On this special episode of The Get Ready Money Podcast: The Financial Five, I was joined by Chris Mouzon, Financial Coach and Co-Founder of United Agency; Derrick Wesley, founder of Seedlyng Financial Education, Mac Gardner, Certified Financial Planner and Founder & Chief Education Officer of FinLit Tech and Thomas Kopelman, financial planner and the co-founder of AllStreet Wealth to talk about changing the way we think about money and why compound interest is the eighth wonder of the world.
Here’s what we discussed:
Chris Mouzon is a Financial Coach and Co-Founder of United Agency where he helps people and families build better lives through finances. With expertise ranging from Entrepreneurship and wealth building to business tax hacks and retirement planning, Chris is knowledgeable in many different areas of Finance and Business. Chris believes in the power of positive energy and daily habits to transform lives and he's sharing what you can do to reach a place of financial (and personal) freedom.
Derrick Wesley is the visionary founder of Seedlyng Financial Education. He is on a mission to bridge the financial literacy gap among youth and young adults. With a background in education and a passion for empowering the next generation, Derrick founded Seedlyng to instill essential money management skills in students worldwide. Through interactive workshops, personalized curriculum, and cutting-edge technology, Seedlyng equips students with practical financial knowledge. Derrick's vision is to create a world where financial literacy is not just a subject in school but a life skill embedded in every young person, empowering them to make informed financial decisions.
Mac Gardner, a Certified Financial Planner practitioner, has served in the financial services industry for more than 20 years.
His passion for financial literacy led him to publish his first book, “Motivate Your Money!”. The book served as a tool to share his extensive experiences in the field of Personal Financial Planning. As his family grew and his clients began to ask him for ways to teach their kids about managing money, he decided to use elements from his first book to develop a financial literacy platform for young children. "The Four Money Bears" represent the four basic functions of money. When children gain exposure to money management skills at an early age, they are likely to develop healthy financial planning habits as adults. Mac also serves as Founder and Chief Education Officer of FinLit Tech. The company's mission is "Building a Bridge Between Financial Literacy and Financial Technology".
Thomas Kopelman is a financial planner and the co-founder of AllStreet Wealth as well as a blogger, podcaster and speaker. Thomas was recognized as one of the 23 best financial advisors for millennials by Business Insider, 2023 Young Advisor to Watch and Top 100 Advisor by Investopedia in 2022 and 2023. Thomas is also the Head of Community at Wealth.com.
On this special episode of The Get Ready Money Podcast: The Financial Five, I was joined by Chris Mouzon, Financial Coach and Co-Founder of United Agency; Derrick Wesley, founder of Seedlyng Financial Education, Mac Gardner, Certified Financial Planner and Founder & Chief Education Officer of FinLit Tech and Thomas Kopelman, financial planner and the co-founder of AllStreet Wealth to talk about changing the way we think about money and why compound interest is the eighth wonder of the world.
Here’s what we discussed:
Chris Mouzon is a Financial Coach and Co-Founder of United Agency where he helps people and families build better lives through finances. With expertise ranging from Entrepreneurship and wealth building to business tax hacks and retirement planning, Chris is knowledgeable in many different areas of Finance and Business. Chris believes in the power of positive energy and daily habits to transform lives and he's sharing what you can do to reach a place of financial (and personal) freedom.
Derrick Wesley is the visionary founder of Seedlyng Financial Education. He is on a mission to bridge the financial literacy gap among youth and young adults. With a background in education and a passion for empowering the next generation, Derrick founded Seedlyng to instill essential money management skills in students worldwide. Through interactive workshops, personalized curriculum, and cutting-edge technology, Seedlyng equips students with practical financial knowledge. Derrick's vision is to create a world where financial literacy is not just a subject in school but a life skill embedded in every young person, empowering them to make informed financial decisions.
Mac Gardner, a Certified Financial Planner practitioner, has served in the financial services industry for more than 20 years.
