1 00:00:06,519 --> 00:00:10,440 Speaker 1: Tonight what most Wall Street money managers are probably watching 2 00:00:10,840 --> 00:00:14,280 Speaker 1: versus what actually matters to you, plus what to do 3 00:00:14,320 --> 00:00:17,640 Speaker 1: with company stock when speculation hits, and we answer as 4 00:00:17,680 --> 00:00:21,280 Speaker 1: always your questions. You're listening to Simply Money presented by 5 00:00:21,320 --> 00:00:25,760 Speaker 1: Allword Financial on Bob Sponsller along with Brian James. Right now, 6 00:00:25,800 --> 00:00:28,960 Speaker 1: I'm guessing if you walked into most Wall Street money 7 00:00:28,960 --> 00:00:32,400 Speaker 1: manager meetings or analyst meetings, you'd hear one thing being 8 00:00:32,479 --> 00:00:35,080 Speaker 1: talked about over and over right now this week, and 9 00:00:35,120 --> 00:00:38,320 Speaker 1: that's interest rates. In other words, the will the Fed 10 00:00:38,400 --> 00:00:42,320 Speaker 1: cut in December? What's the latest on inflation? Are wages 11 00:00:42,400 --> 00:00:46,000 Speaker 1: too hot? Is the labor market cooling too fast? Are 12 00:00:46,040 --> 00:00:48,120 Speaker 1: we going to get a soft landing? Or you know, 13 00:00:48,200 --> 00:00:51,479 Speaker 1: God forbid a recession? But here's the truth, and what 14 00:00:51,600 --> 00:00:56,080 Speaker 1: Wall Street's watching has very little to do with what's 15 00:00:56,200 --> 00:01:01,279 Speaker 1: actually driving your personal long term finanie success. And that's 16 00:01:01,320 --> 00:01:03,640 Speaker 1: what Brian and I want to get into tonight because 17 00:01:03,680 --> 00:01:06,000 Speaker 1: this is important. Brian, let's walk through a couple of 18 00:01:06,000 --> 00:01:06,520 Speaker 1: these things. 19 00:01:07,040 --> 00:01:09,520 Speaker 2: Wall Street is always looking for what's going to happen 20 00:01:09,520 --> 00:01:11,520 Speaker 2: in the next minute, right That is not how we 21 00:01:11,880 --> 00:01:14,039 Speaker 2: need to be thinking about our own personal financial planning. 22 00:01:14,080 --> 00:01:18,200 Speaker 2: And same with the financial media right exactly, it's financial pornography. 23 00:01:18,280 --> 00:01:19,039 Speaker 1: Let's call it what it is. 24 00:01:19,120 --> 00:01:22,320 Speaker 2: Keeps our attention for a while, and all they're really 25 00:01:22,319 --> 00:01:25,000 Speaker 2: trying to do at that point is keep your eyeballs 26 00:01:25,040 --> 00:01:27,640 Speaker 2: glued to the screen in between the commercials. So let's 27 00:01:27,680 --> 00:01:30,760 Speaker 2: start with a Wall Street list. So fed rate cut timing. 28 00:01:30,800 --> 00:01:32,680 Speaker 2: This is a big thing right now because we're hearing 29 00:01:32,680 --> 00:01:35,760 Speaker 2: NonStop noise about weather Chair Powell is going to cut 30 00:01:35,800 --> 00:01:36,920 Speaker 2: in December or March. 31 00:01:36,959 --> 00:01:39,360 Speaker 1: Ooh, this is big stuff. But here's the truth. 32 00:01:39,400 --> 00:01:42,240 Speaker 2: The quarter point move does affect short term bond prices, 33 00:01:42,240 --> 00:01:44,960 Speaker 2: and it moves algorithmic trading. But that said, I if 34 00:01:44,959 --> 00:01:47,480 Speaker 2: you're a long term investor, really the bigger concern is 35 00:01:47,560 --> 00:01:50,080 Speaker 2: how do these interest rates affect my income plan, my 36 00:01:50,120 --> 00:01:53,000 Speaker 2: bond ladder, my taxes, and more importantly, how does it 37 00:01:53,040 --> 00:01:53,680 Speaker 2: affect my debt. 38 00:01:53,720 --> 00:01:55,400 Speaker 1: If I've got debt that's a tied. 39 00:01:56,120 --> 00:01:58,480 Speaker 2: