• Nick Maggiulli
  • The Wealth Ladder (New Book!)
  • Just Keep Buying (Book)
  • Of Dollars and Data (Blog)
  • Why You Shouldn’t Buy the Dip (Stay Wealthy Interview)

This week I’m doing something I’ve never done before.

You might remember my conversation with Nick Maggiulli a few years ago. He wrote the book “Just Keep Buying,” and it has sold over 400,000 copies since we last spoke with him.

Well, he’s on the show again today to share his latest retirement research and walk us through some of the key concepts in his brand new book, The Wealth Ladder, that just hit the shelves this week.

Like I’ve done in the past to support the work of friends and guests of the show, I personally purchased 15 hard copies of Nick’s new book to give away to listeners.

But it gets even better. I shipped all 15 of them directly to Nick after he kindly agreed to personally sign each one with a special stay wealthy message.

To receive one of these signed copies, all you have to do is leave a written review of this show in the Apple Podcast app.

Take a screenshot of your review and email it to podcast at you stay wealthy dot com. That’s podcast at you stay wealthy dot com.

The first 15 emails that we receive will receive one of the signed copies. And if you’re listening to this later in the day or week, don’t let that stop you from writing a review and emailing your screenshot for two reasons.

First, emails do not come in as quickly as you’d think. People are often on the move when listening to podcasts.

And two, I have an extra box of unsigned copies that I’ll be giving away to listeners until they’re gone.

Thank you very much in advance for supporting the show by leaving a review; it means more than you know.

And thank you for supporting the amazing guests who kindly share their expertise and knowledge with all of us without ever expecting anything in return.

The Wealth Ladder (with Nick Maggiulli)

What if everything you’ve learned about money completely changes once you cross the $1 million mark?

Many people preparing for or nearing retirement believe that accumulating a healthy seven-figure nest egg means the hard part is over. But ironically, that’s exactly when the biggest financial challenges begin.

At this level of wealth, your investments typically begin to earn more than your paycheck. Your saving strategies don’t compound the way they used to. And most importantly, mistakes become more costly than ever.

Today, Nick Maggiuli, author, data scientist, and COO of Ritholtz Wealth, returns to the show.

He’s out with a new book, The Wealth Ladder, which brilliantly breaks wealth into six distinct levels and provides actionable advice for conquering each stage because, as Nick states, what works at level one will not cut it at level six and vice versa.

In today’s conversation, we’ll explore why so many millionaires feel financially stuck just when they should be feeling secure, why the path that got you to retirement won’t get you through retirement, and the hidden pitfalls that catch even the most experienced investors off guard.

When it comes to retiring successfully, crossing the million-dollar mark is not the finish line; it’s the moment the rules of the game shift entirely.

The 6 Wealth Ladders

Nick Maggiulli:

The idea behind this is that there are six different wealth levels, and these levels are based on your net worth, which is calculated by subtracting all your liabilities from all your assets.

So, take everything you own: your car, your home, your stocks, and the cash in your bank account. That’s your asset side.

Subtract all your debt, mortgage debt, student loans, credit card, et cetera. That’s your net worth.

Obviously, let’s hope it’s a positive number and a large positive number. And depending on where your net worth is, you fall into one of the six levels.

Level one is defined as having less than $10,000 in wealth—that represents about 20% of US households.

Level two is 10,000 to $100,000 in wealth—that also represents about 20% of US households.

Level three is defined as $100,000 to $1 million in wealth, representing approximately 40% of U.S. households. That’s what I would call the standard middle class.

Level four is defined as a net worth of $1 million to $10 million. That is what I would call the upper middle class, depending on where you live. It accounts for approximately 18% of U.S. households.

And finally, level five, which ranges from $ 10 million to $100 million, and level six, which exceeds $100 million. And those two levels together comprise the top 2% of wealth holders, with only about 11,000 households in level six. So it’s like zero point zero, zero, zero something percent; it’s a very small number.

