Peter Mallouk: The Path to Financial Freedom | E84

#84: The Path to Financial Freedom with Peter Mallouk

Are you ever confused or overwhelmed at the prospecting of investing?

If you are, don’t worry! Our guest today, Peter Mallouk, has simple strategies on how to invest and save as well as why it’s so important.

Peter Mallouk is the CEO of Creative Planning, a wealth management firm, that has been ranked #1 in America by outlets such as CNBC and Barron’s. Peter has been on Worth Magazine’s Power 100 rankings and has received other accolades such as the Ernst & Young Entrepreneur of the Year Award. He is also a financial industry thought leader and author. His upcoming book, The Path, is all about helping you achieve financial freedom and is co-authored by Tony Robbins.

In today’s episode, we’ll talk about common misconceptions that Peter has encountered in his many years in the financial services industry as well as his thoughts on the news and its impact on us as investors. We’ll also cover topics such as the importance of diversifying, the plans you should lay out before investing, and how to find the right financial advisor to meet your needs.


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Check out our website to meet the team, view show notes and transcripts:


01:11 – How Peter Met Tony Robbins and All About Their New Book

03:53 – Why the Financial Services Industry is Broken

05:00 – How to Find a Great Advisor

06:53 – Truth About Today vs. the Past

10:49 – The Contradictory Thing About Media and the News

13:36 – Why is Now the Best Time to Start Investing

15:37 – Why it’s Important to Diversify

17:49 – Real Life Example of the Importance of Diversifying

19:30 – The Six Human Needs

21:58 – The Power of Compounding

24:20 – Why it’s Important to Know What We Want

25:58 – Financial Independence vs. Retirement

27:15 – Important Plans to Have Before Investing

28:48 – Difference Between Brokers vs. Financial Advisors

29:50 – When Should You Get a Financial Advisor? 

31:30 – Tips for Someone Working at a Corporation

33:34 – Advice about Insurance

35:08 – What to Look at for Financial Planning

37:20 – Peter’s Secret to Profiting in Life

Mentioned in the Show:

Peter’s New Book, The Path

Peter’s Website:

Peter’s LinkedIn:

Peter’s Twitter:

Peter’s Facebook:

#84: The Path to Financial Freedom with Peter Mallouk

[00:00:00] Hala Taha: This episode of YAP is sponsored by Podcast Republic. Hey, Android users, this one's for you. Podcast Republic is a podcast app where you can discover and subscribe to 1 million shows and enjoy live radio streaming. They have over 85,000 authentic reviews and a 4.6 star app rating in the Google play store.

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And on young and profiting podcast, we investigate a new topic each week and interview some of the brightest minds in the world. My goal is to turn their wisdom into actionable advice that you can use in your everyday life. No matter your age, profession, or industry, there's no fluff on this podcast and that's on purpose.

I'm here to uncover value from my guests by doing the proper research and asking the right questions. If you're new to the show, we've chatted with the likes of ex FBI agents. Self-made billionaires sleep, psychologists, CEOs, and best-selling author. Our subject matter ranges from enhancing productivity, how to gain, influence the art of side hustles and more, if you're smart and like to continually improve yourself, hit the subscribe button because you'll love it here at young and profiting podcast this week on YAP.

We have a return guests on the show. None other than Peter Mallouk. Peter Mallouk is the president and CEO of creative planning. Creative planning is a registered investment [00:02:00] advisory firm that manages over $50 billion in assets and serves clients in all 50 states, both creative planning and Peter have been repeatedly recognized as industry leaders by organizations, such as Barron's financial times and CNBC. RIA channel published by Forbes recently ranked creative planning as the number one wealth manager for 2020.

Visit to review important information related to their industry recognition. Back in episode, number 72, we discussed Peter's thoughts on how the economy will shake out in a post COVID world. We got his perspective on how you should be investing during the coronavirus and his thoughts on speculative investments like cryptocurrency.

After this episode, I encourage you to go back and check out number 72. This time around on YAP. We're gonna be taking a deep dive into Peter's upcoming book, the path coauthored by Tony Robbins. We'll talk about why Peter thinks the financial services industry is broken. What plans you should lay out before you should even consider to [00:03:00] start investing and how to find the right financial advisor to meet your needs.

Hey, Peter, welcome back to young and profiting podcasts. 

Peter Mallouk: Good to be back with you. 

Hala Taha: Yeah. Last time that you were on, it was such a hit, it was one of our most downloaded episodes ever, which is incredible. So thank you so much. I had to just have you back on now that you have a new book coming out with Tony Robbins on

October 13th, it's called the path. And I'd love to really focus on that. For those of you that missed it. Peter was on back episode number 72. It was called post COVID predictions and investing tips with Peter Mallouk. Like I said, it was one of our most popular episodes and this time around, I really just wanna focus on your books since we covered a lot of your career journey and things like that in the previous episode.

