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April is historically a strong month for stocks, but the corporate earnings season is coming up, and the expectations are pretty low. According to FactSet, the estimated earnings growth for the S&P 500 for the first quarter is 4.7%. If 4.7% is the actual growth rate for the quarter, it will mark the lowest earnings growth rate reported by the index since the fourth quarter of 2020. That was 3.8%. Now, we know the game companies, guide lower their earnings forecast and then blow through expectations with their actual results, hoping to impress investors. We'll see if that works this time around, but the glory days of blowout profits are behind us, at least for now.
April is also National Financial Literacy Month, even though here at Investopedia every month is Financial Literacy Month. We're grateful to reach more than 20 million monthly readers from around the world who visit our site, our social media channels, our newsletters, and podcasts like this to learn about finance and investing. However, millions of people still need financial literacy and guidance, but don't have easy access to it online, in schools, or in their communities. It is our goal to reach them. We're committed to extending our reach and resources to underserved communities who have traditionally been closed out of the financial services and information industries. We've created new guides to support today's investing environment, translated key resources into Spanish, and produce how-to videos for visual learners. In our updated financial literacy section on Investopedia, you'll find resources to help you become an engaged and educated investor in the ever-evolving financial markets. You'll also find resources to share with people in your family and community to help support their financial journeys. We wish you all a Happy Financial Literacy Month, year, and future.
Nick Maggiulli is the chief operating officer of Ritholtz Wealth Management, a registered investment advisory firm. A prolific writer, Mr. Maggiulli created and has been running his personal finance blog, Of Dollars and Data, since 2017. His first book, Just Keep Buying: Proven Ways to Save Money and Build Your Wealth, was released this year. Mr. Maggiulli has also been featured in several major publications, including The Wall Street Journal, CNBC, Money, and The Los Angeles Times.
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What if there was a simple and straightforward guy that taught us the basics of how to build wealth and grow it over our lifetimes? In fact, there are probably thousands of them out there already and even more online that promise to do just that. The problem with so many of them, though, is that they are either too dense and complicated for most of us or too simple and lacking nuance for others. Personal finance and investing are, well, personal. One size doesn't fit all, but there are basic rules that we can apply that help us set up the foundations for wealth building and investing successfully over the long term. No magic bullets, no proven formulas, but principles.
Our friend Nick Maggiulli, the man behind the terrific blog Of Dollars and Data, is out with the book or guide I wish I had when I was in my 20s, starting to earn money and beginning my investing journey. It’s called Just Keep Buying: Proven Ways to Save Money and Build Your Wealth. And Nick is back aboard the Express with us this week to talk about it. Welcome back, Nick. Good to see you. 
Nick:
"Thanks, Caleb. Thanks for having me on again."
Caleb:
"Well, I went right through this book so quickly, but it's broken up into sections on saving and investing. But each one of them you could take on its own, but together, so valuable. What made you want to put it into a book? I know you've written all about a lot of these things on the blog."
Nick:
"Basically, I've been writing for almost four years at this time. By that time I said, 'I don't want to write a book.' And honestly, it was cause of COVID. I was trapped inside, this was December 2020, and I thought COVID was over after the first wave in New York. I was here in New York City. I'm like, 'Oh, it's over now. We flattened the curve.' I was wrong. Then I thought, 'Oh, that after the big Memorial Day jump and all that, after that summer jump in the rest of the states…' I was like, 'Oh, it's done now, right?' And it was it. And then December 2020, we had this big wave across the country. I was like, 'This thing is going to last forever. I need to use this time properly.' And so I said, 'I think I have enough material out there, and I think I just need to organize it properly and I can put together something useful for people.'"
Caleb:

"Yeah, it is super useful. And like I said, I wish I had it in my 20s, or somebody said, 'Follow these steps.' And again, it's not a magic formula, but there are those basic principles and you start it with the title. Just Keep Buying. I want to get into that in a second, but also you started off talking about your grandpa. I think we talked about him the last time we had you on the show. He loved the ponies, he loved to gamble, and he ended up not doing so well. Give us the background on that and why that may have been an inspiration for you somehow to get into doing what you're doing."
Nick:
"Yeah. So, he had had gambled for most of his life, and he did start with horse racing, but then he started getting into going to the casinos and playing baccarat and all these different games. I don't even know all of them, you may have heard some of these things. But yeah, I mean, it was just… it was kind of… it's not a great part of our family history, but it's something he did. He was a very nice man, churchgoer, great with family. But at the same time, he had his demons, which was gambling. And so, I saw that, I was a little kid, I didn't really understand. But as I got older, I started to see it, and he just he got paid Social Security and his pension and just blew it every month. And that's really unfortunate cause he could have done so much other things with his life, his money."
