Money, Makes Money, Makes Money

Is your money making you more money? If it's not, you are harnessing the power of our next financial term, "compound interest." In this episode, we brought in book author and financial expert Brian Feroldi to explain to us how compound interest works. Not understanding this term could cost us all big bucks down the road. Don't miss out and listen in to find out how money, makes money, makes money in this episode of the Cash Kid Podcast. Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

Welcome back Cash Kids!

Alright, I’m going to get serious... listen up. We’ve hit on many financial terms this season already.

But today.

Today’s term is one that many, many, lose lots of money without even realizing it because they don’t understand how it works. If we Cash Kids can understand the power of “compound interest” early in life... guess what, we’ll have more later in life.

And I’ve got a great financial expert and book author here to break it all down for us. Brian Feroldi is the author of the book, “Why Does the Stock Market Go Up?” We loved this book in our house and Brian agreed to come on the show to talk about it.

Stay tuned, please... it’s a matter of big bucks down the road.

The Cash Kid Podcast is underway!

Intro tease:

So you’ve got some cash. Maybe from an allowance, or that money your grandma gave you for your 7th birthday. Here you go, sweetie. Thanks, Grandma.

Whatever it is, what are you going to do with it? Spend it, hide it away... or maybe invest it? Let’s start learning how to make that money grow.

Time to learn how to be a cash kid.

So joining us today is Mr. Brian Feroldi. Brian is a financial educator, podcaster, YouTuber, speaker, writer and author. Mr. Brian’s vision is to spread financial wellness, which is exactly what us Cash Kids need. Welcome to the show Brian. And first off, tell us a little bit about yourself.

Brian Feroldi: Well, thank you for having me. It is a true honor to be here. I myself graduated from college in 2004 and I really put that down as the mark of the start of my money journey. Prior to that, I was taught absolutely nothing about about money growing up, despite graduating with a degree in business. I was taught next to nothing about personal finances.

I was taught next to nothing about the stock market, about compound interest, about the basic principles of spend less than you earn, invest the difference, and grow your wealth. Now, after college, my dad handed me a copy of a very popular book back in 2004 called The Rich Dad Poor Dad, by Robert Kiyosaki. And that book was the first book I ever read that opened my eyes up to the idea that anybody can build wealth.

Anybody can become wealthy in one generation. And importantly, rich people think differently about money than middle class people, and poor people do. And that book opened my eyes to the power of compound interest, introduced me to people like Warren Buffett and Peter Lynch. And that really kickstarted a love affair with everything related to money, personal finance and investing that continues to this day.

So for the last 20 years since I launched that book, I have been doing everything in my power to educate myself and take that information, to educate other people about how to do better with their money.

Cash Kid: All right. That's amazing. So first off, tell us about your book, “Why does the stock market go up?”

Brian Feroldi: So I have been voraciously reading books about money and investing for, again, the last 20 years. One question that I always had about investing in the stock market is that lots of books I read essentially said the same thing. The stock market is the greatest wealth creation machine ever. The stock market grows at a compound annual growth rate of about 10% per year.

And every time the stock market crashes, don't worry, that's the time to buy. The stock market will always come back. I bought that hook line and sinker. However, I didn't understand a fundamental question despite reading those great books. And that was I could see the long term chart that showed the U.S. stock market going up and to the right continually for decade after decade.

But it was never explained to me why that happens. And I was always taught as a kid, what goes up must come down. So every time the stock market crashed, as it did in the year 2000, as it did in the year 2008, as it did in the year 2020, I always thought, Well, that's it. It's crashing. Why on earth would this stock market come back and continue on to a new high?

So I wanted to answer that question fundamentally for myself and really get into the crux of why. Why does the stock market go up? So that was the that was the reason that I wrote the book, is that no such book like that existed.

Cash Kid: Yeah. You cover a lot of topics in your book, but today we ...