The Patient Investor's Playbook with Noah Kerner - CEO of Acorns

Speaker A: It just means that there's no such thing as a get rich quick scheme. And so we're not about hype or shiny objects or quick fixes. We're about the reality of what it takes to grow your money, which is decades, not days. Certainly the normalization of spending money that you don't have is problematic. I am very concerned about this idea that I keep hearing that the American dream is dead. And I think there's like real reasons for why people think that. But what's not dead is the fact that you can invest small amounts of money every day in a diversified portfolio and, and stick with it for 10, 20, 30, 40 years. It's not far from 100% of people who gamble lose money online. I think it's 96% and trading is, is gambling. I think an investing app with a prediction market is like a bank with a blackjack table. That's the reality. The best investor is a dead investor. Turn it on, set it and forget it. Uh, cash is not safe, actually, because you're losing money to inflation every year.

Speaker B: On this episode of the personal finance

Speaker C: Podcast, how to build Wealthy Slow and

Speaker B: Steady Way with Noah Kerner.

Speaker C: What's up everybody and welcome to the Personal Finance podcast. I'm your host, Andrew, founder of MasterMoney Co and today on the personal finance podcast, we're going to be diving into some trends I do not like in the fintech space. But also we're going to dive into a conversation with Noah Kerner who is the CEO of Acorns. And we're going to talk through why slow and steady is going to help you build wealth. If you guys have any questions, make sure you join the Master Money newsletter by going to MasterMoney Co newsletter. And don't forget to follow us on Apple Podcasts, Spotify, YouTube or whatever your favorite podcast player is. And if you want to help out the show, consider leaving a five star

Speaker B: rating and review on Apple Podcasts, Spotify or your favorite podcast player.

Speaker C: Now today we're going to be talking through some of the disturbing trends that

Speaker B: are happening within the fintech space.

Speaker C: And we're going to talk to Noah Kerner, who is the CEO of Acorns, who is going to help walk us through why he believes there are a lot of problematic things in the fintech space. We're also going to dive into the slow and steady way to build wealth and some of the things that he is seeing in the finance space that

Speaker B: are really important for most of you to hear about.

Speaker C: So this is an action packed episode so, without further ado, let's get into it. All right, so before we dive into our interview with Noah, I want to go into some of the things that I am seeing across the board when it comes to to disturbing trends with a lot of brokerages out there. And I want a lot of people to understand why there are certain brokerages out there that we tend to criticize

Speaker B: a lot more than others.

Speaker C: So one of the big things that I am seeing up front is prediction markets. Now, prediction markets can give you some decent data, especially when you are looking into trading in individual stocks or if you are looking at IPOs, things like that. But prediction markets are getting out of hand and they are being dressed up as investing. In fact, I think if you were utilizing prediction markets as investments instead of using them as data points, it can be one of those things that can

Speaker B: be problematic for a lot of people.

Speaker C: Now, what do I mean by utilizing

Speaker B: a prediction market as a data point?

Speaker C: Well, let's say, for example, a prediction market right now says that SpaceX has an 80% chance of IPOing in 2026. Well, a lot of times this is a good indicator that this potentially could

Speaker B: happen over the course of the next year.

Speaker C: So if you're waiting for a SpaceX IPO and you wanted to ensure that you got in on that IPO or you had funds ready to invest in that ipo, this could be a great indicator. But if you are utilizing prediction markets to bet on if it's going to rain tomorrow, I think that's a major problem. I think it is one of those things that is built into a lot of fintech apps that are supposed to help promote wealth building, but instead it

Speaker B: is getting somewhat out of hand. In addition, it is also a way to just cover gambling.

Speaker C: It is one of those things that Noah and I will talk about later

Speaker B: on on this episode as well.

Speaker C: Number two is I think gamification that

Speaker B: targets the dopamine loop.

Speaker C: See, dopamine is a problem that a

Speaker B: lot of us have to deal with.

Speaker C: You utilize dopamine every time you're scrolling on TikTok or Instagram. And a lot of different brokerage apps are also trying to target your dopamine. So, for example, Robinhood used to use confetti every single time you made a trade. Now, that was not something. That was an unconscious thing.

Speaker B: They did.

Speaker C: They did that very specifically. And in fact, Robinhood had to remove confetti only after the State of Massachusetts sued and the SEC published a report on gamification.

Speaker B: There was a report that came out

Speaker C: that showed that this was gamification. And, and this was a behavior that rewarded frequent trading. So this was one of those things where we are seeing gamification come out even more. You know, here we are long term investors here on the personal finance podcast. And so gamification to promote more trading

Speaker B: is not something I am interested in.

Speaker C: Number three is zero commissions are not always free. And this is one of those things where a lot of brokerages out there will make you feel as though it's free. But many times their business model is payment for order flow. Or your trade is the product that is sold to a lot of different market movers. Companies like Citadel securities or Virtue or a handful of others pay brokerages billions per year to route retail orders. And so this is something that you need to note. It is not always completely free. Now there's a conflict here and that conflict is obvious because the broker gets paid the more that you trade, which is why a lot of these companies want you to trade more, because they get paid more. And so this is a backend portion of how data gets sold with a

Speaker B: lot of different brokerages out there.

