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Speaker 1: Tonight we're going to take a little bit of a

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Speaker 1: deeper dive into the whole topic of diversification, in other words,

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Speaker 1: finding that true balance, and I mean balance between risk

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Speaker 1: and return. You're listening to Simply Money, presented by all

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Speaker 1: Worth Financial on Bob Spondseller along with Brian James. Well,

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Speaker 1: is this you? You think you're diversified. You bought broad

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Speaker 1: index funds maybe decades ago for the low fees and

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Speaker 1: the nice diversification, and it's worked really well. You didn't

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Speaker 1: take debait on cable, you know, business channels trying to

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Speaker 1: pick hotstocks or time the market. So you've done all

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Speaker 1: the right things. But what if we told you, as

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Speaker 1: of today you might be taking on a little more

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Speaker 1: risk than perhaps you bargained for.

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Speaker 2: So what we're thinking about here is a small group

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Speaker 2: of companies, and we've talked about this before, but these

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Speaker 2: are Indian videos, Apple's, Microsoft, Google, those come the world.

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Speaker 2: They've gotten so large they now dominate the entire US

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Speaker 2: stock market. This isn't just the headlines, and it's not

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Speaker 2: just the returns, but it's the actual weight inside the

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Speaker 2: index funds you own. So when you say I own

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Speaker 2: the S and P five hundred which you really own

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Speaker 2: is a portfolio where a handful of stocks are driving

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Speaker 2: an outsized portion of those returns, both directions up and down.

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Speaker 2: Whatever those stocks do, that's what your investments do, and

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Speaker 2: that's what people interpret as the market because that's the

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Speaker 2: ticker that runs across the bottom of a TV screens

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Speaker 2: every day. That's really really different from how diversification is

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Speaker 2: supposed to work.

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Speaker 1: Though, well, and and again again, as Brian said, we've

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Speaker 1: talked about this often on this show. What we're really

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Speaker 1: talking about here is these magnificent seven stocks, big cap

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Speaker 1: tech stocks, which have been dominating the market now for

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Speaker 1: a few years with all the build out, data centers

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Speaker 1: and all that you know that involve this a rush

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Speaker 1: of AI which is now becoming ubiquitous, you know, all

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Speaker 1: over the place. And you know the theme going into

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Speaker 1: twenty six and we hear it all time as hey,

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Speaker 1: all this build out is great, when is it going

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Speaker 1: to monetize itself in the way of future earnings growth

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Speaker 1: or continued earnings growth at the pace that earnings of

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Speaker 1: some of these companies have been growing. And Brian, you

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Speaker 1: and I have lived through this before, you know many times,

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Speaker 1: you know, over the thirty plus years we've been doing this.

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Speaker 1: Volatility can happen quickly, and stocks always go down a

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Speaker 1: lot more and faster than.

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Speaker 3: They go up.

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Speaker 1: And at the first sign of any decline in earnings growth,

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Speaker 1: some of these big tech you know, these big tech

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Speaker 1: names can take a hit. And even as we've started

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Speaker 1: off the year, other sectors of the market have outperformed,

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Speaker 1: you know, just big cap techs, tech and the high

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Speaker 1: cap weighting of the S and P five hundred international stocks.

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Speaker 1: We talked about that yesterday. Small cap stocks, some commodities,

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Speaker 1: gold and silver have just been parabolic here. So I

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Speaker 1: think the theme we're trying to get out here, and

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Speaker 1: thankfully we do this in the portfolios we work with

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Speaker 1: with clients, is you really do need to take a

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Speaker 1: look at what you own, because if you just own

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Speaker 1: five or six S and P five hundred index funds,

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Speaker 1: you might be taking on more volatility than maybe a

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Speaker 1: bargain for if and when that eventual decline or volatility

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Speaker 1: creeps back into the market.

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Speaker 2: Right and we feel pain a lot more intensely than

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Speaker 2: we feel good when the market goes up. So if

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Speaker 2: I take a ten percent loss, I'm going to be

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Speaker 2: a lot angrier about that, then I am going to

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Speaker 2: be happy when I get a ten percent gain. Both

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Speaker 2: of those are going to happen, and within my lifetime,

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Speaker 2: as Bob just mentioned, within the year we had that

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Speaker 2: last April when the market came down almost twenty percent

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Speaker 2: after our initial panic over tariffs. So let's walk through

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Speaker 2: some hypotheticals here, Bob, just and see if people recognize

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Speaker 2: themselves in some of these little vignettes here. So first

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Speaker 2: of all, take the set it and forget it couple.

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Speaker 2: So maybe mid fifties married couple done really well, saved

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Speaker 2: about four million dollars, most of it in four to

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Speaker 2: oh one k's and taxable accounts. That strategy for years

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Speaker 2: has been very simple, low cost index fund, let the

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Speaker 2: market do its thing. On the online they call it

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Speaker 2: voo and chill and which which is a reference to

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Speaker 2: an index based exchange traded fund that you invest in

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Speaker 2: one that.

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Speaker 4: Is that one of these Reddit sayings that yeahs they

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Speaker 4: read it a young so I've never even on Well,

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Speaker 4: if you go on Reddit and you look for personal

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Speaker 4: financial advice, the ninety percent of the responses are just

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Speaker 4: buy one index fund and ignore it for thirty years.

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Speaker 3: And that does work with you when you're in your twenties, thirties,

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Speaker 3: even forties.

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Speaker 2: But that will put you eventually in a position where

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Speaker 2: you have smarter decisions to make. They don't get enough

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Speaker 2: into should you be doing this? And roth should you

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Speaker 2: be doing it? You know that the asset location types

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Speaker 2: of things.

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Speaker 3: But yes, Vo and Chill is a buy one thing.

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Speaker 2: Ignore it and you know, probably be okay maybe, but anyway,

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Speaker 2: so when so let's get back to our fake couple here.

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Speaker 2: When markets go up over a year over the last

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Speaker 2: few years, they felt smart because they followed a discipline approach.

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Speaker 2: They didn't panic when the market wobbled. But here's the issue, though,

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Speaker 2: you know, they feel like they're diversified across these five

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Speaker 2: hundred companies, but that really wasn't the case because of

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Speaker 2: what we were just talking about. The outcome is being

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Speaker 2: driven by just these five or six companies. If those

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Speaker 2: stocks stumble at the same time you're approaching retirement, this

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Speaker 2: is gonna happen to somebody, Bob right, and Nvidia is

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Speaker 2: not the end of all companies of all time. It's

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Speaker 2: not going to be the only company out there, even

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Speaker 2: though they've been sitting pretty until somewhat recently because they've

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Speaker 2: been at the tip of the spear of the latest

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Speaker 2: thing that is driving the market in AI. That's not

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Speaker 2: going to last forever, so somebody is going to own

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Speaker 2: too much of it and then try to retire, and

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Speaker 2: that's going to change their outcome. And I think back

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Speaker 2: to this isn't related to just the tech industry. That's

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Speaker 2: just the most recent place that this has occurred. But

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Speaker 2: I think back to another topic we talk about all

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Speaker 2: the time, which is Procter and Gamble in the early

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Speaker 2: two thousands, when Procter and Gamble hired a guy named

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Speaker 2: Dirk Yager, and the market market insta hated him and

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Speaker 2: took half the stock's value away over the matter of

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Speaker 2: a few months. Obviously, P and G is what it is,

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Speaker 2: and probably don't need to explain that to anybody listening

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Speaker 2: to the show. It's great company, great dividend history, but

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Speaker 2: that doesn't mean it's not subject the whims of the market.

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Speaker 2: Market hated Dirk Yager, took half the value away, and

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Speaker 2: I remember family members saying, I guess I got to

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Speaker 2: work another three, four five years until that can recover.

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Speaker 3: So that does happen. Make sure it's not you, Yeah,

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Speaker 3: and that's.

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Speaker 1: Really what we're trying to avoid here, is you know,

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Speaker 1: the best intentions. Again, a strategy that has worked, it'll

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Speaker 1: still work. We're just saying that, you know, if you

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Speaker 1: have too much of one thing and you don't recognize

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Speaker 1: the cap weighted concentration of these big stocks, things can

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Speaker 1: get volatile. And we don't want to see people have

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Speaker 1: to make lifestyle changes, you know, because they haven't looked

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Speaker 1: under the hood at what's really in their you know,

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Speaker 1: investment portfolio.

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Speaker 3: That's really the point here.