So let's get started the path it's called accelerating your journey to financial freedom. It's co-authored by Tony Robbins. It comes out October 13th and I was lucky enough to get an advanced copy. So [00:04:00] I got to read it and it was fabulous. There's a lot of great strategies. But let's start with your coauthor, Tony Robbins.

How did you guys meet what was the motivation behind the book? Because you guys have a lot of financial books that you've put out in the past, what's makes this book different or are new and what was the motivation behind it? 

Peter Mallouk: The way I met him is in a really interesting story, at least to me.

Anyway, he had a 401k plan at his work employed, tons of people, and he met this guy, Tom Zgainer. Who was handling independent 401k plans. And what he basically found out was that he had been paying two to 300% more for his 401k and his employees were paying two to 300% more than they needed to. So he wound up hiring Tom to handle his 401k.

I didn't know Tom, at the time Tom works at creative planning now, but that really opened up his eyes. And so he called. Two of his good friends. I think they're also clients of his Ray Dalio and John Paul Tudor Jones, who are two of the greatest [00:05:00] hedge fund managers of all time. And he just started asking him like, what did he not understand?

And they educated them a little bit on the investment world and they also directed them to others. And so he wind up interviewing Alan Greenspan who used to run the federal reserve, Charles Schwab, who obviously founded the company by the same name, John Bogle, who founded Vanguard and many others, maybe 50 people or so.

And his advisor at the time had said you should take off no, one's interviewed all these people. You should take all of these and turn them into a book. And he hadn't released a book in 20, 30 years, but anyway, he wind up doing that and he added a lot of what he learned from talking to all of those people.

And that book became wildly popular. And so some of my clients would show up with this book and I'd never met Tony Robbins or talked to him, but they'd have questions from reading parts of the book. And the shorter version from there is along the way we met and then we wind up riding unshakable together.

And then now I wrote the path and he covers a couple chapters in here, along with Jonathan Clements. Who's used to write for the [00:06:00] wall street journal who adds a chapter to the book as well. 

Hala Taha: That's awesome. From my perspective in the self-help world, Tony Robbins is like a legend. He's been doing it since he was 17.

Like he's the goat when it comes to those things. So it's awesome that you got to work with him. And maybe one day you can introduce me to Tony Robbins. So you start off the book with a really bold claim. You say the financial services industry is broken and you've had a career journey and experiences that really helped you see the financial services industry from a different vantage point.

Tell us about that. How you were able to see what was wrong with the industry and why, in fact, you think that is broken. 

Peter Mallouk: That's funny cause Tony learned about it by being on the receiving end and finding out that he was getting screwed over and his employees were on the fees and their plan.

I learned about it on the advisor end, I was a advisor, I was doing planning for clients, but also did legal work for clients through other advisors. And I met a lot of amazing advisors that were [00:07:00] really good, but I also met a bunch that were really selling products and selling variable annuities and doing things that may might've enriched them.

But didn't really enrich the client and it exposed a lot of the conflicts in the industry, which is most of the time when we're, when someone's paying an advisor, they're really paying them to then sell them an investment product. And really, you want a separation of the product from the advisor. And that was my main takeaway from the beginning of my career.

Hala Taha: Yeah. So that's really interesting. And I think we can dig deeper later on in terms of like, how to find the right financial advisor and things like that. Is there anything else in terms of the financial industry that you want to speak to in terms of why it's so broken? Are there any other themes or trends that we should be aware

Peter Mallouk: I think the main theme is you want to work with an advisor. That's a fiduciary all the time has to act in your best interests on everything all the time, every investment all the planning, all of that second year, it's great to work with an advisor that only gets paid one way that they don't have an incentive to.

[00:08:00] They don't have incentive to recommend one investment over the other. And you will ideally you're working with an advisor whose company does not own their own products, because otherwise that advisor is gonna be inclined to use those products, which may or may not be best for you, but you wouldn't go to a Honda dealership and pay a fee and ask what car should I buy?

You'd wind up getting a Honda. So ideally you have that separation. And I think all of those things together help. And if you wanna go the extra mile, having a planning led approach helps. So it's nice to have investments, but it's even better to have the investments pointed towards an actual objective towards an actual goal.

And I think that's a very big part of making sure you're on the right path. When you're investing. 

Hala Taha: Yeah, totally. And I think it's important to note that most financial advisors out there or wealth managers as they call them, they're really just sales people. At the end of the day they're trying to push products and you want an advisor.

