Learn About Interest? How... Interesting.

Interest is something that will always be a variable in life. Whether it is through loans, investing, or even savings. But why do they happen? What do you need to consider about if it is working against you and how can you get it to work for you?

We want to address some of these things and hopefully it will help build some options for things that you can invest in personally and work out for your goals.

Transcript

Chris Holling: 0:00

gambling addiction hotlines would do so much better if every 10th caller was a winner. Woulnd't that be a terrible system? Did I win? No, click. And who is that the attorney general or whatever gets involved? And we we have reports that you're, you're supposed to be helping with gambling addictions, and you're actually enabling them. Is this? Is this true?

Sean Cooper: 0:36

Yeah. But look how much better our core call volumes are.

Chris Holling: 0:40

It went up 400%. overnight. Do you want to try?

Sean Cooper: 0:46

Do you want to try?

Chris Holling: 0:49

You too could get a $10 gift card to Chili's. Okay. Whatever. Let's just start. How about lets just start?

Sean Cooper: 1:05

Maybe we should introduce yourself.

Chris Holling: 1:07

Okay. Welcome to the truth about investing. Back to Basics. My name is Chris Holling.

Sean Cooper: 1:33

And I'm Sean Cooper.

Chris Holling: 1:36

Today, on this episode, we're going to talk about interest. And we will, we will talk about interest with such interest that

Sean Cooper: 1:48

I knew you were going bring that up

Chris Holling: 1:50

be interested. Wait, what

Sean Cooper: 1:52

I knew you were going to like, play on that.

Chris Holling: 1:57

I just I mean,

Sean Cooper: 1:58

you had to,

Chris Holling: 1:59

if you should be one thing, you should be consistent.

Sean Cooper: 2:01

There you go.

Chris Holling: 2:03

Well, okay. Um, I mean, do i do i babble about what what interest is? To me? What what interest is

Sean Cooper: 2:13

go for it.

Chris Holling: 2:14

What? Okay, let's see, let's find out. Interest is generally something that is accrued, or something that is placed when involving a loan of some sort is probably the most common way. When you are loaning out money and you are paying it back, you're paying back at an interest rate. And that is, in a way for, for whoever loaned out the money, the incentive for them to say, Yeah, please borrow my money. And you can use the money for whatever you choose, and then paying it back at that higher rate might be a good choice for you. And that interest can go at different levels, different variables, some are a fixed rate, which means that you have an agreement that the interest stays on a solid rate, a solid percentage. And some of them are a variable rate, where it kind of ebbs and flows, usually with the market, but are ultimately written on paper. It's just whenever they feel like it. And so that can go up, they can go down, and they can go sideways, if you're not paying attention. And yeah, so that's been the truth about investing back to base. What do you what do you think like, that's, I mean, if somebody says interest to me, those are the things that hit my brain.

Sean Cooper: 3:43

Well, that's fair. Yeah.

Chris Holling: 3:45

Okay.

Sean Cooper: 3:46

Your interest is just the additional funds paid for the privilege of borrowing money. And it's paid for two reasons. Number one, the person lending The money is giving up the opportunity to spend it now. So there's the the time value of money, that giving giving up that opportunity, so the opportunity cost, if you will, and then there's the risk factor the risk that somebody will not pay it back. So that's what the interest is, it's compensating for both of those things, whether it's interest on debt or interest on equity. Now, interest on equity works quite a bit different. It's not guaranteed, or that would be the primary difference between the two. But yeah, it doesn't matter whether you're borrowing the funds or lending the funds. There is going to be interest involved, you know, unless we're talking about between family members, and there might not be interest involved. But you know, that's a different story. For the most part, we're talking about interest and, you know, most people think of it in terms of like their credit card or borrowing for their mortgage, something along those lines. And that's us. Being on the receiving end of paying the the interest, we're receiving the funds, we're borrowing the funds, we're paying the interest for the privilege of borrowing the funds for spending now as opposed to spending later. And for them taking on that risk. But there's also interest that you can accrue as an investor by lending company funds by lending. I get most time it's going to be a company, but oftentimes, it's ultimately lending to individuals as well. So for example, when you deposit money into a bank, they are turning around and lending those funds out to individuals and companies, and things of that nature. That's why your your money market or your CD or certificate of deposit earns interest, or you buy bonds from a company or a government entity, you're lending them funds, and they're gonna pay you interest. As with equity, it's a little bit different. So stocks, you're you're not necessarily it's not exactly a lender borrower relationship, you are, in fact giving them funds. But you're you're giving them funds for ownership for actual interest in the company, as opposed to being a third party that's just lending in that scenario. So the interest that you accrue is more based on the success of the company and whether or not the company grows, and therefore increases the value of your ownership and or pays out dividends to you, that would be the interest that you're accruing for giving them those funds in exchange for ownership for interest. So a little bit

