Simple Builds Wealth | Don Bennyhoff | Growing Money Podcast

In this episode of Growing Money with Sean Trace, I sit down with Don Bennyhoff, a longtime investment professional and fractional Chief Investment Officer, to talk about why successful investing is often much simpler than people think. Don shares why so many investors get pulled in by scary headlines, financial media, market predictions, and the pressure to “do something” when fear sets in. 

What stood out to me most is that investing success is not just about being smart or having more information. A huge part of it comes down to behavior, emotional control, keeping costs low, staying diversified, and avoiding unnecessary mistakes over time. We also talk about compounding, long-term investing, why even high-income professionals can overcomplicate money, and why simple strategies often beat complicated ones. 

This conversation is a great reminder that real wealth is usually built by staying patient, staying invested, and not letting fear or ego take over.

What do you think is harder for most people: learning how investing works, or controlling their emotions when the market gets scary?

Transcript

SPEAKER_00 0:00

Yeah, investor behavior is such that they pay attention to things at the margin. Um, you know, that people talk about animal spirits and they talk about really the drivers uh behind most or too many investment decisions are either fear or greed. Um, but fear or greed are at the extremes of the distribution, right? Most of the time, hopefully, we're not living in times that are, you know, where we have we're all one thing or the other. Most of the time, you know, investors should be bored with their portfolios, not concerned about them, not jazzed about them because they are picking out that that one stock that they own that's a winner and forgetting maybe the ones that aren't doing so well. It's really the investors that can manage the behavior and their emotions that tend to be more successful in the long run because the alternative is being in a position almost like a tennis game. It's back and forth between these extremes. And like tennis, usually the people that win aren't the most skillful, but the people that make the least amount of unforced errors. And I think that's where investors could take a take a lesson from that.

SPEAKER_02 1:25

Welcome everybody back to the Growing Money with Sean Trace Podcast. I've got an awesome guest with me today. Would you like to tell people who you are and what you do?

SPEAKER_00 1:32

Sure. I'm uh Don Bennyhoff. Uh I provide a fractional chief investment officer services uh mainly to investment advisors.

SPEAKER_02 1:41

How did you get started down this path, Don? Like, I mean, that's that's the the question I have. Like, what took you down this path and got you going?

SPEAKER_00 1:51

Well, it's uh actually been a fairly long path. This is uh my 34th, uh fifth year in the business. Um and I actually started as a traditional financial advisor, uh, working for one of the larger broker dealers. And then uh eventually, after uh about six or seven years, uh moved to Vanguard Mutual Funds. So um there I did a little bit of uh financial advising for you know uh clients, but then they had set up uh an investment strategy team that they were asking to sort of build out the why do why do we do what we do? Like, what does Vanguard think about investing in different investment topics or asset allocations, um, asset classes? They had never really been uh thought of as a thought leader in the space. And so we were sort of tasked with filling in those gaps to explain why Vanguard did what they did and what they believed in.

SPEAKER_02 2:56

It's so interesting to think about creating that that policy and that plan. And you know, because you were watching people doing it, you've had decades of watching real investors, and it leads me to ask the question of like, what is the most common mistake people make that feels responsible but actually hurts them in the long term?

SPEAKER_00 3:17

I would say probably listening to it or getting information and advice from the media, you know, the talking heads, um, whether it's uh um the people on the infotainment type of services, the uh the CNBCs of the world or economists. Um I understand most people feel like they could use more information. More information is good in making better decisions. Um the problem is that with most of what they're getting on the media, it's not about them, it's about what those people think is important to talk about, what those people maybe are incentivized to talk about. Um so it's it it there's some conflicts there. Um, and probably the biggest one is that people often hear now's the time to be doing this. And they think that because of the way it's being presented, if if they don't follow suit, they're doing something wrong. When really that's just general advice. They don't those people who are making those um those comments don't know them or their circumstance at all. They're not providing them advice like a financial advisor would that maybe gets to know them. Um what they're really conveying is their opinion, but a lot of times investors confuse that with insight, like they're experts. And and I think that's the biggest challenge.

