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Speaker 1: I got a lot today. Do you I do got

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Speaker 1: to put up these Halloween decorations? Will it's time to

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Speaker 1: do it? Dude? The rest I do need to know

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Speaker 1: On fifty five KRC the talk station.

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Speaker 2: Tonight, a look at the importance of the S and

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Speaker 2: P five hundred, how smart planning can totally change an outcome,

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Speaker 2: and we answer your questions. You're listening to Simply Money

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Speaker 2: presented by all Worth Financial on Bob Sponseller along with

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Speaker 2: Brian James.

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Speaker 3: We want to.

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Speaker 2: Start with the government shut shutdown that was still going

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Speaker 2: on today day six. I know that as we were

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Speaker 2: getting ready to come on the air tonight, the Senate

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Speaker 2: was actually seated in their chambers beginning at five point

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Speaker 2: thirty to supposedly vote on you know, the latest iteration

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Speaker 2: of this bill and try to get it past. We've

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Speaker 2: got all Worth Chief Investment Officer Andy Stout with us tonight.

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Speaker 2: Andy manages more than thirty billion dollars of investments for

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Speaker 2: are all Worth clients right here in Cincinnati.

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Speaker 3: Andy.

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Speaker 2: The Federal Reserve did not get the September jobs report

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Speaker 2: on Friday because of the shutdown. How significant was that

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Speaker 2: and what do you think is going to happen here tonight.

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Speaker 2: If anything with the Senate vote, Well.

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Speaker 4: When you look at the Federal Reserve and not getting

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Speaker 4: the data that they really need to get in order

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Speaker 4: to understand how the economy is working, you know, it

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Speaker 4: is a big deal, especially with the Josh Report, that's

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Speaker 4: probably the single most important.

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Speaker 5: Monthly report that the Federal Reserve gets.

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Speaker 4: I know they look at inflation as well, not discounting

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Speaker 4: that whatsoever, but given the fragility of the labor market

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Speaker 4: right now, it certainly is not one data point that

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Speaker 4: the Fed wants to be missed. Essentially, you know, the

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Speaker 4: flying blind heading into their next meeting coming up here.

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Speaker 4: So we'll see how this all takes out. But there

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Speaker 4: is definitely a lot of uncertainty on top of the

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Speaker 4: normal uncertainty that we get with the Federal.

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Speaker 3: All right, I'm seeing this morning when I was, you know,

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Speaker 3: scanning the news and what have you.

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Speaker 2: I think there's the markets pricing in what something like

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Speaker 2: a ninety six percent probability of a quarter point rate

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Speaker 2: cut here at the October meeting. If we get no

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Speaker 2: jobs report data between now and the next Fed meeting,

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Speaker 2: does that mean that they.

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Speaker 3: Put this thing on hold?

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Speaker 2: Because as we all, as they all like to say

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Speaker 2: all the time, they are quote unquote data dependent. If

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Speaker 2: they don't get any data in the form of a

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Speaker 2: job's report, do they just potentially put things on hold

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Speaker 2: here until this shutdown is over.

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Speaker 5: No, I don't think so. I think you got to

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Speaker 5: shift to what the data looks at.

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Speaker 4: One of the first things to consider is that the

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Speaker 4: Federal Reserve essentially becomes the data themselves. So I know

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Speaker 4: there's a fair amount of Federal Reserve speakers hitting the

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Speaker 4: trail this week.

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Speaker 5: So assuming there is.

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Speaker 4: No resolution, you know, that's what we really need to

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Speaker 4: pay attention to, is what the Fed officials are saying. Essentially,

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Speaker 4: every is going to be parsed determining how confident they

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Speaker 4: are about cutting rates later this month. And if let's

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Speaker 4: just say mint, it's unlikely to shut down last until

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Speaker 4: the Fed's next rate setting meeting, which is on October

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Speaker 4: twenty ninth. But if it does, in that instance, yeah,

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Speaker 4: I think they still cut. I mean just because it

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Speaker 4: adds to even further uncertainty. And if the government stays

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Speaker 4: shut down that long, that essentially adds to the economic

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Speaker 4: weakness that is out there now. To be fair, doesn't

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Speaker 4: impact GDP too much, especially when you consider that once

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Speaker 4: these furloughed workers get back, you know, spending resumes and

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Speaker 4: all the back pay comes it comes back in. But essentially,

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Speaker 4: you know, when you look at it, I mean pretty

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Speaker 4: much some mensa rate cut, it doesn't postpone it.

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Speaker 6: So andy, I'm reminded of probably twenty whatever years ago,

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Speaker 6: when there used to be on CNBC there was a

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Speaker 6: there was always a clip of Alan Greenspan walking across

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Speaker 6: the street to the Fed Reserve meeting, and it was

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Speaker 6: the focus was on how big his briefcase was, because

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Speaker 6: that would impact what he would say. I am picturing

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Speaker 6: Jerome Powell walking across that Stame street with his hands

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Speaker 6: in his pockets and carrying nothing because he's got no

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Speaker 6: information to make this off of. So literally, how does

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Speaker 6: this work If we're not going to look at data,

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Speaker 6: If data is unimportant and there never was important apparently

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Speaker 6: according to some, then are we just going by gut feel?

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Speaker 7: Is this?

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Speaker 6: It seems it occurs to me that it's sort of

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Speaker 6: like baseball, where there was a huge movement to sabermetrics,

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Speaker 6: and now we're going back to the baseball guys who

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Speaker 6: just get a who just kind of wing it with

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Speaker 6: a gut feel.

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Speaker 7: Is that kind of where we are with us?

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Speaker 4: Well, when you think about the Sabermetrics Jerome Palell moneyball

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Speaker 4: sort of comparison and whether or not, you know, we

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Speaker 4: want to say Jerome Powell is Billy Bean or anything

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Speaker 4: as crazy as he as that because I could make

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Speaker 4: the argument, Brian that yeah, Billy Bean and Jerome Palell

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Speaker 4: Billy Bean. Today's world, they're probably not looking at piles

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Speaker 4: and piles of paper.

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Speaker 5: It's on a computer, it's on their smartphone.

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Speaker 4: So let's Brian, let's uh, let's step into the twenty

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Speaker 4: first century just a bit and reset.

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Speaker 5: So all teasing aside.

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Speaker 4: Uh, when you look at the Federal Reserve, when you

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Speaker 4: look at you know what their data they're looking at.

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Speaker 5: We do have some private data coming through, you know.

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Speaker 4: Last week we got the ADP data, which is one

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Speaker 4: of the biggest payroll processing companies.

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Speaker 5: In the world.

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Speaker 4: They told us what they're seeing out there, but there's

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Speaker 4: other data as well from some other private markets. We've

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Speaker 4: got some isms reports last week which give us a

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Speaker 4: gauge of what the manufacturing and service sector looks like.

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Speaker 4: So the Fed's not walking in completely blind and Let's

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Speaker 4: just also be clear.

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Speaker 5: You know they're talking to people.

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Speaker 4: You know, they're gathering anecdotal evidence from various CEOs and

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Speaker 4: business leaders to see what's going on there. They they

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Speaker 4: have their ear to the to main street to know

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Speaker 4: what's going on. It doesn't mean that, you know, that

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Speaker 4: would necessarily move it, but they do know what's going on.

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Speaker 5: But they are flying blind to a degree.

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Speaker 4: So I don't think he's walking over empty pocketed, but

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Speaker 4: I would say I don't say it's half empty or

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Speaker 4: anything like that.

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Speaker 5: But there is a partial data that will help guide

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Speaker 5: the FED.

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Speaker 2: All right, Andy, speaking of not flying blind, I know

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Speaker 2: you and your team, you know, put together this recession

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Speaker 2: scorecard that looks at a multiple of different indicators, and

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Speaker 2: you guys track it all day every day.

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Speaker 3: To be totally.

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Speaker 2: Honest, I trust the data you and your team gather

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Speaker 2: for us every day much more than I trust the

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Speaker 2: Federal Reserve.

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Speaker 3: That being said, with.

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Speaker 2: A potential longer term shut down and the FED flying blind,

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Speaker 2: should long term investors be at all concerned right now

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Speaker 2: with what the recession scorecard is saying and any volatility

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Speaker 2: short term we might get because of any kind of

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Speaker 2: extended shutdown of the government.

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Speaker 4: So the question is, should you know, should clients or

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Speaker 4: should infest, you know, be concerned about, you know, what's

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Speaker 4: going on. I mean, of course people should be paying attention,

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Speaker 4: but you shouldn't be really basing any moves off of

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Speaker 4: what's going on. If you just look back over the past,

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Speaker 4: you know, handful of years, the market, the large cap

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Speaker 4: stocks are up pretty good, and you can make an

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Speaker 4: argument we're due for a downturn if you just want to,

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Speaker 4: you know, look at just normal statistics where you know,

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Speaker 4: ten percent and drop occurs about once a year on average,

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Speaker 4: give or take a little bit. But you know, marcus

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Speaker 4: don't really care too much about calendars. What they really

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Speaker 4: care more about is earnings. They care about what the

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Speaker 4: Fed is doing. They care about, like you were saying,

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Speaker 4: about what the economy is doing. That's why we look

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Speaker 4: at it is like the recession scorrecard. What is that

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Speaker 4: recession risk out there? And right now that recession risk

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Speaker 4: I'll call it medium, not terribly high, but not definitely

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Speaker 4: not non zero, that's for sure.