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Speaker 1: Let's talk about hypothetical number two, you know, and we

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Speaker 1: get this sometimes, Brian, Hey, you guys, that's fine. You've

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Speaker 1: mentioned the risk of SP five hundred. But I own

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Speaker 1: total market funds, you know, and there are funds out there,

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Speaker 1: really well run funds that you know, get a little

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Speaker 1: bit of everything. You get the large cap, you get

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Speaker 1: the mid cap, you get the small cap, growth and value,

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Speaker 1: you got it all in there. Total stock market index funds.

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Speaker 1: You can get those for very low cost. The thing

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Speaker 1: we need to remind people of with that is, while

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Speaker 1: that's still a great strategy, all of these total market

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Speaker 1: funds are still heavily weighted to the large cap sector

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Speaker 1: and in the same thing. With most professionally run portfolios,

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Speaker 1: you're gonna be heavily weighted by default to large cap stocks,

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Speaker 1: large cap growth because that's where the long term return

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Speaker 1: comes from, and return with historically less volatility. So again

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Speaker 1: you got to look at cap weightings there as well.

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Speaker 2: Yeah, and the other thing I would say is you

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Speaker 2: may have been very disciplined about looking at your looking

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Speaker 2: at your portfolio and things, but maybe you never had

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Speaker 2: to rebalance. A lot of people notice this in their

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Speaker 2: four to one case. They kind of get away from

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Speaker 2: the idea that, well, it doesn't really change very much,

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Speaker 2: so I never need to rebalance it because my four

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Speaker 2: to one case stays in balance. And that's a true statement.

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Speaker 2: There's a reason for that. You're putting money in every

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Speaker 2: single week, every two weeks, every month, however often you

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Speaker 2: get paid. That cash flow is going in proportionally into

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Speaker 2: whatever you set up those mutual funds to do, whatever

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Speaker 2: investment choices you made in there, So it's going to

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Speaker 2: keep itself fairly balanced. But don't take your eye off

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Speaker 2: the ball. When you've got a big pile of money

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Speaker 2: in there. After retirement, you're not throwing any more money

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Speaker 2: into it. Which isn't a bad thing, right, that's another

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Speaker 2: little side point. People apologize, well, I guess I can't

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Speaker 2: put any more money into my four oh one K

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Speaker 2: because I've retired.

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Speaker 3: Yeah, that's the point. That's a good thing, right, That's okay.

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Speaker 2: But anyway, the lack of inflow flowing into those funds

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Speaker 2: is going to allow it to wander a bit more so. Therefore,

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Speaker 2: the stock market as we're sitting here right now is

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Speaker 2: up about sixty percent since twenty two because of that

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Speaker 2: big dip that we took. So if you haven't touched

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Speaker 2: your portfolio, maybe it was supposed to be sixty forty.

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Speaker 2: I bet it's sneaking up on eighty twenty right now

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Speaker 2: because you haven't touched it. Again, that's a good thing.

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Speaker 2: But this is the time to go ahead and say,

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Speaker 2: you know what, I want to walk out of this

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Speaker 2: casino with some chips left in my bucket.

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Speaker 3: Let's rebalance a little bit.

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Speaker 1: Well, and this is a good time too to call

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Speaker 1: out that there's a major difference between being in what

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Speaker 1: we call the accumulation phase of life and the retirement

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Speaker 1: or distribution phase of life. You really don't care, I mean,

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Speaker 1: people emotionally care but economically you don't care so much

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Speaker 1: about volatility in the stock market. While, as you say, Brian,

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Speaker 1: you're just dollar cost averaging every two weeks and throwing

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Speaker 1: more money in. As long as that average return is

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Speaker 1: great over twenty thirty forty years, life is good. The

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Speaker 1: calculus changes significantly once you've got to turn that pile

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Speaker 1: of money into a monthly paycheck or pay for new

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Speaker 1: cars or things with things other than you working in

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Speaker 1: generating a paycheck.

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Speaker 3: That's really what we're talking about, which.

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Speaker 1: Leads us into walk us through hypothetical hypothetical situation number three,

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Speaker 1: retirement timing risk.

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Speaker 2: Brian, Yeah, this is what we were kind of hinting

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Speaker 2: at this before. But this affects everybody. Everybody's going to

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Speaker 2: retire at some point in the market, at some point

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Speaker 2: in the economic cycle. Nobody gets to control that. You know,

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Speaker 2: maybe some people do a lot of people are informed

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Speaker 2: that they're about to retire via a layoff or something

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Speaker 2: like that, or some you know, maybe they weren't think

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Speaker 2: anyone to retire, but they get a salary package or

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Speaker 2: something and it's just an offer they can't refuse, but

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Speaker 2: they weren't thinking about it. Those things tend to come

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Speaker 2: at a time where the economy is perceived to be

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Speaker 2: slowing down. That's why those companies are making those offers

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Speaker 2: to get you to go away, so they can save

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Speaker 2: on your salary and replace you, yes, with younger, cheaper people.

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Speaker 2: But that means you didn't get to call your shot,

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Speaker 2: and you might not have seen it coming. So you know,

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Speaker 2: this can happen, you know right now if this is

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Speaker 2: you know, if we're thinking about right now, or if

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Speaker 2: you're somebody who plans to retire in three years. Currently

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Speaker 2: your markets are near all time highs. That portfolio looks

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Speaker 2: fantastic on paper. So you're looking at that twenty twenty

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Speaker 2: nine date and just kind of starting to salivate a

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Speaker 2: little bit because you can see the finished line ahead.

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Speaker 2: If the market corrects and those biggest stocks again that

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Speaker 2: we've been talking about, lead that decline, your portfolio doesn't

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Speaker 2: just dip, it's going to actually concentrate the pain because

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Speaker 2: you were out of balance to begin with. That can

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Speaker 2: push retirement out. Think of the P ANDNG folks I

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Speaker 2: just mentioned. This is not just related to the technology industry.

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Speaker 2: Can happen anyway. It's going to change your withdrawal plans.

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Speaker 2: Force you to sell in a down market, or it

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Speaker 2: may force you to just plan not retire, or take

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Speaker 2: I have to go seek more of a part time

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Speaker 2: income than you originally plan to.

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Speaker 3: So what do we actually do about it? Brian?

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Speaker 1: Here's a couple of ideas that you know, we talk

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Speaker 1: about all the time.

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Speaker 3: You know.

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Speaker 1: Take a look at your balance between US and international stocks.

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Speaker 1: Last year was a phenomenal year for the international stocks,

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Speaker 1: and we're off to a great year you know in

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Speaker 1: that area in twenty twenty six at all.

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Speaker 3: And this is an.

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Speaker 1: Area that people have largely ignored for the last several

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Speaker 1: years because, let's face it, international stocks have underperformed. That

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Speaker 1: is starting to move around and change a bit. Make

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Speaker 1: sure you've got some small cap value exposure. You know,

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Speaker 1: it all comes down to valuation.

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Speaker 3: What are we.

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Speaker 1: Paying for a dollar's worth of earning growth? And you

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Speaker 1: want to make sure you've got good balance in all

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Speaker 1: of these sectors. Another thing to look at is private equity,

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Speaker 1: private credit.

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Speaker 3: There's some good you.

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Speaker 1: Know, on a valuation basis, there's some good stuff to

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Speaker 1: be had there that you can't just click a button

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Speaker 1: and buy in an ETF. And then there's some more

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Speaker 1: what We'll say niche strategies like you know, buffer ets,

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Speaker 1: more outcome strategies where you're building in some risk protection

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Speaker 1: into the portfolio by having some professionals layer in some

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Speaker 1: option protection as part of that stock portfolio.

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Speaker 3: So a lot of ways to do this.

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Speaker 1: It's just important to sit down and you know, run

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Speaker 1: some scenarios in testing historical periods of volatility and say,

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Speaker 1: how would my current portfolio perform if you know what

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Speaker 1: happened in two thousand and eight or twenty twenty two

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Speaker 1: happen again, and just make sure you understand what your

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Speaker 1: true risk exposure is.

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Speaker 3: Here's the all Worth advice. True diversification is it about

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Speaker 3: owning more funds.

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Speaker 1: It's about understanding where your risk is really coming from

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Speaker 1: and making sure it matches the life and income strategy

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Speaker 1: you want your money to support. All right, Coming up next,

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Speaker 1: we've got some actual good news about the cost of investing,

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Speaker 1: especially if you're someone who cares about keeping more of

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Speaker 1: your returns in your pocket versus giving them over to

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Speaker 1: an investment management firm. We'll explain what we're talking about next.

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Speaker 1: You're listening to Simply Money, presented by all Worth Financial

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Speaker 1: on fifty five KRC the talk station you're listening to

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Speaker 1: Simply Money, presented by all Worth Financial. I'm Bob Spondseller

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Speaker 1: along with Brian James straight ahead at six point forty three.