SPEAKER_02 4:54

I'm not an expert, but I also notice when people are trying to get my attention. And I am an expert on social media and YouTube and content. And when I go in for this podcast, I very specifically try to give as neutral information as I can and talk to as many different people as I can. Now, one of the interesting things is when I go to the section in YouTube where it recommends other content like mine that's performing well. Do you know what all those videos are? They're like, the stock market's gonna crash in one month. Be prepared. And it's always this chart with like a downward arrow, fire on the thumbnail, and some guy who's got this crazed look and leaning in. And I'm struck by, wow, that's the person that people are trusting with for their financial advice. Like, my dad once sent me this video about a guy that he thought was an expert on a topic. The guy had a sheet hung up behind him. It was filming in a house, like the sheet's hanging there, and it was just like, and my dad's like, this guy knows what he's talking about. Like, this guy does not know what he's talking about. This is some dude who put up a sheet in his house and is just like filming this on a phone and not even a good light. Like, and the microphone was horrible. And I said, Dad, not everyone's an expert online. Not everyone's an expert. And that's from stuff that's easier to see on YouTube and social media. But like these big organizations, their biggest goal is to get people to watch. And it's much easier to get people to watch if you're giving them stuff that's either fantastic or a little scary, you know? So gotta be questioning that at times, you know?

SPEAKER_00 6:37

Yeah, investor behavior is such that they pay attention to things at the margin. Um, you know, that people talk about animal spirits and they talk about really the drivers uh behind most or too many investment decisions are either fear or greed. Um, but fear and greed are at the extremes of the distribution, right? Most of the time, hopefully, we're not living in times that are, you know, where we have we're all one thing or the other. Most of the time, you know, investors should be bored with their portfolios, not concerned about them, not jazzed about them because they are picking out that that one stock that they own that's a winner and forgetting maybe the ones that aren't doing so well. It's really the investors that can manage the behavior and their emotions that tend to be more successful in the long run because the alternative is being, you know, being in a position almost like a tennis game. It's back and forth between these extremes. And like tennis, usually the people that win aren't the most skillful, but the people that make the least amount of unforced errors. And I think that's where investors could take a take a lesson from that.

SPEAKER_02 7:57

That's a great point. The least amount of unforced errors. I was talking to my team, and I think one of the things that, even for people who are wise, there's a lot of people who don't understand this stuff. And so, like my team of editors, because I run a video production company for and we do a ton of videos for financial professionals, and they're trying to educate people on the stock market, on what these different things are and aren't on what your portfolio should look like. One of the things that was interesting is my team started having this discussion today because my team is based out of Vietnam, and they a lot of people don't have investment portfolios. They don't have 401ks, they don't have stocks. And it was interesting because my workers were like, oh, it's just really risky, it's really dangerous. Because I heard about this one guy who put all of his money onto this one company. And I was like, okay, well, let's talk about this. Let's talk about what you know people should be doing and what a balanced portfolio looks like. And I was talking about like, but actually, real professionals are building in checks and balances. And one of the greatest ones that I heard of in school was like, and then we're seeing this right now, airline industry versus like oil. Like, you know, you kind of get these things that balance. And I was talking about like diversification, like when oil goes up, airlines hurt, which is we just saw that with Spirit Airlines going under right now that we have all the oil prices shooting up because of geopolitical stuff. But it's interesting because my my employees were just sitting there going absolutely blank stares. And I was like, but after we talked about it for a while, they're like, oh, so and like I what I wish they were still sitting there because talking about unforced errors is such an interesting concept because you see that in sports. I am terrified by this one sport. I did martial arts, I did muay thai, I studied Filipino martial arts, I studied like samurai sword, like Iido and Kindo a little bit. But I was never scared of going up against someone with another like like Boken or but one sport has always terrified me. You know what that is? Fencing. Fencing has always been so terrifying for me because if you work with someone, it's a game of like little, little like tiny movements. And you know, and just like with fencing, it's not about winning, it's about making sure that you have less errors than your opponent because you you don't counter that one thing and thunk, oh, hey, there's a piece of steel sticking out the back of me. That's like this big, but it went all the way through, you know, and it's terrifying to me, but like the whole concept of fencing is making less mistakes. Like you don't have to be perfect, you just have to make fewer mistakes to win.

