Aug 27, 2021 · 1h 22m · my-first-million
Why You Should Have a Diversified Investment Portfolio | My First Million #214 with Ramit Sethi
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Personal finance author Ramit Sethi joins My First Million hosts Sam Parr and Sean Puri to debate diversified index investing versus concentrated risk, dissect the mechanics of scaling digital education businesses, and explore the emotional psychology of money.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. The hosts hold 37.2% of the talking time here. How this is scored →
The hosts as informed peer 4.7 Guest teaching 4.9 Guest disagreement 2.9 The hosts pushing back 2.1
speaking balance: gold is the hosts, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 47:45 Ramit mocks Shaan's anti-diversification stance
Ramit forcefully dismisses Shaan's claim that 'diversification is for losers,' comparing Shaan's portfolio to an irrational all-chocolate-cake buffet and highlighting the hidden costs of tech founder arrogance.
Hardest push from the hosts ▶ 1:05:48 Shaan challenges Ramit's mass-market advice frameworkShaan directly pushes back on Ramit's core philosophy, arguing Ramit offers 'most people advice' whereas their podcast is designed for entrepreneurs seeking outsized asymmetric returns.
Biggest teaching moment ▶ 1:18:10 Ramit schools Sam on emotional spending and engagement ringsRamit educates Sam on looking past 21-year-old Silicon Valley utilitarianism to recognize that money should serve relationship meaning and personal values.
The host holds their own ▶ 45:18 Sam diagnoses the 60-minute camera recording limitSam immediately identifies why Ramit's camera shut off at the 60-minute mark, citing obscure international import tax regulations on point-and-shoot cameras.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | The hosts as informed peer | Guest teaching | Guest disagreement | The hosts pushing back | Why |
|---|---|---|---|---|---|---|
| Launching the I Will Teach You To Be Rich Podcast | 4 | 3 | 1 | 1 | Sam and Shaan interview Ramit on launching his new podcast, comparing it to Esther Perel's relationship format. Sam shares his own operational insights on the difficulties of podcast attribution compared to email marketing. | |
| The Evolution of Online Courses and Respected Creators | 5 | 4 | 3 | 2 | Ramit jokingly ribs Sam for not knowing the exact name of Shaan's course, before giving a detailed overview of the 20-year history of online education models. Ramit declines to share his exact revenue numbers, which Sam gracefully accepts. | |
| Marketing Mastery and Theatricality: The Jay Abraham Philosophy | 3 | 6 | 3 | 1 | Ramit breaks down Jay Abraham's marketing genius and theatricality, contrasting Abraham's 40-suit wardrobe with Silicon Valley's narrow metrics-driven mindset. Ramit also explains his controversial policy of barring people in credit card debt from buying flagship courses. | |
| Evaluating Brand Names and Building an Education Business | 4 | 5 | 2 | 2 | Shaan brings up whether Ramit's brand name is catchy or cringey, leading Ramit to dissect the pros and cons of clear vs clever copywriting. Ramit clarifies that he runs an education business rather than a mere course business. | |
| Solopreneur Team Structure and the Psychology of Internet Trolls | 5 | 4 | 2 | 2 | Shaan explores solopreneur monopolies and audience conversion funnels, while Ramit explains his team structure. Ramit then shares his psychological methodology for categorizing and engaging with online trolls, which Shaan playfully calls an intellectual rationalization for clapping back. | |
| Launch Mechanics and Scaling Course Businesses to $100 Million | 5 | 5 | 2 | 1 | Sam brings up legacy internet marketers and asks whether course businesses can scale to $100M. Ramit breaks down the mechanics of massive launches and explains why reaching $100M turns businesses into aggressive, mercenary customer acquisition machines. | |
| High-Demand Business Opportunities: Pets, Cosmetics, and Kids | 4 | 3 | 2 | 1 | Ramit pitches business opportunities centered around insatiable demand and price insensitivity in pets, cosmetics, and kids. The hosts banter about skincare habits while Ramit details high-margin packaging tactics. | |
| Founder Investment Blindspots and Concentrated Portfolios | 4 | 6 | 4 | 1 | Ramit vents his frustration with startup founders who refuse to invest in index funds because they believe they can yield higher returns reinvesting entirely into their own businesses. Sam contrasts his conservative investing approach with Shaan's concentrated strategy. | |
| The Technical Glitch: Point-and-Shoot Camera Recording Limits | 7 | 6 | 6 | 6 | After Sam displays deep technical camera tax expertise during a glitch, Shaan and Ramit clash over portfolio allocation. Shaan defends concentrated bets in tech and crypto while Ramit compares Shaan's portfolio to an all-chocolate-cake buffet and warns about survivorship bias. | |
| Ramit's Money Rules: Balancing Guilt-Free Spending and Saving | 5 | 4 | 1 | 1 | Ramit details his personal money rules, emphasizing unlimited spending on appetizers, books, and health while automating investments. Sam relates and shares how he established spending benchmarks and financial rules in his early twenties. | |
| Asset-Backed Loans, Margin Risk, and Historical Market Cycles | 6 | 6 | 5 | 4 | Sam explains how wealthy investors utilize low-interest asset-backed loans to live tax-free off margin. Ramit smiles and reminds the hosts that these strategies gained popularity only due to an unprecedented 10-year bull market and ultra-low interest rates. | |
| Mass Market Financial Rules vs. Outlier Entrepreneurship | 6 | 6 | 5 | 5 | Shaan argues Ramit's advice is tailored for 'most people' whereas My First Million targets outliers seeking asymmetric upside. Ramit counters that one must earn the right to take outlier risks by building a stable financial foundation first. | |
| The Engagement Ring Lesson: Beyond Utilitarianism to a Rich Life | 3 | 6 | 2 | 1 | Ramit recounts intervening when Sam initially planned to buy an inexpensive engagement ring due to Silicon Valley utilitarian logic. Sam candidly confirms that spending more aligned with what his partner valued and transformed his perspective on living a rich life. |
Statements from this episode (28)
Sethi: People overvalue math and undervalue psychology in personal finance
“Money is not just about math. In fact, we overvalue math and we undervalue psychology”
Parr: Growing My First Million has been his hardest growth challenge
“Growing our podcast, we've talked about it a bit on this podcast, which people like and sometimes don't like us talking about it too much, but it's been the hardest thing that I've had to grow.”
