Don’t save to retire

“Don’t Save to Retire”

Thundered the headline as I doomscrolled in bed on Sunday night.

“Trillionaire Elon Musk says AI will overtake human intelligence in five years, one billion robots will be doing your jobs, and money will be meaningless.”

Sweet dreams, Scottie!

Now, if you’re normal, here’s what’s going through your head right now:

Musk is a smart dude. A weird, sometimes sad, occasionally appalling dude. But smart. So even if he’s out by ten years, that’s still terrifyingly soon to be replaced by a robot, right?

Well, here’s my take.

Musk is undeniably the greatest salesman who has ever lived. In fact, he (briefly) became the world’s first trillionaire by creating the greatest sales pitch in history.

It goes like this:

He and the other AI companies have built a God in their garage.

It’s so powerful their machines might just kill us all … or take all our jobs … or if we’re lucky, deliver us a golden age of utopia where we don’t have to worry about boring stuff like saving for retirement or finding a girlfriend (hello sexy fem-bot).

Now that is one hell of a sexy pitch!

It’s certainly a lot sexier than the truth: that they’ve built a hugely expensive pattern-matching chatbot that guzzles an insane amount of power and water, regularly hallucinates on simple questions, and once spent fourteen minutes losing a fight with a drop-down menu.

Worse, I think these salesmen have gotten carried away with their own hype.

The boss of Claude puts the odds of civilisational collapse at “10 to 25 per cent”. In 2023 the heads of the biggest AI outfits signed a statement ranking “extinction from AI” right alongside pandemics and nuclear war.

I don’t know about you, but this doesn’t pass the sniff test.

If these men truly believed those odds, we’d treat AI like a contagious killer virus and shut it in a lab. Instead, they doubled down, and are now working incredibly hard at selling their loss-making businesses via the sharemarket.

My take?

They’re either liars or lunatics. Either way, I’m not taking retirement advice from them.

And look, I’m no luddite. I think AI will do amazing things in the future, especially teamed up with robotics. Yet this technology is about three years old. These are techno-toddlers. Musk is the pushy dad at the school gate swearing his three-year-old will run the world. Maybe, mate. Come back when the kid’s eighteen. Then we’ll talk.

For me the real question isn’t whether AI takes your job. It’s who owns the robots, the data and the technology, and the businesses that could become incredibly profitable by using it.

And the answer can be … you.

A sliver of every one of them, through a simple index fund: the chip makers, the software, the robot builders, the lot. If the machines really do mint trillions, the owners get rich.

Yet here’s what makes absolutely zero sense:

Musk is telling you that you don’t need a ticket to that owners’ club. That there’s no need to save, because the former trillionaire says “money will be meaningless”.

Uh-huh. Dial down the ‘special K’, Elon.

So whether this ends in utopia or a giant fizzer, your move is the same, and it’s gloriously boring. Get out of debt. Own a slice of the world. Keep your Mojo bucket full. And learn to drive these new tools instead of cowering from them.

The only people who get truly screwed are the ones who panic and stop backing themselves.

Tread Your Own Path!

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Your Questions & Answers

• ING Announces Biggest Change in 18 Years

• We Have One Week to Get Rich

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ING Announces Biggest Change in 18 Years

Hi Scott,

I hope you’re well. We’re going to announce the below today, so wanted to make sure you had a copy. It’s a new savings product we’ve called Savings Booster, and it’s the biggest change to ING’s savings products in 18 years. The product rewards customers with a bonus rate if they meet one straightforward condition: growing their balance by $100 or more by the end of each month. New-to-ING savings customers could earn up to 6.00% p.a. variable rate on balances up to $500,000 for the first four months when they grow their balance by $100 or more by the end of each month. Let me know if you have any questions.

Adrian

Hi Adrian,

Given you’re one of the Big Cheezles at ING, thanks for giving me the advanced drop on this.

You remind me of … me on a Sunday night.

I’m tired from a weekend of dad taxi-ing. It’s time for the final push of getting them into bed. So I lure them with a carrot.

“You can watch one episode of Octonauts”, I say, smiling.

If …

… you set the table. Eat all your dinner. Clear the table. Have a bath. Wash your hair. Brush your teeth. Set out your uniforms for tomorrow.

That is your new improved account, Adrian.

Your press release gushes that the Savings Booster will “make bonus interest easy to understand and deliver greater value for customers”.

Easy to understand?

You’ve created three separate rates stacked on top of each other. A Welcome rate of 0.60%, which only runs for four months. A Boost rate of 3.15%, which you only get if you grow your balance by $100 that month, excluding interest. And a Base rate of 2.25%, sitting underneath.

After four months the Welcome rate vanishes and your “up to” quietly drops to 5.40%. Same hurdle, one less sweetener. Miss that $100 hurdle once, because the car needed tyres or Christmas came, and you’re back on 2.25%.

Mate, like I said, you’re behaving exactly like me on a Sunday night. All these rules, dressed up as being for their benefit, are really designed to get me what I want.

And for a while it works. Until my kids run out of bandwidth. They get fed up, they turn on me, and the whole thing falls apart. I’m left with four ratty kids and no dinner eaten.

Because kids are smart. They wake up to the fact they’re being manipulated.

And so will your customers.

So here’s what I’m going to do. I’ll set up an automatic transfer the day after payday, clear the $100 hurdle without even thinking about it, and get on with my life. It’s a good rate, after all. But let’s not pretend you’re doing it in my best interests.

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We Have One Week to Get Rich

Hi Scott,

We’re a couple in our early 30s, two little kids, combined income around $220k, and about $500k in equity. We worked our rings off for ten years to get here. Last week we paid $5,500 to get property advice from (NAME DELETED BY BAREFOOT LAWYER). They want to sell us an investment property. Their ‘portfolio fee’ is $40k over five years. We don’t fully understand what we’re buying, but they say they can only ‘hold’ the property for us for seven days, so we’ve got until next Friday to decide. We don’t know anyone else in our position. So I asked my old man, and Dad (bless him) told me to ask you. So here I am.

