieties.' And so then you kind of lose your sense of hope or you double down.
And so a lot of people are like, 'Once my net worth is a million dollars, I'll be great.' And then you get there and you're like, 'Well, I feel the same.' So maybe it's 2 million. And you get there and you're like, ah, I feel the same. Maybe it's 10 million and you're just constantly chasing the high that you think you're going to get from it. Money can solve a lot of problems in your life, but this is another area that we just overestimate what it can do for you.
What is the research that you've done showed is the amount of money for which we do derive a lot of happiness? Like how much for somebody listening, how much you're like, you know what, you really don't feel bad for going up until this amount of money.
I think it's so different from person to person and geography to geography. But certainly at the lower levels the more money you earn the more that you can like massively increase your happiness. If your income goes from 10,000 a year to 20,000 a year you change your life completely. And going from 50 to 100 can change your life. Probably going from 100 to 200 can change your life. Different for everybody based off of their ambitions.
But I think for a lot of people, once you own a house that has enough bedrooms for you and your kids and you like the neighborhood that you live in and you have good neighbors that you enjoy and your car isn't breaking down and you're eating healthy food and you're checking some pretty basic boxes, you have adequate health care, those things like that, and most barriers in life, you might be able to get that for different region to region, but 200, 250, whatever it might be. Then after that it's not that the money can't make you happier but it diminishes quite quickly from there.
And at the extreme levels is there any difference in lifestyle between Elon Musk who's worth I think 600 billion and Jeff Bezos who's worth 200 billion? Of course not. $400 billion difference, there's no difference in lifestyle whatsoever. For most people there would be no difference in lifestyle between 100 million and 100 billion. You know, you have too many houses, you have planes. You have everything you could want. It just diminishes quickly from there.
A more important point though is I think for a lot of people there is a net worth at which not only do you stop getting happier but your life gets more complicated and you start dealing with like big existential questions of who am I and what do I do with this and it becomes a social liability. There's a level at which your friends and your family are going to start coming asking you for money. You have such higher expectations of like how do I raise kids without spoiling them and whatnot. There's all those questions and that level of net worth is probably lower than people think.
I remember when I didn't have much money at all. I would listen to something like this and be like, 'Yeah, I'm gonna try it.' Like, 'Fuck, I don't know. I'm going to try it.' Like, 'We'll see what happens.' And like when I get there, if I'm still unhappy, fine. So be it. Right.
But I think the other thing to push back on here, and I feel this strongly, is like you have to like — what does Munger always say? Incentives, always incentives. And you know the incentive in the world today is to make you consume more, spend more, keep up with other people. Like that is just how our economic...
In a competitive world. Yeah.
Yeah. In our society works. And so you have to like push back slightly on that and go, at what point is this all just mimetic desire where I'm chasing somebody else's dream, somebody else's hope, and I'm stuck in a rat race that I didn't even want to enter in the first place? And you know I think you have a lot of reasons why we do that and I love some of the quotes you have like spending money to show people how much money you have is the fastest way to have less.
And so you know even for the person that's listening out there, you know it's not like oh don't worry you stay poor we don't care. It's really psychologically if you don't rewire your brain you actually never will get wealthy and then simultaneously you will have a counterproductive...
Right. I think people should have a lot of ambition to have more money for independence.
I think that should be the ultimate goal. It's not that money won't do anything for you and you should stop chasing it and enjoy being poor. It's not that in the slightest. You should want more and I want more for that reason. I just want to be completely independent. And everybody is talented in their own way, can be happy in their own way if they have independence. And it's actually very difficult to express that talent and to express who you are if you are completely beholden to somebody else's goals, metrics, incentives, which most people are. And so that's where I think the ambition should be. It's not ambition necessarily for a greater material life or greater social status. It's ambition for independence.
So how do you tell if you're spending to show other people you're cool versus you're spending to get independence?
This is like an imperfect way to think about it, but I think a lot about this in my own life, which is just asking if I was on a deserted island and nobody could see how I lived. Nobody could see a single possession that I have, would I still want this thing? And a lot of people in that mental exercise would say in that world, I wouldn't change anything. I'd have the same cars and the same house and the same clothes and they're great. And that's I think a lot of people would answer that. But I think we would see...
Do you think a lot of people would say that? I think for the most part... why do you need like — doesn't the average American have like 20 pairs of shoes?
That would make sense. Well, I think so there is a lot of spending in the world that is purely social status.
