1 00:00:02,040 --> 00:00:07,080 Speaker 1: Tonight some important context for worried investors. You're listening to 2 00:00:07,120 --> 00:00:10,160 Speaker 1: Simply Money, presented by Award Financial on Bob's Fond Seller 3 00:00:10,240 --> 00:00:14,200 Speaker 1: along with Brian James. Well, we're fortunate to have a 4 00:00:14,320 --> 00:00:18,760 Speaker 1: forum where we can provide listeners, hopefully with some level 5 00:00:18,840 --> 00:00:23,040 Speaker 1: headed perspectives on financial matters, especially when we start to 6 00:00:23,200 --> 00:00:27,000 Speaker 1: enter into periods of volatility like what we're going through 7 00:00:27,160 --> 00:00:31,600 Speaker 1: right now, because let's face it, usually it's investor behavior 8 00:00:31,960 --> 00:00:35,440 Speaker 1: that tends to negatively impact their long term financial plan. 9 00:00:35,800 --> 00:00:39,199 Speaker 1: And one of the ways we hopefully provide this helpful 10 00:00:39,240 --> 00:00:43,080 Speaker 1: perspective is to talk to all worst Chief Investment Officer 11 00:00:43,200 --> 00:00:47,720 Speaker 1: Andy Stout. Andy has an innate ability and an extremely 12 00:00:47,920 --> 00:00:50,320 Speaker 1: level head here to look under the hood, look at 13 00:00:50,320 --> 00:00:54,600 Speaker 1: a lot of data rather than just headline news, to 14 00:00:54,640 --> 00:00:57,640 Speaker 1: give us a realistic look at what's going on and 15 00:00:57,720 --> 00:01:01,400 Speaker 1: maybe what to expect in the days and minds ahead. Andy, 16 00:01:01,520 --> 00:01:05,080 Speaker 1: let's start with the markets. Obviously, we have moved into 17 00:01:05,200 --> 00:01:08,759 Speaker 1: at the end of next week quote unquote correction territory, 18 00:01:09,120 --> 00:01:12,120 Speaker 1: which just means both the Nasdaq and the S and 19 00:01:12,160 --> 00:01:16,000 Speaker 1: P five hundred for that matter, are ten percent below 20 00:01:16,080 --> 00:01:20,240 Speaker 1: they're all time highs. It's been quite some time, almost 21 00:01:20,319 --> 00:01:23,920 Speaker 1: about a year so since we've even talked about negative 22 00:01:23,959 --> 00:01:27,920 Speaker 1: returns with you. But here we are, and you know, 23 00:01:28,040 --> 00:01:32,360 Speaker 1: the sixty four thousand dollars question is this normal or 24 00:01:32,680 --> 00:01:34,080 Speaker 1: is it different this time? 25 00:01:35,280 --> 00:01:38,160 Speaker 2: Well, when you look at the market returns, I mean 26 00:01:38,200 --> 00:01:41,639 Speaker 2: there's a few things to keep in mind here. First, 27 00:01:42,160 --> 00:01:45,160 Speaker 2: by the way, it's the Dow is in the corraction territory. 28 00:01:45,200 --> 00:01:48,360 Speaker 2: The S and P five hundred is still just you know, 29 00:01:49,160 --> 00:01:53,800 Speaker 2: just eight point seven percent off of its highs from 30 00:01:53,880 --> 00:01:56,640 Speaker 2: January twenty seventh, while the doll is down you know, 31 00:01:56,680 --> 00:01:59,680 Speaker 2: ten percent, So we are in that correction territory and 32 00:01:59,720 --> 00:02:02,320 Speaker 2: that can sounds scary, but to your point, you know, Bob, 33 00:02:02,400 --> 00:02:05,120 Speaker 2: it's really quite normal. I mean, let's just look to 34 00:02:05,320 --> 00:02:08,840 Speaker 2: last year, right about this time, when we had Liberation 35 00:02:09,040 --> 00:02:11,600 Speaker 2: Day and the S and P five hundred, you know 36 00:02:11,639 --> 00:02:15,120 Speaker 2: what it did, It fell nineteen percent from its high 37 00:02:15,160 --> 00:02:18,800 Speaker 2: water mark in twenty twenty five to its ultimate low price. 38 00:02:19,800 --> 00:02:23,160 Speaker 2: And what ended up happening if you don't if you recall, well, 39 00:02:23,240 --> 00:02:28,000 Speaker 2: the market had a pretty pretty nice year, climbing eighteen 40 00:02:28,240 --> 00:02:32,280 Speaker 2: percent for the entire calendar year. So when you look 41 00:02:32,320 --> 00:02:36,639 Speaker 2: at just the volatility, the vault and there's always a 42 00:02:36,760 --> 00:02:39,960 Speaker 2: different catalyst and that's why it feels worse almost every 43 00:02:40,000 --> 00:02:42,560 Speaker 2: single time. I mean last year we thought the end 44 00:02:42,600 --> 00:02:46,400 Speaker 2: of the world was coming because of you know, all 45 00:02:46,440 --> 00:02:49,880 Speaker 2: the trade war rhetoric. But if you go back, I 46 00:02:49,880 --> 00:02:52,120 Speaker 2: mean as far back as you want, there's always going 47 00:02:52,160 --> 00:02:54,280 Speaker 2: to be something to worry about. And I would venture 48 00:02:54,280 --> 00:02:56,680 Speaker 2: to say that a lot of our listeners here. You know, 49 00:02:56,880 --> 00:02:59,360 Speaker 2: you've lived through their tech bubble, you lived through the 50 00:02:59,400 --> 00:03:02,320 Speaker 2: financial careis, you live through COVID, you live through the 51 00:03:02,960 --> 00:03:06,079 Speaker 2: European Union about the fall apart, you know in the 52 00:03:06,200 --> 00:03:09,679 Speaker 2: early twenty tens, and you know what happened. You saw 53 00:03:09,760 --> 00:03:13,360 Speaker 2: markets pull back. I mean it's part of the part 54 00:03:13,360 --> 00:03:16,560 Speaker 2: of the process, but you also saw them recover. So 55 00:03:17,120 --> 00:03:20,760 Speaker 2: when you think about it from that perspective, understanding those 56 00:03:20,840 --> 00:03:24,840 Speaker 2: market cycles, understanding you know what's happened in the past, 57 00:03:24,919 --> 00:03:27,360 Speaker 2: not that there's obviously in the guarantee of the future, 58 00:03:28,080 --> 00:03:31,360 Speaker 2: but you know, history does tend to repeat itself, and 59 00:03:31,440 --> 00:03:34,679 Speaker 2: it's really key to stay focused on, you know, the 60 00:03:34,920 --> 00:03:38,960 Speaker 2: big picture, your financial plan, and not trying to time 61 00:03:39,000 --> 00:03:41,400 Speaker 2: the market because when the market sells off it can 62 00:03:41,440 --> 00:03:43,880 Speaker 2: be really scary. But by the time you know, you 63 00:03:43,920 --> 00:03:46,440 Speaker 2: get the all clear, and I'm doing air quotes here. 64 00:03:46,480 --> 00:03:48,480 Speaker 2: You probably can't see that if you're listening on the radio. 65 00:03:48,600 --> 00:03:49,920 Speaker 2: But if you get. 66 00:03:50,960 --> 00:03:56,720 Speaker 3: That yeah, yes, by the time you get the all clear, 67 00:03:57,000 --> 00:04:00,280 Speaker 3: you know, by then the market's already recovered from you 68 00:04:00,320 --> 00:04:01,800 Speaker 3: know where you got out when you started to get 69 00:04:01,800 --> 00:04:02,440 Speaker 3: really early worded. 70 00:04:02,440 --> 00:04:05,480 Speaker 2: Because here's the kicker. News is always best at market 71 00:04:05,520 --> 00:04:08,480 Speaker 2: tops and worse at market bottoms, and that's the exact 72 00:04:08,520 --> 00:04:11,360 Speaker 2: opposite times of you know, when you feel comfort about investing. 73 00:04:12,400 --> 00:04:15,640 Speaker 4: Hey, Andy, speaking of bizarro world, one thing that has 74 00:04:15,680 --> 00:04:18,960 Speaker 4: been very fascinating to me is the sort of sort 75 00:04:19,000 --> 00:04:22,200 Speaker 4: of the at least temporary new world order in terms 76 00:04:22,200 --> 00:04:26,160 Speaker 4: of the stock market, meaning that emerging markets and developing 77 00:04:26,200 --> 00:04:30,120 Speaker 4: foreign markets and developed for markets rather have been outpacing 78 00:04:30,200 --> 00:04:31,880 Speaker 4: the S and P five under the American markets for 79 00:04:31,920 --> 00:04:33,960 Speaker 4: a good while. Now that's still happening. Matter of fact, 80 00:04:33,960 --> 00:04:36,320 Speaker 4: I'm looking at numbers right now. The only safe place 81 00:04:36,360 --> 00:04:39,479 Speaker 4: to be safe again air quotes, as you just taught me, 82 00:04:40,240 --> 00:04:43,479 Speaker 4: is emerging markets, which are that's the about the only 83 00:04:43,520 --> 00:04:46,640 Speaker 4: positive equity market there is right now, at barely positive 84 00:04:46,680 --> 00:04:50,000 Speaker 4: at that International markets are down two percent versus the 85 00:04:50,080 --> 00:04:52,320 Speaker 4: Nasdaq's down ten percent, S and P more like six 86 00:04:52,440 --> 00:04:55,320 Speaker 4: seven percent somewhere that range. So do you think that 87 00:04:55,320 --> 00:04:58,040 Speaker 4: that is does that cause you to think that there 88 00:04:58,080 --> 00:05:01,799 Speaker 4: may be some more permanent shifting among you know, among 89 00:05:01,880 --> 00:05:04,359 Speaker 4: preferences of investors of where to focus, or do you 90 00:05:04,400 --> 00:05:06,239 Speaker 4: think this is more temporary nature? 