Episode #85: Financial Literacy Isn’t Just For Students
While many of us are passionate about teaching mathematics, we’ve found that more often than not many educators do not leave ourselves enough time, energy, or maybe just aren’t interested in learning about money management and in particular, investing despite how mathematically centered finance is.
This episode is a little different in what we normally share, but we feel that financial literacy is so important for our students to learn and in turn, we must learn about it as well.
So, sit back and listen in while we get down and dirty with why you need to learn about managing money, what to do with that “extra” money you’re saving by getting started with investing, and create a framework in your life where finances are taken care of so you can “Get on with your life!”
Let’s get into it!
- Why you should manage your own finances.
- How you can get started with investing?
- How can you create a framework in your life where finances are taken care of so you can “get on with your life!”
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Omar: So, I mean, you don’t want to focus on this for a long, long period of time. Learn how to do it, learn how to take control of your finances so you can live life on your terms, and then get it going on on what’s more important to you, right, spending time with your family, your friends, whatever it may be, traveling, at least you’ll have the means and the understanding to do so now. Right?
Omar: Well, I think the key with everything else in life, if you want to be good at something it’s a matter of acquiring knowledge. We talked to it, and Mathew and I, we take a holistic approach [crosstalk 00:00:23].
Kyle Pearce: While many of us are passionate about teaching mathematics, we found that more often than not many educators do not leave ourselves enough time, energy, or maybe just aren’t interested in learning about money management, and in particular investing, despite how mathematically centered finance really is.
Jon Orr: Heck, I know that sounds an awful lot like me, but Math Moment Makers, Kyle is further down that path, and he owes a lot of it to our guests on the show today. This episode is a little different than what we normally share, but we feel that financial literacy is so important for our students to learn. And in turn we and me, or I in particular, must learn more about it as well.
Kyle Pearce: So sit back and listen in while we get down and dirty with why you need to learn about managing money, what to do with that extra money you’re saving by getting started with investing, and how to create a framework in your life where finances are taken care of so you can get on with your life.
Jon Orr: Let’s get into it.
Kyle Pearce: Welcome to the Making Math Moments That Matter Podcast. I’m Kyle Pearce from tapintoteenminds.com.
Jon Orr: And I’m Jon Orr from misterorr-isageek.com. We are two math teachers who together…
Kyle Pearce: … with you, the community of Math Moment Makers worldwide who want to build and deliver math lessons that spark engagement…
Jon Orr: … fuel learning…
Kyle Pearce: … and ignite teacher action. Are you ready to dive into the money, Jon?
Jon Orr: Always. Always, Kyle. Before we get into our financial masterclass, we want to share with you the great learning reflections that are happening after teachers are listening to the podcast. It’s amazing to us to hear these reviews. It’s comments like this one from Gaga Fame that fuel us to keep making these episodes.
Kyle Pearce: Awesome. Gaga Fame says, I love it. Last few episodes have been so timely, and I’ve gotten so much out of them, already planning for next year and putting so much of these into practice. Huge fan, keep up the great work and getting these awesome guests.
Jon Orr: We absolutely get supercharged when we read a review like this one. It’s amazing to us that we’re helping teachers like Gaga Fame change classroom routines.
Kyle Pearce: That’s right, Jon. We are definitely super geeked when leave us a rating and review. So thanks for that. Now, before we get into this talk with Omar and Matthew, we are super excited to share another professional learning opportunity for the Math Moment Maker community. Right now, for a limited time, you can get your first 30 days free, and it’s for any math moment maker from around the world to access our academy professional development courses, including our courses on spiraling your math curriculum, assessment, math tech tools, and even our latest course on how to make math moments from a distance.
Kyle Pearce: These self paced courses are jam packed with videos and action items to get you reflecting and growing your math content, knowledge, and pedagogical practice.
Jon Orr: Also, gain access to our monthly Q and A web calls, both live and replay recordings, the over 20 virtual summit sessions from last November, and our make math moments problem-based tasks and full units of study with teacher guides. They’re all available for you to access in the Academy. Get it before it goes away at makemathmoments.com/academy.
Kyle Pearce: That’s makemathmoments.com/academy. And now let’s get on with our masterclass for your finances.
Jon Orr: Hey there, everybody. Welcome back to another episode of the Making Math Moments That Matter podcast. Today we have Omar and Matthew here joining us. They’re going to lead us into a great discussion about investing and money and finance and financial and mathematical education. So, guys, welcome to the podcast. How have you been doing in this COVID-19 era?
Omar: Well, thanks for having us on, Jon. I would say when life gives you lemons you make lemonade, correct? So that’s exactly how we’ve been doing. You’re either making most of it, and you try to get better, and you try to get better habits, or you could down yourself. So I think there’s only one way to look at this, is, how do I get better, how do I come out of this better? It’s not going to last forever. There’s no way. As dire as it may seem in the storm we’ll come out of this, and we’ll come out of this for the better.
Jon Orr: Yeah. And-
Matthew: Yeah. [inaudible 00:05:11].
Jon Orr: … you know what, that’s… Yeah. Go ahead there, Matthew. Say-
Matthew: No. [crosstalk 00:05:14].
Jon Orr: … hello here before we keep diving in.
