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This week on The Millionaire Choice Podcast, Tony talks with Myles Gage, co-founder of Rapunzl Investments. Tony and Myles discuss financial literacy, investing, and community outreach.
Myles has been an advocate for encouraging young people to invest in the stock market given his exposure to learning about it in elementary school where he won stock trading competitions and even got to hold Warren Buffet's wallet once!
About Myles Gage
Co-founder of Rapunzl and advocate for financial education; especially for individuals in under-served communities. Attending Ariel Community Academy on Chicago's south side exposed Myles to the stock market at a very young age, as financial literacy was the crux of its curriculum. That's why, after graduating from the University of Illinois Urbana-Champaign, he developed Rapunzl with high school friend, Brian Curcio. Together they designed and developed an app that addresses the three roadblocks that prohibit many from understanding the stock market: fear, exposure, and accessibility.
Learn more about Myles Gage, https://rapunzlinvestments.com/
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Show Transcript
Tony (00:00):
Welcome back to the millionaire choice show today, we're gonna have a fun show and a talk with Myles Gage, co-founder of Rapunzl investments. I'm excited about this Rapunzl app. He was telling me about it in the pre-show; It's an investing simulator, which, if you don't have a lot of practice, or maybe you do have a lot of practice and you need a little bit more practice; working through your investment. This app is gonna be a fun thing to talk about. Myles, welcome to the show.
Myles Gage (00:26):
Thanks for having me. That was a great introduction. I'm the co-founder of Rapunzl investments, which is actually a mobile application that gives users 10,000 fictional dollars to buy and sell stocks of real publicly traded companies. So, you can think of this as a risk-free way to learn about investing in the stock market. The cooler thing about our simulator versus some of the other ones in the marketplace is we allow our users to enter their fictitious stock portfolios into competitions where you can compete first real scholarship and cash prizes.
Tony (01:01):
I love that. You said that- let's make sure we don't pass over that again; your app is designed so that you get fictitious dollars to play with, but at the same time you can actually win prizes. And, did you say specifically paid out in scholarships or are there other ways that it's paid out?
Myles Gage (01:18):
So, for high school students, those are paid out in scholarships, and Rapunzl works with an organization in Chicago, Dreams for Kids, in which we're able to get donations and grants from financial service institutions because we satisfy a lot of their corporate giving requirements. So, through that avenue we're able to give away scholarships to high school students from under served neighborhoods. And, then for the over 18, or for college students, they're not necessarily driven by the scholarship aspect of the app. So, we figured out a way to give away cash prizes to them. Another part of Rapunzl's business model is that we do private competitions for various organizations and companies. And so, there are costs assocated with running those competitions. So, we're able to take a portion of the proceeds from the money that we receive from those programs to actually fund the cash prizes that we give away for users over the age of 18.
Tony (02:19):
That sounds like a wonderful business model and design; plus, you're making a difference. Now, people may not pick up on it, but you're one of the younger guests I've had on my show. I didn't ask you this in the pre-show, but how old are you?
Myles Gage (02:30):
I turned 28 three weeks ago.
Tony (02:32):
That's awesome. I was just making my millionaire choice at age 25 and deciding I didn't wanna be broke for the rest of my life. It sounds like you're a little bit ahead of that. So, you're in this financial world now, but how did you really get your start? What did things look like for you growing up? What were some of the hurdles that you faced as a young man in your family, learning from your parents, financial habits and things.
Myles Gage (02:56):
So, I think finances have always been around and something that's always been a very much an integral part of my life. As a kid, my mom enrolled my brother and I at a public school on the south side of Chicago. They had a finance based curriculum called Aeriel Community Academy that was founded by John Rogers, who's CEO of the largest minority on asset management firm and R. E. Duncan, the former secretary of education. But, my mom put my brother and I in the school because she didn't want us to make some of the same financial mistakes my father and she had. So, we started learning about the basics of money management in first grade and that carried over outside of the classroom. Every time we got money, she made us split it up three ways.
Myles Gage (03:44):
So, she had this thing called "the three jar system." 10% of our money would go to charity; cuz you always have to give back. 40% with savings because you always should be saving for a rainy day; that would ultimately become the investing fund. And then, 50% was your spending or your living jar, which is what you could use for discretionary purchases. So, that was something that was always instilled in me. I think just even watching some of some challenges that my parents had financially was something that always inspired me to wanna pursue a career in finance, or go on wall street just because I knew that this was an avenue or a route to making a high salary or really being in a position to take the reins of your financial future.