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Speaker 2: So are we still want a pretty healthy economy when

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Speaker 2: it's all said and done.

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Speaker 4: Well, when you look at where the data has been

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Speaker 4: coming in and again the data just went on a

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Speaker 4: big pause, so you know, take that with a grain

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Speaker 4: of salt. We can look at what like what we

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Speaker 4: call like a GDP tracking estimate and prior to essentially

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Speaker 4: or at least based on all the data water seed,

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Speaker 4: including or excluding things that we should have gotten in

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Speaker 4: the past a few weeks. Data for the third quarter

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Speaker 4: ending September thirtieth suggest that the economy was tracking at

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Speaker 4: a rate of around three point eight percent, which is

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Speaker 4: just mind boggling to think about everything is going on

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Speaker 4: when you look at the headlines, when you hear all

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Speaker 4: this scare tactics from wherever.

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Speaker 5: I mean, they're everywhere.

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Speaker 4: I'm not going to make any sort of the statements

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Speaker 4: one way or another, but they're everywhere.

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Speaker 3: I mean.

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Speaker 4: So we're tracking at a three point eight percent growth

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Speaker 4: right th and third quarter. Yes, the first quarter was negative.

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Speaker 4: Second quarter recovered all of that and then some because

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Speaker 4: we grew up about We grew about three point eight

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Speaker 4: percent from GDP to US economy in that second quarter.

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Speaker 4: So slight negative first quarter, three point eight, second quarter,

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Speaker 4: three point eight tracking so far, third quarter and economists

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Speaker 4: are probably right around to two percent for the fourth quarter.

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Speaker 4: So when you put that all together for the calendar

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Speaker 4: year twenty twenty five, it's decent. It's not bad. It's

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Speaker 4: not you know, screaming, you know, the world is, you know,

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Speaker 4: just gangbusters. It's and it's certainly not screaming that the

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Speaker 4: world is coming to an end. It screams slightly healthier

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Speaker 4: than expected overall economy when you look at what people

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Speaker 4: thought heading into this calendar year.

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Speaker 5: So that's just really shows you that, you know.

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Speaker 4: Patient investors, discipline investors when you don't pay attention to

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Speaker 4: all of the noise that's out there and you really

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Speaker 4: focus on your own goals and where you need to be,

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Speaker 4: where what you're trying to do, you know, that is

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Speaker 4: what really matters.

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Speaker 5: To making sure you avoid any sort of really bad decisions.

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Speaker 6: So Andy, obviously there are there are different parts of

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Speaker 6: the market in the economy that are going to be

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Speaker 6: impacted differently here. So if if you're somebody who's investing

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Speaker 6: on your own and maybe you haven't looked at your

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Speaker 6: portfolio in a while, what specific sectors or maybe regions

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Speaker 6: are most exposed if the shutdown drags on it We

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Speaker 6: think it like defense contractors or small businesses that rely

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Speaker 6: on federal contracts, that kind of thing.

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Speaker 7: What comes to mind for.

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Speaker 5: You, So like for just a worker or from an

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Speaker 5: investor expert.

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Speaker 7: From an investment standpoint.

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Speaker 4: Yeah, so when you look at you can look at

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Speaker 4: at the different sectors that you know, the you know,

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Speaker 4: from a corporate standpoint, I mean, they're all going to.

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Speaker 5: Be hanging in there.

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Speaker 4: It's really just more you're i'll call it your tertiary, uh,

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Speaker 4: you know, fallout. So let's just say you happen to

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Speaker 4: have a bay Oel shop in Washington, d C. You

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Speaker 4: probably not doing too well right now with a lot

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Speaker 4: of the furloughed workers going on. But when you look

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Speaker 4: more bigger picture, when you look at the corporate profits,

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Speaker 4: the corporate earnings from you know, these large caps and

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Speaker 4: even small cap stocks, they are.

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Speaker 5: Handling this just fine.

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Speaker 4: It's more about whether or not there is a prolonged

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Speaker 4: impact from the government's shutdown that affects corporate profits. And

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Speaker 4: history suggests that all we really normally see from shutdowns

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Speaker 4: is a lot of anxiety on on Main Street and

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Speaker 4: a lot of cautiousness in the news media. But when

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Speaker 4: you look at Wall Street, you know it's done all right.

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Speaker 4: You haven't really seen any sort of you know, major

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Speaker 4: negative reactions, and we haven't seen them on this. I mean,

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Speaker 4: we're posting rec highs, you know, very very recently, and

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Speaker 4: that suggests that Wall Street is looking through this and

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Speaker 4: doesn't really see a material impact on the economy.

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Speaker 2: Andy, speaking of earnings, we've got all the bank earnings

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Speaker 2: starting to come out next week, you know in earnest

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Speaker 2: and some hot news here locally, Fifth Third Bank acquiring

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Speaker 2: Comerica Bank this morning to create the ninth largest bank

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Speaker 2: in the United States. Uh, it looks like m and

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Speaker 2: A activity is starting to pick up in the financial space.

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Speaker 2: Is this a precursor for really healthy bank earnings coming

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Speaker 2: out next week?

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Speaker 3: What? What? What does your crystal ball tell you?

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Speaker 4: Well, I don't know if this one acquisition, with kudos

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Speaker 4: to to Fifth Third on that, I don't think this

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Speaker 4: one act is acquisition, is anything where we can say

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Speaker 4: this is a precursor or one thing, you.

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Speaker 5: Know, positive or negative.

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Speaker 4: I mean when you look at just a big picture,

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Speaker 4: I mean, corporate profits have.

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Speaker 5: Been just really good.

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Speaker 4: I mean the past you know, basically the past two years,

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Speaker 4: we've seen either high single digits or double digit earning growth.

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Speaker 4: When I say earnings growth, I'm talking about like year

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Speaker 4: over year earnings growth. So now when we head into

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Speaker 4: this next period coming up, you know, just like you

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Speaker 4: were asking here a second ago, Bob, what Wall Street

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Speaker 4: is expecting right now is about a seven percent year

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Speaker 4: of year growth rate. So comparing Q three earnings tore

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Speaker 4: twenty twenty five to Q three earnings twenty twenty four,

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Speaker 4: we're looking at seven percent. What you usually see, though,

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Speaker 4: in reality, is that the companies beat that by a

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Speaker 4: handful percentage points. So I would not be shocked whatsoever

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Speaker 4: if we once again see double digit earning growth. And

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Speaker 4: that's really what drives markets. And that's why you got

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Speaker 4: to put that political noise aside and focus on earnings

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Speaker 4: and profits, because if you're an investor in the stock market,

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Speaker 4: you're an investor in stocks.

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Speaker 5: And stocks do well when they make more money, and

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Speaker 5: that's what we're seeing.

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Speaker 3: Sounds good to me, all right?

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Speaker 2: Coming up next, Y, investing in the S and P

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Speaker 2: five hundred instead of throwing all your eggs in just

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Speaker 2: the mag magnificent seven will pay down the road, or

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Speaker 2: it should. You're listening to Simply Money, presented by Allworth

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Speaker 2: Financial on fifty five KRC, the talk station.

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Speaker 1: Yes, he's a fifty five k available everywhere with the iHeartRadio.

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Speaker 8: App now number one for podcasting fifty five KRC an

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Speaker 8: iHeartRadio station. Allworth Financial a registered investment advisory firm. Any

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Speaker 8: ideas presented during this program are not intended to provide

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Speaker 8: specific financial advice. You should consult your own financial advisor,

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Speaker 8: tax consultant, or estate planning attorney to conduct your own

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Speaker 8: due diligence.

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Speaker 2: You're listening to simply Money presented by all Worth Financial

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Speaker 2: on Bob Sponseller along with Brian James. Is gold really

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Speaker 2: the safe haven it's made out to be? Should you

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Speaker 2: consider structured notes for protection or answering real questions from

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Speaker 2: investors like you? Straight ahead at six forty three. They

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Speaker 2: have been called the darlings of the stock market for

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Speaker 2: a couple of years now, the so called Magnificent seven Amazon, Alphabet, Navidia, Tesla, Meta, Microsoft,

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Speaker 2: and Apple. But the landscape landscape could be changing, Brian,

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Speaker 2: give us some updated data. I know these Mags seven

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Speaker 2: companies make up thirty six percent now of the S

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Speaker 2: and p's total market capitalization. But the gains dry, the

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Speaker 2: gains that are coming this year are moving around a

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Speaker 2: little bit and that bodes well for the whole concept

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Speaker 2: of diversification.

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Speaker 7: Yeah, that's why we talk about it all the time,

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Speaker 7: isn't it.

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Speaker 4: So.

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Speaker 6: Yeah, The reason this is important is because the S

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Speaker 6: and P five hundred may be a little bit more

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Speaker 6: complicated than lots of people assume.