91 00:05:07,200 --> 00:05:11,440 Speaker 2: Well, I think context matters here, Brian, because the numbers 92 00:05:11,520 --> 00:05:13,440 Speaker 2: are giving are year to date numbers. If you look 93 00:05:13,640 --> 00:05:17,800 Speaker 2: at since this, uh, you know, the conflict in the 94 00:05:17,800 --> 00:05:21,800 Speaker 2: Middle East started, Emerging markets are actually down more than 95 00:05:21,839 --> 00:05:24,520 Speaker 2: what the S and P five hundred is, you know, 96 00:05:25,040 --> 00:05:28,320 Speaker 2: pricing US dollars. You know, they're down about almost thirteen 97 00:05:28,360 --> 00:05:33,320 Speaker 2: percent through Friday's close. So the period that you're looking 98 00:05:33,360 --> 00:05:35,720 Speaker 2: at certainly matters. And when you think about the year 99 00:05:35,720 --> 00:05:39,400 Speaker 2: to date results, Yes, emerging markets are through Friday at 100 00:05:39,480 --> 00:05:43,560 Speaker 2: least up almost three percent. Developed markets were down one 101 00:05:43,760 --> 00:05:46,720 Speaker 2: one and a half percent. Meanwhile, year to date, you know, 102 00:05:46,760 --> 00:05:49,520 Speaker 2: the SMP is down about almost seven percent, while the 103 00:05:49,600 --> 00:05:54,200 Speaker 2: nastac's off ten percent. So clearly year to date international 104 00:05:54,279 --> 00:05:59,960 Speaker 2: has been outperforming US markets. However, during this period of volatility, 105 00:06:00,279 --> 00:06:04,440 Speaker 2: you've seen US hold up a little bit better now 106 00:06:04,480 --> 00:06:07,839 Speaker 2: in terms of like a bigger picture perspective. You know, 107 00:06:08,320 --> 00:06:10,440 Speaker 2: once we get past this, because you know this will 108 00:06:10,440 --> 00:06:13,599 Speaker 2: this too will pass. I mean right now, essentially we're 109 00:06:13,600 --> 00:06:15,440 Speaker 2: in the fog of war, so there's a lot of 110 00:06:15,520 --> 00:06:18,880 Speaker 2: uncertainty out there, but this will pass. We'll refocus on 111 00:06:19,040 --> 00:06:21,960 Speaker 2: fundamentals and the question will be really be, you know, 112 00:06:22,040 --> 00:06:25,080 Speaker 2: where do we see the most economic upside out there? 113 00:06:25,240 --> 00:06:28,520 Speaker 2: And the US growth prospects are generally higher than a 114 00:06:28,560 --> 00:06:32,080 Speaker 2: lot of those developed markets like in Europe and even Japan. 115 00:06:32,440 --> 00:06:34,599 Speaker 2: Emerging markets said, you know, they're going to come with 116 00:06:34,640 --> 00:06:37,280 Speaker 2: a lot more volatility, but they can't also come with 117 00:06:37,360 --> 00:06:39,640 Speaker 2: some you know, potentially better upside. And if you look 118 00:06:39,680 --> 00:06:42,599 Speaker 2: at the past, you know, basically twenty years, you know, 119 00:06:42,640 --> 00:06:45,880 Speaker 2: for all intents and purpose as US stocks have significantly 120 00:06:45,920 --> 00:06:48,800 Speaker 2: outperformed international stocks. There's really no question about that. The 121 00:06:48,880 --> 00:06:51,760 Speaker 2: data is the data. However, that doesn't mean that's what 122 00:06:51,839 --> 00:06:54,520 Speaker 2: will always happen. And that's why it's really critical to 123 00:06:54,560 --> 00:06:58,159 Speaker 2: make sure that investors are diversified, because trying to pick 124 00:06:58,200 --> 00:07:02,000 Speaker 2: the best asset classes for every single regime is going 125 00:07:02,040 --> 00:07:06,279 Speaker 2: to be pretty much an impossible task. Instead having you know, 126 00:07:06,320 --> 00:07:08,919 Speaker 2: exposure to different areas that may do better in some 127 00:07:09,960 --> 00:07:12,800 Speaker 2: in some different economic environments. Is really the way that 128 00:07:13,240 --> 00:07:14,840 Speaker 2: you know, we think you should be thinking about it. 129 00:07:15,760 --> 00:07:18,800 Speaker 1: Andy, speaking of fundamentals, One of my favorite things that 130 00:07:18,880 --> 00:07:22,120 Speaker 1: you and your team do on a regular basis, and 131 00:07:22,200 --> 00:07:25,680 Speaker 1: this is completely separate from all the headline news and 132 00:07:26,080 --> 00:07:28,400 Speaker 1: you know noise that's out there is you guys keep 133 00:07:28,800 --> 00:07:32,240 Speaker 1: something called a recession scorecard where you're looking at umpteam 134 00:07:32,360 --> 00:07:36,160 Speaker 1: different you know, data points on where where the ball 135 00:07:36,240 --> 00:07:40,080 Speaker 1: is moving here, what we can expect expect from the 136 00:07:40,120 --> 00:07:44,120 Speaker 1: fundamental impact of certain events like the Iran war and 137 00:07:44,160 --> 00:07:50,120 Speaker 1: oil prices on the stock market and the greater global economy. 138 00:07:50,520 --> 00:07:54,880 Speaker 1: As you look at that recession scorecard going into this week, 139 00:07:55,160 --> 00:07:58,120 Speaker 1: what is it telling you? What is our risk of inflation? 140 00:07:58,760 --> 00:08:02,200 Speaker 1: And I'll borrow a term from probably the greatest hockey 141 00:08:02,240 --> 00:08:05,560 Speaker 1: player of all time, Wayne Gretzky, who said, it's not 142 00:08:05,600 --> 00:08:09,080 Speaker 1: really important where the puck is now. It's important to 143 00:08:09,120 --> 00:08:11,680 Speaker 1: see where the puck is going to be moving to 144 00:08:12,200 --> 00:08:14,480 Speaker 1: and get out in front of it. So given that 145 00:08:14,680 --> 00:08:17,520 Speaker 1: as a reference point, where are we at with the 146 00:08:17,560 --> 00:08:20,160 Speaker 1: good old Andy Stout recession scorecard? 147 00:08:20,960 --> 00:08:24,200 Speaker 2: Well, what the recession scorecard does? It looks at leading 148 00:08:24,240 --> 00:08:26,880 Speaker 2: economic indicators, which are data points that move before the 149 00:08:26,880 --> 00:08:30,440 Speaker 2: broad economy does. And when we look at those leading 150 00:08:30,520 --> 00:08:34,720 Speaker 2: economic indicators, it shows i'll call it about a medium 151 00:08:34,800 --> 00:08:37,040 Speaker 2: amount of risk. It's not as if we're on the 152 00:08:37,160 --> 00:08:39,160 Speaker 2: verge of a recession. And when you look at just 153 00:08:39,679 --> 00:08:42,240 Speaker 2: you know, the big picture, you know we still have 154 00:08:42,679 --> 00:08:45,920 Speaker 2: some economic tailwinds that are supporting the economy. There's no 155 00:08:46,000 --> 00:08:48,600 Speaker 2: question about that, like the one big beautiful bill that 156 00:08:48,760 --> 00:08:51,720 Speaker 2: was passed last year where people are receiving larger than 157 00:08:51,720 --> 00:08:54,400 Speaker 2: normal tax refunds and that is helping to offset the 158 00:08:54,480 --> 00:08:57,440 Speaker 2: higher gas prices that people are seeing. And even with 159 00:08:57,600 --> 00:08:59,679 Speaker 2: the higher gas prices, I mean, if you just think 160 00:08:59,720 --> 00:09:01,880 Speaker 2: about what you actually spend, Yes, it might kind of 161 00:09:01,880 --> 00:09:05,240 Speaker 2: stink to see a four dollars a gallon price tag 162 00:09:05,280 --> 00:09:09,720 Speaker 2: when you're pumping gas, but that's a relatively small amount 163 00:09:09,760 --> 00:09:13,720 Speaker 2: in all honesty compared to what you're spending overall. The 164 00:09:13,720 --> 00:09:16,320 Speaker 2: real effect there is going to be on consumer sentiment 165 00:09:16,360 --> 00:09:18,880 Speaker 2: and if there's any sort of changing behavior. So when 166 00:09:18,880 --> 00:09:20,840 Speaker 2: we look at the actual economic data, we look at 167 00:09:20,880 --> 00:09:25,040 Speaker 2: those leading economic indicators, this shows a modest amount of 168 00:09:25,120 --> 00:09:28,520 Speaker 2: risk out there, and you know, we still see economic growth, 169 00:09:29,160 --> 00:09:31,320 Speaker 2: not just in the first quarter, which is obviously about 170 00:09:31,320 --> 00:09:33,760 Speaker 2: to wrap up tomorrow, but also when we look out 171 00:09:33,800 --> 00:09:36,600 Speaker 2: to the second and third quarter. Now, the real risk 172 00:09:36,679 --> 00:09:39,680 Speaker 2: would be if you see oil prices happen to get 173 00:09:39,679 --> 00:09:41,880 Speaker 2: to we'll call it one hundred and thirty dollars a 174 00:09:41,880 --> 00:09:44,360 Speaker 2: barrel and stay there. That's the key. It's not just 175 00:09:44,440 --> 00:09:46,440 Speaker 2: going up there and touching. They would have to stay 176 00:09:46,440 --> 00:09:50,240 Speaker 2: there before you really start to see a material economic impact. 177 00:09:50,400 --> 00:09:52,439 Speaker 2: So right now, yes, it could be a modest drag 178 00:09:52,520 --> 00:09:56,120 Speaker 2: on growth, but we don't see a significant risk of 179 00:09:56,160 --> 00:09:59,320 Speaker 2: a recession over the next couple of quarters, and. 180 00:09:59,559 --> 00:10:01,880 Speaker 4: The unit the States is moving away from it, to 181 00:10:02,240 --> 00:10:05,480 Speaker 4: the shock of no one really away from the so 182 00:10:05,600 --> 00:10:10,440 Speaker 4: called green energy sources, the chief case of which is 183 00:10:10,679 --> 00:10:12,440 Speaker 4: we wrote a believe a billion dollar check to a 184 00:10:12,440 --> 00:10:14,520 Speaker 4: French company to just stop what they were doing and 185 00:10:14,559 --> 00:10:17,240 Speaker 4: break that contract. I'm just wondering, is that Are you 186 00:10:17,360 --> 00:10:20,160 Speaker 4: seeing that yet? Can you spot any movement in oil 187 00:10:20,240 --> 00:10:23,079 Speaker 4: markets because of that? If the largest economy by far 188 00:10:23,160 --> 00:10:24,680 Speaker 4: on the face of the earth is going to be 189 00:10:24,760 --> 00:10:27,480 Speaker 4: focused apparently more on oil than it has been over 190 00:10:27,480 --> 00:10:29,520 Speaker 4: the last couple of decades, can you see that happening yet? 191 00:10:29,559 --> 00:10:30,599 Speaker 1: Any impact. 