His passion for financial literacy led him to publish his first book, “Motivate Your Money!”. The book served as a tool to share his extensive experiences in the field of Personal Financial Planning. As his family grew and his clients began to ask him for ways to teach their kids about managing money, he decided to use elements from his first book to develop a financial literacy platform for young children. "The Four Money Bears" represent the four basic functions of money. When children gain exposure to money management skills at an early age, they are likely to develop healthy financial planning habits as adults. Mac also serves as Founder and Chief Education Officer of FinLit Tech. The company's mission is "Building a Bridge Between Financial Literacy and Financial Technology".
Thomas Kopelman is a financial planner and the co-founder of AllStreet Wealth as well as a blogger, podcaster and speaker. Thomas was recognized as one of the 23 best financial advisors for millennials by Business Insider, 2023 Young Advisor to Watch and Top 100 Advisor by Investopedia in 2022 and 2023. Thomas is also the Head of Community at Wealth.com.
Are you looking to get ready, be prepared and transform your financial future? Then you've come to the right place. This is the Get Ready Money Podcast with Tony Stewart, where Tony has insightful conversations with financial experts who are changing the way we think about money. Catch up on the latest financial trends and hear practical advice from Tony and his expert guests so you can build healthy habits that work, Be empowered with tips for implementing small changes that can have a big impact on your financial future. So sit back and get ready to hear from today's guest.
Speaker 2:Welcome to the Financial Five podcast. I'm Tony Stewart author and financial wellness advocate.
Speaker 3:And with me today is hey, I'm Thomas Koppelman. I am the co-founder of All Street Wealth and a financial planner for millennials.
Speaker 4:I am the co-founder of All Street Wealth and a financial planner for millennials.
Speaker 5:Chris Mouzon, your financial coach, financial planner, helping you understand all things money.
Speaker 6:Matt Gardner, certified financial planner, author of the Four Money Bears and founder and chief education officer of Finlint Tech. Eric Wesley, owner and founder of Sealing Financial Education. We work with schools, banks and nonprofits to provide our innovative financial literacy tools.
Speaker 2:And today we're going to be talking about the concept of compound interest and the importance of saving early. So, to tip it off, we're going to go to our guest Thomas to talk to us a little bit about compound interest and what he thinks about it.
Speaker 3:Cool. Always fun to be the first one to start as the guest. Well, I think the interesting thing about compound interest is like our minds don't really, we can't really understand how it works, right? I mean, you just think, like most people think, how your investments grow is like I have a hundred thousand dollars, I get 8% a year. Now it's at 108. The next year I get a 116. And then another year I get eight and it's 124. But really what compound interest is is, like you, your value is growing, so you have last year's growth plus last year's principle, so then it'll grow by X percentage and then that number becomes bigger, so it grows by more and more and more.
Speaker 3:And like this is something I talk about with millennials all the time, because, like, when we think of investing, when most people think the most important part of investments is picking the right investments and then selling and going to the new one and selling and going to the new one, but really, like, what's the most important thing in investing is like getting a decent rate of return for the longest period of time possible. I always kind of like throw out these examples and the math and for, like you know, millennials are 25 years old and they invest for 40 years. The thing that I think is so hard for people to understand but like once you show them is like a kind of light bulb moment is when you invest for 30 to 40 years, almost like 50, over 50% of all of that growth comes from about the last six to eight years of investing and I think that's what surprised people, cause you know, in your twenties and your thirties maybe you're putting away $10,000 a year and you're like, oh, like I'm really not making that much progress. It's been 10 years. You know I'm $140,000, but I always use, like the rule of 72 to help signify this. And the rule of 72 is basically like you divide 72 by the rate of return you're getting on your investment. So let's just use nine, so you get 9% rate of return a year. That means every eight years your money's going to double.
Speaker 3:So if you have a hundred thousand, eight years from now that's 200,000, you know, maybe that doesn't feel good. But then, eight years from then, you go 200,000, 400,000, 400,000, 800,000, 800,000, 1.6 million, 1.6 million, 3.2 million. And again, these aren't guarantees. This is just like a simple thought exercise in your mind. Help understand it. But if you look at that like that, one last eight year period in that example went from 1.6 million to 3.2. The first 24 years you went from 1,000 to 400,000.