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Speaker 7: Most people think, Okay, that that's an index. I get it.

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Speaker 6: It's just a group of stocks that we've declared, we've

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Speaker 6: collectively as a society declared as the United States Stock Market. Well,

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Speaker 6: it's not quite that simple because that assumes that all

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Speaker 6: five hundred stocks have an equal weighting within that index,

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Speaker 6: and that's not the case with the S and P

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Speaker 6: five hundred. The thing that crawls across your TV screen

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Speaker 6: at the end of every day is capitalization weighted. What

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Speaker 6: that means is the bigger the company, the more of

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Speaker 6: the index it makes up. So that's what Bob meant

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Speaker 6: when he said that the Magnificent seven, which by the way,

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Speaker 6: that's Amazon, Alphabet which is Google, Nvidia, Tesla Meta which

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Speaker 6: is Facebook, Microsoft, and Apple.

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Speaker 7: That's the magnificent seven stocks.

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Speaker 6: They make up more than a third of the S

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Speaker 6: and P five hundred, even though they are only seven

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Speaker 6: out of those five hundred companies, so that's why it

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Speaker 6: drives the S and P five hundred mostly does what

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Speaker 6: they do, but those seven aren't driving the S and

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Speaker 6: P five hundreds gains the way they did in twenty

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Speaker 6: three and twenty four. In the past, they've been capable

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Speaker 6: of adding about five trillion dollars in market value every

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Speaker 6: year on average, but they've only managed three point one

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Speaker 6: trillion in market cap gains for the first three quarters

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Speaker 6: of twenty twenty five, so not nearly what they have

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Speaker 6: done in the past. That's coming from the Dow Jones organization.

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Speaker 6: That's still a massive presence in the market, but it

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Speaker 6: does suggest that their momentum might be dropping off just

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Speaker 6: a bit.

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Speaker 3: Yeah.

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Speaker 2: In other words, new darlings have emerged this year, and

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Speaker 2: this is how it always works over the longer term.

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Speaker 5: Brian.

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Speaker 2: For example, Broadcom. Most people have heard of Broadcom, but

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Speaker 2: it gets very little, you know, publicity or headlines. But

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Speaker 2: Broadcon this year has in a lot of chip stocks,

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Speaker 2: have muscled its way to become the fourth biggest contributor

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Speaker 2: to the S ANDP in terms of market capitalization this year,

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Speaker 2: and their return has outpaced Meta, Tesla, Amazon, and Apple,

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Speaker 2: and then don't forget about Oracle and Pallanteer Technologies. They've

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Speaker 2: also cracked the top ten companies with the largest market

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Speaker 2: cap gain so far in twenty twenty five, and that's

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Speaker 2: according to dal Jones Market Data.

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Speaker 3: So you know, this works the same way all the time.

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Speaker 2: Over the longer term, people tend to have recency bias,

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Speaker 2: and they pile in and overallocate to things that have

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Speaker 2: done super super well over the last one two or

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Speaker 2: three years, and they get underdiversified, over concentrated, and they

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Speaker 2: forget about these other companies that by the time you've

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Speaker 2: actually heard of them and heard about their gains, you know,

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Speaker 2: the proverbial horse has left the barn and you missed

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Speaker 2: out if you're not fully diversified.

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Speaker 6: Yeah, it used to be that those seven magnificent seven

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Speaker 6: of those magnificent seven stocks where again, like we said,

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Speaker 6: driving the market, and some of them still are. We're

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Speaker 6: not implying that there's no growth here. So Nvidia, Alphabet, Microsoft,

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Speaker 6: and Facebook are up anywhere from twenty to forty percent. However, Amazon, Apple,

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Speaker 6: and Tesla, Now those are three stocks that we haven't

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Speaker 6: thought twice about for decades now because they've been driving

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Speaker 6: the market. But those three are stumbling back behind, and

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Speaker 6: that is opening opportunities for those companies that Bob just mentioned,

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Speaker 6: because we are hitting a point of the cycle where

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Speaker 6: investors are going, hey, these companies are great. However, haven't

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Speaker 6: heard much new or innovative out of Amazon or Apple

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Speaker 6: or Tesla, and they seem to have be coming up

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Speaker 6: with more competition than they used to have. So again,

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Speaker 6: the Oracle is not a newcomer to the overall investment scene.

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Speaker 6: Oracle has been, you know, ever since technology became a

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Speaker 6: thing about thirty years ago.

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Speaker 7: Oracle has been in and out of it.

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Speaker 6: But because they came up with their their three hundred

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Speaker 6: billion dollar cloud computing deal with open ai, that's that's

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Speaker 6: chatch GPT by the way, in that deal committed open

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Speaker 6: AAI to purchase computing power from Oracle for about five

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Speaker 6: years starting in twenty twenty seven. All of a sudden,

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Speaker 6: Oracles is on its I don't know, fifth or sixth

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Speaker 6: wave over the past thirty years of being a darling

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Speaker 6: of the industry. So therefore, these magnificent seven stocks are great,

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Speaker 6: But there could be a different number and a different

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Speaker 6: cutz name for a different group of stocks here coming

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Speaker 6: up soon.

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Speaker 2: Yeah, So whether you're somebody that has had tremendous success

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Speaker 2: owning some of these mags seven individual stocks, or someone

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Speaker 2: with just dry powder on the sidelines wondering what to do,

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Speaker 2: how to get involved in the stock market. Just keep

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Speaker 2: stories and fundamental data like this in mind, because if

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Speaker 2: you just follow the headlines and you follow the talking

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Speaker 2: heads on CNBC or whomever.

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Speaker 3: You're likely to not diversify soon or.

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Speaker 2: Not get into the market soon enough in some of

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Speaker 2: these emerging upcoming winners, because you just pay attention to

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Speaker 2: what's being blabbed about on the news every night, yep.

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Speaker 6: And so therefore it always comes back to let's make

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Speaker 6: sure we know why we're investing in what we own, right.

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Speaker 6: If we're just chasing performance, well that's eventually going to

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Speaker 6: blow up in your face. Understand why you have this

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Speaker 6: particular pile of money, whichever dollars you're using. Why are

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Speaker 6: you heavily invested in these companies if that's what you own?

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Speaker 6: Is it because of your buzz from the headlines you're

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Speaker 6: trying to keep up with. Is it a keeping up

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Speaker 6: with the Joneses kind of thing or fear of missing out?

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Speaker 6: Did you actually look at the fundamentals or are you

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Speaker 6: simply saying, well, this is the ones that have run

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Speaker 6: the most, therefore I'll just continue to own them. But

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Speaker 6: most importantly, just understand what you're trying to accomplish. Is

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Speaker 6: this truly a growth portion of your portfolio or are

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Speaker 6: you simply chasing performance.

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Speaker 2: Here's the all Worth advice. Diversification cannot only protect you

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Speaker 2: from major downturns, it also helps you capture those future winners.

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Speaker 2: Coming up next to families with the same wealth but

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Speaker 2: completely different outcomes, We'll show you how smart planning changes everything.

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Speaker 2: You're listening to Simply Money, presented by all Worth Financial

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Speaker 2: on fifty five KRC the Talk station.

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Speaker 1: What's happening President Trump telling Hamas except peace deal by

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Speaker 1: Sunday or face all hell like no one has ever

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Speaker 1: seen before. Checking in each hour, it's likely going to

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Speaker 1: be in the thousands.

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Speaker 2: The Trump administration has been firing since January twenty.

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Speaker 1: And fifty five KRS The Talk see RC an iHeartRadio station.

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Speaker 2: You're listening to Simply Money, presented by all Worth Financial

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Speaker 2: on Bob Sponseller along with Brian James. Tonight, we want

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Speaker 2: to discuss how two families with the same wealth can

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Speaker 2: end up with completely different outcomes, you know, years down

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Speaker 2: the road, just based on the planning choices they make.

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Speaker 2: And we'll call this segment two Paths, two outcomes. We're

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Speaker 2: gonna give you some real world examples and you'll see

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Speaker 2: how small decisions today can make as much as a

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Speaker 2: six figure difference or more down the road. Brian, let's

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Speaker 2: get into it. Example number one, how you use your

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Speaker 2: rm ds, require require minimum distributions and whether people do

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Speaker 2: wroth conversions or don't even discuss it, you know, to

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Speaker 2: say nothing of planning and planning accordingly and proactively.

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Speaker 6: So let's put some names on these fake people, right,

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Speaker 6: So Bob and Mary, they're both seventy two years old.

442
00:21:33,400 --> 00:21:36,199
Speaker 7: These are fake people, of course, but these are situations.

443
00:21:35,640 --> 00:21:37,320
Speaker 6: We deal with every day at all Worth when we're

444
00:21:37,320 --> 00:21:39,480
Speaker 6: putting flames from plans together for people, because everybody's got

445
00:21:39,520 --> 00:21:42,840
Speaker 6: decisions to make. So Bob and Mary seventy two years old,

446
00:21:42,880 --> 00:21:45,720
Speaker 6: they're retired a couple million dollars across their traditional pre

447
00:21:45,840 --> 00:21:46,760
Speaker 6: tax iras.