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Speaker 1: We're tackling the real retirement questions you're actually worried about

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Speaker 1: and asking us about, for example, what to do with

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Speaker 1: a big capital gains exposure in a brokerage account, whether

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Speaker 1: it's smarter to sell stocks or just live off the dividends,

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Speaker 1: and why feeling quote unquote ready to retire doesn't always

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Speaker 1: feel so comfortable.

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Speaker 3: All right.

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Speaker 1: First off, Vanguard, brian of the largest fund companies in

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Speaker 1: the world, just announced another round of fee cuts on

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Speaker 1: its mutual funds and ets. This is actually some good

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Speaker 1: news in this inflationary world we're trying to combat every day.

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Speaker 2: Yeah, this is and it's good news in a sense

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Speaker 2: of yet another a sign that the race to the

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Speaker 2: bottom has not yet ended in terms of expense ratios

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Speaker 2: on these mutual funds and exchange traded funds.

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Speaker 3: So here a live bit of background.

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Speaker 2: So what we're referring to here is something called an

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Speaker 2: expense ratio which is built into each and every mutual

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Speaker 2: fund and or exchange traded fund ETF under the sun.

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Speaker 2: Those different things are like companies unto themselves. They have employees.

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Speaker 2: Those employees have computers and office space and all that

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Speaker 2: other stuff that costs money, and the way they pay

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Speaker 2: for that is via something called the expense ratio, which

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Speaker 2: is a small amount of money that is deducted on

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Speaker 2: a daily basis from your investments. Whether you see it

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Speaker 2: or not, this is not something you can look for

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Speaker 2: on your statement. It's happening inside that particular ticker symbol

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Speaker 2: that you own there, but you can find the.

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Speaker 3: Expense ratio on it. The lower the better. We like

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Speaker 3: to keep them, you know, zero point one percent.

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Speaker 2: Sometimes they go higher than that because a strategy may

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Speaker 2: be worth it and may be appropriate given time, but

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Speaker 2: generally speaking, we like to keep them point one to

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Speaker 2: point two something like that. Now that's been true for

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Speaker 2: a long time, but I'm guessing Bob's we're gonna be

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Speaker 2: able to go a little lower here because of what

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Speaker 2: Vanguard does, and Vanguard tends to lead the charge here.

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Speaker 3: The other companies are going to respond, probably in kind

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Speaker 3: as they have in the past.

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Speaker 2: So in total, Vanguard's productions are going to save nearly

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Speaker 2: at two hundred and fifty million dollars. That's a quarter

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Speaker 2: billion dollars in savings to investors who hold those funds

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Speaker 2: in twenty twenty six. Combined with the same cuts they

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Speaker 2: made last year. Now we're talking about a half billion

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Speaker 2: dollars in savings over two years.

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Speaker 3: That's not a bad deal, not a bad deal at all.

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Speaker 1: I think this is a good time to point out,

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Speaker 1: you know, especially if you're considering working with an advisor

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Speaker 1: or working one, working with one right now, and Brian,

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Speaker 1: this is a question that comes up to us, you know,

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Speaker 1: every now and then, what is the cost of working.

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Speaker 3: With you guys?

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Speaker 1: And what I always try to explain is is you're

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Speaker 1: basically paying for a financial advisor in two ways. One,

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Speaker 1: if you're working with a true fiduciary, they're going to

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Speaker 1: charge you a fee, an asset based fee to do

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Speaker 1: all the financial planning and all the things that need

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Speaker 1: to go on, including you know, investment management. And then

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Speaker 1: the second part of that is what you just talked about,

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Speaker 1: what is the expense ratio of the underlying investments being

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Speaker 1: being used in the portfolio? That is, it's parts in

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Speaker 1: labor all right, Well, this is where you know some

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Speaker 1: people don't understand that, and especially when you get into

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Speaker 1: the annuity world where everything can be made to look

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Speaker 1: like it's quote unquote free, when you look under the

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Speaker 1: hood and look at some of the fees embedded in

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Speaker 1: these contracts, they are enormous. So it again you want

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Speaker 1: to look at what are the underlying costs of the

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Speaker 1: investments being used, and then what are you truly paying

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Speaker 1: for and what are you getting from a so called

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Speaker 1: investment advisor. Those are the things you want to look

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Speaker 1: out for.

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Speaker 3: All right.

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Speaker 1: Another thing we want to cover tonight and just the

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Speaker 1: increase of options investors have nowadays. You know, in terms

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Speaker 1: of what to invest in, they don't just involve stock

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Speaker 1: in bonds. In fact, some younger investors are truly starting

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Speaker 1: to believe that, hey, traditional stocks and bonds are just

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Speaker 1: not going to get the job done in terms of

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Speaker 1: getting them to where they want to be in terms

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Speaker 1: of their goals. Talk about this twenty four study from

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Speaker 1: Bank of America Brian well.

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Speaker 2: Boa found that seven to ten high net worth investors

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Speaker 2: ages twenty one to forty three. So these are on

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Speaker 2: the younger end, but those folks believe it's no longer

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Speaker 2: possible to achieve above average returns by relying solely on

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Speaker 2: these traditional stocks and bonds, like Bob just said. So

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Speaker 2: at the same time, exchange traded funds, which have become

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Speaker 2: really popular because of what we just talked about, low

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Speaker 2: cost liquidity, you know, tax efficiency, Those are dominating investor interests,

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Speaker 2: and those are fairly dominant in this in the traditional

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Speaker 2: stock and bond space. And you know, last year we

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Speaker 2: had over eleven hundred ett new etf launched. So you know,

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Speaker 2: what are we looking for here? If people are changing

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Speaker 2: what they're looking for, but we're still pumping out the

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Speaker 2: same types of things. Investors tend to be looking for

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Speaker 2: the types of investments that give them the perks of

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Speaker 2: these alternative assets inside that exchange traded fund wrapper.

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Speaker 3: So low fees are on an option.

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Speaker 2: Coinbase has charges about point six percent on their transactions

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Speaker 2: up to ten thousand bucks, while a lot of the

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Speaker 2: top spots of bitcoin ETFs they're coming in with expense.

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Speaker 3: Ratios of a quarter or below.

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Speaker 2: So you have to make sure you understand what you're

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Speaker 2: owning in these things if this is what you're after.

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Speaker 1: Yeah, and I think we got to pump the brakes here.

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Speaker 1: I mean, when we're talking about you know, twenty one

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Speaker 1: to forty three year olds, and you know, people older

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Speaker 1: than I mean we're talking about people have a whole

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Speaker 1: different range of expectations and goals. You know, when it

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Speaker 1: just comes to investing, there's a lot of people right

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Speaker 1: now that just want to do everything on their phone.

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Speaker 1: They want to buy and sell stocks, ETFs, crypto all that.

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Speaker 1: They're just looking to try to beat the market and

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Speaker 1: are more short term trading oriented. That is a completely

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Speaker 1: different type of customer then the folks you and I

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Speaker 1: deal with every day, which are trying to build a

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Speaker 1: long term, diversified portfolio and then prepare to retire.

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Speaker 3: So I think stories like this are great. I think the.

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Speaker 1: Watch out here is, you know, these etf everybody wants

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Speaker 1: an ETF, but when you get into these spaces like

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Speaker 1: private equity and private credit, you know, some of the

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Speaker 1: benefits of these asset classes come with not not being

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Speaker 1: able to flip it every five or ten minutes.

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Speaker 2: And kind of the purpose of an ETF itself, that

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Speaker 2: structure is intended to be that liquid exactly.

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Speaker 1: So I think the story here is make sure you

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Speaker 1: understand what you're buying before you buy it, and we're

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Speaker 1: we're finding that that's one of many reasons people come

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Speaker 1: in and just want to sit down and understand what

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Speaker 1: this whole landscape is out there, so that they don't

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Speaker 1: get into something they don't understand and then regret it later.

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Speaker 2: A bitcoin ETF, a private equity ETF, those types of

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Speaker 2: things are very, very different than your state index based ETFs.

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Speaker 2: You have something that has all day liquidity and that's

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Speaker 2: that's it's mains your selling point, but the stuff it

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Speaker 2: owns may be completely illiquid, like private equity. So I

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Speaker 2: don't know how that's gonna that dichotomy is going to

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Speaker 2: break out.