Tony (04:30):
And so, your family was pretty stable growing up, but did you hit any turmoil or problems along the way?
Myles Gage (04:37):
So, I would say that I, for the most part, grew up in a stable middle class family. but, I think during, 2007-2008, a lot of folks experienced hardship and we were not immune to that. So, there were a lot of different challenges. My dad had to close his business. The house that we lived in ultimately got closed, and my parents separated. So, that was a very egregious and difficult time for me in middle school. So, I mean that adversity at a young age is really what I would say put the fuel in my oven, or just under me, to really continue and really want to be financially well off. So, this really was like all kind of crap hitting the fan when I was in middle school, and that's when I really got serious and got aggressive about my involvement in financial markets.
Tony (05:35):
Now, if you listen to guys like Dave Ramsey and some of the statistics out there; they talk about money issues being the number one problem, or the number two problem, in marriages. Do you think that was a major contributing factor to your mom and dad's split? Was it the financial turmoil?
Myles Gage (05:50):
There were a lot of challenges, but that was definitely of them for sure.
Tony (05:56):
I think my wife and I really haven't had a lot of problems fighting about money. I think the biggest thing was when we weren't managing our money really well. I was kind of relying on her to watch how we were spending money more. And, it was interesting because I would ask if we had enough money to buy a certain thing versus having a plan, and she would say, "sure, yes, we have enough to buy that." What I didn't know was that she was actually going into our savings, our emergency fund because that's where the money that we needed was to buy what I was wanting to buy. So, she didn't wanna tell me "no." So, we were draining our emergency reserve accounts down, and I would go the funds and the account and go, "oh wow. There's some money missing there. Where'd that $5,000 go? Where is that $2000?" And, that happened a couple times. And then, I stepped up to the plate and took responsibility, but the whole money journey is just a very interesting thing for people and for families. Now, with your app that you're out there promoting; let's go through the history of that. You said on the pre-show the app came out in beta in 2017?
Myles Gage (07:05):
I think it's important to really tell the story of why we even developed this app. So, the idea of Rapunzl- the Genesis of Rapunzl was in July of 2016 . This is around the time when Brian and I, my partner, who I co-founded the app with, we saw a lot of our friends flocking to other platforms; other brokerage platforms that were accessible via mobile devices. It also didn't have any commission. So, investing in the stock market was becoming more and more accessible around this. And, we saw a lot of our friends utilizing some of these systems and some of these applications, but didn't understand the fundamentals of investing in the sense that they were buying companies when they were green and then selling them when they were red. And, as a fundamental rule of investing; the idea is to buy low and sell high; not buy high and sell low.
Myles Gage (07:59):
So, we saw a teachable opportunity, and we knew that there were other simulators out there, but there weren't any that I would say catered towards that millennial or gen Z crowd. And, we were really firm believers in, "oh, we can create something. We can create a tool that allows people to interact with the stock market. And, you can also follow people of the investing community and see what's in their portfolio." So, we're creating this transparent investing community that's also an education tool, and we're like, "okay, well, how do we keep people on board?" Then we're like, "oh, why don't we host competitions that span various periods of time and give away prizes? So, that keeps people on top of it. It took us about a year and a half to develop the platform. And then, once it was developed, we were like, "how do we go and get users?" This is around the spring of 2017.
Tony (08:57):
Starting up a mobile app is not an easy thing to do. It's a very interesting process; especially finding the right one, and being able to get people on board. So, you guys launched this thing, and then you did your competitions in 2018; launched your first competition. And, what did that look like? Was that a huge success? Was it a mild success? What did it look like?
Myles Gage (09:19):
It was insane to say the least, basically we were thinking, "how do we go and get users on the platform around this time?" My partner, Brian, was getting very much integrated in the financial education scene in Chicago, which would ultimately lead him to chairing the planning committee for the Federal Reserve Bank of Chicago's "money smart week." To give you a little bit of back story; I was the 2008 Federal Reserve Bank of Chicago's "money smart kid of the year" in eighth grade when I wrote an essay about how I planned to finance my college tuition by liquidating my stock portfolio. So, fast forwarding; 10 years later my business partner is now on the planning committee of this competition. That kind of shifted my trajectory in other ways. So, we had the idea of, "Hey, you all still do this middle school essay competition. You're complaining about how entrance or entries or applicants for this competition have shrunk significantly.
