What Does 60 Years of Compounding Actually Look Like?

Debit card users are quietly funding everyone else's credit card rewards. Wheeler and Colin trace the three ways credit card companies actually make money, interchange fees, net interest income, and annual fees, and land on why swiping a debit card doesn't opt you out of the cost, it just means someone else collects the reward. A client story backs it up: a couple who paid off $40,000 to $50,000 in credit card debt across five cards by switching to debit, now sitting on a new house, no debt, and $300,000 saved.

From there, a chart on rate hike expectations versus the Truflation Index, a real-time inflation measure built on actual merchant transactions instead of the CPI's monthly surveys, plus a fast history of the CPI itself. Then the big number of the episode: a $1,000 government seed plus $100 a month to age 60 turns $73,000 in total contributions into $1.87 million, the anchor for a full breakdown of the newly formalized Trump accounts for kids under 18.

Sources:
U.S. Bureau of Labor Statistics, Consumer Price Index history and methodology
Truflation.com, index methodology (real-time alternative inflation index)
CME Group FedWatch Tool, market-implied Fed rate expectations
U.S. Department of the Treasury and IRS.gov, Trump Accounts program guidance
Congress.gov, Road to Housing Act legislative record
Visa and Mastercard interchange fee schedules; Square payment processing rate disclosures

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Credits:
Created By: Wheeler Crowley and Colin Walker
Production, Editing and Post-Production: Tori Rothwell

Transcript

Right.So if the child had a Trump account, they got the $1,000 up front.Mm-hmm.Then you did $100 a month.Mm-hmm.And the child continued it when they turned 18 up until they were 60- Mm-hmmnot 65.Right.They wanted to retire early.$1.87 1000000.Yeah.This number doesn't shock me because I knew the answer, right?But, but, um- What's crazy- Yeahis your total contributions to the plan is $73,000.$1.8 million of the account is just from investment growth.Yeah.That's, that is pretty shocking to think about, but as we know- Time value.Yeah, I mean, it's just- Yeah, and it, like, it just, the doubling every 10 years really makes an impact in the final 30 years.Totally.Welcome to The Compound Growth Podcast with Colin and Wheeler, where we talk all things growth.From financial growth to career growth, personal development to societal progress, we explore how each layer builds on the next, compounding over time to shape who we become.Each week, we break down complex ideas and emerging trends into clear, actionable insights, because growth isn't just about numbers, it's about understanding the world and our place in it.I have a, a confession to make.Continue.Sometimes I can be a complete and total asshole, okay?Do you have an example?No, I'm justI'm, I'm, I'm trying to be aware.I, I, I'm, I'm snarky.I can be very snarky.Okay.Snarky, snippy, et cetera.I think we all can, though.This isn't, like, a unique to you situation.I have unique strengths in this, in this territory.Okay, sounds great.This is an area of strength for me.I'm good at giving people shit,Yes.And as Tori pointed out the other day, I have some hater tendencies.And so I've been reflecting on Tori's comment.You know, I do, I do think that Tori might be onto something a little bit because if everybody likes something, I feel like you won't like it.It's true.It's like, it's like, well, why, well, I have to be contrarian it feels like.It's like a natural- You are naturally a contrarianI'm naturally a contrarian, and that's weird.And I'm trying to, like- Some of the most successful investors are contrarians.Well, so I'm try- Yes, but I'm not a contrarian investor.I know, you're a momentum guy.But I'm, I'm trying to, like, suss out, like, where it comes from, 'cause you're not born, like- Contrarian?You don't, like, you know, drink haterade when, when you're an infant.I don't know.I've met some kids that I'm like, "How is he so combative at this age?"Well, yeah, I mean, a combative nature is one thing.I, I think, though, there'sIt's worth figuring out, like, why that's a natural instinct.So I'm, I'm working on that, and I'm, I'm working on it especially because sometimes I see my snark come out in my 12-year-old.Okay.And I'm like, ah, okay.It's like a nice mirror- Yeahlike a nice reflection.And I just want you guys to be aware that I'm going to try to be more supportive.Should we have, like, a safe word if something comes out?You, uh, yeah, like, uh, like, "You're doing it again" type of thing?Yeah.You can justI don't need a safe word.I don't need a code word.You're doing it again.Just, just tell me, "You're doing it again."All right.All right.Sorry.Sorry.Back off on that.Well- So you-I think we all have things to improve upon.I won't get into my long list of things, but I don't think it's as bad as you're making it out to seem.No, it's, it's probably worse, actually.That's true.So just- I don't know what Tori told you, but seemingly it's- Tori put me in the corner, and she gave me a good talking to, and, uh, I feel really bad about myself now, Tori, so thank you for that.Oh my God.I'm just kidding.Tori made one small comment, and it was in alignment with things I'd already been thinking, so.Listen, I'm also a hater.Like, I, I get it.I'm the same, but you were in the, in the moment, you were just being a hater, and I had to tell you.I don't think, I don't think you're a hater, Tori, because I feel like you're into all the things that everybody else is in.No.Well, I- Love Island.No.Justin Bieber.Like- I'll get on the bandwagon-all that stuffif I like the bandwagon, but Wheeler will just be like, "I'm not getting on the bandwagon because everyone's on the bandwagon."I will literally torch the bandwagon.Exactly.Like, you'll get mad- That's true.Like, why does that bandwagon exist?I'm trying to think of something that I really don't like that, like, I'm not on the bandwagon for.Well, see, I've actually come a long way in terms