Matthew: Yeah. So I’m Matthew and this is Omar, just so you can recognize the voices as you listen back to this. So yeah, I mean, this is a great time in terms of it’s only work [inaudible 00:05:25]. There’s no extra icing on the cake in terms of meetings or coffees or lunches and stuff like that, so you can be really, really efficient. You can clean up whatever backlog you have administratively or around the house or with family, great time to spend more time with family, great time to learn another skill. So it’s like if you don’t come out of this thing better and with all his extra time, then [crosstalk 00:05:49]-
Kyle Pearce: What did you do?
Matthew: … the question, what did you do? Right now quite frankly-
Jon Orr: You watched Tiger King the whole time.
Matthew: Tiger King, and hey man, there’s lots of good stuff on Netflix. I mean, there’s a new a Michael Jordan documentary that started up today actually, so.
Matthew: So, yeah.
Kyle Pearce: Yeah. And guys, having you on the show, this is definitely, I would say, our most interesting topic, I think-
Jon Orr: So far.
Kyle Pearce: … we’re bringing on, because typically, yeah, so far, because we’ve been sticking mostly to math class pedagogy and content knowledge and really useful and impactful episodes for people who are listening. But I reached out to you both because I’ve had an opportunity to do some learning myself with you. I want to fill in the audience on some details. I think this is going to be a really powerful episode. And I think Matthew just highlighted pretty nicely about this whole COVID thing coming out and doing some new learning.
Kyle Pearce: I feel like that’s how we could treat this entire episode, is you can listen to this episode, or maybe this idea of investing maybe initially scares some people. I’m going to encourage people to give it a good listen and maybe challenge themselves to do a little bit of learning today.
Kyle Pearce: So before we get into any more of this discussion, can you both fill us in with some details? Maybe we’ll start with Omar. We’ll flip back to Omar. What would you call your current profession, and give us a little bit of background in how what you do might connect to some of the mathematics that we’re teaching students.
Omar: Yeah. Okay. That’s great. So what I do is I’m a full time investor. I own a sizable real estate portfolio, and I trade options, and I’m also the cofounder of Theta Trading Co. along with my friend Matthew. So that’s what I do now. So we trade options. That’s a significant portion of what we do. And that’s what we teach at Theta Trading Co. And it’s very math centric. It’s all about odds and probability.
Omar: So I was always pretty good at math growing up. And my parents who immigrated from Pakistan in the 1970s, they put me in Kumon until high school. So my math became really, really, really good. Right. It just became good. And that’s actually translated to a lot of success when you’re calculating either business deals or you’re trying to calculate the return that you’re getting on a particular options trade, when you’re trying to calculate what your return on a home may be. Yeah, so for me…
Matthew: I mean, yeah. So, again, my ancestor is also from India, and my parents came here… They did a little pit stop in England for about 20 or 30 odd years back in the ’50s. So that’s a long, long time ago. But, again, a lot of that is focused on education, this and that, you have three options, what type of doctor do you want to be, engineer, accountant, and then the-
Kyle Pearce: Right.
Matthew: … list may end there just as biggest professionals and as really highly sought after, right? And that translated into me becoming an accountant, and I’m in private practice right now. The accounting is an awesome profession to be in, very happy to do that. But then when we founded Theta Trading it was really an opportunity to put something together that can help a lot of people beyond the scope of what [inaudible 00:08:52] can do, so.
Matthew: And it’s something that literally everyone needs. Looking back at this, it’s kinda like, when you have a kid, what are essential life skills? A lot of people put their kids into swimming, for example, right? This is similar, right? This is a life skill that everyone should know no matter what the profession is, because the end of the day you eventually need these skills at some point later in your life. We’d hope that that is in your early 20s, but sometimes it’s in your early 50s, and it should’ve been in your early 20s. Right? So hopefully we’re here to add a little bit of ease to that transition.
Kyle Pearce: Yeah, no, absolutely. And that’s precisely why we thought it would be excellent to change the routine, flip the script on what people typically expect when they hit the play button every week on our podcast. And before we dive deeper into how you’re both doing with investing and how you’re trying to give back to other people through the trainings that you do, we ask a question to every guest, and I know you both probably aren’t avid Math Moment listeners simply because you’re not teaching math students, but for those who do listen to the episodes they know that we ask every single guest to reflect back on their own math learning experience and to think of a math moment.
Matthew: We do teach Math though.
Omar: Yeah. We do.
Kyle Pearce: Oh, you totally teach. You teach math to a little bit of an older crew, but I’m telling you absolutely like much of what you’re doing through when you’re teaching, all of those elements are so similar and so connected. So let’s stick with Matthew on this one first here. Matthew, if you think back to math class, what would be a math moment that comes to mind? And you don’t have to sugar coat. People sometimes think it has to be a positive memory. Whatever pops into your mind is what we’re after here.
Matthew: I’ll give you two math moments, one from high school, one from university. The one from high school or grade school probably was BEDMAS, just learning how important that was, and the other one was the importance of understanding probability in finance class in high school.
Kyle Pearce: Oh, that’s awesome.
Matthew: And the most recent one in university is when this whole present value, future value, including payments, and when all that stuff clicked in my head, those were the key moments that I can actually immediately recall after you just simply asking me off the cuff just now.
