Episode Transcript
Daniel Wrenne: Another problem with the shiny object thing is I think if you're going about a thing strictly for financial reasons, like all you care about is making money as max much money as possible, that’s a lot of times not the best approach to take.
Welcome to Finance for Physicians, the show where we help physicians like you use money as a tool to live a great life. I'm your host, Daniel Wrenne, and I've spent the last decade advising physicians on their personal finances with the mission to help them understand that taking control of their finances now means creating a future where they can practice medicine where, when, and how long they want to.
Daniel Wrenne: Jackie, how's it going?
Jackie Griggs: Hey, Daniel. Doing well. How are you?
Daniel Wrenne: I'm doing good. I'm excited to talk again. We had Jackie on recently for the first time, and now we're back at it again and we have another exciting topic to talk about. It's a pretty common one. And so you remember there was the craze not long ago with… there was a tech—not a tech company—a little stock.
There was a video game company that everybody got really hyped up about. And it was Reddit. There was a Reddit forum where the people were all jacked up about the stock and they were gonna short it or something and do the hedge fund guy or do the big Wall Street guys do it.
Jackie Griggs: Right, we’re gonna do like a short squeeze of it.
Daniel Wrenne: Yeah, and it worked.
Jackie Griggs: For some people.
Daniel Wrenne: For some people, but not for the average person probably. So when was that ,that happened?
Jackie Griggs: Oh, a couple years ago.
Daniel Wrenne: Couple years ago. Anyway, that's a good example of a shiny object kind of a thing.
So that's what we were gonna talk about is shiny objects that come up and how to know that it's a shiny object maybe and how to navigate those. And because a lot of people—we work with a lot of families and the way that we would hear from it from them is it like, “I had a buddy that's buying this GameStop thing. What do you think?”
It wasn't like, “I've been following this Reddit forum for years and have read all the posts and like—“
Jackie Griggs: I think this is a really solid found financial idea. Yeah.
Daniel Wrenne: No. It was like a buddy. And I think I'm gonna do this thing.
Or it was like at the end of the meeting it was like, “Oh, by the way, there was one more thing.”
Jackie Griggs: Always gotta sneak that in, right? When the meeting's almost done.
Daniel Wrenne: “I got some GameStop.” And a few of them did well, but the problem was that kind of thing, you just have to be careful with, I guess we could say.
Anyway, we're gonna talk about those shiny objects and ideally help you navigate those better.
Jackie Griggs: Yeah, because I feel like it's one thing that is consistent across time for us as financial planners working with clients is there always is that shiny object in the financial world.
There's always that kind of buzzword that we start hearing from many different clients in many different parts of the country. And so there's some sort of common thread where that gets into the mainstream and becomes a buzzword. Maybe right now, AI recently has been a more of a buzzword on some of the financial news networks, things like that, where then we start to field more questions about whatever that buzzword is as people find out about it.
Daniel Wrenne: Yep. Or cryptocurrency.
Jackie Griggs: Yep. Yeah.
Daniel Wrenne: Or Dogecoin or what's another good example? What's your favorite shiny object? Passive income. That's another.
Jackie Griggs: Yeah, passive income I think has been a really big one in the past five years or so. Maybe more, maybe less depending on what type of circles people are in, but I would say that one also got especially hot in some of the physician circles.
Would you agree that they get a lot of appeal in some of the blogs and podcasters, other influencers in those spheres?
Daniel Wrenne: Yeah. For sure. And that one's kind of sneaky because it can be good, or some people do really well with it. So I guess it's not like the true definition of a shiny object and that it could be managed really well and it could be a very responsible decision to make. But when people go about it the wrong way is when it becomes the shiny object.
Jackie Griggs: And I think that can be part of what the shiny object is that we don't want to look at any one of these buzzword topics as the keys to my sound, financial independence, retirement, or of replacing a whole financial plan with going all in on whatever that is.
But some of them do still have a place in your financial plan and in whatever that looks like for you. It's just that with any of these shiny object buzzwords, we need to approach with caution. I think we need to have a little bit of scrutiny about where the information's coming from, what the pros and cons and risks are, and how we can factor that into a financial plan without becoming overweight in that, without causing any undue risk to how solid the plan is.