Two interest rates, then right now I should be in 40 00:01:58,480 --> 00:02:00,880 Speaker 2: the mode of maybe looking for opportunity unities and finding 41 00:02:00,880 --> 00:02:03,920 Speaker 2: the right entry point to refinance my mortgage. Or maybe 42 00:02:03,920 --> 00:02:05,760 Speaker 2: if I've got if I've got credit cards out there 43 00:02:05,760 --> 00:02:07,760 Speaker 2: that haven't forbid I'm paying interest on, then you really 44 00:02:07,760 --> 00:02:10,680 Speaker 2: ought to be paying attention to that anyway, and a 45 00:02:10,760 --> 00:02:13,480 Speaker 2: quarter point cut next month is not going to be 46 00:02:13,560 --> 00:02:15,480 Speaker 2: the pivot point as to whether you should take action. 47 00:02:15,720 --> 00:02:18,360 Speaker 2: You should be paying attention to these things anyway. And 48 00:02:18,639 --> 00:02:21,080 Speaker 2: if the time is right to again refinance that mortgage, 49 00:02:21,080 --> 00:02:21,520 Speaker 2: then do it. 50 00:02:22,320 --> 00:02:24,840 Speaker 1: Yeah. And and to your point, I mean, look as 51 00:02:24,840 --> 00:02:26,960 Speaker 1: a reminder, and I think a lot of people know this, 52 00:02:27,080 --> 00:02:30,680 Speaker 1: but it's worth repeating. I mean, what moves mortgage rates 53 00:02:30,720 --> 00:02:33,040 Speaker 1: most of the time is the ten year bond yield, 54 00:02:33,160 --> 00:02:36,480 Speaker 1: not short term interest rates. And oftentimes, and we've seen 55 00:02:36,480 --> 00:02:39,720 Speaker 1: this happen whin the last year, Brian short term rates 56 00:02:39,720 --> 00:02:43,400 Speaker 1: have moved, mortgage rates didn't move at all. So you 57 00:02:43,520 --> 00:02:45,880 Speaker 1: got to look at the longer term here, like a 58 00:02:45,919 --> 00:02:47,799 Speaker 1: lot of things we're going to talk about tonight, when 59 00:02:47,840 --> 00:02:53,200 Speaker 1: making financial decisions, and you know, the speculation about interest rates. 60 00:02:53,240 --> 00:02:56,639 Speaker 1: I mean, let's face it, I think that's why small 61 00:02:56,680 --> 00:02:58,799 Speaker 1: cap stocks have really taken a beating here in the 62 00:02:58,880 --> 00:03:01,639 Speaker 1: last you know, relatively speaking, over the last week or so, 63 00:03:01,720 --> 00:03:05,560 Speaker 1: because they have more debt. A lot of these small 64 00:03:05,600 --> 00:03:08,400 Speaker 1: companies are borrowing money on a short term basis, So 65 00:03:08,560 --> 00:03:11,360 Speaker 1: depending on the price of that borrowing that is going 66 00:03:11,400 --> 00:03:14,120 Speaker 1: to move the needle in terms of how they're planning. 67 00:03:14,200 --> 00:03:16,000 Speaker 1: And that's that's those are the type of things that 68 00:03:16,040 --> 00:03:19,800 Speaker 1: we see, you know, impacted by short term rates, to 69 00:03:19,840 --> 00:03:22,919 Speaker 1: say nothing of money market yields and you know interest 70 00:03:23,000 --> 00:03:25,760 Speaker 1: rates you're getting on a bank account. But give us 71 00:03:25,760 --> 00:03:29,600 Speaker 1: a hypothetical mistake here, Brian, of what could happen to 72 00:03:29,639 --> 00:03:32,920 Speaker 1: somebody that just listens to all this short term news 73 00:03:32,960 --> 00:03:36,600 Speaker 1: and then makes big, massive moves in their portfolio as 74 00:03:36,600 --> 00:03:39,880 Speaker 1: a result. So let's take a hypothetical Darren. So Darren 75 00:03:39,920 --> 00:03:40,960 Speaker 1: is fifty eight years old. 76 00:03:40,960 --> 00:03:42,440 Speaker 2: And by the way, all these names are fake, but 77 00:03:42,480 --> 00:03:44,800 Speaker 2: these all these stories are based off