But the idea here is if you just memorize one wealth level—let’s just pick level four—and you say, hey, level four is 1 million to 10 million in net worth. Well, you can back out all the rest by either multiplying by 10 to go up a level or dividing by 10 to go down a level. And so I made it very easy in that way, and the data just happened to fit it very nicely in the sense that you have these levels and these levels actually do kind of represent the economic classes in the United States quite well.

So those are the six levels. The point of The Wealth Ladder isn’t just to divide these levels, but each one has different opportunities and focuses to consider for advancement, as well as different questions you must ask yourself.

And so, by realizing this, you can start to think more deeply about how spending, income, and investment decisions change at each level. And that’s kind of the underlying idea behind it—depending on where you are and where you want to go, your strategy might need to vary somewhat.

Taylor Schulte:

Since most of my audience is in level four—those with 1 million to $10 million. And if anybody listening here is not there yet, I’d argue that it’s a place that you probably want to get to.

So with that in mind, Nick, would you mind just sharing a little bit more about that level? Let’s not quite go into the challenges of that level quite yet or some of the pitfalls that are ahead, but just a little bit more about who these people are in level four.

Nick Maggiulli:

So, in general, those in level four tend to be older. The median age in level four is 62 years old. They have a good amount of their assets in retirement accounts, they have the median income in that level. Household income is around $200,000. So that’s including obviously if there are two spouses working, that means you probably have two six-figure earners in the household or just one slightly higher six-figure earner. Someone in level four has, on average, about 30% of their wealth tied to their primary residence.

That’s something among those who actually own their home in retirement; they have about 20% of their wealth real estate outside of their primary residence. That’s going to be less than 10%. So there’s probably some people that have a lot of properties, some that have a few. And so it averages at about 10% stocks and mutual funds.

This is outside of retirement accounts, that’s about 20% as well. And then I’m sorry. No, that’s about 10%. I apologize. So stocks and mutual funds outside of retirement accounts like a brokerage account of some sort, that’s going to be about 10% of their wealth. And then lastly, on average, 10% of their wealth would be in a private business.

Now, of course, some people are own businesses, some won’t. And so those are probably very varied, but that’s some of what we’re seeing in the data. Over half of their assets are income-producing, so they own them in stocks, bonds, et cetera.

Taylor Schulte:

Yeah, I have a couple of questions there too. I guess first in each of these levels you kind of give them a description. So level one being paycheck to paycheck, level two being what you call grocery freedom level three, restaurant freedom. And then level four, if we stick here for a minute, you labeled as having travel freedom. So share a little bit more about travel freedom showing up in level four.

Nick Maggiulli:

I think once you get into level four, it really depends on how your wealth is allocated and your age, among other things. I mean, but let’s just look at it just straight up. In level four, I say there’s travel freedom because once you have, let’s say, a million dollars in wealth, I’m assuming, I’m making a very conservative assumption that that wealth is generating 0.01% per day, which on an annualized basis is 3.7% per year.

And so the idea is if your wealth is generating 0.01% per day, that’s basically how much money you could spend frivolously and not worry about losing your wealth because on average, you’re just going to stay flat forever. And so the thinking is that the marginal spending decision you make gets larger as you have more wealth. And so right when you enter level four using the 0.01% rule, if you multiply 0.01% times a million, that’s a hundred dollars, or you could divide by 10,000.

It’s the same thing so that every day your wealth is generating a hundred dollars for you. If you have a million bucks, if you have 2 million bucks, it’s generating $200 for you, et cetera. And this is a very conservative assumption, and because of that, I’m saying, Hey, your wealth’s throwing this off; you can spend that without worrying about losing any wealth.

And so I think the marginal spending decision of a hundred dollars or 200, et cetera, that’s kind of like the spending decision when you’re traveling like, oh, can I get a nicer seat? Yes, you can probably upgrade to a more legroom seat for a hundred bucks, right? I mean no, if you want to go first class, that’s going to probably cost closer to 500, a thousand. It’s a little bit bigger jump there, but that’s where you get deeper into level four and you have a little bit more of that travel freedom.

