Money 101: A Podcast For Young Adults

Mar 26, 2021 | Financial Planning, Investing

Financial literacy is lacking in this country. Unfortunately, it’s not getting taught in most of the schools. On this podcast, Karl Eggerss gives a money 101 lesson to young adults. If you have a child or grandchild, this is the podcast for them.

Hey. Good morning, everybody. Welcome to the podcast. This is Creating Richer Lives. My name is Karl Eggerss. We thank you for joining us. Our telephone number is (210) 526-0057, or just go to, that is our website. Again, we’ve put a lot of work into it over the last several months. So go check that out if you’ve never been there before, or if you haven’t been there in a while. It’s got a nice, fresh look to it. It’s got some new content. We’ve got a video on there. Easy ways to navigate, especially if you need something from us. It really shows our process. It shows who we work with. It’s got all the wonderful people at Covenant that are at the company and their roles and what they do. So go give that a look, and maybe it’s something to send to one of your friends who is in need of some financial advice or a second opinion on something, we’re here to help.

Well, for those of you that are new, the way the show works is we try to keep the show to maybe 30, 45 minutes, just depending on what’s going on. And we try to do a brief rundown of what happened on Wall Street involving your money, the important things we think that you need to know. Sometimes there’s nothing to talk about in that regard. And it’s very brief because frankly, a lot of it’s noise, right? You come back a few weeks later and everything you were worried about kind of resolved itself.

And so we’re not going to waste your time making stuff up. And we don’t do fear radio here or fear podcasting or fear TV. You get enough of that all over the place, and it’s usually meant to cause you to buy something. You noticed that? The world’s going to collapse, you should buy gold. The world’s going to collapse, you should buy an annuity, right? We don’t do that here. What we try to do is give you honest information the way we see it, it’s our opinion, but the way we see it. And we try to filter out some of the noise and bring you things that are important to you. And we’re excited, over the next few weeks, we occasionally have guests. I’ve got some good guests lined up that are going to really help you out and really be some interesting information and some angles and some things I’d like to know more about as well. So we’ll have more on that in the next few weeks. So look forward to that.

Today though is a show for your teenager. Or if you’re a grandparent, maybe you have a grandchild that’s a teenager. They don’t get the financial literacy and the finance 101 that they should be taught in school. I’ve tried to get it in some schools and it’s either we don’t have enough time. Sometimes I go and speak to some students. I spoke to about 30 students last weekend in somebody’s home to about 30 students and gave them some of the information that I’m going to give you today. And what I’m going to do today is speak to the teenagers, not to you but to the teenagers.

So this is something you can share with them. And this isn’t everything, but it’s a little starter course. It’s things that people should be taught at the high school level before they go off to college, before they go off to start their career, whatever they’re going to do after high school, basic things. And what I’ve learned is a lot of parents don’t have the tools to teach them. They may tell them some things from time to time, but they don’t have the real tools. In fact, what’s unfortunately being taught in schools, and this is what I’ve learned, is there’s some economics which bores most people to sleep, or they’re teaching them how to trade stocks for a two-month period, right? The worst thing you could teach them. That’s what they’re doing with the students. And that’s what we want to try to avoid. So what I’m going to do is go over some of the things that I talked to these kids about the other night. And I hope that you find it useful. And again, I’m going to speak to them, so that’s the context I’m coming from here.

But before we do that, let’s do a quick recap of what we saw in the markets this week, another strong week. Most of it came on Friday, kind of back and forth. But the volatility index is something that measures how much expected volatility we could see in the next few weeks. And what we’re seeing right now is a new, we’ll call it post COVID low or COVID low. So we haven’t had this low of a reading going all the way back to about a year ago. And it kind of makes sense as things are improving, as the markets are improving, the economy is healing, the numbers of cases are going down, businesses are getting back online, even the ones that were in the hospitality area are doing better. So volatility is dropping and the stock market is going up. And what we saw this week on the Dow Jones was it finished very strongly, 450 points up on Friday. And the Nasdaq, which was down most of the day, turned around and had a very strong finish.

But really, when you look at the things that were working this week, it was things that would remind you that the economy is doing okay, right? Railroads, home builders, semiconductor stocks, right? Real estate, steel stocks, transportation stocks. Everything did pretty darn well this week. Now, the things that were kind of on the downside, we did see a drop in biotech. And you have to be careful, some of these pharmaceutical stocks or biotech indices, they may contain large holdings in one company. We know the retail ETF holds a big chunk in GameStop. So however that goes, the retail ETF tends to move like that and they may rebalance it from time to time. But we saw weakness in the metals like the gold miners and this silver stocks and things of that nature. But for the most part, and by the way, the small caps underperformed this week. They had a good day on Friday, but they were down as well.

