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Speaker 1: I am destroyed about this now more than ever.

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Speaker 2: Listen as often as possible fifty five KRC the talk station.

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Speaker 3: Tonight. The power that local companies have on your portfolio,

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Speaker 3: the big money mistake that even seasoned investors make, and

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Speaker 3: we are tackling your questions. You're listening to Simply Money

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Speaker 3: presented by all Worth Financial on Bob Sponseller alone with

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Speaker 3: Brian James. Let's face it, we've got some great companies

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Speaker 3: here in the Cincinnati area and one of the biggest

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Speaker 3: ones is making national headlines. Tonight.

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Speaker 1: GE Aerospace, our friends just down the hill in Evendale,

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Speaker 1: stock jump to a record level after reporting very strong earnings,

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Speaker 1: actually up about eighty two percent for the year, which

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Speaker 1: is fantastic. Business is exploding right now, especially when it

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Speaker 1: comes to the jet engines, so we're talking about a

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Speaker 1: lot of business for commercial airplanes.

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Speaker 4: It's just a good business story.

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Speaker 1: Orders are up, deliveries are up, meaning things are going well,

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Speaker 1: and profits are way up as well, way up to

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Speaker 1: So what's grabbing investor attention? Of course, GE has raised

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Speaker 1: its expectations for how much money it's going to make

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Speaker 1: going forward, and this is a very very different GE

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Speaker 1: than we've seen over the past ten to fifteen years

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Speaker 1: as it was kind of going through some convulsions of

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Speaker 1: what it was going to become, from one gigantic company

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Speaker 1: that did a little bit of everything to now the

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Speaker 1: situation where it has broken into four completely individual companies.

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Speaker 1: In the GE we know here in Cincinnati, though, is

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Speaker 1: on the aerospace side. That's what was built here a

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Speaker 1: long time ago. Actually, I think I like the history.

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Speaker 1: I don't know if you like this stuff, Bob, but

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Speaker 1: I like to understanding. I love where this stuff came from.

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Speaker 1: And ironically, that plant there in Evendale that's got its

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Speaker 1: roots in the right aeronautical plant.

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Speaker 3: You guessed it.

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Speaker 4: It's those right brothers.

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Speaker 1: They were originally involved or that company was originally involved

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Speaker 1: in choosing that space there and to build their plant.

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Speaker 1: And that was taken over by GE directly in nineteen

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Speaker 1: forty eight, just after World War Two, starting with the

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Speaker 1: jour forty seven jet engine, and that has grown into

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Speaker 1: what we now know today is the world headquarters for

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Speaker 1: GE's aviation business. Has since expanded into a into a

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Speaker 1: huge global aerospace hub and is known for innovations of

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Speaker 1: both commercial and military engines, and just last year a

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Speaker 1: little over a year ago became its own company after

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Speaker 1: splitting from the big company GE So. GE Aerospace is

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Speaker 1: currently the third largest publicly traded company based in the

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Speaker 1: Cincinnati area. So and I know, we get we wind

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Speaker 1: up talking to a lot of people who spent their

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Speaker 1: careers there, pretty happy, driven people.

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Speaker 4: But you can tell why it's been a successful company.

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Speaker 3: Well, Brian, one of those people that spent their entire

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Speaker 3: career there is my own father. He spent over thirty

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Speaker 3: five years at GE. And and I mean, I'm grateful

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Speaker 3: to GE. GE allow, you know, put food on my

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Speaker 3: table growing up as a kid, made it possible for

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Speaker 3: me to go to college. So I'm very grateful to

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Speaker 3: GE and all the fine people over there. The history

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Speaker 3: is wonderful to study. But the thing that stands out

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Speaker 3: to me getting back money here is and you met.

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Speaker 3: You know, a lot of companies will beat their earnings estimate.

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Speaker 3: That happens all the time. People play the game. They

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Speaker 3: revised down and then come out with a beat. What's

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Speaker 3: great about GE Aerospace is they, you know, for the

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Speaker 3: first time in nearly a decade, they raised their guidance

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Speaker 3: going forward. And that's what you like to see, not

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Speaker 3: only the earnings announcement. But what's going to be happening

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Speaker 3: going happened going forward and ge aerospace raising guidance is

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Speaker 3: a good thing, all right, Brian, I know you want

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Speaker 3: to talk about a couple of other companies locally as well.

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Speaker 1: Let's get into Kroger. Yeah, so click details on Kroger. So,

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Speaker 1: Kroger is the largest publicly traded company that's based in Cincinnati,

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Speaker 1: and it goes back all the way to eighteen eighty

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Speaker 1: three when twenty three year old Bernard Kroger invested his

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Speaker 1: life savings of all of three hundred and seventy two dollars.

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Speaker 1: So think of that cost basis and what kind of

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Speaker 1: capital gains he'd have to pay if he still owned

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Speaker 1: all of his stock in that company.

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Speaker 4: But he opens to.

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Speaker 3: Some direct he needs to do some direct indexing forr.

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Speaker 4: With you to spread those dollars out right, you know.

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Speaker 1: So if he had simply taken that and put that

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Speaker 1: into adversified portfolio, he could be looking at a five

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Speaker 1: to six percent annualized rate of return. But that's equivalent

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Speaker 1: to about twelve and a half thousand dollars now in

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Speaker 1: twenty as recently as twenty twenty four, and he opened

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Speaker 1: that first grocery stores down and over the Rhine at

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Speaker 1: sixty six Pearl Street. I'm going to look that up

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Speaker 1: and see what's there now. I bet it's a restaurant

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Speaker 1: or loft apartments or something like that.

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Speaker 3: Then was not a dispensary, Yeah, that could be.

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Speaker 1: But then, finally, we can't talk about the Cincinnati business

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Speaker 1: history without getting into P ANDNG. So P and G

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Speaker 1: was founded by two immigrants from England and Ireland in.

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Speaker 4: Eighteen thirty seven. They got together.

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Speaker 1: This is William Procter and James Gamble really kind of

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Speaker 1: hit the ground running when they got contracts for the

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Speaker 1: Union Army going back to the Civil War. So cincinnat

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Speaker 1: He's got some pretty strong history related to the Civil

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Speaker 1: War as well, despite none of the battles actually being

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Speaker 1: fought here. But then in the eighteen eighties, Ivory was

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Speaker 1: invented and it was off for races from there. So

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Speaker 1: Procter and Gamble is when we hear about soap operas,

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Speaker 1: it happened to floating soap.

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Speaker 3: The floating soap. Do you think that's what made that

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Speaker 3: company really sing? Is people are like, hey, if you

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Speaker 3: can create a soap that'll float, I am all in.

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Speaker 1: Well, Bob, these are the days when people took all

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Speaker 1: of their baths in half barrels, and it was very

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Speaker 1: helpful for the soap to be right on the surface.

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Speaker 1: We didn't have, you know, soap dishes and bath hubs

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Speaker 1: and so forth. But yeah, though, the term soap operas

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Speaker 1: literally comes from it comes from Procter and Gamble because

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Speaker 1: they were using soap operas on the radio and eventually

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Speaker 1: TV shows to market the soap.

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Speaker 4: So that's where that came from.

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Speaker 3: Bob.

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Speaker 4: More history for.

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Speaker 3: You, all right, Speaking of history, you know, we can't

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Speaker 3: leave out our good friends at Fifth Third Bank, another

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Speaker 3: big local company that's always in the news, and it's

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Speaker 3: now one of the largest banks in the United States.

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Speaker 3: The name fifth third was derived from the names of

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Speaker 3: the banks to predecessor companies, the third National Bank and

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Speaker 3: fifth National Bank, which merged in nineteen oh eight. Why

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Speaker 3: is it called fifth third and not third fifth? Supposedly

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Speaker 3: the merger took place when prohibitionist ideas were gaining popularity,

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Speaker 3: and it is a legend that fifth third was considered

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Speaker 3: better than third fifth, which could have been construed as

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Speaker 3: a reference to three fifths of alcohol. It's always interesting

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Speaker 3: to look at back at history, Brian, and see how

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Speaker 3: things you know come about here? Good stuff. All right,

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Speaker 3: you're listening to simply Money presented by all Worth Financial.

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Speaker 3: I'm Bob sponsor along with Brian James. What's the point

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Speaker 3: of all of this historical you know discussion. Well, first,

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Speaker 3: and if you're from Cincinnati, Brian, I know you and

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Speaker 3: I both are. These stories should give all of us

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Speaker 3: an immense sense of pride. The city's got a great

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Speaker 3: legacy of building excellent businesses. And second, and maybe more

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Speaker 3: importantly for our listeners with significant assets, it shows why

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Speaker 3: paying attention to local companies isn't just sentimental, it's smart

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Speaker 3: invest because, Brian, these companies do move markets in there

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Speaker 3: they continue to be very innovative. Yeah.

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Speaker 4: Absolutely.