SPEAKER_00 10:41

Yeah, and I think that's that's a concern of many investors is they feel like like they have to have all this knowledge before they do something. They are afraid of making big mistakes, and they're afraid of of making mistakes in general. Um there are diff the idea that I think too many people ignore is that the very act of investing is basically taking your money and putting it into an investment, and there's lots of them to pick from, but you're consciously bearing risk for the hope of reward or return. Like it's not a guarantee. Now, there are some things that are safer, but that's where that's where if people are concerned about losing a lot of money, then as your you know, your story mentioned, don't don't lose all your money in one stock. It's like going to any other event, take roulette, you know, which is you know, if you're you know, if you're trying to put your number down, you know, your money down on one number, like your odds are of losing are far greater than winning. Now, gambling is such that your odds are always tilted in the house's favor, so it's not a great analogy, but the idea is that you know choosing red or black instead of you know, you know, double zero is akin to diversifying. And what you're diversifying is that risk. That's where you're buying more than a single holding and increasing the chance that you don't end up because even within industries, say airlines, some in airlines are actually doing better, maybe not necessarily great in response to higher fuel prices. But some of them, like Spirit, it tipped them over the edge and they're out. Yeah. So owning airline stocks as a as a whole is easier or better from a risk-reward standpoint than potentially than just owning Spirit Airlines.

SPEAKER_02 13:00

Yeah, right. Well, I wanted to ask you this next question too, because I'm so fascinated by this stuff. It like investing is something that I just don't know a lot about because I didn't grow up around it. And it was like an area that is fascinating to me because I hear a lot of people talking about things, but it's very much like people talk in different ways. And you hear people talk about invest for the long term. But what does that actually mean in real life when like markets drop and careers change, your fear sets in? Like, what does it mean to invest for the long term, you know?

SPEAKER_00 13:32

Um, yeah, it's you know, it is all relative, and it quite honestly is very personal. For some people, they have longer term objectives like saving for some time when they want to stop working. For some people, that could be 30 or 40 years in the future. For others, it may be three or four. So you do need to be adaptive to your circumstance and always keep your goals and your interests in mind. Um, and that's important because risk is one of those things and the reward that we hope to get from stocks, their timetables and their evaluation periods are not exactly completely aligned. They're not always the same. So, you know, if you look at, say, the US stock market, the S P 500, um if you went back to the late 20s and you looked at the the individual return for the index on a daily basis, a little more than half of the time it created a positive return, right? So it's almost a coin flip, but a little bit tilted towards um a gain. If you look at that over like how many 12-month periods they had gains, positive returns for the stock market. Now you're talking about 70 to 75. And when you start to get into the longer terms, 15 to 20 years, now you're in the high 90s, never a hundred. Now, it's not to say it couldn't be a hundred, it's just to say that historically it hasn't been. Um, but the idea is that when you when you're when you're investing and you're consciously bearing that risk for the hope of return, you should understand that the probability of being successful as an investor increases as you leave your money invested in the marketplace. Time is an ally, and that's usually due to compounding. Um, because your returns over time will grow because of that compounding. Um it's often attributed to Einstein, but compounding is but called the eighth wonder of the world. Um, and it's significant, and it's a great tool to help particularly the younger investors, because they've got the most time. As you age, you have less time. Um and and so the the problem is that say if you were looking at a 15, 20, even a 30-year investment horizon, the odds of getting a positive return increase, as we s as we saw, they go to close to 100%. The problem is that as you're you know, when you're looking at that, you're looking at average returns for 20 15 year periods. And to get there, you have to go through all these shorter periods, one month, 12 months, three years of potential problems along the way. And you have to have the conviction to stay with it. And that's where most people get derailed. They they sometimes don't have the conviction in what they're doing. Sometimes that's because they maybe didn't put a lot of effort into building their investment strategy. Um many people don't. Um but I think that's a an important aspect with risk and reward. The odds of getting good returns increase the longer that you you're invested and you stay invested. But the odds of in coming across a really challenging return, terrible negative returns, you know, in the 10, 20, 30 percent, they increase as well. But those tend to be like short-term events where you see those negative return, those significant negative returns, one or two years, not 10, 20, 30 years.