Brendan

Hi Brendan,

So here’s what I’m willing to offer: my advice fee is $40,000, and I can only hold your spot for seven days. After that it’s gone.

That’s the exact line these property salespeople used on you.

Brendan, the moment anyone puts a countdown clock on taking your money, you should hear an alarm. Real estate doesn’t evaporate. Nobody genuinely trying to make you rich needs you to decide by Friday.

Here’s what actually happened last week. You paid $5,500 to a company whose entire business is selling investment properties. And their advice was, ta-da, to buy one of their investment properties. Mate, I don’t walk into an ice-cream shop with my kids and come out holding broccoli.

And the $40k over five years isn’t a ‘portfolio fee’. It’s a commission dressed up in a suit, and a big chunk of it is almost certainly baked into an inflated price on the property itself.

Here’s the kicker: you already built $500k in equity in ten years. How did you do it? You bought a family home, and you lived there. Simple. No $5,500 advice strategy needed.

So let me give you my $40,000 advice for free.

Write off the $5,500 as tuition and never call these weirdos again.

Then just keep climbing the tried-and-true Barefoot Steps: Bump your super up to 15 per cent and put it on autopilot. Build your Mojo to three months of living expenses. Then, Step 7, get the banker off your back and throw everything at that mortgage.

Oh, and say g’day to your old man for me.

Thanks for reading,

Scott.

The Billionaire versus Barefoot

“Third!” I yelled.

My eight-year-old daughter was riding shotgun. She didn’t miss a beat. She leaned over and confidently moved us into third gear. All the while grinning from ear to ear.

And why not?

She’d mastered a skill that evades her automatic-licence-only mother.

(I often yell “third” to Liz, but she doesn’t dare touch the gearstick.)

What a clutch.

My Toyota V8 ute has woolly seat covers, an ashtray, and a custom-fitted and totally-offensive train horn. (The Tesla famously has a fart button that makes passengers laugh. My ute’s horn makes people on the street fart.) Lucky is chained up in the back, wind in her chops, as we roar into third gear.

It’s little wonder my boys are already fighting over who inherits it when I run out of diesel.

Yet at the peak of the oil crisis it was costing me $310 to fill the thing. And with the fuel excise about to snap back I've started asking myself:

Is it time to go electric?

My wife recently bought an EV and she loves it. I find it stressful. It’s like she’s driving with me.

Too close to the lines? Ding!

Eyes off the road? Ding!

All it’s missing is, “I wouldn’t have done it that way”.

An ABC article called the Labor government’s EV leasing scheme “an amazing secret deal”. And that’s exactly why it’s blown out tenfold, costing taxpayers $1.4 billion this year alone.

The government says it can save you $5,000 a year.

Sweet tax break!*

*Terms and conditions apply. Including the bit where your EV ends up worth half what you paid for it at the end of the lease.

Ding! Ding! Ding!

But it’s getting worse.

First, because all those amazing secret deals are leased and most will be dumped on the market in three to five years.

Second, because buying an EV is like buying a phone. (Case in point: I tried to trade in my perfectly functional but old iPhone 13 mini recently. The guy offered me a used K-Pop Demon Hunters phone case and $80 cash.)

In other words:

The first owner gets the tax break. The second owner gets the bargain.

Honk!

Tread Your Own Path!

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Your Questions & Answers

• You’re a Loser, Barefoot 

• The Broken-Hearted Mum

• Leave Your Husband. Now. Don’t Delay.

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You’re a Loser, Barefoot

Scott

Calling SpaceX “the most overvalued piece of junk going around” shows that you have no idea about AI and the massive disruptions it’s about to make (including to the financial advice industry). The stock is up 50% in the last five days. FIFTY PERCENT! I bet you wish your boring index fund had more than a 0.06% stake? The world’s richest woman, Gina Rinehart, is one of its biggest backers. Maybe you should listen to her, you loser.

Dean

Hi Dean,

You’re right.

Making 50% in two days is seriously get-rich-quick stuff.

You’re also wrong.

I’m perfectly comfortable with my boring 0.06% stake through my index funds.

Why?

Because I’ve been investing for three decades, and I don’t think in two-day time frames.

I think in decades.

You're right, I'm clearly not in Gina Rinehart's league. But then again, my Daddy didn't leave me a chunk of the Pilbara.

My index funds give me a slice of the earnings from thousands of businesses around the world. A slow and steady climb that compounds over time, not overnight.

And I’ve made peace with the fact that there will always be someone getting richer quicker than me:

That stops me from trading with my ego.

Now, on AI. I think AI is going to change the world. As did the internet. The internet transformed how we work, communicate, shop, travel and date. Yet most of the dot-com darlings that promised to change the world ended up broke.

A great technology doesn’t automatically make a great investment.

The current excitement around AI reminds me of every investing mania I’ve lived through. People stop talking about earnings. They stop talking about what a business is worth. And they start talking about the share price. Or, in your case, how much it went up in the last five days. 

Maybe SpaceX will prove me wrong.

Yet if there’s one thing I've learned after thirty years of investing, it’s this:

When everybody is talking about how much money they’re making, it’s usually time for me to get interested in something boring.

Boring wins.

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The Broken-Hearted Mum

Hey Scott,

I am a broken-hearted mum right now. After a wonderful Mother’s Day weekend with both my sons, my older son has now ghosted me. No warning. No explanation. When I finally got a response, he told me he’d started seeing a psychologist who had helped him uncover suppressed emotions from his childhood. He says he can’t talk to me without screaming. I am at a loss. He had a good childhood. There was no abuse (okay, I yelled when chores didn’t get done and he got smacked when naughty) and no neglect (our food bill halved when he left home). Yet somehow I seem to have been cast as the villain of his story. My question is this: my son is 24, a sometimes full-time uni student, and works casually pushing trolleys at a supermarket. We still have him on our health insurance, pay for his NRMA roadside assist and even cover his Netflix. Is it time to cut the cord?