So not everything was up this week, but it was pretty broad-based for the most part, especially on Friday. There are very few things that were actually down on Friday. And there wasn’t much news other than, again, we’re continuing to see more and more vaccines rolled out. And so there is encouragement that the economy is continuing to improve. And we saw a lot of money continue to come into the stock market this week as we track some of the flows.

All right. Well, let’s jump right into really what I wanted to talk about today, and is pretty simple for you high schoolers. I’m gearing it towards high schoolers, but obviously, it could be a 20 something year old starting their career. It could be an advanced seventh grader, right? But for the most part, let’s talk to primarily high schoolers, early college. And really, I’m going to cover three basic things today, which the basics of saving, of investing, and debt. Okay? Now, again, if you’re an adult, if you’re somebody that’s 80 years old listening to this, you may still pick up some things that maybe you’re a little surprised about. And it has to do with more on the, let’s call it the debt side and some of these things and how compounding works. So let’s get right into it.


When I talked to some of these people, I tell them, “Look, here’s the thing you guys. If you’re 18 years old listening to this, then you’re about to go off to college. You have one huge advantage over your parents and grandparents. And that huge advantage is your age. Now, normally your age is a negative, right? I can’t wait till I’m 16. I can’t wait till I’m 18. I can’t wait till I’m 21. Right? There’s landmarks or times that feel great when you reach them. But if you’re 18, there’s a couple of things that happen. You can open your own brokerage account, right? Your own Roth IRA, your own individual brokerage account. You can do this on your own with your own saved money. And that oftentimes is what happens. Clients come to me and say, “My child has five, six, $7,000 saved. What can they do?” We even have a small investor program at Covenant for that, but they are okay to open it themselves and have a … they don’t have to have their parents on that particular account. So 18 is an interesting age, but the advantage you have is your age because of the fact of compounding, it is amazing if you get started early, the dramatic compounding that takes place.

And one of the charts that I showed everybody was somebody’s fictitious person named Jack that starts investing $200 a month, right? Not too much, $200 a month at age 25. Somebody named Jill that doesn’t start investing until 35 and somebody named Joey that doesn’t invest until 45, and they continue to invest $200 per month each of them until they’re age 65. So the one that got started early, obviously contributes more but ends up, and this is assumption by the way, this is from But the assumption is your investments make about 7% annual return. That’s what we’re using here. Got to use some number. So it’s mostly in stocks, right? And Jack, the one that invested $200 per month at age 25 ends up with over $500,000 by the time he’s 65 years old.

Now, Jill who, again, waited until age 35 ends up with about $250,000. So less than half of what Jack had, because she waited 10 years. Joey, who didn’t start saving until 45, he only has about $100,000 saved. Okay? They all contributed the same amount, it’s just they contributed longer. So it’s a dramatic compounding effect that happens. Now, what’s even more interesting. And this is something that some of you may have heard is if you started at 25 and stopped at age 35, even if you stop, somebody that invest the same amount starting at 35 all the way to age 65 doesn’t have as much money.

So listen to me guys, if you are 18 years old right now and you started investing $200 a month at age 18, even if you stopped in your late 20s, there’s a chance you’re going to have more money than somebody that starts in their 30s all the way until retirement. I’m not suggesting you stop, I’m pointing out the power of starting early, even if it’s $20 a month, $50 a month, whatever it is and let it sit in the compound. And invested accordingly, the compounding takes over and time is of the essence, and it makes a huge difference.

Now, the other thing that I see you guys do and as I see you high school kids and college kids go into Starbucks a lot, right? And not just Starbucks, any coffee place, and you spend five bucks a day, okay? Now, there was a book written on this. Think it was either the Automatic Millionaire or the Millionaire Next Door. So, one of the two books. And it was talking about the latte factor. And the idea is that if you just simply skipped that $5 cup of coffee, maybe it’s more than that when you get the grande frappaccino with extra whip and oat milk and all this other stuff, takes 10 minutes to order. But if you skip that $5 a day and you invested it 30 years later.

So you’re 48 years old, just the $5 a day. Again, assuming a 7% return per year, you’d have almost $200,000 50 years later, it’s almost over $800,000. And the idea is not necessarily to skip the coffee. That’s not a bad idea to do. Some of you can’t not have coffee, right? That’s how you function. But what if you were skipping other things, right? The things you’re buying on Amazon, the meals you’re going out to with your friends. Save something. Most of you can save something $5 a day, $10 a day, whatever it is. So little things do add up.