SPEAKER_02 17:43

I was talking to my wife about this because I was trying to teach her and my daughter about like compounding interest. Because neither of them was like, what are you talking about? And so I was talking to my daughter, we use chickens and eggs, and it was in the zombie apocalypse world. And I say, imagine that you got a chicken and it lays two eggs, and then like those two eggs become you don't eat them, and then the next, you know, you get four, you know, chickens, and then those four chickens have eight eggs, and then those eight eggs become and it just grows, and eventually in a couple of years, you got this whole chicken farm. And my daughter's like, wow, that's amazing. You have all these chickens. But I I was taking there and I was talking to my wife, and we were, and I said, she's like, Well, I don't get it. Like, okay, so you know, I start investing now versus later. It what's the huge difference? And I said, Okay, you want to do something fun. I said, let's look at what happens if we can go back in time and we meet vampire, Dracula, you know, in 1600. And Dracula finds some stable investment. They invest, obviously, there wasn't a stock market that was like stable at that time, and things changed between 1600 and now. And I said, Well, let's look that Dracula invests at, you know, uh a stable 4% return. And I did the random math on it, and it came back like Dracula invested a 4% return, and it was like $18 million. And I said, you know, that's conservative, that's low risk. But let's imagine Dracula invests at like a 7% return, like an average stock market return. And I said, you know, she's like, well, it's not gonna be that much more. I was like $3 trillion. $3 trillion. And I was just like, and then like if it got really aggressive and there was like something that you got at 10%, you just got really lucky and did it right, it's like $60 quintillion dollars. And my wife's like, oh my God, how can that even be possible? And I was like, well, first of all, humans don't live that long. So we're not getting numbers like that. But the wild part is, is like, if you keep it invested that long, it's insane the amount of growth you can get. And I was able to frame it in vampires and zombies, which is how how my brain works. But it was interesting because both of them got it. And I think that one of the things that I think that what I'm trying to do is to make some of this stuff cool again. You know, and I think talking to people about some of this stuff and like how I frame it to my daughter, she was able to get it. Because I think so many people just don't understand it. Because I want to ask this as well, because like how much of the investing success is math, and how much is behavior and emotional control? How much is it is understanding and just sitting back and saying, I'm gonna chill now, like Mr. Vampire. Mr. Vampire going, I will not take up the near the money, you know?