Caleb:
“You use it as a launch pad to sort of get into these basic questions, and the most basic is: investing versus saving. What do you do early in life? When does compounding work the best? So, let’s take that apart a little bit. We get this question all the time at Investopedia. Should I be saving that extra money I have, or should I be investing it? And it kind of depends, but give us the argument for saving early in life.”
Nick:
"There's two arguments here. There's the mathematical one, which I guess a lot of your listeners has heard. Money that's invested earlier in life, it's compounded at the same rate over time. If you invest earlier, you're going to grow to more money than money invested later. That's the very easy mathematical argument."
“I think the second argument is more of a behavioral argument, and it’s much easier to compound your money than it is to save money. And so, if you were to save the same amount of money… let’s say you saved $10,000 a year for 40 years and you were to get a 7% return after the end of that 40 year period. Half of your portfolio value comes from the first 10 years of saving, and the other half comes from the last 30 years. So, that shows if you do that hard work upfront and save earlier, later you don’t have to save as much. Later you don’t have to do that work. And so, that’s… the idea is saving money is hard, but compounding money is easy. The market just does it for you. So, that’s kind of the main premise there. And I think that’s why I kind of talk about saving first to get people into getting their saving money and but also get that money invested. So, you have to save but also invest with that money.”
Caleb:
“Sitting in the bank, it’s not going to do much for you, especially these days. But then there becomes the question of, ‘What are you going to put it in if you invest?’ And again, we get that question all the time. You get it at the firm you work for as well, but you realized when you wrote about this in the book, it didn’t matter when you buy stocks or when you buy into indexes or ETFs, just keep buying them. Why is dollar-cost averaging such a magic formula for success?”
Nick:
“I mean… cause the long-term trend of across most markets and throughout most of history is up into the right, there’s economic growth. And because of that, that growth ends up sending profits back to business owners. And so, when you’re buying a stock, you’re buying a share of ownership in that company. And when you buy an index fund, you’re buying a very, very, very small slice and share ownership in lots of companies. You’re kind of owning the American economy in a way when you buy the S&P 500 index fund. So, that’s the main premise there.”
Caleb:
"But it's not just buying it, it's to continue to buy it and then to not sell when things get rough, except if you need to. It's so tough behaviorally to do that, Nick, we all know that. It's tough to hang on when you're watching things fall, and you're watching news headlines, and we go through these periods of uncertainty. Why is it so important to not give in to that fear?"
Nick:
"The question is… let's say you do give to that fear. Let's just play devil's advocate and say, 'OK, you know what? I'm going to get out.' The real question is, when are you going to get back in? And that's the real issue. If you had some sort of time, you're like, 'I'll get out.' But if you have rules to get back in, you might do OK. But a lot of people get out, and then they sail for so long, like, 'I'm going to wait for the dust to settle.' By the time the dust settles, the markets are 30%, 40%, 100% higher. I imagine you sold in like early March 2020 before the bottom, and it hits the bottom and you're like, 'I'm not sure it's over.' And next thing you know, six months later, its set a new all-time high. So, before you could even blink an eye, you would have missed out on all the gains. You would be buying back later at a higher price."
“And that’s the thing we’re trying to prevent when we tell people not to sell out and not to worry and panic. It’s like as long as you’re sufficiently diversified, you shouldn’t have to worry about that as much. And of course, in the short term, that’s not true. But in the long run, these things tend to even themselves out. You can have a bad market here or there, and as long as you’re sufficiently diversified, you should be OK.”
Caleb:
“You also say, ‘Don’t worry about buying the dip.’ Yet that’s what we hear in the financial news headlines all the time or on financial Twitter or… ‘Buy the dip, buy the dip because this may be the bottom.’ We do know this, Nick, and I’ve seen this through the great research you guys put out at Ritholtz Wealth Management. We know that the best days in the stock market are usually during those bottoms when you get these 2%, 3% bounces. It’s hard to capture those when the market’s grinding higher. But down there at the bottom, the dips, so to speak, is kind of one of those bounces are the most aggressive. But why not try to buy the dip? Because we don’t know where the dip is?”