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Speaker 1: The fifth third and not a lot of people know this,

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Speaker 1: but fifth third basically invented the ATM. The genie was

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Speaker 1: the original ATM that took hold here, I believe in

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Speaker 1: the seventies.

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Speaker 4: And so your little old Cincinnati on the map.

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Speaker 3: So what do we do?

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Speaker 1: So let's bring it back to the reason we do

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Speaker 1: this show on a daily base anyway, So what are

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Speaker 1: the kinds of things that people who are involved in

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Speaker 1: these opportunities, what are they exposed to. Well, a lot

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Speaker 1: of times when we see this very very frequently here

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Speaker 1: as we're doing financial planning for people, is over exposure

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Speaker 1: to one stock. It's great to have a career with

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Speaker 1: a company that's that's been around this long and are

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Speaker 1: these power for this powerful, But at the same time

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Speaker 1: that can lead a lot to a lot of overexposure.

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Speaker 1: And we're not really just talking about the you know,

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Speaker 1: the fact that you've got a lot of stock in

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Speaker 1: your employee stock purchase plan or your four oh one

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Speaker 1: K or whatever, just the fact that your income is

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Speaker 1: already tied to it. So we want to make sure

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Speaker 1: no matter how great any stock is, we want to

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Speaker 1: make sure that our entire lives are not tied up

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Speaker 1: to it because there's something wrong. Of course, it's going

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Speaker 1: to take our portfolio with it, but if it's really bad,

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Speaker 1: it could potentially take our income and it just our

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Speaker 1: livelihood overall, not to mention the nest egg. So we

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Speaker 1: want to make sure that we usually recommend that you know,

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Speaker 1: no more than ten percent. Sometimes you can't control this,

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Speaker 1: my friends at P and G, Yeah you're stuck.

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Speaker 3: A little bit.

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Speaker 1: But there are worst companies to be stuck with I

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Speaker 1: guess just to hope that we don't hire Dirk Yager

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Speaker 1: right when you're trying to retire that didn't.

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Speaker 3: Go so well. You really don't like him, do you, Brian.

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Speaker 1: Well you look look at the stock chart, see what

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Speaker 1: the market thought of him twenty five years ago.

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Speaker 4: He was not a popular man at that point. But

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Speaker 4: but yeah, anyway, all these things add up.

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Speaker 1: You might have exploite stock purchase plans, you could have

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Speaker 1: restricted stock units, old option grants from say fifteen years ago.

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Speaker 4: All of it adds up. As long as the company

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Speaker 4: is doing well, feels great.

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Speaker 1: But when something heads the heads the wrong direction, it

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Speaker 1: really can hit every part of your life. So just

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Speaker 1: make sure you've got things spread out just enough to

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Speaker 1: ensure that you don't take a hit like that.

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Speaker 3: Well, let's face it, Brian, you and I are old

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Speaker 3: enough and have been doing this, you know, financial advice

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Speaker 3: gig for long enough. We have seen all of these

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Speaker 3: companies take big dives, you know, and to the employees

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Speaker 3: that work for them, through no fault of theirs at all.

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Speaker 3: Just stuff happens in the economy, a tough quarter, a lawsuit,

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Speaker 3: a flash crash, I mean, all these things can and

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Speaker 3: have happened. And even if you've got the best company

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Speaker 3: in the world and you're very loyal to it and

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Speaker 3: for good reason, you just can't sit there and have

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Speaker 3: two thirds of your net worth tied up in these things,

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Speaker 3: because you can get really taken for a ride and

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Speaker 3: whip saw it here, and it can negatively impact your

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Speaker 3: long term financial health if you don't have a plan

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Speaker 3: in place at a time.

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Speaker 1: Yeah, and then I'll give a quick example of personal

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Speaker 1: history here. So in two thousand and eight, obviously, that

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Speaker 1: was when we had the Great recession brought on by

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Speaker 1: the banking crisis, and I was working for what was

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Speaker 1: known as National City at the time up.

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Speaker 4: In Dayton, and we at.

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Speaker 1: The shortly prior to that National City had purchased Providence,

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Speaker 1: and all of a sudden we were all in Cincinnati

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Speaker 1: helping the Provident, our Provident friends get get going, and

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Speaker 1: I just remember all the banks went through the same thing.

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Speaker 1: Of course, we all rode that roller coaster. Fifth Third

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Speaker 1: bottomed out. I don't quote me, I think two three

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Speaker 1: bucks to share something like that, as did National City.

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Speaker 1: And on the surface they looked fairly similar as regional banks. Well,

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Speaker 1: it wasn't that long after that one of them came back,

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Speaker 1: which is the one we're talking about today. National City

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Speaker 1: is now PNC, and by the way, PNC stands for

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Speaker 1: previously National City for those of you who were working

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Speaker 1: there that day that that announcement was made and those

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Speaker 1: little posted notes went up all over the windows anyway,

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Speaker 1: so you just never know. Is the point two banks

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Speaker 1: that looked otherwise the same one made it. One didn't

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Speaker 1: through that crisis. So this is why we always say,

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Speaker 1: be super careful not to have your absolute entire livelihood

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Speaker 1: and gymnastig tied to one company.

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Speaker 5: Find a way to get it diversified. Yeah, and there

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Speaker 5: are strategies to do that. I mean, you know, I

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Speaker 5: jokingly mentioned direct indexing. I mean color strategies, just good

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Speaker 5: old put options, you know, to protect a large position.

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Speaker 5: There are strategies in plays to protect the downside while

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Speaker 5: still participating in the upside. But you need a plan.

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Speaker 5: Here's the all Worth advice.

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Speaker 3: Loyalty to our wonderful local companies is admirable and well placed,

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Speaker 3: but your retirement shouldn't depend on just one ticker symbol.

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Speaker 3: Diversify with purpose coming up next, how investors can lose

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Speaker 3: thousand avoidable taxes by putting the right investments in the

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Speaker 3: wrong accounts. You're listening to Simply Money, presented by all

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Speaker 3: Worth Financial on fifty five KRC the talk station.

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Speaker 4: What they want to hear in the no twenty four

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Speaker 4: hours a day.

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Speaker 3: We only deal in what you need to hear these days.

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Speaker 3: You need to keep an open mind. On fifty five

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Speaker 3: KRC the Talkstation.

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Speaker 6: Allworth Financial a registered investment advisory firm. Any ideas presented

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Speaker 6: during this program are not intended to provide specific financial advice.

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Speaker 6: You should consult your own financial advisor, tax consultant, or

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Speaker 6: state planning attorney to conduct your own due diligence.

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Speaker 3: You're listening to Simple Money because that about all Worth

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Speaker 3: Financial UNBOP sponsorller along with Brian James. You've saved, diligently,

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Speaker 3: built your wealth wisely. But now what we're tackling the

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Speaker 3: biggest questions real families are asking about what comes next?

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Speaker 3: Straight ahead of six forty three. All right, you've done

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Speaker 3: your homework, You've got a diversified portfolio, you've picked strong funds,

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Speaker 3: have a solid foundation, maybe even some tax efficient ETFs.

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Speaker 3: But here's the question, did you put all of those

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Speaker 3: investments in the right places. Tonight, we're diving into what

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Speaker 3: might be one of the most overlooked and most expensive

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Speaker 3: mistakes we see when talking to folks in our office. Brian,

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Speaker 3: let's get into it.

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Speaker 1: Asset allocation versus asset location. One syllable makes a huge difference,

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Speaker 1: So we're gonna separate these two terms. It kind of

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Speaker 1: sound the same, but really couldn't be more different. Asset

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Speaker 1: allocation is the different types of things that you own

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Speaker 1: that make up a portfolio of stocks, bonds, alternatives, real estate,

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Speaker 1: you know, whatever else you've got there that make up

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Speaker 1: your overall asset mix.

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Speaker 4: Asset location is where you put them.

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Speaker 1: Is this and there are really three kinds of tax

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Speaker 1: treatment accounts. Asset location refers to tax treatments. Is it

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Speaker 1: a taxable account, is it tax deferred which means pre tax,

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Speaker 1: or is it tax free otherwise known as roth, or

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Speaker 1: possibly mean this babond something like that.

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Speaker 4: So here's the thing.

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Speaker 1: Some investments themselves, right that it's one thing to put

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Speaker 1: that put an investment in a certain type of account,

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Speaker 1: but there are certain investments themselves that can be more

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Speaker 1: tax efficient than others. Just no matter what accounts you

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Speaker 1: put them in so where you park those accounts can

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Speaker 1: directly impact your annual tax bill and your long term returns,

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Speaker 1: because we want to we want to be thinking about

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Speaker 1: after tax returns, not just before.