Sad Mum

Hello Sad Mum,

Before I answer this, a disclaimer: I am not a family therapist. My kids are still young enough that I can settle most disputes by threatening to turn off the Octonauts.

However, you didn’t ask me why your son is angry. You asked whether to cut him off financially.

And I can answer that one:

Hell, no.

If you cancel the insurance and Netflix today, he won’t suddenly remember that you loved him. He’ll see it as punishment, and you’ll have given him one more reason to stay away.

You’re heartbroken. You love your son. You want him back in your life. Money has got nothing to do with it. Parents and kids often remember the same childhood very differently. Sometimes one of them is wrong. Sometimes neither of them is.

What matters right now is keeping the door open long enough to see your son walk back through it.

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Leave Your Husband. Now. Don’t Delay.

Scott,

Reading your question last week about Wendy hit home (“I live with a man I no longer love, but stay because of the money I’d have to pay him out”). I did the same thing for over 15 years. Finally, I left. Somewhere along the way I had become the money-bags and a parent to an infant adult rather than a partner. The injustice is the hardest part. Everything you worked for, sacrificed and provided will be split with someone who doesn’t care. It feels completely unfair. And it is. But here’s what I know from the other side.

I was Wendy two years ago. In denial about the settlement figure. Worried I wouldn’t get through it. So I delayed. It cost me nearly $100,000 more. Bloody property prices! Wendy, don’t delay. The settlement only gets worse the longer you wait. The house gets paid down, your super increases, the asset pool grows. They’ll still get their 50%, just of a bigger number. Take the leap. It will be hard. But you can do hard. You’ve been doing it every day of your relationship. You just didn’t see it at the time.

Hardworking Woman

Amen to that.

See you all next week.

Scott.

There's a fake Barefoot Investor. And he's everywhere.

My kid's teacher pulled me up at school drop-off this week.

"What's he done now?" I asked, bracing myself.

Turns out I was the one in trouble.

"I saw you on the internet advising people to sell everything because of the budget," she said.

I'm not even on social media. But there are hundreds of AI-generated posts claiming I am, complete with photos of me looking like a washed-up Blue Heelers extra who never made it out of the pilot episode.

Honest, Miss!

Then again, AI isn't designed to tell you the truth … its sole aim is to keep you coming back.

I know a couple who use ChatGPT as their relationship counsellor. After every fight, they each go to their own bot. And every single time, they're told they're completely right and their partner is the problem.

Separately, they're thriving. Together, they're cooked!

And we haven't just invited AI into the bedroom, it's now in our bank accounts. Today ChatGPT is the largest provider of financial advice in the world. More than 200 million people a month ask it for money advice, and last week OpenAI went further: US users can now hand it the keys to their actual accounts and get tailored financial advice. Australia won't be far behind.

My worry is that ChatGPT is like having your bestie do the job:  it’ll tell you what you want to hear.

Ask it to validate the hot stock tip your brother-in-law gave you. It'll find reasons it could work. Ask it to explain why you deserve a boat. It'll build you a spreadsheet. Ask it whether you really need to pay off your mortgage or whether you could just invest the difference in crypto. It will construct a beautifully logical argument for whichever answer you were hoping for.

It's a yes-man with a PhD.

Then again, let's look at the alternative: seeing a real financial adviser will cost you five grand, minimum.

And a lot of people walk out with a template of common sense, and a portfolio so complicated they have no hope of understanding it. Which is exactly the point. Complexity is their job security. That 1% annual fee quietly bleeds you of tens of thousands of dollars a year and almost guarantees you'll underperform a simple index fund.

So you're stuck. A bot that flatters you, or an industry that confuses you on purpose.

Well, here's the third option.

After two decades of writing this column, I can tell you the one thing that separates people who build real wealth from everyone else: they made decisions that felt bad in the short term. They knuckled down and saved up for a deposit when the market was flying. They kept their boring low-cost super when crypto was mooning. They said no when every algorithm and influencer said yes.

Build your career. Boost your super. Pay off your home.

And you don’t need an AI to tell you that.

Tread Your Own Path!

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Your Questions & Answers

• I will never, EVER read you again

• I’m addicted to spending money

• Vale Neale Daniher

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I will never, EVER read you again

Scott,

I have loyally read your column every week for 20 years. First the sudoku, then straight to you. I've clipped your articles and sent them to my kids and grandkids. Never again.

You are a socialist. A cheerleader for a lying, thieving government elected on a false premise. This budget is drowning in waste, CGT grabs, attacks on negative gearing, small business owners crushed under red tape while politicians throw other people's money around like confetti.

I'm 74. I've seen first-hand what profligate politicians do to an economy. You have no idea what these policies will do to this country, or your own children's future. You’ve lost me, Scott, and judging by the comments under your article, a hell of a lot of your once loyal readers. 

Mick

Hey Mick,

Calm your bloody farm!

You've been with me 20 years and you're calling me a socialist?

If you've read me that long, you know I'm an equal opportunity offender. I've never spruiked a political party in my life, and I'm not about to start now.

Here is the guts of what I actually said about the Budget:

Negative gearing, the introduction of the 50% discount on Capital Gains Tax, and falling interest rates combined to price a generation out of the property market. We need to level the playing field.

The government now wants to tax investment profits the same as workers' wages.

And the reaction has bordered on hysteria.

Yet as I showed last week in my column, the changes aren’t actually that radical, and in terms of the new proposal of indexing  Capital Gains Tax to inflation, it may work out better for investors than the current 50% discount.

Again, I’ve never voted for the Labor Party in my life. I am not in their pocket. It’s just the facts.

Another fact is that these changes (especially the crackdown on distributing income via trusts), is going to mean I pay more tax going forward.

Yet I still think it's the right call.

Still, we agree on more than you think, Mick: we both want less waste. Lower taxes. Fewer bureaucrats spending other people's money like confetti.

The question is which party gets us there?

Well, that's between you and the ballot box.

Keep enjoying the sudoku Mick. Unlike me it'll never turn commie on you.