Chris Holling: 6:45

all makes sense

Sean Cooper: 6:46

in those regards. Yeah,

Chris Holling: 6:48

yeah, I mean, that makes sense. And, and, you know, speaking of, for, for it, as an investing perspective, that's, that's something that a route that different types of investors might go down into, when it gets more into the becoming a lender and not so much utilizing lending anymore. I know, that's pretty common in the real estate investing world, where they will start out as utilizing loans or utilizing whatever capital they have, and purchasing and flipping or buy and hold or, or whatever process that they like to do. But then towards the end, when they have a large profile, and either they want to step back from it, or they're just looking to have a different process or maybe add to their their process, then they might become a lender and have somebody that goes, You know, I, I've been flipping houses for X amount of years, and I understand the system. So now I'm going to loan money to other flippers that want to use this money to do just that. And then that way they use their expertise to figure out whether or not it's a good deal if they're going to get their money back in interest. If they think it's a good purchase, or or that sort of so investing wise, it's not uncommon to veer into the loan lending lending world is the term I was gonna say, loan officer, but that sounds far too, like official. But yeah, the the lending world,

Sean Cooper: 8:19

yeah, or you'll see like a successful business person, they started their own business, obviously, they borrowed funds, in most cases to do that. They've made their business successful. And maybe they are a serial entrepreneur, they do it over and over again. But maybe they just take the funds that they their excess funds that they've accumulated, and they invest in other entrepreneurs, other people starting their businesses, they'll, you know, I'll take 10% stake in your business in exchange for this money that you can use to actually get it going. Or maybe it's a 40% stake, whatever it is, depending on the the size of the investment, or they invested in the market. And that's the same thing. When you're buying stocks, you're still buying into a company and you're you know, it all falls under the same guise. So

Chris Holling: 9:05

yeah, that makes sense. Well, and because I'm not sure how regulation stuff works in this podcast, I'll just stay somewhat cryptic. I've I have recently invested in one of those types of things where it's a friend of mine that is getting off the ground that I might have told you about actually.

Sean Cooper: 9:32

Okay,

Chris Holling: 9:32

that is doing live streaming yoga studio yoga, fitness. And

Sean Cooper: 9:38

oh, yeah,

Chris Holling: 9:39

a brand type thing.

Sean Cooper: 9:41

You've become a venture capitalist. Chris

Chris Holling: 9:43

I have

Sean Cooper: 9:45

Look at, you.

Chris Holling: 9:46

I'm branching out. Yeah. And so I, I had a similar conversation with him that I did with you where he's like, Hey, I'm doing this thing. I'm like, that's great. These things look awful. He said what oh, We should make them look less awful. I said, You're right, you should try these things, I don't know how to do these things, you should do those things. Oh, okay. And, and so we've, we've been working on that where my buy in. And that's what made me think of this my buy in was to purchase higher end recording equipment so that the sound quality is higher and kind of like we did before we started this podcast, we wanted to make sure that we had good recording equipment, both him and I,

Sean Cooper: 10:30

right.