Speaker C: Number four is that options are being promoted for everyone. So options are a complicated thing to invest in, especially if you are new to investing. They are something that you really need to know what you're doing before you

Speaker B: actually start to trade options.

Speaker C: But they are becoming much more accessible for a lot of folks out there with a lot of these trading apps. And I think it is much more

Speaker B: of an advanced strategy than it is something for beginners.

Speaker C: Number five is that sports betting and

Speaker B: brokerages are now the same product.

Speaker C: I think this is the troubling thing that most people agree, hey, you're bookie

Speaker B: and your brokerage should not be on the same app.

Speaker C: And if you have to scroll through sports predictions or sports betting every single time you want to make an investment, I think that is a huge problem. Sports betting is not something that is good for your finance. It is not something that is in your best interest. And if you are the type of person who says to yourself, actually I make some pretty decent money, sports betting,

Speaker B: it is going to catch up to you at some point in time.

Speaker C: Listen to me right now. The house always wins. And if you feel as though sports betting is something where you can make

Speaker B: a little money, it is not going to happen.

Speaker C: Unless you make it one, two or three times and then you stop, then it's one of those things that it

Speaker B: is not going to happen.

Speaker C: Now if you want to have a little Fun with sports betting. Nothing wrong with that whatsoever. You would have put 5, 10, 20 bucks on a game.

Speaker B: I don't see any issues with that whatsoever as long as you can control it.

Speaker C: But if it is one of those things that is causing you to think that you're investing when you're not, that

Speaker B: is a major problem.

Speaker C: Number six is crypto, specifically Meme coin promotion inside a lot of real brokerages. So a lot of brokerages out there are starting to promote Meme Coins, which I think is one of the most speculative assets that are out there. Sure, if you want to invest a small portion of your portfolio in Meme coins, more power to you if that's something you're interested in. But for me specifically, there are not many crypto assets that are true assets, Bitcoin being one of them that I invest in. But outside of that, there's not a ton of other assets inside of the

Speaker B: crypto space that I would be interested in.

Speaker C: Number seven is leverage is being normalized. Charlie Munger had this great quote and I'm probably going to butcher it, but he said there are three ways that men go broke.

Speaker B: It's liquor, ladies and leverage.

Speaker C: And leverage is something that is being promoted more and more inside of a lot of different trading apps.

Speaker B: I have seen it in places like

Speaker C: Coinbase, I have seen it in places like Robinhood where you can now have

Speaker B: leverage in place to be able to trade.

Speaker C: A first time investor having the ability to 3x the amount of money they are investing by borrowing money or leveraging money is a problem in my opinion

Speaker B: and should not be be something that is so easily acceptable.

Speaker C: The next one is AI as the new stock tip machine. So I have seen some brokerages adding AI LLMs into their brokerage account and it's giving personalized uh, stock picks. As an AI advisor, I think that is something that you need to be cautious about.

Speaker B: You need to be careful about.

Speaker C: The model does not think through your tax situation. It does not think through your personal finances. It does not think through your risk tolerance completely. And so we want to make sure that we are careful when we have AI giving us personalized advice, especially, especially inside brokerages because these can be programmed in a very specific way to make

Speaker B: you do very specific things.

Speaker C: And so you want to be cautious if you are seeing that across the

Speaker B: board when you are investing your dollars.

Speaker C: And the last one is social trading in public portfolios. Now there's nothing wrong with social trading if you, it makes you invest more if you see your friends or your family out there and it motivates you to invest more dollars and get more dollars invested, I think that's a positive thing. But if it motivates you to buy the same exact stock that they are buying and they're making the wrong move and or their stock that they are buying does not risk tolerance or your financial plan, that's where I think this

Speaker B: could become a problem.

Speaker C: So social trading, I think could be something that's good. There's apps out there like Blossom and Public that I think are very cool. But if you are utilizing some of

Speaker B: those in a way that doesn't make

Speaker C: sense for your own risk tolerance, or if it makes you invest in a

Speaker B: specific way, I think that can also be an issue.

Speaker C: So these are just some of the trends that I do not like in a lot of different fintech apps or brokerage apps. Again, if you have the willpower to get past these and you like some of those specific apps, more power to you. But one of the things that I just want to point out up front is that these are some of the

Speaker B: troubling trends that we are seeing across the board.

Speaker C: Now today we have the ACORN CEO Noah Kerner coming on the show. And what I love about Noah is he is promoting one of the most important and timeless ways to invest.

Speaker B: It is long term investing.