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Speaker 1: Well, the dichotomy is going to continue to evolve. Here

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Speaker 1: is where we are going to get to twenty four

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Speaker 1: to seven trading I think within the next couple of years,

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Speaker 1: and we're gonna tokenize everything, and there's going to You're

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Speaker 1: gonna be able to buy anything you want, uh at

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Speaker 1: a moment's notice, and a lot of people are gonna

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Speaker 1: be sorry when they look at what they're paying in

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Speaker 1: expenses to trade and in the expense ratios. Back to

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Speaker 1: our friends at Vanguard for lowering these fees in other

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Speaker 1: areas of this world. It's not it's not happening that

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Speaker 1: way anyway, here's the all with advice.

438
00:20:41,920 --> 00:20:43,800
Speaker 3: Alternative investments can play.

439
00:20:43,560 --> 00:20:46,520
Speaker 1: A role in the right plan, but like any tool,

440
00:20:46,640 --> 00:20:49,840
Speaker 1: they work best when you're clear on what problem they're

441
00:20:49,880 --> 00:20:53,800
Speaker 1: meant to solve. Uh, and make sure you avoid problems

442
00:20:53,840 --> 00:20:54,640
Speaker 1: you need to avoid.

443
00:20:54,840 --> 00:20:55,160
Speaker 3: All right.

444
00:20:55,160 --> 00:20:59,240
Speaker 1: Coming up next, a brand new local housing market update

445
00:20:59,760 --> 00:21:03,200
Speaker 1: from our good friend Michelle Sloan at Remax Time. You're

446
00:21:03,200 --> 00:21:06,399
Speaker 1: listening to Simply Money presented by all Worth Financial on

447
00:21:06,440 --> 00:21:14,159
Speaker 1: fifty five KRC the talk station. You're listening to Simply

448
00:21:14,200 --> 00:21:17,679
Speaker 1: Money presented by Allworth Financial. I'm Bob Sponseller along with

449
00:21:17,720 --> 00:21:20,800
Speaker 1: Brian James, joined tonight by our good friend and real

450
00:21:20,960 --> 00:21:25,399
Speaker 1: estate expert Michelle Sloane, owner of Remax Time. Michelle, thanks

451
00:21:25,400 --> 00:21:28,240
Speaker 1: for spending some time with us tonight and we want

452
00:21:28,280 --> 00:21:32,280
Speaker 1: to get a market update here in February. I would

453
00:21:32,320 --> 00:21:34,639
Speaker 1: love to be proven wrong, and I know you always

454
00:21:34,640 --> 00:21:36,840
Speaker 1: find ways to make it happen out there, but I

455
00:21:36,880 --> 00:21:40,960
Speaker 1: can't imagine that people are running around looking at homes

456
00:21:41,040 --> 00:21:43,760
Speaker 1: when the temperature is seven degrees fahrenheit.

457
00:21:44,440 --> 00:21:46,280
Speaker 3: But tell me I'm wrong. How's the market? Do you

458
00:21:46,280 --> 00:21:50,280
Speaker 3: know what you are wrong? Good? All right? I'm wrong

459
00:21:50,400 --> 00:21:52,840
Speaker 3: all day every day. I tell him that I have time.

460
00:21:53,640 --> 00:21:56,719
Speaker 5: All right, you're wrong, actually, So it's really we have

461
00:21:56,800 --> 00:22:00,280
Speaker 5: a really interesting market right now because there are a

462
00:22:00,280 --> 00:22:03,439
Speaker 5: lot of people out and about looking at homes. But

463
00:22:03,560 --> 00:22:06,639
Speaker 5: I will tell you I listed a property. It was

464
00:22:06,720 --> 00:22:13,840
Speaker 5: a condo ranch home, perfect for someone who's looking to downsize,

465
00:22:14,000 --> 00:22:17,000
Speaker 5: and I listed it over the weekend. We ended up

466
00:22:17,000 --> 00:22:20,399
Speaker 5: with three offers over list price, and I was, to

467
00:22:20,440 --> 00:22:24,600
Speaker 5: be honest, I was shocked because I really didn't expect

468
00:22:24,640 --> 00:22:27,720
Speaker 5: because I have other listings that have been lingering on

469
00:22:27,800 --> 00:22:30,680
Speaker 5: the market and not getting a whole lot of activity,

470
00:22:31,160 --> 00:22:33,560
Speaker 5: but I put this one on. There are so many

471
00:22:33,640 --> 00:22:36,520
Speaker 5: people that are in their sixties and seventies that are

472
00:22:36,600 --> 00:22:39,920
Speaker 5: looking for ranch homes, maybe a condo so they don't

473
00:22:39,920 --> 00:22:44,160
Speaker 5: have to deal with the exterior maintenance of the property.

474
00:22:44,600 --> 00:22:48,720
Speaker 5: And that sucker went really fast. And so if you're

475
00:22:48,760 --> 00:22:50,800
Speaker 5: in the market for a home like that, you have

476
00:22:50,920 --> 00:22:55,000
Speaker 5: to be ready. So it's sort of like the It

477
00:22:55,040 --> 00:22:59,120
Speaker 5: depends on what you're looking for. And some buyers are

478
00:22:59,119 --> 00:23:02,280
Speaker 5: going to be in the camp where they'll have lots

479
00:23:02,280 --> 00:23:05,120
Speaker 5: of things to look at, they'll have lots of opportunities,

480
00:23:05,640 --> 00:23:08,760
Speaker 5: but there are going to be other properties that are

481
00:23:08,800 --> 00:23:12,440
Speaker 5: going to be so in demand that they won't have

482
00:23:12,520 --> 00:23:13,880
Speaker 5: as much opportunity.

483
00:23:14,080 --> 00:23:16,879
Speaker 2: Mist I think you already answered most half this question,

484
00:23:17,240 --> 00:23:19,639
Speaker 2: so that it sounds like the ones that went quickly

485
00:23:19,680 --> 00:23:22,040
Speaker 2: they were as you described. I assume the ranches with

486
00:23:22,080 --> 00:23:24,199
Speaker 2: older people looking to kind of simplify, can you describe

487
00:23:24,240 --> 00:23:25,360
Speaker 2: the ones that are lingering?

488
00:23:25,359 --> 00:23:26,160
Speaker 3: What's the difference.

489
00:23:26,880 --> 00:23:31,919
Speaker 5: The difference is actually two story homes that are over

490
00:23:32,080 --> 00:23:36,720
Speaker 5: five hundred thousand dollars, So we have this if it's

491
00:23:36,880 --> 00:23:40,200
Speaker 5: under three hundred, you know, if it's pretty. I mean,

492
00:23:40,240 --> 00:23:42,920
Speaker 5: although the ranch that I sold was close to four

493
00:23:43,320 --> 00:23:47,000
Speaker 5: four hundred thousand, so anything under five hundred thousand, let's

494
00:23:47,040 --> 00:23:49,640
Speaker 5: just put that as the breaking point. Anything under five

495
00:23:49,720 --> 00:23:54,040
Speaker 5: hundred thousand is getting showings, it's getting activity. Anything over

496
00:23:54,119 --> 00:24:00,399
Speaker 5: five hundred thousand dollars is slower. And the inside it

497
00:24:00,400 --> 00:24:02,720
Speaker 5: doesn't even matter if it's perfect, because I have one

498
00:24:02,760 --> 00:24:05,160
Speaker 5: listing that's been on the market now for four months,

499
00:24:05,400 --> 00:24:10,080
Speaker 5: three months, way longer than I appreciate it, way longer

500
00:24:10,080 --> 00:24:11,840
Speaker 5: than I'd like it to be on the market.

501
00:24:12,880 --> 00:24:14,200
Speaker 3: But there's nothing wrong with it.

502
00:24:14,240 --> 00:24:17,840
Speaker 5: I mean, is it is pristine, It is updated, you know,

503
00:24:17,880 --> 00:24:20,359
Speaker 5: all the things that are so important when you're selling

504
00:24:20,400 --> 00:24:23,320
Speaker 5: your home. This home has it all. It's in the

505
00:24:23,320 --> 00:24:27,000
Speaker 5: Little Miami School district. If you think that that's something

506
00:24:27,000 --> 00:24:29,320
Speaker 5: that you're looking for, look at my website at Sloan

507
00:24:29,440 --> 00:24:32,960
Speaker 5: sellshomes dot com and you can see it. But yeah,

508
00:24:33,000 --> 00:24:37,160
Speaker 5: there are properties out there. So those properties. If you're

509
00:24:37,200 --> 00:24:40,439
Speaker 5: in the market to buy now and you're looking for

510
00:24:40,520 --> 00:24:42,760
Speaker 5: a two story and the home has been on the

511
00:24:42,800 --> 00:24:46,760
Speaker 5: market for more than two months, there is a tremendous

512
00:24:46,840 --> 00:24:51,720
Speaker 5: opportunity for buyers to negotiate with the seller because those

513
00:24:51,800 --> 00:24:56,000
Speaker 5: sellers are getting tired and they are ready to get

514
00:24:56,080 --> 00:24:59,200
Speaker 5: out because for whatever reason they're moving right they either

515
00:24:59,240 --> 00:25:01,840
Speaker 5: they don't live there anymore, they're moving because of a job.