of, like, music.I used to really just, like, take a stance against a lot of music.Now it's mostly just Justin Bieber.But, but even that- But it's 'cause I like Justin BieberTori's a Belieber.Yes.It's, it's actually just because she likes Justin Bieber so much.And that's, that's the root.But, but- Is that where this came from?Am I not being more supportive with the Justin Bieber now?I'm trying to turn over a new leaf is all.He said he was rooting for England only 'cause Jess was rooting for France.Well, that's true.That's where that came from.first of all, it was Norway.Norway, whatever.second of all- Norway is sick, thoughsecond of all, I did say that, but I had already been rooting for England as soon as they beat Mexico, which I also said that day, and it was just fun because- You did say you were rooting- Against your friendfor them.Yeah, because Jess wanted- Jess and I never, never get to root against each other.We're always rooting for the same team.But it wasn't just Jess.It was fun.What about in Survivor?It wasn't just Jess.Well, no, no, no.I said I don't like Argentina because Seth loves Argentina so much.Yeah, exactly.That is true.Right after.That is true.Yeah.And is heDoes he have Argentinian, like- When you select your team, do you ask everybody else first?Are you like, "Which teams do you like?"And then you look at which ones are left?I think- And you're like, "I'm going with this one."I think this comes from a deeply rooted 1990s me, which just was really annoyed that everybody loved the Bulls so much when they were growing up in Vermont.I'm like, this doesn't make any sense.This isI get Michael Jordan.You didn't like Pippen and Jordan?No, IYes, but Celtics, they're right there.No, I know, but- No, my teamit's the GOAT.Don't change my team because Jordan exists.That doesn't make any sense to me.I mean, that's fair.What I will say is when it came to the Patriots and Brady was there, like, that was really fun to watch.Right, but everybody hated that.And I do think we had, you know, either everybody hated Brady or everybody was a bandwagon Patriots fan.You know?I'm just not a big bandwagonLike, my brother, you know who his favorite F1 team is now?Ferrari Uh Because, well, you know.Yeah.Whoever Lewis Hamilton- Because they sell the most merchracing feels.My point is, I wanna be more supportive.That's what I'm trying to say.So I'm gonna try to go into our conversation today being supportive, Colin.Okay.Well, maybe we should start then with credit card points.While we're on the topic.While we're on the topic- Yeahof being supportive.I was reading through some of the research, and it is quite interesting as a refresher on how much money credit card companies make through 3 different avenues.Yeah, so do you wanna talk about that, the credit card points research?Yeah.Well, for those of you that missed our last episode, I would highly encourage you to go back and listen.We got into, I don't wanna say a debate, but a discussion about whether or not using credit card points for student loans was a good or bad thing.Yes.And in that, we afterwards went down a bit of a rabbit hole about, uh, the way credit card companies make money, just as a refresher, and there are 3 big ways.Yes.What are the 3 ways?So there's interchange or discount revenue, which is whenever you swipe your credit card, the merchant pays a one to 3% fee.Yep.I think Amex is the highest.I think Amex is, like, 3%, which is why some people don't allow Amex.You know, one time I was in Mexico and they only accepted Amex.That's all of Mexico or just, like, a place that you- It was just this place in this airport.Yeah, it's a fancy place you went to.No, it was- No, I'm sure it was a very well-deserving place.It's a convenience store.Um, then there's also net interest income, so people that don't pay their credit cards.Mm-hmm.They receive a very high rate of interest from that, anywhere from, like, 19 to 27% I think.29.29 I saw.Yeah.Yeah, that's crazy.And then annual credit card fees.Yeah.So Amex Platinum, Chase Sapphire Preferred, Chase Sapphire Reserve.Mm-hmm.Which makes sense because I personally pay a good chunk of credit card fees because I have multiple- Mm-hmmcards that I use for different things.Yep.So those were the 3 big drivers of their revenue.Yeah.Which makes total sense.Yeah, totally.Totally.What I think wasThe reason I went down this rabbit hole is shortly after we rec- In support.Shortly after we recorded that episode, we received a listener question.I love it.And the listenerLet me, let me pull out the exact question that was passed along to us.Oh, here it is."Tell the boys to do an episode on their thoughts using debit card versus credit card.Do they agree with Dave Ramsey?And then talk about credit card points."So- So tell me about Dave Ramsey's stance.I- If I had to guess, it's never use a credit card.Well, I actually didn't look into Dave Ramsey's stance.I forgot about that part of the, the, uh, the listener response.But, uh, I think the debit card versus credit card thing is really interesting- Mm-hmmto me, and, and that's what some of this research that I sent over was about.Because that interchange fee is charged to us when we swipe our credit cards.It's also charged to anybody who's using a debit card.Isn't it charged to the merchant?So, yes.Sorry.Okay.It's charged to the merchant.My apologies.Yeah.It's charged to the merchant regardless of whether it's a debit card or a creditOkay, got it.And then the merchant will frequently pass along the cost to cover that fee.Right, they'll up their product prices.Yeah, it's like tariffs, basically.Right.Yeah, yeah, yeah.It's like, you knowSo they up the prices on these stores.So, but you brought up a, a convenience store, for example.You can go, you could maybe a bodega or something like that.There are stores where the clientele, the customer base, is more likely to use a debit card if they use anything and not pay cash.They'll use a debit card instead of a credit card.Really?Yeah.Because that's just the, the segmentation of the population that uses a credit card versus uses a