Speaker C: And as most of you know out there, we here on the personal finance podcast, we are long term investors. And so in this episode, Noah and I discuss a number of different things. We talk through some of the troubling things that we are seeing in the fintech space and some of the things that he would love to see changed when it comes to the fintech tech space and in regulation. In addition, we are diving into Noah's portfolio and how he invests his money

Speaker B: and how he thinks about that.

Speaker C: He's going to give us actionable tips that you can use to take away and actually take action on building wealth

Speaker B: and building your portfolio over time.

Speaker C: And newsflash, slow and steady is the

Speaker B: way that he loves to invest.

Speaker C: But the cool thing about Noah, uh, is that he is building acorns the

Speaker B: same exact way he is building it

Speaker C: the slow and steady way. Because that is his approach to almost everything in life. And so this is a really eye opening and great interview. I'm excited for you all to hear this. So let's welcome Noah, uh, to the

Speaker B: personal finance podcast,

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Speaker A: Good to be here.

Speaker B: We are so excited to have you

Speaker C: here and I want to kind of talk through some of the really cool

Speaker B: stuff that you guys are doing at acorns.

Speaker C: But one of the things that I

Speaker B: love most about you is that you are promoting this financial education. You are promoting, you know, compound interest and long term investing, which I think is one of the most powerful lessons for most people out there.

Speaker C: So you've kind of described yourself as

Speaker B: the anti hype CEO.

Speaker C: Uh, so what does that actually mean to you and why did you decide

Speaker B: to plant your flag there?

Speaker A: It just means that there's no such thing as a get rich quick scheme. And so we're not about hype or shiny objects or quick fixes. We're about the reality of what it takes to grow your money, which is decades, not days. Consistency, patience, benefiting from compounding small amounts invested regularly into a diversified portfolio. So I guess I would say, uh, the idea of anti hype is just about what is real and what are the real tools of wealth making and what is the realistic situation for everybody out there. So, you know, so it's not like, ironically, I don't think about it as some like, unconventional stance, but I guess against the backdrop of what's happening, it is unfortunately unconventional.

Speaker C: It is unfortunate because I think the

Speaker B: financial industry is an industry that you have seen time and time again. It just runs on noise. If you go into, you know, one of the financial media outlets right now, a lot of them will have doom and gloom or they'll say, hey, the

Speaker C: market is exploding right now.

Speaker B: Or they'll just kind of give all

Speaker C: these clickbait titles that really cause a

Speaker B: ton of fear for a lot of people.

Speaker C: I know anytime there is some sort

Speaker B: of market pullback, we get our email

Speaker C: flooded, our DMs are flooded from people

Speaker B: like, what do I do? What am I supposed to do here? And we talk through just long term investing and how important that can be. Which is why I think this is really, really important.

Speaker C: And so most of this industry does

Speaker B: run on this noise.

Speaker C: So what made you kind of go

Speaker B: in the other direction from what most of the financial industry does?

Speaker A: It's honestly, for me, it's a funny question because it's just what is the reality of what people are supposed to do? And we put the customer's money first, ours next. And again, I guess that's unconventional too. But, um, but that's, that's the central, uh, premise of Acorns is your money first, ours next. And the business logic. We consider ourselves a mission and of course we're a business and we are building a business. But the Business logic is that by giving people the real tools of wealth making, by putting people in the right products, by teaching people the right things, that over the long term, we will win as a business, and it's a much more durable, sustainable relationship. And I do believe 20, 30 years from now, look back on this time, and people will say, uh, you know, I hope they'll say, oh, is that like acorns? Really? That's the right way to do it because we're just applying the basic fundamental principles of good investing.

Speaker B: Exactly.

Speaker C: And I'm sure you and your team

Speaker B: have had a lot of conversations with a lot of investors out there and kind of talk to some of your customers out there who are, you know, working with acorns and kind of doing their investing there, and a lot of different cool things. There's.

Speaker C: But when you look at the landscape

Speaker B: of a lot of the average American's relationship with money, are there things out there that are worrying you right now? Are there things that you see that could be toxic or detrimental to their finances?

Speaker A: Certainly the normalization of spending money that you don't have is problematic. I am very concerned about this idea that I keep hearing that the American Dream is dead. And I think there's, like, real reasons for why people think that. But what's not dead is the fact that you can invest small amounts of money every day in a diversified portfolio and stick with it for 10, 20, 30, 40 years. And if you do that $5 a day, you actually can retire with a really significant amount of money. So the American Dream, while a lot of things are compromised and the cost of living, is really high. And there's obviously a lot of painful issues going on, like the American Dream is in, uh, your hands to take advantage of. I'm super concerned about the fact that the conflation between trading, gambling, prediction, and investing, and I think that there's nothing wrong with playing around. But I think unfortunately, the way that it's marketed and sometimes the way that it's misperceived is that this is a substitute and it's just not. You know, I. Sorry, uh, to curse, but fuck around with 10% of your money, I do great. But 90% of your money should be in diversified portfolio ETFs. Stay long, slow and steady wins the race.