516
00:25:02,160 --> 00:25:04,680
Speaker 5: There's some reason why their home is on the market.

517
00:25:05,000 --> 00:25:07,000
Speaker 2: So, can you give us an example of an offer

518
00:25:07,040 --> 00:25:09,320
Speaker 2: that would not be an insulting low ball? Like a

519
00:25:09,359 --> 00:25:12,360
Speaker 2: percentage below you know, the asking price, not a low ball,

520
00:25:12,400 --> 00:25:14,480
Speaker 2: but you know in the ballpark of reasonable issues.

521
00:25:14,640 --> 00:25:19,520
Speaker 5: And honestly, I would say three to five percent. If

522
00:25:19,560 --> 00:25:23,320
Speaker 5: you get into that ten percent dip on the list price,

523
00:25:23,520 --> 00:25:27,560
Speaker 5: it's most likely going to be very insulting unless there's

524
00:25:27,600 --> 00:25:30,919
Speaker 5: a reason why. And so I think you have to

525
00:25:30,960 --> 00:25:35,000
Speaker 5: work with your real estate agent to find that happy medium,

526
00:25:35,280 --> 00:25:37,840
Speaker 5: because you don't want to make the sellers mad right

527
00:25:37,880 --> 00:25:41,680
Speaker 5: off the bat, because then you have this contentious type

528
00:25:41,720 --> 00:25:45,960
Speaker 5: of negotiation that may or may not get anywhere. Because

529
00:25:46,000 --> 00:25:50,400
Speaker 5: everybody takes their home so seriously. Everybody feels, you know,

530
00:25:50,480 --> 00:25:54,479
Speaker 5: they get it's they take it very personally. Right, So

531
00:25:54,800 --> 00:25:57,560
Speaker 5: you're telling me that my baby is ugly and it's

532
00:25:57,600 --> 00:26:00,000
Speaker 5: not worth what the market says it should.

533
00:26:00,080 --> 00:26:02,000
Speaker 3: Bob said that, Michelle, I would never say that to you.

534
00:26:02,040 --> 00:26:05,040
Speaker 3: That was all Bob, that my baby's ugly.

535
00:26:05,400 --> 00:26:07,760
Speaker 1: All right, Hey, Michelle, I want to go back because

536
00:26:08,000 --> 00:26:10,600
Speaker 1: I remember the last time you were on and we

537
00:26:10,600 --> 00:26:14,439
Speaker 1: were talking about how these months January February, where it

538
00:26:14,520 --> 00:26:16,840
Speaker 1: might not seem like we need to be doing anything,

539
00:26:17,240 --> 00:26:20,160
Speaker 1: we're getting closer and closer to the spring market where

540
00:26:20,200 --> 00:26:22,679
Speaker 1: things are really going to start to, you know, to

541
00:26:22,760 --> 00:26:25,680
Speaker 1: fly around here. And I remember you talking about, hey,

542
00:26:25,680 --> 00:26:28,159
Speaker 1: if you're getting ready to sell, you need to be

543
00:26:28,200 --> 00:26:30,719
Speaker 1: getting out in front of this now, talking with your

544
00:26:30,720 --> 00:26:33,640
Speaker 1: real estate professional and doing some planning so that you're

545
00:26:33,720 --> 00:26:37,479
Speaker 1: ready to list your home when that March in April

546
00:26:37,480 --> 00:26:40,240
Speaker 1: timeframe comes around, when the when the flowers start coming

547
00:26:40,280 --> 00:26:41,840
Speaker 1: out and temperatures get warmer.

548
00:26:41,840 --> 00:26:44,000
Speaker 3: Are people listening, are they talking to you?

549
00:26:44,200 --> 00:26:47,520
Speaker 1: Are they doing the planning, the pre planning that you

550
00:26:47,760 --> 00:26:48,800
Speaker 1: advise folks to do.

551
00:26:49,800 --> 00:26:53,040
Speaker 5: There are some phone calls coming into the office at

552
00:26:53,040 --> 00:26:57,080
Speaker 5: this point that people that are planning and knowing that

553
00:26:57,119 --> 00:27:00,520
Speaker 5: they're going to be moving in the next year. Right now,

554
00:27:00,520 --> 00:27:02,600
Speaker 5: we are in a little bit of a calm before

555
00:27:02,640 --> 00:27:06,720
Speaker 5: the storm because the snow's falling. You don't if you

556
00:27:06,760 --> 00:27:10,320
Speaker 5: don't have to list your home right now, you probably

557
00:27:10,400 --> 00:27:12,800
Speaker 5: don't want to. You may want to wait until March.

558
00:27:12,840 --> 00:27:15,000
Speaker 5: You may want to wait until I think there may

559
00:27:15,080 --> 00:27:20,720
Speaker 5: be an opportunity for the temperatures to get above forty degrees.

560
00:27:20,880 --> 00:27:23,800
Speaker 1: But remind, remind folks on what they need to be doing,

561
00:27:23,880 --> 00:27:25,280
Speaker 1: even if you're not going to kind of put the

562
00:27:25,400 --> 00:27:27,720
Speaker 1: sign in the front yard, you know this week. What

563
00:27:27,840 --> 00:27:30,360
Speaker 1: do you need to be doing now so that you

564
00:27:30,440 --> 00:27:32,400
Speaker 1: are ready to be in the best spot to help

565
00:27:32,440 --> 00:27:34,480
Speaker 1: them when it is time to list the home.

566
00:27:35,000 --> 00:27:38,760
Speaker 5: Declutter, declutter, declutter. If we've lived in our house for

567
00:27:38,800 --> 00:27:43,080
Speaker 5: any length of time, we have so much stuff, and

568
00:27:43,400 --> 00:27:45,960
Speaker 5: you know your closets are packed. Your basement, if you

569
00:27:46,000 --> 00:27:48,800
Speaker 5: have a basement is packed. You have an extra room

570
00:27:48,840 --> 00:27:52,040
Speaker 5: in your home where you just throw everything. Make sure

571
00:27:52,160 --> 00:27:55,760
Speaker 5: that you are decluttering your home. You know, make friends

572
00:27:55,840 --> 00:28:01,000
Speaker 5: with either your garbage man or a woman. And decluttering

573
00:28:01,160 --> 00:28:03,680
Speaker 5: is the absolute best thing because it takes the longest

574
00:28:03,720 --> 00:28:06,000
Speaker 5: to go through all of your stuff and your memories

575
00:28:06,320 --> 00:28:09,040
Speaker 5: and decide what's going and what you're going to keep.

576
00:28:09,560 --> 00:28:12,000
Speaker 1: Now that's music to my wife's ear. She is the

577
00:28:12,119 --> 00:28:16,280
Speaker 1: literal queen of decluttering. So all right, good stuff as always, Michelle.

578
00:28:16,480 --> 00:28:18,960
Speaker 1: You're listening to Simply Money presented by all Worth Financial

579
00:28:18,960 --> 00:28:27,159
Speaker 1: on fifty five KRC, the talk station. You're listening to

580
00:28:27,200 --> 00:28:30,200
Speaker 1: Simply Money presented by all Worth Financial on Bob Sponsorer

581
00:28:30,240 --> 00:28:33,560
Speaker 1: along with Brian James. You have a financial question you'd

582
00:28:33,600 --> 00:28:36,000
Speaker 1: like for us to answer. There's a big red button

583
00:28:36,040 --> 00:28:38,360
Speaker 1: you can click while you're listening to the show. If

584
00:28:38,440 --> 00:28:41,560
Speaker 1: you're listening on the iHeart app, simply record your question

585
00:28:42,000 --> 00:28:45,240
Speaker 1: and it will come straight to us. All right, Brian

586
00:28:45,400 --> 00:28:48,880
Speaker 1: ron and Anderson says, our net worth looks great, but

587
00:28:48,960 --> 00:28:52,040
Speaker 1: a lot of it is a liquid home equity, business interest,

588
00:28:52,160 --> 00:28:55,959
Speaker 1: private investments. How do I think about liquidity risk without

589
00:28:56,040 --> 00:28:57,920
Speaker 1: assuming we need to sell everything?