192 00:10:31,920 --> 00:10:36,640 Speaker 2: Right now? Everything's been relatively Yeah, it hasn't been. It's 193 00:10:36,720 --> 00:10:37,520 Speaker 2: been immterial. 194 00:10:38,440 --> 00:10:38,880 Speaker 1: Right now. 195 00:10:38,920 --> 00:10:42,160 Speaker 2: The green market is I mean, it's something that will 196 00:10:42,200 --> 00:10:46,640 Speaker 2: grow over time regardless of any administration, but right now 197 00:10:46,760 --> 00:10:50,520 Speaker 2: it's so small in the reliance on fossil fuels in general. 198 00:10:50,640 --> 00:10:53,840 Speaker 2: If you just like look at the percentages the amount 199 00:10:53,920 --> 00:10:58,520 Speaker 2: of energy that is derived from fossil fuels, it's a 200 00:10:58,640 --> 00:11:01,960 Speaker 2: significant majority. So any sort of real impact on the 201 00:11:02,000 --> 00:11:06,160 Speaker 2: green side of the world. While can be beneficial in 202 00:11:06,200 --> 00:11:08,839 Speaker 2: certain areas, you know, we're not really seeing it yet, 203 00:11:08,840 --> 00:11:11,120 Speaker 2: and it's not having impact in you know, the oil 204 00:11:11,240 --> 00:11:13,559 Speaker 2: market or anything like that. So right now I'm not 205 00:11:14,400 --> 00:11:18,280 Speaker 2: paying too much attention to it from a broad economic impact, 206 00:11:18,480 --> 00:11:21,920 Speaker 2: and certainly probably kind of what we're what investors are 207 00:11:21,920 --> 00:11:24,320 Speaker 2: getting used to, I'm not used to. But what investors 208 00:11:24,360 --> 00:11:26,600 Speaker 2: are seeing right now, there's a lot of headline noise 209 00:11:26,679 --> 00:11:28,880 Speaker 2: out there, and when it really comes down to is 210 00:11:28,920 --> 00:11:33,439 Speaker 2: boiling that headline noise into actionable items and controlling what 211 00:11:33,480 --> 00:11:36,600 Speaker 2: you can control. Because as much as you may have 212 00:11:36,640 --> 00:11:40,560 Speaker 2: an opinion on one way or another about green energy 213 00:11:40,720 --> 00:11:44,440 Speaker 2: or about the Middle East conflict, that by and large 214 00:11:44,520 --> 00:11:47,319 Speaker 2: is well beyond anyone's control. You know where people can 215 00:11:47,400 --> 00:11:51,480 Speaker 2: really control their own destiny is making sure they have 216 00:11:51,480 --> 00:11:54,800 Speaker 2: a solid financial plan, making sure they're spending not only 217 00:11:55,000 --> 00:11:57,319 Speaker 2: within their means, but you know, you know below their 218 00:11:57,360 --> 00:12:00,480 Speaker 2: means if you will, So, just really making sure you 219 00:12:00,559 --> 00:12:02,400 Speaker 2: control what you control. 220 00:12:03,440 --> 00:12:06,679 Speaker 1: Here's the all Worth advice. Don't let short term headlines 221 00:12:06,800 --> 00:12:13,000 Speaker 1: drive long term decisions. Stay disciplined because volatility is normal 222 00:12:13,320 --> 00:12:17,400 Speaker 1: and patience is still the best strategy to win in 223 00:12:17,440 --> 00:12:21,920 Speaker 1: the long term. Well, some breaking news. Wallmakers on Capitol 224 00:12:22,000 --> 00:12:24,720 Speaker 1: Hill actually sat down and talked about how to keep 225 00:12:24,720 --> 00:12:28,920 Speaker 1: the social security system solving for real. They actually had 226 00:12:28,920 --> 00:12:32,439 Speaker 1: a meeting. It just happened, But did it go anywhere? 227 00:12:32,559 --> 00:12:35,000 Speaker 1: We'll tell you about that next. You're listening to Simply 228 00:12:35,040 --> 00:12:37,960 Speaker 1: Money presented by all Worth Financial on fifty five KRC, 229 00:12:38,480 --> 00:12:43,040 Speaker 1: the talk station. You're listening to Simply Money presented by 230 00:12:43,080 --> 00:12:47,480 Speaker 1: all Worth Financial, pop spon seller along Brian James straight 231 00:12:47,520 --> 00:12:50,440 Speaker 1: ahead of six forty three, from selling your business the 232 00:12:50,520 --> 00:12:54,680 Speaker 1: right way to smart social security timing to whether you're 233 00:12:54,679 --> 00:12:57,880 Speaker 1: a state plan will really hold up for the long haul. 234 00:12:58,280 --> 00:13:04,040 Speaker 1: We're covering some key moves families cannot afford to ignore. Well, 235 00:13:04,120 --> 00:13:07,800 Speaker 1: some shocking news Brian lawmakers actually discuss the fact that 236 00:13:08,040 --> 00:13:11,440 Speaker 1: the Social Security Trust Fund is going to run out 237 00:13:11,440 --> 00:13:13,920 Speaker 1: of money, as you and I have been talking about 238 00:13:14,000 --> 00:13:17,480 Speaker 1: for months and months now in about six years. Can 239 00:13:17,520 --> 00:13:19,640 Speaker 1: you tell we were being a little sarcastic. Did they 240 00:13:19,720 --> 00:13:23,960 Speaker 1: figure out a solution? Of course they didn't, but at 241 00:13:24,040 --> 00:13:27,880 Speaker 1: least we got a couple things to talk about, just 242 00:13:27,960 --> 00:13:32,000 Speaker 1: some other you know, various and a sundry suggestions thrown 243 00:13:32,040 --> 00:13:34,120 Speaker 1: out by different members of Congress. 244 00:13:34,520 --> 00:13:37,040 Speaker 4: Well, it's almost Easter, so it's time to talk about 245 00:13:37,080 --> 00:13:40,240 Speaker 4: when the Social Security Fund is going to become insolvent. 246 00:13:40,400 --> 00:13:40,520 Speaker 1: Right. 247 00:13:40,559 --> 00:13:42,360 Speaker 4: We do this in the first quarter of every year 248 00:13:42,880 --> 00:13:46,280 Speaker 4: or thereabouts, and this year the new number, the new 249 00:13:46,360 --> 00:13:48,840 Speaker 4: year that we're all looking forward to marketing on our calendar, 250 00:13:48,880 --> 00:13:54,640 Speaker 4: is twenty thirty two. That is when the money that 251 00:13:54,640 --> 00:13:56,760 Speaker 4: it comes out of our paychecks and goes directly to 252 00:13:57,800 --> 00:14:02,200 Speaker 4: beneficiaries of so security system will run out. Meaning but 253 00:14:02,240 --> 00:14:03,880 Speaker 4: I want to be really careful about the words we 254 00:14:03,960 --> 00:14:06,800 Speaker 4: use here. This does not mean that Social Security is going. 255 00:14:06,600 --> 00:14:07,240 Speaker 2: To go to zero. 256 00:14:07,400 --> 00:14:10,240 Speaker 4: That is, as I see that on on on X 257 00:14:10,280 --> 00:14:12,319 Speaker 4: all the time and on you know on out in 258 00:14:12,360 --> 00:14:14,439 Speaker 4: the media, that this is the year that we run 259 00:14:14,480 --> 00:14:14,920 Speaker 4: out of money. 260 00:14:14,920 --> 00:14:16,000 Speaker 1: Well, that's not the case. 261 00:14:16,360 --> 00:14:18,840 Speaker 4: There is always going to be money flowing from the 262 00:14:18,880 --> 00:14:21,920 Speaker 4: top of people's pay stubs from their jobs to the 263 00:14:21,960 --> 00:14:26,120 Speaker 4: bottom of people's social Security checks. That's FIKA, and unless 264 00:14:26,160 --> 00:14:28,560 Speaker 4: they eliminate the taxation, there's no way that the that 265 00:14:28,600 --> 00:14:31,680 Speaker 4: sociecurity can go to zero. However, what's what is happening 266 00:14:31,760 --> 00:14:33,720 Speaker 4: is that what the number here is that the fact 267 00:14:33,720 --> 00:14:36,040 Speaker 4: that right now there's a surplus we still bring in 268 00:14:36,120 --> 00:14:38,600 Speaker 4: more than we need to pay out benefits. That's what's 269 00:14:38,640 --> 00:14:41,119 Speaker 4: projected to go away in twenty thirty two, that surplus. 270 00:14:41,400 --> 00:14:44,640 Speaker 4: So if changes aren't made, then the benefits are going 271 00:14:44,680 --> 00:14:46,600 Speaker 4: to have to drop by about a quarter, by about 272 00:14:46,600 --> 00:14:50,600 Speaker 4: twenty five percent, unless we act to actually make some 273 00:14:50,760 --> 00:14:53,400 Speaker 4: changes here. So this is not you know, this isn't 274 00:14:53,440 --> 00:14:55,400 Speaker 4: really new. And I've been doing this for thirty years, 275 00:14:55,440 --> 00:14:57,520 Speaker 4: one of the little and Bob, you've been doing a 276 00:14:57,520 --> 00:14:59,480 Speaker 4: little bit longer than me, and we've been hearing this 277 00:14:59,760 --> 00:15:01,920 Speaker 4: for decades. I remember thinking it was going to happen 278 00:15:01,960 --> 00:15:04,840 Speaker 4: tomorrow when I was a very new advisor in the 279 00:15:04,920 --> 00:15:07,680 Speaker 4: late nineties, and this headline comes up every single year, 280 00:15:07,800 --> 00:15:10,760 Speaker 4: and even those years having come up nearly as quickly 281 00:15:11,400 --> 00:15:13,720 Speaker 4: that it seems to be arranged from about twenty thirty 282 00:15:13,720 --> 00:15:16,080 Speaker 4: six to twenty thirty two that I'm remembering, and it 283 00:15:16,160 --> 00:15:17,640 Speaker 4: just doesn't it's. 284 00:15:17,600 --> 00:15:19,960 Speaker 1: Having heard it for thirty years. I'm just not sweating this. 285 00:15:20,200 --> 00:15:22,200 Speaker 4: I'm glad we're talking about it so people have a 286 00:15:22,280 --> 00:15:24,440 Speaker 4: chance to kind of think through how it will impact 287 00:15:24,440 --> 00:15:26,920 Speaker 4: their plans, and that's certainly something we bake into when 288 00:15:26,920 --> 00:15:29,120 Speaker 4: we're stressed afting financial plan for people. 