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Speaker 3: And we're going to walk through a couple of actual

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Speaker 3: examples here, so you know, we run into this all

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Speaker 3: the time. We call it the dey you know, dey

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Speaker 3: mistakes that do it yourself mistakes. Let's start with a

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Speaker 3: hypothetical couple named Jeff and Rachel. They're both sixty two

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Speaker 3: and they're recently retired. They've got three million dollars split

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Speaker 3: evenly across three accounts, about a million dollars in an IRA,

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Speaker 3: a million dollars in a WROTH IRA, and another one

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Speaker 3: million dollars in a joint taxable account. They've got a

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Speaker 3: solid sixty percent stock forty percent bond allocation, but they

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Speaker 3: spread it evenly across all three accounts. Each one has

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Speaker 3: that same mix of stocks and bonds, and Brian, what's

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Speaker 3: the problem. The bonds, obviously in that taxable account are

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Speaker 3: generating interests at ordinary income rates, and in their case

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Speaker 3: that's thirty two percent. These people are still working on

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Speaker 3: earning a high income. The WROTH account is holding value

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Speaker 3: stocks and reads, which could have been more tax efficient.

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Speaker 3: You know, if the assets have been placed elsewhere, they're

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Speaker 3: losing thousands of dollars a year, all because of how

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Speaker 3: and where they placed their assets, not what they own.

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Speaker 3: What they own is fine, it's just where it's located.

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Speaker 1: Right, So I think let's drill into this a little

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Speaker 1: bit what we're talking about. So the reason we're saying,

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Speaker 1: for example, that value stocks and ates are not very

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Speaker 1: efficiently held in the rocks because those are already slightly

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Speaker 1: more tax efficient on their own. Value stocks will spit

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Speaker 1: out a dividend. Dividends are generally taxed at fifteen percent,

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Speaker 1: not always, but most of the time there's a fixed

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Speaker 1: rate on them, not as ordinary income. So on the

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Speaker 1: other hand, the ordinary income types of things they own,

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Speaker 1: they do own a bunch of bonds, and that's sitting

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Speaker 1: in a taxable account. If they flip those over, right,

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Speaker 1: maybe they sell the bond funds in the taxable account

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Speaker 1: and buy and rebuy the value stocks and the real

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Speaker 1: estate investment trusts in that account, and then do the

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Speaker 1: same thing in the wrong Now they will have replaced

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Speaker 1: their assets.

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Speaker 7: Now.

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Speaker 1: It's never this simple, of course, because that itself might

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Speaker 1: incur taxes, but it's something worth looking at and hopefully

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Speaker 1: that illustrates the impact of making sure we've got the

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Speaker 1: right assets in the right type of tax treatment type accounts.

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Speaker 3: All right, hey, I've got a question for you, because

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Speaker 3: you know, to your point, there is no one size

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Speaker 3: fits all way to do this, and I'm interested in

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Speaker 3: your perspective on this because you know, we all build

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Speaker 3: financial plans every day and you might have a little

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Speaker 3: bit different perspective than me on this. But if you're

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Speaker 3: taking a regular income stream from a taxable brokerage account,

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Speaker 3: you know it is important to control volatility in that

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Speaker 3: account when you're pulling money from it. Is it wrong

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Speaker 3: to have any bonds whatsoever in a taxable brokerage account,

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Speaker 3: Brian No.

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Speaker 4: I would I wouldn't say necessarily.

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Speaker 1: And it's really only been, you know, the last couple

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Speaker 1: three years where I would say that that municipal bonds,

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Speaker 1: but for the highest brackets that I would say municipal

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Speaker 1: bonds have really been worth paying attention to. When rates

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Speaker 1: started to go up again and these types of assets,

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Speaker 1: we started to see more of a spread between taxable

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Speaker 1: and tax free as opposed to everything being on the

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Speaker 1: floor for fifteen years. Then this wasn't quite as important.

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Speaker 1: You would you would basically on an after tax yield

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Speaker 1: in your taxable bond portfolio. You just wouldn't see as

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Speaker 1: much after tax rate of return, and it was a

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Speaker 1: little benefit to the tax free side. But now I

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Speaker 1: think I think it's now worth looking at. Now we're

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Speaker 1: kind of back to where we were again, maybe fifteen

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Speaker 1: years ago or so, where it makes more sense to

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Speaker 1: think about these things and think about bonds in general.

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Speaker 1: Now that that interest rates are off the floor, bonds

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Speaker 1: have a little bit more ability to move and can

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Speaker 1: can really be treated the.

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Speaker 4: Way they were a while ago. Hopefully we'll get to

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Speaker 4: stay in that environment for a little while.

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Speaker 3: All right, let's look at another case example. We'll talk

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Speaker 3: about Lisa. She's fifty nine, recently widowed. She has a

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Speaker 3: net worth of a little over five million dollars. Her

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Speaker 3: late husband managed their money himself, and now she's working

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Speaker 3: with an advisor. The advisor runs a tax analysis and

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Speaker 3: discovers her municipal bonds are placed in a rough IRA,

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Speaker 3: completely wasting that tax free you know, place to own assets.

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Speaker 3: Her growth stocks earned traditional IRA, setting her up for

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Speaker 3: huge require minimum distribution problems, and her taxable account has

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Speaker 3: bond funds that are spending off about twenty two thousand

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Speaker 3: dollars a year in fully taxable interest. I think this

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Speaker 3: this case is kind of making the point you know,

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Speaker 3: you just made on it. It's a good time to,

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Speaker 3: you know, do a little bit of an inventory and

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Speaker 3: audit and see where all this stuff is placed. In

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Speaker 3: this case, the advisor rebounds everything for tax efficiency and

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Speaker 3: projects forty one thousand dollars in tax savings just over

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Speaker 3: the next decade Brian by doing nothing but doing some

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Speaker 3: planning and just relocating where these assets are held.

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Speaker 1: So I think one quick just a point of clarification here,

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Speaker 1: why why does it matter that her municipal bonds were

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Speaker 1: sitting in a wroth. Well, municipal bonds are tax free

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Speaker 1: no matter where they sit. That can be a taxable account,

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Speaker 1: individual account of trust, or whatever. They're not gonna you're

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Speaker 1: not gonna pay income taxes on those municipal bonds. But

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Speaker 1: if they're held in a roth, that means that means

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Speaker 1: you're waste that those dollars on something that was tax free.

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Speaker 3: To begin with.

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Speaker 1: And the other important point is there's a difference between

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Speaker 1: municipal tax free income and taxable income. Bond interest that

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Speaker 1: is taxable could be let's call it four percent the

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Speaker 1: comparatible comparable amount, and a tax free and uni portfolio

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Speaker 1: might be three percent. So you're already giving up money

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Speaker 1: on the front end. It's the tax free You got

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Speaker 1: to do the after tax analysis on that to find

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Speaker 1: the benefit.

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Speaker 3: Here's the all Worth advice. It's not just what you own,

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Speaker 3: it's where you accounts big time. Think your money safe

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Speaker 3: just because it's in the cloud. An Amazon cloud outage

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Speaker 3: this week proved otherwise. Next, why third party risk is

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Speaker 3: quietly becoming one of the biggest threats to your finances

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Speaker 3: in what you can do about it. You're listening to

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Speaker 3: Simply Money. Is that a by all Worth Financial on

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Speaker 3: fifty five KRC the talk station from Portland. Portland has

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Speaker 3: been on fire for years to Chicago. That's a great city.

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Speaker 3: That's like a war zone to write here in town.

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Speaker 8: I mean it feels like things are just getting.

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Speaker 9: Work and worse.

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Speaker 6: Fifty five krsers an iHeartRadio station.

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Speaker 3: You're listening to Simple Money, presented by all Worth Financial.

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Speaker 3: I'm Bob Sponsorer along with Brian James joined tonight by

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Speaker 3: our cybersecurity and technology guru, mister Dave Hatter. H Dave,

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Speaker 3: thanks as always for being with us and we got

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Speaker 3: a lot to talk about tonight, so let's get into

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Speaker 3: it first. We are really interested to hear your perspective

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Speaker 3: on this recent Amazon Cloud Services outage that had a

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Speaker 3: lot of stuff shut down for a couple of days.

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Speaker 3: What was going on there and what do we need

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Speaker 3: to be aware of?

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Speaker 4: Yeah, Dave, why did all my stuff break the other day?

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Speaker 8: Well, as always, thanks for having me on guys.

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Speaker 10: And you know, Amazon Web Services is a cloud provider

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Speaker 10: that provides services for lots of other companies. Some estimate

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Speaker 10: anywhere between thirty percent and thirty eight percent of essentially

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Speaker 10: all Internet based services. You know, think of anything that

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Speaker 10: you're using online, your bank, you're a great net of

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Speaker 10: things device. I don't know if you guys saw sleep

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Speaker 10: number beds stop working because of this, but they host

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Speaker 10: about thirty eight percent of that. So when there's an

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Speaker 10: outage like this, which lasted roughly fifteen hours, and experts

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Speaker 10: estimate will.

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Speaker 8: Cost billions of dollars by the time it's all added.

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Speaker 10: Up across all the different services that went down, including

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Speaker 10: things like Zoom and video games like ropeblocks.

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Speaker 8: It's pretty devastating. You know.