of war stories 78 00:03:44,800 --> 00:03:46,760 Speaker 2: that we have the Bob and I and all the 79 00:03:46,760 --> 00:03:49,480 Speaker 2: other advisors at all Worth have sitting down talking with 80 00:03:49,560 --> 00:03:52,560 Speaker 2: people and figuring out how they make decisions. So anyway, 81 00:03:52,840 --> 00:03:55,160 Speaker 2: so Darren heard a strategist online say that the Fed 82 00:03:55,240 --> 00:03:57,640 Speaker 2: is going to cut rates by December. So his decision 83 00:03:57,720 --> 00:03:59,760 Speaker 2: was to pull about three quarters of a million dollars 84 00:03:59,760 --> 00:04:02,240 Speaker 2: out of his long term portfolio and park it in 85 00:04:02,240 --> 00:04:06,120 Speaker 2: a money market fund to wait it out. But unfortunately, 86 00:04:06,120 --> 00:04:08,360 Speaker 2: what happens here is rates don't fall as fast as 87 00:04:08,360 --> 00:04:11,040 Speaker 2: he expected. Market ends up bouncing nine percent in the 88 00:04:11,040 --> 00:04:14,200 Speaker 2: next six months, and Darren misses out on about sixty 89 00:04:14,200 --> 00:04:16,640 Speaker 2: seven thousand dollars worth of potential growth, and now worse, 90 00:04:17,000 --> 00:04:18,720 Speaker 2: he's got to decide when to get back in, which 91 00:04:18,720 --> 00:04:22,320 Speaker 2: he adds even more emotional risk timing the market like this, 92 00:04:22,680 --> 00:04:24,960 Speaker 2: and people don't really refer to it as timing. When 93 00:04:25,000 --> 00:04:26,839 Speaker 2: we point out that that's what they're doing, that they'll 94 00:04:26,839 --> 00:04:28,920 Speaker 2: say is no, no, no, I'm just I'm protecting my assets. 95 00:04:29,040 --> 00:04:31,600 Speaker 2: I'm not trying to time the market. It's the same thing. 96 00:04:32,160 --> 00:04:34,680 Speaker 2: Whether it's out of greed or fear. We're still trying 97 00:04:34,720 --> 00:04:36,600 Speaker 2: to be in at the right time and out at 98 00:04:36,600 --> 00:04:39,680 Speaker 2: the wrong time. And that's that that is not a 99 00:04:39,680 --> 00:04:42,880 Speaker 2: recipe for financial success because it's a two step process. 100 00:04:43,000 --> 00:04:45,479 Speaker 2: Darren's next step he's got to try to time it again, 101 00:04:45,520 --> 00:04:47,600 Speaker 2: and by the way, he's over one now he's got 102 00:04:47,640 --> 00:04:49,200 Speaker 2: to decide when he's going to get back in. If 103 00:04:49,200 --> 00:04:51,680 Speaker 2: I missed, we had a peak again, and he'll do 104 00:04:51,800 --> 00:04:53,680 Speaker 2: this for years. I have a couple of clients that 105 00:04:53,760 --> 00:04:56,080 Speaker 2: sat in cash Bob from two thousand and eight until 106 00:04:56,080 --> 00:04:59,400 Speaker 2: they met us in the early twenty twenties, and we 107 00:04:59,440 --> 00:05:02,280 Speaker 2: finally put a plan together and taught about market history 108 00:05:02,400 --> 00:05:03,960 Speaker 2: and helped everybody understand. 109 00:05:04,120 --> 00:05:04,960 Speaker 1: I haven't had the heart. 110 00:05:04,839 --> 00:05:07,039 Speaker 2: To tell them that they've they've left literally millions of 111 00:05:07,080 --> 00:05:09,520 Speaker 2: dollars on the table by sitting out of the market 112 00:05:09,560 --> 00:05:11,720 Speaker 2: ever since two thousand and eight because they got spooked. 113 00:05:12,400 --> 00:05:14,840 Speaker 1: Yeah, Brian, we all have a few clients like this, 114 00:05:14,920 --> 00:05:17,040 Speaker 1: and I think you bring up a great point, this 115 00:05:17,200 --> 00:05:21,840 Speaker 1: emotional risk of being wrong once and then you just freeze. 