590
00:28:58,360 --> 00:29:01,000
Speaker 2: Yeah, that's a great question, and it's actually a timing problem,

591
00:29:01,000 --> 00:29:02,680
Speaker 2: not a net worth problem. Here's a good way to

592
00:29:03,040 --> 00:29:05,320
Speaker 2: kind of frame and think about it. So, so step

593
00:29:05,400 --> 00:29:09,200
Speaker 2: one here is to separate wealth from spendability. Ill liquid assets,

594
00:29:09,200 --> 00:29:12,480
Speaker 2: home equity, closely held business, private investments. That's very real.

595
00:29:12,520 --> 00:29:14,920
Speaker 2: Wealth looks pretty on paper, but it doesn't help if

596
00:29:14,920 --> 00:29:16,520
Speaker 2: you need cash on a short notice. You're not going

597
00:29:16,600 --> 00:29:18,680
Speaker 2: to sell off ten percent of your private business because

598
00:29:18,680 --> 00:29:20,040
Speaker 2: it's time to buy a car or send a kid

599
00:29:20,120 --> 00:29:23,520
Speaker 2: to college. Liquidity risk shows up when expenses or opportunities

600
00:29:23,560 --> 00:29:26,280
Speaker 2: show up before those assets can be monetized. So the

601
00:29:26,320 --> 00:29:29,120
Speaker 2: question is isn't are we wealthy? It's what can fund

602
00:29:29,160 --> 00:29:31,880
Speaker 2: the next one three, five years without forcing a sale

603
00:29:31,880 --> 00:29:34,160
Speaker 2: we didn't want to make. So here's the here's the

604
00:29:34,200 --> 00:29:36,720
Speaker 2: next step here to what can we do about this? Well,

605
00:29:36,720 --> 00:29:39,840
Speaker 2: first off, bucket that liquidity by the time horizon. Don't

606
00:29:40,000 --> 00:29:43,640
Speaker 2: don't assign assets to goals. Figure out the liquidity you

607
00:29:43,720 --> 00:29:46,960
Speaker 2: need over time and you know, and then figure out

608
00:29:46,960 --> 00:29:49,080
Speaker 2: what assets can fill that. So so your first as

609
00:29:49,120 --> 00:29:51,880
Speaker 2: your immediate zero to twelve months, this is cash money market,

610
00:29:52,080 --> 00:29:55,080
Speaker 2: your near term bond maturities. Then there's that mid range

611
00:29:55,080 --> 00:29:58,280
Speaker 2: one to five years. This might be higher quality bond CDs.

612
00:29:58,360 --> 00:29:59,440
Speaker 2: You know, I'm going to lock in a rate.

613
00:29:59,440 --> 00:30:01,120
Speaker 3: Maybe I can get three and a half maybe four

614
00:30:01,160 --> 00:30:03,800
Speaker 3: percent now and lock that in for maybe three years.

615
00:30:03,840 --> 00:30:05,680
Speaker 3: That's a little on the long end. Banks aren't going

616
00:30:05,720 --> 00:30:06,360
Speaker 3: that long anymore.

617
00:30:06,360 --> 00:30:08,520
Speaker 2: But those are the types of investments you look for

618
00:30:08,560 --> 00:30:11,200
Speaker 2: there longer term, anything over five years, that's where you

619
00:30:11,240 --> 00:30:13,360
Speaker 2: want to take advantage of growth. So this is equity,

620
00:30:13,400 --> 00:30:16,280
Speaker 2: private assets to your business equity, those kinds of things.

621
00:30:16,320 --> 00:30:18,480
Speaker 2: That's what's going to help you fight off over the

622
00:30:18,480 --> 00:30:21,800
Speaker 2: remainder of your life and look for forced sale risk,

623
00:30:21,920 --> 00:30:24,400
Speaker 2: not market risks. So what kind of expenses can you

624
00:30:24,480 --> 00:30:27,240
Speaker 2: not defer? Are you stuck paying with these types of things?

625
00:30:27,360 --> 00:30:29,760
Speaker 2: Are there capital calls coming for investments you've made, or

626
00:30:29,760 --> 00:30:31,880
Speaker 2: maybe tax bills that could show up at the wrong time.

627
00:30:32,160 --> 00:30:34,800
Speaker 2: Make sure you've got some liquidity available to pay for

628
00:30:34,800 --> 00:30:35,240
Speaker 2: those things.

629
00:30:35,240 --> 00:30:36,600
Speaker 3: So hopefully that helps.

630
00:30:36,680 --> 00:30:40,080
Speaker 2: And so let's move on to Al and Shitviot. Al's

631
00:30:40,080 --> 00:30:42,720
Speaker 2: dealing with capital gains. Go figure, it's a tax season.

632
00:30:42,760 --> 00:30:45,480
Speaker 2: Everybody's thinking about this. He's got capital gains sitting in

633
00:30:45,480 --> 00:30:47,560
Speaker 2: his brokerage account, and he doesn't want to sell and

634
00:30:47,640 --> 00:30:50,560
Speaker 2: incur those because nobody wants to pay taxes. Well, so

635
00:30:50,600 --> 00:30:53,160
Speaker 2: how do you know, Bob, when waiting is costing more

636
00:30:53,240 --> 00:30:54,120
Speaker 2: than paying the tax?

637
00:30:55,040 --> 00:30:57,880
Speaker 1: Well, now I don't I obviously don't know your entire

638
00:30:57,960 --> 00:31:00,880
Speaker 1: situation here, but the first thought that to mind is

639
00:31:00,920 --> 00:31:03,840
Speaker 1: you could be, you know, in a situation where you're

640
00:31:03,920 --> 00:31:07,600
Speaker 1: letting the tax tail wag the dog. Here's what I mean, Uh,

641
00:31:07,640 --> 00:31:09,480
Speaker 1: this money, you know, you got to think of this

642
00:31:09,560 --> 00:31:12,360
Speaker 1: money you have. There should be a purpose behind it.

643
00:31:12,400 --> 00:31:13,280
Speaker 3: What is it for?

644
00:31:13,560 --> 00:31:17,240
Speaker 1: In other words, if you're delaying, and if you're married,

645
00:31:17,280 --> 00:31:20,400
Speaker 1: you and your wife are delaying taking a meaningful vacation,

646
00:31:20,760 --> 00:31:23,560
Speaker 1: you know, with yourselves or with your family, because you

647
00:31:23,600 --> 00:31:26,960
Speaker 1: don't want to pay, you know, eighteen percent combined long

648
00:31:27,040 --> 00:31:31,640
Speaker 1: term capital gains taxes to free up some money. That

649
00:31:31,640 --> 00:31:34,360
Speaker 1: that that can be a real lost opportunity from an

650
00:31:34,440 --> 00:31:38,440
Speaker 1: enjoyment standpoint. Another thing, if we're flicking about returns, you know,

651
00:31:38,560 --> 00:31:41,680
Speaker 1: we see this sometimes people have these large long term

652
00:31:41,760 --> 00:31:45,880
Speaker 1: capital gains and they love staring at that compounded you know,

653
00:31:45,960 --> 00:31:49,040
Speaker 1: four hundred percent return over twenty years, but they don't

654
00:31:49,080 --> 00:31:51,560
Speaker 1: look at how that stock has performed, say over the

655
00:31:51,640 --> 00:31:54,560
Speaker 1: last three, five, seven years. And if the return is

656
00:31:54,640 --> 00:31:57,640
Speaker 1: flat and you could have, you know, sold that stock

657
00:31:57,680 --> 00:32:00,840
Speaker 1: and put it into something else or diversified portfolio that

658
00:32:00,960 --> 00:32:04,280
Speaker 1: does better. There's an opportunity cost that you're paying in

659
00:32:04,360 --> 00:32:07,320
Speaker 1: the way of return, you know. Set another way. Al

660
00:32:07,400 --> 00:32:09,520
Speaker 1: if I if I came to you, if I'm your

661
00:32:09,560 --> 00:32:11,120
Speaker 1: boss and I come to you and I say I'm

662
00:32:11,120 --> 00:32:14,320
Speaker 1: going to give you one thousand dollars raise, would you

663
00:32:14,360 --> 00:32:17,160
Speaker 1: say no, No, that's okay, Bob, because if you pay

664
00:32:17,200 --> 00:32:20,520
Speaker 1: me an extra thousand dollars, I got to give one

665
00:32:20,560 --> 00:32:22,840
Speaker 1: hundred and eighty dollars in the government to the government.

666
00:32:22,880 --> 00:32:23,959
Speaker 1: So I'm not going to take that.

667
00:32:24,000 --> 00:32:26,360
Speaker 3: You're right, let's figure that problem. I'll cut your salary

668
00:32:26,360 --> 00:32:28,760
Speaker 3: in half. We'll all save money. You'll save on taxes,

669
00:32:28,760 --> 00:32:29,680
Speaker 3: and I won't have the same.