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Speaker 10: While I'm generally a proponent of cloud based services and

439
00:21:25,240 --> 00:21:28,200
Speaker 10: the three big providers. You got AWS, you got Microsoft,

440
00:21:28,280 --> 00:21:31,440
Speaker 10: and you've got Google Cloud, kind of the three main players,

441
00:21:31,440 --> 00:21:32,520
Speaker 10: there are others out there.

442
00:21:33,119 --> 00:21:33,840
Speaker 8: It does, in my.

443
00:21:33,840 --> 00:21:36,960
Speaker 10: Opinion, show we continue to build systems that are sort

444
00:21:36,960 --> 00:21:40,480
Speaker 10: of brutal and fragile, and as our society becomes increasingly digital,

445
00:21:40,840 --> 00:21:41,960
Speaker 10: we rely on these things.

446
00:21:42,000 --> 00:21:43,119
Speaker 8: I mean, you could see the impact.

447
00:21:43,119 --> 00:21:45,679
Speaker 10: Even your Internet of Beings devices, ring cameras and so

448
00:21:45,760 --> 00:21:49,080
Speaker 10: forth stop working because the backing services that make it

449
00:21:49,119 --> 00:21:52,400
Speaker 10: work are hosted in these giant cloud providers like AWS.

450
00:21:52,400 --> 00:21:55,919
Speaker 10: So it's concerning to me. Thankfully, the outage wasn't that long.

451
00:21:56,200 --> 00:21:58,720
Speaker 10: This isn't the first one. Every one of these major

452
00:21:58,760 --> 00:22:01,720
Speaker 10: providers has had some sort of like this. You know,

453
00:22:01,840 --> 00:22:03,920
Speaker 10: in my mind, it shows we have to be focused

454
00:22:03,960 --> 00:22:09,359
Speaker 10: on robustness, resilience, and uptime versus cost and market share.

455
00:22:10,880 --> 00:22:13,920
Speaker 3: Well, Dave, I'll tell you my wife had no problem

456
00:22:14,040 --> 00:22:18,200
Speaker 3: continuing business as usual with AWS. I mean, the little

457
00:22:18,240 --> 00:22:21,159
Speaker 3: blind that she ordered to go in our bathroom windows

458
00:22:21,240 --> 00:22:24,360
Speaker 3: showed up as scheduled. She still managed to work through

459
00:22:24,400 --> 00:22:28,239
Speaker 3: this and spend money. So but in all seriousness, what

460
00:22:28,240 --> 00:22:29,840
Speaker 3: are we supposed to do about it? I mean, the

461
00:22:29,880 --> 00:22:32,080
Speaker 3: world has evolved to where we we do we just

462
00:22:32,119 --> 00:22:35,440
Speaker 3: depend on all this stuff just to function. Are there

463
00:22:35,480 --> 00:22:38,840
Speaker 3: any are there any practical tips or pieces of advice,

464
00:22:39,400 --> 00:22:41,720
Speaker 3: you know, relative to this outage that we should be

465
00:22:41,760 --> 00:22:44,960
Speaker 3: aware of and anything we should take actual action on.

466
00:22:46,040 --> 00:22:47,800
Speaker 10: Well, the good news is at this point, from what

467
00:22:47,840 --> 00:22:50,000
Speaker 10: they've reported, it appears to be a DNS do may

468
00:22:50,080 --> 00:22:54,240
Speaker 10: name system issue that caused services to go down inside AWS,

469
00:22:54,320 --> 00:22:56,399
Speaker 10: which then rippled out to the companies that depend on it.

470
00:22:57,080 --> 00:22:58,679
Speaker 8: So it doesn't appear to be a cyber attack.

471
00:22:59,000 --> 00:23:01,000
Speaker 10: But again, when you think about things guys like that

472
00:23:01,080 --> 00:23:05,200
Speaker 10: are proposed digital ID, central bank, digital currency. Imagine if

473
00:23:05,200 --> 00:23:09,159
Speaker 10: this weren't just a simple mistake or mechanical failure or

474
00:23:09,200 --> 00:23:11,440
Speaker 10: something that caused this, and it were an intem nation

475
00:23:11,560 --> 00:23:14,560
Speaker 10: state actor like China that deliberately knocked this out, and

476
00:23:14,640 --> 00:23:17,160
Speaker 10: let's say it couldn't be repaired in fifteen hours, let's

477
00:23:17,160 --> 00:23:18,439
Speaker 10: say it took fifteen days.

478
00:23:18,800 --> 00:23:19,879
Speaker 8: Think of the impact of that.

479
00:23:19,920 --> 00:23:22,600
Speaker 10: So we've got to be as our society becomes increasingly

480
00:23:22,640 --> 00:23:26,280
Speaker 10: digital and increasingly reliant on these sorts of technologies. We

481
00:23:26,320 --> 00:23:29,040
Speaker 10: really need to be thinking about the impact on society,

482
00:23:29,160 --> 00:23:33,640
Speaker 10: the possible disastrous consequences of wide scale, long term outages,

483
00:23:33,920 --> 00:23:37,119
Speaker 10: and be focused on building systems that again are resilient

484
00:23:37,240 --> 00:23:39,320
Speaker 10: and robust. I mean, this is the prime example of

485
00:23:39,359 --> 00:23:40,240
Speaker 10: third party risk.

486
00:23:40,680 --> 00:23:41,280
Speaker 8: You build a.

487
00:23:41,240 --> 00:23:44,080
Speaker 10: Service that relies on another service, it goes down and

488
00:23:44,119 --> 00:23:47,080
Speaker 10: now you're out. And too much concentration in the hand

489
00:23:47,119 --> 00:23:49,399
Speaker 10: of the hands of a small number of players. So

490
00:23:49,960 --> 00:23:52,399
Speaker 10: there's no simple answer for this going forward other than

491
00:23:52,440 --> 00:23:55,520
Speaker 10: businesses need to think about how can they Dislike you,

492
00:23:55,560 --> 00:23:59,199
Speaker 10: guys would advise and investing, diversify so that you're not

493
00:23:59,240 --> 00:24:02,639
Speaker 10: dependent on one provider who then takes you out to

494
00:24:03,200 --> 00:24:04,520
Speaker 10: a third party outage.

495
00:24:05,640 --> 00:24:07,879
Speaker 4: Yeah, got you, Dave, So thank you for that for

496
00:24:08,600 --> 00:24:10,080
Speaker 4: the summary there. So let me ask you.

497
00:24:10,119 --> 00:24:12,080
Speaker 1: You're a business owner, so and you would have done

498
00:24:12,080 --> 00:24:13,679
Speaker 1: things a long time ago. I'm sure there really is

499
00:24:13,720 --> 00:24:15,919
Speaker 1: nothing that you did in response to this, But what

500
00:24:15,960 --> 00:24:17,920
Speaker 1: are the steps that you took as a business owner

501
00:24:17,960 --> 00:24:19,800
Speaker 1: to protect yourself from these types of things.

502
00:24:20,680 --> 00:24:25,399
Speaker 10: Well, again, it's really about diversification, understanding the players getting

503
00:24:25,480 --> 00:24:29,399
Speaker 10: things like a sock two type two audit, understanding what

504
00:24:29,480 --> 00:24:33,600
Speaker 10: is their disaster recovery policy, What is their uptime and

505
00:24:33,920 --> 00:24:37,560
Speaker 10: SLA agreements with you as part of their contracts.

506
00:24:38,280 --> 00:24:38,520
Speaker 3: You know.

507
00:24:39,080 --> 00:24:42,040
Speaker 10: Again, cloud services in general, I'm a fan of it

508
00:24:42,119 --> 00:24:46,119
Speaker 10: reduces capital expense, it reduces complexity on prem but you've

509
00:24:46,160 --> 00:24:49,679
Speaker 10: got to understand the players. And again, while there are

510
00:24:49,720 --> 00:24:53,320
Speaker 10: ways even within these providers, like Amazon Web Services has

511
00:24:53,440 --> 00:24:57,720
Speaker 10: multiple different data centers across the country, it costs more

512
00:24:57,800 --> 00:25:00,840
Speaker 10: to try to build resilience in It costs or to

513
00:25:00,880 --> 00:25:05,239
Speaker 10: diversify across multiple cloud service providers to limiture risk and

514
00:25:05,520 --> 00:25:08,040
Speaker 10: it you know, I understand why businesses will put all

515
00:25:08,080 --> 00:25:09,760
Speaker 10: their eggs in white basket and look for the low

516
00:25:09,880 --> 00:25:13,280
Speaker 10: cost solution. But at the same time, how much downtime

517
00:25:13,280 --> 00:25:15,760
Speaker 10: can your business withstand? If you're down for three or

518
00:25:15,760 --> 00:25:18,600
Speaker 10: four days because of a third party outage to a

519
00:25:18,640 --> 00:25:21,520
Speaker 10: provider you use, well, you know they're not going to

520
00:25:21,520 --> 00:25:23,280
Speaker 10: pay you back for that in all likelihood?