116 00:05:22,200 --> 00:05:24,279 Speaker 1: It's a deer in the headlights, you know. And I 117 00:05:24,320 --> 00:05:27,760 Speaker 1: think this happens to men way more often than women 118 00:05:27,880 --> 00:05:30,919 Speaker 1: because men, we tend to have our ego tied to 119 00:05:30,960 --> 00:05:34,440 Speaker 1: everything and it's like, man, we were wrong about that move, 120 00:05:34,600 --> 00:05:36,840 Speaker 1: and I got to make sure I don't do anything 121 00:05:37,320 --> 00:05:40,960 Speaker 1: until I can absolutely right about the future direction of 122 00:05:41,000 --> 00:05:45,200 Speaker 1: the market. And to your point, it's virtually impossible to 123 00:05:45,279 --> 00:05:47,680 Speaker 1: pull that off in the short term, and that's what 124 00:05:47,800 --> 00:05:51,800 Speaker 1: can leave people just frozen and not making any money 125 00:05:51,839 --> 00:05:54,640 Speaker 1: for years and years. And boy, you miss out. We 126 00:05:54,720 --> 00:05:57,560 Speaker 1: talk about missing the best ten days in the market 127 00:05:57,600 --> 00:06:00,560 Speaker 1: over a twenty thirty year period. This is where it 128 00:06:00,680 --> 00:06:04,600 Speaker 1: manifests itself during these these these periods where people are 129 00:06:04,640 --> 00:06:09,000 Speaker 1: just emotionally frozen because they're afraid of being wrong in 130 00:06:09,080 --> 00:06:12,359 Speaker 1: the next seven days instead of over the next seven years. 131 00:06:12,720 --> 00:06:15,600 Speaker 1: And it really can cost people a ton of money. 132 00:06:15,800 --> 00:06:20,839 Speaker 1: All right, let's pivot into trying to guess where inflation 133 00:06:21,040 --> 00:06:23,360 Speaker 1: is heading next. You want to talk about a fool's game, 134 00:06:23,440 --> 00:06:24,360 Speaker 1: get into this one. 135 00:06:24,760 --> 00:06:26,720 Speaker 2: Yeah, so this is this is another you know, with 136 00:06:26,720 --> 00:06:28,760 Speaker 2: these these big numbers that we look at all the time. 137 00:06:29,240 --> 00:06:32,159 Speaker 2: So Wall Street just devours these CPI and PPI numbers. 138 00:06:32,160 --> 00:06:34,480 Speaker 2: Those are inflationary numbers depending on whether you are the 139 00:06:34,480 --> 00:06:37,680 Speaker 2: consumer or the producer, and also wage growth numbers. So 140 00:06:37,720 --> 00:06:40,800 Speaker 2: we're we're tearing apart used car prices and and and 141 00:06:41,160 --> 00:06:43,480 Speaker 2: housing inflation. Just like it's the Zapruder film from the 142 00:06:43,560 --> 00:06:44,520 Speaker 2: Kennedy assassination. 143 00:06:44,960 --> 00:06:46,040 Speaker 1: Even a tenth of a. 144 00:06:46,000 --> 00:06:49,000 Speaker 2: Percent surprise can send stocks flying or crashing because of 145 00:06:49,040 --> 00:06:51,160 Speaker 2: the way all these algorithms work and the way program 146 00:06:51,200 --> 00:06:51,880 Speaker 2: training happens. 147 00:06:52,279 --> 00:06:56,200 Speaker 1: Here's in the short term, right of course, yes, absolutely 148 00:06:56,279 --> 00:06:56,839 Speaker 1: the short term. 149 00:06:56,880 --> 00:06:59,719 Speaker 2: And in other words, when the headline comes out, it 150 00:06:59,760 --> 00:07:02,880 Speaker 2: can be one reaction, and then after lunch it's another reaction. Entirely, 151 00:07:02,920 --> 00:07:06,039 Speaker 2: none of this affects what you the average consumer, the 152 00:07:06,080 --> 00:07:09,680 Speaker 2: average person with a looking for financial stability, and making 153 00:07:09,680 --> 00:07:11,080 Speaker 2: sure you can keep up with inflation and all that 154 00:07:11,160 --> 00:07:11,680 Speaker 2: kind of stuff. 