SPEAKER_00 20:27

Um, well, they're both important. Um, you know, the the math I think is important for the reasons that you just pointed out. It's not understanding the complexities of investing, it's actually understanding the simplicities of investing, the nature of compounding. If you start with $100 and you get 10%, you know, for your first year, you end up with $110. You gain $10. Now, if you get another $10, it's on $110. And so now you're getting $11. So the first year you gain $10, the second year you gained $11. And so, as you say, it starts to grow from there, and it can grow extremely quickly. Understanding that math is a great resource. Um, similarly, understanding things like the effect of costs. So most people, instead of buying individual stocks and bonds, often end up in, say, a mutual fund or an ETF to be able to capitalize on diversification. Similarly, the returns from those are gross of their fees, their expense ratios, and often there's some other fees that might be hidden in there. It's always good to know what those may or may not be. But when you net those returns, fees essentially subtract from your return, even though you took all the risk. And so all else equal, smaller expense ratios, for example, with mutual funds, tend to result in you keeping more of the money that you put your money at uh keeping the return of the money you put at risk. And so academically and through research, they've actually studied, and there's an there's what's called an inverse correlation between costs and returns. The higher the cost of the fund, the lower the expected return, and actually the lower actual return that you see. So paying is kind of different than real life. You know, the math in real life often is the people with skill and talent get paid the most. And so you're tempted to say, well, if that mutual fund costs more, it must be because the manager is more skillful. Unfortunately, the math says the opposite. It has nothing to do with his talent. It has everything to do with the drag of the costs on your net return. So from that regard, understanding the math can be beneficial, but you don't have to understand the financial ratios, you don't have to do accounting and evaluate balance sheets. That math is probably you can leave, you can you can leave for someone else to do, you don't need to do that. Behavior is really what makes or breaks investor success, in my opinion. Mainly because when we invest, if we're investing for any longer length of time, we don't know the outcome yet. We're still building that. And so tilting some things in our favor, the maths, you know, saying, I'm gonna try and capitalize on low expenses because I know the math works there, and compounding because I know the the math works there. What I'm gonna do is I'm gonna let those be my drivers of success, and I'm gonna stay out of its way. Those people that can can manage their own emotions, especially through the tough times, because that's when all the challenges are. That's when the doubt the doubt sets in. You know, you begin to doubt what you're doing is the right thing. You begin to start to listen to some of those people on the uh, you know, the TV or in the press that really are maybe tossing out some of those extreme headlines that get people really concerned or really greedy. It works both ways. Um, but if you control your emotions, you have a chance of staying in the game, and that game is really time. That's where compounding works best, that's where saving strategies work best. The longer you save for, the more you'll have at the end. If you save $10,000 a year for 20 years, you have more than if you just save for five or ten. It's even if you get no return, you're still better off because you saved as opposed to spent. And so understanding the math, but also understanding your role in success by curtailing your emotions and maybe not being um as uh active in the market and making changes for the sake of making changes because things don't seem to be going well, that to my opinion, the best strategies are often derailed by emotions, not because the strategy wasn't well thought out. And that's kind of the thing is that when you look at some of these best performing managers over a 10-year period, if you looked at their returns for each of the 10 years, rarely were they the top performing fund, or even in the top half. Oftentimes they're, you know, they're fund managers that ended up being the best performer, but had plenty of underperformance along the way. The question is: do you have the behavioral uh discipline and emotional discipline to go through those periods when things are challenging?

SPEAKER_02 26:15

I remember watching a documentary about the Battle of Britain and uh and the U.S. bombers flying through, and it was showing like they had some footage of the inside of one of these planes and the flak. Flack was like coming up off of the of the they would it was anti-aircraft fire being fired from the ground, it would come up and it would explode and it would send shrapnel to the side of the plane. And the only way to get to your destination was to fly through it. And it wasn't fun, it was dangerous, but these guys just had to ride it out. And it was interesting too because the urge to panic was very real. The urge to drop early so they could get out of that was very real. But the reality is that sometimes the most important thing, but also the hardest thing, was just sitting steady and going through the storm, going through that thing, you know. And yet it's not easy.

SPEAKER_00 27:17

No, it's never easy. It's always challenging. That's why everyone can't do it. And maybe some people shouldn't do it on their own. Uh that if if you don't feel like you have that fortitude, could be you don't have the time, you don't have the willingness or the interest in doing it alone, then that's where a financial advisor may come into play. But I think it's also good because you have an additional perspective that's not yours. And to go back to your example, uh, your World War II example, another interesting thing you may have seen from similar reports is that that they would analyze those planes that were caught in battle in flak. They looked at the profile of the plane and they analyzed where the damage was occurring on all the planes. And they built essentially a layout of the model. And one camp said, oh my God, we're getting all this damage all over this airplane. Um, and this is where we need to shore up the armor. And then they got another camp that said, wait a minute. These are the airplanes that came back with all this damage. They landed and we took a look at all where all the holes were, and then we plotted them on this graph. These were the planes that survived despite this damage. What we don't see is damage all around the cockpit. Like you don't see it. So it's interesting, it's interesting because sometimes the right answer requires two different perspectives, and sometimes the right course of action is to do it with a financial advisor, just like we might, you know, you might train um, you know, in martial arts, you have a coach, you have a training buddy. Um, sometimes it's best not to do it alone and try and teach yourself. Sometimes you need to lean on other people's experience and perspectives. Sometimes their perspectives aren't yours, to be able to at least go, okay, I can understand why you may think that, but what about this?