And that’s just one way I think about it. Obviously, on most days, most people aren’t even spending this, so they could stack them together in theory and then use that to justify purchase. But that’s my thinking when I’m trying to think about travel freedom, which is, how are you making that marginal spending decision? And my argument is you should make it based on your wealth, not your income, because your wealth is something that’s there, it’s tangible. It’s going to keep, in theory, if it’s invested in income-producing assets, which I’m assuming it is in this case, it’s going to keep throwing off income that’s going to allow you to live a certain lifestyle.

So my thinking with travel freedom is like, yeah, you can start to spend more, stay in a nicer hotel, get a better seat on the airplane, et cetera, and you go through that and those marginal decisions are about going to be somewhere between a hundred and a thousand dollars on a per day basis. When you think about that, of course you can’t fly private yet. That’s whole. I know it’s still a travel room, but that’s really another, you kind of have to be in level five, which is 10 million plus to really fly private on any sort of regular basis.

Taylor Schulte:

I’d love for you to expand a little bit more on investments. You’ve touched on a couple of things already, but you share in the book that investments will likely have the biggest impact on a person’s annual change in wealth for those in level four. Now, I’m not going to speak for everybody, but I think many people tuning in might be surprised that investments will have the biggest impact. I think a lot of people might assume that the biggest change in wealth might come from a better job or higher salary, or someone’s already retired, maybe taking advantage of some major tax planning strategies to reduce seven figures of their lifetime tax bill. But talk to us more about why you argue that investments will have the biggest impact on wealth at this level.

Nick Maggiulli:

If we just use the data. So let’s assume that you’re a median household in level four, and that household is earning $200,000 a year. I’m not going to assume your tax rate, but let’s say 25% of it’s gone from the top. So now you’re left with one 50. Just to be very safe here, it’s probably more than 25%, but let’s just assume that okay, now you’re with one 50, you have to obviously pay to live. So even conservatively, how much are you saving here? Could you even very conservatively, could you save a hundred K maybe, right? And that’s a lot of money. It’s a 66% savings after tax savings rate. So let’s say you’re saving a hundred KA year if you have a million dollars in a portfolio and that a 10% year, that’s not irregular. I mean it’s not the average return, it’s the average nominal return in the US stocks, but a 10% year, it matches your income how much you can save in a year.

So it’s like your portfolio when you get into level four is just starting to match the median income with some very conservative assumptions in terms of who’s going to impact your wealth more this year, your portfolio, or you, right? When you get into level four, it can still be, you could be saving more than a hundred K, or maybe you’re saving 200 K or whatever, but by the time you’re deeper into level four, you can’t compete. And I saw this tweet recently that was like if investment portfolio earns more than you do, is your job a side hustle? And it’s kind of a joke, but it’s really getting at this point of which I’m getting at, which is like, Hey, your investment portfolio is going to start getting so large that you can’t impact your wealth in the same way anymore once if we just do the math a adding a hundred KA year on a million dollars, that’s a 10% change in wealth.

Just you saving money by the time it gets to 5 million, that’s a 2% change. You’re not moving the needle anymore. And so I think the math is just kind of brutal and level and this is not a bad thing. Then you’re like, oh, I have $5 million. Great. And it’s not a bad thing, but it’s just you can’t impact your wealth anymore unless you get a massive increase in your income. You have to see a huge increase in your income to keep up with your own money. And so when I’m thinking about why are investments so important in level four, I think they’re important everywhere for everybody, but they’re more important because there’s another zero on the end that’s not there in level three, and that’s zero basically says, Hey, your decisions here are so important that even your entire savings in a year from your job won’t matter as much as what you do in the markets, et cetera, right? So that’s why I think those are the people that hire advisors. The math makes sense at that point because why I, if I make a mistake, I could cost myself more than all my hard work for a year in saving and grinding and doing all this for what? So I think people realize that and they may not know the math and all that logic, but they start to realize, oh my gosh, the decisions I make really matter here. And so that’s why I tell people to focus more there.