155 00:07:11,760 --> 00:07:14,160 Speaker 1: None of that day to day stuff matters. Here's what 156 00:07:14,240 --> 00:07:16,400 Speaker 1: really matters to you. Has your spending change? 157 00:07:16,680 --> 00:07:20,240 Speaker 2: Have you updated your plan to reflect what your grocery budget, 158 00:07:20,280 --> 00:07:23,320 Speaker 2: your travel budget, and your healthcare cost? Now notice that 159 00:07:23,360 --> 00:07:25,320 Speaker 2: word your that I said over and over again. Do 160 00:07:25,400 --> 00:07:27,280 Speaker 2: you know what you spend in the first place? 161 00:07:27,560 --> 00:07:28,680 Speaker 1: And a lot of people. 162 00:07:28,520 --> 00:07:31,160 Speaker 2: Simply don't because they've never been forced to have a budget. 163 00:07:31,240 --> 00:07:33,400 Speaker 2: And I'm not advocating that everybody has to go out 164 00:07:33,400 --> 00:07:35,200 Speaker 2: there and have a budget and put money in envelopes 165 00:07:35,240 --> 00:07:37,440 Speaker 2: and stick to it, but it's a good idea to 166 00:07:37,480 --> 00:07:39,560 Speaker 2: have it, just to have a vague idea of what 167 00:07:39,600 --> 00:07:41,880 Speaker 2: it costs you to be you for a month or 168 00:07:41,920 --> 00:07:44,440 Speaker 2: for a year, because that will help you understand exactly 169 00:07:44,520 --> 00:07:46,360 Speaker 2: what you need to have an emergency fund, that kind 170 00:07:46,400 --> 00:07:48,320 Speaker 2: of thing for the short term needs, and then you 171 00:07:48,320 --> 00:07:50,720 Speaker 2: can leave your medium and long term ass that's alone 172 00:07:50,840 --> 00:07:52,600 Speaker 2: and ignore this day to day noise. 173 00:07:53,320 --> 00:07:56,360 Speaker 1: All right, Well, let's put another hypothetical example to this 174 00:07:56,520 --> 00:07:59,720 Speaker 1: case scenario. We'll take Kathy. She's sixty three years old. 175 00:08:00,160 --> 00:08:03,440 Speaker 1: She sees a hotter than expected inflation number and assumes 176 00:08:03,520 --> 00:08:06,800 Speaker 1: bonds are going to get crushed again. She sells, She 177 00:08:06,880 --> 00:08:10,280 Speaker 1: goes to cash out of all her intermediate bond fund 178 00:08:10,360 --> 00:08:13,240 Speaker 1: holdings in a panic and lo and behold. The FED 179 00:08:13,400 --> 00:08:17,560 Speaker 1: ends up holding steady inflation cools. The next month, bond 180 00:08:18,120 --> 00:08:22,679 Speaker 1: values rebound. They stabilize, not only stabilized, but rebound. But Kathy, 181 00:08:22,960 --> 00:08:27,080 Speaker 1: she locked in all those losses, making them permanent, and 182 00:08:27,160 --> 00:08:31,960 Speaker 1: now she's sitting holding cash and is frozen emotionally and 183 00:08:32,080 --> 00:08:35,920 Speaker 1: missing out on steady income she originally wanted from that 184 00:08:36,040 --> 00:08:40,240 Speaker 1: bond fund. Just another example of really throwing your long 185 00:08:40,360 --> 00:08:44,360 Speaker 1: term financial plan and income strategy off all because of 186 00:08:44,640 --> 00:08:47,959 Speaker 1: trying to time or predict what's going to happen next, 187 00:08:48,120 --> 00:08:52,599 Speaker 1: or listening to, as you say, financial pornography in the media. 188 00:08:53,080 --> 00:08:55,199 Speaker 2: And this is just reacting to the headlines that are, 189 00:08:55,320 --> 00:08:57,880 Speaker 2: but more importantly, reacting to the headlines that might be. 190 00:08:58,559 --> 00:09:01,160 Speaker 2: She assumed that her in that her, the bonds were 191 00:09:01,200 --> 00:09:03,320 Speaker 2: going to get smashed again, and so she was looking 192 00:09:03,360 --> 00:09:05,480 Speaker 2: forward to a headline that didn't yet exist, and she 193 00:09:05,559 --> 00:09:07,680 Speaker 2: wound up in the same problem that Darren has, which 194 00:09:07,720 --> 00:09:09,760 Speaker 2: is now I'm sitting in cash and I'm zero for 195 00:09:09,840 --> 00:09:11,599 Speaker 2: one on timing. But now I have to do it 196 00:09:11,640 --> 00:09:13,400 Speaker 2: again because I'm gonna have to decide when to get 197 00:09:13,440 --> 00:09:13,960 Speaker 2: back in there. 