You don't wanna sales person. Who's advising your financial feature. Okay. So when it comes to money, mindset is everything. Let's talk about [00:09:00] perspective because I know that you believe that having a balanced, accurate view of the world is important so that you can make good financial decisions. We tend to be the past as the golden age.

We're always wishing that it could go back to the way that it was. And we tend to look at the future, very pessimistically. But you say life is actually better than it has ever been. So tell us the good news. Why is life so much better now than it was yesterday? And how can that help us get into the mindset in making good financial decisions?

Peter Mallouk: Yeah, there's just something about the human condition that we find a way to be pessimistic. When everything tells us all the facts. Point to constant progress and optimism. It's amazing. I think it's funny that when people use like this phone, we call it a phone, but it's a super computer that can basically do things that you used to need a hundred things or a thousand things to do back in all the way back in 2007, you needed to have an Atlas and an alarm clock and a calculator.

And this is all [00:10:00] we can do everything on this phone has more technology than what was used to land on the moon. And we'll use that phone to go complain about how bad things are today online. It's just, it's so crazy. And sometimes we'll do it while we're having lunch, where we might have a salad that 15 different farms were involved in getting that salad on our table and we're paying less for it adjusted for inflation than people did.

50 years ago, we find a way to complain despite things being not just good. But beyond the wildest dreams of everyone on earth 50 years ago. So there is no good old days. We've been around for tens of thousands of years. Only a lately insane person would say I would rather be alive in the 18 hundreds or the 15 hundreds or thousands or whatever.

Back when there wasn't plumbing and heating and cooling and all the wonderful food we get to eat. Just, we can go see each other more easily, everything about the world today is better. But we were attracted to bad news. We're attracted to [00:11:00] negativity. It's much more easy to sound smart if you're pessimistic than optimistic and the media knows this and they feed into all of those natural biases that we have.

But if you look at everything it's stunning, the speed. Let's just take music as an example. It used to have to be live. And then we got to the eight track and records and we got to cassette tapes. Then we got to CDs. Then we got to MP3. Now, we can get any song. Pretty much ever published in one second.

Instantly in our hand, this was impossible to imagine 15 years ago, and we could do the same thing with movies and we can save all quality of life from the average size of a home, to the amount of money we have to spend on food versus things we enjoy to the amount of money we all make adjusted for inflation by every measure, the world is better today than it used to be.

And where it ties into investing is. Investing is really a bet on the future, right? So if you bet the future is gonna be bad, you're not gonna invest in things like stocks and you're gonna do very poorly. But if [00:12:00] you accept not optimism, but reality that the future probably is gonna be better than today.

Just every 50 year period tends to be. If we look 10 years down the road, 20 years 30, or is it gonna be better? Most certainly probably will be right. And if you believe that, then it becomes easier to be a good investor and not get shaken up by all the noise that's out there. 

Hala Taha: Yeah, I think that's a really important point.

You actually quote Matt Ridely from the rational optimist and he explains the rapid acceleration of human progress. Over the past 50 years, he says in 2005, Compared to 1955, the average human being on the planet earth are nearly three times as much money adjusted for inflation ate one third more calories of food burned one third as many and buried one third as many of her children as could.

I'll redo this later. As could expect to live one third longer. I butchered that. Sorry, I'll redo that later. Yeah so it's so clear that things are drastically improving and I wanna touch on one point that you made just a little earlier in terms of the [00:13:00] news. Let's talk about the media and the news for a second, in terms of shaping our perspectives.

In the book, you mentioned that like really media is a for-profit industry, right? They're there to make money, not necessarily to inform. So tell us more about that and why that's a problem in terms of, how it shapes our mind and behaviors for 


Peter Mallouk: We think about how the media makes money.

So the media wakes up every day and they have a fiduciary obligation. To make money for their shareholders. So if you're a publicly traded company, you have a legal obligation to your shareholders. So those are the people that own the stock in the company. Whether we look at NBC, ABC, CBS, MSNBC, Fox, CNN, all of these places are part of publicly traded companies, which means they wake up every day going, how do we maximize our return to shareholders?

How do these places make money? They sell advertising. They don't make money from news. They sell advertising. How do you get more money from advertising? You have to have more viewers. A show with 10,000 viewers is going to be able to charge an [00:14:00] advertiser more than a show with 1000 viewers Coca-Cola will play more money to hit more people more frequently.

So now how are they gonna get more viewers? They have to have content that brings people back. We know people are attracted to negative news. More than positive news. It's just a fact in there and negative news is more effective. It's why for every positive ad campaign, you'll see by either party in politics, seven will be negative.