Taylor Schulte:

Well, on that note, you shared earlier that the median age for somebody in level four is 62, and then you say that for many people in this stage, they end up feeling stuck. So my guess is they feel stuck partly because yeah, their investments are out earning them as an individual. Maybe they do start to feel like their job is a side hustle, but maybe just share a little bit more about what causes people in this level to feel stuck and then maybe second to that, how can they overcome that feeling or maybe even avoid it altogether?

Nick Maggiulli:

Yeah, so in terms of feeling stuck, it really depends on what your goals are. If you were like, oh, I want to keep building wealth and you will keep building wealth, but if you’re like, I want to get to level five, if that’s like your goal, you want to really like multiples of your current wealth, that’s where you’re going to get stuck. If you’re hitting, let’s say you’re 62, you just got into level four, or you’re like, we have a few million dollars in level four, and you’re like, oh, I’m just going to retire. I’ll be comfortable. That’s fine. There’s nothing wrong with that. But there are people that get there and they’re like, I want to keep going. I want to build more wealth. And you’re getting stuck because the math is working against you. My guess is you got into level four because you had a good job, you saved and invested for a few decades and that’s it.

So it’s like good job, good savings and time. Those three things put together got you into level four. Those are not the things that are going to get you into level five unfortunately. And when you start running the math on this, it gets pretty brutal here. And so let me just give you an example. Let’s say you start with a million bucks, you’re adding a hundred KA year. Once again, I’m just making the math very easy. Let’s assume you’re returning 5% a year. We’ll say this is inflation adjusted. So I think that’s a fair portfolio return. How long does it take you to get to 10 million with that scenario? The answer is 28 years. So after you’ve already gone to a million, which is a major accomplishment for a lot of people, then you still got to keep grinding for 28 more years to get there.

And even if you’re like, well, Nick, I’m going to a hundred thousand. No, I could do more. I’ll do 300,000, great, save 300 KA year, do that, get your 5%, start with a million bucks. Guess how long it takes 17 years? So you’re probably making almost a million a year, you’re paying half of that in taxes and you’re somehow living on 200 K and then saving the other 300 K, and you’re still going to do that for 17 years, and that’s after you hit a million. So even if you hit a million in your fifties, you’re grinding until you’re 67 years old, assuming you’re going to save 300 K. I mean, there’s so many assumptions I’ve thrown in here. It’s nuts, right? But you see, my point is the math is not kind to you once you get into level four just because the things that got people into level four are not the things that get them out, and there’s nothing wrong with that.

So to answer your second part of the question is if you’re trying to get out of level four, you need to change your strategy altogether. My argument is you don’t need to get out of level four. There’s nothing wrong with being in level four. I think it’s great. I think it’s where most people, especially in the United States can have enough. I don’t think you need to go beyond that. Some people want to, and we can get into that discussion separately, but I think it’s the big decision point of saying, why do I need this? Why do I need more wealth? What’s it really going to do for me? And so by thinking of wealth in this way, I’ve, I’ve trying to equalize this a little bit because I’m saying like, oh, what’s the difference between 4 million and 6 million? I’m saying almost nothing you’re saying, but Nick, that’s $2 million.

But most retirees aren’t going to spend that money. They’re going to do their spending almost based on their income or the 4% rule where it’s like, it’s not like you just, okay, I’m going to spend 2 million, then I’m going to go to the 4% rule. No, I’m not saying no one’s ever done it, but I’ve never heard of it being done. But that’s how people work. They’re saying, okay, I’m going to have a little bit more income, but it’s not like you’re going to spend 2 million and then do the 4% rule from 4 million down, right? It’s just not going to happen. So at this point, the marginal utility of money, that extra million dollars doesn’t impact you as much as that first million obviously did.