debit card leans a little bit more towards the haves and the have-nots.The haves are more likely to use a credit card.Interesting.The have-nots are more likely to use a debit card, which is interesting because weIt's multiple points, but one being that we talked about how credit card debt is so bad.Right.Clearly, credit card debt comes from a have-not stance.Totally.But there are markets of the population that never really established credit.They have a hard time establishing credit.Yep.maybe they didn't, they didn't go to college to get the predatory Discover card, whatever it was.But, uh- YestheySo anybodythe, all those interchange fees get collected and paid to the Visas of the world or whoever the credit or bank, whatever bank is- Yeah, yeah, yeahis providing the debit card, and then those get put into the pool of profits that then get some component of that distributed for credit card points.Interesting.So it's really interesting because it's not even just likeI think for Bilt it's probably a little bit different because- YeahI don't know- It's probably a different demographic.Right.Yeah.I don't know the bank necessarily about that, but let's say Chase, for example.Sure.JPMorgan Chase.Chase is gonna have debit card users.Yep.And Chase is gonna have credit card users.Yes.And on some level, the debit card users are funding the credit card users with the points.Right.Right?It's not- Yeahthey, Chase isn't, you know, JPMorgan doesn't go in there and say, "Well, we are only going to take the profits we generate from the credit card users and give them back points."It's just so crazy to me that in my mind, I guess the way that I have always thought about credit cards once I kind of learned about like multipliers and cashback and things like that, once I learned that- YeahI was like, "Well, I don't wanna use a debit card for anything, because if a merchant fee is being charged, like, I'm gonna want that money back, regardless of whether or not it's travel points or cashback-" Rightor whatever it is.Yeah.But I would say that for a lot of people, credit cards could be a kiss of death.Yeah, because theyWell, it's interesting.The one feature of the debit card is that if you don't have money, you can't spend it.Totally.Right?So that's, that's why some people feel more comfortable using a debit card, 'cause they can't build up credit card debt.Yeah.Well, I remember, we have some clients, this has actually happened with a few clients, but they came in in their 20s, and they had a ton of credit card debt, and they had like 4 or 5 credit cards.They would have like 5 on one, 8 on another, 6 on one, 10 on another.Yeah.And they ended up having, at the time if I recall, around 40 or $50,000 of credit card debt.Mm.They were making like $200,000 a year-ish, maybe a little bit more, but long story short, we had them switch to a debit card for a while, then use a lot of excess funds to pay down that credit card debt.Yeah.So as opposed to paying close to 850 to like $1,100 a month of just interest payments- Just interestyou know, 6 or 7 years later, whereas opposed to having, let's just say 50K in the bank and 50K of credit card debt, now they have a beautiful new house, no credit card debt, like $300,000 put away.They're saving like crazy because if you look at the amount of money you paid towards interest, if you were to just put that in the market and compound it- Yeahit's absurd.Yeah, totally.And this, so I think what's interesting is you brought up the, your experience of like once you learned how this all works- Yeahyou're like, "Well, I, I wanna get my money's worth-" Rightessentially.Yeah.Right?I think that the question about whether we use debit card or credit card comes down to financial literacy.Yeah.If you understand that you're being charged this interchange fee, even if you just use a debit card, and everything costs, it's like extra inflation, essentially.Yeah.Right?And it's, you know, there are some places, like our pizza place will charge you a 3% fee on top of everything to cover the credit card or you- For like the merchant fee?Yeah.Yeah.Or you can pay cash.Right.Right?But there are other places like a convenience store where they're not gonna do that.Yeah.Right?So then that's just built into the price of the, the goods on the shelves.Sure.So if you know that's how it's working, this is where I get supportive of credit card points.Okay.I'm excited.So I, we've talked a lot in this podcast and offline, et cetera, about how the stock market is the game.It needs to work for you or it will work against you, and you have to participate in it or else you're being left behind.I think it's the same way with credit card points.If you're paying cash, pay cash, whatever.But if you're using a debit card, then there's an ex- essentially an extra inflation that's being tacked on to whatever you're buying with your debit card, and you're not getting any value back.So regardless of whether if you use a credit card, whether you do the cashback like Tory prefers, or if you do the points like you prefer, if you're getting some sort of value back, you're offsetting that inflationary cost or that transaction cost or that, you know, tariff essentially.Right.I think that's the only way to make a prudent financial decision, provided that you have the financial literacy to understand how it all works, and that you have the behavioral aspect of it.Yeah, the behavior and the literacy is the big thing because if you are, I'll say, not going to be able to pay off that credit card-then not only have you incurred the tariff, as you mentioned, of the 3% with the merchant fee- Rightand everything like that- Rightbut now you're incurring way more fees on top of it, obviously, because you have interest charges and- Yeahall those other things.If you can do it and if you are, I'll say, financially literate and prudent enough to pay it off every single month, it's a great tool.If that's not the case, then debit cards make a lot of sense.Yeah.Something that I was just thinking about, and this is once again another kind of refresher