670
00:32:29,640 --> 00:32:32,200
Speaker 1: So anyway, I'm not I'm not trying to make light

671
00:32:32,240 --> 00:32:35,200
Speaker 1: of this or have you, but I think it's I

672
00:32:35,280 --> 00:32:37,160
Speaker 1: think it's a good time to just sit down, look

673
00:32:37,200 --> 00:32:40,600
Speaker 1: at your entire plan, and I say this all the time.

674
00:32:40,760 --> 00:32:43,960
Speaker 1: Know your why, why are these different components of your

675
00:32:43,960 --> 00:32:47,120
Speaker 1: portfolio there? What are they designed to do? And make

676
00:32:47,160 --> 00:32:49,440
Speaker 1: sure you know if needed, you know, you kind of

677
00:32:49,520 --> 00:32:52,200
Speaker 1: update things here to make this money work for you.

678
00:32:52,240 --> 00:32:52,720
Speaker 3: The right way.

679
00:32:52,800 --> 00:32:54,680
Speaker 2: I want to add a less snotty comment for Al.

680
00:32:54,680 --> 00:32:55,760
Speaker 2: I was having a little bit of fun there, but

681
00:32:55,800 --> 00:32:58,400
Speaker 2: sometimes I think your last question is great. How do

682
00:32:58,440 --> 00:33:00,760
Speaker 2: you know when waiting costs more than paying attacks? Well,

683
00:33:00,800 --> 00:33:03,120
Speaker 2: sometimes the capital gain will take care of itself by

684
00:33:03,160 --> 00:33:03,760
Speaker 2: going away.

685
00:33:06,520 --> 00:33:08,720
Speaker 1: I was trying not to all right, good, all right, Greg?

686
00:33:09,000 --> 00:33:13,480
Speaker 1: Moving on to Greg and Westchester. Our projections say we're fine,

687
00:33:13,520 --> 00:33:17,000
Speaker 1: but they assume market returns are evenly distributed. How do

688
00:33:17,040 --> 00:33:22,400
Speaker 1: you protect the early retirement years if returns come in unevenly? Well,

689
00:33:22,440 --> 00:33:24,280
Speaker 1: I got news for you, Greg, they are going to

690
00:33:24,360 --> 00:33:26,800
Speaker 1: come in unevenly. So Brian, how do we how do

691
00:33:26,840 --> 00:33:27,320
Speaker 1: we manage?

692
00:33:27,320 --> 00:33:30,240
Speaker 2: That's not an if question, that's a that's a win question.

693
00:33:30,320 --> 00:33:31,640
Speaker 2: So that that is the way it works, of course,

694
00:33:31,640 --> 00:33:33,520
Speaker 2: And that's what has happened. You know, we've had the

695
00:33:33,560 --> 00:33:36,080
Speaker 2: opposite for the last three years. Anybody who has retired,

696
00:33:36,080 --> 00:33:38,760
Speaker 2: and I've literally sat down with many people, many advisors

697
00:33:38,800 --> 00:33:42,160
Speaker 2: have where they've retired, they've started taking distributions, and they

698
00:33:42,200 --> 00:33:44,840
Speaker 2: somehow they're bewildered to find out that they actually have

699
00:33:45,000 --> 00:33:47,400
Speaker 2: more money in their accounts than they did at the

700
00:33:47,400 --> 00:33:48,320
Speaker 2: beginning of the years.

701
00:33:48,360 --> 00:33:50,720
Speaker 3: Because because that's just what the market has given us.

702
00:33:50,920 --> 00:33:53,240
Speaker 2: That's one of the few bet Brian James guarantees rock

703
00:33:53,320 --> 00:33:54,840
Speaker 2: solid I get to give you is that ain't gonna

704
00:33:54,840 --> 00:33:57,320
Speaker 2: happen forever. At some point we're going to take a

705
00:33:57,320 --> 00:33:59,800
Speaker 2: step back and you'll still need to take those distributions

706
00:34:00,280 --> 00:34:02,520
Speaker 2: to get your bills paid. So the thing we need

707
00:34:02,560 --> 00:34:04,120
Speaker 2: to be thinking about here again, it goes back to

708
00:34:04,160 --> 00:34:06,080
Speaker 2: those buckets, and Bob and I have been saying this

709
00:34:06,320 --> 00:34:08,520
Speaker 2: all year long, really the last couple of years, which

710
00:34:08,640 --> 00:34:11,239
Speaker 2: is that if you know you have expenses, come and

711
00:34:11,280 --> 00:34:12,879
Speaker 2: do right. We know we're going to buy a car

712
00:34:12,920 --> 00:34:14,640
Speaker 2: here soon, we know we got a wedding to pay

713
00:34:14,680 --> 00:34:16,480
Speaker 2: for this summer, we're going to take that big trip.

714
00:34:16,760 --> 00:34:18,719
Speaker 2: Market is at a peak, go ahead and pull those

715
00:34:18,719 --> 00:34:20,440
Speaker 2: dollars out and protect them, because you're going to be

716
00:34:20,480 --> 00:34:23,319
Speaker 2: a lot more upset if the market moves at the

717
00:34:23,360 --> 00:34:25,760
Speaker 2: wrong time, right before you have to pay those bills,

718
00:34:26,080 --> 00:34:28,600
Speaker 2: then you will. If you pull the money out protect

719
00:34:28,640 --> 00:34:30,239
Speaker 2: it and the market continues to go up a few

720
00:34:30,239 --> 00:34:33,200
Speaker 2: percentage points, we feel that loss so much more intensely

721
00:34:33,239 --> 00:34:36,000
Speaker 2: than we will be happy about.

722
00:34:35,280 --> 00:34:37,359
Speaker 3: The remaining gains that we may have missed out on.

723
00:34:37,680 --> 00:34:39,520
Speaker 2: Do the things that make you happy, make sure you've

724
00:34:39,520 --> 00:34:42,040
Speaker 2: got the funds to pay for them in a manner

725
00:34:42,040 --> 00:34:45,680
Speaker 2: that's efficient. So don't try to squeeze every last second

726
00:34:45,719 --> 00:34:48,200
Speaker 2: of market growth out of there. All right, we got time,

727
00:34:48,239 --> 00:34:49,920
Speaker 2: I think for one more here, so we're going to

728
00:34:50,000 --> 00:34:51,680
Speaker 2: move on to Stephen Covington.

729
00:34:51,680 --> 00:34:53,080
Speaker 3: Steve needs one hundred thousand a year.

730
00:34:53,320 --> 00:34:56,320
Speaker 2: He's wondering if it's better to sell monthly, quarterly or annually.

731
00:34:56,360 --> 00:34:57,720
Speaker 3: Bob, you got like thirty seconds.

732
00:34:57,880 --> 00:35:01,040
Speaker 1: Yeah, there's no magic answer to this, you know, and

733
00:35:01,080 --> 00:35:03,600
Speaker 1: you guys that listen to the show regularly probably hear

734
00:35:03,640 --> 00:35:05,839
Speaker 1: me say this all the time. Just don't treat your

735
00:35:05,880 --> 00:35:09,719
Speaker 1: growth stock portfolio like an ATM machine. You know, you

736
00:35:09,719 --> 00:35:11,960
Speaker 1: have an emergency fund, you have a cash build up

737
00:35:11,960 --> 00:35:14,600
Speaker 1: for a reason, and if you're on a systematic withdrawal plan,

738
00:35:15,600 --> 00:35:17,680
Speaker 1: you know, I'd say, have the next three to four

739
00:35:17,680 --> 00:35:20,719
Speaker 1: months worth of income that you're counting on out of

740
00:35:20,760 --> 00:35:24,279
Speaker 1: the market in a safe place so that your next

741
00:35:24,320 --> 00:35:27,760
Speaker 1: three to four months worth of grocery bills aren't subject

742
00:35:27,800 --> 00:35:31,439
Speaker 1: to market volatility. All right, Coming up next, Brian has

743
00:35:31,520 --> 00:35:34,080
Speaker 1: his bottom line. He's got some great advice here. As

744
00:35:34,120 --> 00:35:37,840
Speaker 1: we're all preparing to get ready to file our tax returns.

745
00:35:38,080 --> 00:35:40,560
Speaker 1: You're listening to Simply Money presented by all Worth Financial

746
00:35:40,600 --> 00:35:48,239
Speaker 1: on fifty five KRC the talk station. You're listening to

747
00:35:48,239 --> 00:35:51,759
Speaker 1: Simply Money presented by all Worth Financial on Bob Sponseller.