Caleb:
“Yeah. Well, A) you don’t know when it’s going to happen. And B) let’s say you just start saving cash to buy the dip. Question is your threshold. How big of a dip is a dip for you? If you’re like, ‘Oh, you know what, a 2% dip, that’s not big enough. I’m going to find a way for a 20% dip. Well those dips are rare, and the bigger the threshold or the deeper the threshold, the more rare they are, and the more you’re going to be sitting in cash and not being invested, not making money.”
“And I think an example I give is… I started blogging early 2017, and I actually wrote a blog post called Just Keep Buying, which became the intro chapter in some ways for the book. And back then, people were telling me, ‘Oh, markets are too overvalued. We can’t do this. I shouldn’t be buying right now.’ And even if you had saved cash for 2017, and you had perfectly timed the bottom in March 2020, and you bought perfectly on March 23, 2020 (which is the bottom), you still would have bought at prices 7% higher than you could have gotten in early 2017. And that’s kind of the point there. You may be able to buy the dip, and that’s great, but you that dip could be at a much higher price than what you originally could have gotten.”
Caleb:
“You also say it’s better to buy index funds and ETFs, or at least it was for you, as opposed to individual stocks. The diversification aspect of that makes a ton of sense to me. I do that. But when you look at the returns for some of the individual stocks and some standouts over the past 10 years, Nick, several of them have handily beat the market. Here’s just a short list, and I know you know these names: Tesla up something like 14,000%, Nvidia 8000%, Netflix 2000%, Amazon 1500%. These are the big, giant, mega cap stocks that have done unbelievably well. You had to know to buy them, but if you had an idea that Tesla was going to be a successful company, you just bought that. Why would that not have been better than buying the QQQ ETF, for example?”
Nick:
“I guess the thing here is like we have some sort of selection bias or survivorship bias. We know the winners now, but like go back to 2014, 2012, Tesla didn’t look like the stock it is today. It was a very different company. People thought it wasn’t going to work. There’s a lot of risk there, and so people were not bidding up the price accordingly.”
“So, I think that’s the issue. It’s like… you finding companies that look great back then, they haven’t done as well. So, you need to go back to then and say, ‘At this point in time, which companies look like they’re going to be big?’ And it’s not always the same set of companies. I remember someone’s like, ‘Oh well jeez, jeez. And the Dow, they’re a solid company. They’re never…’ And they’ve been down. They’re down very bad since that time. So, it’s very difficult to do that. So, that’s my that’s my counter. Of course, yes, people have done it. But how do you know that you’re going be able to do it consistently? I think it’s very, very difficult to do so.” 
Caleb:
“Right. So, as you started investing in your 20s and setting up your portfolio, you obviously got familiar with the market. You’re now working for an RIA. But how did you set yourself up in terms of diversification in your 20s?”
Nick:
“So, I wasn’t as diversified as I am now, but I did have just a U.S. stock index fund, like a developed and emerging market index fund, and then bonds. So, that’s all I had so far but eventually added other things. Since then, I’ve added some art, I’ve added some crypto, and other things of that sort.”
“But yeah, when I just started, I was just like, ‘Hey, you know…’ And honestly, the fact is that I kind of discussed this in the first chapter of the book. It doesn’t really matter where your asset allocation is when you’re 22 because you probably don’t have that much money to invest. So, I had like less than a thousand dollars to my name. So, whether I was 10% bonds or 15% or 5% bonds didn’t really matter in the long run. It matters a lot more now what my asset allocation is because I have more money invested, more money in the game, so to speak.”
“So I think that’s the thing to keep in mind for people who are super young, don’t worry as much about that. Or people don’t have as much money invested, I would worry less about allocation until you have a serious amount of capital there and then you’re like, ‘OK, this is going to matter.’ So, that’s what I would say.”
Bank of America's Sell Side Indicator, which tracks the average recommended allocation to stocks by sell side strategists, has fallen for three straight months since August of 2019.
Caleb:
“And then there’s Bitcoin, Nick, which is up a million percent in the past decade, according to our buddy Charlie Bilello. Million percent, who would have ever thought that? But I guess there are some people that did, and they’re pretty happy with their returns so far. But it’s pretty volatile. It still isn’t backed by anything that makes any sense to a lot of us. There’s no real fundamentals there, except for the scarcity aspect of it. But it’s here. It’s here. Financial firms are offering it. Retailers are offering it. The investing base is growing every single year. But how should new investors, especially younger investors, think about Bitcoin and other cryptocurrencies as a part of their portfolio mix?”