Myles Gage (10:28):
We also recognize that you don't do anything for high school students. And, we also have identified this as the time when students are starting to form good and bad habits that pertain to money management." Because, in high school you start to get more disposable income, whether you're working your first job, doing tours, getting an allowance, etc, etc. So, we saw this as an opportunity to introduce the Rapunzl platform to high school students and the Federal Reserve Bank essentially supported that. They're like, "okay, well, that's cool. We'll back it. But, you are in charge for getting the users and figuring out the scholarship prize." So, that previous year Rapunzl crowdfunded roughly $300,000 to build the app from friends and family, and we had a little bit of money left over from the development. So, we're like, "Ok, we'll sponsor a $10,000 scholarship."
Myles Gage (11:27):
And so, then we went to the office of Ariel Investments and spoke to John Rogers, and they also agreed to support the scholarship for $10,000. So, we had $20,000 in scholarship prizes, and now we thought that that was the hardest part. Then it was going to be easy; just getting the users. We thought there was just gonna be some person that we could talk to at the public schools in Chicago. And, they were just gonna disseminate scholarship to everyone. That was not the case. What ended up happening was the team drove to over a hundred high schools in the city of Chicago. Through those grassroots initiatives, we were able to get 2000 students to participate in the competition, but it was just unfortunate and kind of discouraging because we were sending emails and calling all these people, but no one was necessarily answering the phone.
Myles Gage (12:25):
We literally had to take it upon ourselves to pull up to all these different schools. But, what ended up happening was; as our grand prize winner, a young lady by the name of Destiny; she ended up winning our entire competition. And, we found out that she came from a very challenging background, and this scholarship prize of $5,000 allowed her to continue her education at college in Chicago. Prior to that, she thought she was gonna have to join the military to support her family. So, it really shifted her whole trajectory. And, as a result of that, we brought her to the office of Aerial Investments, which is where we ultimately found out about her story, and she got an internship at an asset management firm. Then she interned at Aeriel the next summer. And, then she interned with Rapunzl. So, through that we got a lot of media coverage, and it allowed us to expand and do programs and other areas. That next year, we worked with a firm in LA to do a similar program with five high schools on the west coast. And, we also worked with another investment firm to do a competition for the NESCAC colleges, which is a consortium of liberal arts colleges on the east coast. And, we've just been rocking ever since. It's hasn't been just a fluid upward trajectory; there are hurdles. It's kind of like a roller coaster. There are bumps in the road and you really just have to be nimble and adjust during those circumstances.
Tony (13:57):
I love your story there and the power. I mean, you're doing a little bit of gorilla marketing. You're out there beating the streets; getting in front of people, which I think there's no really substitute for that. Even if you're doing digital marketing and things like that; you still gotta sometimes fall back to getting to the people that you wanna get in front of; which, it sounds like you guys did a good job. So, how many schools did you personally visit?
Myles Gage (14:20):
Me? I visited like three because I was still working a full-time job as a banker. So, I wasn't full time. My partner, after he graduated, cause he did a gap year. There was already more traction with the app, so he just decided to work on that full time. That was not the case for me because when we came up with the idea, I was already graduating. So, I already committed to a job, and I have student loans. So, I'm like, "I have to support myself." But, after that competition, I was like, "oh, this is the writing on the wall. This is bigger than me. I need to go do this full time." And, I had been saving and planning to make that leap. So, I had positioned myself to be able to do that at the end of 2018. So, January 1st, I started at Rapunzl full time; not making a salary, but luckily I had positioned myself to at least weather that storm a little bit. It wasn't easy at all, but nonetheless, that's how that works, but I did go to a couple schools.
Tony (15:26):
Well, getting your hands dirty is always good. Especially when you're trying to put a business together. So, you love doing this now. Cause you're actually connecting your work to people's lives and seeing things get transformed. That's inspiring, isn't it?
Myles Gage (15:40):
Absolutely. And, for that to happen, the first go round; the first time that we're doing this was just one of those moments when I was it's like, "okay, this is bigger than me. And, I feel like I gotta go- this might be my call. And, lemme go follow this path and see where it takes me."