for me because it's been a long time since I've thought of this, but just as a merchant in general, like a storefront, it's almost refreshing sometimes to think about just like how much there are in terms of fees as well.Mm.Not only are you being charged 3%, let's just say, from your credit card company on every transaction, but if you have one of those touchless payment systems like a Square- Oh, yeahas an example too- Yeahthat's like another 2.5% plus 15 cents per transaction, and then online payments are even more.So, I mean, right there is 5 to 6%- Yeaheasily off your bottom line before you've even started making a good.And it's invisible costs.It is.You don't see those, right?Like, when we talk to our clients about, like, our fees, it's like, "Hey, here's our fee.It's right here."Right?Yeah.We're not a mutual fund hiding the fee- Right.Yessomewhere else.Yeah, I think that's, that's a really good point, Colin.Thanks.Where I think themy concern still with the bill and the paying the rent with your credit card is- Yeahis just, it- it quickly can, it can lead to a bigger mess if you're, if you're playing the game and you're bad at it.Well, that's the thing.Like, I totally agree with you that if you are not making your credit card payments, or if you're not going to use the card responsibly.Yeah.You know, what I mean responsible, I mean pay it off every single month so that way you're not charged extra interest.It is a terrible decision to put your rent on a credit card.Yeah.Terrible.Yeah.You know?But if you are in a position where you're paying it off every single month, and you can get extra cashback or extra points, I could see it being a good financial tool.We have a client whose husband, he has a very expensive hobby, and he will use his credit card to fund his hobby, and then he'll have a hard time paying it off.Okay.And the problem that they run into is that his credit card limit keeps getting increased.Okay.And he's like, "Well, I, I didn't ask for it.They just did it."And I said, "Well, of course they did.You're a really good customer."Right.So Yeah.But ifI think one way to manage this is if you know how much you can spend on a monthly basis, like, a debit card is basically saying, here's a cap to your spending.And, and a credit card can be the same thing.If you know that you have $3,000 a month that you can put on your credit card and safely pay off every month, for example- Mm-hmmthen if you have a $3,000 credit limit, you'll be capped at that.It won't be able to build up on top of itself.Right.And you can actually request with your credit cards a lower limit.It's not as good for your credit- Rightbut it's still better than the alternative if you have a spending problem.Yeah.Yeah, for sure.I know for me, I actually call the credit card companies to up my limit a little bit once a year.Yeah.And the reason why I do that is because if you look at your credit score, you're basically gauged in several different ways.One of them- Yeahis the amount of available credit.So let's just say, um, you pay off your credit card every month and you have a $5,000 credit limit.Well, you've had that card for a few years.You can call and ask to increase your credit limit, and then automatically you have more available credit- Yeahwhich in theory helps your credit score.So I try to do that.But to your point, if you're struggling with paying things off, lowering your limit is also a great strategy to help you get out of those problems.Yeah, yeah.I think yours is a greatA- I, I don't necessarily request it, but I- YeahI will receive and, and appreciate these credit card inc- Yesbalance or inc- uh, limits because, yeah, sure, they help your credit.we talked about- Where do you wanna go from here?I'd like to talk about this rate hike expectations thing- YesI sent you.That sounds great.I'm gonna pull this up.So this is a chart that shows the rate hike expectations, and there's been a lot of talk.You and I have talked about it in the podcast as- Yes, we havethe hike rates.Yes.And basically you've been in alignment with the market, right?The market says, "I think we're gonna see a, a hike before-" Yeah"the end of the year."And I say, "Why?"Right Right.And it's because all the Fed people are coming out and talking about how like, "I don't know, we're feeling like we might need to hike things.Inflation's pretty bad."Yeah.And I think that that, coming into this year, nobody was expecting that, and we were getting a new Fed president who was essentially put there to either keep- Lower rates or keep themor lower rates.Yeah.Right?So I'm like, why would that, why would that change?This is his marching orders.Like, why would he actually change?And the reason that this started, the narrative started to change here was the, the war in Iran.Interesting.Okay.And oil and the cost of that going up, which obviously itThe cost of oil is a major contributor to the inflation.To inflation, right.So this shows us the rate hike expectations versus the Truflation Index.I'm gonna get into what Truflation is.Um- Reminds me of truffles.But essentially, what happened here is the f- the expectation that rate hikes would go up started to rise right around the time that Truflation peaked and inflation started to go down.And Truflation is, to me, and we're gonna get into what exactly it is, but it's a better way to measure the inflation in this country.And after I put this together, we saw a new inflation print this week that showed that inflation had, in fact, dropped.Interesting.So- We've talked about how the inflation metrics- Yesare flawed.They are flawed, and let's read what Truflation is.All right?So Truflation is, and this is another document you can pull up Truflation is a decentralized financial data platform that provides a real-time, daily updated alternative to official government inflation metrics like the CPI.Rather than relying on slow monthly government surveys and st- statistical smoothing, Truflation uses modern data scraping and blockchain technology, which we're getting into the weeds here, to measure actual consumer