Now, why do we invest? What is the reason we invest? Primarily, it’s to get the things you want in life, your goals, right? It’s also to over time beat inflation. Now, what is inflation? Well, inflation is simply there’s more demand for something, supply and demand, right? You guys probably learned that in economics, but if you have more demand and less supply, the price tends to go up, right? Whether it’s your tennis shoes or even the coffee we talked about. If there’s more demand for it and less supply, it’s going to go up in price. That’s inflation. So over time, things cost more and more and more. And so one goal of investing is that your pile of money grows faster than inflation. So down the road, when you need it, it has outpaced all these things that you are buying throughout your life.

And what’s fascinating is that this is like, if you ever take a frog and put it in a boiling pot of water, and you bring the water up from room temperature to boiling, what happens? The frog doesn’t realize what’s happening and eventually just dies, right? The frog and the boiling pot of water, that is inflation in a nutshell. What happens is it creeps up on you. And there’s a slide that I showed the other night, and I had the cost of items in 1938 and then I had the cost of items in 2014. It’s a little dated, but a huge difference, right?

About 90 years or so of 80, 90 years of difference in price. And of course, as you would suspect, a new house in 1938, $3,900, right? A new house in 2014, $313,000. Gasoline was only 10 cents a gallon. In 2014, it was $3.38 per gallon. And on and on and on, we could talk about milk. We could talk about coffee and movies were 25 cents. Hear people say it used to be a quarter. And now it’s, what? $10 to get into the movies. So things do cost more, just takes time. And it’s important that your money continues at that pace. It has a big difference over time.

Now, here’s the thing about investing. You probably hear from your parents sometimes, maybe from friends, parents, that the stock market is gambling, it’s risky, and you should just keep your money in the bank. And we’re going to talk about that in a minute, but in the short term, we’re going to talk about long term because long-term returns for the stock market are fantastic. We don’t know over the next really I would say the next three months, six months, the stock market is kind of a coin toss over that timeframe. But as you go out, there’s never been a time from 1928 all the way until today, there’s never been a time over a 20 year period where the stock market has lost money. In other words, if your time horizon, when you put the dollars in is longer than 20 years, there’s never been a time in history going all the way back to 1920, before the great depression, mind you, that the stock market has lost money in a basket of stocks. 500 stocks called the Standard & Poor’s 500 ever. So again, you guys, being 18, you have plenty of 20 year periods left in you of investing. So the odds of success are extremely high. And over the long term, the stock market has made, depending on what you invested, it’s somewhere between let’s call it 8% to 10% per year. Now, there’s periods where it doesn’t make anything. There’s periods it loses money. But for you guys to add to it when it’s down knowing what the long term picture it looks like is a gift. It’s a gift. And in order, stocks tend to do the best, maybe real estate is up there, does pretty well over the long term as well. Then you start coming down to bonds, and then you start coming down to safer things like cash and treasury bills and things like that.

But what you’re trying to do is beat inflation, and all those things over the long term have beat inflation. That’s the goal. And so the stock market is a great place to be over the long term. And, frankly, for you guys, it’s probably best to buy a basket, invest in a basket of a mutual fund or a basket in an exchange traded fund. It’s just a basket of stocks. So instead of buying one stock, buy a lot of them. Now, some people would say, “Just go buy one stock. It’s a great learning lesson of how stocks work.” That can be, but you can also lose a lot of your money in the short term if you buy at the wrong time, if the CEO dies in a car crash, if they’re cheating on their financials. So buying a basket is a safer way to go. And then as you get more and more money, then yes, you can buy individual stocks. If you need to, I can tell you a little secret though. Some of the wealthiest people I know that we deal with, don’t buy individual stocks.

Yes, that’s the big secret. Everybody thinks everybody’s making a bunch of money with individual stocks, and a lot of wealthy people, you know what they’re doing? They are managing their balance sheet. That’s what we help them do. In other words, we’re looking at how much debt they have, how much income they have. We’re looking at their balance sheet, meaning how much assets versus liabilities they have. How much stocks versus bonds versus real estate versus cash. We’re looking at that more so than, is this particular stock better than another particular stock? That’s a little pro tip. Now, for you guys also, one benefit you have is dollar cost averaging, and all that simply means is you’re putting in on a systematic basis and you’re buying a fund or whatever it might be at different prices, and you’re not getting caught up in the emotions of up or down, you’re buying consistently.