Chris Holling: 10:31

And this this is some actual, that's where the thought stemmed from is that I feel like people are immediately turned off by poor audio quality, because they, they just think that people aren't taking it seriously, whether they are or not, I think that's just an inherent thought that people have. And so I wanted to get involved in that. And so we've been taking some time to improve his online presence a little bit. And we're, we just launched the website the other day, and we're going to implement the new audio recording equipment, hopefully in the next week or so and see how that carries over. And, you know, if if really, this, this is more on a personal note, you know, less less on the investing side, because this is about what you want to do with stuff that you invest in, I did make a purchase here, too, to make this happen, because it had to be good quality equipment. But my thought on all of this is very much either this will become marginally successful, which is, you know, at the very bottom, what we should be shooting for, where it is enough for him to be able to do what he wants to do. And enough for him to not have to go back to his full time job that he wasn't particularly enjoying. And if he's doing that, and he's doing what he loves, and I dropped a little bit of cash that I would like to invest in seeing somebody else reach that point, then that's still a good investment to me. And on the back end of that if he choose proves to be wildly wildly successful, which I really think he has the qualities to be able to do so then hey, let's make some money is is really what it boils down to. But I'm I'm pretty pleased with that either way, but now that I have some skin in the game that kind of make sure that that I am invested in it personally myself and wanting to see it succeed. And can I get some some deadlines on there just as he has because he had to do his own investing on certain pieces of equipment and getting the website started and then those things so yeah, that's, that's that's a way to invest using interest in ownership.

Sean Cooper: 12:54

Yeah.

Chris Holling: 12:54

Or in early stages. Very early stages. Go. Go make your money. God, I want to ask you about like getting dividends out as part of your interest. But that's that's a future episode. That's uh,

Sean Cooper: 13:11

are we talking about dividends later?

Chris Holling: 13:13

Yes. According to our big fancy. Yeah. Our Oh, shoot. What's the name of that? used to get them in school all the time?

Sean Cooper: 13:26

Yeah.

Chris Holling: 13:27

Oh, our there's some word for

Sean Cooper: 13:29

syllabus

Chris Holling: 13:30

doesn't matter. Yeah. According to our syllabus, we'll be doing dividends. Where do we do dividends? What? No, you know what you did? You did mention dividends. We I thought it was happening later this season. And upon my research, I was wrong. So let's, let's touch on dividends now. So if you're getting paid out as a form of interest in dividends, because you have invested in a company in some way, shape or form, then how does that work? Sean?

Sean Cooper: 14:05

So, I mean, yeah, like you said, it's just a form of interest that you're being paid in exchange for the funds that you have given the company. That's your way of being paid as an owner of the company or one of two ways rather, you know, the first is the appreciation of your ownership, but the second is the dividends. So, basically, the company has their gross revenue, then they have all of their expenses paying their executives, their employees, their you know, mid level management, the covering the company, or the buildings, the maintenance, everything so all their all their expenses or cost of goods sold. All of that comes out. Then they have their their profit. From the profit. They have a number of things that they can do with it. They can reinvest it in the company for growth purposes or new ventures. They can They can pay it out as dividends, or they can retain it for future prospects. So that would be retained earnings. So that option that we're talking about those, those three options, one would be to be dividends to pay the owners of the company for that ownership. And some companies will do it on a regular basis, it's just part of their their business, oftentimes, we're talking about large blue chip companies that have been in business a long time they pay out they strive for x percentage to be paid out on a quarterly basis typically is what dividends are paid out on. And normally, it's a fairly level dividend, it might be increasing slightly over time. To keep pace with inflation, others, you know, if they're just becoming profitable, they might pay out some sporadic dividends. But ultimately, it's to pay pay the owners in exchange for those funds that the company had access to. So

Chris Holling: 16:07

So that I'm understanding I'm sorry, go ahead.

Sean Cooper: 16:09

I was just gonna add that dividends, like we talked about in prior episodes are taxed differently. So from an investor standpoint, as opposed to paying taxes at your income tax bracket. Typically, dividends are the same as like long term capital gains, which is going to be 15%, unless you're in some of the higher tax brackets, in which case, you get hit with another, I think three point something percent, or you're at like 20. Need to look it up again, I think you can get back up to kind of the mid 20s. Ultimately, if you're in some of the higher tax brackets, but the reason that you're paying lower taxes on dividends is because the company has already paid taxes on it in many, many forms, but primarily corporate income tax. So it's basically a second tax, which is why it's taxed at a hopefully a lower rate, at least currently.