It's just purely that. And so in that mental exercise, you understand the difference between utility and status between like what am I doing just to impress other people and what is actually making my life better. And you can spend a lot of money to make your life better. It's not to say like on that desert island, I would have an awesome house. I would have very comfortable clothes and I wouldn't want to dress feel like a slob. I would want to feel good about myself. So maybe it wouldn't be that much different. But you start thinking about things differently. If nobody was watching, how would I live? Because the truth is almost nobody is watching. Like that's the truth for most people.
So, in that situation, you go to — you just brought up Charlie Munger and I just read this article about him about a month ago that was describing his last week of life — or his last year of life, I should say. And I might be getting a few of these details slightly wrong, but he built an incredible house in Santa Barbara overlooking the ocean. Amazing house that a multi-billionaire would own. And then he had his house in Pasadena that he had lived in for like 60 years. And by every account, it was not just a middle-class house. It was like, dare I say, a dump. But he'd lived there for 60 years. And in his last couple months of life, that's where he wanted to be. That's where he wanted to be. Not in the palace overlooking the ocean. The house that felt like home to him, that had the memories that he had. That was probably, I assume, surrounded by neighbors who he enjoyed and friends nearby and whatnot.
And I think that model explains a lot of things in life of like what you want out of this material possession is not just the price or the square footage or like the things that you can measure like that. So much of it is just like well do you actually enjoy it? It's the intangible things of what you enjoy them for.
You know, it's so interesting because you have a quote that I really liked which is somebody saying quotes, 'Renting is throwing your money away' is the kind of thing you said by a guy who has never had to replace the roof on a house he owns.
I wrote that tweet in anger after replacing the roof on our house.
I felt that from you. Like I'm curious, do you think it's better to own...
or rent a house?
I can tell you my experience. My wife and I rented for a decade or more and it was the greatest thing in the world. We lived in like five different cities and we could just pick up and go and that flexibility at that phase of our life was unbelievable. And I was very pro-renting. I don't believe houses are great investments, financial investments. That's always my view. About a week after our first child was born, I felt this overwhelming sense that like I want to buy my own house and I want to do it right now.
The idea of like I don't want to be a transient renter. I want a firm solid home base for my family. That feeling was so strong. So, we went out and bought and it's been great. The important thing though is like you should buy when you can afford it and when you think you're going to settle down. And the idea of like people doing these calculations of like, oh well actually if I bought I would save $100 a month versus if I rent. This is not a spreadsheet endeavor. Like you should do it when you can afford it. But so much of it is just the value and stability that you want for you and your family.
I think we did a lot of harm in society when we taught people that a, rising home prices are a good thing. That did a lot of damage to people. It's a terrible thing. And b, that in the decision of whether you should buy or rent is a spreadsheet decision versus just the quality of life and the kind of life that you want for you and your family. Like those two I think things inadvertently did a lot of damage to society.
I think you're right. I mean, because when you look at the math, it's actually quite hard to argue that home ownership is better than renting.
If it's just looking from math, if all you're looking for is the financial outcome, I would not be surprised. In fact, I think it's almost certain that I've been a homeowner for 10 years, that if I had rented the whole time, my net worth would be higher. I think that's probably right.
and not a single cell in my body, if I had a time machine, would go back, would do it differently.
Yeah, that's a good point.
I'm like, I'm not doing this to maximize my net worth. I'm doing it so I have a stable place for my children. That's it. And we can live in the school district that we want to. And I think the sense of ownership that comes with owning your house is a really good fulfilling thing if you're in the phase of your life where you're ready for that.
I want to talk about something else that I think maybe is a detriment to society and that people have categorized wrong. At least I think. But I'd be curious your take. Let's talk about passive income. Is it real? Can you get it? Is this reasonable for people to want?
I think it rarely if ever exists because what people think of passive income is I don't have to work to get this. And anyone who's been like a landlord realizes like that could be a full-time job for doing it or owning small businesses. The idea like, oh, you just buy them and collect the checks tends not to be the case. You understand this better than anybody. If you're investing in the stock market, the psychological price you can pay for the uncertainty and the volatility or investing in somebody else's private equity fund and the psychological price tag that you pay of like dealing with that person, trusting that person, lack of trust with that person, the returns aren't coming in like you thought. You don't know when the returns are going to come in. That's a cost. And it's a different cost than driving to work and working 9 to 5 in a cubicle. It's a different cost. But let's not pretend that it's not a cost that you just give money to people and then the money just starts flowing back and you don't have to do anything for it. It's easy to underestimate the price tag of those things.
Yeah, it's very true. Even if you're just talking about the K1s and the tax complications,