And lo and behold, guess what happens? When the pandemic started a year ago, the stock market fell 38%. What a gift, right? If you’re a young person, what a gift that you can buy something on sale. Imagine if those Nike tennis shoes you wanted so badly, what if they were on sale for 40% off? You’d want to buy more, right? Well, guess what? Most people in the stock market gets scared when that happens, then they want to buy less. Don’t do it. Don’t fight it. Be consistent. That’s what makes 401Ks so great when you get your first job, is you’re going to see over the longterm that you’re going to have a discount on this stuff and you’re going to be buying systematically, and you’re not going to think about it. And lo and behold, you’re going to say, “Boy, when it was down 38%, I actually was buying because I was putting in every two weeks with my paycheck.” That’s called dollar cost averaging. It’s a great way to do it.

Now, another thing you guys will hear is, well, maybe I should just wait until the time is right to invest in the market. And there’s a great, great piece out of Charles Schwab, which is a big brokerage house. They do a lot of research. Obviously, it’s a place you can invest your money. And what they did was they went all the way back to 1926 and they looked at 20 year periods. Remember we talked about 20 year periods being very good for the stock market? If you can invest for 20 years, it’s been great over the long term. Well, what they did was they did a study and they said, “Let’s look at 20 year periods and let’s assume somebody had perfect timing in the stock market. They just put it in on day one, over day one and then came back 20 years later, or they actually had bad timing, and all three of those regardless, were better than staying in cash.

So even if you have bad timing and you’re not very good at this, the point is to keep doing it and doing it consistently and you will outperform sitting around in the bank, sitting around just keeping your money in the bank. Now, it is important that you guys establish a rainy day fund. You’re going to need new tires when you go off to college. You’re going to need to get an oil change. You’re going to have medical things that pop up. The first thing you should try to do is maybe try to save $1000. Put $1000 in a bank. And then over time, especially when you get your first job, maybe you get that up to three to six months of your expenses. So whatever you’re spending on rent, whatever it might be, gasoline, three to six months of that, in case you lose your job. That’s your bridge loan. That is your emergency funding. Get that settled. Then you can start thinking about this fun investing that can watch your money accumulate over time.


Now, I want to end with debt, and we’re going through this pretty, pretty quickly, we’ll try to do more on this, but let’s start with debt. And this was Experian put a note out or a report that talked about the average debt in 2020 and the average credit card debt was about $5,315. Personal loans, about $16,000. Auto loans, about $20,000. Student loans, almost $40,000. So people that have student loans that’s an average debt. Home equity loan, meaning people are taking money from the equity, what they own in their house, and they’re pulling money out and borrowing against it, $42,000. And the mortgage, $208,000. So there’s a lot of debt out there. And if you guys, another benefit of being your age is probably you don’t have debt right now, try to keep it that way.

Now, at some point, you may want to get a mortgage and sometimes there’s strategic reasons in business. Maybe you want to get some debt, but if you can afford to not have debt, it is fantastic, and you’re starting out that way. So try to do that, because America has a lot of debt as a country and individuals do too. And the reason why, and by the way, there’s some statistics from the Federal Reserve that came out that 39% of Americans don’t have enough money to cover a $400 emergency. Think about that, guys. Most of you listening, most of you 18 year olds and 17 year olds and maybe 21 year olds listening, probably have $400 saved up. 39% of Americans, adults, don’t have enough money to cover a $400 emergency. Now, we know a $400 emergency could be new tires. It could be something medical. The median savings account in the U.S. is $3,500. That’s it. $3,500.

There’s a lot of these statistics that are pretty sobering, so what we’re trying to do is get you started on the right foot, and the right foot means start saving early, try not to take on debt, let the compounding work for you. And why do we not want to take on debt? Why do we not want to do that? I mean, if someone’s going to lend us money, yeah, we’ll buy some fun stuff with it. Well, number one, items are going to cost you more. It’s going to cost you more for that item because you’re going to probably pay interest on it. So it’s going to end up costing you a lot more. It can get out of control, because they’re not forcing you, these credit card companies are not forcing you to pay it all back. They want you to pay interest. And then when you don’t pay the balance off, you get charged a really high interest rate, 12%, 13%, maybe

… 15%, maybe 17%, 20% interest. So that adds up a lot and you can really get a lot of financial trouble that is a big hole to climb out of. And it can cause you stress. It can literally cause you physical problems as well. If you’re married, it can hurt your marriage. This is something that we see in the financial industry all the time, especially when each spouse isn’t on the same page in terms of spending. Finances are one of the number one reasons people do get divorced. So be thinking about that while you’re single, again, start talking about this stuff. If you’re dating somebody seriously, start talking about… Watch their spending habits. What do their parents spend? Are they savers? Do they buy extravagant things, but you know they don’t quite have the money for it? Because you could have an eventual spouse with those same characteristics.