448
00:21:46,880 --> 00:21:48,240
Speaker 7: This is a very common situation.

449
00:21:48,880 --> 00:21:50,320
Speaker 6: So there's two things they can do if they do

450
00:21:50,400 --> 00:21:52,359
Speaker 6: nothing and just let life happen to them and let

451
00:21:52,400 --> 00:21:55,320
Speaker 6: the irs happen to them, then they're gonna hit shortly

452
00:21:55,359 --> 00:21:57,320
Speaker 6: in the next few years, they'll they'll hit their required

453
00:21:57,359 --> 00:22:00,440
Speaker 6: minimum distribution age, which basically means the IRS says, hey,

454
00:22:00,480 --> 00:22:02,000
Speaker 6: the gravy train has come to a halt.

455
00:22:02,320 --> 00:22:04,200
Speaker 7: No more tax deferred growth.

456
00:22:04,200 --> 00:22:05,960
Speaker 6: It's time to start paying a little bit of taxes

457
00:22:05,960 --> 00:22:09,639
Speaker 6: on these distributions. So these required minimum distributions, and if

458
00:22:09,880 --> 00:22:12,880
Speaker 6: you want a ballpark number, take roughly four to five

459
00:22:12,920 --> 00:22:16,159
Speaker 6: percent of your of whatever your closing balance of your

460
00:22:16,200 --> 00:22:19,240
Speaker 6: IROA was the prior year. That is roughly what you

461
00:22:19,320 --> 00:22:21,679
Speaker 6: have to take out. That's not your taxation. That's what

462
00:22:21,720 --> 00:22:23,960
Speaker 6: you have to take out that therefore will be taxed.

463
00:22:24,320 --> 00:22:27,399
Speaker 6: So these required minimum distributions can and will push you

464
00:22:27,400 --> 00:22:30,800
Speaker 6: into higher tax brackets which can also trigger bigger Medicare

465
00:22:30,880 --> 00:22:34,520
Speaker 6: premium via something called IERMAMAA for those of you are

466
00:22:34,560 --> 00:22:37,640
Speaker 6: keeping score out there, and so you're probably gonna wind

467
00:22:37,680 --> 00:22:39,680
Speaker 6: up giving away more in taxes than you expected.

468
00:22:39,680 --> 00:22:40,720
Speaker 7: That's the default plan.

469
00:22:40,920 --> 00:22:44,000
Speaker 6: So that's Bob and Mary not not having any kind

470
00:22:44,000 --> 00:22:46,960
Speaker 6: of plan in place. Now, let's take another couple, let's

471
00:22:46,960 --> 00:22:49,640
Speaker 6: call them Mob and Berry. If they do a little

472
00:22:49,680 --> 00:22:52,199
Speaker 6: bit of planning, same situation. Let's pretend that they had

473
00:22:52,240 --> 00:22:54,879
Speaker 6: started some ROTH conversions back in their mid sixties, just

474
00:22:54,920 --> 00:22:57,760
Speaker 6: a few years ago, maybe just fifty thousand dollars a year,

475
00:22:58,000 --> 00:23:00,040
Speaker 6: steadily moving money from a pre tax.

476
00:22:59,840 --> 00:23:00,880
Speaker 7: Eye to a ROTH.

477
00:23:01,119 --> 00:23:03,560
Speaker 6: Now depending on their tax bracket, you know, so they

478
00:23:03,600 --> 00:23:05,480
Speaker 6: might let's pretend they're only maybe in a twenty five

479
00:23:05,520 --> 00:23:08,159
Speaker 6: percent tax bracket. Well, then they're going to pay you know,

480
00:23:08,560 --> 00:23:12,520
Speaker 6: say twenty percent federal and five percent state, and their

481
00:23:12,520 --> 00:23:14,840
Speaker 6: writing checks voluntarily to that. So that's going to be

482
00:23:14,880 --> 00:23:17,959
Speaker 6: something like twelve thousand dollars per year. That's the sacrifice

483
00:23:18,000 --> 00:23:20,640
Speaker 6: they're making. However, by the time they hit urmd AH,

484
00:23:20,920 --> 00:23:23,840
Speaker 6: those requirement of distributions are much smaller, and they can

485
00:23:23,880 --> 00:23:27,520
Speaker 6: also use qualified charitable distributions to replace any giving that

486
00:23:27,560 --> 00:23:30,240
Speaker 6: they're doing, which makes it a lot more tax efficient

487
00:23:30,560 --> 00:23:32,760
Speaker 6: and more of their money winds up in tax free accounts.

488
00:23:32,800 --> 00:23:35,640
Speaker 6: On the ROS side, the longest of long term benefits

489
00:23:35,640 --> 00:23:37,880
Speaker 6: there too, is that their kids are going to inherit

490
00:23:38,119 --> 00:23:39,360
Speaker 6: those dollars whatever's left.

491
00:23:39,160 --> 00:23:41,280
Speaker 7: In those ROTH iras tax free.

492
00:23:41,400 --> 00:23:44,520
Speaker 6: And while they have those inherited iras, they've got ten

493
00:23:44,600 --> 00:23:47,520
Speaker 6: years to continue to let that tax free growth go.

494
00:23:48,320 --> 00:23:50,840
Speaker 6: After the death of mom and death, So definitely something

495
00:23:50,880 --> 00:23:52,640
Speaker 6: to consider there, all right.

496
00:23:52,720 --> 00:23:57,320
Speaker 2: Example number two, we want to highlight tonight concentrated stock positions.

497
00:23:57,359 --> 00:24:02,200
Speaker 2: So our next hypothetical person, Steve. Steve worked for a

498
00:24:02,240 --> 00:24:05,560
Speaker 2: big tech company and over the years his company stock

499
00:24:05,640 --> 00:24:09,760
Speaker 2: position grew to over eight hundred thousand dollars, almost half

500
00:24:09,960 --> 00:24:14,320
Speaker 2: of his one point eight million dollar total portfolio. Patha

501
00:24:14,400 --> 00:24:17,760
Speaker 2: that Steve could have taken no planning. He just hangs

502
00:24:17,800 --> 00:24:20,399
Speaker 2: on because he doesn't want to pay any capital gains

503
00:24:20,480 --> 00:24:23,480
Speaker 2: taxes and then lo and behold, the stock takes a

504
00:24:23,520 --> 00:24:26,800
Speaker 2: forty percent hit, either in a market downturn or in

505
00:24:26,840 --> 00:24:31,560
Speaker 2: a downward earning surprise. Overnight his retirement nest Eggs shrinks

506
00:24:31,880 --> 00:24:33,879
Speaker 2: by hundreds of thousands of dollars.

507
00:24:34,080 --> 00:24:36,600
Speaker 6: Yeah, and not having a plan is a plan. You're

508
00:24:36,640 --> 00:24:39,160
Speaker 6: just probably not gonna like it, all right.

509
00:24:39,480 --> 00:24:42,199
Speaker 3: With planning, Steve takes a different route.

510
00:24:42,400 --> 00:24:45,760
Speaker 2: He uses a strategy like charitable giving donor advice fund,

511
00:24:45,880 --> 00:24:49,040
Speaker 2: you know, chairit of remainder trust, just giving away, slicing

512
00:24:49,080 --> 00:24:53,000
Speaker 2: off some appreciated stock every year, to say nothing of

513
00:24:53,119 --> 00:24:57,680
Speaker 2: using a collarede strategy or a direct indexing strategy, something

514
00:24:57,720 --> 00:25:00,760
Speaker 2: where he has a plan to responsible. We maybe pay

515
00:25:00,800 --> 00:25:03,639
Speaker 2: a little bit of capital gains taxes along with some

516
00:25:03,760 --> 00:25:09,000
Speaker 2: charitable strategies and just slowly diversify that position, reduce his

517
00:25:09,119 --> 00:25:14,480
Speaker 2: downside risk, get his portfolio better diversified, and by doing

518
00:25:14,560 --> 00:25:17,760
Speaker 2: so he has the same starting point, but instead of

519
00:25:17,840 --> 00:25:21,199
Speaker 2: watching things crash and take his potential future with it,

520
00:25:21,520 --> 00:25:23,720
Speaker 2: he's diversified and protected.

521
00:25:24,080 --> 00:25:25,360
Speaker 3: All right, Brian walk.

522
00:25:25,200 --> 00:25:28,560
Speaker 2: Us through example number three, the estate plan that's out

523
00:25:28,600 --> 00:25:29,000
Speaker 2: of date.

524
00:25:29,240 --> 00:25:31,240
Speaker 6: Right, and this is very common because the state plans

525
00:25:31,280 --> 00:25:33,439
Speaker 6: are no fun to talk about. They seem scary and

526
00:25:33,480 --> 00:25:35,840
Speaker 6: they force us to talk about things that maybe we

527
00:25:35,880 --> 00:25:37,200
Speaker 6: don't necessarily want to.

528
00:25:38,080 --> 00:25:41,160
Speaker 7: And so let's still use the example of John and Susan.