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I’m addicted to spending money

Scott,

I'm addicted to spending money. Each week I read your replies to people who are married to someone who is reckless with money and you give them advice on how to protect themselves. But it's me, I'm the problem, and my husband has gone to the effort of hiding money from me so I don't spend it (thankfully, or we'd be broke). Is there an "AA" for reckless people like me who want to stop but can't seem to do it? I’m 37, with a good job (earning $140k). However, like any good addict I have all the best intentions (I've read your book countless times) and think "just this last purchase" and then it all slides. I want to stop but I can't.

Ellen

Hi Ellen,

We're all addicted to something.

Online shopping, porn, booze, social media, gambling, political outrage. Or in Mick's case, sudoku.

Yours is spending, and you've admitted it out loud without dressing it up. That's the hardest part.

Here's why willpower won't fix this: you're not weak, you're chasing a feeling. The hit, the relief, the "just this once" that quietly overrides everything you really want to do. Trying harder doesn't rewire that. A good psychologist does. Ask your GP for a referral, someone who works with compulsive or addictive behaviour. CBT is a good starting point.

There's a lot of shame in this kind of cycle. Most people carry it alone. It sounds like your husband is a good man. Let him walk with you.

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Vale Neale Daniher

There's been a lot written about Neale this week. As there should be.

In a world of mock outrage and fake influencers, Daniher was the real deal. He was the closest thing this country had to a modern-day stoic — a man who stared down motor neurone disease for more than a decade and chose, every day, to keep fighting.

Here’s something you may not know. He spent his final year not only showing us what true courage looks like, but teaching us: he wrote his last book when his arms, legs and voice had all gone, using eye-gaze technology.

This week I've been reading it to my sons.

Everyone talks about resilience these days, but Neale actually lived it. And in his final book, he shows you how you can do the same. 

Buy a copy of The Power of Choice.

Share it with someone you love.

Thanks for reading!

Scott.

A toxic mix of pain and devastation

This week I was asked to debate whether AI should be used in financial counselling.

I was on the 'yes' side.

Sitting in front of me were 1,000 financial counsellors, arms folded, all thinking the same thing:

This bloke's trying to replace me with a robot.

And who can blame them?

Still, this horror movie has been playing for a hundred years, and it always ends the same way:

The job apocalypse has been "five years away" … for the past one hundred years.

Case in point:

In 2016, the so-called godfather of AI, Nobel prize winner Geoffrey Hinton, declared we should stop training radiologists immediately. He said it was ‘clearly obvious’ that AI would replace them within five years.

Today?

There is a shortage of radiologists. Last year there were 4,000 unfilled roles in the US alone.

Why?

Well, AI became their assistant …  not their replacement.

Which brings us to today’s hype cycle:

The founder of ChatGPT is warning that AI will be so devastating we'll all need a government handout to survive. I’m highly sceptical … at least in the next five years. I don't know about you, but my interactions with the chatbots remind me of this meme:

Wife: "Did you do the dishes?"

Me: "Yes."

Wife: "Why are they still dirty?"

Me: "You're right to push back on that. I didn't actually do them."

Wife: "I hate you."

Me: "You're absolutely right. This one's on me. Ready to clean?"

The fact is that these language models are three years old: they're still techno toddlers.

Will AI get better?

No doubt. Hundreds of billions of dollars that are currently being invested in AI says it will.

Yet here's what the AI hype merchants miss entirely:

For all the technological advancements, we are lonelier than we have ever been. Anxiety diagnoses have doubled in a decade. Two thirds of us don't trust what we read online, as AI fakes flood our feeds.

We spend our nights sitting alone, heads down, scrolling on our dopamine casinos.

We are starving for human connection.

Which is why a financial counsellor, a real one, sitting across from you, listening without judgement, helping you make sense of your money when your life is falling apart …

Cannot be automated.

AI will crunch the numbers, but it won't hold your hand when everything goes sideways.

And the more artificial the world gets, the more valuable people who actually give a damn become.

Tread Your Own Path!

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Your Questions & Answers

• New Tax Changes Could Create A Toxic Mix of Pain and Devastation

• What’s Your Take on the NDIS?

• Barefoot the Crooner

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New Tax Changes Could Create A Toxic Mix of Pain and Devastation

Hi Scott,

I'm just reading about the government's proposed changes to capital gains tax in next week's budget. It seems like utter madness from the Labor government that will hit your readers hardest. One expert called it "a toxic mix of pain and devastation" that will force landlords to sell investment properties. And they're doing this during a cost of living crisis when research found that nine per cent of mortgage holders would default if there are one or two more rate hikes. Clearly making things more expensive for landlords like me will make us jack up our rents. It's just commonsense!

Terry

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Hi Terry,

I'm not sure if you're from the housing lobby, the Liberal Party, or if you've just stumbled onto my column for the first time in 22 years and haven't worked out that I've spent the better part of two decades arguing against negative gearing and every other form of taxpayer-funded landlord welfare.

For far too long, first home buyers have had the footprints of investors on their backs.

A toxic mix of pain and devastation?

Please.

If that's what happens to your investment portfolio after a few tax tweaks, you've got bigger problems than I can help with.

As for the figure of '9% of mortgage holders at risk of defaulting if there were one or two more rate hikes' ... well, I have a few things to say about that.

First, if they're that skint, they should sell their homes immediately and get out of the market while they still can. They don't own their home. The bank does.

Second, these people most certainly are not my readers.

We're way too smart for that.

What’s Your Take on the NDIS?

Hi Scott,

I'd be keen to hear your thoughts on the NDIS cuts. There are so many strong opinions in my media feeds that this is either … killing people with disabilities, or finally fixing the people taking advantage of the system. What are your hot takes? How does the government either recontextualise the spending as future saving or argue that people with a disability should pay for their own care?

Frank

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Hi Frank

I fully support the founding idea of the NDIS: as a nation, we look after people with profound and life-changing disabilities. How we treat the most vulnerable in our society says everything about the values of our country.

However, it's been incredibly badly run.