People respond to the negativity more. Unfortunately it works. They don't spend the money on negative ads just to be mean they're doing it because it works. The same thing with the news. So the weather channels ratings are higher when the weather is terrible. And if it's a question. The weather channel is not going to put people at ease, right?

The weather channel is going to keep this narrative going as long as possible, because it means more eyeballs on the screen, which makes the ratings better, which gets more advertisers, which makes more money for the shareholders and they've fulfilled their fiduciary obligation. So if you can focus on that when it comes to investing, that when you're watching financial media or reading financial [00:15:00] media, there's a tremendous incentive for them.

To make everything into a narrative, into a story, into a news cycle, into a crisis that keeps you coming back for more, just like a soap opera. And there was a tremendous disincentive that can't be overstated. To calm anybody down. And so I think if you, if investors understand that they're less likely to make investment mistakes.

Anyway, the side benefit is if all of us understand that we're less likely to make, just get all worked up about everything all of the time, 

Hala Taha: Yeah. So then tell us, you say that. It's, now is better than ever to be an investor, at least a globally diversified investor. So tell us about that. Like, why is now, I know you just set the stage, but really drill it home.

Like why is now the best time to start investing? 

Peter Mallouk: If you think about what drives the market likes to see technology and innovation. So they wanna see are things getting better. That make things easier. We know that there as there are advancements, there's this myth that, that kills jobs and it doesn't kill jobs at all in the 1800.

One and [00:16:00] two of us were farmers, today it's less than one in 20, but we have more farm output. And the job unemployment stayed the same. We then, if you go back to 1950, one in four of us was in manufacturing today. It's less than one in 20. Yet we produce more goods through manufacturing because of technology and unemployment has stayed the same.

So the quality of life of everybody gets better with these advancements. But those things also drive markets. We need innovation to drive markets. So one, you have to ask yourself, am I living at a time in history? Where there are advancements with technology and innovation, any rational person has to say yes to that.

The second thing we need is we need people to buy this stuff. So we need the demographics to come into play. We know over the next 10 years, we have 1.2 billion people emerging from poverty, all over the world. What do those people do when they emerge from poverty? I hope they might buy Nike shoes.

They might go to McDonald's. They might go to Walmart. These are all publicly traded companies. It gets reflected in the markets. So if we look objectively at demographics and innovation and technology, we have to say, not only is it a good time [00:17:00] moving forward, but literally the, maybe the best time ever to be alive with those factors mattering to the outcome.

Hala Taha: Yeah, I think that's a really good point. One thing that I want to talk about next is the S&P 500. Last time we talked about how the S&P 500 was a great thing to invest your money in. And that typically year over year, it's an average of like 8 to 10% return on your money.

When you invest in the S&P 500 in this book, you guys mentioned something about the loss decade. So that's between 2000 and 2009, a full 10 years, the S&P 500 produced 0% returns. This is much different than what I had thought. I thought the S&P 500 was like safe, no matter what, you put your money in there.

And you're good. And I think a lot of people think that, and we've been taught that. And it's been like drilled down our throats the past couple of years in terms of, young people investing their money. You've got to do this S&P 500 blah, blah, blah. So tell us why, this isn't exactly [00:18:00] true.

And like why we need to diversify in order to mitigate any risks with putting our money in the S&P 


Peter Mallouk: Nothing goes straight up in the S&P 500. It definitely does not go straight up. So if you invest in the market, the S&P 500 today, the odds you'll have a positive return a year from now, or three out of four 75%.

That's pretty good.  No one wants to bet their life savings on 75%. But if you leave it in the market for three years, five years, your odds are moved at 93%, 95%, 10 years, 98% plus. So it's really, you've got to invest it and spend the time in there. And you've got to know that corrections are gonna happen about every year.

There's a correction. A correction is a drop of about 14% or more some years like 2020, there's a bear market, which is a drop of 20% or more. The average bear markets, 34%. Believe it or not. With the coronavirus crisis, the market dropped exactly 34%. It felt much worse cause it was the fastest drop in history to that level.

And there was a lot of uncertainty and it involved health, which is obviously the only thing to many people scarier than losing their money. But in terms of depth, the average bear [00:19:00] market, but like you just pointed out, there are very long periods of time where the market does not perform. So from 2000 to 2010, that same has to be a hundred.

Earn zero. Something that normally would average six to 11% a year average, zero per year, over 10 years. But over the same time period, international stocks were way up small stocks in the U S are way up small stocks, overseas way up emerging markets, real estate and bonds were way up. So that's the importance of having your eggs spread out in several different baskets instead of all in just one index.