Tony (16:00):
That's wonderful. I feel like I'm doing a little bit of that too these days with the show and reaching out, it's nothing quite like getting a call from somebody out of Florida, or out of Boston, or somewhere I've never met before and they're being inspired by what you're doing to reach and touch their lives and you're having an impact. For you, being able to do that at 28, I didn't get into the financial world until I was 31. So, I've been able to see some of that, but I wasn't as directly impacting it as you are. I was more like indirect impact, building systems, but being able to see that. It's gonna be really cool for you in another 10 years out, when you got people coming back who built out half-million dollar portfolios or million dollar portfolios. I mean, the people on this show, like Jerremy Newsome; a lot of these guys that come on, they're doing millionaire stuff within seven to fifteen years. So, that's kind of the window. Once somebody starts getting serious about investing and growing and you're giving 'em a tool; you're gonna help a whole generation start at age 10-13.
Myles Gage (17:05):
Absolutely. And, as you know; the earlier you start, the better; it's about time. A dollar today is not worth a dollar tomorrow; time value of money. So, the earlier you can start investing; the earlier that you can start taking advantage of compound interest and the stock market has grown at 10%, on average, since it's inception. That's even with the various troughs and the recessions and periods of economic downturn. So, it's a vehicle, it's a great vehicle. And, I think it's something that people need to be exposed to.
Tony (17:48):
Now, inside of your app- and answer not just in the app, but also how you do your own trading too- is it equipped with- obviously you said it's real time data coming outta the market, so you could day trade inside the app. You could swing trade inside the app; you can buy and hold inside the app. You could do all of the above?
Myles Gage (18:07):
You can do all of the above, and I think some of those various strategies coincide with the various competitions. So, we have weekly competitions, monthly competitions, quarterly, and year long. The day trading might not serve you in the best way for a year long competition, cause you're probably gonna need to hold. But, you may wanna be looking and making movements in and outta positions if you're trying to win a weekly competition. At the very least, we believe that that initial exposure, and being able to see the markets, is really exciting because in the long run, passive investing is ultimately gonna be active investing. The majority of people are not gonna be great investors, but sometimes you need to see that you're not a good investor to understand the importance of leaving it to professionals or buying mutual funds or buying an ETF or buying an index fund and just leaving it there.
Myles Gage (19:06):
But, that's not as glamorous when you're trying to explain the importance of investing, cuz people wanna see the volatility in the market movement or, "oh, I could have won or I could have made a killing if I bought this stock," then they get that rush or whatever, but then they also lose money and it's like, "okay, well maybe I need to be a little hands off and just watch the market cycle play out and just consistently contribute to it. But, not fret if it doesn't necessarily go the direction I want over a short term period."
Tony (19:44):
I'm a big believer that you need to invest at your level of competency. So, if you wanna just stay unplugged and not put a lot of effort into learning about stocks and staying in the news and everything that's going on; watching what's happening politically, economically globally; then your best model is definitely to go and do a mutual fund investment or an index fund. Just let it sit there and ride. For somebody that wants to live that type of lifestyle. Some of the other guys that I've come across more recently- I've met a friend this last year and he was real interesting. He was a first time investor last year in his Roth IRA and got 1200% returns inside of his Roth IRA. How did he do that?
Tony (20:27):
And, his answer to me was, "man, I just hooked up with some people that knew what they were doing and did with they did." So, wise people that were experienced investors and played the game and hit some good licks. I've got another friend, in the cryptocurrency world, he kind of did the same thing, made his first million dollars last year in cryptocurrency. He did the same thing. He didn't know anything about it; first year cryptocurrency investor. And then, just had some friends that said, "Hey, come along with us, we'll show you what to do. We'll teach you." And then, he turned that into something. I'm more of a 'do it yourself-er'. I always have been, which is like; figure it out and use the tools. I think that's what your tool Rapunzl is so cool for because you're learning while you're not really risking any money. You're learning in a safe fashion. And, I think that's especially important for new investors. So, you're not cutting your teeth with real money. You're cutting your teeth with play money, and getting the education behind you. So, what's your Rapunzl portfolio look like?
Myles Gage (21:25):
Well, it's funny cuz there really isn't rhyme or reason with it to be quite frank. Because, whenever I'm speaking and giving people a tutorial, I'll buy shares of random companies just to show them how the app works. So, it doesn't necessarily mirror my actual stock portfolio. So, it's not that great. To be honest with you.