529
00:25:41,200 --> 00:25:42,879
Speaker 6: So they've got about two and a half million dollars

530
00:25:42,880 --> 00:25:44,639
Speaker 6: and they haven't looked at their state plan since two

531
00:25:44,680 --> 00:25:46,439
Speaker 6: thousand and eight, back when the market crashed, and that

532
00:25:46,480 --> 00:25:49,440
Speaker 6: got everybody's attention. So what happens how do we get

533
00:25:49,440 --> 00:25:52,280
Speaker 6: surprised here? Well, if John passes away suddenly and Susan

534
00:25:52,320 --> 00:25:56,240
Speaker 6: has to sort throughout these outdated wills and old beneficiary designations,

535
00:25:56,600 --> 00:25:58,199
Speaker 6: the kids are going to wind up having to go

536
00:25:58,280 --> 00:26:00,920
Speaker 6: through probate, paying legal fees for that and fighting over

537
00:26:01,040 --> 00:26:03,919
Speaker 6: unclear instructions so probate is the easiest thing in the

538
00:26:03,960 --> 00:26:06,320
Speaker 6: world to avoid. Just make sure everything that can have

539
00:26:06,400 --> 00:26:09,880
Speaker 6: a best beneficiary listed on it does, and financial accounts

540
00:26:09,920 --> 00:26:11,639
Speaker 6: are the easiest things to do. You're gonna sign one

541
00:26:11,680 --> 00:26:13,359
Speaker 6: piece of paper that says, here's my three kids, and

542
00:26:13,400 --> 00:26:15,760
Speaker 6: they get a third of it each, and that's the

543
00:26:15,840 --> 00:26:17,600
Speaker 6: end of it. That you have wiped out probate for

544
00:26:17,640 --> 00:26:21,040
Speaker 6: that specific account. So but anyway, so this causes a

545
00:26:21,040 --> 00:26:23,639
Speaker 6: lot of stress and costs and delays, all because nobody

546
00:26:23,640 --> 00:26:25,479
Speaker 6: took a look at this stuff. So let's look at

547
00:26:25,480 --> 00:26:28,720
Speaker 6: the the alternative with a little bit of planning. You know,

548
00:26:28,800 --> 00:26:30,640
Speaker 6: this is the same couple, but let's pretend that they

549
00:26:30,640 --> 00:26:32,639
Speaker 6: did sit down once every couple of years or so

550
00:26:32,760 --> 00:26:35,840
Speaker 6: and just make sure that nothing has really changed. Their wills,

551
00:26:35,920 --> 00:26:38,840
Speaker 6: trust beneficiary designations are all lined up in place. I've

552
00:26:38,880 --> 00:26:41,080
Speaker 6: got an email in my inbox today from somebody who

553
00:26:41,080 --> 00:26:44,920
Speaker 6: had a heart attack figuratively speaking over the weekend, wondering

554
00:26:45,000 --> 00:26:45,760
Speaker 6: this exact thing.

555
00:26:45,880 --> 00:26:46,760
Speaker 7: Is everything in order?

556
00:26:46,800 --> 00:26:48,680
Speaker 6: And it is and I haven't responded yet, but that's

557
00:26:48,680 --> 00:26:51,560
Speaker 6: what they're going to hear, that they've got things in place.

558
00:26:51,600 --> 00:26:53,399
Speaker 6: But I'm glad that the thought is occurring. To them

559
00:26:53,440 --> 00:26:56,000
Speaker 6: to double check. So then when we do have that

560
00:26:56,119 --> 00:26:59,000
Speaker 6: death in the family, it's a very sad situation for

561
00:26:59,040 --> 00:27:01,480
Speaker 6: the family, of course, but the transition goes smoothly. So

562
00:27:01,520 --> 00:27:04,639
Speaker 6: the difference between the two no probate, no fighting, and

563
00:27:04,720 --> 00:27:07,040
Speaker 6: no guessing. It was all laid out in advance. The

564
00:27:07,040 --> 00:27:09,800
Speaker 6: family stays intact and the money transfers efficiently.

565
00:27:10,480 --> 00:27:10,840
Speaker 3: All Right.

566
00:27:10,880 --> 00:27:13,080
Speaker 2: The last example we want to touch on tonight, the

567
00:27:13,240 --> 00:27:17,520
Speaker 2: too much cash on the sideline scenario. Let's talk about Linda.

568
00:27:17,600 --> 00:27:20,240
Speaker 2: She and her husband have about two million dollars save,

569
00:27:20,640 --> 00:27:24,240
Speaker 2: but nearly four hundred thousand dollars of it is parked

570
00:27:24,320 --> 00:27:27,040
Speaker 2: in cash, earning next to nothing in the way of

571
00:27:27,119 --> 00:27:27,680
Speaker 2: interest or.

572
00:27:27,640 --> 00:27:29,640
Speaker 7: Return, no planning at all.

573
00:27:29,760 --> 00:27:31,760
Speaker 3: They feel safe keeping into the bank.

574
00:27:32,200 --> 00:27:35,119
Speaker 2: But over the next ten years inflation let's say average

575
00:27:35,160 --> 00:27:38,639
Speaker 2: is three percent on average every year, believe it or not,

576
00:27:38,680 --> 00:27:42,640
Speaker 2: that four hundred thousand dollars in cash loses about one

577
00:27:42,720 --> 00:27:47,200
Speaker 2: hundred thousand dollars or twenty five percent of its purchasing power.

578
00:27:47,400 --> 00:27:48,600
Speaker 3: Again, these people.

579
00:27:48,359 --> 00:27:52,439
Speaker 2: Feel great, but they're actually moving backwards in terms of

580
00:27:52,440 --> 00:27:56,560
Speaker 2: what their heart earned assets can purchase. With planning and said,

581
00:27:57,200 --> 00:28:00,679
Speaker 2: Linda and her husband keep an emergency cash reserve, you know,

582
00:28:00,760 --> 00:28:04,160
Speaker 2: in cash where it belongs, but the rest is allocated

583
00:28:04,440 --> 00:28:07,720
Speaker 2: into a diversified portfolio, maybe just a mix of short

584
00:28:07,800 --> 00:28:10,560
Speaker 2: term bonds for stability and a little bit of stock

585
00:28:10,840 --> 00:28:14,560
Speaker 2: for growth. Ten years later, instead of losing ground to inflation,

586
00:28:15,040 --> 00:28:19,200
Speaker 2: that money has grown meaningfully and it's funding and keeping

587
00:28:19,280 --> 00:28:23,000
Speaker 2: up with their lifestyle needs. Here's the all Worth advice.

588
00:28:23,040 --> 00:28:26,760
Speaker 2: The difference between no planning and smart planning is often

589
00:28:26,880 --> 00:28:30,760
Speaker 2: six figures or more in terms of taxes, stress, or

590
00:28:30,880 --> 00:28:35,840
Speaker 2: lost opportunities. If you recognize yourself in any of these examples,

591
00:28:36,240 --> 00:28:39,360
Speaker 2: that's a sign to maybe get proactive and perhaps sit

592
00:28:39,440 --> 00:28:42,640
Speaker 2: down with a good fiduciary advisor who can help you.

593
00:28:43,520 --> 00:28:47,640
Speaker 2: All Right, buzzwords like gold and direct indexing sounds smart,

594
00:28:47,960 --> 00:28:51,400
Speaker 2: but are they. We're answering your questions. Coming up next.

595
00:28:51,400 --> 00:28:54,080
Speaker 2: You're listening to Simply Money, presented by all Worth Financial

596
00:28:54,120 --> 00:28:57,040
Speaker 2: on fifty five KRC the talk station.

597
00:28:57,800 --> 00:29:01,160
Speaker 1: A series of events. The most important events make for

598
00:29:01,480 --> 00:29:03,800
Speaker 1: eventful days happening every day.

599
00:29:03,960 --> 00:29:05,680
Speaker 7: The political violence in this country.

600
00:29:05,800 --> 00:29:07,680
Speaker 1: You're seeing more and more events like this.

601
00:29:07,680 --> 00:29:11,120
Speaker 6: This is a Trump shut day, refusers, She's fired in

602
00:29:11,240 --> 00:29:13,480
Speaker 6: these eventful times.

603
00:29:13,120 --> 00:29:16,680
Speaker 2: Very serious times, all the time, it's time for action

604
00:29:16,960 --> 00:29:17,960
Speaker 2: in any event.

605
00:29:18,120 --> 00:29:19,840
Speaker 1: We're following these events.

606
00:29:19,440 --> 00:29:21,560
Speaker 3: On and off the field on the streets of our city.

607
00:29:21,720 --> 00:29:24,320
Speaker 1: Check in, we'll check it out, checking into it fifty

608
00:29:24,320 --> 00:29:27,960
Speaker 1: five krs the talk station. More than a few of

609
00:29:28,000 --> 00:29:29,920
Speaker 1: our patients are welcome to here.

610
00:29:30,040 --> 00:29:32,440
Speaker 7: I do think he is too old to run in

611
00:29:32,480 --> 00:29:33,360
Speaker 7: twenty twenty.

612
00:29:33,080 --> 00:29:36,040
Speaker 1: Four fifty five krs the talk station.