But it's not that any one of these are bad or need to be avoided at all costs, but more just that I think we can go—
Daniel Wrenne: Well, some of them are bad, some of them are bad.
Jackie Griggs: You know what? To each their own.
Daniel Wrenne: Yeah. Some of them are schemes.
Jackie Griggs: I will not be making any judgements on that.
Daniel Wrenne: Yeah. But the ones we've thrown out so far, we'll just say that the ones we've thrown out so far as examples, they're not necessarily bad in themselves.
Jackie Griggs: Sure. Yeah. Okay. So then I'll agree with you. Don't have any Ponzi schemes.
Daniel Wrenne: Ponzi schemes, because we have definitely worked with families that have been taken advantage of through Ponzi schemes. Like legit because of the whole shiny object thing.
Jackie Griggs: Yeah. And it often is what we talked about earlier, like, “Oh, I heard about this from my friend, or from a friend of a friend who invested in this thing and they had these spectacular returns and now I'm going to do the same because I would love to have that happen to me.”
Daniel Wrenne: “I like to earn money when I sleep.”
Jackie Griggs: Right. And so sometimes those things that sound too good to be true, it's because they are too good to be true, unfortunately.
Daniel Wrenne: Right. So that's one little red flag of a potential shiny object; sounds a little too good to be true. Another thing, you've hit on this a little bit is dig really digging into the purpose behind it. Why are you wanting to do it in the first place? And what type of process did you take to come about to get to the point of making that decision? And for example, the answer of, because my buddy's doing it is a bad answer.
Jackie Griggs: Right. Or because the buddy or whoever else, you're like, “Whoa, I want them to think that I look a certain way or that whatever I may be purchasing here or investing in, or whatever, that it portrays some sort of image of who I am to the world.” Like you're keeping up with the Joneses sometimes.
Daniel Wrenne: Yeah. Comparison is the thief of joy. And so that's always a bad starting point for the—because I think a lot of those shiny objects, the fact that they get so hyped up, that's how they do it, is that people get that component going and they're like, “I gotta do it. 'cause my buddy's doing it and my neighbor's doing it, and I wanna look good.”
Jackie Griggs: “Everyone else is getting rich off of NFTs. Why aren't I?”
Daniel Wrenne: FOMO.
Jackie Griggs: Yeah. Yep. Big FOMO aspect there. And I feel like that's something we try and focus on with our clients a lot is we want to build a life that is actually fulfilling and that actually is achieving what you value and what your principles are and not just amassing the biggest sum of money possible so that someday you die with a big number in the bank.
That's not really our goal. And so I feel like that why can really help drive a lot of these potential conversations.
Daniel Wrenne: Yeah. I think most people realize that money in itself doesn't make them happy. It takes a while sometimes for—some people don't realize it till like they're at the very end.
Yeah. But I think eventually everybody realizes money in itself for sure doesn't make you happy. In some cases, it makes it worse. Especially if you become consumed by the money itself ‘cause money in itself is just to store value. It's like neutral. It doesn't necessarily add or subtract.
It's more about the other stuff that's important. So you gotta remember that when you're trying to—so another problem with the shiny object thing is, I think if you're going about a thing strictly for financial reasons, like if all you care about is making money as max much money as possible, that's a lot of times not the best approach to take, especially for something like passive income, I think of with that example, it's common that it's like I want to do it to make money, but usually, after a few months of being involved in that kind of a thing or scheme or whatever you wanna call it, you realize that there's other stuff that comes with it and a risk up and down.
It's stressful. And time, you gotta spend time on it and read the reports or go clean the house if it's real estate.
Jackie Griggs: Yeah. And I think real estate often is one of the more common avenues for that that we see among clients.
Daniel Wrenne: Yep. So you gotta think about it from the overall standpoint.
I mean making money is good and all, but it definitely doesn't bring happiness. And in some cases, that makes life worse. I'll give you just the example of the real estate, 'cause we talked about it a few times. If you're a super busy physician and you're burned out at work and you're looking for alternatives, passive income sounds pretty sweet.