Speaker 3:Think about how different that is, and that's why I think it's so important to understand compound interest. Stay invested for the longest period of time you possibly can, and the way to do that really is build a financial system where you never have to sell your investments at a bad period of time, like right now. If you have an emergency fund, you should never have to, while you're building, be selling your investments. Right now. If you have the right insurances, you should never be selling to fix something with your car or to cover medical expenses, and so really the best thing you can do is first set up a financial system where you'll never have to sell at the wrong period of time because you need that money.
Speaker 2:Well, that's great, let's go around the horn. Who wants to go next?
Speaker 6:All right, I'll go ahead and jump in.
Speaker 3:I'll go ahead and jump in.
Speaker 5:And I'll anchor on this one because this is cool.
Speaker 6:Yeah, thomas, that was some really good information and, as I mentioned to you guys, I'm sealing financial education. We work with schools and middle schools, and so hearing that information that's definitely some information that my students need to hear. But my biggest challenge with that is listening to you talk, thomas, was I heard it sounds like it's a mindset issue, that you have to have the discipline and the mindset to be able to save over those long periods of time, and so that's my challenge figuring out how to help mold younger minds to be able to come into, you know, as they think about adulthood. How can I plan out for that long term, because everyone's dealing with these issues right now where they don't have enough money because inflation and different things like that. So that's definitely a challenge not wanting to pull from what they may have started saving. What do you guys think about that? How do we help someone in that situation?
Speaker 3:I mean I can, I can add to that. I think that's a really important point. I think I mean we all probably know this, but we've heard the Fidelity study where they look at like what are the best investment accounts? Over that, if you buy the S&P 500 or just like a few, you could go target date portfolios, you could go any diversified portfolio and hold onto it over a long period of time. Like that research shows that that's typically what does the best.
Speaker 3:I think for some of these people you're saying like inflation is hitting them, maybe they don't have the money. I think investing is a stepping stone. I mean, if you have a 401k at work and you have 100% match or 50% match, like yeah, you start there because that rate of return is higher than even your credit card interest will be. But above and beyond investing there, like you should pay off your high interest debt, you should be building an emergency fund. And then if you get to the point, like I know there's like a bottom part of the country who are like there's nothing that we can do to cut any more to free up cashflow for those people, that's really hard because we can all sit here and say you need to invest more. But really those people what they need to do is increase their income, and that is so much easier said than done, right? Like I think everybody thinks and focuses way too much on cutting costs. But there's a baseline that you can get to Increasing income. There's not.
Speaker 3:And so I know there's a lot of people that lack education, they lack the skill set, but we're not fixed people. There are plenty of people who came from nothing, had no education, has made their way because they've committed to become better at something. One thing and that's why I always tell people is like, in your 20s and 30s, we get all this information of you know, seven streams of income. I actually wrote my newsletter about this today. Like you need seven streams of income and rental properties and then side business, and then blah, blah, blah. And it's like that's not really how people become wealthy. Like the people that become wealthy become super, super good in one area, and it's way easier to become really good at one thing than it is to become really good at seven things. And so, like, I do empathize with those people who don't have that extra room, but I think if you find yourself there and know that you really can't cut costs more.
Speaker 5:Your only and the McNugget I like to share with folks when it comes to compounding interest, your money can work harder for you than you can work for your money, and I'll tell you how that whole thing came out. In a story I was asked to come and speak to a middle school years ago about what I do for a living and financial planner asset manager what have you? And I shared with them that rule of 72. And I think the whole thing behind compound interest is understanding the concept but then understanding the engine blocks that you put into the assets that you own to get, and this is what I mean. Right now, interest rates are what? Less than 1%, but let's just say it's 1% for ease of numbers.