price changes as they happen.So there's a little bit of a chart here.So you, you look at CPI, it's reported fr- uh, the frequency of reporting is monthly, Truflation is daily.Data collection is all manual surveys, secret shoppers, you know, like calling, calling up and say, "Hey, how much did you pay for blah, blah, blah?"And then this is actually automated data points direct from merchants, actual transactions.I know, I love, I love here how some of the merchants surveyed are Amazon, Walmart, and then they're using Zillow for real estate- Righttransactions.Yeah, yeah.And then there's a- yeah, and they're, the treatment of housing, the owner's equivalent rent.We've talked about this before on the podcast, but owner's equivalent rent is essentially me f- working for whatever, you know, organization puts this survey together, calling you up and saying, "Hey, if you rented out your house, what do you think you'd get for it?"And you say, "Oh, I'd get $3,000 a month."And as we all know, everybody thinks their house is worth more than what it is.Yeah, even the, even a rent.Yes.But like, then it's basically just what, what, why do you believe that?What, what reason do you have to think that?100%.I'm hating on the old ways.Um, but I'm finding a new way that- Well, I was gonna say, it's fine to disprove the old ways- Yeahif you have a better solution.So what we're saying essentially is that- So you invented Truflation.Exactly.I, Wheeler Crowley, invented- Yesand then oversee all Truflation.No, Truflation, I think it'sLook, I'm sure that it's imperfect as anything, to me, what's matter, what matters is the direction.And CPI is a very imperfect measurement.It relies on a lot of subjective data points.It also relies on, I'll say, uh, national points that don't have, we've talked about this before, like micro effects.And Truflation looks at things a little bit more in depth, and it suggested that we were not in the inflationary environment that everybody felt that we were in.And I think that when we go to the grocery store and we compare it to prices from 2020 or '20 or '19, like prices that we've pegged in our minds, yeah, sure, we're, we're paying more, but housing, in a lot of areas, not the Seacoast, but housing has started to come down, right?So- Rightowner equivalent rent doesn't actually reflect how housing has started to come down in price, and that right s- right there is just like one metric.And then looking at oil, oil is a shock.That's an inflation shock.Totally, yeah.Right?It's not something that should be looked at as predicting what inflation is going to be or has been over the last year, et cetera.It's just like a small moment in time.Well, the other thing too, and I, I've had a few clients bring this up and they're like, "Well, I don't understand how oil necessarily affects, like affects inflation so much because it's just like fuel at the pumps and people could just drive less," or things like that.But I'm like, it's not just fuel at the pumps.Think about the energy cost to produce goods.Think about the energy cost to transport goods.Think about the energy costs for every single thing that we do, moving goods between countries and shipping around the world.Not to mention, like the entire energy market trades off the US dollar, which is an entirely different situation.Yeah.But yeah.So when it comes to just oil in general, it's not just fuel at the pumps.It factors into everything that we do.You know?It's interesting.So anyways- Truflation, thoughgood news.We're focusing on good news today.I like it.More good news before we jump into your thing.Yes.I just wanted to say or point out that the Road to Housing Act was approved, right?Um, which is the Housing Act legislation we talked about a couple of episodes ago.Yeah.Where they're basically trying to remove some of the restrictions to get more affordable housing faster.Yes.Right?And it's bipartisan support, left, right, center, everybody wants this.Yeah.It went to Trump's desk, and he said, "I refuse to sign this until we've solved for voter ID."The crisis for voter ID, yes.And he threw his huff and puff and temper tantrum, but he didn't actually veto it.He just crossed his arms and said, "No."And then- Yesafter a while, if that happens, the bill passes anyway.So it was really just an opportunity for him to make some noise on a subject that he, he cares about- Rightand not him actually poo-pooing this thing.Right.Right?So which, that's interesting to me.I'm happy that this happened.I think it's good news.It is good news, yeah, because we were not sure that that was gonna- No, we were notYeah.So, um, quick fun fact for you, as we were talking about CPI and as you were talking about this, um- Back to CPI.Uh, sorry, yeah, CPI.So, um- I was thinking, like, when was CPI actually started to get tracked?Like- Oh, yeahwhen was CPI kind of invented?Yeah.And some interesting dates for you.1888, the US Bureau of Labor conducted its first major study of family spending and retail prices.Okay.And then the CPI metric went into effect in 1913.Okay.Now, it's been updated a lot- Sure.Yeahsince, but I think the problem is, is that it's been updated since, because you're tracking different- Mmthings now than you were even in the '80s and '90s and '70s.So you look at CPI as a chart, but it's kind of deceiving because it would be like if you're looking at a basket of 10 stocks from, like, 1970 to now, but that basket of 10 stocks has changed, like, 6 times- Sure.throughout that time period.So then it's like you have to ask yourself, well, how accurate is this?To your point, Truflation is a better metric because it's tracking more things that people are spending their money on now.It's real time data.Yeah.Yeah.And I think that's whatYou're right.I think inflation as a, like a percentage, something that we talk about as an inflation rate, is really there just to simplify a very complex situation, just like a lot of all these other things that we talk about.It's basically for the average American to say, "Well, this is what inflation is," if they even care or, like- Surethey