Jon Orr: We’ve asked, I don’t know, I guess it’s been 70 something guests now, right, Kyle, what their math moments are. And most people will tend to talk about feelings, what they felt about being in math class. And you, Matthew, went straight to content. It’s like, I remember BEDMAS, that BEDMAS is the content that stuck with you. These are the things that you’re like I think these were super valuable to me and especially in the work that I’m doing. Thanks for that, Matthew.
Jon Orr: Omar, let’s turn it over to you. When we say math class there is an image that pops into your brain right now. I know it. Describe that image for us.
Omar: Yeah. It was always the class I always did the best at, that and the gym class. So that’s one that pops in my head right. It was the one class I was sure of a good mark, because I knew I could… natural gravitation towards, and so that was a good part. Obviously the Kumon, the countless hours of Kumon that I must have done, I can’t even remember, it truly ingrained math into my mind. And I would say also with Matthew, I remember finite being a subject that I really, really enjoyed, the odds and probabilities part of it.
Omar: And also, finally when you figure out financial math, like the present value format, the future value format. Those are moments that really stuck on my mind in my mathematics journey.
Jon Orr: Let’s dive a little bit more into what you guys have been working on, what you guys have been teaching. And I know that I’ve got a lot to learn in this field too. And I think all of our listeners also do too. And I know that as an educator we always say we’ve got so much on our plate. We’ve got to teach all day, we’ve got our families to manage, we’ve got things that have to get done, we’ve got kids to take to soccer practice, and we think investing is sometimes on a teacher’s plate.
Jon Orr: Now I’m speaking from mostly my experience, is that I don’t really have time to learn something new, especially like investing. If I talk to the bank, the bank will figure that out for me. And I know that you guys are teaching about investing and want to share that here with us. Why is it important for us educators, and maybe not necessarily educators, just people in general, to take control of their finances and not let, say, the banks do it, and also just to better understand how it works. Why should we be doing that? With all of the stuff that we’ve got to do on our place right now, why invest?
Omar: It’s very important, not just important for your financial wellbeing, it’s important for your mental wellbeing, it’s important for your physical wellbeing, right? It’s proven that lower-income segments of society have higher prevalence of certain divorces, alcohol use, early deaths. So what we want to do and why it’s so important to learn it is so that you have that much more confidence in life. You can afford more time off. You’re aware of things.
Omar: It’s not just the financial component that makes it important. There’s a saying that I can wholeheartedly agree with, you don’t need a gazillion dollars a year, but you definitely need a certain level where you’re not arguing with your wife, you’re not getting involved with owing people money and the stress that comes with. Stress is a big problem in society, right? It is a huge problem.
Omar: So, to me, it’s quite unusual and strange that how is financial literacy not taught in high school or even in university, just [inaudible 00:14:22], getting in credit card debt, what is a credit score? The fact that these simple things are not taught and yet they’re so important in one’s life is, to me, that’s incredibly perplexing. I simply don’t get it. And that’s one of the main reasons Matthew and I set up this company, is to give people the financial literacy tools they need to live life on their terms.
Omar: So I think it’s a very, very important thing to learn, and it should be taught in fact at a much younger age. I’m sure you guys probably agree with that, no?
Kyle Pearce: For sure. Definitely agree.
Jon Orr: Definitely.
Omar: They teach you so many weird things in school. They teach you Philosophy. Sure, that’s great, I’m sure it is, but I’d probably rather learn what happens if I get a credit card in the first day of university and I don’t make the payments, what happens to my credit score? These are the things that they should teach you.
Kyle Pearce: We definitely agree. And I know from my own experience teaching in secondary, I’ve taught a couple of courses where students who are going into the workplace, for example, part of their curriculum will be things like budgeting and credit cards and so on and so forth. And I’ve spoken to so many different teachers who have taught those courses and how many times they’ve said, wow, I learned a lot from that course.
Kyle Pearce: And I’m not blaming it on the teacher myself, it’s the fact that how come we’re learning this for the first time and we’re the math educator? I have the math degree, Jon has a math degree, and yet it’s not something that I already knew. I had to learn it in order to teach it, and only to a select group of students. The students who are heading off to post-secondary institutions, oftentimes it’s like they don’t get that learning because it doesn’t fit in their schedule. They have to do complex math and not this financial literacy, which is so important.
Jon Orr: My only guess is because it’s not in the curriculum standards for senior level math classes or even junior level math classes for kids that are off to, say, college or university is I guess the standards and the governments who are developing the standards are thinking that the kids will get it in the end anyway, like you’ll learn that as you go on your own, I guess. This is the only thing that I can think why they’ve excluded it from kids who are going off to post-secondary education from learning financial.
Omar: To me, is mind boggling a question as ever. I simply don’t understand why you would exclude something that important, and yet include so many things that are not important. That example you just gave is a really good example of how eye opening it is. The unfortunate part is these kids go into post-secondary then they find out the hard way what happens when you don’t pay your credit card bill. They find out the hard way how long it takes to make minimum payments and ruin your credit now you can’t buy a house. They learn the hard way. They shouldn’t have to learn the hard way.
Jon Orr: Totally.
Kyle Pearce: Absolutely.