Chris Holling: 17:13

And when you're talking about being in that higher tax bracket, whatever that amount is that 3% or whatever that occurs, because of your income amount,

Sean Cooper: 17:25

Correct,

Chris Holling: 17:25

you're okay. So your income is set and your your income tax bracket is set. And then they look at whatever dividends or capital gains or anything that you gathered that year, and then that will determine the percentage on that. Right?

Sean Cooper: 17:41

Yeah, it's at least 15. But it can be higher.

Chris Holling: 17:46

Okay, so then so I understand that then dividends are paying out, essentially profit margins. So everything that the company has chosen to take money and put it back into whether it's its growth, or resupply, or how however, it goes back into the company, once it hits that limit, and they go, Oh, we we made $10 this year, then they determine how much of that $10 gets sent throughout the owners of the company, should they? Should they decide that that's that's what they want to do with the money?

Sean Cooper: 18:19

Exactly.

Chris Holling: 18:19

Understanding dividends to be cool,

Sean Cooper: 18:21

yes. Okay, so as as a form of interest, it's a definitely more challenging, less rigid form than you would see on debt interest. So like, if you lent a company money, or if you borrowed money, where it's normally a set percentage that you're paying, so, you know, maybe you're earning you, you buy a bond from a company. So you've you lend them money, and say it's 5%. So they're paying you a 5% coupon annually, or, more likely, it's probably going to be monthly or quarterly that you're, they're paying a person, a piece of that 5% out and then they they pay the full amount back typically at the end.

Chris Holling: 19:08

So years down the road, when I'm part of shark tank, then I need to sit there and make sure to to evaluate my amount that I'm purchasing into the company because that 30% ownership that I want in this company is the idea that at the end, whenever they do start to send out dividends amongst the company, because that's their project profit margin, then I'm looking at 30% of those profit margin dividends down the road whenever it grows to that point. Is that right? Is that what I'm understanding?

Sean Cooper: 19:44

Yeah, that are more likely I expect a lot of the Shark Tank, they're building up the company and then selling it and they're taking their profit from the increased value of the company itself. So they buy the company when it's worth 250,000 so 30% of You know, is 75,000. And then you know, they grow it. So it's worth 10 million or something. And then they sell it and now they are 30% is worth 3 million. So that's typically how they're there. They're not waiting for the company to get to a point of paying out dividends typically, in a lot of venture capitalist scenarios, dividends, you're more looking at like your Warren Buffett, he wants to buy into a company and hold it for the long term. And he's looking for a company that's going to not only grow in valuation, but also going to pay out some dividends over time as well.

Chris Holling: 20:43

So the these are more like, Shark Tank is like growth stages.

Sean Cooper: 20:49

Right? Yeah. That's the venture capitalist.

Chris Holling: 20:52

venture capitalist. I like that.

Sean Cooper: 20:54

Yeah.

Chris Holling: 20:56

Okay.

Sean Cooper: 20:57

Yeah,

Chris Holling: 20:58

that's cool. No, I, I feel like I kind of knew what a dividend was. But that actually clears it up pretty nicely for me, I think.

Sean Cooper: 21:04

Yeah.

Chris Holling: 21:06

Okay. So we've looked at interest, we look at interest, how things are affected on the receiving end, so to speak, where it's where it's us being involved in loans and paying interest and, and the reasons that those interests exist, and and why they are there and what risks are being taken and why why interest happens in the first place. And we talked about, very briefly, the fact that there is difference between fixed rate and variable Actually, I'll mention that quickly, because I feel like we've talked about it in different episodes. I'll actually, we talked about it in inflation. That's right, our last episode. Okay. Yeah. So just hitting on that, again, just know, just know, if you have a fixed rate, or if you have a variable rate when it comes to interest, because that can change and it can affect things and it may or may not flux with the market. But if you don't know and then you get hit with a big bill. You know, you don't be surprised because you have a variable rate.

Sean Cooper: 22:11

That's more common on mortgages, and things of that nature, then,

Chris Holling: 22:15

sure.