521
00:25:23,480 --> 00:25:25,040
Speaker 8: Can you withstand that kind of outage?

522
00:25:25,080 --> 00:25:28,119
Speaker 10: So it's guys, it's really thinking about risk and you know,

523
00:25:28,200 --> 00:25:30,800
Speaker 10: making risk informed decisions and trying to mitigate the risk

524
00:25:30,840 --> 00:25:33,119
Speaker 10: to the extent your budget can withstand it, and that

525
00:25:33,160 --> 00:25:35,080
Speaker 10: you can withstand outages.

526
00:25:36,200 --> 00:25:38,600
Speaker 3: All right? Switching gears here to, you know, because what

527
00:25:38,680 --> 00:25:41,480
Speaker 3: we're talking about right now is things business owners probably

528
00:25:41,520 --> 00:25:44,399
Speaker 3: need to think about, you know, thinking about ordinary folks

529
00:25:44,440 --> 00:25:47,920
Speaker 3: that are subject to potential hacking schemes. Here you came

530
00:25:47,960 --> 00:25:50,720
Speaker 3: across the story, you know, when we talk about this

531
00:25:50,800 --> 00:25:54,040
Speaker 3: all the time, the risk of AI coming in and

532
00:25:54,080 --> 00:25:58,720
Speaker 3: hacking people and committing cybercrime. Talk about this most recent

533
00:25:58,840 --> 00:26:02,040
Speaker 3: AI really really cyber crime spree.

534
00:26:02,800 --> 00:26:03,000
Speaker 8: Yes.

535
00:26:03,040 --> 00:26:05,560
Speaker 10: So the bottom line is, for the average consumer, your

536
00:26:05,560 --> 00:26:09,320
Speaker 10: biggest risk from AI is deep fakes and spoofing. It's

537
00:26:09,440 --> 00:26:12,040
Speaker 10: it's trivially easy to go online find it free sight

538
00:26:12,520 --> 00:26:16,600
Speaker 10: and clone someone's voice, create completely fake videos, etc. People

539
00:26:16,640 --> 00:26:18,880
Speaker 10: need to look into that and need to understand that risk.

540
00:26:19,240 --> 00:26:21,159
Speaker 10: This article, though, is about, you know, more of a

541
00:26:21,160 --> 00:26:23,880
Speaker 10: business angle around a hacker who went out and used

542
00:26:23,880 --> 00:26:27,639
Speaker 10: anthropics claude, which is a quote it's primarily focused on

543
00:26:27,760 --> 00:26:30,439
Speaker 10: quote vibe coding unquote, which I hate that term, but

544
00:26:30,520 --> 00:26:32,399
Speaker 10: it's the idea that you don't need to know how

545
00:26:32,400 --> 00:26:34,560
Speaker 10: to write software anymore. You just tell the AI what

546
00:26:34,680 --> 00:26:36,960
Speaker 10: you want and it produces it for you. I can

547
00:26:37,000 --> 00:26:37,880
Speaker 10: tell you there are.

548
00:26:37,840 --> 00:26:39,960
Speaker 9: All kinds of problems with that, but suffice it to

549
00:26:39,960 --> 00:26:43,680
Speaker 9: say that's become a common thing in the business, and

550
00:26:44,160 --> 00:26:46,720
Speaker 9: a hacker used this to essentially go out and say,

551
00:26:46,720 --> 00:26:51,600
Speaker 9: all right, I want to find companies that have vulnerabilities.

552
00:26:52,119 --> 00:26:55,000
Speaker 10: And then once I've identified these companies that have vulnerabilities,

553
00:26:55,040 --> 00:26:58,119
Speaker 10: vulnerabilities meaning like you have old unpatched software, you have

554
00:26:58,200 --> 00:27:00,600
Speaker 10: stuff that's no longer supported by the vent there, you

555
00:27:00,720 --> 00:27:04,280
Speaker 10: have known problems that have not been fixed in your environment,

556
00:27:04,320 --> 00:27:07,480
Speaker 10: which is common guys, very common across businesses and governments.

557
00:27:08,200 --> 00:27:11,680
Speaker 10: Find those companies and then create It showed me how

558
00:27:11,680 --> 00:27:15,080
Speaker 10: I can exploit those vulnerabilities, whether it's you know, try

559
00:27:15,119 --> 00:27:18,480
Speaker 10: this particular approach on this particular firewall, write some software

560
00:27:18,560 --> 00:27:21,280
Speaker 10: or whatever that would allow me to exploit these this

561
00:27:21,280 --> 00:27:26,240
Speaker 10: this particular individual or individuals. Basically, then you know, used

562
00:27:26,280 --> 00:27:30,480
Speaker 10: claw to figure out who to attack because they have vulnerabilities,

563
00:27:30,600 --> 00:27:34,359
Speaker 10: and then build tools using this to specifically attack them.

564
00:27:34,880 --> 00:27:37,119
Speaker 8: And you know, that's kind of where we're at, you know.

565
00:27:37,240 --> 00:27:40,159
Speaker 10: Sadly, while there's a lot of upside AI, some of

566
00:27:40,200 --> 00:27:44,040
Speaker 10: the downside is it supercharges these sorts of attacks, and

567
00:27:44,080 --> 00:27:46,679
Speaker 10: it gives people who would not normally have this knowledge

568
00:27:46,800 --> 00:27:50,400
Speaker 10: or skills to launch these sorts of attacks the ability

569
00:27:50,440 --> 00:27:52,560
Speaker 10: to do it because the AI helps them.

570
00:27:53,119 --> 00:27:54,720
Speaker 3: All right, We got to leave it there for tonight.

571
00:27:54,760 --> 00:27:58,280
Speaker 3: We are certainly living in interesting times. Thanks as always, Dave.

572
00:27:58,359 --> 00:28:00,920
Speaker 3: You're listening to Simply Money, presented by all Worth Financial

573
00:28:01,280 --> 00:28:04,040
Speaker 3: on fifty five KRC, the Talk Station.

574
00:28:05,800 --> 00:28:06,960
Speaker 4: Mark Levin, you.

575
00:28:06,920 --> 00:28:09,520
Speaker 7: Know, America, we spend an awful lot of time in

576
00:28:09,560 --> 00:28:14,080
Speaker 7: this country responding to an unreality created by the people

577
00:28:14,080 --> 00:28:17,200
Speaker 7: who hate America, created by people who get sucked into

578
00:28:17,240 --> 00:28:19,920
Speaker 7: the narratives that are pushed out there each and every day.

579
00:28:20,040 --> 00:28:22,879
Speaker 7: And they're posting, and they're posting, and they're posting, and

580
00:28:22,920 --> 00:28:24,560
Speaker 7: then move on to the next thing, and the next

581
00:28:24,560 --> 00:28:25,320
Speaker 7: thing and the next thing.

582
00:28:25,359 --> 00:28:26,720
Speaker 3: That's what the media enemy do.

583
00:28:26,960 --> 00:28:30,680
Speaker 2: Mark Levin tonight at ten oh six on fifty five KRC,

584
00:28:31,119 --> 00:28:32,040
Speaker 2: the Talk Station.

585
00:28:32,600 --> 00:28:34,440
Speaker 3: Why don't you grab a pen you're going to want

586
00:28:34,440 --> 00:28:35,919
Speaker 3: to take this number of year? Why do we keep

587
00:28:36,000 --> 00:28:38,440
Speaker 3: letting thousands of people come over and do nothing about it?

588
00:28:38,720 --> 00:28:40,160
Speaker 3: My family's safety is at risk.

589
00:28:40,320 --> 00:28:42,960
Speaker 4: Fifty five KRC, the Talk Station.

590
00:28:47,560 --> 00:28:49,400
Speaker 3: You're listening to Simply Money. Is that a buy? All

591
00:28:49,400 --> 00:28:53,000
Speaker 3: Worth Financial and Bob Sponseller along with Ryan James. You

592
00:28:53,000 --> 00:28:55,160
Speaker 3: have a financial question you'd like for us to answer.

593
00:28:55,200 --> 00:28:57,400
Speaker 3: There's a red button you can click while you're listening

594
00:28:57,480 --> 00:29:00,760
Speaker 3: to the show right on the iHeart apps, record your

595
00:29:00,840 --> 00:29:04,960
Speaker 3: question and it will come straight to us. Allison in

596
00:29:05,080 --> 00:29:07,920
Speaker 3: Lebanon leads us off tonight, Brian. She says, I'm in

597
00:29:07,920 --> 00:29:11,120
Speaker 3: my fifties and my spouse and I have very different

598
00:29:11,240 --> 00:29:15,160
Speaker 3: risk tolerances. How do you build one plan when one

599
00:29:15,240 --> 00:29:19,720
Speaker 3: person's nervous and the others aggressive. This happens from time

600
00:29:19,760 --> 00:29:22,240
Speaker 3: to time, Brian. We see this more often than not.

601
00:29:22,720 --> 00:29:24,280
Speaker 3: It's a great question to dive into.