Matthew: I think the linkage is not there.
Kyle Pearce: Yeah, go ahead there, Matthew.
Matthew: The linkage is not there. Sorry to interrupt, but because it’s like, okay, you learn certain things like, let’s just go back to credit card debt, right, what is credit card debt? Credit card debt is simply a function of compounding interest. Right? That’s all it really is. But you need to say, well, hold on a second, remember that thing you learned in high school, well, apply that at the rate of 30% per annum compounded monthly. And it’s like, is that really going to work out for you very well if you book stuff on your credit card and then only pay the minimum payment? And the answer is, no, it’s not. Right.
Matthew: I don’t think that connectivity is happening. That’s what I am seeing. Some of it is people take math and like… For us it’s a focus, is because we do stuff with numbers day in and day out, Omar and I, right, in whatever business we are in. But supposing you did math in high school, what have you, and then you don’t touch it because you became, I don’t know, like an English teacher or a social worker and you just never looked at it again, now you have to relearn this and re-look at this and say, okay, why is this really important, and make those connections. Because it can be very, very far removed.
Kyle Pearce: Yeah. I like your connection there, this idea that making those connections, because in many of the high school curriculums, I know here in Ontario many of our courses do, we talk about exponential growth, we talk about compound interest, we talk about those things, but oftentimes those connections, as you’re mentioning, we try to make them but then, again, I always wonder, am I qualified as a student who comes out with a math degree just because I have a math degree, am I actually qualified to be teaching how that math impacts or influences financial literacy?
Kyle Pearce: And I feel like our society, we’re in some ways trained to be afraid of investing and afraid of managing your own money. People are constantly hearing about risks and remembering the bad times and-
Jon Orr: Stock market crashes.
Kyle Pearce: Yeah. My parents, for example, they were savers, but I wouldn’t say full blown investors, for example, because they have these memories of when they were younger when things weren’t going so well, and that really leaves this idea of investing as scary or something that only certain people in society can do well.
Kyle Pearce: So I’m wondering, what would you say to anyone who’s listening and nodding their head right now saying, yeah, that’s exactly how I feel, I’m actually feeling a little anxious that we’re having this conversation. What might you say to them as you want… to get their anxiety to subside a little bit and to help guide them towards maybe a direction and next step for themselves? And why don’t we flip it over to Omar? We’ll flip back to Omar there.
Omar: There’s nothing to be ashamed or embarrassed about of not having financial literacy, and it is so important to learn it, because, again, the fact that it’s not taught in school, it’s something we should definitely take time to educate ourselves on, even in the older age. You should definitely take time to educate yourself on this stuff, because it can make a vast amount of difference.
Omar: Again, it’s not about being the richest person, it’s not about that, but it’s about allowing you to live life on your terms and not getting bamboozled by the industry which keeps you really unaware of a lot of things, like the credit card. How much are you paying to have your mutual funds managed for you? Right. If people actually knew these things there’d be a lot more incentive to say, wow, maybe I should learn this on my own, maybe I should figure out what exactly these guys are doing.
Omar: But a lot of these things in finance are hidden and stuff like that, so to take charge of your own financial future… Let’s take an example here. Let’s say you have somebody here who has $200,000 in their RSP. Now, they’re going to be paying about two and a half percent a year for someone to manage that money for them. Okay. And that person is going to be performing a little bit less than the stock market because a two and a half percent handicap is difficult to do, so most often these fund managers can’t do it.
Omar: So you’re paying two and a half percent on $200. You’re paying $5,000 a year for this money to be managed on your behalf, but since it’s rolled in, you don’t never really complain about it, you don’t really notice it. If somebody gave you a bill for $400 a month, just a little more, you would be livid. Right? It would be a whole different ball game. You would be like, wow, I really need to learn this on my own, I can save this 425 bucks, but that’s one of the main reasons that we’re just not really taught.
Omar: You think the financial industry had $1.5 trillion in assets, prior to this crash anyways, prior to this coronavirus crash. On average, if they’re charging two and a half percent a year for that money to be managed, okay, that’s $37.5 billion dollars a year just in Canada. That seems like, to me, a lot of reasons to really educate society on the subject matter. And I’m not talking about a conspiracy, I’m just saying it’s fortunate that it isn’t because it’s so costly to society. You know what I mean?
Kyle Pearce: It sounds like a second career option, a money management there, Jon.
Jon Orr: Right. Yeah. It’s definitely something to think about. It seemed like, Kyle, you were saying that you’d learned initially from your parents, and I’m in that boat too, that I learned really how to do this from my parents. And being an educator here in Ontario we’ve been talking about our pension before. We have a pretty strong pension, so some teachers are of the other opinion that we don’t need to actually invest in anything, or that mutual fund and the RSP can manage it.
Jon Orr: If people are thinking about getting started in investing more of their money now, Matthew, do they go into… Should they buy RSPs from the bank? If not, what are the options?
Matthew: Well, I mean, I think from that perspective is, yeah, teachers are in a unique and favorable position, because there is a very strong pension fund, right. Now, define benefit, exactly, right? Omar knows all too well, his wife’s a teacher. Omar can’t wait until his wife retires [inaudible 00:22:31].