198 00:09:14,400 --> 00:09:15,959 Speaker 1: So so here some other things. 199 00:09:15,760 --> 00:09:17,240 Speaker 2: That the tend to to to throw us for a 200 00:09:17,240 --> 00:09:20,359 Speaker 2: loop are big tech earnings, right, so, the big technology 201 00:09:20,360 --> 00:09:22,240 Speaker 2: companies have been driving the market, of course for a 202 00:09:22,240 --> 00:09:22,880 Speaker 2: few decades. 203 00:09:22,880 --> 00:09:25,280 Speaker 1: Now, we said this before, We bring this up all 204 00:09:25,320 --> 00:09:25,640 Speaker 1: the time. 205 00:09:25,760 --> 00:09:28,480 Speaker 2: There are seven companies out there that make up almost 206 00:09:28,520 --> 00:09:30,920 Speaker 2: forty percent of the S and P five hundred right now. 207 00:09:31,200 --> 00:09:33,720 Speaker 2: So you know, yes, when when Nvidia and Apple miss 208 00:09:33,720 --> 00:09:36,320 Speaker 2: earnings by a penny, remember what, Well, it doesn't matter 209 00:09:36,320 --> 00:09:38,240 Speaker 2: what they actually earn, It matters how close to the 210 00:09:38,240 --> 00:09:40,360 Speaker 2: the how close they get to what the analysts thought 211 00:09:40,400 --> 00:09:42,120 Speaker 2: they were going to earn, because the analysts are the 212 00:09:42,160 --> 00:09:44,000 Speaker 2: ones with out there with the opinions first, and then 213 00:09:44,000 --> 00:09:45,160 Speaker 2: the companies have to follow. 214 00:09:46,280 --> 00:09:48,600 Speaker 1: Yeah, Brian, can you believe that Navidia? I mean, who 215 00:09:48,640 --> 00:09:51,760 Speaker 1: comes out with earnings on Wednesday? They make up almost 216 00:09:51,800 --> 00:09:54,440 Speaker 1: eight percent of the S and P five hundred right now, 217 00:09:54,600 --> 00:09:58,480 Speaker 1: one company and you know Wall Street money managers they 218 00:09:58,559 --> 00:10:01,600 Speaker 1: trade on that short term news for sure. But for you, 219 00:10:01,760 --> 00:10:05,160 Speaker 1: the more important question to ask is am I too 220 00:10:05,280 --> 00:10:10,600 Speaker 1: concentrated in all of those magnificent seven companies, and if so, 221 00:10:11,440 --> 00:10:14,760 Speaker 1: don't try to time the market, take an opportunity when 222 00:10:14,760 --> 00:10:17,760 Speaker 1: the market's at a high and diversify. Take some money 223 00:10:17,760 --> 00:10:20,400 Speaker 1: off the table. God forbid. You might even have to 224 00:10:20,400 --> 00:10:24,120 Speaker 1: pay a little bit in taxes, but last time I checked, 225 00:10:24,240 --> 00:10:28,319 Speaker 1: paying fifteen percent in capital gains taxes by trimming some 226 00:10:28,400 --> 00:10:32,520 Speaker 1: gains is way better than seeing the whole dollar go 227 00:10:32,679 --> 00:10:35,520 Speaker 1: down in value because you know, a stock falls out 228 00:10:35,559 --> 00:10:38,319 Speaker 1: of bed on a bad earnings announcement. Again, it's not 229 00:10:38,400 --> 00:10:41,679 Speaker 1: trying to predict what's going to happen next. It's doing, 230 00:10:41,840 --> 00:10:46,120 Speaker 1: you know, basic solid financial planning to get yourself out 231 00:10:46,120 --> 00:10:49,600 Speaker 1: of potential harm's way. You know, ahead of all this 232 00:10:49,720 --> 00:10:53,280 