602
00:29:24,560 --> 00:29:25,640
Speaker 4: Yeah, go figure marry.

603
00:29:25,680 --> 00:29:29,520
Speaker 1: Couples don't tend to agree on absolutely everything, and so

604
00:29:29,680 --> 00:29:33,280
Speaker 1: this is another place where sometimes some differences can come in.

605
00:29:33,440 --> 00:29:33,600
Speaker 4: Now.

606
00:29:33,680 --> 00:29:36,240
Speaker 1: Interestingly, I would say more often than not, there's a

607
00:29:36,320 --> 00:29:39,880
Speaker 1: there's a difference of opinion in UH, in risk tolerance,

608
00:29:39,920 --> 00:29:41,520
Speaker 1: and frankly, this is the kind of thing that keeps

609
00:29:41,520 --> 00:29:42,200
Speaker 1: marriages alive.

610
00:29:42,240 --> 00:29:44,880
Speaker 4: If everybody agreed on everything, I think everybody would be divorced.

611
00:29:44,880 --> 00:29:47,080
Speaker 4: It doesn't doesn't resent ten to go very well.

612
00:29:47,200 --> 00:29:48,280
Speaker 3: Anyway. How do you deal with this?

613
00:29:48,440 --> 00:29:51,000
Speaker 1: Well, first of all, understand exactly what each other means.

614
00:29:51,600 --> 00:29:53,800
Speaker 1: A lot of people will say they're they're they're there.

615
00:29:53,880 --> 00:29:57,040
Speaker 1: They'll say they're conservative when it comes to investments. But

616
00:29:57,120 --> 00:29:59,080
Speaker 1: then we look at a portfolio and it looks not

617
00:29:59,120 --> 00:30:01,920
Speaker 1: necessarily aggressive, but it's much more growth oriented. So make

618
00:30:01,960 --> 00:30:04,440
Speaker 1: sure everybody's defining the terms, you know, the right way.

619
00:30:04,640 --> 00:30:07,080
Speaker 1: Conservative can simply mean I don't want to get into

620
00:30:07,080 --> 00:30:09,680
Speaker 1: cryptocurrency or speculative types of stuff. I don't want to

621
00:30:09,680 --> 00:30:12,560
Speaker 1: be day trading that kind of thing. But I might

622
00:30:12,560 --> 00:30:15,160
Speaker 1: be okay with a portfolio of S and P five

623
00:30:15,240 --> 00:30:17,400
Speaker 1: hundred based index type stocks because I know the market

624
00:30:17,400 --> 00:30:19,320
Speaker 1: goes up and down. Or it can mean I want

625
00:30:19,320 --> 00:30:21,600
Speaker 1: to bury everything in the backyard and never read a headline.

626
00:30:21,720 --> 00:30:24,640
Speaker 1: So just make sure you have big discussions about what

627
00:30:24,960 --> 00:30:27,640
Speaker 1: the impact of those various types of portfolios will be.

628
00:30:28,360 --> 00:30:31,800
Speaker 1: You know, somebody who is so super conservative that they

629
00:30:31,880 --> 00:30:34,120
Speaker 1: want to again bury everything in the backyard and never

630
00:30:34,160 --> 00:30:37,520
Speaker 1: see any fluctuation is probably going to eventually suffer from

631
00:30:37,560 --> 00:30:40,360
Speaker 1: inflation eating away at the portfolio if nothing is really growing.

632
00:30:40,680 --> 00:30:43,480
Speaker 1: Somebody who's on the other end of the spectrum, who

633
00:30:43,520 --> 00:30:46,400
Speaker 1: is extremely aggressive is going to have some very bumpy,

634
00:30:46,400 --> 00:30:49,840
Speaker 1: white knuckle times during those market pullbacks that don't feel

635
00:30:49,840 --> 00:30:51,920
Speaker 1: that like that big of a deal when your thirties

636
00:30:51,920 --> 00:30:55,720
Speaker 1: forties still working, but will really change the trajectory when

637
00:30:55,920 --> 00:30:58,040
Speaker 1: you are retired and you've got really the big thing

638
00:30:58,080 --> 00:31:01,880
Speaker 1: is time to think about it, and it's impacting your portfolio.

639
00:31:02,160 --> 00:31:04,400
Speaker 1: So the right answer is going to be somewhere in

640
00:31:04,400 --> 00:31:06,240
Speaker 1: the middle. But bring everybody to the table with a

641
00:31:06,280 --> 00:31:09,440
Speaker 1: financial advisor. And the more Alison you talk to your

642
00:31:09,440 --> 00:31:13,280
Speaker 1: spouse about this and not the advisor, the better off

643
00:31:13,280 --> 00:31:15,120
Speaker 1: you'll be. Let the advisor be in the middle to

644
00:31:15,200 --> 00:31:17,560
Speaker 1: kind of mediate that conversation. But it's an important, good

645
00:31:17,600 --> 00:31:20,120
Speaker 1: conversation they have, especially as you're starting to head.

646
00:31:19,960 --> 00:31:21,000
Speaker 4: Into those retirement years.

647
00:31:21,760 --> 00:31:24,520
Speaker 1: Jeff and Anderson. Jeff says they've got a few advisors

648
00:31:24,520 --> 00:31:27,640
Speaker 1: in the mix. They've got separate tax, legal, and investment people,

649
00:31:27,640 --> 00:31:30,120
Speaker 1: and they've worked together for a long time. But these

650
00:31:30,160 --> 00:31:32,000
Speaker 1: groups are not talking to each other. How do you

651
00:31:32,040 --> 00:31:34,440
Speaker 1: actually get everybody on the same page. Sounds like Jeff's

652
00:31:34,440 --> 00:31:36,920
Speaker 1: being a sort of pinball or ping pongs between all

653
00:31:36,920 --> 00:31:37,880
Speaker 1: these different advisors.

654
00:31:37,920 --> 00:31:38,960
Speaker 4: Bob, have you run across that.

655
00:31:40,200 --> 00:31:42,320
Speaker 3: I have. I run into it all the time, and

656
00:31:42,840 --> 00:31:45,560
Speaker 3: I'm pretty passionate about this topic. So Jeff, I'm going

657
00:31:45,640 --> 00:31:48,960
Speaker 3: to use a football team analogy. Hope this makes sense.

658
00:31:49,040 --> 00:31:51,800
Speaker 3: What you've got right now, and you might have very

659
00:31:51,840 --> 00:31:54,320
Speaker 3: good ones, but you've just got a bunch of different

660
00:31:54,360 --> 00:31:58,160
Speaker 3: players running around on the field, very skilled probably players,

661
00:31:58,720 --> 00:32:01,320
Speaker 3: but they're not talking to whateother and they're not coordinating

662
00:32:01,320 --> 00:32:04,680
Speaker 3: with one another's which means you don't have a head coach.

663
00:32:04,960 --> 00:32:07,840
Speaker 3: You don't have a head coach putting together a game plan,

664
00:32:08,280 --> 00:32:12,560
Speaker 3: forcing communication between these people. And this is what a

665
00:32:12,680 --> 00:32:17,200
Speaker 3: FI financial advisor is supposed to do. Take the bull

666
00:32:17,280 --> 00:32:20,160
Speaker 3: by the horns and speak with you who I will

667
00:32:20,200 --> 00:32:23,880
Speaker 3: say is the general manager of this hypothetical football team,

668
00:32:23,920 --> 00:32:27,240
Speaker 3: because let's face it, you've got hiring and firing power

669
00:32:27,320 --> 00:32:30,360
Speaker 3: over everyone, which is how it should be. But a

670
00:32:30,400 --> 00:32:34,320
Speaker 3: good financial advisor, a true fiduciary, brings these people to

671
00:32:34,360 --> 00:32:39,280
Speaker 3: the table sparks, communication and planning. And I have found

672
00:32:39,320 --> 00:32:43,480
Speaker 3: over many, many years, all of these CPAs and attorneys

673
00:32:43,560 --> 00:32:46,680
Speaker 3: are more than willing to work with me if I

674
00:32:46,840 --> 00:32:51,400
Speaker 3: treat them with respect and I value their opinion. And

675
00:32:51,520 --> 00:32:55,840
Speaker 3: sometimes they don't want to talk to commission salespeople because

676
00:32:55,880 --> 00:32:59,120
Speaker 3: those people are not fiduciaries and they can smell a

677
00:32:59,280 --> 00:33:02,000
Speaker 3: sale coming from you know, a mile away, and they

678
00:33:02,040 --> 00:33:03,960
Speaker 3: don't want to interact with those kind of folks. So

679
00:33:04,640 --> 00:33:08,840
Speaker 3: get a good fiduciary financial advisor to really run the

680
00:33:08,880 --> 00:33:12,840
Speaker 3: show here. Get people in the same room, force the communication,

681
00:33:13,440 --> 00:33:16,480
Speaker 3: get the team members working together, and Jeff as the

682
00:33:16,560 --> 00:33:19,680
Speaker 3: general manager, You and your family are going to come

683
00:33:19,680 --> 00:33:22,600
Speaker 3: out way ahead if you can get everybody working together.