'Cause it's earn money while I sleep. And it's a better return than the stock market. And I wanted to diversify and I'd rather earn higher returns. So let's do this real estate thing. You do it, you realize. It's a lot more than just my earn when I sleep. There's actually an obligation to it and the obligation you don't have time.
Because you're already burned out and maxed out at work, right? There's no time available to go do the thing, and so it actually makes life worse.
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The goal of our podcast is to empower you to make better financial decisions, but sometimes the best financial decision you can make is to work with someone who understands your financial goals and has the expertise to keep you on track to reach them. That's where Wrenne Financial Planning comes in. We are a full-service financial planning firm that works with over 400 physicians and their families across the country.
We charge a transparent monthly flat fee for our services and offer virtual meetings you can take from anywhere. Best of all, you'll get to work with a team that specializes in working with physician families. So whether you're starting out and wondering how you'll balance your student loan payments and saving for a home, or you are an established physician trying to figure out how to pay for your kid's college and how much you need to save to reach financial freedom, we can help.
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Jackie Griggs: Yeah, I think I can speak for myself and my own clients. I've definitely had some that have wanted to go that route with, say, rental property, for example, for that passive income to feel like they're less reliant on their own human capital to generate an income.
But I have had some where they've then found the opposite, that it was more headache than it was worth. It ended up being a net financial negative once they factored in all of the expenses of purchasing real estate and then being the one who's responsible as the landlord to fix, maintain, things like that.
There's a downtime if you don't have a tenant throughout anywhere, that expense isn't going to go away. And then on top of that, you've added a lot of leverage to your financial picture, which, the dual coin there. You can maximize or increase your return through leverage, but you can also significantly increase your risk.
And so that's just something we need to factor in and make sure that works. And as you mentioned, not even on the financial side, but just when we work with a lot of busy families, it's seen as, “Oh, maybe if I do this I can work less or rely less on earning an income in a traditional way.”
But as you mentioned, the time factor, we often see that we work with a lot of very busy people and adding in some of these things like trying to achieve passive income through rental properties or some other means often adds more of a burden than it's really worth for some people.
Daniel Wrenne: Yeah. I've had more than just a few families that have tried real estate come back and tell me, “I wouldn't do it for all the money in the world anymore.” I'm like, that's quite telling, that's very interesting to hear that. But what we're trying to say is think about that on the front end.
Think about not just the money component. Think about the other baggage that comes with it 'cause there's always gonna be something and you gotta think through the pros and cons. I think one other thing that I've seen with these shiny object kind of deals, even when they go really well, that also can bring its own set of baggage.
First of all, the fact that it's like being hyped up and is a shiny object in itself means that it's already become really popular.
And it's probably less likely to continue to be so popular in the future.
Jackie Griggs: Right.
Daniel Wrenne: That's hard to say. But that's definitely, if I had to guess, like the fact that it's, 'cause I was gonna use the example of crypto, the best time to buy crypto would be like 2010 or when it was starting or whatever. And no, it was, nobody knew about it then.
So now that it's hyped up, its value is much higher. But what happens though, even with all that, sometimes people hit it big with these shiny objects and so one risk of hitting it big is you start to think you're smarter than you are.
You're like, maybe it was me. I saw this.
Everybody does this. They tell the story back to themselves of the past. They're like, “That was pretty good research I did.” And you forget that you actually did no research whatsoever and did it 'cause somebody did it.
Jackie Griggs: It's like market timing with investing where you could have bought this thing or the example you used, you could have bought crypto way, way back.
And then you're like, “I'm really good at this. I'm great at market timing, I'm a genius.” But research across the board consistently shows that you will not be able to maintain that type of return there forever. It's not possible.
Daniel Wrenne: Yeah, it's definitely a stressful ride too. And the ups and downs and eventually that kind of thing caves and so I think maybe a good last point we can throw out there though, if you do you still feel that the shiny object makes sense… I don't know. Do people call it a shiny object after they decide to do it?
Jackie Griggs: I don't know.
Daniel Wrenne: I think that's probably people stop calling it a shiny, because shiny object has a negative connotation.