SPEAKER_02 29:27

Love that. And I think that it it's like I love that we're talking about this stuff because to me it's fascinating. And it's like because I think that what's interesting is that, you know, a lot of these people are really smart, they make a lot of money, and yet they still make mistakes because it's not all about being smart, and that's not all about having a lot of like money to your name. There's something else. And I I want to ask you because what do smart and high-income professionals consistently get wrong about money and investing? Because you know, there's a lot of people that that get caught up and then make these mistakes, and then they sit there and go, What did I do wrong?

SPEAKER_00 30:08

Probably the thing that I would think of first is that most of these people that you've just described, you know, these higher income professionals, they tend to come from jobs that require skill, they require, you know, intelligence, they require a ton of work, time, and study. Um there are your doctors and your attorneys and engineers or scientists. Like there are a lot of people that are really, really good because they've dedicated their life to their profession and they focused on it, they know they're smart. Um those often are the type of people that have the biggest challenge with investing because they think that because they're smart and because they've they've been accomplished and successful in one field, that that means that they should be able to do it in every field, or at least in the investment field. Um the the thing that's interesting about professional investors who are also smart and it requires a lot of time and experience to get good at it, and they go through tons of credentials and education. When you look at the industry, and I'll just use go back to that mutual fund industry, every year, and I think more often every quarter, um, there's uh SP uh creates what's called their SPIVA report, and it stands for um uh the SP index versus active data. And it what it does is it looks at all of the active funds that are out there, and it says it looks at their performance relative to their benchmarks and looks at how many of them outperformed, which is their goal, compared to those that didn't. And historically, that number is very skewed towards underperformance. And and I only mention that, and especially as you go longer time periods, you start to talk about five, 10, 15-year, 20-year periods, the underperformance by active managers becomes more and more um pronounced. I'm not saying that to challenge or to derive their abilities or talents. I think it's the opposite. I think it's they're competing in a field against all these other talented, hardworking, resourceful individuals. It's like it's like when you look at professional sports and you see the all-star games. You have the top players competing against each other. Rarely is it quite as even a or uh uneven a playing field as when those top professionals of whatever field are playing against, say, a college player or a high school player or someone of lesser ability. And it's they don't have the decided advantage when you get to the best of the best. They're much more evenly matched, and that's why it's a much more level outcome and why you find that that the players often just don't win, you know, one after another. They don't they don't have a string of wins. Often it's it usually ends up as something, you know, maybe uh more more even than you know one player just simply beats the other player like a drum, like day in and day out. That's the same thing with with active management. And like you said, like it's not an intelligence thing. And that's where people need to realize that the most intelligent investors, regardless of your level of income or experience, the most intelligent investors and the most experienced and resourceful investors are the professional investors who do it for a living and doing it day in and day out, and they still have a hard time beating the field and outperforming. So maybe the answer is, you know, for individual investors, let's let's take a different tact and not try and play that game.

SPEAKER_02 34:25

I I think that's a really interesting point. And like, you know, I wanted to ask you this like if someone could get only one thing right with their finances over 30 years, what would matter most?

SPEAKER_00 34:35

Well, if I I can tell you what I tell my kids.

SPEAKER_02 34:40

I like that.

SPEAKER_00 34:41

You know, um, so I have four kids, the youngest is turning 26 uh next week. Um so what I've told, I've got a 26 and now a 27-year-old. What I've told them, in particular, since they're still living in our area and will still listen to me, while the older ones are, you know, they're they're they're so much more experienced, they've got the answers. Um but for the youngest, what I've told them is to manage your spending and your savings. Like, figure that out because what you what you don't save and invest today can't be there when you need it in the future. For whatever that is. It might be five years down the line, could be 35 years down the line in their case, when they retire. But I think if there was one thing I'd point out, it's be honest with yourself. Like, understand that if you if you spend today, that money is not going to be available for you in the future. That money can't, you know, if you invest it, you can take advantage of compounding for a longer period of time. You can take advantage of the fact that maybe you've put that money at arm's length a little bit. It does require you to sort of defer the enjoyment you might get out of spending the money now on a you know, travel or a new car or whatever that would be. But you also have to weigh that against what that money might grow to, what might be necessary to buy in the future as opposed to maybe now, where um, you know, it certainly younger people have have more um required spending as a percent of their income. You know, you've got, you know, you're you know, you've uh as they just don't have as much disposable income often, but it it's still very important to be able to rein in and understand and make those decisions consciously spend versus save slash invest.