684
00:33:22,920 --> 00:33:26,520
Speaker 3: Hope that helps, all right, Tom, And Montgomery says, We've

685
00:33:26,600 --> 00:33:30,960
Speaker 3: say invested for years, but now that retirement is near,

686
00:33:31,040 --> 00:33:34,600
Speaker 3: I'm realizing we've planned for growth, we haven't done anything

687
00:33:34,600 --> 00:33:37,560
Speaker 3: to plan for income. How do you shift gears without

688
00:33:37,640 --> 00:33:39,080
Speaker 3: completely starting over?

689
00:33:39,840 --> 00:33:42,040
Speaker 1: Well, Tom, that's a great question, and I hope you're

690
00:33:42,040 --> 00:33:44,080
Speaker 1: not kicking yourself too hard because that's what you should

691
00:33:44,120 --> 00:33:47,520
Speaker 1: have done, you know, investing for growth before you're retiring.

692
00:33:47,560 --> 00:33:49,360
Speaker 1: That's that's how you get to the point where you

693
00:33:49,400 --> 00:33:53,080
Speaker 1: can retire. So again that you've made the right moves,

694
00:33:53,120 --> 00:33:54,520
Speaker 1: it sounds like you're just trying to think about what

695
00:33:54,520 --> 00:33:56,960
Speaker 1: that next step is. So and you're not alone, right. So,

696
00:33:57,280 --> 00:33:59,520
Speaker 1: there was a study done by JP Morgan in twenty

697
00:33:59,520 --> 00:34:02,360
Speaker 1: twenty five. They found that seventy percent of pre retirees

698
00:34:02,440 --> 00:34:05,240
Speaker 1: still have growth heavy portfolios. And heck, I would put

699
00:34:05,240 --> 00:34:07,320
Speaker 1: myself in this category. I'm fifty one and I'm still

700
00:34:07,320 --> 00:34:09,359
Speaker 1: all growth. I don't really care what the market's gonna

701
00:34:09,400 --> 00:34:11,440
Speaker 1: do to me in the next ten fifteen years while

702
00:34:11,440 --> 00:34:13,880
Speaker 1: I am heading into retirement myself.

703
00:34:13,920 --> 00:34:15,920
Speaker 4: So I think the right way to handle.

704
00:34:15,600 --> 00:34:20,080
Speaker 1: This is is to just it's a transition, and you know,

705
00:34:20,080 --> 00:34:22,000
Speaker 1: maybe think about it this way. You're going to want

706
00:34:22,040 --> 00:34:25,040
Speaker 1: to think your money and say three buckets, so one

707
00:34:25,080 --> 00:34:27,440
Speaker 1: to two years worth of your income in cash and

708
00:34:27,440 --> 00:34:27,919
Speaker 1: short term.

709
00:34:27,960 --> 00:34:29,319
Speaker 4: This is kind of an emergency fund.

710
00:34:29,320 --> 00:34:31,319
Speaker 1: It's also kind of just a short term we are

711
00:34:31,320 --> 00:34:34,400
Speaker 1: going to consciously spend these dollars, and you want to

712
00:34:34,440 --> 00:34:36,480
Speaker 1: park this in something that's getting a little bit interest,

713
00:34:36,520 --> 00:34:38,000
Speaker 1: maybe three and a half four percent you should be

714
00:34:38,040 --> 00:34:40,479
Speaker 1: able to get right now, but consciously spend that down

715
00:34:41,640 --> 00:34:43,680
Speaker 1: over time, and then you're gonna have a second bucket

716
00:34:43,680 --> 00:34:46,600
Speaker 1: that's more medium term income. This could be bond ladders

717
00:34:46,680 --> 00:34:49,640
Speaker 1: or perhaps dividend paying ETFs that kind of thing. And

718
00:34:49,640 --> 00:34:51,200
Speaker 1: then of course you got your third bucket, which you

719
00:34:51,200 --> 00:34:53,279
Speaker 1: already have plenty of and most people do. That's your

720
00:34:53,280 --> 00:34:56,720
Speaker 1: long term growth stocks and equity funds. And as these buckets,

721
00:34:56,760 --> 00:34:58,720
Speaker 1: think of it this way, that long term growth bucket

722
00:34:58,719 --> 00:35:00,399
Speaker 1: is the one that's going to grow the most. Let

723
00:35:00,440 --> 00:35:03,799
Speaker 1: it overflow occasionally into the medium urn bucket. In turn,

724
00:35:03,920 --> 00:35:06,600
Speaker 1: that medium term bucket should be spitting interest into your

725
00:35:06,680 --> 00:35:08,120
Speaker 1: cash and short term bucket.

726
00:35:08,320 --> 00:35:09,319
Speaker 4: This isn't something you're going.

727
00:35:09,280 --> 00:35:11,520
Speaker 1: To accomplish in an afternoon, but those I think are

728
00:35:11,520 --> 00:35:13,000
Speaker 1: the kind of that that's a good way to break

729
00:35:13,040 --> 00:35:15,719
Speaker 1: it down, to really get down to what you need there.

730
00:35:15,800 --> 00:35:18,040
Speaker 1: So I think we have time for one more quick one. David,

731
00:35:18,040 --> 00:35:20,680
Speaker 1: and Mason says his wife and he are both self employed.

732
00:35:20,719 --> 00:35:22,640
Speaker 1: Income moves around a lot. How do you create a

733
00:35:22,640 --> 00:35:25,360
Speaker 1: stable financial plan when that paycheck isn't quite predictable?

734
00:35:26,400 --> 00:35:29,680
Speaker 3: Well, real, David is someone who owned a business, you know,

735
00:35:30,239 --> 00:35:33,320
Speaker 3: personally for years and years. I've lived this, and here's

736
00:35:33,360 --> 00:35:37,080
Speaker 3: my quick and simple answer. You need a larger emergency fund.

737
00:35:37,080 --> 00:35:39,880
Speaker 3: You just and I know it's boring, it's not sexy,

738
00:35:39,920 --> 00:35:41,920
Speaker 3: you don't earn a big return, but you got to

739
00:35:41,960 --> 00:35:44,400
Speaker 3: just put a little bit more money away, you know,

740
00:35:44,520 --> 00:35:46,640
Speaker 3: for a rainy day, and make sure you don't get

741
00:35:46,640 --> 00:35:49,080
Speaker 3: into a problem, you know, with short term cash flow.

742
00:35:49,520 --> 00:35:53,200
Speaker 3: Coming up next, we've got Brian's bottom line. You're listening

743
00:35:53,280 --> 00:35:55,600
Speaker 3: to Simply Money, presented by all Worth Financial on fifty

744
00:35:55,680 --> 00:35:57,960
Speaker 3: five KRC, the talk station.

745
00:35:58,800 --> 00:36:00,680
Speaker 4: You got a lot do you.

746
00:36:00,800 --> 00:36:03,160
Speaker 7: I do got to put up these Halloween decorations, do

747
00:36:03,239 --> 00:36:04,440
Speaker 7: some work, do the laundry.

748
00:36:04,520 --> 00:36:06,880
Speaker 3: We do have to go shopping. Will this is what

749
00:36:06,920 --> 00:36:09,440
Speaker 3: we do. Do the rest. It's time to do it.

750
00:36:09,719 --> 00:36:11,759
Speaker 3: We do traffic and weather, doing the news at the

751
00:36:11,800 --> 00:36:14,040
Speaker 3: top and bottom of the hotus. It's the most important

752
00:36:14,040 --> 00:36:16,360
Speaker 3: thing we can do. Do check in. Let's do it

753
00:36:16,400 --> 00:36:18,200
Speaker 3: the way you want. I do need to know. It's

754
00:36:18,239 --> 00:36:21,239
Speaker 3: important that we do it today. While doing your day.

755
00:36:21,280 --> 00:36:22,120
Speaker 3: There's always more to do.

756
00:36:22,239 --> 00:36:23,320
Speaker 4: I ain't doing nothing today.

757
00:36:23,400 --> 00:36:25,400
Speaker 3: I do have something to say, so let's do it.

758
00:36:25,440 --> 00:36:29,239
Speaker 3: On fifty five KRC the Talk Station. Hey is Brian

759
00:36:29,280 --> 00:36:31,799
Speaker 3: Thomas wisk I am so worried that next month I

760
00:36:31,800 --> 00:36:34,360
Speaker 3: have to choose between groceries for my kids or gas

761
00:36:34,360 --> 00:36:37,360
Speaker 3: for my car. Talk about it here fifty five KRC,

762
00:36:37,760 --> 00:36:44,840
Speaker 3: the Talk station. Moment you're listening to Simple Money? Is

763
00:36:44,840 --> 00:36:47,279
Speaker 3: that about all worth financial? I'm Bob sponsorller along with

764
00:36:47,280 --> 00:36:51,120
Speaker 3: Brian James. Speaking of Brian James, it's time for Brian's

765
00:36:51,160 --> 00:36:54,080
Speaker 3: bottom line. Brian wants to highlight a bit of an

766
00:36:54,520 --> 00:36:57,919
Speaker 3: income to tax I think loophole for our friends in

767
00:36:57,960 --> 00:37:01,880
Speaker 3: northern Kentucky, which is worth learning about. Brian, What do

768
00:37:01,920 --> 00:37:02,800
Speaker 3: you have for us tonight?