Sean Cooper: 22:17

Like your credit card, normally, as a stated rate, as opposed to a fixed rate as opposed to a variable rate. Your mortgages you're typically going to see is where you're more likely to see like a five one arm, which means you got five years at a fixed rate. And then every year thereafter, it can change based on interest rates at that time.

Chris Holling: 22:41

That sounds like a, like a wrestling guy. A The Five, one arm.

Sean Cooper: 22:49

You should

Chris Holling: 22:49

Oh, he's getting the chair.

Sean Cooper: 22:50

You should create a character. persona, he's the he's the banker.

Chris Holling: 23:03

Oh, he's gonna, look at the dividends coming out of that guy. Oh, God.

Sean Cooper: 23:07

He's bringing out the coin bag.

Chris Holling: 23:15

Dumbbest wrestling persona ever

Sean Cooper: 23:23

Yeah, okay. But anyway,

Chris Holling: 23:25

right.

Sean Cooper: 23:26

Why? I feel like we should talk about why interest is so important.

Chris Holling: 23:31

Yes. Wow. Yeah, maybe we should have started with that. Yeah. what

Sean Cooper: 23:35

no we're just gonna bore them with interest in what it is. And there'll be like, I don't I don't care. Why do I care?

Chris Holling: 23:41

Yeah, I might I might even put this at the beginning. Let's Let's find out.

Sean Cooper: 23:44

Okay,

Chris Holling: 23:45

so why why do we care about what interest is? I get it?

Sean Cooper: 23:51

Yeah. So we've been talking about it from two standpoints. One the the the borrower and the lender, so we'll keep it in those terms. First off as a borrower, if you have a credit card, say that has a 24% interest rate. That means every dollar that you let stay on there that you don't pay off on a monthly basis, is costing you 24 cents annually. Actually, it's it's more than that, because they normally have daily compounding after the 30 day window or whatever. So it actually ends up being the APR annual percentage rate ends up being higher than whatever the stated rate is. But you get the idea. The point is, it's it's really expensive

Chris Holling: 24:39

That's a lot,

Sean Cooper: 24:40

yeah, credit card interest can be really expensive. The other thing is, if you have for example, a late payment, say you missed a bill, it was 100 bucks. You missed it by a few days and it cost you 30 bucks.

Chris Holling: 24:54

Are you making fun of me?

Sean Cooper: 24:55

Yeah, I am

Chris Holling: 24:55

Because I admited to you that.

Sean Cooper: 24:56

Yes,

Chris Holling: 24:56

I missed a payment.

Sean Cooper: 24:57

Yep,

Chris Holling: 24:58

this last month. I just you know, it Sometimes, we can't all be superheroes Sean,

Sean Cooper: 25:03

No, but that's why we will learn from it. And that's why we're letting everybody else learn from you, Chris.

Chris Holling: 25:07

Yes, yes. Because I don't know if I just clipped that from earlier, but I, I'm pretty good about paying it. My full credit card every couple weeks, and then life happened. And I saw something shiny, I don't know. And I missed a payment. And they hit me with 30 bucks. And I was but hurt.

Sean Cooper: 25:27

Yep.

Chris Holling: 25:28

Okay.

Sean Cooper: 25:28

And my point is,

Chris Holling: 25:29

On the same page

Sean Cooper: 25:30

If, that was only like 100 bucks. So you missed$100 payment, and they charged a$30, late fee. 30 bucks doesn't sound like much. But from a percentage standpoint, that's 30%. Yeah, your odds of earning that by lending to someone is slim to none. The market earns that every now and then. Absolutely. But it's not guaranteed. And it's not frequent. So it doesn't sound like much, but from a percentage standpoint, as a percentage of what you actually owed. That was a lot. That was a lot.

Chris Holling: 26:06

Yeah, totally agree.

Sean Cooper: 26:08

From the lender standpoint where and this actually applies to the borrower as well. But typically, you hear from an investor standpoint, so the lender standpoint, if you will. And that's the concept of compound interest. And how powerful compound interest is because most people, you know, you think about interest, you're looking at simple interest. So you invest 100 bucks, you earn 10%, that's $10. Okay.