Omar: She would like to retire now man.
Kyle Pearce: No, that’s here in Ontario though. So I guess something as well for folks who are listening at home, here in Ontario we do have a very strong pension fund. So we’re definitely blessed with that, but maybe not quite the case for some others in different parts of the world. In different states, for example, things are different. However, yeah, here in Ontario, for sure. It’s something that I think as teachers it almost makes us ignore it. And it sounds like even in that case we still should have a keen sense of what’s going on there. Matthew, would you agree?
Matthew: It’s also a bit of a question about what your goals and objectives are. You have a wonderful feel safe there, maybe you want to live a better life every year with a little bit more financial freedom every year. And from that perspective, absolutely, there’s value in doing certain things on top of that.
Matthew: There’s value in just understanding what, I mean, when you get a OTPP report at the end of the year, who reads it, do you understand what’s going on there, what divisions are inside that pension plan, what assets are they investing in? Right. You may not have a choice to change it, but maybe you read it and say, well, you know what, I can do some more exposure to XYZ kind of asset class or what have you. There could be information to be gained from those types of reports.
Matthew: Maybe it’s like, well, you know what, this is really great, I’m going to try investing in another strategy or getting real estate holdings or doing more trading on my own because I have some free time in the summer. Right? You may have some free time during the day to do some of these activities as well on top of this. And at the end of the day also, learning a new skill is very, very important, whatever that skill is. Right.
Matthew: I would say, especially as we were talking about life skills, like swimming for a kid, I think financial literacy for an adult is just as important as swimming for a kid, because at the end of the day you’re expecting some kind of retirement and to stop working at a certain point because of your own blood, sweat, and tears throughout your career.
Matthew: So it’s very, very important from that perspective. But yeah, there’s definitely a need, and especially in other places or the provinces or states where they don’t have a defined benefit, they have defined contribution, then you’re at the risk of a lot of things happening. Like, I mean, also think about this, what happened, and you can correct me if I’m wrong, but what happens to teachers that are nearing retirement this June? What does their defined benefit look like? How’s has it been affected from this last December versus this June with the market going down like 20 or 30%?
Omar: It will be affected on the overall-
Matthew: [inaudible 00:24:58].
Omar: … pension plan assets, of course, yeah, the [inaudible 00:25:00], but not the individual [crosstalk 00:25:01].
Matthew: … if it’s the DC plan then it’s totally different.
Jon Orr: So, I want to dig a little deeper here, say I have my pension or say I have my contributions being made for me with my employer, and what should I be doing next? If I want to get started in investing, or maybe I want to get started in reanalyzing what my investments are in, for example, if I’m in the States and I have a 401k plan and I had to choose where it went, maybe I chose a mutual fund managed by my financial provider, or maybe I chose this group or this investment fund, and what should I be looking at?
Jon Orr: I want to give some actual steps here to educators, what should they be doing if they want to start investing or looking at their finances? What are some very beginning steps for people to take action here? So imagine they’re listening, they walk away from this podcast, what do you want them to do, what do you want them to know?
Omar: For me I would say I would want them to know, just go to your local bookstore or go to somewhere in the area and just get a basic book on, if you don’t know anything at all in terms of how much your mortgage is and you don’t know any of that stuff, then yeah, you just have to go basically get a book on basics of financial planning. That doesn’t show you how to manage your money though, unfortunately, okay, it just shows you don’t let that happen, and this is what you do in case, how much you should be putting away every month, and it doesn’t tell you what to do with the money. Okay?
Omar: So there’s a lot of things that help on that aspect. I’ll tell you what you should do, and I highly encourage people go read it if they have no background whatsoever and they want to figure out what is in my mutual fund, it’s like a financial literacy 101, that’s one thing.
Omar: But then I would also tell you afterwards, after you’ve done that and now you know how much money you have, you know where you want to go in life, and what age you want to retire, and what lifestyle you want to live, once you’ve figured that out, then you should absolutely take the time to figure out, now, how do I educate myself on managing my own money so I don’t have to pay these people a lot of money per year, and that’s a lot of money, to do that on my behalf?
Omar: It’s just like anything else in life. If something in life is important to you, you want to be educated on the subject matter. I would never blindly trust. It’s like your health. You want to educate, as much as you love your doctor and you trust your doctor, you want to educate yourself on how does my body work, how much exercise do I need? It’s the same thing. It’s the same concept, right? You don’t put it in someone else’s hands, take it into your own hands, because it’s such an important part of your overall life.
Omar: And like I said, you don’t need to be a billionaire, but you want to make sure you live a comfortable life where it doesn’t affect you mentally. You don’t want to go somewhere and you’re, oh, I can’t do this, and I can’t do that, and I’m financially stressed. Financial stress is the worst kind of stress. It sucks. It’s very debilitating, right? It’s equivalent to a lot of other really bad stressors, has physical damage to it, right, and psychological mental damage that’s associated with it.
Omar: So I would say as important it is to learn about your body, yes, you should also learn how to manage your own money, because as long as you have enough, you’re happy, and you’re content, that’s what you should strive for it. Educating yourself on the subject matter will only get you there that much faster.