289 00:15:29,800 --> 00:15:34,080 Speaker 1: Yeah, at least we have some bipartisan agreement that we 290 00:15:34,200 --> 00:15:38,359 Speaker 1: have a problem. So what some lawmakers actually said here recently, 291 00:15:40,400 --> 00:15:44,720 Speaker 1: Senator Jeff Merkley, a Democratic senator from Oregon, said, quote, 292 00:15:44,880 --> 00:15:48,760 Speaker 1: six six years from now, it's almost like tomorrow. And 293 00:15:48,840 --> 00:15:52,040 Speaker 1: he's right, and he's trying to underscore the urgency of 294 00:15:52,120 --> 00:15:55,400 Speaker 1: giving some real adults in the room to tackle the problem, 295 00:15:55,720 --> 00:15:58,840 Speaker 1: which by the way, does provide benefits to about seventy 296 00:15:58,840 --> 00:16:01,880 Speaker 1: five million American you know. On the Republican side of 297 00:16:01,920 --> 00:16:06,680 Speaker 1: the aisle, Wisconsin, Republican Senator Ron Johnson said, quote, we 298 00:16:06,840 --> 00:16:10,000 Speaker 1: have an enormous problem. Stating the obvious, he said, we 299 00:16:10,160 --> 00:16:13,040 Speaker 1: waited too long. We have a big mess on our hands. 300 00:16:13,200 --> 00:16:15,360 Speaker 1: So at least they can all agree that we have 301 00:16:15,440 --> 00:16:18,000 Speaker 1: a problem. You know, now they got to we got 302 00:16:18,040 --> 00:16:20,320 Speaker 1: to get some actual adults in the room to solve 303 00:16:20,360 --> 00:16:24,320 Speaker 1: the problem. And therein lies the rub Brian. A new 304 00:16:24,400 --> 00:16:30,280 Speaker 1: proposal from Bill Cassidy, a Republican from Louisiana, has proposed 305 00:16:30,320 --> 00:16:34,720 Speaker 1: taking one point five trillion dollars over five years and 306 00:16:34,760 --> 00:16:39,000 Speaker 1: sticking it in basically a separate side fund, an investment 307 00:16:39,080 --> 00:16:43,320 Speaker 1: trust fund, separate from the Social Security and Trust Fund, 308 00:16:43,440 --> 00:16:47,360 Speaker 1: and then you know, investing that which would hypothetically get 309 00:16:47,400 --> 00:16:49,600 Speaker 1: them about an eight and a half percent rate of 310 00:16:49,640 --> 00:16:53,400 Speaker 1: return over seventy five years. You know, big questions there. 311 00:16:53,440 --> 00:16:55,000 Speaker 1: Where are you going to get the one point five 312 00:16:55,120 --> 00:16:57,600 Speaker 1: trillion problem? Are is it an important detail? He didn't 313 00:16:57,600 --> 00:16:59,480 Speaker 1: talk about that. Are you going to print it like 314 00:16:59,560 --> 00:17:02,240 Speaker 1: we are, or are you going to cut things elsewhere? 315 00:17:03,480 --> 00:17:05,040 Speaker 1: It's just interesting. 316 00:17:05,280 --> 00:17:08,240 Speaker 4: So, you know, Bob, the one thing that I do 317 00:17:08,280 --> 00:17:11,000 Speaker 4: find fascinating about this particular period of time, the one 318 00:17:11,040 --> 00:17:13,360 Speaker 4: thing that feels different. The very first thing you just said, 319 00:17:13,680 --> 00:17:15,879 Speaker 4: six years from now is like tomorrow. That was the 320 00:17:15,960 --> 00:17:19,720 Speaker 4: quote from Jeff Burkley, the Democratic senator. Any senator who 321 00:17:19,800 --> 00:17:23,560 Speaker 4: is who is elected in the very near future will 322 00:17:23,600 --> 00:17:26,080 Speaker 4: see this within their term. That's the first time we've 323 00:17:26,080 --> 00:17:29,000 Speaker 4: had the situation where people who are making decisions right 324 00:17:29,040 --> 00:17:33,200 Speaker 4: now may actually be in office when the stuff hits. 325 00:17:33,200 --> 00:17:36,280 Speaker 4: The proverbial fan and the closer we get to that, right, So, 326 00:17:36,359 --> 00:17:38,600 Speaker 4: Senators have six year terms, so the very next group 327 00:17:38,600 --> 00:17:40,520 Speaker 4: we elect, they're going to be in office when this 328 00:17:40,560 --> 00:17:42,600 Speaker 4: actually occurs, unless that year changes again. 329 00:17:43,080 --> 00:17:44,520 Speaker 1: Representatives have two year terms. 330 00:17:44,560 --> 00:17:46,600 Speaker 4: A little bit different situation over there, but for the 331 00:17:46,720 --> 00:17:48,840 Speaker 4: very first time we have people who know they will 332 00:17:48,840 --> 00:17:52,359 Speaker 4: be holding the bag for their constituents when the time comes. 333 00:17:53,000 --> 00:17:56,280 Speaker 1: I think that's an excellent point, Brian, because right now 334 00:17:56,920 --> 00:18:00,600 Speaker 1: politicians are just campaigning from the midterm election. They're trying 335 00:18:00,640 --> 00:18:03,760 Speaker 1: to get elected in November, so they'll go on TV 336 00:18:03,920 --> 00:18:06,719 Speaker 1: and talk about anything that they can use the fundraise 337 00:18:06,800 --> 00:18:08,720 Speaker 1: and sound responsible. 338 00:18:08,040 --> 00:18:08,560 Speaker 2: And all that. 339 00:18:08,920 --> 00:18:12,159 Speaker 1: We saw another proposal floated this week by the Committee 340 00:18:12,200 --> 00:18:18,400 Speaker 1: for a Responsible Federal Budget. They suggested, Brian, capping social 341 00:18:18,400 --> 00:18:21,960 Speaker 1: Security benefits at one hundred thousand dollars of income, meaning 342 00:18:22,320 --> 00:18:26,119 Speaker 1: the Social Security benefits that are generated at a cap 343 00:18:26,160 --> 00:18:27,560 Speaker 1: of one hundred thousand dollars. 344 00:18:28,760 --> 00:18:30,119 Speaker 2: I you know. 345 00:18:30,400 --> 00:18:33,600 Speaker 1: The Washington Post said an editorial piece on Tuesday that 346 00:18:33,720 --> 00:18:36,720 Speaker 1: keeping benefits to that level was at least a good 347 00:18:36,800 --> 00:18:40,240 Speaker 1: starting point. I don't know. I mean, the waves cap 348 00:18:40,280 --> 00:18:42,320 Speaker 1: is what one hundred and eighty four thousand right now 349 00:18:42,359 --> 00:18:45,040 Speaker 1: and change. I guess if you limit it to one 350 00:18:45,080 --> 00:18:50,000 Speaker 1: hundred thousand, it spreads, you know, cutting this across the board, 351 00:18:51,800 --> 00:18:54,439 Speaker 1: It'll be interesting to see. I don't know what to 352 00:18:54,480 --> 00:18:55,080 Speaker 1: make of all this. 353 00:18:56,119 --> 00:18:58,520 Speaker 4: The challenge is for anybody to fix it is is 354 00:18:58,560 --> 00:19:01,159 Speaker 4: it has to be a sacrifice. Nobody is going to 355 00:19:01,240 --> 00:19:03,640 Speaker 4: quote unquote when nobody's going to end up with more 356 00:19:03,680 --> 00:19:06,280 Speaker 4: than they had before. However, we fix this, we are 357 00:19:06,280 --> 00:19:13,000 Speaker 4: either sacrificing benefits on future retirees future beneficiaries by reducing them, 358 00:19:13,160 --> 00:19:15,600 Speaker 4: or we are increasing taxes on current workers. There is 359 00:19:15,600 --> 00:19:17,360 Speaker 4: a million ways that can be done. Matter of fact, 360 00:19:17,359 --> 00:19:20,199 Speaker 4: the Social Security Administration itself has about one hundred and 361 00:19:20,240 --> 00:19:23,600 Speaker 4: forty different scenarios on their own website that could possibly 362 00:19:23,600 --> 00:19:26,440 Speaker 4: address insolvency. But rest assured, each and every one of 363 00:19:26,480 --> 00:19:29,199 Speaker 4: those one hundred and forty different options is either lowering 364 00:19:29,240 --> 00:19:32,200 Speaker 4: benefits in the future or raising taxes now. Lots of 365 00:19:32,240 --> 00:19:34,040 Speaker 4: ways we can change the timing, We can change all 366 00:19:34,119 --> 00:19:36,760 Speaker 4: kinds of things, but lots to think about. 367 00:19:37,560 --> 00:19:40,600 Speaker 1: Yeah, and to no one's surprised that hearing that occurred 368 00:19:40,680 --> 00:19:44,720 Speaker 1: last Wednesday did not end with any new proposal or 369 00:19:44,760 --> 00:19:48,080 Speaker 1: any action plan put into place. Here's the all Worth advice, 370 00:19:48,200 --> 00:19:52,240 Speaker 1: do not count on Washington alone to solve social security. 371 00:19:52,400 --> 00:19:56,720 Speaker 1: Build a retirement plan that works with or without it, 372 00:19:56,840 --> 00:20:00,520 Speaker 1: or with some kind of cuts involved. If someone in 373 00:20:00,560 --> 00:20:04,359 Speaker 1: your family needed care tomorrow, would you step in? And 374 00:20:04,440 --> 00:20:08,560 Speaker 1: more importantly, what would it cost your career, your retirement 375 00:20:08,800 --> 00:20:12,119 Speaker 1: and your financial plan. We're breaking down the real price 376 00:20:12,240 --> 00:20:16,000 Speaker 1: of caregiving. Next, you're listening to Simply Money, presented by 377 00:20:16,000 --> 00:20:21,480 Speaker 1: all Worth Financial on fifty five KRCV talk station. You're 378 00:20:21,520 --> 00:20:21,960 Speaker 1: listening to. 379 00:20:21,960 --> 00:20:24,840 Speaker 5: Simply Money, presented by all Worth Financial Law bomp's fun 380 00:20:24,920 --> 00:20:29,320 Speaker 5: seller along with Brian James, breaking news in the world 381 00:20:29,359 --> 00:20:32,960 Speaker 5: of personal finance, and this one hits a lot closer 382 00:20:33,000 --> 00:20:36,760 Speaker 5: to home for many many people out there, Even more 383 00:20:36,840 --> 00:20:39,320 Speaker 5: so than near term market volatility. 