Chris Holling: 26:35

Yes, that that I checking on the math? That is correct,

Sean Cooper: 26:42

right. So if you look at simple interest, that same $100, you just let it sit there for 25 years, and it earns$10 every single year, that's what simple interest is, you're just earning interest on the invested amount. At the end of that 25 years, your $100 is now 450. No $350, right? Because you earned 250 $10 increments times 25 250 plus your original 100. So you got 350 bucks, compound compound interest, you're earning interest on the interest. So after year one, you now have $110 in there, so that full $110 is earning 10% in this example. So the next year, you don't just earn $10, you actually earn $11. And so in one year, it made a difference of$1, which doesn't seem like a lot. But in our 25 year example, instead of having $350, at the end of 25 years, you have$1,083.47.

Chris Holling: 27:43

Wow.

Sean Cooper: 27:44

Yeah, it's a huge difference. That is interest on interest. That's the power of compound interest. And that's why we talk about investing, because investing is the ability to grow your assets without having to necessarily put in a ton of extra work in the process. I mean, it depends on how you do the investing, of course. But, you know, conceptually, that compound interest does not require extra work on your part is the idea. And it can make a significant difference, especially when you have longer investment timeframes. That compounding effect is more and more powerful. The longer we're looking, the longer your timeframe. So the earlier you can start investing, the better the more that compounding can work for you. Again, it does impact to the borrower as well, that compounding effect has a very opposite impact if you are the one borrowing the money.

Chris Holling: 28:53

Right? Run, run that by me again.

Sean Cooper: 28:56

Okay, so if I have a if I've borrowed $100 In this example,

Chris Holling: 29:05

yes,

Sean Cooper: 29:06

instead of paying it back, I just let it sit and accrue interest at 10%. That compounding is working against me.

Chris Holling: 29:16

Right? That makes sense,

Sean Cooper: 29:18

because the amount I owe is growing faster and faster.

Chris Holling: 29:24

Right, right, right, right.

Sean Cooper: 29:26

Yeah. Now technically speaking, as a borrower, typically the lender is going to require certain payments either. You know, at a minimum interest only, you might sometimes see in which case you're paying off the interest, but you're not paying off the principal at all. So you're just paying that $10 over and over and over again and not necessarily making any ground. So it's not compounding on itself. But hypothetically, if you didn't pay it at all, then it could compound on itself and become that much worse and basically spiral out of control as it were.

Chris Holling: 29:58

Well, and that's that's why However many episodes ago when I was talking about how I thought I knew about money, and I didn't know, I was just making minimum payments, like,

Sean Cooper: 30:06

Oh, right.

Chris Holling: 30:07

Yeah, that's a good explanation of, you know, not making any ground. Absolutely.

Sean Cooper: 30:12

Right.

Chris Holling: 30:12

I liked that. I liked that little like, Oh, yeah, you you did make those choices that I didn't make those choices. I heard that. It must have been must have been hard making those choices. I can't imagine myself even having that thought process.

Sean Cooper: 30:30

No, that's a good No, that's a good point, though, you should definitely look at your credit card statements, look at the minimum payments. And then it also I believe, is supposed to show how much you would pay if you only made the minimum payments, how long it would take and how much you would pay. So you know, you you owe X amount. But if you only made the minimum payments, you would end up paying this amount over this period. And look at how much more that amount is. And that is the compounding of interest working against you.

Chris Holling: 31:00

And it's just kind of good to have that knowledge as well, because the that's something that comes up even on the fixed rate side of things, where something I didn't know, it's I guess it's not a huge deal to me, but I just didn't know this is that when you it's typically with auto loans that I've seen this, it has a fixed rate interest. And you you sign for four years, six years, whatever, whatever the amount of time is for the auto loan. But I've learned that because of the fixed rate and just the way that they're built, that they they don't have this ability, how do I put this, if you pay it off sooner, you're still paying the same amount in interest, because that's what's in the contract. So in order to pay it off, you will still be paying off X amount of money. So there's there's always going to be an amount that says if you want to pay this off today, it will be X amount of money. And it will be more than what you see on just your overall first step loan. If that makes sense.