try to know what it is.Yeah, yeah, yeah.Right?And it's not thereI don't think it's there to just like what we talked about last week, to help anybody really.It's- Yeah, I mean, that's- You know?Yeah.What you care about is how much it costs for you to pay for gas at the pump, or to go to the grocery store, or to pay your rent, right?Yeah.You don't actually care what the national inflation rate is.You care about your individualistic experience most of the time.In my opinion, the only reason why I would personally care about whether or not inflation is going up, down, left, or right is because it might signal a rate hike or cut- Yeahwhich would have potentially an effect, not always- Righton your mortgage.Not, it, it could be on your mortgage, on your bonds- Car loans or whateverstock portfolio.Yeah Stocks.Yeah.It was, it was just nobody knew- It was just therewhat the Fed was doing.I know.And now we always know everything, all the different Fed chairs and presidents and chiefs and members all think in a sense.It's very polarizing- Yeahthing these days.Let's justMaybe we need less.Well, I'm going to bring up something polarizing- Well, goodbut in a good way.Okay.No, we're stillThis, we're gonna say this is not polarizing.It's just all good.It's all good.It's all good.This is supportive.Yes.Government being supportive.Trump accounts.Trump accounts.Yeah.I wanna talk about Trump accounts.We've talked about this briefly, and it might have even been last year when this was announced.It's been a while since we've talked about Trump accounts.It was last year that it was announced.Yeah.Yes.And then it was in July that they were formalized and- Rightyeah And put into action.Yeah.So I did a bunch of research on, and we can do a refresher on what Trump accounts are, but not only what Trump accounts are, but how you get involved, who benefits, what the advantages are.Yeah.Like, what to invest in, where your money actually is, and it was a great exercise for me because this is a new thing, you know?Not many people had much information on this up until about 4 months ago, I would say- IYeahis when, you know, it really started to kinda come into its own.We knew that it was happening last year, but we didn't know the mechanics of it necessarily until Yeahpretty much.So just as a refresher, Trump accounts are for children under the age of 18.In order to get a Trump account, you need to have a US Social Security number, and then you have to be a US citizen, and if you want the $1,000 from the government for free, you have to be born between January 1st of 2025 and December 31st of 2028.Now, that doesn't mean you can't open a Trump account if you were born, you know, between 2028 and whatever 18 is beyond that, but it just means you're not gonna get the $1,000 of assistance.Yeah.So again, you open a Trump account means a parent opens a Trump account for the child.Yes.Yes.Yeah.I guess if you're a very savvy 16-year-old- Sure.You could do it yourselfyou could do it yourself too.So a little background on, on that aspect of it.So this is Brad Gerstner's baby, right?So he, in 2020, had a lot of extra time on his hands.He did.He did.Um, and he was sitting apparently around the, the dinner table, as the lore goes, with his kids, and they were talking about this problem that we've, you know, we have in this country with wealth disparity, et cetera- Yeahand how to get people into the stock market.And the rough idea for the app that is now the number one app in the App Store, the Trump Account app, was scribbled together on the, on paper at the dining room table that one night in 2020.I imagine him with a candle- Yeah.and, like, a monocle, like, drawing.Yeah.So yeah, long story short, it's $1,000 from January 1st, 2025, if you were born that day or after, up until December 31st of 2028.So if you are born between that time period, you get $1,000 from the government.From the government, yep.From the government.In order to have, I'll say, a stake in being an investment provider on the Trump Account platform- Mm-hmmyour fees have to be below dot-1%.Yes.And you have to basically be an index.So you cannot invest in things like Bitcoin, Apple stock.No SpaceX, unfortunately.But-most of these things- Not yetnot yet.Not yet.Not yet.Most of these are just broad US stock market funds.Yeah.So when you log into the IRS.me.gov, you know, your custodians are some of the major platforms, and then your investment options are going to be large cap ETFs for the most part, and I think that's great because by designed, the, by design, we don't want too many options.We don't want people getting analysis paralysis.Yeah.The purpose of this is to just get the money in and get it invested.Right.So yeah.So anybody born between that time period opens an account, they get the initial $1,000.Um, and it doesn't matter, you know, what wealth you have access to in life.This is just an automatic $1,000- Correctcontributed to each child.And this $1,000 does not count towards your $5,000 annual limit.Okay.So $5,000 can go into these accounts annually.Most of the time I assume it's gonna be by the parent, is the one that's going to be contributing, but what's interesting is employers can also contribute to the accounts as well, and they can contribute up to $2,500 a year.Yeah.And that doesn't count towards the 5,000.So that would seem to me toIt, it's $5,000 per child can go into the account, right?Yep.So that means that if your employer is gonna make a contribution to your Trump account, your child's Trump account, you probably need to plan for that, right?You do, yeah.I mean, you're gonna need to have the account open and whatnot.I'm sure there's gonna be an HR portal for this.I don't know how it works.There are a few employers who have announced, like major companies, that it is going to be a company benefit for them.Yeah.But I think the logistics still haven't been fully ironed out.I think theWhat I'm trying to get to that is if you open this account, and you receive $1,000 for the government, and you're like, "Well, I'm gonna put another $4,000 in