Speaker B: Exactly.

Speaker C: And I think that is one of

Speaker B: the things that we talk about all the time in this podcast. We say small amounts of money over time can grow to very large amounts of money.

Speaker C: And once people understand that, it'll drastically change their perspective. When it comes to investing and how

Speaker B: they manage their dollars. It's not hard.

Speaker C: It is one of those things that

Speaker B: is very simple, but it is difficult to execute for some people.

Speaker C: And so overall, your message is, hey, patience is the core message here. Patience and investing these small amount of

Speaker B: money over time can really be a big difference maker. But, and I found that it is one of those hardest cells that, that,

Speaker A: uh, we've kind of had out there

Speaker B: is trying to teach people to be patient because there's so much noise out there.

Speaker C: Why do you think that is the

Speaker B: hardest sell out there?

Speaker C: Why do you think it is one of those things that we really have

Speaker B: to push for people to actually understand how this works?

Speaker A: I think we all fall prey to our impulses, and that's just the sort of reality of dopamine and the human mind. Everybody has some form of addictive behavior. And so when, when we're served up opportunities to pursue addiction, you know, addictive behavior, that's how the brain works. And so we're sort of captive to our dopaminergic system. Uh, one thing I was going to say before, when you look at a business, you always have to follow the money, and you always have to follow the industrial logic of a business and how it operates and how the business generates revenue. The fundamental thing to understand about Acorns in that sense also is we have a slow and steady wins the race philosophy about our business. So it maps to the philosophy that we're espousing you pursue. Like, we want to be a generational company. You know, we want to be a company that's around forever and that grows in lockstep with our customers. I think that alignment is really important to understand. I think when you're monetizing transactions, follow the money, right? So the, when you, when you look at the business and you understand how the business makes money, you can understand whether the business is aligned to your best interests, uh, or not.

Speaker B: Absolutely. And I think that's where the big overarching thing that you guys are doing is really, really cool. Because overall, it's the math of patience and it's kind of thinking through, okay, we could take these small dollars and we can start to invest these dollars over time. We can see the compounding here. And the same thing goes for a business.

Speaker C: If you can make sure that you

Speaker B: are growing in a way that is conservative, but also a way that really does have lasting power, that is going to be really, really important. Is there any math behind this? When you guys look at kind of the patience, you Know, the way that people are investing over time, they invest these small amounts of money over time or these, you know, $5 a day, $10 a day, whatever else that is.

Speaker C: Is there math that you guys use

Speaker B: behind the scenes where people's money can actually grow to these large amounts of money?

Speaker A: My favorite screen in the Acorns app is called the Potential screen. And it's, it's really just a, uh, I think an elegant visual way to show the power of compounding and how it works over 40 years. If you're a kid and you're using. Or you're a parent and you're using Acorns early, and you start investing in your kid as early as birth, you can see how that money compounds over 65 years. So if you do $5 a day invested consistently over that time period, you will retire a millionaire. You know, if you, if you start your kid at birth at $5 a day. And of course, it's really those outer years, which is why time is so important that, you know, sometimes it may feel like a long slog, but because it's really those outer years, like if you enter into a compounding calculator, you can even you, you know, you can see once you get to 40 years, 41, 42, 43, 45. Because of course, the money's growing on a bigger, uh, principle balance. That's the magic of compounding. What I see with our customers is as soon as you understand that you're locked in, you know, we have a. We have really good retention. That's the tipping point moment is once you understand the magical power of compounding, the way that the S and P works, the concept of diversification and that you can contribute small amounts in dollar cost average through, you know, especially through, through choppy periods. That's when you're locked in. And I get, uh, the thought of even one customer being locked in that way, because it's transformative for that person's life and probably their kids and their kids. Kids. And so we as a company, uh, you know, get very proud every time one customer. I mean, we. And you know, we've got obviously millions of customers, but every one customer and that person becomes a beacon also for other people. Uh, we use this, we use the phrase share the wealth. It was like, my hope is as soon as you figured out compounding, tell everyone, you know, because if everyone in America is doing this, America becomes a very different country.

Speaker B: Absolutely.

Speaker C: And I think that's the most powerful

Speaker B: thing is learning how to, to share this and sharing this Message is, is so important. Overall, I think a lot of people when they get started investing, maybe they start to see compound interest working a little bit for them.

Speaker C: But uh, all of a sudden it

Speaker B: kind of feels like a slog. And for most people, I kind of tell them, hey, your first 100k is pretty, pretty tough.

Speaker C: The reason why is because most of

Speaker B: it is your contribution. So your contributions are a big proponent to you investing your first a hundred thousand.

Speaker C: But after you get to your first

Speaker B: a hundred thousand and then your money starts to grow more and more and it compounds more. And even your first million, like you were saying, I think it's one of those areas where you start to see a big, big difference.