Kyle Pearce: And that’s great. And I’m wondering maybe if Matthew or Omar, depending on who has something to share, do you have a favorite getting started book? I think there’s many out there that will help you with getting that basic money management piece down. I know when I was younger my parents suggested I read The Wealthy Barber. That was the first financial book that I read, and I think I was in university when I read it, and at the time, very helpful. Do you have any getting started giving some people a perspective as to what investing could look like for them that you would recommend?
Omar: Yeah. Well, a book like The Wealthy Barber, by the way, that’s a great book. I would highly encourage everyone to read that book. And that’s a great book to start off with again, but again, it won’t really get into what do I do with my money. It’s got a lot of very important concepts that one should know though, so it is a very important book to read. So I would highly recommend that.
Omar: Now, once you’ve got that down, then you have to look at, okay, what do I actually do with my funds? How do I multiply them faster? Right? And then you could look at books of… Because this is basic stuff, like, okay, what do I do, how do I do this, and how do I do that? That’s basic stuff, which is very important. Don’t spend beyond your means, don’t get them credit card. These are very basic things. Save for the future.
Omar: So there are really important things in this Wealthy Barber, and I highly recommend to read it, but after you’ve done that and you’ve gotten a certain level of knowledge then you have to say to yourself, well, now I’m ready to figure out what I want to do with my money. How do I multiply it faster with lower risk? I don’t want to trust somebody to do it for me, I want to learn how to do it myself.
Jon Orr: That’s a good tip. I want to dive in on that in a moment, because we’re talking books, and I think another great book, this is one Kyle recommended to me, because I think Kyle’s been my mentor for financial literacy for myself as an adult, the book Rich Dad, Poor Dad opened my eyes to a different way of looking at money and having, especially that whole line of you don’t work for money, you have money work for you. That was kind of… opens my eyes to thinking about how we view our work life versus what we want the money to do for us.
Jon Orr: But you mentioned what do you do and how do you multiply that money, what is a good tip for people? What should we be doing to do that? If we want people to say, I want to start earning more money, investing, what should they do?
Omar: That’s a shameless plug, but that’s exactly why we came up with this company of ours. So, Matthew and I, we were the victims of financial illiteracy our whole lives. It was a personal mission for us. When you have immigrant parents who saved for everything, don’t incur any debt, and you’re never exposed to wealthy people, you don’t know what they do, so we grew up financially illiterate, and it really bothered us that actually we went to university, acquired really good degrees, worked in the financial industry for years and years and years and we still didn’t know how to multiply our money faster.
Omar: And we had to learn that on our own. And that’s how we came up with Theta Trading Co. Which, Kyle, you’ve taken our course, and I’m sure perhaps you can speak about how it’s benefited your life, but that’s exactly why we came up with this. And the reason we came up with it is because to teach people, no, you don’t need someone to manage your money for you, you can do it yourself, and you can do it a lot better than they can.
Omar: And that’ll make a huge difference in the end when you retire, you’ll retire much faster, sooner, on your terms, and it’s just a matter of knowledge, just like the same thing you would figure out, okay, what do I eat every day, how do I keep my body healthy? It’s the same thing. You have to take the time to learn, because it’s important.
Kyle Pearce: No, absolutely. And I know I’ve told you gentlemen this before online and in person here and before we started recording, I definitely was not one for stock investing in particular. I was very scared, just like we had mentioned before. I think a lot of people are scared, skeptical, and something that really got my attention, I heard you guys on another podcast, on an investing podcast, and it really hit me. You share a different strategy, a different approach, and a very, I’ll call it a very safe approach.
Kyle Pearce: And there’s nothing that ever guarantees safety, right? You could have the best car with the most airbags and it doesn’t guarantee that everything’s going to be fine, but it’s a much, much safer way to drive. And something about that really got me. So I’m wondering, just briefly for those math moment makers who are out there, we’ve really been designing this for maybe the ones who are a little bit hesitant to get into investing, but my guess is there’s probably going to be a lot of people out there who are maybe further along in their investing journey.
Kyle Pearce: So I’m wondering if you can give a snapshot as to the strategy that you teach in the Theta course, and now that I’ve been reading more about, and really my mind and my world has been open to a way that I feel like I can confidently engage in investing in the stock market without having that anxiety, without having that second guessing or just constant worry. Do you mind sharing, maybe we’ll start with Matthew on this one, just in general, how does it work, and what is it that you’re actually doing and teaching in that course?
Matthew: Sure. So I mean, Omar and I believe that, although we’ve been harping on it, this podcast, that this is [inaudible 00:33:19] your entire part of your life. So we wanted to put something together in terms of what’s really, really efficient, it doesn’t take you all day. So I spend about 30-35 minutes a day on my phone trading. It needs to be accessible all the time. So luckily the year’s 2020, most people have a smartphone, and we trade from our phones literally all the time.
Matthew: And obviously it needs to be profitable for us, right, we need to basically have this fund our family’s lifestyles and retirement etc. Right? So it needs to be reliable and consistent. And we want to put a framework around this. So we actually, and it’s most easy to understand terms, is we sell insurance on stocks that we want to own. So it’s really, really that simple. If you think about paying your car insurance, $100 a month, $200 a month, or if you’re really, really bad driver, significantly more than that.