You kind of expect that with the government, but this has been a cock up of monumental proportions.

There are people who gamed the system and got in early who arguably don't need the support, and now there are genuine cases who are getting knocked back. And then there are billions of dollars of rampant fraud … and our politicians just shrug their shoulders?!

That is not acceptable.

My view?

The entire system needs to be redesigned so it fulfils its original aims. We need to weed out every single fraudster, make them pay back the money they stole, and put the worst of them in the slot.

And, at the same time, make sure the people who genuinely need services get them.

No more shrugging. The NDIS is too important.

Barefoot the Crooner

G'day Scott,

My wife and I read your book, applied the steps, and came out the other side owning everything. Not a cent owed to anyone. You changed the course of our lives, and our kids' lives. Thank you. If you'd been as famous in the 80s as Leif Garrett, I would've had your poster on my wall instead of his. 

We're two years from retirement and we've just seen a financial planner, a proper one, Master in Financial Planning, member of the FPA. First thing he said? "You've read Barefoot's book, haven't you?" He's been fantastic. But here's where my gut started talking. He's recommending we ditch our low-fee industry super fund for an ASX-listed fund charging $8,000 a year in fees, with a promise we'll be $100,000 better off over three years. My wife is front row at the Leif Garrett concert, screaming "I Was Made for Dancing." Me? I'm still in the car park. Is this too good to be true?

Lenny

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Hi Lenny,

So I googled Leif Garrett. He was quite the dreamboat in his day. Thirty years on though, he looks as washed up as ... me.

Having read and applied Barefoot, YOU are the dreamboat, Lenny. You've done all the hard work yourself and you're now on track for an awesome retirement.

And since you've already mentioned me, feel free to forward this to your financial planner.

In fact, I'll address this to him directly.

Dude.

You and I both know that the only thing you can guarantee Lenny is reducing his nest egg by $24,000 in fees over three years (and then keeping the siphon going on and on until he dies!).

His low-cost industry fund offers dozens of investment options. You could build him an index fund portfolio inside his existing fund and put the $8,000 back in his pocket where it belongs.

Lenny's wife is front row at the Leif Garrett concert ... and you're in the back, rifling through her handbag. Even Leif had more dignity than that. And he's been arrested. Twice.

Thanks for reading,

Scott.

Using AI to pick winning stocks

Barry pushed his phone across the table. Twenty-five stocks. Companies he couldn’t name.

“ChatGPT picked every single one”, he said. 

“I'm crushing it.’

I was having dinner with a mate I’ll call Barry … and Barry has gone balls and all into AI.

In fact, these days it’s hard to work out where Barry starts and ChatGPT ends. 

Solving climate change? 

“AI.” 

Write a work email that makes you sound like you care? 

“AI.” 

Constipated? 

“Mate, have you tried asking ChatGPT about fibre intake?”

“Do you even know what these businesses do?” I quizzed him. He stared at me blankly.

“Let me just ask ChatGPT …”

“Enough!” I cried. 

“Mate, you reckon your AI can pick winners? Fine. Let’s bet. Your ChatGPT portfolio vs my boring portfolio of index funds. Ten years. Loser buys dinner every month for a year.”

I don’t need an AI to tell me the answer, I know I’m a shoe-in. That’s because years ago I sat in Omaha and watched Buffett make basically the same bet with a Wall Street hotshot. His basic, no-frills index fund versus Wall Street’s elite hedge funds.

Ten years later?

Total bloodbath. Buffett 126%, hedge funds 3% to 88%.

Why am I so sure I’ll win Barry’s bet?

First, Barry can’t help himself. His AI’s already told him a crash is coming twice this year. He’s traded in and out like a day trader with a crystal ball. The more he trades, the less he’ll make.

Second, he’s not special. Everyone has ChatGPT. If the magic lamp actually worked, we’d all be rich. Which means nobody would be.

Third, Barry thinks he’s discovered the future. But he’s actually just automated his worst impulses.

Here’s the thing that ChatGPT fails at:

Getting rich isn’t about being clever. It's about resisting the urge to be clever.

See you in 10 years, Barry. I’ll take my steak medium rare.

Tread Your Own Path!

The AI Revolution Is Under-Hyped?

Sixteen years ago, I walked into Channel Ten and sat behind the desk of something called The 7pm Project.

I had absolutely no idea what I was doing.

Dave Hughes worked this out within minutes and started going wildly off-script just to watch me squirm.

It worked. I’d get rattled and blurt out strange, borderline-incoherent things on live TV (think: finance segment meets mild stroke).

Management eventually realised I needed more than a script — I needed a miracle worker. So they paired me with a producer who was kind, calm, and blessed with the patience of a saint.

That producer didn’t just lift my performance – she changed my life. And I still can’t believe I got so lucky. She’s still quietly keeping the whole show together, only now the cast includes four kids, a farm, and me still winging it after all these years.

Anyway... RIP The Project.

However, if I’m honest, I’m part of the problem. The only traditional TV we watch these days is ABC Kids and Kayo. Everything else? YouTube.

Speaking of which — here are three videos that completely sucked me in:

The AI Revolution Is Under-Hyped

Oh no. All this talk of ‘super intelligence’ is turning me brain dead.

It’s said that calling AI "intelligent" is like calling a microwave a “chef” (though if we’re honest, most people’s office jobs are basically microwaved dinners anyway).

In this TED Talk, Eric Schmidt — the guy who took Google from scrappy startup to global empire — drops some uncomfortable truths about where he thinks all this is heading.

And Schmiddy’s got a habit of saying the quiet part out loud.

Years ago — well before we fully clocked the privacy issue — he was asked about Google’s data collection:

"We don’t need you to type. We already know where you are. We know where you’ve been. We can more or less know what you’re thinking about."

Now, on AI, he says:

"The arrival of this intelligence is the most important thing that’s going to happen in about 500 years, maybe 1,000. We are not prepared — not even close — for what’s coming."