Puri: Second writing cohort doubled revenue, but he retired it anyway
“After the second one from the first one, the second one made double the money, and it took a quarter of the time, Which is like exactly what you would want, and it's should, the answer should be, go do it again, and instead I don't want to do it at all. I'm ju…”
Sethi: Top course creators could easily double revenue by sacrificing integrity
“High integrity. And we can talk about why integrity is lacking in the course business because it is they run the business the way they want to. Each of those could easily double their revenue. Easily. If they did a couple of different decisions, they don't. An…”
Sethi: Over-relying strictly on direct ROI attribution is a massive mistake
“There's more to life than metrics, you Silicon Valley nerds. That's a huge mistake that all these ROI attribution positive. Sometimes, in fact, the best companies know that's why they advertise in Times Square. They can't track that, but they do it because it'…”
Sethi: Jay Abraham grew Icy Hot using zero-risk remnant radio advertising
“Icy Hot was one of his, and he has a fantastic story. He bought remnant radio advertising. He paid a hundred percent of the first fee to the radio station. So it was no risk to them. And then he took the long-term profits and grew that business in a massive wa…”
Sethi: Banning indebted customers from flagship courses costs him millions annually
“For example, I don't allow people with credit card debt. To join our flagship programs, the higher end ones. That costs us millions of dollars every year.”
Sethi: I Will Teach You To Be Rich has 50,000 customers
“I have over a million books sold, 50,000 customers.”
Sethi: When engaged, 25% of trolls apologize and 25% double down
“50% of them will never reply. Of those who reply, 50% will go, oh, oh, my God, I didn't know anyone would actually read this. Oh, I'm sorry. Hey, man, big fan. Which kind of leads to the question, if you didn't know anyone was going to reply, why on earth woul…”
Sethi: Earn1K course generated $600,000 during its very first launch
“And then at the end, it made 600,000 dollars on our first launch. And we raised the price and never lowered it again, ever.”
Sethi: An online business program generated $5M to $6M in one week
“We launched another business program. I think it did like five million or six million in one week.”
Sethi: Scaling a course business to $100M requires a massive acquisition engine
“You cannot make it to a hundred million dollars without a true massive acquisition machine. And that means that most of your business will be focused on acquisition.”
Sethi: Unnecessary luxury pet items are often more profitable due to price insensitivity
“There's a decorative items for dogs, which I love because the more unnecessary they are, Oftentimes the more profitable it can be, right? I don't, you're not buying a luxury sweater because you need it. You're buying it because you want it and price is largely…”
Sethi: Half of pet businesses sell 'complete horseshit'
“Because half these pet businesses are complete horseshit.”
Sethi: Over 50% of his founder friends do not invest in stocks
“Most of my founder friends don't even invest in the market. I would say over 50% of them.”
Sethi: Founders should allocate business profits to boring Vanguard index funds
“Hey, take a little bit, put it in the market, boring Vanguard funds, do this stuff. Of course they haven't read my book, do this stuff in the book. And when you do that, you will be wealthier than you can possibly imagine. And you, your risk will be decreased …”
Parr: Point-and-shoot cameras cap video recording at 60 minutes due to taxes
“You can't import a camera or the import tax on a camera that can record above 60 minutes is taxed at a video camera versus a picture camera. Therefore, you can't record for more than 60 minutes on a point and shoot camera.”
Puri: Portfolio is 30% tech stocks, 40% crypto, and 1% Vanguard
“No, no, I have 30% in a handful of tech stocks, about six tech stocks, and then I have about forty-ish percent in crypto. I have a small amount, maybe one percent, two percent, still left in a Vanguard fund.”
Parr: Portfolio Is 90% Public Equities and Index Funds
“I'm looking at my portfolio now. It's basically 90% index funds or includes HubSpot stock, which is not indexed, but it's 90% publicly traded stock, most of which is, is, is, is index funds.”
Sethi: 15% Annual Index Returns Will Not Continue Indefinitely
“Even an index investor made over 15% annualized returns, which is insane. But the music doesn't keep playing.”
Sethi: Always maintain a one-year liquid cash emergency fund
“Always have a year of emergency fund cash.”
Sethi: Unbreakable rule to fly business class on flights over four hours
“Business class on flights over four hours. That's a rule. I don't have to debate it or think about it. It's just boom, it's done.”
Parr: My asset-backed borrowing rate from big commercial banks is 1.1%
“There's some number where you can start borrowing money from big banks right now. I think what's the rate? Like my rate is 1.1%, one percent.”
Sethi: I spend less than one hour per month on finances
“I spend less than one hour per month on my finances.”