Hala Taha: Yeah. In the book you have a story of, I think it's Tony's story about his friend, Jason, do you know that story? And can you share that with us? So that our listeners can really understand the point of diversification and its importance? 

Peter Mallouk: I think Jason had I'm familiar with this person. He had this very big role.

With real estate and he really just thought he couldn't lose because history told him he can't lose and it kept going and going. And he just was one of those people that really wanted to have an entourage around him all the time and have a lot of things, [00:20:00] had a lot of. A very public way of displaying his wealth.

Ultimately he never diversified. And the story ended very tragically for him when the housing market and condo market blew up in the 2008, 2009 crisis. Had he just taken a little piece and diversified it, things would be a lot different. I The more modern day story of that is someone has a bunch of money in the tech stock.

The tech stock takes off. If they hold it, will it keep going maybe for a while, but eventually every company. Does itself in, and you never know when that's going to be. And so always, we always encourage people, just take something and diversify it. So you're never at the mercy of having all your eggs in one basket.

Hala Taha: Yeah, I think that makes sense. So the S&P 500 is really like US companies. So to mitigate that we would choose international companies to invest in or real estate, like you just mentioned, or other avenues bonds, whatever it is something that diversifies your portfolio so that if something does tank or doesn't improve in terms of your return you have other [00:21:00] options to, to make money.

So that makes sense. So let's talk about our emotional needs and what that has to do with money. So in the book, you and Tony touch on six human needs, certainty, variety, significance, love, and connection, growth, and contribution. Could you go over these human needs at a high level with us and let us know maybe what you prioritize in terms of your human 


Peter Mallouk: So I thought, when he asks me. What do you think I should write about in this book? I specifically asked him to talk about those things because the book is really about identifying your goals and he writes a lot. He's written a lot in the past about you really need to know what drives you. A lot of people aren't really in tune with what drives them.

Some people are motivated by contribution, which is they want to make a difference whether in their work or with their family or with charities or in the community. A lot of people feel that need to do that. And if that's your goal, then you're driven to accumulate a certain amount of wealth and maybe set up a foundation or free up your time.

So you can volunteer your time to the charities or others. Some [00:22:00] people are motivated by certainty. They really need to know what's gonna happen and when it's gonna happen and otherwise they're anxious, that would really drive a lot about your investments too. So there's a whole chapter writing about these six basic needs that we have and trying to identify in yourself.

Which needs do each of us have and having that get built into the financial plan. 

Hala Taha: Yeah. And what are your what needs do you focus on when you're considering your plan? What do you think? 

Peter Mallouk: I keep one of the needs is certainty versus variety and I'm definitely a variety person. So one of the things I love about my profession is that every day.

It's different, you just never know what's, what's gonna happen or what's gonna come up. And I like, I enjoy that. I enjoy all of the change that comes with things. I'm very motivated by contribution. I like making a difference in the community. I like making a difference for clients.

I know that a lot of the people on our team are really motivated by that and trying to lead the industry in a certain way, or at least put a dent in the industry. And so those are two very big motivators for me personally. 

Hala Taha: Yeah. And speaking of contribution, a [00:23:00] hundred percent of your profits for the path with Tony Robbins is going towards a feeding America

to charity. I think you guys have a mission of a feeding of 1 billion people or 1 billion meals. So that's awesome. 

Peter Mallouk: Thank you. We're excited about that. And in this particular case, a lot of it's going to the cities where we have offices, which are a lot of the major markets in the United States, as well as where our headquarters is.

And then to the national, feeding America organization as well. So we're very excited about. 

Hala Taha: That's 

cool. So let's talk about compound interest and why that's so powerful. You have a great story in the book about Kodak that illustrates the power of compounding. Would you share that story with us and how, they almost created the first digital camera and what went wrong there?

Peter Mallouk: So the idea of compounding is that things are gonna double and win things double. They happen very quickly. So you think about Kodak doubling the quality of an image, or if you, most of us can identify with an iPhone, right? Like the speed with which the camera doubles or our internet speed would double or what we could hold on a laptop [00:24:00] doubles and it doubles and doubles.

And it gets to a point where it's absolutely stunning what it can do. And the same thing applies to might few have $10,000 and you're 20 and you just earned 7%, but when you're 30, it will double the 20,000. But when you're 40 it's 40,000. And when you're 50, it's 80,000. And when you're 60, it's 160,000.

So that 10,000 is become 160,000. It's amazing what that power of compounding does because you're adding to a bigger number. Every time the concept drives a lot of technology innovate. As it drives the speed with which we get technology, but it also. It has a lot to do with money. And so your listeners, I know your audience is very young in general and they should really be thinking about setting aside something, no matter how small, as soon as they can to get the advantage of compounding on their side.