Taylor Schulte:

Well, it’s really interesting. And the flip side of all this, perhaps one of the bigger things that jumped out to me in your book was that people with millions of dollars, people here in level four, one to 10 million you share are actually more likely to lose wealth than people with less money. In other words, you found that people in levels four and five have the highest chance of dropping down a level. I think most people would think, gosh, if you have seven or eight figures in the bank or seven or eight figure net worth, you’re probably for life. So what’s going on here? Why are wealthy retirees more at risk of losing ground? And what mistakes should our audience maybe attempt to avoid or know about?

Nick Maggiulli:

So I think it depends how they got their wealth. And the data isn’t as granular as I would want a, and there’s sample size issues, especially in level five because there weren’t too many of these households we could follow over time. But the thinking that I’m seeing with this is the people that got into level five especially, or maybe higher into level four, probably got there by concentrating in a single position, whether that’s a single stock they owned or they started a company and then sold it, and now they have all of their money in one thing or they still own that company perhaps. And if anything happens to that one thing, so I make this argument that Bill Gates is richer than Elon Musk, and you can go look up the figures right now and you’ll say, well, Elon Musk is worth 200 billion more than Bill Gates, and you can tell me this on paper.

I’m like, that’s on paper. If something happens to Tesla, his wealth is done. I mean, I’m saying he’s not going to zero, obviously he’s still going to be an absolute billionaire. There’s no debate there. But something happens to Tesla. He’s not diversified like Bill Gates is. Bill Gates is the largest landowner in the United States after I think the US government and maybe McDonald’s the largest private landowner. That’s as an individual. So you’re talking about someone who has massively diversified wealth, and I doubt that’s what’s going to take that down, I don’t know. But compare that to someone who’s very concentrated. I have no idea if something’s going to eventually take Tesla down, and I can’t predict the future, but you can understand the different types of risks there. And so what I think happens is the same concentration issues are in level four and level five, and so they’re more likely to fall down if they have that. And once you’re diversified, it’s much harder. Of course, you have income producing assets, they’re going to change in value, even if you can have the s and p 500 that can drop 50% in a given year. So that happens to anybody. But if you’re concentrated, you can see even a bigger drop than that. And that’s where I think that’s happening in the data.

Taylor Schulte:

You write about this concept of the nothingness of money and how life’s greatest pleasures are often free. So for listeners who have spent decades building wealth, how do they start to recalibrate their relationship with money to focus on fulfillment rather than the accumulation of just more dollars in their nest egg?

Nick Maggiulli:

I think the key is realizing that one of the reasons why people focus so much on wealth is because it’s so easily measurable. You and I can open our bank account right now and we can see a number or open our brokerage account, et cetera, retirement account. You can’t do that with your health. You can’t do that with your relationships. No. Like, oh, you can say, well, I have a lot of friends on Facebook. That’s not your true relationship wealth, right? So we can measure things and because they’re measurable, we tend to make them a target and then we follow that, et cetera. So I think that the trick here is that’s not that you can’t measure health at all. There’s VO two max and certain things, but it’s not easily as measurable. And so the focus is how do I go from a world where I’m just focusing on a singular goal that’s easy to measure, to maybe find goals that are a little bit harder to measure, but there is some backend reward.

The time preference is a little bit bigger there, you have to just wait a little bit longer. It’s like you can’t do one set in the gym and then you’re going to see the result. Yeah, you might have a pump or something, but that you’re not going to see the long-term result of that. Kind of same with money, but you’ll get a paycheck and you’ll see that coming in even immediately. So I think that’s the big thing, is kind of shifting your focus to think about other types of wealth, whether that’s time wealth, whether that’s social wealth relationships, whether that’s your health, mental wealth, any of that stuff. Those are all kind of the things that I would say to focus on is think about those. And it’s especially true in level four, level five, level six because it’s one of the few things you can’t buy.

You can’t write a check to your spouse and say, love me, you can’t buy new cardiovascular system. All these things that are maybe lower on the well flatter, you can’t do that either, but lower on the well flatter, all your problems are money problems. Someone in level one, almost all their problems are money problems. If they had more money, most of their problems in life would be solved by the time you get to level four, five and six, very few of your problems related to money, if we’re being honest. And people don’t realize that and they overlook them and then all the problems they have left are like, I can’t do anything about this because I didn’t put in the time and effort to make it happen.