Tony (21:53):
I've got a friend, Cordell Frazier, he grew up in Mississippi. He was on the show, and he didn't start investing until he was 38 and he passed his millionaire threshold in 2020. So, it took him nine years. He was 47, started when he was 38, to become a millionaire. But, he invests in a little bit of everything. He's in race horses, he's in- obviously Tesla, and some other things. But, if he sees something that looks interesting, he'll just put some money in it. So, his mindset- you mentioned earlier when you're going through the financial education course, 50% into living expenses, 40% into saving, which is also investments, and then 10% into giving or tithing if you're going to church.
Tony (22:39):
And, I think for me, a big piece of that- and that's a great model to adopt cuz that way your money is going into some good places. But, if you can train yourself mentally to go, "Hey, I got a new dollar. What can I invest it in? I got another extra $10. What can I invest it in?" Most people are going, "Hey, I'll go buy Starbucks," or go buy something that they can consume versus putting it into something that can return dividends or multiply itself. I call it 'multiplying money.' But s,o if somebody goes and signs up for Rapunzl today; what's that experience gonna be like for them?
Myles Gage (23:14):
So, if you download Rapunzl on the Google play or the iOS app store, basically it'll ask you the standard questions. First and last name, birthday, username, password. You'll have to click a verification email and then you'll back to the home screen. There'll be a series of boxes to give you a tutorial on how the Rapunzl app works. After that, there'll be another icon on the home screen that says place your first trade. And, after that it's pretty intuitive in the sense that people are able to pick it up without necessarily having me tell them how it works. We've tried to really make be user friendly. We have had several iterations of the platform. Just using feedback that we've gotten from people on things that we should include to make the platform have a better user experience, or to create a better user experience for users.
Tony (24:21):
Now, are you guys doing any education on helping people inside of the app learn a methodology to pick stocks?
Myles Gage (24:28):
As far as education goes, we have a bunch of quizzes that live on the app that cover various aspects of investing like diversification risk. And on our website we have a school suite of resources and education modules that cover an array of financial topics that are complimented with 'teacher minutes' because we've gotten a lot of questions as we go into schools that are oftentimes asked over and over again. So, we're like, "let's just develop a curriculum that we can use to compliment the Rapunzl app itself that's available free of charge, so teachers are able to use it in their classrooms and there are some teachers that have more experience with the stock market. There are teachers that don't, but it's really designed to not be intimidating, and for anyone to be able to pick it up to follow along.
Tony (25:23):
Awesome. That sounds fun. It's interesting. My wife had never made any investments until last year, and I've got six kids. So, I'm working through the process of how I teach my kids about abundance and investing because I had to learn on my own. So, it's very difficult to make a shift as a dad to go, "Hey, how do I teach my kids this stuff now instead of letting 'em figure it out on their own." And, Dave Ramsey has got a financial course. They teach that at their school. I'm probably a little bit more aggressive on the investing side; a little bit more risk engaging, maybe than his curriculum is, it's a good- like you said, with John Rogers stuff; that you learn- it's a good foundation. But, there's so much more to the world of investing. Once you get into it and start learning about, the possibilities and well, how are they gonna find out about your app, Myles, and a little bit more about what you're doing. Maybe download that app today, future millionaires, get playing with the Rapunzl app.
Myles Gage (26:16):
I mean, you said it best. So, you can find us at in the app store, Google play @rapunzlinvestments. That's our same handles on social media as well.
Tony (26:34):
Well, Myles, I wish you a lot of luck in the future. 28 year old, future millionaire or millionaire yet?
Myles Gage (26:41):
On paper, apparently I'm a millionaire, but it's not quite seeing that in my bank account quite yet. Don't feel it yet. We're getting close. I don't feel it.
Tony (26:49):
It'll get there, man. That's awesome. 28 years old millionaire on paper, and a lot of bright things ahead of you. I'm gonna be eager to follow your stuff in the next few years, and see it kind of impact you have. There's a few people I probably wanna introduce you to too. A guy named Taylor Welch, here in Nashville. He's doing some of the same things; trying to have an impact on society and kids and youth and really transform people's finances. I think you guys might hit it off pretty well.
Myles Gage (27:22):
I would love to connect.
Tony (27:25):
Thanks for being on the show, Myles.