YouTube channels definitely worth subscribing to
Hi folks, the company news didn’t excite me on Tuesday. Instead, I thought I’d take a few minutes to show you some YouTube channels I’ve been watching religiously for the past few weeks.
Now, the best YouTube channel is clearly the one that is owned by this website (we’ll have 100 subscribers soon!). Here’s the recent podcast, in Youtube format:
Please go ahead and subscribe to our channel, to get us over the 100 subscriber mark! Here’s the link.
Having said that, there are many other channels I enjoy. Here are two finance channels I’ve recently started watching.
1. The Dave Ramsey Show
Dave Ramsey is a personal finance guru with strong and occasionally controversial opinions on how people should take care of their money.
His primary advice to people is to get out of debt. Credit cards, car loans, student debt, you name it – Ramsey wants you to pay it down as quickly as possible and move on with your life.
The only exception to this rule is a mortgage: he doesn’t scream at people if they take out a 15-year mortgage, and if the payments are small as a percentage of household income. But he doesn’t approve of 30+ year mortgages.
Here is his most-viewed clip:
I think the Dave Ramsey show is excellent, because most people would be vastly better off if they followed his advice.
It’s staggering when you think about how much is spent by families on interest, year in and year out. Those car, house and shopping purchases aren’t just costing what is paid for them on day one – they are costing the price paid upfront plus a whole lot more! If people only thought about all the other things they could afford to buy, if they weren’t paying interest.
This is a point that Dave successfully hammers home. Based on studies done of thousands of self-made millionaires, he says the most common route to wealth is to start earning money for yourself, not for a lender.
Avoiding consumer debt is simple, but not easy. The main requirement is to spend less than you earn, and be patient. Like I said: simple, not easy!
There are only a few points where I would have some partial disagreement with Dave’s advice. For example, Dave says that the ideal situation is to avoid all debt. While I agree that the average consumer would be far better off if they didn’t borrow, I do allow for a few exceptions.
People who can borrow very cheaply, and put the money towards a productive use from which they will make an attractive return, might be justfied in doing so (for their business, their investments or in some cases their education). But I do agree that most people shouldn’t do this. For most people, if they can avoid personal debt, they are probably better off without it.
Take this counter-argument by the Motley Fool, for example.
This particular article confounds me when it says that you can make a profit if you borrow at 4.5% even if the investment return is only 3%. If you take a look at it, you’ll see that it’s bad maths – he hasn’t taken into account that the size of the investment portfolio, and therefore its returns, are reduced by monthly car payments.
Putting that to one side, even this proponent of “borrowing to invest” notes some caveats. Two of these caveats strike me as being especially important:
- There are periods when the stock market dramatically underperforms.
- Getting access to money via a loan should not incentivise buying a more expensive car.
On the first of these points, I could still justify “borrowing to invest” in some cases, so long as the loan is small relative to the investor’s total portfolio. But if the loan is large relative to wealth, then paying it back with poorly-performing investments could be a disaster.
The second point is about behaviour and this is a topic where Dave Ramsey excels.
This is what’s so great about Dave’s approach: it’s human. It’s based on what works for real humans, not the approach that works best in an Excel spreadsheet.
Here are some key behavioural ideas:
- Getting a car loan means that you’ll probably buy a more expensive car than you really need.
- Using a credit card means that you’ll probably spend more than you otherwise would.
- Borrowing to invest can create psychological problems which impair your decision-making.
I note that Dave only invests in property and mutual funds, not individual shares. For those of us who focus on individual shares, we will look at things differently
Also, Dave favours actively-managed mutual funds whereas I would in general recommend index funds for the average investor (though buying index funds today might not be the greatest timing!). Index funds are the cheapest and most diversified funds and they require no skill, so I think their risk/reward is excellent for the average person who does not have the skill to pick an active manager.
In summary: watch the Dave Ramsey show. It’s great!
2. Graham Stephan
This young YouTuber has a great name, but he also has a terrific YouTube account with 1.5 million subscribers.
Graham and Dave both have a real estate background. But when it comes to finance, Graham takes a more entrepreneurial perspective, probably because of his age.
Here’s a clip in which Graham argues that a 30-year mortgage is better than a 15-year mortgage:
In the end, I don’t think his approach is entirely inconsistent with Dave’s. He is just more entrepreneurial, and this is reflected in his risk appetite. He is looking at things from the perspective of a real estate investor, not just an ordinary consumer.
For example, towards the end of this video, Graham says:
- be prudent and only buy a house you could afford to pay for in 15 years, but still get the 30 year mortgage (for flexibility).
- his advice won’t work for people who don’t have the discipline to invest the spare cash freed up by lower mortgage payments.
- he acknowledges that there is peace of mind and emotional benefits from being debt free.
While I haven’t been watching Graham’s videos for long, my initial impressions are good. Whenever I thought he was taking his view too far to one extreme (such as in the above video), he has acknowledged the counter-arguments. His videos are an unusual combination of being both highly watchable and containing high-quality financial and practical advice.
There you have it, two channels which I’m currently enjoying. Which YouTube accounts or podcasts are you following these days?