Taylor Schulte:

Well, speaking of health, you quote some research in the book showing that being, and correct me if I’m wrong here, but being in good physical health is worth an additional $400,000 a year in salary. Did I get that right?

Nick Maggiulli:

Yes. So there’s a book, or sorry, there’s a bunch of studies, but I think it was in the book Social, and they basically compared all these different activities and they said, okay, let’s take people that have one of these things that don’t have another, and let’s run a regression and let’s basically say, how much would I have to pay you for you to have the same wellbeing as someone without good health? And so they said, okay, took everyone that says, oh, good health. And then they said, let’s find the people that don’t have good health and how much they make and then let’s see how well they’re doing. And the people in bad health, they had to make so much more before they started feeling as good as someone with less money basically. And they just did this on income, but I imagine it’s the same with wealth, et cetera.

And so I think the thinking there is like, I could take you on the greatest vacation in the world, but if you feel like crap, you’re not going to enjoy it. Everyone knows this intrinsically. And so it’s like when you lose your health, you kind of, nothing else even matters really. So that’s why I think it was the strongest one in the data in terms of the impact was not having good health. And so obviously we can’t control everything. We can’t control the cars. We’re dealt in life on everything. But the one thing I say is you got to focus on exercise, focus on your health because there are so many knock on effects and second order effects of being healthy, whether that means you feel better, that’s great in itself, but not even that, even for your wealth, you can work longer if you’re like, oh, Nick, I really didn’t do a great job saving for retirement.

I’m kind of a little bit late. How do I catch up? I don’t tell people, save more. Everyone knows to save, obviously, you need to save more, right? I say start hitting the gym, get your health in a better place. You can work an extra five or 10 years because you lost the time before. You’re going to need to get it back somehow. So that’s my advice as a financial person, which is to hit the gym, start exercising, do something to increase your health span so you lower your healthcare costs, et cetera. You need to offset the years you weren’t able to save.

And so that’s the same thing I recommend for people in levels four or five and six, because at the end of the day, there’s no shortcut here. You have to put in that work to build up your muscles, build up your body, et cetera. And I’m not an expert on this, but I’ve read enough of Attia and all these other people that have written on this stuff, and the data is very clear. It’s like one of the strongest factors in all that’s more important than not smoking. It’s more, I mean that’s related to health obviously, but there are a lot of other things, like exercising regularly, that have an incredible impact on your life.

Taylor Schulte:

Lift heavy weights and sleep and walk. Yeah, it gets really simple and drink a lot of water. Maybe I got this from your book, but sticking with this for a minute, thinking about health in the investing realm, investing in your health, going to the gym is one thing, but actually taking some of your hard-earned money and your nest egg and actually allocating it to investing in your own health.

I don’t know if there’s anything more for you to share there, anything that our listeners here can think about investing in their health. I thought it was an interesting way to reframe it. It’s not just like, I know I need to do these things great, but actually taking real dollars, and maybe I’m a good example. I know that I need to invest in my health. I know that I need to work out more. I’m busy and it’s hard, and I’ve got three kids and a business to run. So I pay someone to come to my office once a week to pull me out of my office and bring me down to the gym downstairs to make sure that I work out. And I look at that similarly to maybe investing in my

Nick Maggiulli:

401k. Yeah, it’s going to be a case by case basis, so I don’t want to give general knowledge. I think in your case you’re like, time is my thing that’s being crunched, so I need to just schedule this a normal business meeting and that person’s going to show up and I can’t cancel. I’ve already paid. There’s other factors that you’re building into this system that work really well for you. And so yes, your listeners that have a similarly tight schedule, you’re going to have to make some sort of sacrifice and whether that’s, oh, I have to pay for this thing, or I have to find that little bit of time to put that in. There’s a lot of different things you can do here. And once again, I mean there’s not really a ton of shortcuts around this. I don’t have this magical thing you have to put in the work, unfortunately. And I wish there I had a better answer, but that’s basically it.

