[I] Why Young Investors Focus on the Wrong Things [GREATEST HITS]

Afford Anything | Make Smart Money Choices

Paula Pant | Cumulus Podcast Network

Business, Investing, Entrepreneurship

4.7 • 3.6K Ratings

🗓️ 24 December 2025

⏱️ 47 minutes

🔗️ Recording | iTunes | RSS

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Summary

#673: Welcome to Greatest Hits Week – five days, five episodes from our vault, spelling out F-I-I-R-E. Today's second letter I stands for Investing. This episode originally aired in April 2022, but the framework remains one of the most practical guides we've shared for building wealth at any age. Nick Maggiulli joins us to reveal why most young investors obsess over the wrong metrics — and shares his Save-Invest Continuum that shows exactly when your savings beat your investment returns, and when that changes. _____ When Nick Maggiulli was in his twenties, he spent countless hours obsessing over his investment portfolio – tweaking his asset allocation, running net worth projections, and building complex spreadsheets. Meanwhile, he was blowing $100 every weekend partying in San Francisco. It took him years to realize the absurdity. His annual investment returns on his tiny $1,000 portfolio might earn him $100 – the same amount he'd spend in a single night out. Maggiulli joins us to explain why young investors focus on the wrong things and shares his framework for knowing when to prioritize saving versus investing. He introduces the Save-Invest Continuum, which compares your expected annual savings against your expected investment returns. When you're starting out, your ability to save dwarfs any investment gains. A $6,000 annual savings capacity beats a $100 investment return every time. We discuss the math behind saving 50 percent of future raises, not for guilt or deprivation, but to maintain lifestyle balance while building wealth. This rule applies only to real raises above inflation. If you get a 3 percent raise during 3 percent inflation, you haven't actually gotten ahead. The conversation turns to unconventional income-producing assets. Beyond stocks and bonds, Maggiulli explores farmland investing, which offers returns uncorrelated with traditional markets. He shares the story of someone who bought the royalty rights to Jay-Z and Alicia Keys' "Empire State of Mind" for $190,000. The song earned $32,733 in royalties the previous year — an 11 percent return if that income stays constant. We examine why 85 to 90 percent of your portfolio should generate income through dividends, rent, interest, or business profits. Maggiulli keeps his speculative investments — cryptocurrency, art, and individual stocks — under 10 percent of his net worth. He admits his two individual stock picks are down 60 to 70 percent, proving his own point about avoiding stock picking. The episode reveals that time remains your most important asset. Warren Buffett would likely trade his entire fortune — and go into debt — to be 35 again. This perspective shapes every financial decision, from choosing income strategies to deciding between assets that merely appreciate versus those that pay you while you sleep. Timestamps: Note: Timestamps will vary on individual listening devices based on dynamic advertising run times. The provided timestamps are approximate and may be several minutes off due to changing ad lengths. (00:00) Nick's mistake of obsessing over investments while partying away returns (05:31) The Save-Invest Continuum explained (08:11) When savings matter more than investment returns (12:31) Focusing on both saving and investing in midlife (13:11) Crossover point: when investment returns exceed spending (14:11) The 2X Rule for guilt-free spending (15:31) Save 50 percent of future raises (20:41) Five ways to increase income (26:31) Selling time versus selling skills (28:11) Teaching and creating products for income (30:11) Climbing the corporate ladder (31:11) Converting human capital to financial capital (32:31) Income-producing versus speculative assets (36:11) Individual stocks and cryptocurrency allocation (43:51) Farmland investing basics (45:31) Royalty investing example (49:31) Art and non-income producing assets (51:11) Inflation and debt strategies Learn more about your ad choices. Visit podcastchoices.com/adchoices

Transcript

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0:00.0	Merry Christmas Eve. It is Wednesday, December 24th, Christmas Eve. We are running a five-day special for the five letters of F-E-I-I-R-E.
0:14.1	We kicked off on Monday with the letter F Financial Psychology by airing an interview with the behavioral finance guide, Dr. Daniel
0:21.7	Crosby, and we followed it up on Tuesday with the first letter I increasing your income with
0:27.5	Jeff Wetzler on The Art of Negotiating.
0:30.4	Today, Wednesday, Christmas Eve, we are airing an interview with Nick Majuli from of
0:36.9	dollars and data in honor of that second
0:39.5	letter I investing. Now, all of the interviews that we are airing this week come from our
0:45.9	greatest hits vault. Nick's been on the show multiple times. Today's episode originally
0:50.9	aired on April 13, 2022. Nick is a Stanford educated data scientist who has
0:57.8	written multiple books on the data behind How to Build Wealth. And I am thrilled to share it
1:04.3	with you to commemorate the letter I investing. Enjoy.
1:12.0	Hi, Nick.
1:12.9	How you doing, Paula?
1:14.5	I'm great. How are you?
1:15.6	Doing good.
1:20.6	Nick, one mistake that you have publicly talked about was that when you were in your 20s,
1:24.8	you made the mistake of prioritizing your investments.
1:44.3	And that sounds counterintuitive to everyone who's listening. Can you describe what you did and why it was erroneous in hindsight? Yeah. So when I first got out of college, you know, I started reading a lot of investment books. I was like, I'm going to get this right. I knew my asset allocation. I really, I obsessed over it, kind of. I was like, oh, do I need to have 10% in bonds or 5% or 15? Maybe I'm not taking enough risk. All these concepts that you read about in theory and now you're going to seeing it play out. Now you actually have money on the line, right, versus just reading about it in college, right? So started earning just a little bit of money, you know, started saving and all that. And I spent so much time. I had spreadsheets. I had net worth projections, all these crazy things I had. And I didn't realize, I was spending all this time on this thing,
2:03.8	which was kind of cool in its own. I had spreadsheets, I had net worth projections, all these crazy things I had. And I didn't realize,
2:02.1	like spending all this time on this thing, which was kind of cool in its own right, but like at the same time, I was going out my friends in San Francisco and just partying all night. And I'd easily spend $100. And so like, let's say, for example, when I first started, like after, you know, maybe a month or a couple months I had probably $1,000 in my 401K, right?
2:19.1	Let's say I could get a 10% return on that 401K, right? So in a year, I could probably earn about $100, right, investment returns, assuming I just kept in a thousand. So in one year's investment returns, I was blowing in one night, like, with my friend, just going out, like just regularly. And so what I realized, I only, I didn't realize it then. I didn't realize much later, probably five, six years later, like, why was I obsessing over my investment so much when like what I really should have been focusing on was like either my spending or like, how could I raise my income? How could I improve my career? Things like that. And so when I say I made a mistake, I don't think I made like a major flaw,
2:51.3	but I could have been more optimal. I could have said, you know what? It doesn't really matter what
	...

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