384 00:20:39,760 --> 00:20:44,320 Speaker 1: Americans are now providing more than one trillion, that's trillion 385 00:20:44,359 --> 00:20:48,240 Speaker 1: with a tea worth of unpaid caregiving every single year. 386 00:20:48,720 --> 00:20:50,960 Speaker 1: Let that sink in for a minute. Not a billion, 387 00:20:51,160 --> 00:20:55,600 Speaker 1: a trillion. And this isn't just some abstract economic number. 388 00:20:56,000 --> 00:20:59,800 Speaker 1: This is for you, your spouse, your siblings, stepping in 389 00:21:00,160 --> 00:21:05,720 Speaker 1: to take care of aging parents, loved ones, neighbors, whomever. Bryant, 390 00:21:05,800 --> 00:21:08,879 Speaker 1: this is hitting close to home for several of my 391 00:21:09,080 --> 00:21:12,200 Speaker 1: clients right now and some other people very close to me. 392 00:21:12,560 --> 00:21:15,359 Speaker 1: It's a very real issue that is just going to 393 00:21:15,400 --> 00:21:18,639 Speaker 1: become more and more of an issue as this baby 394 00:21:18,640 --> 00:21:22,520 Speaker 1: boom generation and people even older than that are are 395 00:21:22,680 --> 00:21:25,600 Speaker 1: moving into their latter years of life. It's it's a 396 00:21:25,720 --> 00:21:30,480 Speaker 1: significant thing that impacts multiple generations of folks. Let's get 397 00:21:30,520 --> 00:21:34,040 Speaker 1: into that, because this is something we really are covering 398 00:21:34,119 --> 00:21:36,680 Speaker 1: more and more with clients when they come in to 399 00:21:36,760 --> 00:21:37,560 Speaker 1: talk to us. 400 00:21:37,920 --> 00:21:40,359 Speaker 4: Yeah, Bob, and this is something that it doesn't come 401 00:21:40,400 --> 00:21:42,560 Speaker 4: as a huge shock to most people to hear that 402 00:21:42,880 --> 00:21:46,600 Speaker 4: somebody they know, you know, you know, a friend, family member, whoever, 403 00:21:47,240 --> 00:21:50,879 Speaker 4: is taking time off work or if not leaving the 404 00:21:50,920 --> 00:21:54,359 Speaker 4: workplace altogether to go care for their parents or for 405 00:21:54,440 --> 00:21:57,159 Speaker 4: some loved one in their family. That story is fairly commonplace. 406 00:21:57,200 --> 00:21:57,480 Speaker 1: I think. 407 00:21:57,520 --> 00:22:00,680 Speaker 4: What's what the headline here is how many people are 408 00:22:00,680 --> 00:22:04,119 Speaker 4: actually doing this, and more importantly, how much that is 409 00:22:04,240 --> 00:22:04,760 Speaker 4: ramping up. 410 00:22:04,800 --> 00:22:06,760 Speaker 1: So let's talk about let's talk actual numbers here that 411 00:22:06,840 --> 00:22:07,480 Speaker 1: kind of matters. 412 00:22:08,080 --> 00:22:10,840 Speaker 4: So a trillion dollars Bob, that's what we're saying. So 413 00:22:10,880 --> 00:22:14,200 Speaker 4: a trillion dollars is the value of the forty nine 414 00:22:14,280 --> 00:22:17,880 Speaker 4: point five billion hours of care that's being spent by 415 00:22:17,880 --> 00:22:21,160 Speaker 4: these caregivers. There's fifty nine million Americans out there. That's 416 00:22:21,320 --> 00:22:24,520 Speaker 4: up from sixty six hundred billion dollars in twenty twenty one, 417 00:22:24,800 --> 00:22:27,720 Speaker 4: So a sixty seven percent increase in just three years 418 00:22:28,520 --> 00:22:31,880 Speaker 4: is and that equals about twenty four million full time workers. 419 00:22:31,880 --> 00:22:34,240 Speaker 1: That's about seventeen percent of the workforce. 420 00:22:34,560 --> 00:22:36,879 Speaker 4: So remember we're talking I just slapped a bunch of 421 00:22:36,920 --> 00:22:39,000 Speaker 4: dollar amounts on that, But what we're talking about is 422 00:22:39,040 --> 00:22:41,960 Speaker 4: dollars that are not flowing into the system, dollars that 423 00:22:42,000 --> 00:22:45,440 Speaker 4: are not creating any economic benefit, because these are people 424 00:22:45,480 --> 00:22:48,040 Speaker 4: who are for the most part, taking time off of work, 425 00:22:48,080 --> 00:22:50,920 Speaker 4: if not, as we said, if not quitting work altogether, 426 00:22:50,960 --> 00:22:54,560 Speaker 4: removing themselves from the workforce for an unpaid job helping 427 00:22:54,560 --> 00:22:57,280 Speaker 4: their loved ones out. And those are dollars, of course, 428 00:22:57,320 --> 00:22:59,479 Speaker 4: that they themselves don't get to spend on their families. 429 00:22:59,520 --> 00:23:03,959 Speaker 4: So those don't re enter the economic circle because they 430 00:23:03,960 --> 00:23:06,160 Speaker 4: didn't exist in the first place. And then also these 431 00:23:06,200 --> 00:23:08,680 Speaker 4: are since there's no income here, there's no income taxation, 432 00:23:09,040 --> 00:23:11,359 Speaker 4: and so that's more dollars being removed from the system. 433 00:23:11,440 --> 00:23:14,760 Speaker 4: So that's why there's this is a bigger, bigger story 434 00:23:14,840 --> 00:23:17,280 Speaker 4: because it you know, ten fifteen years ago was only 435 00:23:17,280 --> 00:23:19,680 Speaker 4: maybe eight or nine percent of the workforce. But now 436 00:23:19,680 --> 00:23:23,000 Speaker 4: that we're hitting what some analysts are calling peak sixty five. 437 00:23:23,520 --> 00:23:26,440 Speaker 4: Peak sixty five is the catchphrase for this is the 438 00:23:26,480 --> 00:23:30,080 Speaker 4: biggest period of Americans turning sixty five that we've ever had, 439 00:23:30,280 --> 00:23:32,080 Speaker 4: and that's going to run through twenty twenty seven. So 440 00:23:32,119 --> 00:23:35,480 Speaker 4: it's going to continue and continue to pull money out 441 00:23:35,480 --> 00:23:37,399 Speaker 4: of the system here, and we're going to see this impact. 442 00:23:37,400 --> 00:23:40,480 Speaker 1: Bob, Yeah, for sure. And I'm going to take a 443 00:23:40,480 --> 00:23:43,320 Speaker 1: little different spin on this. I mean it, any time 444 00:23:43,440 --> 00:23:46,280 Speaker 1: you assign a dollar amount to all this hours of 445 00:23:46,359 --> 00:23:50,080 Speaker 1: caregiving and put this trillion dollar you know figure on it, 446 00:23:50,119 --> 00:23:53,960 Speaker 1: and lost taxation and seventy all the percentage of the workforce, 447 00:23:54,040 --> 00:23:59,240 Speaker 1: all that we're assuming a hourly compensation rate for all 448 00:23:59,280 --> 00:24:02,040 Speaker 1: this care and I'm not discounting that at all. But 449 00:24:02,080 --> 00:24:04,600 Speaker 1: what I think is really happening out there in the 450 00:24:04,640 --> 00:24:08,359 Speaker 1: world is people are continuing to work their jobs. They're 451 00:24:08,400 --> 00:24:11,560 Speaker 1: continuing to put in They're forty fifty hours a week 452 00:24:11,600 --> 00:24:14,120 Speaker 1: to get their job done so they can keep their job, 453 00:24:14,560 --> 00:24:17,919 Speaker 1: but their whole life is getting stretched. What they're really 454 00:24:18,000 --> 00:24:21,439 Speaker 1: doing is putting in sixty seventy eighty hours a week 455 00:24:21,800 --> 00:24:24,760 Speaker 1: and just really burning the candle that both ends here 456 00:24:25,119 --> 00:24:28,160 Speaker 1: to take care of family members. And that's what I'm 457 00:24:28,200 --> 00:24:30,359 Speaker 1: seeing right now, you know, with some of the folks 458 00:24:30,359 --> 00:24:33,359 Speaker 1: that I deal with. So let's talk about the cost 459 00:24:33,440 --> 00:24:36,760 Speaker 1: of not planning and then talk about what we should 460 00:24:36,800 --> 00:24:38,920 Speaker 1: be doing to get out in front of this as 461 00:24:38,960 --> 00:24:43,440 Speaker 1: we factor all this caregiving into a responsible financial plan. 462 00:24:44,119 --> 00:24:46,719 Speaker 4: So in term, dot's put real dollars to this, Right, 463 00:24:46,720 --> 00:24:48,400 Speaker 4: we just talked about a bunch of dollars that kind 464 00:24:48,400 --> 00:24:50,800 Speaker 4: of don't exist because they're not being earned and taxed. Well, 465 00:24:50,840 --> 00:24:53,440 Speaker 4: let's talk about the real, actual dollars that get spent 466 00:24:53,800 --> 00:24:56,320 Speaker 4: when this situation arises for you or your loved ones. 467 00:24:56,480 --> 00:24:59,720 Speaker 4: An in home non medical caregiver, right, so somebody who 468 00:24:59,720 --> 00:25:02,080 Speaker 4: can do laundry, prepare meals, help in and out of 469 00:25:02,160 --> 00:25:04,880 Speaker 4: chairs and beds and so forth. That's about eighty thousand 470 00:25:04,920 --> 00:25:08,000 Speaker 4: dollars per year. If you need a higher level of care, 471 00:25:08,000 --> 00:25:10,320 Speaker 4: then you're moving into a nurse, a semi private nursing home. 472 00:25:10,320 --> 00:25:12,760 Speaker 4: That's about one hundred and fifteen thousand dollars a year 473 00:25:12,920 --> 00:25:15,520 Speaker 4: on average. Those are median numbers. So if you can 474 00:25:15,560 --> 00:25:19,720 Speaker 4: afford that, that's fantastic. But the problem that people miss 475 00:25:19,760 --> 00:25:21,680 Speaker 4: out on is this is this has got much more 476 00:25:21,720 --> 00:25:25,360 Speaker 4: to do with the family dynamic itself, not just the money. 