Speaker C: But when people are in those early

Speaker B: stages, when people are maybe even in those middle stages and it feels like that money's not really compounding, how can they stay motivated to kind of move forward? Is it looking at something like the potential screen? Is it looking at something that kind of helps them, you know, visualize this,

Speaker C: or how do you think they should

Speaker B: stay motivated throughout that timeframe?

Speaker A: It's absolutely looking at the potential screen, which is why we designed it. And one of the things we're going to do in the near future is merge our, uh, home screen and the potential screen. A philosophical tenet at Acorns is that we've executed this at many places in the product, but you should never see your current present balance without seeing your future potential. I think that's because that's the motivator. Because you're absolutely right. There's a long period in there. You know, it's a little bit like a mid, the sort of middle aged or being in middle age or the sort of midlife crisis years, that kind of thing. It's a funny analog. You can't see as much of that happening for you every day. But if you bring yourself back to the potential screen and understand that the long arc of compounding is always working for you and just staying committed and staying centered in that and staying patient, you know, you'll, you'll, you'll win. And history obviously plays that over and over.

Speaker C: Now there's a big, uh, thing that's

Speaker B: happening right now that I, it's really bothering me.

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Speaker B: And I know it's bothering a lot of other folks out there who are trying to promote financial education and it's one of those areas where fintech apps are trying to get people to trade more. They're trying to get people to trade

Speaker C: in and out of stocks, they're trying

Speaker B: to get people to trade in and out of investment. And it is one of those things that obviously they are doing this for

Speaker C: profits and when you see this across the board, how are you seeing this

Speaker B: being used against everyday consumers? And why can this be a negative for some folks out there, uh, when it comes to, you know, the way that they are trying to get them to, to trade in and out of these investments?

Speaker A: I mean it's not quite a hundred percent of course, but it's, it's not far from 100% of people who gamble lose money online. I think it's 96% and trading is gambling, you know. And again, I hate preachiness. So I don't sit here and like sound preachy to tell people like, don't do this, don't do. People are going to do what they're going to do. And I think it's, I think it's fun to play with a little bit of your money and take some bets, you know, but take some bets on things. Test your skills, you know, challenge yourself to, but keep in the context of course, your broader life, your family, all the stuff that, you know, that ultimately really matters to you in the long run. And make sure that 90% of the money is uh, in a diversified, um, portfolio. I do think it's really alluring. It's sort of preying on people's natural conviction and belief in their confidence. We all have a bit of overconfidence in our own confidence. And so that's what the stuff around trading and gambling really preys upon. And it all loops back to what is the business model when it's free. I love this expression. You are the product.

Speaker B: That's a, uh, great expression because I think that's really what it comes down to when you see this. And it's one of those areas where, you know, you're enticing people to start to trade. And I agree with you. I think this is one of those things where we talk through, hey, 10% or less of your portfolio, if you want to utilize that for things you're

Speaker C: interested in, some fun money, some play

Speaker B: money, to be able to invest in, you know, certain things. And I think that's really, really cool. I do this all the time. I do it for, for very specific things that I think is fun to uh, to invest in. But anything outside of that, if it's causing you to really do your financial freedom and your wealth building strategy is going into some of this stuff, I think it can be problematic.

Speaker C: And we've seen this across the board.

Speaker B: It's getting worse in my opinion, with some of the things like prediction markets where I've seen people in the Past say, hey, your bookie and your broker should not be on the same exact app.

Speaker C: And this is one of those things

Speaker B: that we're seeing happen more m and more with a lot of different fintech apps. And so what do you think about this? And is this something that you know, could cause a problem for the next generation of investors?

Speaker A: I think an investing app with a prediction market is like a bank with a blackjack table. That's the, that's the reality. I grew up with a very kind of clear philosophy of shut up and let the work speak. This was like taught to me, you ah, know as a, as a child. So we walk that walk as a company at Acorns. But I think one of the, you know, one of the things we've just firmly decided now is that like with everything that's happening, it's sort of enough is enough. So we plan to just be louder about this stuff. And while, while we will always let the work speak and let the products and the comms and the, and the things we put out into the world which, which we always put the customer's best interest first speak for themselves, we decided to sort of make what we're going to call the Acorns pledge. And I think this is a really important thing for a company like ours to just come out and state, right? So we have, let's call it tenets of the Acorns pledge. One, we will never play games with your money. And that's back to the. An investment app with a predictions market is like a bank with a blackjack table. If you walked into your bank branch and before you got to the teller there was a blackjack table right there, you'd probably be like, this doesn't feel uh, right. Something's wrong. I'm going to get out of here. Right?

Speaker B: Right.

Speaker A: There's a pit boss in, in the, in the branch like and chips flying and like you probably be like, I'm probably going to go to the branch across the street. That's one.

Speaker B: Uh.