Taylor Schulte:

Yeah, no, I think it’s time. And I also think it’s accountability as well. Again, I know I need to do this thing, but sometimes I just need that person to make sure that I do it. And I think about hiring financial help the same way. It’s like, I know I need to be saving more money. I know I need to reallocate my investments or reduce my expense ratio. And sometimes you need a third party to force you to do those things. So paying for accountability I think can be really impactful at really any stage of life.

Nick Maggiulli:

I agree. And I also think it makes you, by paying for it, you’re kind of like, well, I spent the money on this. I don’t want to waste. It’s a good behavioral crutch to force you to do things. And there’s, I’ve heard of different ways of doing this where it’s like, okay, for every time I miss the gym, I have to pay my spouse this money or whatever. You can come up with any sort of trick or I’m going to donate to someone I don’t like or to a candidate, a political candidate I don’t like. I’ve heard of that one works really well because you’re like, I don’t want to give money to that other person, so I’d rather work out than do that. Or you come up with some sort of system to keep you honest, but those things can work.

Taylor Schulte:

I’m curious, I’ll put you on the spot here for a second in writing this book, what was your favorite part of writing this book? Was there a specific chapter, specific level of wealth that you became really interested in as you dove into the data and the research? What was your favorite part of writing this book?

Nick Maggiulli:

So my initial interest and curiosity in writing this book was based on chapter 10, which is later in the book. I’ve already, the first part of the book, first three chapters are just about spending income investments. Those are the first three chapters. The next six chapters are just the six levels. One go through level one, two all the way to six, and then chapter 10 is the chapter where I was talking about how long does it take to climb the well flatter. If you’re in level two, what’s the probability that I’m going to be in level four within 10 years? What about within 20 years? And then all that data is in there. And so before I ever wrote the book, I wanted to find this data. I want to say I want to understand wealth mobility and how long does it take to build wealth and what’s the probability and all this stuff.

And so I wasn’t able to find the data and then I finally was able to access it and build it and everything. And that data is from the panel study of income dynamics at the University of Michigan. And so that was the impetus for writing the book is some kind of afterthought chapter late in the book. And then I said, wow, this data is really cool. Now I’m going to put it later in the book because I think it’s still interesting, but it’s not the main thrust of the framework. And so for me as a data nerd, those matrices in there, which we kind of talked about, and we said, oh, those people that fall down the wealth flatter like that, I didn’t know what I was going to find. I just looked at it and said, wow, this is kind of interesting. And I’m seeing the data and I’m like, well, why is this true?

And then as I look into, well, how do these people have their wealth? Oh, their wealth’s concentrated. That’s why. And so you can start to build the story out after you look into the data. And it’s really interesting once you do that. And so that for me has been the fun part about writing this was just getting my hands on a different data source and finding cool insights into wealth building than I just didn’t have before. And now I’m sharing with my audience, which is kind of cool. And I had to keep it into wraps. That’s the only thing. I wanted to write about this forever on my blog, but I’m like, no, I’m keeping it into wraps. I got to wait until this thing’s out and I can kind start talking about it a little bit more.

Taylor Schulte:

Was there anything that surprised you or anything that caused you to change your mind about how you think about retirement saving investing?

Nick Maggiulli:

I think a lot. The stuff I talked about with level four with this big decision point, I think it became pretty obvious once I was looking at the data, and I started thinking about the math more. I was like, yeah, you’re trapped here. It’s not bad doing wrong. It’s not bad, but

You’re not going to get out. Getting out of level four is, as I say, it’s the hardest thing to do. If you look over a 20-year period, which level is someone most likely to stay in after 20 years? You can think of the diagonal like, oh, I start in level one. Do I end in level one? Which level you most likely to stay in? It’s level four, level three is up there too, but level four is the highest you’re most likely to get stuck in that level because, as I said, the strategy to get out is very different than the strategy to get in.