477 00:25:25,400 --> 00:25:28,080 Speaker 4: If the money is there, here's some things that Bob 478 00:25:28,119 --> 00:25:30,320 Speaker 4: and I run into all the time with regard to 479 00:25:30,400 --> 00:25:33,159 Speaker 4: how does it affect affect the relationships. So you know 480 00:25:33,480 --> 00:25:36,080 Speaker 4: a lot of times, for example, one child might step up. 481 00:25:36,640 --> 00:25:38,840 Speaker 4: You know, maybe there's one sibling, adult sibling who lives 482 00:25:38,840 --> 00:25:40,520 Speaker 4: closer to mom and dad, and that person is the 483 00:25:40,560 --> 00:25:43,280 Speaker 4: one who does the work that can down the road 484 00:25:44,000 --> 00:25:46,400 Speaker 4: cause a lot of resentment because that person has sacrificed 485 00:25:46,440 --> 00:25:50,959 Speaker 4: something career growth, income, retirement savings themselves. On average, that 486 00:25:51,040 --> 00:25:54,040 Speaker 4: caregiver spends about seventy two hundred bucks out of pocket 487 00:25:54,040 --> 00:25:57,000 Speaker 4: on just incidental things. You know, something mom and Dad needs, 488 00:25:57,000 --> 00:25:59,000 Speaker 4: I'll just run to the store and grab it and 489 00:25:59,040 --> 00:26:01,199 Speaker 4: we'll worry about paying for later. Well, things get so 490 00:26:01,240 --> 00:26:03,000 Speaker 4: busy when you're trying to maintain a career and all 491 00:26:03,040 --> 00:26:06,320 Speaker 4: those kinds of things. Those expenses often don't get reimbursed. 492 00:26:06,320 --> 00:26:08,560 Speaker 4: So not only is this caregiver giving up time they 493 00:26:08,600 --> 00:26:11,160 Speaker 4: could be earning their own money, they're spending dollars out 494 00:26:11,160 --> 00:26:14,199 Speaker 4: of pocket. Meanwhile, you've got other siblings who may have 495 00:26:14,280 --> 00:26:16,800 Speaker 4: the best interests of everyone at heart, but simply don't 496 00:26:16,840 --> 00:26:18,959 Speaker 4: see the day to day and don't feel it, and 497 00:26:19,000 --> 00:26:22,199 Speaker 4: that can cause repercussions well down the road. Sometimes that 498 00:26:22,240 --> 00:26:25,480 Speaker 4: results in after mom and dad have passed, assets get 499 00:26:25,520 --> 00:26:28,400 Speaker 4: split up differently because somebody somewhere along the way determined 500 00:26:28,440 --> 00:26:31,000 Speaker 4: that sibling A did a lot more heavy lifting for 501 00:26:31,080 --> 00:26:33,480 Speaker 4: mom and Dad than siblings B and C, and then 502 00:26:33,480 --> 00:26:37,040 Speaker 4: that changes how money is distributed when it comes time 503 00:26:37,040 --> 00:26:39,080 Speaker 4: to settle the estate, and if mom and dad weren't 504 00:26:39,080 --> 00:26:42,000 Speaker 4: clear about that, that can cause some problems, you know 505 00:26:42,200 --> 00:26:44,680 Speaker 4: that the holidays, when it's time for everybody to be 506 00:26:44,720 --> 00:26:45,480 Speaker 4: in the same room again. 507 00:26:46,720 --> 00:26:49,160 Speaker 1: Yeah, So, in my opinion, what we should be doing 508 00:26:49,200 --> 00:26:53,480 Speaker 1: about this and virtually nobody does this, but you know, 509 00:26:53,560 --> 00:26:55,359 Speaker 1: and I'm going to try to do it, you know, 510 00:26:55,440 --> 00:26:57,720 Speaker 1: eat my own cooking, so to speak. I think at 511 00:26:57,760 --> 00:26:59,760 Speaker 1: some point you got to sit down with your family 512 00:26:59,840 --> 00:27:03,280 Speaker 1: and say, look, if I went into a nursing home 513 00:27:03,440 --> 00:27:06,960 Speaker 1: me today, sitting down with your wife, kids, grandkids, whatever, 514 00:27:07,520 --> 00:27:10,840 Speaker 1: what would happen, and then be quiet and let them 515 00:27:10,920 --> 00:27:13,560 Speaker 1: talk about it. You know, at least tee that conversation 516 00:27:13,720 --> 00:27:16,640 Speaker 1: up on the table, because when it comes down, as 517 00:27:16,680 --> 00:27:19,760 Speaker 1: you just illustrated, to deal with this stuff in real time, 518 00:27:20,680 --> 00:27:25,600 Speaker 1: people are scurrying around. There's no plan in place. People 519 00:27:25,720 --> 00:27:29,920 Speaker 1: have certain expectations on kids and siblings, and then you 520 00:27:30,080 --> 00:27:33,679 Speaker 1: kind of morph into something over time that works. And 521 00:27:33,720 --> 00:27:36,560 Speaker 1: in the meantime, some feelings can get hurt. There could 522 00:27:36,600 --> 00:27:40,399 Speaker 1: be some economic damage to some family members, and you 523 00:27:40,560 --> 00:27:42,240 Speaker 1: really have to get out in front of this to 524 00:27:42,240 --> 00:27:45,800 Speaker 1: the extent you can and start to have some conversations 525 00:27:45,920 --> 00:27:50,680 Speaker 1: before this situation becomes real life. You know, have to stuff. 526 00:27:50,920 --> 00:27:54,200 Speaker 1: Here's the art Worth advice. If caregiving is not built 527 00:27:54,200 --> 00:27:58,720 Speaker 1: into your financial plan, you're not planning for reality. You're planning, 528 00:27:59,200 --> 00:28:02,880 Speaker 1: you know, by default, for a best case scenario. Does 529 00:28:02,920 --> 00:28:05,680 Speaker 1: it ever make sense to delay social security when you've 530 00:28:05,680 --> 00:28:10,040 Speaker 1: already built significant wealth and our charitor remainder trust actually 531 00:28:10,160 --> 00:28:14,200 Speaker 1: useful or just overly complicated. We'll dive into that next. 532 00:28:14,240 --> 00:28:16,720 Speaker 1: You're listening to Simply Money presented by All Word Financial 533 00:28:16,760 --> 00:28:22,119 Speaker 1: on fifty five krc D talk station you're listening to 534 00:28:22,119 --> 00:28:25,240 Speaker 1: Simply Money, presented by All Word Financial on mompspund seller 535 00:28:25,280 --> 00:28:28,159 Speaker 1: along with Brian James. Do you have a financial question 536 00:28:28,280 --> 00:28:30,720 Speaker 1: you'd like for us to answer. There's a red button 537 00:28:30,760 --> 00:28:33,200 Speaker 1: you could click while you're listening to the show. If 538 00:28:33,520 --> 00:28:37,000 Speaker 1: you're listening on the iHeart app, simply record your question 539 00:28:37,359 --> 00:28:40,440 Speaker 1: and it will come straight to us. All right, Brian, 540 00:28:40,560 --> 00:28:42,920 Speaker 1: Tony in Fort Wright, I know how much you love 541 00:28:42,960 --> 00:28:46,120 Speaker 1: the forts down there in north of Kentucky says we 542 00:28:46,200 --> 00:28:49,720 Speaker 1: have about three million dollars in a taxable investment account 543 00:28:49,720 --> 00:28:54,320 Speaker 1: with large embedded gains. Does direct indexing actually make a 544 00:28:54,480 --> 00:28:56,640 Speaker 1: meaningful difference at our level? 545 00:28:57,360 --> 00:28:59,600 Speaker 4: I do love those forts protecting us from the Mongol 546 00:28:59,600 --> 00:29:02,400 Speaker 4: hordes of Florin's Fort Wright, Fort Thomas, Fort Mitchell. I 547 00:29:02,520 --> 00:29:06,120 Speaker 4: feel safe. So let's talk. Let's answer Tony's question here. 548 00:29:06,200 --> 00:29:08,880 Speaker 4: So yes, in direct indexing. Actually you're kind of in 549 00:29:08,880 --> 00:29:12,200 Speaker 4: the wheelhouse for that. For direct indexing with a three 550 00:29:12,280 --> 00:29:15,360 Speaker 4: million dollar taxable account. Remember we're not talking about IRA's roth, 551 00:29:15,360 --> 00:29:18,240 Speaker 4: IRA's four O one ks. We're talking about a joint account, 552 00:29:18,240 --> 00:29:20,760 Speaker 4: individual account, something that spits out of ten ninety nine 553 00:29:21,560 --> 00:29:22,400 Speaker 4: direct indexing. 554 00:29:22,520 --> 00:29:25,400 Speaker 1: Quick reminder, what that does? Is instead of owning one mutual. 555 00:29:25,120 --> 00:29:27,520 Speaker 4: Fund that might own the all that might own five 556 00:29:27,600 --> 00:29:30,440 Speaker 4: hundred s and p five hundred stocks, you literally own 557 00:29:30,520 --> 00:29:35,000 Speaker 4: those five hundred individual positions inside that account. And reason 558 00:29:35,040 --> 00:29:37,360 Speaker 4: that's beneficials because then you can watch each of those 559 00:29:37,400 --> 00:29:40,720 Speaker 4: five hundred positions go up and down, harvest losses as 560 00:29:40,720 --> 00:29:42,840 Speaker 4: they occur, which are inevitable, you're going to see the 561 00:29:42,840 --> 00:29:45,240 Speaker 4: market move up and down. Of course, every company has 562 00:29:45,320 --> 00:29:47,440 Speaker 4: good days and bad days, so on those bad days, 563 00:29:47,480 --> 00:29:50,480 Speaker 4: actually pull the trigger sell it. You get to stockpile 564 00:29:50,560 --> 00:29:53,560 Speaker 4: that loss, and then it'll filter to your taxes. So 565 00:29:53,760 --> 00:29:56,920 Speaker 4: at this scale of three million dollars, it's not unusual 566 00:29:56,960 --> 00:29:59,160 Speaker 4: to see about a half a percent to one percent 567 00:29:59,280 --> 00:30:02,680 Speaker 4: per year and tax alpha, which is fancy investor talk, 568 00:30:03,360 --> 00:30:07,480 Speaker 4: for fifteen to thirty thousand dollars in tax benefits, meaning 569 00:30:08,080 --> 00:30:11,760 Speaker 4: you are either offsetting capital gains that are realized elsewhere. Right, 570 00:30:11,800 --> 00:30:14,160 Speaker 4: some things go up, maybe you have capital gains elsewhere 571 00:30:14,160 --> 00:30:17,680 Speaker 4: in your life, so you're stockpiling losses to offset against that, 572 00:30:18,200 --> 00:30:20,280 Speaker 4: or if there are more losses than gains, then you 573 00:30:20,280 --> 00:30:22,720 Speaker 4: can deduct up to three thousand dollars right off of 574 00:30:22,720 --> 00:30:25,120 Speaker 4: your income. So for a three million dollar portfolio. That 575 00:30:25,160 --> 00:30:27,920 Speaker 4: average is about fifteen to thirty thousand dollars worth of value, 576 00:30:27,920 --> 00:30:30,760 Speaker 4: So I would say absolutely it's beneficial. Now, Baar, in mind, 577 00:30:30,800 --> 00:30:33,080 Speaker 4: you're always going to have tracking error versus the index. 