Matthew: And you’re always paying that premium. And why are you paying that premium? You’re paying that premium in case an event happens? Right? So it’s the same thing with what we’re doing, except we’re not paying a premium, we’re receiving a premium, so we’re receiving that cash payment on a monthly, or weekly, or sometimes not very often [inaudible 00:34:29] daily, but less than a monthly and weekly basis. And we are ensuring it’s a certain event happening.
Matthew: And the event that we are insuring against or we are insuring other people against is in case the stock goes down in value. And those points have picked very, very strategically for us because we are interested in stocks at very, very certain prices. And if we can pick those stocks up while getting paid for it, that’s awesome. At the heart of it that is what we do. And we do that day in and day out, week over week, month over month.
Jon Orr: So are you owning the stock and then someone’s bought in? You’re not owning and then they’re buying the stock off you, how does that actually work just from a newbie like me trying to figure it out?
Omar: It’s a win-win situation here. That’s what we’re really trying to get to. Mathew and I have devised a way that it becomes a win-win situation. So there’s two outcomes that could occur. Okay. So let’s say Mathew is saying you want to insure stock. Okay. Think of your favorite stocks. Give me an example. What’s the stock that you really like?
Jon Orr: A stock that I really like, oh, I don’t know. I’m new at this. Kyle, what’s the stock you really like?
Kyle Pearce: Well, right now I like Disney, but it’s also scary right now too based on the COVID thing, but I still feel good. Yeah. Zoom was a good one for sure.
Omar: Yeah. Zoom is probably something that we sticked to really, really safe stock. So I’ll give you one that’s a really safe stock. Let’s call a telecom like Bell Canada. Okay? Okay. So let’s say Bell Canada is trading at $58 and you say, I know, I want a buyer for $55. What you’re doing is to the market you’re saying, hey, I don’t mind owning Bell Canada, so that’s a win, okay, but if I can own them for $3 less, that’s even more of a win for me.
Omar: And for you agreeing to buy for $3 less the market pays you an insurance premium. Can you imagine that? So you’re getting paid the market pages. So somebody in their end will be taking that trade, that could be somebody who is speculating or somebody who is hedging. But for us it’s free money because we don’t mind buying Bell Canada at the $3 discount. We’re more than happy to. If someone’s going to pay us a dollar to that to guarantee that buy price the next month, month and a half, yeah, we’re more than happy to take that deal.
Omar: So that’s what we do, and that’s what we teach people how to do. And that’s, in a nutshell, what that scenario is.
Kyle Pearce: So the idea is that if I know that I want to own it for the $3 discount, when it goes there I’ll buy it knowing that it should go back up. Is that what it is, or no, it doesn’t even matter because I got premiums?
Omar: You’ve got premium regardless, so either way you won, either you got a stock that you love at a discount and you got a premium or they didn’t go to that price and you kept the premium and then you insured again next month and the month after that, etc. What this does over time is it tilts the odds so heavily in your favor because you’re default scenario is that you own a blue chip dividend paying stock that you really like, let’s say. That’s what we shoot for anyways, Matthew and myself, we shoot for the nice blue chip dividend paying stocks that are going to be resilient throughout a recession.
Omar: And the reason we want that is because that’s our default. We might have to own those stocks for a period of time. We want to make sure that we’re more than happy to own them.
Omar: So what we show you is that, hey, you can manage your money yourself. It takes you about 30 minutes a day, but you’ll do a much better job managing your money, which in the end of the day will give you far more confidence and maybe one day you’ll want to start a business, or if you know how to manage your money it becomes a lot easier to start a business, when you know how to manage your money it becomes a lot easier to buy a rental property, it becomes a lot easier to do a lot of things in life. So that’s the basic gist of it, and Mathew did a great job explaining.
Kyle Pearce: It’s fantastic. I must say one year ago I started doing some of these, I’ll call them beginner books, but Rich Dad, Poor Dad was a book that I read, and another one that I read that I thought really aligned, and Matthew and Omar, we haven’t had this discussion before. Maybe you have or haven’t read this book, but there’s a book called Rule One Investing, and the philosophy, it’s Phil Town’s the author, and his philosophy is all about Warren Buffet approach where it’s like, hey, if you’re buying a company it’s because you want to own that company for the long haul.
Kyle Pearce: I found it to be very similar to the approach that Omar and Matthew share. And as I mentioned, for me it took a long time to become confident enough to feel like I wanted to actually put my own money in the market and have the finger on the red button, like when you click buy or you click sell, and I would overthink all of those things, and now I feel like the philosophy has given me that safety net where I understand what I’m doing. And on the show we constantly talk about mathematics from a perspective of understanding.
Kyle Pearce: We want kids to understand conceptually what’s happening. We don’t want them to just do math and not know why they’re doing what they’re doing. And I feel like the Theta program really gave me that confidence, that understanding in what I was doing so that at least I had, if something did go wrong where it didn’t go as planned, at least I had a reason why I did what I did and I can feel good about making that decision and that choice.
Kyle Pearce: So I want to thank you both for that. I know for me it’s something that’s completely changed my mindset, and that’s why I told Jon, I’m like, we should bring these two gentlemen on, because I think there’s a lot of people out there that could really use maybe a little bit of a push in the direction of reading up on investing and how they can start taking control of their investments themselves.