SPEAKER_02 36:45

I um I just made a video earlier today, uh, and I was like, because I I like to make these videos that just remind me of things that I wish someone had told me, the things that I'm trying to work with my daughter on. You know, it's five ways that you can save more money and and spend less. And it was just really simple. And it's like you don't have to overthink these things. Just find ways that make it harder for you to spend and then take that extra and either invest it or set it into savings and find ways to kind of grow it. And I think what helped me was that I doing this podcast, I got to talk to some amazing financial professionals. And it realized it helped me realize that there are parts of this that I can figure out myself, and there's parts of this that I need to get help with. And I want to ask you this like what parts of investing in personal finance should never people should never outsource, even if they work with a great advisor, and what should they definitely outsource and send to out to get help with?

SPEAKER_00 37:47

Well, I can tell you the stuff that they they definitely shouldn't outsource is investment knowledge. Um I consider coming to work every day, going to school. Um, oftentimes if you're in the press, you'll you know, you'll see people say that the most dangerous, you know, five most dangerous words uh in you know the English language when it comes to investing are things are different this time. Um and I I understand the context because that's often what salespeople use to sell people ideas, you know, that they for things they don't really need. On the other hand, the real the real circumstance, if you look at it, is things are always different today. That's why what you did 10, 20 years ago won't always work as well now, because things change. This is where we live in a dynamic society, you have a lot of different tax laws, you have a different uh lot of different investment options, the industry constantly creates new. And it's worth being aware of those aspects. Again, you don't have to be an expert, but I do think to achieve a base level of investment knowledge, similar to what we talked about before, understand the benefits in the context of uh compounding and the role of costs in your success and the role of time and behavior in your success. If you can if you can understand some of those aspects and help better differentiate those sales pitches from real information that's useful, not just interesting, you're gonna be better off. Um so you know, if I had to answer the question, I'd say, yeah, don't don't offload uh investment uh knowledge.

SPEAKER_02 39:46

That's really interesting too, because I I think that um I find a lot of people, and they've got a lot going on up here. You know, you've got life, you've got this, you've got that. You do they're just trying to get by. And so sometimes I find people that will hyper focus on what something and then they ignore something else that's actually important. And I think that that's where I like working with people who can teach me how to do this stuff because I want to ask you like, what do people tend to obsess over that barely matters? And what do they ignore that matters a lot?

SPEAKER_00 40:20

Um, the thing I think that I see people focused on too much is outperformance. Um not saying returns, but outperformance. Um, a lot of times people think that, you know, that they're supposed to try and out, you know, beat the stock market. Um and the truth is the stock market doesn't care if you beat it or not. Um that if you looked at the data and the historical data is extremely clear on it, that it's very, very difficult to beat a passive index fund. Even the best active managers struggle to do it. And passive index funds just keep you invested, broadly diversified in whatever you know, broad measure you want. Um, there's a lot of different broad broad markets for both the U.S. marketplace and overseas. Um, they all adopt the same thing. It's the um the at Vanguard, the founder was Jack Bogle, and he used to say, you know, you know, don't don't look for the needle, buy the haystack. That's the idea behind owning an index fund. You own the whole market as you want to define it. Could the SP 500, you know, um, or the U.S. total stock market or total international stock market. There's plenty of choices out there. They all share um some some of the same um features. They offer broad diversification to help manage your risk. They offer um low turnover with their portfolios. They're not picking stocks, they're just owning them because they're in the index. So you are, as we talked earlier, you're you're keeping your unforced errors to a minimum because you're not trying to outsmart the market when the market's very smart to begin with. And then the third is that they lower your costs. So the expense ratios are are usually very low. And because they don't buy and sell stocks like an active manager does, they tend to be more tax efficient. And so when it comes down to it, you know, I think a lot of people pay too much attention to outperforming the market when the odds are they won't be successful at it, regardless of what they choose. And they overlook those aspects we just talked about and we've talked about quite a bit, the role of costs in their success, and as part of costs, you know, taxes where it's appropriate. In the U.S., that's a that's a big thing. Um, the less tax you pay, the less it's you know you pay in expense ratios, the better your net returns, and that's all that matters.