Hala Taha: Yeah. Do you have any examples in terms of your clients who have done this really well and have used compounding to their advantage? 

Peter Mallouk: You know, the reality is a lot of people that come to creative planning, they start out older, you start thinking about retirement, when they're in their forties or later, and then they [00:25:00] come to us and.

When we're fortunate enough to get those 20% of clients or so that are starting in their twenties or thirties. It's incredible. Like all of their projections always work out because if you're saving for education or retirement and things like that at such a young age, you have the biggest advantage that exists when it comes to money, which is time.

The biggest advantage is time. If you don't have time, you've got to find a way. To come up with more money or change your objectives or push off your retirement or something else to make it work. And so if you've got somebody in their twenties or thirties, that's willing to start, they should just open an account and start saving as quickly as they can.

Hala Taha: Yeah. Okay. So let's talk about outcomes. You mentioned this earlier, the importance of knowing exactly what you want. So tell us why is it so important to know exactly what we want before we actually start investing and start putting our money in stocks and things like that? 

Peter Mallouk: A lot of us just think about when we want to make a lot of money.

That's what a lot of us think we want. And so we then go to somebody or we [00:26:00] do it on our own and say, I'm gonna buy things that make a lot of money, but really we want to make a lot of money. To do what is it to have 120,000 a year when you're 63, is it to have the money to pay for someone's college?

Whether it's a public school or private school for four years, are we gonna cover room and board or not? Is it because we want to give 10% of our money every year to charity or something different if we have those pieces in place, which should come first, if we know what the goal is, first, it becomes very easy to reverse engineer our way to how do we.

How do we put the pieces in place to make those things happen? And sometimes those are aggressive investments. Sometimes they're not sometimes to increase the chance of hitting a goal. You get more conservative. So say you have somebody that's super lucky and they've got a million dollars. And they need 50,000 a year for the rest of their life.

And they're retiring today. If they're super aggressive, they could actually screw up something that would work out just fine if they were moderately invested. So we really have to know what the [00:27:00] objective is because the objective is not always a great, the biggest pile of money next year possible.

It's usually to produce something you personally want. And then you back into the investments that make sense to get there. 

Hala Taha: Yeah, let's clear up some definitions because I think people get these confused. What's the difference between financial independence and retirement? Like why are they actually different?

Peter Mallouk: I think they're very different. So retirement is you're done working right. Financial independence is you get up in the morning and whatever you're doing. It's cause you want to do it. So if you go to work it's because you've feel fulfilled going to work. If you are doing two jobs, it's because you have to, if you're writing a book, it's because you have to, financial independence means you can walk out the door of your job, whatever you want and go, just do what, golf or swim or vacation or whatever it is you want to do every day.

So financial independence is a liberating feeling because it's hard to be anxious about anything when you know, you're choosing to do it. No one's making you do it. 

Hala Taha: I [00:28:00] think that's helpful. It's helpful when you think of your outcomes, cause it's like, are you really planning for your financial independence or are you planning for your retirement?

They're two different things. Okay, cool. So you, in your book, you talk about the need to have a number of plans in place. Before we ever start investing you talk about things like a net worth statement, retirement projections, education, projections, insurance, projections, risk management, estate planning.

So many different things that you cover. I don't think we're gonna have time to cover all of them on the show, but what are some of the plans that we should really focus on before we ever start investing our 


Peter Mallouk: I think you should at least have two or three things clarified. So one you, what do you have today?

What are your assets and what are your liabilities? That's all. When that worst statement is. Oh, I own a condo. I have an IRA. I have a 401k, I have an investment account. I have a car, maybe that's the net worth statement. And then the liability side of the net worth statement might be, I have some students loans and I have a mortgage and I also money on my car.

And so the assets minus the liability, it gives us your net worth. Some of those assets bring money to [00:29:00] you and some take money away from you. So we have to distinguish between those two. So a house might be an asset on the piece of paper, but really we pay to have the house every month, even if it's paid off, we've got taxes, maintenance, insurance, we're paying to have that asset.

Versus if we have an investment account or a rental property, that's paying us usually, every month something. So we need to start with that. And then we just have to have some simple goals. When do you want to be financially independent? Do you want to pay for your kids' college? Are you trying to get a debt-free let's get two or three goals in place, and then let's say, okay, all these assets and liabilities in our net worth statement, how should we make those assets work for us to make those goals happen?

And how do we get the liabilities contained? So they don't get in the way of our goals. 

Hala Taha: You break it down so simply, but it seems so complicated at the same time. So in terms of somebody helping us make these decisions, I know the importance of an independent financial advisor is very important.