Sean Cooper: 32:01

It depends on the loan. But yes,

Chris Holling: 32:02

sure. Yeah, sure. And so that's, that's just something that I was not aware of, that happens in a fixed rate loan of some sort,

Sean Cooper: 32:10

some

Chris Holling: 32:11

and they say, okay, you know, some fixed rates, if you sign here, then you will owe us that interest. And ultimately, it's kind of a pay it back whenever now the reason that was important for me to learn about was I, we did an auto loan this this last year, and I had all these different reasons for why I did it. And I actually I think we talked about it one day, but I got a good rate for it. And ultimately, when I learned that, whether I paid it off in a year, or if I paid it off in six years, it was going to be the same amount of interest. So then I said, Okay, well then let's just do it for six years, because I know I'm going to pay it off. And I'm not too concerned about that, which is why I thought about doing it within a year. But when I found out that the interest is going to be the same no matter what, and I got a good rate for it, then I just stretched it out. And that was that was my choice.

Sean Cooper: 32:59

No that's it. I mean, if if you're going to pay the same interest regardless, then I would say stretching it out is probably your better option, because then you're at least using inflation against them and holding on to the money and using it. You know,

Chris Holling: 33:11

that was the goal. Yeah. Because I that's that's what it was. It was a they, they said oh, well, Mrs. Mr. Holling, you're approved for 3.25%. And I said, Oh, 3.25. That's, that's interesting. They said, Yeah. Can you go any lower? I guess I guess I would have to talk to to the manager about that much. Well, you should probably do. That sounds great. If they said no, I still would have done the 3.25. But they they call me back they're like three 3% will be just fine. Done. And it's gonna cost me the same if I paid off in a year finally paid off in six years. Yeah, I believe so. Alright, cool. Six years, let's do this. And that's, that's why that happened. But I wouldn't have had the knowledge to do that if I wasn't aware of that. So just just take the time read into read into what what it is if it was a compounding interest deal, then six years would have been a terrible choice. Right.

Sean Cooper: 34:11

Yeah. Or if it was a situation where it didn't have that that interest clause in it and repaying it early would have avoided some of the interest that could have changed that decision making process as well, obviously. So yeah.

Chris Holling: 34:31

What else are we missing? Is there anything else is that is that interested? We just did we just explain interest like interest in a box?

Sean Cooper: 34:39

I'm hoping I'm hoping we have satiated everyone's interest in interest.

Chris Holling: 34:46

I found it quite fascinating. You thought I was gonna say interesting. Didn't you? No I think that's, I think that's a good wrap up. And, you know, I don't know. I think that's pretty cut and dry. We're What else? You know what you were you were right, Sean, I didn't want to admit it. But you were right. This last episode, about a week later, Sean told me Hey, what? Why didn't we tell them what we're gonna do this season? Because they don't need to know. He said, No, we should, we should tell them something. So he's right, this season, season three, because we're you know, already in number two, here, we are getting involved in the actual investing process, which is why inflation was important, because then we are adjusting things you have to consider when you are getting involved in investing and interest because now we're talking about if you are making a a purchase into the long haul, whether it is involved in dividends or getting involved as a venture capitalist and starting to build some business and you're starting to look at interest on your behalf and not just on a receiving end for loans, then then that's some of the things to understand for things that you're looking for. As you start to invest coming up throughout the rest of this season, then then we are going to continue to touch on the actual act of of investing in different ways that you can invest and things to consider as you are investing. And that's that's what season three is about. It's kind of kind of the meat of what we were looking at. And then we do have some plans for some future seasons to get into some more, more advanced stuff, but it's just one step at a time, which is why we're doing okay, you know, you think we're doing one step at a time for you guys. It's for me, because I need to be able to track this. It's it is baby steps for me. Is there? Is there anything else that you can think of that we got?

Sean Cooper: 36:51

Are we given them a specific for Next Episode or no?