578 00:30:33,120 --> 00:30:36,040 Speaker 4: Don't assume it's going to match up completely because you 579 00:30:36,040 --> 00:30:38,560 Speaker 4: are making moves that the index will not the index. 580 00:30:38,680 --> 00:30:41,400 Speaker 4: An index fund doesn't care about harvesting losses, but that's 581 00:30:41,440 --> 00:30:43,240 Speaker 4: the whole reason you're doing it, So don't rely on 582 00:30:43,280 --> 00:30:46,000 Speaker 4: it to be precisely. Just like the S and P 583 00:30:46,080 --> 00:30:48,400 Speaker 4: five hundred for example, and I'm using that as an example. 584 00:30:48,440 --> 00:30:49,160 Speaker 1: There's plenty of. 585 00:30:49,160 --> 00:30:52,400 Speaker 4: Indicies out there you can track with this, so yes, absolutely, Tony, 586 00:30:52,440 --> 00:30:55,720 Speaker 4: look into it, learn more about it. Roger in Glendale, 587 00:30:55,800 --> 00:30:58,280 Speaker 4: Roger says, should I be setting up a trust before 588 00:30:58,360 --> 00:30:59,600 Speaker 4: a business sale. 589 00:30:59,480 --> 00:31:01,640 Speaker 1: Or is it too late once we're already in talks 590 00:31:01,640 --> 00:31:04,760 Speaker 1: to sell. What do you think, Bob Well, Brian, It 591 00:31:04,800 --> 00:31:07,120 Speaker 1: depends on what stage you really are here when you 592 00:31:07,160 --> 00:31:10,160 Speaker 1: talk about in talks, and it also depends on what 593 00:31:10,200 --> 00:31:13,400 Speaker 1: you're trying to accomplish with a trust. So my first 594 00:31:13,440 --> 00:31:18,000 Speaker 1: advice is make sure you're working with a really competent 595 00:31:18,080 --> 00:31:22,560 Speaker 1: CPA and attorney, not just any attorney, an attorney that 596 00:31:22,640 --> 00:31:28,240 Speaker 1: actually specializes in estate planning and estate planning around business sales, 597 00:31:28,320 --> 00:31:32,480 Speaker 1: because there are a lot of nuances here in how 598 00:31:32,560 --> 00:31:34,840 Speaker 1: you do things and why you do them and the 599 00:31:34,920 --> 00:31:37,959 Speaker 1: rules you have to follow. So me, you can always 600 00:31:37,960 --> 00:31:41,040 Speaker 1: avoid probate by putting anything in a trust. You know, 601 00:31:41,600 --> 00:31:43,680 Speaker 1: I'm going to read into your question a little bit. 602 00:31:44,000 --> 00:31:48,000 Speaker 1: You're probably trying to avoid two things, capital gains taxes 603 00:31:48,040 --> 00:31:52,080 Speaker 1: being one, and perhaps getting some valuation discounts for an 604 00:31:52,200 --> 00:31:55,960 Speaker 1: estate planning standpoint, you know, to avoid some federal state taxes. 605 00:31:56,400 --> 00:32:00,600 Speaker 1: So you want to My first in urgent advice here 606 00:32:00,720 --> 00:32:03,640 Speaker 1: is make sure you have a good CPA and attorney 607 00:32:03,720 --> 00:32:06,680 Speaker 1: on your team here in the midst of having these 608 00:32:06,760 --> 00:32:10,160 Speaker 1: quote unquote talks to make sure that you don't build 609 00:32:10,200 --> 00:32:13,840 Speaker 1: some assumptions into your financial plan which might not be 610 00:32:13,920 --> 00:32:18,360 Speaker 1: able to be brought to fruition. Hope that helps. Next 611 00:32:18,440 --> 00:32:23,920 Speaker 1: we've got Paul and Hamilton talking about charitable remainder trust. 612 00:32:24,000 --> 00:32:29,080 Speaker 1: He says, is a CRT charity remainder trust actually practical Brian? 613 00:32:29,640 --> 00:32:34,320 Speaker 1: Or is it mostly just for high ultra high networth families? 614 00:32:34,640 --> 00:32:37,080 Speaker 4: Yeah, this is a great question and actually gets this 615 00:32:37,120 --> 00:32:40,520 Speaker 4: is perfect a duvetail with Roger and Glendale's question because 616 00:32:40,520 --> 00:32:43,080 Speaker 4: you know, CRTs charitable remainder trust get talked about like 617 00:32:43,080 --> 00:32:46,480 Speaker 4: they're a silver bullet that everybody should have, but realistically though, 618 00:32:46,520 --> 00:32:50,520 Speaker 4: they're really situational. So you know, if we've got let's 619 00:32:50,560 --> 00:32:52,720 Speaker 4: talk about what this does. So a charitable remainder trust 620 00:32:52,960 --> 00:32:56,360 Speaker 4: will accept a highly appreciated asset. Right, so maybe you've 621 00:32:56,400 --> 00:32:58,240 Speaker 4: got a stock let's call it Proctor and Gamble, you've 622 00:32:58,240 --> 00:33:02,680 Speaker 4: had forever something like that, and you want to diversify that, 623 00:33:02,760 --> 00:33:05,760 Speaker 4: but you have capital gains involved. Well, if you contribute 624 00:33:05,760 --> 00:33:08,920 Speaker 4: that to the trust, the trust itself will sell it 625 00:33:08,960 --> 00:33:12,520 Speaker 4: and does not incur any capital gains tax because it 626 00:33:12,600 --> 00:33:16,720 Speaker 4: is itself considered a charitable asset that gets reinvested and 627 00:33:16,720 --> 00:33:19,080 Speaker 4: then it pays you an income stream for life or 628 00:33:19,120 --> 00:33:21,480 Speaker 4: a set term. At the end, you will have already 629 00:33:21,560 --> 00:33:24,720 Speaker 4: named some beneficiary. So that's what the word remainder means. 630 00:33:24,920 --> 00:33:28,520 Speaker 4: Charitable remainder trust means, this designated charity X y Z 631 00:33:28,720 --> 00:33:31,320 Speaker 4: charity gets the remainder. In the meantime, I get the 632 00:33:31,360 --> 00:33:33,959 Speaker 4: income stream off of the asset. So the goal of 633 00:33:34,000 --> 00:33:36,800 Speaker 4: this is I have spread out my risk from that 634 00:33:36,840 --> 00:33:39,520 Speaker 4: one stock that one asset, I no longer have to 635 00:33:39,600 --> 00:33:41,440 Speaker 4: ride whatever the stock market wants to do to it. 636 00:33:41,480 --> 00:33:43,400 Speaker 4: But I did not have to pay the capital gains. 637 00:33:43,720 --> 00:33:47,520 Speaker 4: Because I made the donation to Charitable Mainder Trust. I 638 00:33:47,560 --> 00:33:50,080 Speaker 4: am in complete control of the Charita Remainder Trust. It 639 00:33:50,160 --> 00:33:52,880 Speaker 4: is a document that I myself had a lawyer set 640 00:33:52,960 --> 00:33:56,120 Speaker 4: up for me, and I can dictate exactly how that 641 00:33:56,200 --> 00:33:58,280 Speaker 4: is written up and as long as it, of course 642 00:33:58,320 --> 00:34:02,080 Speaker 4: follows the various rules, get a partial charitable deduction right 643 00:34:02,120 --> 00:34:04,280 Speaker 4: on the front end, and then I can take that 644 00:34:04,400 --> 00:34:06,120 Speaker 4: kind of lumpy asset and turn it into a more 645 00:34:06,120 --> 00:34:09,880 Speaker 4: predictable income stream that may be more appropriate for what 646 00:34:09,920 --> 00:34:10,560 Speaker 4: I'm looking for. 647 00:34:10,600 --> 00:34:12,600 Speaker 1: That's the benefit. So this works best. 648 00:34:12,640 --> 00:34:14,680 Speaker 4: This strategy works best when we've got you know, a 649 00:34:14,719 --> 00:34:17,520 Speaker 4: single highly appreciated position, or you know, maybe just a 650 00:34:17,560 --> 00:34:19,520 Speaker 4: handful of them that you do want to get out 651 00:34:19,560 --> 00:34:23,239 Speaker 4: of need for desire for income replacement, of course, and 652 00:34:23,320 --> 00:34:25,239 Speaker 4: also you do have a charitable intent, right. 653 00:34:25,239 --> 00:34:26,239 Speaker 1: These aren't a panacea. 654 00:34:26,600 --> 00:34:28,839 Speaker 4: If you're going to become charitable, there's nothing wrong with that, 655 00:34:29,440 --> 00:34:31,799 Speaker 4: but it's not It doesn't make sense if you are 656 00:34:32,080 --> 00:34:35,120 Speaker 4: not already charitably inclined. It's going to be an additional Again, 657 00:34:35,200 --> 00:34:37,400 Speaker 4: not not that I not to discourage anybody from doing that, 658 00:34:37,680 --> 00:34:40,359 Speaker 4: but there is a there is a charitable intent here 659 00:34:40,400 --> 00:34:42,719 Speaker 4: that really makes this if you're already doing these things, 660 00:34:42,960 --> 00:34:44,920 Speaker 4: that that's what can really make it sing. So be 661 00:34:45,000 --> 00:34:47,080 Speaker 4: sure that you are taking the right steps and that 662 00:34:47,120 --> 00:34:49,000 Speaker 4: it actually does make sense for you to pull the 663 00:34:49,000 --> 00:34:52,040 Speaker 4: trigger on that. Again, benefit of a tax deduction up front, 664 00:34:52,360 --> 00:34:54,879 Speaker 4: spread out the risk and generate an income stream off 665 00:34:54,880 --> 00:34:57,440 Speaker 4: of an asset that may not have had one without 666 00:34:57,520 --> 00:34:59,960 Speaker 4: you having to pay pay any capital gains tax. 667 00:35:01,440 --> 00:35:05,080 Speaker 1: That team in your family could soon be trading stocks 668 00:35:05,120 --> 00:35:08,479 Speaker 1: with zero approval required from you. Is that a head 669 00:35:08,560 --> 00:35:13,800 Speaker 1: start on wealth building or recipe potentially for some costly mistakes. 