Could you tell us the difference between what a broker and an independent [00:30:00] financial advisor is? 

Peter Mallouk: So a broker, about 90% of advisors are brokers and brokers basically. Don't have a fiduciary obligation to act in their client's best interest all the time. So that would allow them to use their own products when their own product might be a little more expensive or sell an investment with a commission when there's a way to buy that investment commission free.

But 90% of advisors fall in that bucket. And then about 10% are independent advisors. Cannot make a commission on a mutual fund. For example, they wouldn't be able to sell a variable annuity for example. And I'm not saying those things are always bad. I'm just saying I guess a conditional mutual fund is always bad, but most of the time they are.

And so I think that if you have that independent advisor, you at least have somebody who's legally obligated to pick the best investments they can for you. And that should, it's sad that has to be the starting point, but that should be at least a starting point for choosing someone to work with. 

Hala Taha: Yeah.

And so for people around my age or younger, like when should we [00:31:00] actually start thinking about having an independent financial advisor? Cause from my perspective, it seems safer to do it by myself for now. So is that the right way to think, or is there like a certain benchmark we should hit before we actually go seek out an independent financial advisor?

Peter Mallouk: I think if you didn't get a great advisor. You're almost always going to be better off with that advisor. I think there's a reason that the higher net worth people go, the more likely they are to work with an advisor because the higher net worth tend to be, to know the difference that advisor can make.

But the problem is most advisors will put you in a worse spot. So if you're just starting out. It really is pretty simple. Open an account, max out your retirement plans at work. If you can, whether it's with a 401k or open a Roth IRA and put as much money as you can in the, into those things. And if you have debts that are high interest rate, if you're paying more than 6%, whether it's credit cards or.

Somehow you have a mortgage, or student loans or car loans at those rates pay those down before you invest, because you've got a guaranteed six to 10 to 20% on those things. If those rates are high, it doesn't make sense to go invest. If you've got credit [00:32:00] card debt at 15%, because you're never gonna probably not get invested in 15% year in and year out, you may as well take the guarantee of paying down the card.

So getting the liabilities under control and maxing out of 401k and Roth IRA and investing in indexes is probably what most people that are just starting out need to do. If they get over 50,000, a hundred thousand dollars, they really should. Consider at least looking for an independent advisor. 

Hala Taha: I think that makes sense.

So you just mentioned a Roth IRA and it reminded me of something in your book. I think about more than half of my listeners probably work at a corporation. I work at Disney. What tips do you have for somebody who actually works at a big corporation in terms of how they should invest their money and what advantages they should take?

Peter Mallouk: Some corporations, not all, but if you're any of your listeners are fortunate enough to work for a corporation that has a match. They should definitely take advantage of the match. So what I mean by that is if you have a 401k plan at work, it means you're allowed to put money away without paying taxes on that upfront.

So let's say you're you have a listener they're making 80,000 a year. [00:33:00] They pay taxes on 80,000, but let's say they take 10,000 and put it in the 401k. They won't pay taxes on 80,000 because that 10,000 goes into the 401k before that. So only pay taxes on 70,000. So that's a big advantage. Number one, I'm putting money in a 401k.

Yes. It's not gonna be taxed today. It's not tax until you withdraw decades later. The second advantage is the money grows tax free. And the third advantage is we get compounding on our side by doing it earlier, but some corporations make it even better than that. And say, look, if you put some money in the 401k, we'll match it.

So you might, they might say, look, the first 8,000 you put in there, we'll give you $8,000. That's a hundred percent return on your money. So all of your listeners should basically go to their employer and say, is there a match. If there is a match, they should add a minimum, put that much in their 401k plan immediately.

No matter what's going on with the rest of their net worth statement, they should be doing that. 

Hala Taha: So even if because 401k, from my understanding, they're actually like investing it in other stocks and things like that. So no matter what they [00:34:00] choose to invest that money in, you're saying no matter what.

Do it and get, 

get the match. 

Peter Mallouk: That's right. If there's a match, doesn't just definitely do it. And then from there, within the 401k, you get to pick as if the S&P 500, if that's in the plan or is it international stocks or bonds or real estate? The plan, if it's a good one, will have a multitude of options.

But definitely don't miss out on that match. 

Hala Taha: Cool. So the next topic I want to talk about is insurance. I think that millennials, we don't really talk about insurance. People tend to think about insurance when they're older, life insurance, things like that. What do we need to keep in mind when it comes to insurance in your perspective?

Peter Mallouk: So insurance is, if you don't have insurance, the plan can really blow up. You can be on track for everything. And if. If you die and you have a young family, young kids relying on you, what's going to happen to them. Yeah. Maybe you're on track to be retired when you're 60, but if you get hit by a bus when you're 28 and you've got two little kids, how are they gonna go to school?