Taylor Schulte:

You called yourself earlier a data nerd for those who don’t know who you are and your background. Maybe just share a little bit more. You aren’t the traditional personal finance expert, CFP, who wrote a book. You do have a really interesting background. You do have a really interesting position in a wealth management firm. Maybe just share more about Nick, the data nerd.

Nick Maggiulli:

So I studied economics at Stanford University, and right after I graduated, I started working at a litigation consulting firm. And for those that don’t know, it’s basically big Fortune 500 companies hire law firms, and then law firms hire litigation consultants. And what we do is we analyze the data and do all this stuff on the backend to help make these legal arguments. So I just basically became a data junkie.

I learned data science and all this stuff, and I happened to be on the personal finance side and started blogging about it at the beginning of 2017. I eventually got some attention. I was using a lot of data in my work, and that was kind of my edge; it was just using data to talk about personal finance in a way that it hadn’t been written about before and got noticed. And then I linked up with all the Ritholtz guys, Barry Ritholtz, Josh Brown, Michael Batnick, et cetera. I linked up with them and they hired me.

And so I joined Ritholtz Wealth back when it was under a billion dollars, and now it’s over six. And so it was under a billion dollars. I came in as a data scientist to help. It’s not a normal hire you have as one of your 21st employees is a data scientist at an RIA, right? So it was a big risk for them, but what I ended up doing was using a lot of these skills to build out all the operational backend. And then in 2020, I was promoted to COO, and I’ve been doing that role for five years now.

And so it’s been great. I mean, just seeing the firm grow, helping its scale, understanding the systems and how we use tech to really scale the enterprise, and obviously help serve clients. And so for me, it’s, I have two different roles. I do the personal finance content, I put that stuff out there, but at the same time, I’m trying to help scale this firm and to give the best advice we can give and deliver it to as many clients as we’re able to.

Taylor Schulte:

Yeah. Well, before we wrap up here, Nick, do you have any final thoughts you would like to share about The Wealth Ladder or any other personal finance topic? Additionally, where can people find and follow you?

Nick Maggiulli:

So you can find the book at Amazon, Barnes and Noble, bookshop.org—anywhere books are sold, you can find it. The only thing I was going to leave everyone with is if you have any questions, feel free to DM me on Twitter (X.com). I’m @dollarsanddata on Instagram, Nick Maggiulli, and LinkedIn, Nick Maggiulli. I’m happy to answer. I answer every DM—I’m a psycho like that. So if you send it, you send a legit DM, I will respond to you, and I’ll try my best. So, that’s the only thing I’d say to leave people with, because everyone has different situations and different things, and so if there’s any way I can help, just send me a line.

Taylor Schulte:

Yeah, we’ll definitely link to the book, The Wealth Ladder, which comes out on July 22nd, so we’ll make sure we have links to that. I don’t want to gloss over, Nick, your amazing blog Of Dollars and Data.

You loosely referenced it a couple of times, but the website is ofdollarsanddata.com—phenomenal work that you’re doing there. I’ve enjoyed following and reading over the years. Congrats on the success of the first book, Just Keep Buying. So if you don’t know who Nick is, you’ve never come across his work, Just Keep Buying was his first book, and it is phenomenal. So congrats on the success of that one. Congrats on the new book. I know how much time and work and effort this took. And just thank you so much for your time today. And maybe I should say thank you as well for all of your contributions to the personal financial world and the financial advice profession. I really, really appreciate it. I’m a huge fan and I look forward to continuing to follow and share your work for decades to come.

Nick Maggiulli:

I truly appreciate that, Taylor. It means a lot to me. I know you’ve been a big supporter of me for a long time, so thank you so much. I’m truly humbled by it. Thank you.

Disclaimer

This podcast is for informational and entertainment purposes only, and should not be relied upon as a basis for investment decisions. This podcast is not engaged in rendering legal, financial, or other professional services.