Chris Holling: 36:55

Well, I'll tell you what, yes, because it's gonna be me babbling anyway. This next episode that we have coming up is we're going to be talking about homes, talking about liquid assets, lateral moves in homes, kind of purchasing within the market, because the fact is, is that I feel like it's less common to find somebody that will actually rent their whole life, there's usually somebody that makes a purchase of some sort for a home, and has has different reasons for it. And we want to talk about purchasing and homes and kind of how that can or can't be applied to your investing process or just taking care of yourself. And just kind of some, some philosophy on on purchasing a home. And if is, is purchasing a home the best investment that you can make, like you've heard before, or is it not a great investment at all? Is that is that a good? Is that a good trailer voice?

Sean Cooper: 38:00

Yeah, that's fine. Yeah, I would just say that I would classify as an illiquid investment. But yeah,

Chris Holling: 38:06

illiquid?

Sean Cooper: 38:07

illiquid, not too liquid.

Chris Holling: 38:10

illiquid. Sounds like sick liquid. We should stop.

Sean Cooper: 38:16

We should definitely stop.

Chris Holling: 38:18

Thank you for joining us on another episode of the truth about investing. Back to Basics. My name is Chris Holling.

Sean Cooper: 38:25

And I'm Sean Cooper.

Chris Holling: 38:26

And we will catch you on the next episode. See that.

Sean Cooper: 38:33

We should keep going and then your

Chris Holling: 38:46

podcast disclaimer disclaimer. The disclaimer following this disclaimer is the disclaimer that is required for this podcast to be up and running and fully functioning and moving forward. This is going to be the same disclaimer that you will hear in each one of our episodes. We hope you enjoy it just as much as we enjoyed making it.

Sean Cooper: 39:10

All content on this podcast and accompanying transcript is for information purposes only opinions expressed herein by Sean Cooper are solely those of Fit financial consulting LLC unless otherwise specifically cited. Chris Holling is not affiliated with Fit financial consulting LLC nor do the views expressed by Chris Holling represent the views of Fit financial consulting LLC. This podcast is intended to be used in its entirety. Any other use beyond its author's intended distribution or copying of the contents of this podcast is strictly prohibited. Nothing in this podcast is intended as legal accounting or tax advice and is for informational purposes only. All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. This podcast may reference links to websites for the convenience of our users, our firm has no control over the accuracy or content of these other websites. advisory services are offered through Fit financial consulting LLC an investment advisor firm registered in the states of Washington and Colorado. The presence of this podcast on the internet shall not be directly or indirectly interpreted as a solicitation of investment advisory services to persons of another jurisdiction unless otherwise permitted by statute follow up or individualized responses to consumers in a particular state by our firm in the rendering of personalized investment advice for compensation shall not be made without our first complying with jurisdiction requirements or pursuant an applicable state exemption for information concerning the status or disciplinary history of a broker dealer investment advisor or their representatives the consumer should contact their state securities administrator

Chris Holling: 40:50

Oh, I don't know if I've told you this or not but this this dad jokes book that I like to poke through

Sean Cooper: 40:57

yeah

Chris Holling: 40:57

has the same mustache I have

Sean Cooper: 41:00

of course it does

Chris Holling: 41:01

maybe that's that's what

Sean Cooper: 41:02

Maybe that's why they gave it to you.

Chris Holling: 41:07

How do you make a swiss roll?

Sean Cooper: 41:10

I don't no,

Chris Holling: 41:11

you simply push him over justice is a dish best served cold because it was served warm. It would be just water just if you read it justice is spelled with ice.

Sean Cooper: 41:36

Okay, I was like I

Chris Holling: 41:42

just just ice is a dish best served cold

Sean Cooper: 41:45

Yes.

Chris Holling: 41:46

Yeah, Otherwise it's just water.

Sean Cooper: 41:48

I was like oh, this is way too deep for me or I'm missing something else because

Chris Holling: 41:54

yeah, I you know I'm many things but unless prompted deep is not one of them. How am I gonna word this I there's got to be a creative way to put this in here. It's like I want to have like a cut us laughing. Oh. Oh. Yes. So tell us about dividends. There Sean.

Sean Cooper: 42:30

You do like it corny