Nick:
“Yeah. So, the thing I recommend is, if you’re going to do this, it’s very high volatility. So, keep it a small percentage of your assets. And if you’re a younger investor, honestly, it’s… unless you get very lucky and have some really… you buy some coin that ends up going into a hundred thousand or something, you’re not going to build a lot of wealth there. I mean, it’s really tough. And so, 2021 was an exception because I know people that literally put like $500 into NFTs, and now it’s like worth a million dollars, which is… these are very, very rare things. These are very rare luck events.”
"And I'm not saying all of cryptocurrency's luck. I'm not saying that, but there are moments where these types of returns, which are just unheard of… the first people to buy the first Solana NFTs or something, they made a bunch of money. Because no one even knew what NFT were, or what Solana was. So, once you get into that, that's what happened. So, my recommendation is, if you want to get into this, put a little bit of your money in there, and you realize it can be volatile, realize you could possibly lose it all, and just… you never know. And so, kind of go from there."
Caleb:

“Let’s talk about retirement. And I think you and I have talked about this in the past, and I’ve talked about it with your colleague Ben Carlson as well. The: ‘When can you retire?’ Is that even the right question? The retirement ‘when can I stop working?’ Or is the question really? How much do I need to afford to be me? The ability to afford your time to do what you want. What’s the right question to ask, and how do you ask yourself that question as you’re sort of building your wealth as you grow older?”
Nick:
"I love the way you put it, 'Do I have enough to afford to be me?' That's one thing. The second thing which I think is more important in retirement, which I kind of discuss in the book a little bit, it's not even the financial aspects. The non-financial of retirement, which is like when you say, 'Oh, to afford to be me. Well, who are you?' I mean this in a very sit down like, 'OK, if you're working full time, that's a big piece of your identity. And now if you stop working all of a sudden what are you going to do with those… let's say you work 40 hours a week. What do you do with those 40 hours?' And I think a lot of people hit retirement and then they'll be like, 'Wait, I didn't plan for all this time and who is my identity, who I am?' And so, it really, I think, impacts people much more than monetary things."
“I don’t think the monetary issues are big for most retirees. I think for most retirees the issue is like, ‘What am I going to do with my time? How am I going to enjoy my final few decades and all that.’ So, it’s a little grim, but it’s true, and you’ve got to kind of think about that. You have to think about like, ‘What do I really want to do to?’ Solve that problem first, and worry less about the monetary thing. In fact, I show some data in the book that only one in six retires are pulling down principal. Most of them live off their dividends and Social Security in the U.S. So, that’s promising. So I wouldn’t worry as much about the monetary aspects, but more about your actual life, and what type of life do you want to live in retirement?”
Caleb:
"That's the right question, and I think we're living longer by and large, which is a good thing. But you could have 30, 40 years once you punch out from your job-job to have to be able to afford that lifestyle, but also you want to enjoy it as well. So, it's such an interesting question, and there are some rules and some good tips in your book that make a lot of sense. Let's get personal with you. Biggest mistake you ever made investing, Nick? And as you learned about this, and you're always candid about it in your blog, but tell our listeners."
Nick:
“I guess the funny thing about saying what a mistake is… at one point I said it was buying something at about $8,000. It was down at like $4,000 or something, and then it went up to $52,000. So, it ended up becoming a huge win. So, that is kind of one of those things, but I think the biggest mistake I made… I still haven’t sold these yet, so that’s not a mistake yet because I haven’t sold, but I actually don’t buy individual stocks in the book. But if you wanna do it for fun, you can. So I had 1% of my net worth, which I think is fine. And one day you’ll get up to 5%, maybe 10% at most if you really love it. But I try not to say beyond that.”
“So I have 1% of my net worth in these two individual stocks. I bought them, and they’re both tech stocks, and they are down very badly. Both were down 50%, 60%, whatever. And so, I haven’t sold them yet, so I can’t say they’re mistakes yet, but that might be my biggest mistake. I’ve done other stuff with individual stocks. I ended up selling basically at the price I bought them at, and so I didn’t really lose any money. I lost some opportunity cost because S&P was probably higher. But yeah, so that’s my biggest mistake, which is just buying individual stocks and thinking, ‘I can play that game.'”
Caleb:
"You're talking to the man who bought Lehman Brothers at 19 thinking it could never go out of business and then doubling down when it went to eight. So, I've made plenty of myself, and that's why I just keep it simple. You've written a terrific book here, but what's your favorite investing book? And I know you've got a few, but give us one or two, especially for the folks who really want to learn and go deep."