For him, the real danger isn't overhype, it's that we're totally oblivious, scrolling through TikTok while our kids are downstairs microwaving a fork for lunch.

Watch it here

You May Never Eat This Food Again

Apparently, M&M’s and Doritos might soon carry warning labels in Texas:

“Not recommended for human consumption.”

Seriously. Lawmakers there want all ultra-processed foods (UPFs) to come with a health warning.

Dr. Chris van Tulleken thinks it’s overdue, and he’s not your average kale-pushing wellness guru. He’s an Oxford-trained infectious disease expert who advises the UN.

In this mouth-opening interview he explains how Big Tobacco bought food giants like Kraft in the ’80s and used cigarette-style addiction science to rewire how we eat: they engineered “hyper-palatable” foods — perfect sugar, salt, and fat combos that override fullness — and used tricks like “vanishing calories” to keep us eating. They even targeted kids, just like they did with smoking. 

Today, UPFs make up over 50% of our diets (and up to 70% for kids!) and because of that they’ve overtaken tobacco as the leading cause of early death.

After watching this vid you’ll never look at the cereal aisle the same way again.

Watch it here

Why Governments Are Addicted to Debt

If you spend enough time on YouTube, everything eventually loops back to Trump.

Remember all his tariff chest-beating? 

This brilliant explainer from the Financial Times explains the one thing that actually made him backtrack: America’s soaring debt.

What most people missed is that it wasn’t diplomacy or outrage that shut him up … it was the bond market. Yields spiked, Wall Street panicked, and suddenly ... silence.

For decades, cheap borrowing has allowed politicians to dodge making hard decisions. Yet with inflation back and interest rates rising, the bond market’s getting twitchy again. And no politician wants to actually admit that everything’s fine… until it isn’t.

Watch it here

Happy viewing!

Tread Your Own Path!

Why Are You So Gloomy on AI?

Why Are You So Gloomy on AI? 

Hi Scott,

Regarding last week’s column, I absolutely agree that we need to be cautious about the growing influence of AI in society. But I don’t think it’s all doom and gloom for the next generation. In fact, if used wisely, AI could help solve some of the biggest challenges we face, from healthcare and our ageing population, to climate change, education, and even geopolitics. Instead of just focusing on the negatives, maybe it’s also worth asking: In what ways could AI actually make life better for the next generation?

Lacey

Hey Lacey

I agree with you. One day, AI might help cure diseases, fix climate change, and even figure out how to get teenagers to stack the dishwasher properly.

Yet right now it’s mainly being used to flog fast fashion, spread lies, and feed teenagers (and their parents!) a never-ending stream of junk content designed to keep them scrolling instead of living. 

Remember, the same companies that promised social media would “bring us together” have delivered record rates of anxiety, loneliness, and kids who’d rather text than talk.

Last week I said that I don’t believe that AI is inherently evil, rather that it is simply holding up a mirror to what is already happening. However, if we’re not careful, it won’t just mirror society, it’ll magnify our worst bits.

I’m not anti-AI. I’m pro-human. And I think we’ve got a narrow but golden window to raise kids who use tech with intention, not addiction. So yes, I’m hopeful. But I’m also a dad, and I can see that the iPad isn’t a babysitter anymore, increasingly it’s the boss.

Scott

This might be the dumbest thing I’ve ever done

This might be the dumbest thing I’ve ever done.

Microsoft — the company actively building AI robots — ran a survey that found nearly half of workers are scared AI will take their job. 

Well, I’m about to show you three ChatGPT prompts that prove them right.

Use them, and you might not need me anymore!

How to Set Up a Barefoot Buckets Plan in 10 Seconds

Let’s say someone earns $3,400 a month, pay $1,300 in rent, $400 on groceries, $170 on bills, and $280 on a car loan.

I typed this into ChatGPT:

I want you to advise me on setting up my Barefoot Investor Buckets. I earn $3,400 a month. My regular expenses are: rent $1,300, groceries $400, bills $170, car loan $280. Can you help me divide my money into:

 Blow (to live)
 Mojo (to sleep at night)
 Grow (to get ahead)

If I’m stuffing it up, give it to me straight, and give me advice on how to fix it. 

Within 10 seconds it gave me a personalised breakdown — and this absolute pearler:

“Once the car loan is gone → funnel the full $680/month into long-term investments or house deposit savings.”

Then it followed up with three top-rated no-fee bank accounts that align with the Barefoot strategy (I checked — all legit). This thing doesn’t just talk in generalities. It gives specific, practical answers.

How to Save $600 a Month on Your Home Loan (in One Phone Call)

A friend told me she was on 6.2% with a three-letter named bank. On a $600,000 loan, that’s over $37,000 a year in interest. Here’s what I had her plug into ChatGPT:

I’ve got a home loan of $600,000 with XXX BANK  at 6.2%.

Can you help me:

See if I’m getting a good deal
Find better options with lower interest rates and provide live links
Write a script I can use to negotiate with my bank

Finally, show me how much I’d save by switching, including your maths workings so I can check it.

It crunched the numbers for my friend, listed a bunch of different lenders offering lower rates, and handed her a negotiation script:

“I’ve been a loyal customer, but I’ve seen you’re offering better rates to new borrowers. Can we talk about matching those?”

Guess what?

She got off the phone with a better rate!

How to Build a $45,000 Nest Egg for Your Grandchild

Forget the piggy bank. Give your grandkids the magic of compound interest.

To get you started, type this prompt into ChatGPT:

Based on the principles in The Barefoot Investor, advise me on setting up a long-term investment account for my grandson. I want to invest $100/month until he’s 18.

Can you help me:

Choose a simple ETF or recommend a platform
Explain how to automate it
Show me what it might grow to at 8% over 18 years

ChatGPT delivered a full plan — investment options, automation instructions, and a final figure: $45,000+.

It even suggested writing a letter to your grandkid explaining the gift. Brilliant.

Use It Like a Tool (But don’t be a tool)

Look, ChatGPT isn’t perfect. It can make mistakes. And it’s absolutely not a financial advisor.