Speaker 1: potential news and headlines that most of us, I would say, 233 00:10:54,240 --> 00:10:56,200 Speaker 1: you know, almost all of us. None of us can 234 00:10:56,240 --> 00:10:58,480 Speaker 1: see this stuff coming in advance. That's why you got 235 00:10:58,520 --> 00:11:01,120 Speaker 1: to do. You got to make good decisions based on 236 00:11:01,160 --> 00:11:04,560 Speaker 1: your the fundamentals of your financial plan, not trying to 237 00:11:04,600 --> 00:11:06,360 Speaker 1: predict what's going to happen next. 238 00:11:06,679 --> 00:11:09,360 Speaker 2: So another thing that tends to get our attention and 239 00:11:09,480 --> 00:11:12,679 Speaker 2: drag us in ways we shouldn't necessarily go is the catalyst, right, 240 00:11:12,720 --> 00:11:16,120 Speaker 2: the occasional thing in the market that everybody gets excited about, 241 00:11:16,120 --> 00:11:18,800 Speaker 2: and right now, of course that's AI, that's artificial intelligence. 242 00:11:18,840 --> 00:11:21,080 Speaker 1: On Wall Street is basically in a love affair with it. 243 00:11:21,679 --> 00:11:23,920 Speaker 2: But that means that when this happens, when we get 244 00:11:23,960 --> 00:11:26,520 Speaker 2: this excited about one of these catalyst type events, they're 245 00:11:26,559 --> 00:11:29,960 Speaker 2: not looking at current earnings. The market is pricing in 246 00:11:30,040 --> 00:11:33,600 Speaker 2: five to ten years of hypothetical future growth, assuming that 247 00:11:33,679 --> 00:11:36,280 Speaker 2: these headlines are going to stay stay the way they are. 248 00:11:36,400 --> 00:11:38,640 Speaker 2: And we're not saying that artificial intelligence isn't real. This 249 00:11:38,760 --> 00:11:41,320 Speaker 2: is very big. We use it every day and it 250 00:11:41,400 --> 00:11:43,080 Speaker 2: is going to touch an awful lot of things that 251 00:11:43,120 --> 00:11:46,559 Speaker 2: everybody uses every day. But the investment mistake that people make, 252 00:11:46,720 --> 00:11:48,560 Speaker 2: you know, it was Take another example, so we have 253 00:11:48,600 --> 00:11:50,760 Speaker 2: sixty one year old Stacy. She read a couple of 254 00:11:50,800 --> 00:11:53,320 Speaker 2: articles about how great artificial intelligence is and it's going 255 00:11:53,400 --> 00:11:55,439 Speaker 2: to be the next great catalyst to create a bunch. 256 00:11:55,240 --> 00:11:56,199 Speaker 1: Of money for everybody. 257 00:11:56,360 --> 00:11:58,600 Speaker 2: So she takes three hundred thousand dollars, that throws it 258 00:11:58,600 --> 00:12:02,200 Speaker 2: into one hot artificial intil Eeligent stock, and for diversification 259 00:12:02,280 --> 00:12:05,720 Speaker 2: quote unquote, purposes a theme based ETF that focuses on 260 00:12:05,800 --> 00:12:09,160 Speaker 2: artificial intelligence companies. So initially that stock jumps for her 261 00:12:09,200 --> 00:12:11,480 Speaker 2: and she's convinced she's a genius. But then it drops 262 00:12:11,480 --> 00:12:14,679 Speaker 2: twenty five percent on weak forward guidance, meaning that they 263 00:12:14,679 --> 00:12:16,760 Speaker 2: didn't bring forward as many as much in earnings as 264 00:12:16,760 --> 00:12:17,960 Speaker 2: the analyst thought they were going to. 265 00:12:18,240 --> 00:12:20,480 Speaker 1: That ETF also starts to drop down a little bit. 266 00:12:20,559 --> 00:12:22,640 Speaker 2: So now she's sitting in a position where she's gotten 267 00:12:22,679 --> 00:12:26,320 Speaker 2: speculative positions and really no plan and no income generation 268 00:12:26,640 --> 00:12:28,920 Speaker 2: as a person who's about to step into retirement. So again, 269 