Speaker 5:If you use the rule of 72 and you have your money parked in a bank account earning 1%, how long does it take for your money to double? 72 years, perfect. And I asked these young people if you get a job out of school, what's a good salary you think to earn coming out of school, college oh, 100,000. Great, easy numbers. I like easy numbers. So you earn $100,000. How long do you think it'll take for your employer to double your salary? And they'll be like oh, five years. I'm like really.
Speaker 5:Five years. Let's use the rule of 72. If you can get 3% bump every year from your employer cost of living adjustment, how long will it take for that to double? 24 years? Right? So that's you working for $100,000 and your employer hopefully giving you 3% every year, so that in 24 years we make it. So I said let's look at the stock market. If you chop up the market in pretty much any 10-year chunk, even with all these ups and downs, you've got about a 10% rate of return on your money. Let's use the rule of 72. How long will it take for your money to double? 7.2 years.
Speaker 5:So I think a lot of what we do as advisors is really educating people to not just know what the rule of 72 is, not just understand what compounding interest is, but finding the right tools that are out there to allow you to reach whatever goals. You heard the horror stories about people the 401k oh, I got a 401k. I got a company match oh, great. What are you? Invested in? 100% money market? Huh, no, you've got the right tool, you've got the wrong engine. So I think that's really important you talk about compounding interest is really going a step further and explaining to people what the tools are that are out there that can get them that growth over time to reach their goals.
Speaker 3:But you had a really important concept there, too, of the idea of like you can either trade your time for money, but then you're super limited. Like there are people who have really high salaries, right. Like you know, maybe you're a lawyer or whatever things, but you know where you're capped at because of time. The whole investing piece is like well, now time is absent, how can I use money to grow money? And that's why everybody's big thing is like equity, right, a lot of us own our own businesses. What's the value of owning our businesses is we can control everything our time, how much we work, what we charge, what we get paid, what we sell for. Like all of those are ways to advance your wealth and give you back more control. That is absent of my 24 hour day, how I can use it.
Speaker 4:That's so good. That's so good. Guys. I've been just sitting back listening because y'all are just preaching, right, this is everything we talk about. This is all. This is all the information that people need to understand. Thomas, love what you said.
Speaker 4:Again, people have to have a financial foundation. This is literally all I talk about. Right, before we get to the investing conversations, we have to have some basic financial foundation conversations cashflow, short-term savings, debt management, real basic stuff and that's where we really have to start. For us to then understand the compound interest, why this works, why we can invest and need to invest for the long haul and not sell, it's because we've built that foundation I'll take. And again, you guys have talked about the. Why we can invest and need to invest for the long haul and not sell, right, it's because we've built that foundation I'll take. And again, you guys have talked about the rule of 72, something. Again, if people that are listening don't know, look it up, right, like it's a really great way to start to understand this concept that we're talking about. But let's I'll flip it over a bit and talk about that high interest debt. Why do you need to understand compound interest? Why do you need to understand interest in general is because of the high interest debt that you might be in If you use that same rule of 72 method and the average credit card is 20% right, 19%, 24%, whatever it's going to be, well you're talking about now.
Speaker 4:If you just paying minimum right that's what a lot of people do Just pay these minimum payments, it's just $40, even though your balance is $2,300, but you just pay $40. Before you know it, that interest is racking up so much because use rule 72, every what four years the money is doubling for the credit card company. And now you're just paying minimum payments and you're wondering why my balance is not going down. It's because you haven't understood this concept of compound interest. So that's why we also have to put it into context to say got to have this foundation. You got to understand how to understand these concepts so that you can make sure that you can invest for the long haul and take advantage of compound interest and not let it take advantage of you. So I follow all the stuff that we're saying, guys. It's important.
Speaker 3:I think it's funny. The foundation pieces was hard because, like I think, if you, this is something that maybe I overlooked until I started to work with people. But people view being good at finance as being my investments are growing, like that's their metric. Their metric isn't even anything else. Like do I have the right amount of saving? Do I have no credit card debt? Do I have no other bad debt? Like do I manage my cashflow well and not overspend? People just all of a sudden assume, like yo, my investment account's going up, I made this good bet on crypto or something else.