So it's let's say you've decided this shiny object is a legitimate thing, but it's still got a lot of risk to it, and we'll call it an alternative asset, so what is a reasonable way to go about doing it? Because, say we're talking about the crypto example, it's sell all your stocks and your retire retirement account and then buy the crypto?
That's probably an unreasonable way to do it, but what's a more reasonable approach once you've decided this is something you want to lease, play around with?
Jackie Griggs: If you're in a position to do I'd say ask your financial planner.
Daniel Wrenne: Yeah, there you go.
Jackie Griggs: I'm sure they'd be happy to help you put together a plan.
If you are not in such a position and you're doing this on your own, I would say, let's be very skeptical and cautious of anything that sounds too good to be true. Make sure we are doing our research before making any significant changes to what we have, how we invest, et cetera.
And then I would say that the next step being find a level that you are comfortable with. I would not want anyone to be in a position where they did what you were just talking about, Daniel, let's sell right everything in my 401k and let's take out the money and let's put it all in crypto or something where maybe I understand it, maybe I don't.
Maybe I'm going off the advice of a friend or my own research or something else, but not putting yourself in a situation where you're going to lose sleep over it. Really leaving, if this is something where I want it to be a part of my portfolio or my financial plan, making sure that it is a small enough component that I'm not taking on irreparable potential harm to my future or to what I need, then tTreating it more if this goes very well, it's a little cherry on top.
If this does not go well, it does not tank my plan, tank my stability, my ability to retire in the future. And so approaching that conversation from how much can I afford to risk here would be a good way to start.
Daniel Wrenne: Yeah. I think going in, assuming it's gonna go to nothing, and if you're okay with that, that's always a good starting point.
But then I would be like, if you really think it's gonna go to nothing, you probably ought to not do in the first place.
But I've made dumb investments, like I've bought into shiny objects, so everybody, gets falls for the temptation on occasion. So I think the biggest takeaway for me, if I think about my experience with it, is you'll make mistakes, but learn from them, or maybe don't forget the past too.
Jackie Griggs: Oh yeah.
Daniel Wrenne: Remember back to the times that you made mistakes and let that instruct your future or learn from, it's even better to learn from the mistakes of other people.
Jackie Griggs: Sure. Yeah, absolutely. And don't put your own portfolio at risk. Just find some cautionary tales out there and learn from those people's experiences to decide if you want to try and stomach that sort of a risk for yourself.
Daniel Wrenne: Yep. Awesome. Any parting thoughts on your end, Jackie?
Jackie Griggs: You know what? We've got a very passive income option. Dividends. You wanna really be passive? You wanna make money while you sleep? Let's get some dividends in our future.
Daniel Wrenne: Yeah, that's a good point. A lot of people don't realize they're already earning passive income. Yeah.
Jackie Griggs: Yeah. I think a lot of people view that as here's a thing, I have to go out and buy a property or buy something and spend a lot of money to do in order to earn passive income.
But we know a lot of people, I think among our clients who are very happy with the passive income they earn from their investments. And that's great too. To each their own.
Daniel Wrenne: And it's very secure and solid. And diversified and…
Jackie Griggs: Yep.
Daniel Wrenne: I had someone text me the other day a friend about stock, and I was like, “You probably already own the stock. 'cause it's like a stock that, I mean like a huge company that everybody would know.” Vanguard Total stock market owns that…
Jackie Griggs: Yeah.
Daniel Wrenne: So a lot of people don't realize that they already, like if you're a client of ours, you already own like thousands of stocks and real estate. So it's very broadly diversified already.
Jackie Griggs: And each of those asset classes are earning certain amounts of dividend as well. So you're already getting some passive there. Not to say that there isn't more out there that you could earn, but just be a little cautious about what parts of that are not passive on your part, whether the time, energy costs headache in order to try and earn that passive income.
Daniel Wrenne: Yep. Awesome. All right, good catching up with you, Jackie. Thanks for coming on again and we'll have to look forward to the next time.
Jackie Griggs: Yes, thanks for having me.
No guests or clients appearing on the podcast received any form of compensation for their appearance and obtained no other benefit from us. It should not be assumed that every client has had the same experience.