to cap it off," and then your- Yepemployer says, "Hey, I've got some money for your kid's Trump account," well, then you can't accept it, right?No, you can't.Like, there's no way to put it.So the employer contribution doesn't count towards the 5,000.Oh, it doesn't count towards the 5,000.Yeah.So in theory, you could get the first year, 8,500- You did say thatin there because it's- Yeahthe 5,000 plus the 1,000 from the government, plus 2,500 from the employer, if your employer offers it.So it's, it's pretty solid.Now, granted, you don't get tax deductions for putting money in here.Like, this isn't, like, an IRA or something like that for your child, where you're gonna put $5,000 in, and you're going to get a tax deduction off the top of this.Yeah.But it is a tax advantaged account, where it's going to grow tax-deferred.Yeah.You know, it's, think about it like a non-deductible IRA, but, you know, it, it's a pretty solid situation.So it grows, it grows tax-deferred, so you get, let's say you get $5,000, $6,000 a year one.And that grows tax-deferred, and you have the opportunity to put, you as a parent have, or that child has an opportunity to get $5,000 into that account.It could come from parents.It could come from friends.Grandparents, friends- It could come from whateveremployers, whoever.Yeah.There's a QR code.Did you know this?No.The Trump app has a QR code.It's just like a Venmo type thing.Okay.And if, like, I wanted to give your child a gift of $1,000 'cause I'm feeling generous, you would just say, "Okay, here's the QR code" that I would Apple Pay to that.You wanna know what?I was going to be going to a, a 4yearold's birthday party over the weekend.Mm-hmm.Didn't make it, but we were trying to think of what to get them as a gift.Yeah.I'm not saying this is a great gift, but it is an option.I think it's a pretty good gift.I mean- It's decentthe 4yearold's not gonna appreciate it.No, of course.It's not, like, some sort of toy or something like that.Yeah, yeah.But, I mean- Yeahin regards to, like, doing something that, you know, down the line they'll appreciate.I think the best advantage, like, the best way to look at this is it's almost kind of like an HSA or a 529, where the money goes in, it's after-tax money that goes in.Yeah.And then it's gonna grow tax-deferred.Now, depending onThis is something I don't 100% know just yet.Well, wait.Sorry.HSAs are pre-tax money.Right, right, right.Right.Sorry, yeah, pre-tax money.Yeah, yeah, yeah.So it's more like a 529.Yeah.But long story short, like, if you were to max this thing out every single year, and you were to get the $1,000 initial contribution, so let's just say you had a newborn.Yeah.And you got the $1,000 from the government, maxed it out, you did $5,000 a year, and let's just assume, like, an 8% rate of growth in the stock market- Okayfor 18 years.That's over 150 grand- Yeahfor that child in an 18-year period.Now, what's to prevent that child from stopping from just going to buy a Corvette when they turn 18?That I don't know Do you wanna know?I do.So the- Good parenting?Yeah, no.AfterAt 18, at the age of maturity, this needs to be rolled over into a traditional IRA or a Roth IRA.It could be converted into a Roth IRA.25% of the account is available for something else, like starting a business or going to s- going to college.Technically, they could pull it out of the IRA, though, in theory.Yeah, and pay penalties.And pay penalties.Yeah, yeah, yeah.Sure.Yeah.But there's, there's, there's other disincentives.Like, so itEssentially, this is only 25% of the Trump account is going to be available for some 18-year-old to spend on something.Right.Okay?The rest of it is earmarked for retirement.That's the point of the account, is to set people up for financial success in the future, in the distant future, not as a replacement for a 529 or, or something like that.Yeah.I mean, it's a great thing.I mean, UPMAs have been around for a long time.Sure.But I don't think very many people are familiar with UPMAs.Like, it's not a very advertised situation, and UPMAs, I think, can be very confusing because it requires financial literacy a lot of the times to choose investments within an UPMA to get it set up.There are nuances around it.This is, like, a very plug-and-play situation, and I think what this is trying to do is democratize getting people into the stock market at an early age, which I'm personally a fan of.Right.'Cause compounding growth, hence podcast name, is very powerful long term, as we know.Well, I think it's a, it's incentivizing a buy-in to capitalism.Yeah.And that's 0 one thing we talked about when this, you know, was first announced, was the similarities to the GI Bills and, and the housing build-out in the '50s following World War II, which was a way for us to find some economic success as a country, but at the same time, a way to combat communism that was starting to take a, hold.Sure.And i- in some ways it was socialism, but it was, you know, the, the Communist, uh, Party was gaining some strength- Yeahin this country, and that was essentially squashed by giving people more ownership in the country.And I think that's part of the game plan here.I agree.I wanna talk a- talk about the education stuff when it comes to Trump accounts a little bit as well.Yeah.Because there are some caveats to this versus a 529.Yeah, totally.Um, and there are some pretty big ones.So when it comes to, like, qualified education withdrawals, like, if someone's thinking that they want to use a Trump account to pay for their kid's college, there are some advantages and disadvantages to that.But compared to a 529, when you pull money out of a 529 and put it towards education, that is a tax-free withdrawal.If you pull money out of a Trump account to apply towards education, you avoid a 10% premature distribution penalty, but you do still have to pay tax on that distribution.Yeah.So this isn't a replacement of a 529 account.You do still have to pay income tax on earnings.But I would say that this is another arrow in your quiver in regards to helping a young person