748
00:35:51,239 --> 00:35:54,520
Speaker 3: Along with Brian James. Well, Brian, it's tax time.

749
00:35:54,680 --> 00:35:57,640
Speaker 1: I got my Turbo tax program all loaded up, ready

750
00:35:57,680 --> 00:36:00,080
Speaker 1: to go. I got my pencil sharpened. What do I

751
00:36:00,120 --> 00:36:02,160
Speaker 1: need to be thinking about it? Just start help me

752
00:36:02,200 --> 00:36:03,120
Speaker 1: do my tax You just.

753
00:36:03,120 --> 00:36:05,400
Speaker 2: Start hoping for that big fat refund and have a

754
00:36:05,400 --> 00:36:08,560
Speaker 2: celebration because there's no downside to a gigantic refund. We

755
00:36:08,600 --> 00:36:10,840
Speaker 2: all want it because it's free money from the government.

756
00:36:10,880 --> 00:36:14,080
Speaker 3: Bob. That's how it works, right, The government always gives

757
00:36:14,120 --> 00:36:16,480
Speaker 3: us free money. What can't what doesn't the government do

758
00:36:16,600 --> 00:36:16,920
Speaker 3: for us?

759
00:36:16,960 --> 00:36:20,839
Speaker 2: Well, anyway, we'll starcasm there, we'll sarcasm to start off.

760
00:36:21,239 --> 00:36:22,799
Speaker 3: Are to end our evening? Drive home here?

761
00:36:22,840 --> 00:36:25,839
Speaker 2: So why a big refund might actually mean you're doing

762
00:36:25,840 --> 00:36:28,719
Speaker 2: this wrong? Well, we're in peak filing season, so of

763
00:36:28,800 --> 00:36:31,319
Speaker 2: course everybody's thinking about this. And some people I can

764
00:36:31,320 --> 00:36:33,080
Speaker 2: tell who's getting a refund because they're the ones calling.

765
00:36:33,120 --> 00:36:35,000
Speaker 2: When when's my ten ninety nine coming out? When's my

766
00:36:35,000 --> 00:36:36,840
Speaker 2: ten ninety nine coming out. Hey, let me let me

767
00:36:37,040 --> 00:36:39,560
Speaker 2: another little side note here. A lot of people are

768
00:36:39,640 --> 00:36:42,240
Speaker 2: hung up on the January thirty first being the deadline

769
00:36:42,239 --> 00:36:44,480
Speaker 2: for ten ninety nine. That's true, but that's for the

770
00:36:44,520 --> 00:36:47,640
Speaker 2: ten ninety nine R. Right, your IRA distributions for when

771
00:36:47,680 --> 00:36:50,400
Speaker 2: K distributions, those are due by January thirty first, a

772
00:36:50,480 --> 00:36:53,440
Speaker 2: couple more weeks into February for the ten ninety nine B.

773
00:36:53,560 --> 00:36:56,120
Speaker 2: The div all that stuff. The reason being is if

774
00:36:56,120 --> 00:36:59,560
Speaker 2: it's an R, then the custodian controls all those distributions.

775
00:36:59,640 --> 00:36:59,719
Speaker 1: Right.

776
00:36:59,760 --> 00:37:02,120
Speaker 2: The only time that you get any taxable activity is

777
00:37:02,120 --> 00:37:05,600
Speaker 2: when dollars leave that account. That means your fidelities, your

778
00:37:05,600 --> 00:37:07,360
Speaker 2: schwabs or whatever. They are the ones who know what

779
00:37:07,400 --> 00:37:10,520
Speaker 2: the taxable activity is. On the other hand, for those

780
00:37:10,960 --> 00:37:14,239
Speaker 2: you know, those tax exposed accounts, joint accounts, trust those

781
00:37:14,320 --> 00:37:16,680
Speaker 2: kinds of things. The companies control it. So if P

782
00:37:16,760 --> 00:37:20,000
Speaker 2: and G restates its dividend, for example, that filters through

783
00:37:20,040 --> 00:37:22,799
Speaker 2: to every last mutual fund, every last exchange traded fund,

784
00:37:22,880 --> 00:37:25,560
Speaker 2: every last individually held position on the face of the earth,

785
00:37:25,760 --> 00:37:27,600
Speaker 2: and they may restate those. That's why they have a

786
00:37:27,640 --> 00:37:30,160
Speaker 2: longer deadline. Give it another more couple more weeks.

787
00:37:30,440 --> 00:37:33,200
Speaker 1: This is Brian's way of saying, stop calling the office

788
00:37:33,320 --> 00:37:37,120
Speaker 1: asking him for when your tax forms are coming. Just relax,

789
00:37:37,200 --> 00:37:39,640
Speaker 1: they're coming, but they're coming later on in February.

790
00:37:39,680 --> 00:37:40,120
Speaker 3: Is that right?

791
00:37:40,160 --> 00:37:41,719
Speaker 2: This might be coming from some reason fund and we

792
00:37:41,719 --> 00:37:43,960
Speaker 2: certainly don't mind answering these questions, but I wanted to

793
00:37:43,960 --> 00:37:45,399
Speaker 2: get on Our answers always the.

794
00:37:45,320 --> 00:37:46,520
Speaker 3: Same and it never changes.

795
00:37:46,960 --> 00:37:49,399
Speaker 2: That's exactly right. Yeah, so there's two different deadlines. It's

796
00:37:49,440 --> 00:37:52,200
Speaker 2: not January thirty first for everything. But anyway, back to

797
00:37:52,239 --> 00:37:54,759
Speaker 2: our topic, right, big fat refunds, Well, all that means

798
00:37:54,800 --> 00:37:57,120
Speaker 2: you did was give the money, the money to the IRS,

799
00:37:57,280 --> 00:38:00,399
Speaker 2: to the federal government for free. You overpaid that during

800
00:38:00,400 --> 00:38:02,759
Speaker 2: the year. You're only getting your own dollars back. So

801
00:38:02,840 --> 00:38:05,000
Speaker 2: if you get that big refund, you know, get your

802
00:38:05,040 --> 00:38:07,160
Speaker 2: taxes done. But by the time you get that done

803
00:38:07,200 --> 00:38:09,520
Speaker 2: will be a quarter of the way through twenty twenty six.

804
00:38:09,800 --> 00:38:11,719
Speaker 2: I would also take a look at how you're having

805
00:38:11,760 --> 00:38:15,760
Speaker 2: your withholding done, make some adjustments, adjust your exemptions, maybe

806
00:38:15,800 --> 00:38:18,759
Speaker 2: stop making that extra fixed payment that you've been making

807
00:38:18,800 --> 00:38:21,399
Speaker 2: for years and years and totally forgot about, because you're

808
00:38:21,400 --> 00:38:24,239
Speaker 2: simply giving money away to the IRS, not a huge deal.

809
00:38:24,280 --> 00:38:26,600
Speaker 2: When interest rates are low and you weren't earning any

810
00:38:26,640 --> 00:38:29,439
Speaker 2: money at all on your cash, on your liquid cash,

811
00:38:29,440 --> 00:38:31,200
Speaker 2: but that that ship has sailed down, you should be

812
00:38:31,239 --> 00:38:32,160
Speaker 2: getting three four percent.

813
00:38:32,280 --> 00:38:34,399
Speaker 3: Keep those dollars as long as you possibly can.

814
00:38:34,520 --> 00:38:38,480
Speaker 1: Don't let the irs have or don't adjust your filings,

815
00:38:38,520 --> 00:38:40,640
Speaker 1: don't do any of the stuff you just said, and

816
00:38:40,920 --> 00:38:43,839
Speaker 1: you know, just take that refund check because deep down

817
00:38:43,960 --> 00:38:45,799
Speaker 1: you just want to check coming in the mail to

818
00:38:45,800 --> 00:38:48,360
Speaker 1: go buy some new golf clubs or something you want

819
00:38:48,760 --> 00:38:51,240
Speaker 1: that you don't have to tell your wife or spouse about.

820
00:38:51,400 --> 00:38:52,560
Speaker 1: That's another strategy.

821
00:38:52,800 --> 00:38:55,320
Speaker 3: Use that work as well. Yeah, use your spring gift

822
00:38:55,360 --> 00:38:56,080
Speaker 3: from the irs.

823
00:38:56,080 --> 00:38:58,120
Speaker 1: It's free mind. All right, Thanks for listening tonight. You've

824
00:38:58,160 --> 00:39:00,600
Speaker 1: been listening to Simply Money, presented by all Worth Financial

825
00:39:00,640 --> 00:39:03,080
Speaker 1: on fifty five KRC, the talk station