Speaker A: We'll never hide how we make money. This is the, and by the way, these are principles of Acorns in the way we move. But we're sort of stating them more loudly now. We'll never hide how we make money. We're a very simple business. We're a subscription business. That's how we make money. We don't monetize your transactions. And you know, and we think it's really important for people to understand here's what we charge, here's what you get. Here's how we make money. That's it. Um, we'll never push products that create bad habits. I would say if you were thinking about where to do your investing or banking or whatever, to know that the company behind it has made a pledge to never push products that create bad habits. It's pretty obvious. I mean, but it should be the pledge. But actually state it and live that and be about it. Um, so that's three. We'll never stop working to put your money to work. That's a really important one. And we'll never talk over your head. When you look at the history of this stuff with the footnotes and the caveats and the corporate speak and the jargon and the acronym, it's. It's like money shouldn't be complex. Why is it so complex? It was because there's an industry that monetizes complexity. So we want to keep it simple, treat people with respect, be fair. That's it.

Speaker B: I love those. And I think those are, those are some of the core principles that I think most people would really want to see in a brokerage that's out there. And I think this is a, uh, really important thing that most people need to understand. There are so many different apps that are out there that are just utilizing you, like you said, as the product. And when you're the product, there are going to be things that they could present to you that may not be in your best interest. And so you have to understand, you know, how some of this works and how some of this operates, which is why financial education is so important. And I think that's one of the biggest things that we, we need to kind of continue to keep pushing here. So if you could ban anything when it came to like the, the fintech industry or any other financial trend that you see out there right now, what would be the biggest thing that you wish would just go away?

Speaker A: False advertising. Because by, uh, the way, and the regulations are supposed to do this, but I would ban false advertising. The problem for people is not that these products exist. It's that they're communicated as something other than they are or, or maybe misunderstood as something other than they are. So, you know, if a tree falls in the woods and nobody heard it, did it really happen? I guess you could say the problem is not that the product exists. It's that. It's that there's so much misinformation about what is the right way to do these things. And a lot of that comes from the communicate, you know, the communic and packaging of this stuff and ultimately miss as a result as consumers, which makes sense because how the hell are we supposed to know predicting is investing? Well, no, it's not trading is investing. No, it's trading again. Just call it what it is. So I would ban false advertising and the regulators are obviously, you know, supposed to make sure that things aren't promissory and this kind of thing. But I, but I think a lot of it, a lot of it still happens.

Speaker B: I love that. And I think that's, that's something that most people don't even realize it's happening and it's right in front of them, which is a big, big deal. Now I want to shift to behavior and habits here.

Speaker C: I want to talk through some of

Speaker B: the things that people can actually put into place and some action steps that they can take from listening to this episode. So obviously we've talked about the beginning of the episode. One of the biggest edge that we have in place is patience.

Speaker C: And time is one of those things

Speaker B: that can really absolutely change your life. So if you're a 20 year old

Speaker C: out there, you have one of the

Speaker B: most, uh, valuable assets of all, which is time.

Speaker C: What are some of these small everyday

Speaker B: decisions that actually compound into real wealth?

Speaker C: What are some of the things that

Speaker B: you want people to know that uh, they can do to really compound into real wealth?

Speaker A: Here there's an expression. The best investor is a dead investor. Do you know this expression?

Speaker B: Yes.

Speaker A: So turn it on, set it and forget it. If you're going to come back, I mean, you know, if you're going to come to the, to the product, keep those principles in mind that it's all about time in the market. Slow and steady wins the race. I always have to remind myself of this mantra actually. This was actually this one, this one is mine. Every downturn in history has ended in an upturn. You know, those are the small, the small things you have to remember. But it's really set it and forget it, play dead.

Speaker B: I love that. I think that's where there's, you know, there's been studies that have come out in the past where like companies have looked at some of their best customers and they're, they look at it and it's folks who have actually passed away that just kind of left their portfolio going and compounding over time. I think that's a really cool thing. Um, and it's a really cool concept to think through this now. One of the things you guys do is you're utilizing automation as a secret weapon. It is one of those things where

Speaker C: automation has become one of the best

Speaker B: forms of firepower that your investors have when they are looking at, you know, building up their portfolio. Why is automation so powerful? And why is that something that you guys kind of started with or one of the things that you kind of thought through when you started to build out your platform?

Speaker A: It's the application of set in, forget it. So the, you know, the automation is. We're doing this work for you to help you make sure you set it and forget it and play dead. Automatic portfolio construction, it is really fundamental. Like you, uh, when you think about the things that we all have trouble with doing, like constructing our own portfolio is just very difficult. So we do that, we automate that for the customer. Um, understanding how to, how much to invest, how to invest, we automate that for the customer. So $5 a day, turn it on, let it ride. You know that. So I would. Automation is literally just the solution to set it and forget it. And, you know, that's how we constructed the Acorns product.

Speaker B: Now there's a whole generation of investors who may have kind of learned about investing from the Meme Stock era. And we saw this kind of happen over the course of COVID in 2020 when we saw a big shift in, uh, a lot of these investors. Well, a lot of these investors are still out there kind of investing. Some of them are investing that way, or maybe they're investing in crypto. Do you see this as a dangerous way for people to learn how to

Speaker C: invest, or do you see this as

Speaker B: a positive because at least people are getting into the market?