gain some financial independence and freedom.Yeah.I think that this isAnd actually, I, I don't think this.I know that, you know, this has been stated as a way to help people who can't afford 529s, right?Absolutely, yeah.Like, it's, it's not a replacement for- Yeahsaving for college.Some people are talking about estate plan benefits.I think that's pretty minimal.I think the goal here is really just to help fight back the wealth inequality problems that we have in this country, and it's great that you're seeing this initial $1,000 contribution from the government.It's great that you have, you know, Michael Dell coming out.Brad Gerstner actually did this for the state of Indiana, I think it was.I saw that.Yeah, yeah, yeah.Yeah, so, like, everybody, you know, all the kids in Indiana that got Trump accounts got an initial contribution from Brad Gerstner himself.It's, like, tens of millions of dollars that he's putting away into this, which is great.And they're making this a charitable donation, right?So you can, if you, you know, if you have means, donate broadly to these Trump accounts as a, as a charitable donation.But I think it's not there to replace anything else.It's, it's really primarily for retirement savings.It is helping a child have a successful financial future decades after they are born.Yeah.And it is notThere are hurdles or disincentives you know, taking from this money before that time.100%.I think this is just encouraging saving and participation- Yeahin the market, and it's like, even if you don't max this thing out, like, I was just running some numbers.If you were to collect the $1,000 and just do 100 bucks a month into a Trump account, that's 52 grand- Yeahyou know, by the time the kid's 18, assuming an 8% rate of growth.Which, actually, over the last 20 years, the S&P 500's returned 13 and a half percent- Rightwhen you analyze.Yeah.But assuming 8%, I mean, 52 grand at age 18 is extraordinarily helpful.Now do that so that you continue to do that $100, right?For- Oh, yeahanother, uh, 40 years, right, before you retire, because that's- Let's say 60?So yeah, we're saying 60.All right.So if the child had a Trump account, they got the $1,000 up front- Mm-hmmthen you did $100 a month- Mm-hmmand the child continued it when they turned 18 up until they were 60, not 65- Rightthey wanted to retire early, $1.87 1000000.Yeah.This number doesn't shock me because I knew this.This is the crazy part.The total contributions to the plan is $73,000.$1.8 million of the account is just from investment growth.Yeah.That's, that is pretty shocking to think about, but as we know- Time valueYeah.Yeah, I mean, it's just- And it, like, it just, the doubling every 10 years really makes an impact in the final 30 years.Totally.Like, that's, that's the powerful thing.I mean, imagine if I was to say, "Give me $73,000, I'll hand you back $1.8 1000000."Right, yeah.And again, it's, it's $73,000 over 60 years, right?So it's, overall, it's a pretty small amount of money.That $1.8 million will, going back to inflation, not have the same purchasing power at that time.Totally.But it's still great.It's- Yeahit is indisputably a great thing, and unfortunately, they are called Trump accounts.And there are people who are not going to take advantage of this- Because of the namebecause of the name, and that sucks.I know.Because they're likeI understand there, there are people who are like, "Well, I don't, I don't trust this.Why, how can I believe it's going to be there?He's a grifter."Totally get it.It's not his idea.Right.He's not holding out these accounts.There's, he has no personal ownership or benefit from this.They're not in his bank account, yeah.And it's not, it's now you have to hate Fidelity and Vanguard and BNY Mellon- Surethe big bank behind it all.Like, the, the point here is that I understand the hang-up.I know it sucks.He's an egotistical maniac.You need to call a Trump account to get this done, signed, sealed, and now people can benefit from it.We have to give credit where credit is due.Right.This is happening.It's a good thing.I don't see how it's a bad thing, and- Participate in itparticipate.And even- Yeahalong the way, if your child isYou know, my child is in, going, is going into 7th grade.She hasn't had this Trump account all along the way.But if this becomes a part of the financial literacy, like, the fabric of this country where there's 12, you know, 12 or 13-year-olds talking about what their, you know, account or looking at their account and saying, "Oh, I have this much in Apple.I have this much in SpaceX.I have this much in whatever."Yeah."I have this much money building for my future," we talked about the nihilistic beliefs that a lot of young people in this country have.This is a way to solve for those.Right.So I just, I want people to get over themselves, put their issues with the Trump name to the side for the moment, and take advantage of something that is only going to help the kids.I think that's a perfect place to end it.Support.Support.Well done.Sorry.Um, like, listen, subscribe.Share with a friend.Send, send comments and questions, 'cause as, as displayed, we will try- We willto address them.We will address them to the best of our ability.Thanks a lot.All right.Thanks, guys.The information in this material is for general information only and is not intended to provide specific advice or recommendations for any individual.Investment advice offered through Integrated Partners doing business as CoFi Advisors LLC, a registered investment advisor.Integrated Partners does not provide legal, tax, mortgage advice or services.Please consult your legal tax advisor regarding your specific situation.Past performance is no guarantee f- of future results.All investing involves risk, including loss of principal.No strategy assures success or protects against loss.The economic forecast set forth in this material may not develop as predicted, and there can be no guarantee that the strategies promoted will be successful.Compound growth with Wheeler and Colin.Sponsored byCoFi Advisors.Reach out today.Yay