Matthew: Yeah. And I mean, when we’re talking about certain… buying stock, selling these kinds of premiums and whatnot, a lot of our decision making is very relatable and is in fact based on very, very simple mathematical concepts, nothing crazy. I mean, Kyle, you went through the course. There’s not crazy math involved at all. In fact, you don’t need to calculate anything. You just need to have an understanding of it and say, oh look, it’s there. A lot of the time the software or the data which we get is all supplied to you, and it is just very basic, simple math, but applied at the highest of levels.
Kyle Pearce: Yeah, absolutely. And as we get close to wrapping up here, I believe you both now do some online webinar trainings. We’re going to be putting a bunch of links in the show notes. So at this point, do you mind sharing where people could go to learn more about some of the trainings that you both are offering? I believe you do some webinars that are free webinars. Obviously the course there’s a paid component if people want to go and dive deeper into it. And then we’ll also have some links to some getting started books like we’ve mentioned, The Wealthy Barber, Rich Dad, Poor Dad, and things like that.
Kyle Pearce: So I’m going to turn it over to you, gentlemen, any links we can add to the show notes that people can grab and learn more about where they can learn from you both?
Omar: Yeah, absolutely. I was going to suggest we have 30 minute, so 30minutestocktrader.com/thetatrading, that’s T-H-E-T-A Trading. Now, if you go on that, we host free one hour webinars once a week, myself and Matthew, where we’ll go over the strategy and we’ll teach you, hey, you can manage your own money. It’s not that hard. And we’ll teach you exactly what we do, the logic, the math behind it, and then you can decide for yourself if it’s something that makes sense to you.
Omar: I would say to 90% of people it’s pretty much a no brainer, because it’s so logical, right? So you can go there, 30minutestocktrader.com/thetatrading, or you can go to thetatradingco.com. And if you want any other information besides that you can always email firstname.lastname@example.org
Jon Orr: Thanks for that. We’ll put those in the show notes for sure. Now, just before we say our goodbyes, gentlemen, give us one takeaway thing that all of our listeners should take away. What is the big idea here you want everyone to know?
Matthew: Create a framework in your lives that finances are taken care of and you can get on with enjoying the rest of your life, and whatever that means for you, work towards and try your best to achieve that goal using the best practices and tools you have available, and make sure you’re discipline and consistent in your approach.
Omar: Yeah. I think that’s very well said. I would have to agree with Matthew, right? Some, I mean, you don’t want to focus on this for a long, long period of time. Learn how to do it, learn how to take control of your finances so you can live life on your terms, and then get it going on on what’s more important to you, right, spending time with your family, your friends, whatever it may be traveling. At least you’ll have the means and the understanding to do so now, right? So that’s the last thing I would leave.
Omar: I think the key with everything else in life, if you want to be good at something it’s a matter of acquiring knowledge. We talked to it, and Matthew and I, we take a holistic approach to life. You want to be in good shape, you want to be healthy so that as you age your body does well. You want to be mentally fit. All these things require knowledge. You have to know how to make them better. So it’s the same thing with your finances. That’s what I will leave you guys with.
Kyle Pearce: Awesome. That’s so fantastic. I really appreciate you both taking the time to share your perspectives. Maybe Omar has a soft spot in his heart for teachers because his wife is a teacher in the greater Toronto area. So we do want to thank you on behalf of the Math Moment Maker community. The only thing I would add on to that as well is for people to not try to move too fast, pick one starting point, whether it’s an audio book or even just starting to listen to a podcast or whatever it might be to just get yourself on that journey.
Kyle Pearce: I think it’s completely the right move to go at your own pace. Take your time. And just like we do as educators, we learn something new every day. So I want to thank you both for giving us some perspectives into the possibilities that are there, and we know that the Math Moment Maker community definitely appreciates it. So thank you so much boys.
Matthew: And thank you so much for having us on, it’s much appreciated guys.
Omar: Yeah. Thanks to you and Jon for having us on. We greatly appreciate the time.
Kyle Pearce: We want to thank Omar and Matthew again for spending some quality time with us and the Math Moment Maker community to help us get our financial goals in line.
Jon Orr: Remember, you can get your first 30 days free inside the Academy, and this is for any math moment maker from around the world to access our academy professional development courses, including our latest course on how to make math moments from a distance.
Kyle Pearce: Yes, that’s right. It is an awesome course on how to help you make math moments while engaging in online learning, join in or watch the replays of our Q&A web calls. Watch over 20 virtual summit session replays and access our Make Math Moments problem-based tasks and full units of study with the full teacher guides and walkthroughs.
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Jon Orr: Also, if you’re liking what you’re hearing, please share the podcast with a colleague and help us reach a wider audience by leaving us a review on Apple Podcasts, and tweet us over at Make Math Moments on Twitter. Show notes and links to resources from this episode can be found at makemathmoments.com/episode85. Again, that’s makemathmoments.com/episode85.
Kyle Pearce: We release a new episode every Monday morning, so keep an eye open for the next one. Until next time, I’m Kyle Pearce.
Jon Orr: And I’m John Orr.
Kyle Pearce: High fives for us.
Jon Orr: And a high five for you.
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