SPEAKER_02 43:10

If you could go back in time and give your younger self some advice, what advice would you give?

SPEAKER_00 43:15

Oh, we're Marty McFly in it, huh?

SPEAKER_02 43:17

We're Marty McFlying it. You better believe it. Not Calvin Klein. Oh man. Yeah, you could go back and give yourself some advice. What advice would you give yourself?

SPEAKER_00 43:30

Uh that's a tough one. Um one, I uh I think I I would tell myself when I meet my wife that she's the one. Don't don't screw that up. Um I think the second thing would be to not overcomplicate things. I think I think our our I think our environment has and the industry And what you see, you know, in the media oftentimes wants to overcomplicate things, as if you need to do that to be successful in whatever it is you're you're choosing. I I don't believe that simple is simplistic. Um nor do I believe that comp the complicated is sophisticated. Um so I think if I would if I would give myself some advice, I'd just tell myself, keep it simple, stupid.

SPEAKER_02 44:29

I love that. I once, my wife and I, I talk about this with haircuts all the time. I go to the most simple barber shop and I get a great cut. I go to a place that's fancy and it's got all the bells and whistles, and I come home looking like an absolute mess. And I told her, and she's like, Well, why don't you try this new place up the street? And I said, I'm not trying any new place up the street. Oh, they've got all of this fancy stuff. And I was like, I don't need, I need someone who's not gonna mess up my head. Like, that's it. I walk in, dude's got a simple set of clippers and not 25 different sets of scissors. That's the place I'm going. Like, because I know that the dude's got the one set of clippers, and the one set of scissors is gonna do me right. Where I go to the person who's got 35 different scissors for every different option, and then they've got 12 different clippers. I know I'm coming out of there looking like a mess. And it's not always that way, but you know, I I love what you're saying. Like, there's this thing to be said for simplicity and just going in, know what you need, and you get it done. I there's a one of my favorite sandwich places is in the Napa Valley. It's called Juni's, and they make some absolutely killer sandwiches there. Used to be affordable, now it's painful. Uh, that's other reasons, but like Juni sandwiches are these big, delicious jet deli sandwiches, probably one of the best deli sandwiches I've ever had in my life. And they've been in that valley in the Napa Valley for have to be going on 40, 50 years. Excellent sandwiches, but they're simple. They've got a set of meats, they got a set of different breads, they've got a set of different veggies, and then you mix a match, and that's it. There's nothing fancy there. And they've been super successful throughout all that time because they've kept it simple. And I think in life, we gotta remember that simplicity is one of the best things you can do.

SPEAKER_00 46:20

Yeah, it's when you overcomplicate things, I think you're also, we talked about behavior, like you're setting yourself off in uh oftentimes you're setting yourself up for um a trap. So in the in the stock market, for example, when you're investing, many times you buy you buy a fund because you think this person has skill. Um or I, you know, I believe in XYZ. When things don't work out, doubt creates sense. And I think that's what complications um in many things uh regardless of the task, investing or otherwise, when you when you start with complicated, you assume things are not gonna work as well. And when they when they don't work, you assume they're broken. And that's what keeps people from staying with you know certain funds that maybe they do end up being the best performer at some time in the future. But you gotta stay you gotta stay on board for the ride to get there. Um complications oftentimes create or plant the seeds of doubt. And when things don't work as well as we intended or as expected, those seeds grow into something substantial, and many times those those substantial things get in the way of your long-term success. If you keep it simple, I think you're keeping those potential seeds of doubt um also, you know, uh to a minimum. I love that. Well, Don, where can people go to learn more about you and what you do? Well, they can go to my website. Um, but you know, uh Google being and you know searching uh uh being what it is, just searching uh for my name will will bring up an awful lot. But if they're interested in learning more about Benny Hoff and company, they can go to our website at www.bennyhofflc.com