Speaker 3:I'm good with money, but what we're all speaking to here is like that's basically one piece, and it's not even the first piece, but it's the first piece people look at because it's fun. You know, building savings, getting 10,000 in emergency fund over two and a half years isn't fun. Paying off credit card debt isn't fun, but you're right. Like that principle. I see people who are like investing in crypto and then they're letting their credit card grow and they're like well, I think I can beat this. And it's like if you're trying to chase beating a 24% credit card with a variable rate of return on a speculative investment, you're losing right there, an extremely volatile asset, by the way 100%.
Speaker 3:I always tell people like crypto is something you can invest in, but you have to earn the right, you have to do all the foundational pieces, you have to have a diversified portfolio build up and then maybe you can throw a small allocation and it'd be a little bit more speculative. But you don't start there hoping that that grows your wealth super quick. All that's going to happen is five years from now. You've been speculating on 0.0001 cent crypto coins and you have $0 and still the credit card debt.
Speaker 4:So true, I'm going to let you jump in real quick. But just to add to that other side because that's a group of people, thomas, that you say right, like they're happy about their money because their investments are growing I work with another group of people that are happy to pay their bills Right, and that's another side of that industry where it's just like I'm just, I'm good with my money because my bills are paid, because I take care of everything. It's like, yeah, but you have less than a thousand dollars in your savings account, like you're not okay, just because you pay the bills. So there's so many sides to that.
Speaker 3:But I just wanted to highlight that point as well.
Speaker 2:It's a great point. I mean what you guys are saying for me about it being foundation. I think I think people miss that, that you have to have these foundational concepts. And it does come back to me to basketball is. You know I coached my son's. You know, starting in third grade I coached his basketball team and out here, steph, steph Curry is out here and so all the kids want to shoot threes but none of them knew how to make a layup. And you know, it's like arguing with them is like, hey, you got to work on your fundamental, you got to be able to shoot that little two-pointer. You know, off off of your foot. You know, get the, get your hand up there, put the hand in the basket. You guys know that. You know, whatever it is, put the goose in a pot or whatever you learn um, I think that's super important, right?
Speaker 3:I I use this story in every presentation I give the college students and you. You know I spoke to crypto universities and things like this. And Alan Stein is like a world famous basketball trainer. I don't know if you guys have heard of him, but he's trained like Kevin Durant, a bunch of these guys.
Speaker 3:I had him on my podcast and he told the story of you know, early on in his career he got the opportunity to go watch Kobe Bryant workout. It was like 5am. He got there. You know four, 40 Kobe's been working out for an hour and for the entire two hour workout he does one move, he does like a right jab, step into a left-hand pull-up. And Alan went up to him after the game. He was like or after the workout.
Speaker 3:I was like Kobe, like dude, you're the best basketball player in the world. Why are you doing such basic things? And he was like the reason why I'm the best in the world is simply because I never get bored with the basics. If you think of finance, basketball relationships, anything in life, like 80% of being successful in it is simply just being good at whatever the basic foundations are, and so the problem is is. Then we look and you know I coached a fifth grade basketball team too the worst player on my team, his dad, came up to us and was like so you know, we've been working on his game a little bit. We've watching a lot of luca and watching a lot of how steph comes off screens and I'm like, dude, your son doesn't even notice the top right elbow on the two three. Like how about we start a little bit of just like positioning, maybe being able to dribble with his left hand up the court before worried about fade away off double screen threes here's a thing called the backboard.
Speaker 5:How do we do it? Let's use that.
Speaker 2:Yeah, I don't think they use a backboard anymore with kids. You know it's like you know.
Speaker 5:I'll learn that this thing called a left hand.
Speaker 2:You may want to try using it every once in a while. Yeah, hey, so we're coming up on our five minute warning, so let's go into our quick wrap up for this episode, zach do you want to kick us off.