613
00:29:40,760 --> 00:29:42,880
Speaker 2: You're listening to Simply Money present up by all Worth

614
00:29:42,920 --> 00:29:46,240
Speaker 2: Financial on Bob Sponseller along with Brian James. Do you

615
00:29:46,240 --> 00:29:48,440
Speaker 2: have a financial question you'd like for us to answer.

616
00:29:48,520 --> 00:29:50,520
Speaker 2: There is a red button you can click while you're

617
00:29:50,560 --> 00:29:53,560
Speaker 2: listening to the show right on the iHeart app. Simply

618
00:29:53,600 --> 00:29:56,480
Speaker 2: record your question and it will come straight to us.

619
00:29:56,880 --> 00:29:59,719
Speaker 2: All right, Jeff and fort Wright leads us off tonight

620
00:30:00,120 --> 00:30:04,120
Speaker 2: in Jeff says, we've harvested some tax losses last year,

621
00:30:04,160 --> 00:30:07,160
Speaker 2: but I'm not sure we did it right. How do

622
00:30:07,200 --> 00:30:11,040
Speaker 2: you make tax loss harvesting actually work without just churning

623
00:30:11,080 --> 00:30:11,880
Speaker 2: your investments?

624
00:30:12,040 --> 00:30:12,360
Speaker 5: All right?

625
00:30:12,400 --> 00:30:14,280
Speaker 7: So this is a great question, it really is.

626
00:30:14,280 --> 00:30:16,800
Speaker 6: And it's great to hear people being proactive and just

627
00:30:16,920 --> 00:30:20,120
Speaker 6: using the tax code as it's designed. Good on you, Jeff.

628
00:30:20,280 --> 00:30:22,640
Speaker 6: All right, So for the uninitiated. Let's talk about what

629
00:30:22,680 --> 00:30:25,520
Speaker 6: this is. So tax loss harvesting one oh one. Obviously,

630
00:30:25,560 --> 00:30:27,560
Speaker 6: when we buy something and it goes up, most people

631
00:30:27,640 --> 00:30:31,080
Speaker 6: know that if this is outside of a tax advantaged account,

632
00:30:31,400 --> 00:30:33,920
Speaker 6: then we're gonna pick capital gains taxes on it. Well,

633
00:30:33,920 --> 00:30:36,360
Speaker 6: the opposite is true too. You get to take deductions

634
00:30:36,360 --> 00:30:38,040
Speaker 6: if you take a loss. And again this is money

635
00:30:38,040 --> 00:30:40,000
Speaker 6: outside of an IRA or WROTH or four oh one

636
00:30:40,080 --> 00:30:42,160
Speaker 6: K or whatever. When an investment is down, you can

637
00:30:42,200 --> 00:30:45,360
Speaker 6: sell it to actually incur the loss and use that

638
00:30:45,400 --> 00:30:48,400
Speaker 6: to offset capital gains elsewhere, or up to three thousand

639
00:30:48,440 --> 00:30:51,040
Speaker 6: dollars can just be straight up deducted off your ordinary income.

640
00:30:51,360 --> 00:30:55,040
Speaker 6: That's what Jeff is talking about with tax loss harvesting here,

641
00:30:55,480 --> 00:30:56,920
Speaker 6: and so what.

642
00:30:56,880 --> 00:30:57,480
Speaker 7: We're talking about.

643
00:30:57,560 --> 00:30:59,480
Speaker 6: One thing you got to avoid here is though something

644
00:30:59,480 --> 00:31:02,560
Speaker 6: called the walk sale trap. You can't simply sell it

645
00:31:02,560 --> 00:31:04,120
Speaker 6: because a lot of people just heard, Hey, I just

646
00:31:04,160 --> 00:31:05,960
Speaker 6: bought something and it's down. I'll sell it and buy

647
00:31:05,960 --> 00:31:08,200
Speaker 6: it right back within ten minutes and then everything will

648
00:31:08,200 --> 00:31:08,640
Speaker 6: be wonderful.

649
00:31:08,760 --> 00:31:09,320
Speaker 7: Can't do that.

650
00:31:09,480 --> 00:31:11,440
Speaker 6: You've got to stay out of a security with for

651
00:31:11,480 --> 00:31:14,880
Speaker 6: thirty days. And this is across accounts in technically your

652
00:31:14,880 --> 00:31:16,960
Speaker 6: household too, if you're filing jointly and so forth. So,

653
00:31:17,360 --> 00:31:19,959
Speaker 6: but again let's get specific to Jeff's question here, churning

654
00:31:20,040 --> 00:31:22,640
Speaker 6: is not the goal here. Tax loss harvesting is going

655
00:31:22,680 --> 00:31:25,600
Speaker 6: to be most efficient as a strategic, infrequent move, not

656
00:31:25,760 --> 00:31:28,120
Speaker 6: constantly jumping in and out of things, which can create

657
00:31:28,240 --> 00:31:31,680
Speaker 6: higher transaction costs, mess up your overall asset allocation, make

658
00:31:31,720 --> 00:31:33,520
Speaker 6: it really hard to keep track of your record. So

659
00:31:33,800 --> 00:31:37,200
Speaker 6: be thinking long term tax efficiency. Don't don't eat or

660
00:31:37,240 --> 00:31:39,720
Speaker 6: don't incur every last tiny little loss and stack them

661
00:31:39,720 --> 00:31:41,160
Speaker 6: all up. That's going to consume a lot of time

662
00:31:41,200 --> 00:31:44,520
Speaker 6: and energy and probably dollars too. Look at your larger

663
00:31:44,560 --> 00:31:48,160
Speaker 6: positions and you might even confirm you might even combine

664
00:31:48,160 --> 00:31:51,160
Speaker 6: this with roth conversions if you've got significant losses you

665
00:31:51,200 --> 00:31:51,560
Speaker 6: can take.

666
00:31:51,800 --> 00:31:52,240
Speaker 7: That's great.

667
00:31:52,280 --> 00:31:54,200
Speaker 6: Look at your calculate your tax savings that you're going

668
00:31:54,280 --> 00:31:57,160
Speaker 6: to generate and then use those to offset some some

669
00:31:57,200 --> 00:32:00,000
Speaker 6: significant roth conversions. Now you're kind of putting your tax

670
00:32:00,080 --> 00:32:03,480
Speaker 6: planning on steroids, So hope that helps you. Jeff's little

671
00:32:04,080 --> 00:32:07,240
Speaker 6: nitrous oxide there for your financial planning and tax planning needs.

672
00:32:07,640 --> 00:32:09,800
Speaker 6: All right, Mark and Lovelin says they've got about two

673
00:32:09,840 --> 00:32:12,160
Speaker 6: million dollars invested, but he's started to worry about inflation

674
00:32:12,280 --> 00:32:16,400
Speaker 6: eating away at his returns. He's apparently aware of Treasury

675
00:32:16,440 --> 00:32:19,840
Speaker 6: inflation protected securities, so he's asking, and beyond those tips,

676
00:32:20,480 --> 00:32:22,520
Speaker 6: what strategies actually hedge against inflation?

677
00:32:22,600 --> 00:32:26,560
Speaker 2: Bob well Mark, I have to assume you know from

678
00:32:26,640 --> 00:32:29,760
Speaker 2: your question that you're a fairly conservative investor, and there

679
00:32:29,840 --> 00:32:32,200
Speaker 2: is nothing wrong with that as long as all your

680
00:32:32,320 --> 00:32:36,160
Speaker 2: long term financial goals are being met, and so I

681
00:32:36,200 --> 00:32:39,640
Speaker 2: think you're smart in at least raising the potential issue

682
00:32:39,680 --> 00:32:41,440
Speaker 2: of inflation eroding your returns.

683
00:32:41,560 --> 00:32:43,080
Speaker 3: So what do we do about that?

684
00:32:43,160 --> 00:32:46,920
Speaker 2: How do we stay relatively conservative but get enough growth

685
00:32:46,920 --> 00:32:50,600
Speaker 2: in the portfolio to outpace inflation. A couple of potential

686
00:32:50,640 --> 00:32:53,360
Speaker 2: strategies to think about and maybe discussed with a good

687
00:32:53,440 --> 00:32:58,360
Speaker 2: fiduciary advisor are structured notes and a buffered strategy buffer

688
00:32:58,440 --> 00:33:01,440
Speaker 2: ETF strategy, And in both of those strategies you can

689
00:33:01,480 --> 00:33:05,160
Speaker 2: get some exposure to the stock market, which is going

690
00:33:05,240 --> 00:33:10,080
Speaker 2: to outpace inflation over the long term, always has, probably

691
00:33:10,120 --> 00:33:13,760
Speaker 2: always will. But with the stock market, as I'm sure

692
00:33:13,800 --> 00:33:18,440
Speaker 2: you're aware, comes from short term potential volatility. So using

693
00:33:18,480 --> 00:33:21,760
Speaker 2: structured notes and buffer at ETFs, we can have some

694
00:33:21,880 --> 00:33:25,760
Speaker 2: protection in place on the front end to protect some

695
00:33:25,920 --> 00:33:28,000
Speaker 2: or even all of the downside risk.