769
00:37:03,000 --> 00:37:04,640
Speaker 1: Yeah, So first off, I want to thank all of

770
00:37:04,680 --> 00:37:07,080
Speaker 1: you for your service, those of you manning our three

771
00:37:07,120 --> 00:37:09,720
Speaker 1: forts down there for it's mental right, and Thomas defending

772
00:37:09,760 --> 00:37:13,320
Speaker 1: us from the mongol hordes of Florence. But Kentucky actually

773
00:37:13,320 --> 00:37:17,680
Speaker 1: has some retirement tax breaks. This isn't quite Florida or

774
00:37:17,760 --> 00:37:19,319
Speaker 1: you know, it's not a tax free state, but there

775
00:37:19,320 --> 00:37:21,520
Speaker 1: are some things, some moving parts there that could be

776
00:37:21,520 --> 00:37:24,240
Speaker 1: attractive to you. So you know, let's start with the basics.

777
00:37:24,320 --> 00:37:28,000
Speaker 1: Kentucky does not tax your Social Security benefits. Zero's abziltch.

778
00:37:28,000 --> 00:37:29,239
Speaker 4: They do not at all.

779
00:37:29,320 --> 00:37:31,600
Speaker 1: And the other piece of this, the state gives each

780
00:37:31,719 --> 00:37:35,600
Speaker 1: retiree what's called a retirement income exclusion. Right now, that

781
00:37:35,680 --> 00:37:38,359
Speaker 1: exclusion is thirty one thousand dollars a little over thirty

782
00:37:38,360 --> 00:37:40,640
Speaker 1: one thousand per person. We're not talking federal by the way.

783
00:37:40,680 --> 00:37:43,359
Speaker 1: This is Kentucky state income tax. So that means the

784
00:37:43,360 --> 00:37:46,320
Speaker 1: first thirty one thousand dollars of retirement income, which includes

785
00:37:46,320 --> 00:37:49,719
Speaker 1: pension IRA four one kadrawals, can be completely free from

786
00:37:49,800 --> 00:37:51,000
Speaker 1: Kentucky state income tax.

787
00:37:51,840 --> 00:37:53,920
Speaker 4: And so there's more to that.

788
00:37:53,960 --> 00:37:57,399
Speaker 1: There's potentially a bill on the floor in frankfort House

789
00:37:57,400 --> 00:38:00,319
Speaker 1: Bill one forty six could raise that exclusion up to

790
00:38:00,360 --> 00:38:03,640
Speaker 1: forty one dollars starting in twenty twenty six. So if

791
00:38:03,640 --> 00:38:06,200
Speaker 1: you're maybe planning on major withdrawals from your retirement accounts,

792
00:38:06,600 --> 00:38:08,560
Speaker 1: it might make sense to try to push that into

793
00:38:08,560 --> 00:38:10,279
Speaker 1: twenty twenty six if you if you.

794
00:38:10,239 --> 00:38:11,239
Speaker 4: Have the ability to do that.

795
00:38:11,760 --> 00:38:14,720
Speaker 1: And so also a special carve out for public service

796
00:38:14,719 --> 00:38:18,400
Speaker 1: employees teachers, firefighters, police, other state workers if part of

797
00:38:18,440 --> 00:38:22,200
Speaker 1: your pension is from service before January first, nineteen ninety eight.

798
00:38:22,280 --> 00:38:23,680
Speaker 4: Right, So we're going back aways here. You got to

799
00:38:23,680 --> 00:38:24,480
Speaker 4: think about this one.

800
00:38:24,880 --> 00:38:28,400
Speaker 1: That portion from before that timeframe can be completely exemped

801
00:38:28,400 --> 00:38:30,520
Speaker 1: from Kentucky income tax. So it could be a big

802
00:38:30,560 --> 00:38:33,399
Speaker 1: deal for long tenured public retirees who have been around

803
00:38:33,440 --> 00:38:34,080
Speaker 1: for a little while.

804
00:38:34,760 --> 00:38:37,560
Speaker 3: So, Brian, this is this is good stuff. How you know,

805
00:38:37,640 --> 00:38:41,839
Speaker 3: how do you segregate income coming from before nineteen ninety eight?

806
00:38:41,880 --> 00:38:42,520
Speaker 3: I'm curious.

807
00:38:42,680 --> 00:38:44,200
Speaker 4: Oh, I don't know. I don't But that's a whole

808
00:38:44,200 --> 00:38:45,160
Speaker 4: segment unto itself.

809
00:38:45,200 --> 00:38:45,399
Speaker 3: Bob.

810
00:38:45,480 --> 00:38:47,799
Speaker 1: No, if this, if this affects you, it'll it should

811
00:38:47,800 --> 00:38:49,920
Speaker 1: appear on your pension statement. There should be a category

812
00:38:49,920 --> 00:38:53,080
Speaker 1: that says this this income came from before January whatever

813
00:38:53,120 --> 00:38:55,160
Speaker 1: of nineteen ninety eight. You're not going to be able

814
00:38:55,200 --> 00:38:57,720
Speaker 1: to determine that on your own. That's for actuaries to track.

815
00:38:57,760 --> 00:39:01,600
Speaker 3: So it's kind of like a proportional proportional calculation of

816
00:39:01,640 --> 00:39:03,880
Speaker 3: your pension based on how much was a crude prior

817
00:39:03,920 --> 00:39:04,920
Speaker 3: to ninety eight. Correct.

818
00:39:04,960 --> 00:39:06,200
Speaker 1: And for those of you who have done your own

819
00:39:06,200 --> 00:39:08,680
Speaker 1: taxes for a long time, you'll remember things like if

820
00:39:08,719 --> 00:39:10,719
Speaker 1: you had an IRA before or a four oh one

821
00:39:10,800 --> 00:39:12,840
Speaker 1: K before nineteen eighty three, there are these rules that

822
00:39:12,880 --> 00:39:14,600
Speaker 1: apply and so forth. Those are these are all things

823
00:39:14,640 --> 00:39:16,680
Speaker 1: that you would be running across and say turbo tax

824
00:39:16,760 --> 00:39:19,239
Speaker 1: or whatever. But so a good deal for you know,

825
00:39:19,520 --> 00:39:22,680
Speaker 1: people in Kentucky. Real quick comparison, How does this look

826
00:39:22,680 --> 00:39:26,960
Speaker 1: in Ohio? Will pretty much most retirement income, including IRA withdrawals,

827
00:39:27,000 --> 00:39:29,520
Speaker 1: is fully taxed at the state level, although Ohio did

828
00:39:29,560 --> 00:39:32,719
Speaker 1: recently cut its taxes to the three percent range. Indiana

829
00:39:32,880 --> 00:39:35,560
Speaker 1: pension and IRA income is also taxable, but you do

830
00:39:35,600 --> 00:39:38,760
Speaker 1: get a smaller deduction for certain public pensions. But within

831
00:39:38,880 --> 00:39:41,840
Speaker 1: these listening area here, Kentucky's system is one of the

832
00:39:41,840 --> 00:39:43,000
Speaker 1: more generous in the region.

833
00:39:44,000 --> 00:39:46,200
Speaker 3: I think I'm going to sell my house immediately and

834
00:39:46,239 --> 00:39:48,840
Speaker 3: move to Covington. Thanks for listening tonight. You've been listening

835
00:39:48,880 --> 00:39:51,400
Speaker 3: to Simply Money, presented by all Worth Financial and fifty

836
00:39:51,440 --> 00:39:55,480
Speaker 3: five KRC, the Talk Station, Mark Levin.

837
00:39:55,680 --> 00:39:57,840
Speaker 7: Probably the people who should be listening aren't, but there

838
00:39:57,840 --> 00:40:00,040
Speaker 7: are a lot of people who tune in actually, and

839
00:40:00,040 --> 00:40:00,920
Speaker 7: then they start listening.

840
00:40:00,920 --> 00:40:03,320
Speaker 3: I get this wherever I go and listen. I listened

841
00:40:03,360 --> 00:40:05,200
Speaker 3: for a week. I listened to two. He said, I

842
00:40:05,360 --> 00:40:07,080
Speaker 3: like this guy. I like what he has to say.

843
00:40:07,239 --> 00:40:10,920
Speaker 2: Mark Levin Tonight at ten o six on fifty five KRC,

844
00:40:11,360 --> 00:40:12,280
Speaker 2: the Talk Station.

845
00:40:13,040 --> 00:40:13,640
Speaker 3: Maybe this is you