Speaker A: There's definitely not a one size fits all answer to that. I think ultimately it's, it's, you know, time will tell for each person. Whether playing around during, during that period or messing around with some of these assets is a good thing for you or a bad thing. I think back to the, you know, thing. I, I always say it's okay if you're doing it with a small percentage of your money. And I probably argue it's a. Not just okay, it's probably a good thing because. Because everything you learn is useful. And I think if we're synthesizing all of this, these experiences and all of these learnings together as we go, then we become better stewards of our own money. But it is certainly a problem if with the large majority of your money, you're gambling and buying risky volatile assets. So diversification is everything in terms of portfolio construction and management. And um, I think it's probably going to be different for every single person. But there are definitely those two categories of people, which is one, you know, people who played around, learned, got smarter, and then. And then people who went all in and got themselves into a really tricky situation, which sucks.

Speaker B: Absolutely.

Speaker C: Now, I want to look at your

Speaker B: personal lens on some of this stuff as well. What is a belief about money that you've completely changed your mind on in the last five years, if any?

Speaker A: Because we're about diversification and, and maximizing returns and minimizing risk. You know, we don't just offer cryptocurrency investing because if you, if you were to do that with the lion's share of your money, it's just. That's. It's just like any other risky volatile asset class. That's not. But I, where I. So, so we, uh, actually didn't get into crypto at all. And where I completely changed my mind was to approach it from a different vantage point, which I think. I don't know if it's been five years. I don't actually know the time horizon, but it's somewhere in that neighborhood, which was to say, actually, let's take this as a moment to do things the acorns way and to spread knowledge. So we rolled out this campaign called Bits of Bitcoin. And basically what the product allowed you to do is get like a small allocation of bitcoin in your diversified portfolio. One to 5%, depending on whether you're in conservative all the way to aggressive. I flipped on the, like, we're not doing that at all because it's a risky, uh, volatile asset class. So let's do it the acorns way. Let's spread education. And we did a camp the Bits of Bitcoin campaign, which is to say, think of it as the sprinkles on top the bits. You know what I'm saying? And all good. And so. And uh, actually, by the way, it turns out that that portfolio is even stickier. There's something there that's really important about the combination of diversification with people's passions, because people are super passionate about this stuff for various reasons. So I, yeah, I completely flipped. I had to look myself in the mirror and say, you're being too paternalistic with this. Like, like, don't be so unreasonable. So that was, that was a flip.

Speaker B: I think that's a good one. And I think for, for a lot of us out there, we've seen it just a shift in the way the crypto market has worked. The institutional investors have kind gotten involved and there's been a lot of different shifts in, in that market. And, and in reality that's one of those areas where I kind of utilize crypto as a percentage of my portfolio in that 10% range that we kind of were talking about where for me specifically, that's kind of the way I think about it.

Speaker C: How do you invest your own money?

Speaker B: Is this something where you kind of, you uh, alluded to kind of using, you know, a small portion of your

Speaker C: portfolio as some of your play money

Speaker B: and then you have this, this other big chunk, this 90% as money that you're utilizing to build wealth. How do you invest those dollars and what are some of the, your philosophies around that?

Speaker A: I invest my money as you would hope, exactly as we espouse. So the vast majority of money is invested in diversified portfolios. I do invest in startups that I believe in that fit into certain criteria. Like, you, uh, know, uh, there's things that I think are great for the country and I, and I try to invest in those things. Obviously in the financial wellness category, medicine, education, that kind of thing. Um, I invest some of my money into. When I was like 15 years ago, I developed a really bad, uh, vestibular migraine problem. It was rough. And it's one of those silent, you know, problems where people are like, oh, you get headaches and you're like no, no, no, it's not headache. It's not, no, it's way worse than that. So I, so I put some of my money into University of San Francisco department, uh, of Neurology to try to figure out what causes migraines. Uh, have an art organization called Give Kids Art with my wife. And we, you know, I put money into that. So, so, but, but you know, but I think, I really think long term in terms of how do we make sure we have a stable future. And we've put, you know, we've, we're maximizing returns and minimizing risk with the rest, with the rest of the money.

Speaker B: I love that and I think that's a, just a powerful lesson in and of itself that, that most people need to kind of think through their portfolio and kind of utilize a huge chunk of it as long term wealth building, you know, activities with those dollars. So that's awesome.

Speaker C: So I want to shift gears to

Speaker B: a couple of questions that we ask a lot of our guests. You know, uh, that are really fun. You can do these rapid fire, you could kind of expand on those however you want to do it. What part of your Work or your life makes you come alive.