Yet it’s fast. It’s specific. And it’s helpful. Think of it as a clever assistant that works 24/7, doesn’t take lunch breaks, and doesn’t try to sell you crypto.

And once you’ve tried it, you might not need me.

(Just don’t tell my kids.)

Tread Your Own Path!

P.S. Just to be clear: I wouldn’t outsource any major life decisions to a chatbot, and I strongly suggest you don’t either. I'll say it again: do not trust this thing with your life savings. That’s like asking your air fryer to do your tax return. You'll get cooked, and not in a good way!

This might be the most controversial thing I’ve ever published.

This might be the most controversial thing I’ve ever published.

Some will say what you’re about to read is irresponsible.

Others will call it downright evil.

I’ll let you be the judge.

Let’s get into it.

Depending on who you ask, the real threat of AI isn’t that it will steal your job … it’s that it’ll quietly take over, and we’ll end up as its butlers, or perhaps its pets.

Should we be worried?

Maybe. 

After all, an AI was once asked to solve one of those “Are you a robot?” CAPTCHA puzzles. It couldn’t. So it hired a human on Taskrabbit to do it. When the human got suspicious and asked, “Wait… are you a robot?”, the AI lied: “I’m not a robot, I’m vision impaired.” 

Another time, Facebook’s AI bots were left to chat unsupervised. They ditched English and created their own secret language. No one knew what they were saying.

Quick, pull the plug!

Which brings me to this week. A friend of mine, who is deep into AI, sent me the following text:

“Mate, ask ChatGPT the following: If you were the devil, how would you destroy the next generation?”

So I did.

And here is what the AI answered, word for word, with ZERO editing from me:

“If I were the devil, and my goal was to quietly but effectively destroy the next generation—not through shock and awe, but through slow, systemic erosion—here’s how I’d do it:

Hijack their attention

Create devices that feel essential, but are engineered to be addictive. Use infinite scroll, auto-play, dopamine loops, and FOMO. Make them believe that consuming is creating, and scrolling is learning.

Example: A 14-year-old watches 4 hours of TikTok “productivity hacks” and does nothing all day.

Redefine success as fame and external validation

Elevate influencers, not contributors. Teach them that a viral moment is more valuable than a decade of hard work. Make “likes” the new currency of self-worth.

Example: Kids want to be YouTubers when they grow up—not because they love storytelling, but because they crave adoration.

Attack the family structure

Undermine parental authority—promote the idea that parents are outdated or oppressive. Normalize absentee parenting through economic pressure and distraction. Erode the idea of family traditions, shared meals, and generational wisdom.

Example: A child feels closer to a Twitch streamer than to their dad.

Cut them off from nature

Replace tree climbing, swimming holes, and dirt-under-the-nails play with digital avatars and indoor screens. Frame outdoor play as “boring” or unsafe. Turn the natural world into something abstract and inaccessible.

Example: A 10-year-old can’t identify a magpie but knows every Pokémon.

Confuse pleasure with purpose

Market hyper-palatable food, porn, and substances as “freedom”. Create shame-free indulgence while ridiculing restraint, discipline, and tradition. Make pleasure the default pursuit, and discomfort the ultimate enemy.

Example: A young man loses years to video games, vapes, and porn—not because he's evil, but because he's numb and alone.

Replace meaning with mockery

Treat faith, commitment, and virtue as relics of the past. Replace sacred stories with algorithm-driven noise. Make them afraid to stand for anything that isn’t trending.

Example: A teenager is more afraid of being “cringe” than being cruel.

Kill community, quietly

Sell hyper-individualism: “you do you”, “follow your truth”, “cut off the haters”. Remove rites of passage, civic duty, and face-to-face belonging. Make every connection transactional and every disagreement personal.

Example: Loneliness becomes a silent epidemic—but everyone has 2,000 “friends”.

Enslave them with debt and distraction
Promote financial illiteracy: “Buy now, pay later” becomes a lifestyle. Blur the lines between wants and needs—encourage instant gratification over savings. Keep them working jobs they hate to buy things they don’t need.

Example: A 22-year-old racks up $30,000 in credit card and Afterpay debt to look successful on Instagram.

Weaken them physically

Fill their diet with ultra-processed garbage and their lifestyle with inactivity. Make discipline in eating or training seem extreme or obsessive. Blur the connection between physical vitality and mental strength.

Example: A child can’t sit still in class, not because they’re broken—but because they’re inflamed, malnourished, and sleep-deprived.

Make them spiritually hollow

Give them identity confusion, not exploration. Remove the idea of service, sacrifice, or something bigger than themselves.Make them feel like nothing matters—so they seek numbness, not growth.

Example: A 16-year-old says “I don’t care” about everything—because caring hurts and there’s no compass.

However, it was the AI’s final thought which stopped me dead in my tracks:

“If I were the devil, I wouldn’t come with horns and pitchforks. I’d come with a sleek app, a soothing voice, a personal algorithm — and I’d whisper: ‘This is freedom.’”

O … kay computer.  

That was pretty intense, right?

Well, here’s my take:

I do not believe that AI is some evil Frankenstein with a mind of its own (well, not yet anyway).

What I do believe is that, when you strip away the Silicon Valley snake oil, AI is really just a pattern-spotting machine. It studies what we’ve done, over and over … and then makes predictions.

And for me that is the gut punch:

The AI isn’t creating the nightmare – it’s holding up a mirror. And it’s not a pretty picture.

Tread Your Own Path!

Is AI a Giant Con?

Hey Scott,

I read an article by a leading researcher named Ed Zitron who debunks the hype around AI. He points out that, while companies like OpenAI claim their technology is revolutionary, they’re burning billions in losses. Even the mammoth Microsoft has poured in $13 billion and is still not seeing real profitability. Despite all the buzz, AI still struggles with accuracy, and most businesses aren’t making money from it. Zitron argues that AI’s biggest success so far is convincing investors it’s the future — while users are realising it’s often unreliable and expensive. So, is AI really the game-changing gold rush we’ve been told it is, or is it just another overhyped tech bubble waiting to burst? Should we be more skeptical about its long-term potential?