696
00:33:28,560 --> 00:33:31,920
Speaker 3: Along with that protection, some of your upside gets capped.

697
00:33:32,240 --> 00:33:35,320
Speaker 2: But again, you got a good chance of out pacing

698
00:33:35,360 --> 00:33:38,800
Speaker 2: inflation with those strategies. It doesn't sound like you're looking

699
00:33:38,840 --> 00:33:41,760
Speaker 2: for all the upside in the stock market, just enough

700
00:33:42,200 --> 00:33:45,880
Speaker 2: to make sure your overall portfolio keeps pace with inflation

701
00:33:46,000 --> 00:33:49,280
Speaker 2: and protects your purchasing power. So those are two strategies

702
00:33:49,320 --> 00:33:52,040
Speaker 2: that I consider and have somebody walk you through and

703
00:33:52,040 --> 00:33:55,680
Speaker 2: see if it's a good fit for your situation. All right,

704
00:33:56,000 --> 00:34:01,680
Speaker 2: let's go to Tim and Mason and speaking of structured notes,

705
00:34:01,720 --> 00:34:05,720
Speaker 2: Tim says, our advisor just mentioned structured notes with downside buffers.

706
00:34:05,720 --> 00:34:09,560
Speaker 2: How do you evaluate whether they're worth the complexity compared

707
00:34:09,560 --> 00:34:12,359
Speaker 2: to just holding stocks and bonds. Brian, this gives you

708
00:34:12,440 --> 00:34:15,560
Speaker 2: a chance to just shoot take shots at everything.

709
00:34:15,560 --> 00:34:16,200
Speaker 7: I just said.

710
00:34:16,920 --> 00:34:19,480
Speaker 6: Well, it's kind of funny that these questions are kind

711
00:34:19,480 --> 00:34:22,160
Speaker 6: of related. Tim and Mark in Loveland and Mason maybe

712
00:34:22,160 --> 00:34:24,040
Speaker 6: they spend some time over at the monkey bar chatting

713
00:34:24,040 --> 00:34:24,920
Speaker 6: with all this stuff out.

714
00:34:25,000 --> 00:34:28,000
Speaker 7: So anyway, so let's talk about structured notes.

715
00:34:28,040 --> 00:34:31,480
Speaker 6: Structured notes are basically a custom built investment there usually

716
00:34:31,480 --> 00:34:35,200
Speaker 6: issued by big banks, and they'll they'll tie returns to

717
00:34:35,280 --> 00:34:38,800
Speaker 6: somewhat arbitrarily to an index. They come with a downside buffer.

718
00:34:38,800 --> 00:34:41,520
Speaker 6: In other words, they have a floor your investments can

719
00:34:41,560 --> 00:34:43,319
Speaker 6: only go down so far. But that also means there's

720
00:34:43,360 --> 00:34:45,759
Speaker 6: a ceiling too. So you might be offered a note

721
00:34:45,760 --> 00:34:47,960
Speaker 6: that says it'll pay up to twelve percent if the

722
00:34:48,040 --> 00:34:50,720
Speaker 6: S and P arises, but it might protect you against

723
00:34:50,719 --> 00:34:53,640
Speaker 6: the first fifteen percent of losses. If the market drops

724
00:34:54,120 --> 00:34:57,880
Speaker 6: more than that, then then you have kind of a

725
00:34:57,920 --> 00:35:00,440
Speaker 6: buffer there. So the buffer can sound like a say net,

726
00:35:00,440 --> 00:35:03,360
Speaker 6: but you're really trading simplicity and liquidity for that protection.

727
00:35:03,680 --> 00:35:05,520
Speaker 6: This is something you're you generally gonna want to commit

728
00:35:05,600 --> 00:35:07,920
Speaker 6: to for two to five years. If you sell early,

729
00:35:08,000 --> 00:35:10,359
Speaker 6: the pricing might not be, you know, very opaque and

730
00:35:10,400 --> 00:35:13,000
Speaker 6: not in your favor. So complexity means you have less

731
00:35:13,000 --> 00:35:15,560
Speaker 6: control over these. But at the same time, if you

732
00:35:15,560 --> 00:35:18,120
Speaker 6: want to participate in the upside of the market, and

733
00:35:18,360 --> 00:35:20,480
Speaker 6: but you're you're a little spooked by the downside, this

734
00:35:20,560 --> 00:35:22,759
Speaker 6: might be something to consider. At the same time, if

735
00:35:22,760 --> 00:35:25,000
Speaker 6: you are somebody who just doesn't worry about the headlines

736
00:35:25,040 --> 00:35:27,759
Speaker 6: and and you're willing to let things roll and you

737
00:35:27,840 --> 00:35:29,960
Speaker 6: realize that the market has recovered each and every time

738
00:35:29,960 --> 00:35:32,960
Speaker 6: it has it has dropped, including the most recent drops,

739
00:35:32,960 --> 00:35:34,560
Speaker 6: because we are sitting here now at an all time

740
00:35:34,640 --> 00:35:36,840
Speaker 6: high once again, then you might not need these things.

741
00:35:37,160 --> 00:35:39,680
Speaker 6: I think they're good in certain situations, but if you

742
00:35:39,840 --> 00:35:42,239
Speaker 6: believe in the long term veracity of the market, then

743
00:35:42,520 --> 00:35:44,640
Speaker 6: maybe not something to lose too much sleep about. So

744
00:35:44,719 --> 00:35:47,040
Speaker 6: let's move on to one more so, Chris and Montgomery

745
00:35:47,120 --> 00:35:49,279
Speaker 6: says he keeps hearing about gold being used as a

746
00:35:49,320 --> 00:35:51,760
Speaker 6: safe haven. He's wondering if you should have a slice

747
00:35:51,760 --> 00:35:53,520
Speaker 6: of it in his portfolio to offset some of the

748
00:35:53,920 --> 00:35:54,640
Speaker 6: ups and downs.

749
00:35:54,760 --> 00:35:56,440
Speaker 7: And if so, what's the smartest way to do that?

750
00:35:56,480 --> 00:36:00,400
Speaker 2: Bob, Well, Chris, in the short amount of time we

751
00:36:00,480 --> 00:36:02,960
Speaker 2: have to deal with this question, it you know my answer,

752
00:36:03,040 --> 00:36:03,640
Speaker 2: It depends.

753
00:36:03,680 --> 00:36:06,200
Speaker 3: The thing I always ask people when they come and.

754
00:36:06,160 --> 00:36:08,440
Speaker 2: Ask me about gold is why do you want to

755
00:36:08,480 --> 00:36:12,120
Speaker 2: hold it? And depending on what people's answers are. You know,

756
00:36:12,200 --> 00:36:15,759
Speaker 2: some people think we're headed toward armageddon where you know,

757
00:36:15,840 --> 00:36:19,320
Speaker 2: ATM machines won't work, or the Internet goes down or whatever.

758
00:36:19,640 --> 00:36:23,080
Speaker 2: Versus people that just want to hedge against inflation. That's

759
00:36:23,120 --> 00:36:26,160
Speaker 2: going to dictate in what form you own gold, So

760
00:36:27,719 --> 00:36:31,520
Speaker 2: it's a loaded question, very difficult topic. I see nothing

761
00:36:31,600 --> 00:36:34,880
Speaker 2: wrong with holding gold as an inflation hedge. It has

762
00:36:34,920 --> 00:36:38,799
Speaker 2: certainly worked out well this year. Just be clear with

763
00:36:38,880 --> 00:36:41,879
Speaker 2: yourself and hopefully with your advisor if you have one,

764
00:36:41,960 --> 00:36:45,360
Speaker 2: on what the purpose of owning gold is for your

765
00:36:45,600 --> 00:36:50,520
Speaker 2: specific situation. All right, If FED chair Jerome Pale a swiftye,

766
00:36:51,160 --> 00:36:53,759
Speaker 2: he may want to consider it as he factors in

767
00:36:53,960 --> 00:36:56,920
Speaker 2: not getting data that he needs to have to make

768
00:36:57,000 --> 00:36:58,280
Speaker 2: a decision on interest rates.

769
00:36:58,480 --> 00:36:59,399
Speaker 3: We'll explain next.

770
00:36:59,440 --> 00:37:02,200
Speaker 2: You're listening to Simply Money, presented by all Worth Financial

771
00:37:02,480 --> 00:37:05,320
Speaker 2: on fifty five KRC the talk station.

772
00:37:06,120 --> 00:37:10,600
Speaker 1: It's become a big story. Big things are happening. We

773
00:37:10,640 --> 00:37:12,920
Speaker 1: are in a government shutdown, a big fight in Congress.

774
00:37:12,960 --> 00:37:16,000
Speaker 1: It's some might even say huge, huge news.

775
00:37:16,040 --> 00:37:20,120
Speaker 6: And to keep up with government layoffs and continuing negotiation.

776
00:37:19,680 --> 00:37:23,200
Speaker 1: You'll need massive amounts of information. Massive the impact that's

777
00:37:23,239 --> 00:37:26,080
Speaker 1: going to have on every American. It's all funded by

778
00:37:26,480 --> 00:37:30,120
Speaker 1: a healthcare fighter. Again for the latest on every big

779
00:37:30,160 --> 00:37:32,760
Speaker 1: store from very big things. This is no small matter.