Speaker 5:Yeah, I love everything. The energy from this is awesome. When I think about compound interest, I think about that whole Albert Einstein. He mentions and he says that compound interest is the eighth wonder of the world. Those who understand it earn it. Those who don't pay it. So that's something to be very aware of. For those of you out there who are looking at why IRAs are beneficial versus your sort of non-qualified accounts, it's a concept called triple compounding that I want to leave people with. And people say well, what's triple compounding? Well, triple compounding is when you have an account and you're earning interest on the money you put in. You're earning interest on the interest that it earned and the triple compounding is the money that you would have paid taxes on. So that's why IRAs are really neat tools for long term goals. Retirement, so on and so forth is this idea of triple compounding. So utilize it. Again, those who understand it earn from it. Those who don't, they have to pay it.
Speaker 6:Good stuff, mac, I'll go ahead and jump in. Thomas, thank you for joining us today. One of the most important things I heard you say was that you have to earn your right to invest in crypto. I really love that, because that's something that I can take to the folks that I work with and remind them that, hey, you got to have these foundational skills before you want to do anything else like that. If you haven't done the small things, you can't do the big things. So thank you again for sharing that good stuff.
Speaker 4:Absolutely. And yes, thomas, thank you for the contribution to today's show Super insightful. The one thing I'll double click on, which probably will be a theme throughout the show, is your financial foundation, guys. You got to make sure that any of these concepts that we start talking about, but specifically compound interest and the other things we go on to, it really all starts with having a foundation that supports you being able to invest for the long haul, because that's what we do it for. That's it, guys.
Speaker 3:Yeah, I'll add into that. I think the foundation is important, but I think where a lot of the foundation, where you become successful with it, is the habits that help build the foundation. And so people that don't have a lot to invest or a lot to save or a lot to pay off their credit card, that might be a reality. But building the habit of doing those things, building the habit of spending less than you make every single month and knowing like, hey, next year my income went up $10,000. Well, I don't have 10 more thousand dollars of spending. I have, you know, maybe 8,000 of that of spending. Just understand, focus on your habits, do the right things and most of the time, if it's really fun and it has to do with finance, you're not focusing on the right things, Like it's meant to be boring.
Speaker 2:Yeah, a hundred percent. And then, thomas, you know, thanks for joining us today. And Mac, I was going to talk about Albert Einstein, so I got something else that I'm going to spring out here. I mean that's, that's the greatest quote. Albert Einstein, I mean, kind of knows what he's talking about with some stuff. Is you know? For me it's about compounding knowledge. Is you know, the more knowledge you have, the better decisions you're going to make. And everything that we've talked about, thomas, and what really resonated with me is when you were talking about expenses and income, is that it's all about. You know the knowledge. You know what are your opportunities, what can you do in your situation? Everybody's got different opportunities and you know, you hear about the school teacher who saved $2 million and never earned more than $50,000, you know, and how did they do that? You know, what decisions did they make? What knowledge did they get that allowed them to compound the decisions that they were making? So you know, I'll leave that as my closing thought. Anybody else with anything before we close out the episode.
Speaker 3:I would just say one last thing that the point you just made about compounding knowledge is huge. Like I think, people think of compounding only in money but, like in every area of your life, things compound. There's this I think I don't remember who put out this graph and it just shows like the 1% better every day and how it's not just this straight line but then eventually compounds and your skillset really grows. I think that goes back to what I was talking about before of like hey, if we need to make more income, like focusing on that one skillset and really growing it daily can just reap some great rewards in the longterm.
Speaker 5:The last two seconds I'll drop in Thomas, I love it. Habits, habits, habits. If my kids were here they'd be like yes, papa, habits, behaviors, traits. Good financial habits become good financial behaviors. It could become good financial traits. So I write about that in my books and I try to preach that to clients. Start the habits early. Start the habits early. Amazing things can happen. You can have your money working for you.
Speaker 2:Money works harder for you than you can work for your money. That's great, and I think that's a fantastic close and so thanks, thomas, for joining us. Thanks to the rest of the Financial Five, this has been a great episode. Thank you, everybody for joining us for this special episode of the Financial Five on compounding interest. Be sure to check out the financialfivecom website to learn more and subscribe Until next time you.