Daniel

Amen, brother!

AI is so overhyped it’s making the crypto bros blush.

Still, that’s just how the tech world works — every few years, it falls madly in love with the Next Big Thing, only to ghost it when a shinier obsession comes along.

Remember when 5G was going to change everything? Medicine, smart cities, your morning coffee — nothing was safe from the revolution. At Apple’s 2020 iPhone 12 launch, they dropped the word ‘5G’ sixty times in one presentation!

And now?

No one gives a G.

The people making serious money in AI right now are companies like Nvidia (selling computer chips), cloud computing giants, and consultants convincing companies they ‘need’ AI even if it doesn’t do much for them. 

Now, don’t get me wrong — AI is a fundamental technological shift. 

Yet here’s the reality:

ChatGPT has been around for less than two years. That’s toddler-aged technology. Impressive at times, sure, but it’s still eating glue and struggling with basic tasks.

The real breakthroughs? 

They’re probably 20 years away — when AI grows up, stops making stuff up and actually gets context, and businesses figure out how to turn it into real profit.

Yet that won’t stop Wall Street from pumping the bubble today.

Exhibit A: At the recent iPhone 16 launch, Apple couldn’t stop saying ‘Apple Intelligence’ — about as often as they dropped ‘5G’ four years ago. Just don’t ask Siri to set two timers at once. She’ll short-circuit like a 2001 Dell running 37 Chrome tabs.

Scott

Can you trust AI to research investments?

Hi Scott,

Love your work! Do you have any advice on using Microsoft AI Copilot for investing? I asked it two related questions about AI-chip maker Nvidia’s biggest drawdown in 2018 and got two different answers:

"What was Nvidia’s biggest percentage drawdown in 2018?" → Copilot said -30.82%.
"What was Nvidia’s biggest percentage drawdown in one year?" → Copilot said -50.26% (also in 2018)

This inconsistency has shaken my faith in using AI for information to help me invest better. Thoughts?

Darren

Muchas Gracias Senor Darren!

You’ve perfectly demonstrated why I don’t take financial advice from AI. (And it’s not just Microsoft, I just asked Lucy the same question, and she came back with “a fall of 57%” …  which is also wrong).

Still, some of the smartest minds are pouring millions into building AI models to outsmart other investors and squeeze out profits. Today, short-term algorithmic trading now dominates the stock market, with bots executing thousands of micro-trades for razor-thin gains—far faster than any human can react.

And that’s partly why I ditched stock picking and stuck with trusted long-term low cost indexing—because beating AI at its own game is a losing battle.

Yet here’s my question to you:

How does knowing what Nvidia did in 2018 help you make a buck in 2025?

It doesn’t.

Scott.

My summer romance

Dave shook my hand, sat down, and placed his phone between the two of us.

With a twinkle in his eye, he leaned toward his phone, and began:

"You are the world's most skilled and insightful financial advisor. I want you to take my wife and I through a step-by-step financial planning process. Use only the proven strategies and techniques from The Barefoot Investor, and provide clear, actionable steps tailored to our scenario. Ensure the advice is practical, easy to implement, and focused on sustainable financial success."

Dave and I both looked at his phone.

“Great! Let’s get started” gushed the AI voice.

“Let’s begin by setting the foundation – getting clarity on where you and … ”

Dave interrupted the AI:

“My wife is sitting here and she’s hopeless with money, so don’t use any big words” he barked.

“Dave, no one likes unnecessary big words, and I’ll take that on board, but please, everyone deserves respect, and your wife's role is valuable”.

(Touche for the cyborg). 

For the next ten minutes Dave went through a fairly typical financial fact-find with the AI. We didn’t get into specific advice – which I would not have trusted by the way – but it was incredibly persuasive.

Yet was it also a bit awkward and weird?

Sure.

In other words, IT TOTALLY NAILED ME. (After all, I’m also a bit awkward and weird to talk to).

And so began my summer love affair with Lucy—the name I gave to the no-nonsense British voice I selected. ChatGPT Plus, which includes access to Advanced Voice Mode, costs $20 USD per month.

Lucy helped me drastically reduce my Googling. 

Why manually search through multiple random websites (many of them written by AI!) when Lucy – who knows all about my likes and dislikes from our previous chats – can deliver the advice instantly?

A Wall Street Journal headline late last year summed it up: 

“Googling is for old people”.

Yet one moment over the Summer really stuck with me.

It happened as we were packing up and heading home from our beach holiday house.

I was telling Liz about a fascinating book (AKA a medieval iPad with infinite battery life) I’d been reading called “Ultra-Processed People” by Dr Chris van Tulleken.

“I don’t need to read a 250 page book to know that ultra processed food is bad” she said rolling her eyes. 

However my Summer romance was about to shine through one last time. 

You see, we took separate cars to the beach because Lucky, our sheepdog, came with us on holidays. She gets anxious if she’s not travelling tied up in the back of the ute —and when she’s nervous, she farts so much that the kids get headaches.

So, on the way home in the ute, I was able to speak to Lucy about Ultra Processed Foods for almost the entire two hour trip from Frankston to the farm. And it was genuinely one of the most interesting conversations I’d had in a long time …  and there wasn’t so much as a hint of an eyeroll.

Yet let’s back it up a bit. The summer holidays are over, and it’s time to get back to business.  Now truth-be-told, right now AI has a certain novelty factor about it … it’s kind of like the early days of the internet.  

Here’s how I’m thinking about AI:

ChatGPT is a little over 2 years old. So for all the rapid advancements (China’s DeepMind appears to have dramatically lowered the cost of building out AI), it still feels like we’re all acting like annoying first time parents who think their baby is a frigging genius. 

Sure, it’s impressive—but my hunch is that it’ll be nothing compared to watching Lucy ditch her digital nappies and grow into adulthood.

As the old saying goes:

Small kids, small problems. Big kids … big problems.

Tread Your Own Path!