Nick:
“The Intelligent Asset Allocator by William Bernstein. That’s really good. If you want to think about asset allocations very… a lot of his books are really good. Against the Gods, that’s another Bernstein, Peter Bernstein. So funny they both have the last name Bernstein. A lot of great books out there. Zweig’s Your Money and Your Brain, that’s really good for behavioral. The Psychology of Money, Morgan Housel, that’s just a great read, most of your readers or listeners probably heard about that already. So, yeah, there’s a lot of ones, and those are investing specific. You start getting to personal finance, there’s so many more, like Your Money or Your Life, Get Good with Money by Tiffany Aliche. So, there’s like a lot of… it depends, you need to be much more specific to get me. But those are kind of just a handful I would throw out there.”
Caleb:
“Sure, we have those on our lists of best investing and personal finance books on Investopedia, and we did have Morgan on the show here talking about his book, which is terrific. So great calls there, and folks we’ll put those in the show notes. Nick, you know we’re a site built on our investing terms, and that’s why a lot of people come to us, at least for the first time. I got a feeling I know what your favorite investing term is, but I’d love to hear from you. What’s your favorite? What’s the one that speaks to your soul? And why do you love it so much?”
Nick:
“So my favorite and least favorite at the same time is dollar-cost averaging, and I will explain why. Cause the issue is… so the original, I think, definition of dollar-cost averaging came from Benjamin Graham, and it was just this idea of buying over time. As soon as you get money, you buy. And so, that’s kind of what, if you have a 401(k) or something, you’re buying every two weeks or once a month, whatever you’re getting paid, and you’re just buying.”
"The issue with that term is that term has also been used to explain how people invest an inheritance or you sell a business. You have a big amount of money, let's say you have $100,000. I'm not going to put all $100,000 in now. I'm going to spread it out over the next 12 months. You're going to put $8,300 a month for the next 12 months, and that's going to get you to $100,000. That's also called dollar-cost averaging, but that's very different than like buying as soon as you have your money. You're buying as soon as you have your money, you're technically investing right away. But saying, 'Oh, I'm going to slowly get into a market,' that is like the term I don't… so, I have a love-hate relationship with the term, but that's probably the most used term I have out there." 
Caleb:
"And at the heart of it is really the message in the title of your great new book, Just Keep Buying: Proven Ways to Save Money and Build Your Wealth. Nick Maggiulli, you got to check out the blog too folks Of Dollars and Data, and this book is tremendous. We're going to put a link to it so you can check it out in the show notes. And so good to have you back on the Express, Nick. Thanks for rejoining us."
Caleb:
"Yes, thank you. Thanks for having me again, Caleb. Appreciate it."

It’s terminology time. Time for us to get smart with the investing and finance term we need to know this week. This week’s term comes to us from Steven in Conroe, Texas, the county seat of good old Montgomery County, just north of Houston. Steven, suggest gas tax this week and we like that term, given President Biden’s announcement last week that he’s ordered the release of 1 million barrels a day from the nation’s strategic petroleum reserves beginning May 1 for six months to ease gas prices. He did not commit, however, to pausing the gas tax, which some people had been hoping for since that would make a much bigger difference than a million barrels of oil on the market. Keep in mind, we consume about 20 million barrels of oil a day here in America, so a million is just a little more than a drop in the bucket.
So, what is the gas tax? Well, according to Investopedia, here in the U.S., the gas tax is an excise tax that you pay when you fill up your vehicle. The federal government and states both impose gas taxes, with much of the revenue raised going towards fixing highways and other infrastructure projects. State gas taxes range from just under 10 cents to nearly 60 cents for a gallon of gas, although some states charge based on the type of gas rather than the amount of gas that you’re buying. The federal government imposes a gas tax of 18.3 cents per gallon on gasoline and 24.3 cents per gallon on diesel right now. But where did this gas tax come from? Well, states have been levying gas taxes on gas since the early days of automobile travel in the United States. In 1919, a little over a decade after Henry Ford’s Model T made owning a car affordable to the masses, Oregon became the first state to create a gas tax at 1 cent per gallon. Within 10 years, every state was collecting taxes. The federal government followed suit in 1932, establishing a nationwide gas tax of 1 cent per gallon to help pay for the Great Depression-related programs. Good suggestion, Steven. Investopedia’s famous socks are coming to you in Conroe, Texas.
FactSet. "Earnings Insight," Page 1.
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