670 00:35:13,800 --> 00:35:16,359 Speaker 1: We'll talk about that next. You're listening to Simply Money, 671 00:35:16,400 --> 00:35:19,400 Speaker 1: presented by all Worth Financial on fifty five KRC. The 672 00:35:19,800 --> 00:35:24,120 Speaker 1: top station you are listening to Simply Money is up 673 00:35:24,120 --> 00:35:28,399 Speaker 1: by all Worth Financial. I'm hopspon seller along with Brian James. Well, 674 00:35:28,480 --> 00:35:32,400 Speaker 1: we're seeing something pretty interesting right now, and that's teenagers 675 00:35:32,480 --> 00:35:36,960 Speaker 1: not just learning about money, but actually investing it on 676 00:35:37,040 --> 00:35:41,120 Speaker 1: their own and not in some simulated classroom environment. We're 677 00:35:41,160 --> 00:35:45,960 Speaker 1: talking about real accounts, real dollars, real gains and losses. Brian, 678 00:35:46,480 --> 00:35:50,239 Speaker 1: give us an update here on something Charles Schwab just 679 00:35:50,360 --> 00:35:52,560 Speaker 1: rolled out, and I know others are doing this as well. 680 00:35:53,040 --> 00:35:55,840 Speaker 1: Now they've just rolled out something called a teen investor 681 00:35:55,880 --> 00:35:59,319 Speaker 1: account for kids as young as thirteen. And so here's 682 00:35:59,320 --> 00:36:01,640 Speaker 1: the twist here, parent is still on the account. So 683 00:36:01,640 --> 00:36:04,640 Speaker 1: this is actually it's basically a custodial type of an arrangement, 684 00:36:04,680 --> 00:36:08,880 Speaker 1: which isn't new, but the team actually has control. They 685 00:36:08,880 --> 00:36:12,440 Speaker 1: can log in themselves, trade move money around, all while 686 00:36:12,480 --> 00:36:17,759 Speaker 1: being actually authenticated as themselves the teenager, not mom, and 687 00:36:17,840 --> 00:36:19,960 Speaker 1: not using mom and dad's credentials to log into it. 688 00:36:20,000 --> 00:36:22,880 Speaker 1: That's really the big change here, this custodial account arrangement. 689 00:36:23,000 --> 00:36:24,480 Speaker 1: That's not a new thing, that's been around for a 690 00:36:24,560 --> 00:36:25,240 Speaker 1: very long time. 691 00:36:25,880 --> 00:36:29,320 Speaker 4: So a couple forces pushing this financial education is getting 692 00:36:29,360 --> 00:36:32,800 Speaker 4: a lot more mainstream, thankfully, Bob. I can remember thinking 693 00:36:32,840 --> 00:36:35,359 Speaker 4: back to when I was a young advisor. I did 694 00:36:35,400 --> 00:36:37,360 Speaker 4: the stock market game, and I think I did it 695 00:36:37,400 --> 00:36:41,040 Speaker 4: around two thousand and two during the Internet bubble bursting, 696 00:36:41,360 --> 00:36:43,320 Speaker 4: and none of these kids understood why in the world, 697 00:36:43,320 --> 00:36:45,400 Speaker 4: you know, the winner of the stock market game that 698 00:36:45,480 --> 00:36:48,120 Speaker 4: fall simply lost the least because that was one of 699 00:36:48,160 --> 00:36:50,440 Speaker 4: the worst years we've ever had. And these kids all 700 00:36:50,440 --> 00:36:52,160 Speaker 4: walked around and go, what is this idiot telling us 701 00:36:52,200 --> 00:36:55,240 Speaker 4: to do this for? I was never no wonder. 702 00:36:55,360 --> 00:36:57,239 Speaker 1: These kids don't want to put money in a raw 703 00:36:57,280 --> 00:36:59,000 Speaker 1: fire in and they just want to eat out and 704 00:36:59,080 --> 00:37:02,359 Speaker 1: go to concerts to shoot. You know, any idiot could 705 00:37:02,360 --> 00:37:04,960 Speaker 1: figure out pretty quickly if I'm gonna lose half my money, 706 00:37:04,960 --> 00:37:07,120 Speaker 1: and that's a that's a fool's game. Let me go 707 00:37:07,200 --> 00:37:10,640 Speaker 1: have some fun with this money. But exactly that's exactly right. Yeah, 708 00:37:10,680 --> 00:37:11,920 Speaker 1: So that that was the past. 709 00:37:11,920 --> 00:37:14,200 Speaker 4: But now you know, so Schwab did a study and 710 00:37:14,239 --> 00:37:17,120 Speaker 4: they found that about seventy percent of teenagers are interested 711 00:37:17,120 --> 00:37:19,239 Speaker 4: in investing. And I've had three of them in my 712 00:37:19,320 --> 00:37:21,160 Speaker 4: house and every one of them was maybe we they 713 00:37:21,320 --> 00:37:24,520 Speaker 4: overheard me talking about it. But you know, a lot 714 00:37:24,600 --> 00:37:27,040 Speaker 4: a lot of kids are bringing it up more often 715 00:37:27,080 --> 00:37:29,440 Speaker 4: than in the past. Parents are talking about it too. 716 00:37:29,480 --> 00:37:32,680 Speaker 4: You know, we've got really kind of the second generation 717 00:37:32,960 --> 00:37:37,200 Speaker 4: of adults who is learning how to retire with a 718 00:37:37,320 --> 00:37:40,080 Speaker 4: pile of money versus a stream of income. What I'm 719 00:37:40,120 --> 00:37:43,120 Speaker 4: getting at there is we're now two generations into the 720 00:37:43,239 --> 00:37:47,200 Speaker 4: four oh one K versus pension type of retiree, and 721 00:37:47,280 --> 00:37:49,440 Speaker 4: people are wanting to get their own kids started and 722 00:37:49,480 --> 00:37:52,560 Speaker 4: maybe get their own kids information that they hadn't had 723 00:37:52,600 --> 00:37:55,319 Speaker 4: before that they didn't get themselves because of that, that 724 00:37:55,400 --> 00:37:57,520 Speaker 4: whole shift. So, you know, here's where we do need 725 00:37:57,520 --> 00:38:00,000 Speaker 4: to be careful though. You know, just because teen teenagers 726 00:38:00,120 --> 00:38:02,319 Speaker 4: younger people can train doesn't mean they understand the risk. 727 00:38:02,680 --> 00:38:05,480 Speaker 4: They're actually more exposed to than we've ever been in 728 00:38:05,520 --> 00:38:08,200 Speaker 4: the past. You've got TikTok stock tips, you know, people 729 00:38:08,239 --> 00:38:12,200 Speaker 4: with really no reason to follow up, no fiduciary obligation, 730 00:38:12,680 --> 00:38:14,880 Speaker 4: just throwing out things for views and clicks and all 731 00:38:14,880 --> 00:38:17,800 Speaker 4: that crypto get rich schemes. All this stuff is everywhere, 732 00:38:18,400 --> 00:38:20,880 Speaker 4: and fortunately there are some policymakers out there who are 733 00:38:20,920 --> 00:38:23,879 Speaker 4: kind of starting to raise concerns. Charles Schwab is a big, 734 00:38:24,000 --> 00:38:27,400 Speaker 4: huge custodian, so there's no concern that they're gonna run 735 00:38:27,440 --> 00:38:29,360 Speaker 4: away with money or anything like that. But at the 736 00:38:29,440 --> 00:38:31,880 Speaker 4: end of the day, that custodian, that parent still plays 737 00:38:31,880 --> 00:38:34,240 Speaker 4: a very important role of making sure. 738 00:38:34,040 --> 00:38:37,120 Speaker 1: We don't give enough rope to hang ourselves. Yeah, I 739 00:38:37,160 --> 00:38:41,120 Speaker 1: think this is a wonderful thing going on here. Financial 740 00:38:41,280 --> 00:38:44,360 Speaker 1: education and having some real skin in the game, the 741 00:38:44,840 --> 00:38:48,800 Speaker 1: announce and there's nothing more educational than making or losing 742 00:38:48,880 --> 00:38:52,200 Speaker 1: real money. That'll get your attention real quick. I liken 743 00:38:52,280 --> 00:38:54,719 Speaker 1: this to learning how to ride a bike. When you 744 00:38:54,800 --> 00:38:57,719 Speaker 1: take the training wheels off and let the kid ride 745 00:38:57,719 --> 00:39:00,240 Speaker 1: the bike on his or her own, they're gonna fall 746 00:39:00,320 --> 00:39:02,920 Speaker 1: down a little bit. And the key here is, you know, 747 00:39:03,000 --> 00:39:05,839 Speaker 1: are you gonna let them just skin their kneecap or 748 00:39:05,960 --> 00:39:07,920 Speaker 1: arm or you're gonna let them hit their head and 749 00:39:08,000 --> 00:39:12,640 Speaker 1: cause you know, irreparable damage. So you know. The all 750 00:39:12,640 --> 00:39:16,080 Speaker 1: Worth advice here is start your kids or grandkids do it. 751 00:39:16,160 --> 00:39:18,960 Speaker 1: Start them early and investing, but make sure you are 752 00:39:19,080 --> 00:39:23,120 Speaker 1: there present to teach discipline, not just giving them access 753 00:39:23,400 --> 00:39:26,200 Speaker 1: to day trade. Thanks for listening tonight. You've been listening 754 00:39:26,200 --> 00:39:28,720 Speaker 1: to Simply Money, presented by all Worth Financial on fifty 755 00:39:28,719 --> 00:39:30,960 Speaker 1: five KRC, the Talk station