How's that house gonna get paid off? How's your spouse gonna continue to live? Or they have to pay for childcare at home, [00:35:00] quit the job, what's what's gonna happen. So you want to protect against that problem. With a term insurance policy, a term insurance just means you're buying insurance for a period of time or a term of times it's not permanent.

It doesn't stay with you your whole life, but if you're 30 and we know that your kids will be out of the house and your house will be paid for by the time you're 50. And you'll have savings to take care of your spouse when you're 50. We're not worried about 50 and later everything will be okay if you're around.

Then we just need insurance to get us from age 30 to 50. So we would buy a 20 year term insurance policy costs very little, usually hundreds of dollars and solves a big problem. And you want to look at that through all parts of your life, whether it's about insuring against a disability or your home burning down or a car accident or whatever, we don't want the family to lose everything.

All of their wealth. because you didn't get some low-cost coverage to protect you against a really adverse situation. 

Hala Taha: I think that makes sense. So this really drives the point home in terms of having to look at your financial plan, like very [00:36:00] holistically instead of in silos. Tell us more about that. Like what else do we need to consider when financial planning and why is it so important to look at the full picture and not just like



Peter Mallouk: Well if you think about it? What people really want is they wanna be secure and accomplish their goals. But to do that, it's not just one thing. It's not just saving money. It's not just a 401k. It's not just insurance. It's all aspects of growing wealth. What am I trying to do? How do I get there?

It's all the aspects of protecting your wealth. How do I not lose my wealth? Because of a problem that happened along the way, someone slipped and fell on the ice on my sidewalk, how do I not lose all my wealth over that incident? And then it's how to transfer the wealth. If something happens to you early, whether it's an incapacity or death, how does that move in a low cost private way to other people?

And so all of those things are part of the same plan and we have to be thinking about all of them. It's not as complicated as it sounds. I break it down step by step in the path on the book. But you really have to look at all of them because if one thing goes wrong, it's enough to derail the plan. 

[00:37:00] Hala Taha: Totally cool. So I think this was a great discussion in terms of the book.

Is there anything else that you want to drive home to my listeners or anything that you think we should touch on? 

Peter Mallouk: I've written in other books, the five mistakes, every investor makes, I wrote another book with Tony unshakeable. This one is really the first time I've written about step-by-step, how to do all of these things.

And so I try to make it very clear. Here are the components of building wealth. Here are the components of protecting wealth. Here are the components of transferring wealth, and here are the things you need and why you need them to get them done. So hopefully I've laid that out really clearly.

I did my best to do that. And your listeners can pick up the path on Amazon or any bookstore. And they can reach out to creative planning by going to our website,, or they can follow me on LinkedIn, Twitter, or Facebook as well. 

Hala Taha: Awesome. Yeah, I highly recommend it. I, read it end to end.

I think it gives great strategies. A lot of the stuff we also covered back in episode number 72, in terms of like how the markets work. What's the difference between a bear [00:38:00] market, a bull market. So I would definitely recommend to go back and check that episode out. The last question I ask all my guests is what is your secret to profiting in life?

Peter Mallouk: I, so I view profiting in life as more just trying to enjoy life. And I think the secret is priorities. Just knowing what really matters. I feel like I know what matters to me and I focus. My time and energy and the things that I'm thinking about in my mind on those things, as much as I possibly can.

And it has resulted in me, enjoying life a lot more than before. I really thought about it with that kind of clarity and just got up and went about my day. And so I think at least for me, just really knowing where my priorities are, what I'm focused on has made a big difference. 

Hala Taha: I think that's sound advice.

And it goes back to what you were saying before, really knowing your outcomes so that you can have the right plan so that you can effectively achieve those goals. I think that's great. Thank you so much, Peter. It's always such a pleasure to have you on young and profiting podcasts. We're so [00:39:00] grateful to have had this conversation with you and we'll put the link for your book in our show notes.

Peter Mallouk: Fantastic. Thank you 

Hala Taha: Thanks Peter. Thanks for listening to young and profiting podcast. If you enjoyed this episode, please consider leaving a review on apple podcasts or comments on YouTube SoundCloud or your favorite platform reviews. Make all the hard work worth it. They're the ultimate thank you to me and the YAP team.

The other way to support us is by word of mouth. Share this podcast with a friend or family member who may find it valuable. Follow YAP on instagram @youngandprofiting and check us out at You can find me on Instagram @yapwithhala or LinkedIn, just search for my name, Hala Taha until next time, this is Hala signing off.

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