It really does cause you to buy things that you really don’t need. It’s easy to put something on a piece of plastic. So if you can spend cash, please do so. It can also lastly, push back your retirement. It’s going to take you longer. You’re going to be working more years if you have all this debt piled up. Now, I know that was quick, but I wanted to stress three things. I wanted to stress saving, investing, and debt. So keep out of debt, start saving early, and for youngsters, look at the stock market.

It’s been the greatest wealth maker of our time. Don’t listen to people trying to scare you. Don’t listen to people trying to get you to buy weird investments or gold or anything like that, and maybe even individual stocks. A lot of people are playing around with individual stocks right now because it’s cool, it’s hip, there’s no transaction fees to do so, but start broad and then let the compounding work. Then down the road, when you have more money. If you want to buy some individual companies, go for it. But then you have the luxury that if it doesn’t work out, it’s not going to ruin your life and your savings isn’t going to go away.

Then as you get older, you will look at even more conservative investments and you’ll have different goals. You’ll want a financial plan as well because you’re going to have a lot of decisions coming up over your life. But the key thing you have to do is get started early. Get started early. I can’t emphasize that enough, and it can turn into a very exciting thing when you start seeing these account balances build up and all the rest of your friends have all this debt and they’re buying stuff they really don’t need because they want to keep up with the Joneses. So please, please, please go back and listen to this. We’ll probably do more on it and I’ll try to show some of these slides that I presented the other night to these high school seniors that are about to go off.

They had some great questions. I sat there for an hour, maybe over an hour answering questions. A lot of them were about credit cards and credit scores, and what mutual fund do we use? A lot of things we talked about in person. Feel free to send me your questions. If you’re somebody listening right now, email me. If you’re a parent, have you have your child reach out, have your grandchild reach out. Again, at Covenant, we have smaller starter accounts that we can set people up with, a Roth IRA, and it’s a great way to do it, but we always start with education and they are not getting it at many of the schools unfortunately. It’s not that the schools don’t have the best intentions, but they don’t have the proper teachers to do that type of education. These are very smart educators.

My wife was an educator. I know a lot of educator’s extremely smart, but in this particular arena, they don’t have the tools or the equipment. So I’ve gone and spoke at many high schools. I see what they’re teaching and it’s just not the practical stuff that kids really need to know. I wanted to start with this. I hope this was helpful. Again, there’s lots of ways this can go and lots of things I could talk about for hours, but I think those are the basic things. Those are the things that really get you started on your journey. Please share this. Share with your friends because again, not everybody is going to listen to the podcast. So share the podcast with them, get them to listen to it, and it will start your life off on a great foot, low stress, and you will have a nice nest egg to buy that first home.

You’re going to have kids someday and you’re going to want to pay for their college or some of it. All these different things are going to come up in life. How about paying for a wedding? Those aren’t cheap nowadays. So start saving as much as you can. There’s lots of side hustles you can do. I know everybody can’t save. Everybody has different financial backgrounds, and it sounds easy to say, but guess what? There’s a lot of places that will allow you to save very small amounts of money if you commit to doing it. They want to reward you for doing that. A lot of mutual fund companies do that as well.

All right. If you need my help, I’m always here. We’re eager to help you at Covenant. Just go to, or you can reach out to us at (210) 526-0057. Hey, you guys have a great week. Enjoy the beautiful weather wherever you are. Take care, everybody.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product, including the investments and/or investment strategies recommended or undertaken by Covenant Multifamily Offices, LLC, Covenant, or any non-investment related content will be profitable. Equal, any corresponding indicated historical performance levels be suitable for your portfolio or individual situation or prove successful. Moreover, you should not assume that any discussion or information serves as the receipt or as a substitute for personalized investment advice from Covenant. To the extent that has any questions regarding the applicability of any specific issue discussed above to his or her individual situation, he/she is encouraged to consult with a professional advisor of his/her choosing. Covenant is neither a law firm nor a certified public accounting firm, and no portion of the newsletter content should be construed as legal or accounting advice. A copy of our current written disclosure brochure discussing our advisory services and fees is available upon request or at


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