780
00:37:32,880 --> 00:37:35,360
Speaker 1: Fifty five krs the talk station.

781
00:37:36,280 --> 00:37:40,120
Speaker 7: This absolutely reliable information and of course not just one

782
00:37:40,200 --> 00:37:40,919
Speaker 7: sided view.

783
00:37:41,080 --> 00:37:43,320
Speaker 2: News that affects you at the top end to bottom

784
00:37:43,320 --> 00:37:45,240
Speaker 2: of the hour fifty five krs.

785
00:37:45,880 --> 00:37:47,040
Speaker 1: The talk station.

786
00:37:52,080 --> 00:37:54,680
Speaker 2: You're listening to simply Money, presented by all Worth Financial

787
00:37:54,680 --> 00:37:58,080
Speaker 2: on Bob Spon Seller along with Brian James. You might

788
00:37:58,120 --> 00:38:00,880
Speaker 2: think the Federal Reserve chair has little to do with

789
00:38:01,040 --> 00:38:02,759
Speaker 2: pop music, but hear us out.

790
00:38:02,840 --> 00:38:05,960
Speaker 3: Taylor Swift just dropped her twelfth.

791
00:38:05,280 --> 00:38:08,799
Speaker 2: Studio album called the Life of a show Girl, and

792
00:38:08,840 --> 00:38:12,320
Speaker 2: Brian I saw she sold a boatload of movie tickets

793
00:38:12,360 --> 00:38:16,040
Speaker 2: over the weekend too. And that's what seems like just

794
00:38:16,080 --> 00:38:20,520
Speaker 2: a headline for music blogs could actually carry signals for

795
00:38:20,560 --> 00:38:23,480
Speaker 2: the US economy. Brian, I say, if we are not

796
00:38:23,680 --> 00:38:27,680
Speaker 2: getting employment data, uh, maybe the Fed just should just

797
00:38:27,840 --> 00:38:32,160
Speaker 2: track the economic impact of Taylor Swift in deciding whether

798
00:38:32,200 --> 00:38:34,439
Speaker 2: to cut interest rates later this month.

799
00:38:34,520 --> 00:38:36,160
Speaker 7: Well, Bob, let's not bury the lead here.

800
00:38:36,200 --> 00:38:37,960
Speaker 6: I think all of our loyal listeners want to know

801
00:38:38,000 --> 00:38:40,439
Speaker 6: exactly what time you got in line for your Life

802
00:38:40,440 --> 00:38:43,520
Speaker 6: of a Showgirl out. Oh, give the people what they want, Bob,

803
00:38:45,520 --> 00:38:47,719
Speaker 6: All right, so we all remember the eras I did not.

804
00:38:47,960 --> 00:38:51,240
Speaker 3: I did not participate, nor will I ever. How about

805
00:38:51,239 --> 00:38:53,200
Speaker 3: that I have I have a deep.

806
00:38:53,000 --> 00:38:56,680
Speaker 2: Respect for her, though she's wonderful entertainer and an even

807
00:38:56,840 --> 00:38:58,040
Speaker 2: better business person.

808
00:38:58,200 --> 00:39:01,239
Speaker 3: So I respect you know, I respect the world out

809
00:39:01,280 --> 00:39:03,200
Speaker 3: of her. Really all choking.

810
00:39:02,920 --> 00:39:05,280
Speaker 6: Aside, I think you have an alter ego that tears

811
00:39:05,360 --> 00:39:06,239
Speaker 6: up when these things happen.

812
00:39:06,280 --> 00:39:08,319
Speaker 7: But anyway, we all remember the Eras tour.

813
00:39:08,360 --> 00:39:10,720
Speaker 6: It was a juggernaut, one hundred and fifty shows across

814
00:39:10,719 --> 00:39:14,520
Speaker 6: five continents, and we spoke about it here in these airways,

815
00:39:14,560 --> 00:39:16,680
Speaker 6: and yes, an immense amount of respect for this woman

816
00:39:16,719 --> 00:39:20,400
Speaker 6: who has created basically almost an industry of a different

817
00:39:20,440 --> 00:39:23,320
Speaker 6: type of concert experience. So analysts estimate that generated about

818
00:39:23,320 --> 00:39:27,200
Speaker 6: five billion dollars in US custom consumer spending hotels, restaurants, flights,

819
00:39:27,719 --> 00:39:31,279
Speaker 6: retail and from people hanging around cities that have the

820
00:39:31,320 --> 00:39:33,680
Speaker 6: concerts and so forth. So if this new one leads

821
00:39:33,719 --> 00:39:35,840
Speaker 6: to another tour like that, that basically makes it a

822
00:39:35,880 --> 00:39:38,040
Speaker 6: stimulus event, which is why we're talking about it on

823
00:39:38,040 --> 00:39:42,840
Speaker 6: a financial radio show here, because it'll mobilize disposable income,

824
00:39:42,880 --> 00:39:45,399
Speaker 6: it gets local economies moving, and this is the kind

825
00:39:45,400 --> 00:39:47,719
Speaker 6: of stuff that does get the attention of something like

826
00:39:47,760 --> 00:39:50,720
Speaker 6: the Federal Reserve because it will move the needle and

827
00:39:50,400 --> 00:39:53,440
Speaker 6: we can use especially when we seem to be lacking

828
00:39:53,520 --> 00:39:57,319
Speaker 6: data from our traditional sources. People's willingness to spend money

829
00:39:57,360 --> 00:40:00,279
Speaker 6: on something that historically has been very popular can an

830
00:40:00,320 --> 00:40:02,839
Speaker 6: indicator in and of itself, so on its own that

831
00:40:03,160 --> 00:40:05,600
Speaker 6: don't look for this. You know, the album's release did

832
00:40:05,600 --> 00:40:07,880
Speaker 6: not move the stock markets. We're not looking for anything

833
00:40:07,920 --> 00:40:10,400
Speaker 6: like that. This would be, you know, a bigger, longer

834
00:40:10,480 --> 00:40:12,439
Speaker 6: term type of a thing to look for here.

835
00:40:12,640 --> 00:40:16,080
Speaker 2: What will what will potentially move the stock market is

836
00:40:16,200 --> 00:40:20,640
Speaker 2: how much Life of a show Girl merchandise you've already purchased, Brian,

837
00:40:20,719 --> 00:40:23,120
Speaker 2: how much how much of it do you own?

838
00:40:23,640 --> 00:40:26,080
Speaker 3: And I see you have a beautiful T shirt on today.

839
00:40:26,920 --> 00:40:28,000
Speaker 3: That's what's going to move the.

840
00:40:27,960 --> 00:40:30,279
Speaker 6: Needle, right, You're making meatier up now. And I had

841
00:40:30,280 --> 00:40:32,399
Speaker 6: to clear out my closet to make room for all

842
00:40:32,440 --> 00:40:34,480
Speaker 6: my new merch and I just can't I can't wait.

843
00:40:34,680 --> 00:40:36,560
Speaker 6: I'll wear it in the office today and I'll do

844
00:40:36,560 --> 00:40:38,239
Speaker 6: a little hatwalk thing down the hallway and you can

845
00:40:38,320 --> 00:40:39,080
Speaker 6: you can critique me.

846
00:40:39,840 --> 00:40:42,439
Speaker 3: Awesome, Thanks for listening. Tune in tomorrow and.

847
00:40:42,360 --> 00:40:46,160
Speaker 2: We'll talk about the four letter word that's draining your retirement.

848
00:40:46,320 --> 00:40:49,280
Speaker 2: And know it's not what you say when you open

849
00:40:49,320 --> 00:40:52,520
Speaker 2: your monthly brokerage statement. You've been listening to Simply Money,

850
00:40:52,600 --> 00:40:55,719
Speaker 2: presented by all Worth Financial on fifty five KRC the

851
00:40:56,120 --> 00:40:56,680
Speaker 2: Talk Station.

852
00:40:57,760 --> 00:41:01,080
Speaker 1: Something is happening. It's time to end held experiment of

853
00:41:01,160 --> 00:41:04,480
Speaker 1: open borders. Your countries are going to hell. Something in

854
00:41:04,520 --> 00:41:08,360
Speaker 1: our country, Charlie Kirk, I forgive him. Antifa across this

855
00:41:08,440 --> 00:41:10,880
Speaker 1: country would be Trump assess and Ryan Ruth guilty on

856
00:41:10,920 --> 00:41:12,960
Speaker 1: all five charges. Something in our world.

857
00:41:13,120 --> 00:41:16,960
Speaker 2: NATO countries should shoot down Russian aircraft sky in all

858
00:41:17,080 --> 00:41:18,600
Speaker 2: day they enter their airspace.

859
00:41:18,680 --> 00:41:20,120
Speaker 1: It's always something.

860
00:41:20,040 --> 00:41:20,480
Speaker 4: Yes, I do.

861
00:41:20,760 --> 00:41:25,360
Speaker 1: It's a very important moment. Fifty five KRC, The Talk Station,