Speaker A: You know, the, the part of my work that, that makes me come alive is a lot of the stuff we're talking about, which is the fighting this fight, standing for the right thing and using integrity as the central guiding force in business. And it makes me come alive to know that we have a culture, a team, a company that puts the, puts people first and moves with the philosophy of your money first, ours next. And if you, if you talk to anybody at the company who works at the company, and this includes people who want to come work at the company, there's a really, really strong glue that people feel because they know that the decisions that get made here put the customer first, that we're not going to compromise on our integrity. That makes me come alive. And I think that goes back to just. I, I grew up with two really ethical parents, you know, so that's a great one.

Speaker B: And then what is your biggest fear when it comes to money?

Speaker A: You know, no matter how much better I've gotten at this, when the markets go completely sideways, I think just, it comes up from inside just like anybody else. Like, like no matter how much I've trained myself that well, the of fear of this is it, it's never going to get better. This is it, we're at the end, the world's over. And that's just like this uncom, you know, so. But I've trained my brain to take over in that. But I don't. I still experience that, that same fear that I think everybody experiences.

Speaker B: I think it's one of those things too. I've kind of trained myself to always try to remember. There's a, uh, couple things I go back and reference and read all the time. And it's one of those things that I stopped looking at my portfolio for a little while, especially when the market is down. It's just I won't look anymore and it's one of those things. I'll try to set it, forget it, just let it go. Um, and just look less when that's happening. So that's a, that's a big one. I think everyone kind of goes through that and it's a, it's an important one to talk about. How do you plan to level up your finances the. This year, if you're doing anything at all?

Speaker A: I have no plan to level up my. Fine. I have no plan to level up my finances. My. I'm, I'm a long term. I'm m. I'm. I'm. Slow and steady wins the Race. So my plans are locked, you know what I mean? And yeah, I, I think I, I, I have no plan to level up. It's just keep it completely level.

Speaker B: I love that.

Speaker C: And I think that's, that's uh, a,

Speaker B: that's an awesome answer. What is the best money advice you've ever received?

Speaker A: You know, I, this is not like a one liner, but I was really Conservative in my 20s and I lost a decade. This comes back to why I think part of the motivation for doing what I do. But I really lost a uh, decade, you know. And, and I, for, for me it was a brave move to have a cd. I don't mean compact disc. It was a brave move and then muni bonds was a brave move. And the best advice I, you know, I ever got and thing uh, I did was, was I got a money manager at that time and they really relayed to me the power of compounding and showed me and helped me understand what I lost over that decade. So that will be the best advice because before that I was not taking advantage of, of the magic of compounding. And, and I uh, like I said, I uh, I uh, lost a decade due to, due to the, the same fear that I think inhibits so many of us, you know, and it's that

Speaker B: spread of that message. Look how many lies it's changed from igniting that fire into you and you starting, you know, to do what you do now. I think is just a really, really powerful lesson on uh, why we need to spread this message even more.

Speaker A: Can I say one more thing, Andrew?

Speaker B: Sure.

Speaker A: This goes hand in hand with that. It's actually not. Investing is not safe. So having your money in cash or an instrument that's yielding 1% or 2% or even 5%. I was really struck by that period where it was like 5% high interest savings accounts and everybody's pushing them with no context. During that period the market went up 30%. 18 month period it went up 30%. So while you're celebrating 5% returns, you lost 25 points. So hand in hand with that is that cash is not safe actually because you're losing money to inflation every year. And I, I, it's, it's really important to understand that mattress fund not safe. Not just because you could light it on fire if your house burned down, but it's not safe. Checking account, not safe. Like even high yield savings account if you're, if, if you're thinking about that for the majority, um, not safe because you're just losing immense amount of returns.

Speaker B: It is one of the riskiest things you could do is avoid investing. And I think that's one of the areas where most people, we try to promote that as much as possible. We're like, hey, if you do not invest your dollars, you will not be able to retire unless you make a massive amount of cash and you have a massive amount of cash on hand. So it's one of those things for sure, uh, that I completely agree. I think it's one of those areas most people need to understand. Yeah, the last one is my favorite and it's what does wealth mean to you?

Speaker A: Uh, I'm just gonna say the first thing that came to my, to my mind. So I. So to me it is to be fulfilled. I have never chased money as my primary objective. Sometimes people will say, yeah, but you, you, you know, you started making a lot of money really early doing startups and things. And it's like, no, no, before I did, it was never the primary motivator. So to be wealthy is to be fulfilled. And I think, yeah, uh, that's what I think of as wealth.

Speaker B: I love that answer. I think that's a great one. Well, Noah, thank you so much for coming on here. We truly appreciate it. Where can people find out more about you? Acorns and everything else?

Speaker A: Acorns.com or obviously you could download the Acorns app in any app store. We also have Acorns early. I don't really do social media. I am on LinkedIn but I'm not a big like back to shut up and let the work speak.

Speaker B: Yep.

Speaker A: So I love that.

Speaker B: So we'll link all those up down below in the show notes as well. Noah, thank you so much for coming on here.

Speaker A: Thanks for having me.

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