00:12:29,120 --> 00:12:32,360 Speaker 2: real stories from real interactions we've had based off of 270 00:12:32,800 --> 00:12:35,160 Speaker 2: us reacting in a very human manner to where we 271 00:12:35,200 --> 00:12:36,280 Speaker 2: think profits can be had. 272 00:12:36,880 --> 00:12:40,000 Speaker 1: Here's the all Worth advice. Don't let Wall Street's headlines 273 00:12:40,080 --> 00:12:43,720 Speaker 1: become your strategy. Focus on what you can control, because 274 00:12:43,840 --> 00:12:48,640 Speaker 1: that's what leads to real financial freedom. When is the 275 00:12:48,679 --> 00:12:53,199 Speaker 1: right time to sell company stock? Speculation over a big 276 00:12:53,240 --> 00:12:56,840 Speaker 1: local company has us posing this question, and we'll explain 277 00:12:56,880 --> 00:12:59,120 Speaker 1: what we're talking about next. You're listening to Simply Money 278 00:12:59,120 --> 00:13:02,160 Speaker 1: presented by All Words financeel on fifty five KRC, the 279 00:13:02,480 --> 00:13:12,400 Speaker 1: talk station. You're listening to some point money to Buy 280 00:13:12,440 --> 00:13:15,520 Speaker 1: All Work Financial on Bob Spondseller along with Brian James. 281 00:13:16,280 --> 00:13:19,800 Speaker 1: Should you mix ETFs and mutual funds and a taxable account, 282 00:13:20,160 --> 00:13:23,520 Speaker 1: is your roth IRA being used the right way? And 283 00:13:23,600 --> 00:13:28,040 Speaker 1: can a portfolio optimizer really deliver better results? We've got 284 00:13:28,080 --> 00:13:31,560 Speaker 1: answers that could help you save on taxes, avoid some 285 00:13:31,760 --> 00:13:36,240 Speaker 1: common pitfalls with your investment plan, and invest with confidence. 286 00:13:36,360 --> 00:13:38,839 Speaker 1: All of that's coming up at straight Ahead at six 287 00:13:39,000 --> 00:13:43,720 Speaker 1: forty three. Well tonight, the ninth largest publicly traded company 288 00:13:43,720 --> 00:13:48,360 Speaker 1: in Cincinnati is in the news, and the news is massive. 289 00:13:48,440 --> 00:13:52,400 Speaker 1: TV station owner Sinclair has been in talks with Cincinnati's 290 00:13:52,440 --> 00:13:56,960 Speaker 1: own ew Scripts company about merging. According to a new 291 00:13:57,440 --> 00:14:00,640 Speaker 1: regulatory filing, give us the details, Brian. 292 00:14:01,440 --> 00:14:03,800 Speaker 2: So ew Scripts has been here for a long time 293 00:14:04,240 --> 00:14:07,200 Speaker 2: and Sinclair is based a little bit north of us, 294 00:14:07,520 --> 00:14:10,400 Speaker 2: is talking about picking them up. Sinclair owns Just to 295 00:14:10,440 --> 00:14:12,720 Speaker 2: kind of set the table here, Sinclair owns Channel twelve 296 00:14:13,440 --> 00:14:16,080 Speaker 2: and they've bought already six point three million shares worth 297 00:14:16,120 --> 00:14:18,840 Speaker 2: of Scripts, which represents about an eight percent share in 298 00:14:18,880 --> 00:14:21,760 Speaker 2: the company. And Scripts owns Channel nine, so this will 299 00:14:21,760 --> 00:14:24,120 Speaker 2: be Channel nine and Channel twelve being part of the 300 00:14:24,160 --> 00:14:28,960 Speaker 2: same company. They recently traded from the ABC to CBS. 301 00:14:29,000 --> 00:14:30,760 Speaker 2: They swapped those a few years ago, and I'm not 302 00:14:30,760 --> 00:14:32,480 Speaker 2: sure I'm ever going to keep that straight in my head. 303 00:14:32,640 --> 00:14:35,120 Speaker 2: Channel twelve is ABC forever, in Channel nine is CBS 304 00:14:35,160 --> 00:14:37,320 Speaker 2: in my brain because I'm born and raised here anyways. So, 305 00:14:37,360 --> 00:14:39,320 Speaker 2: according to this filing, Sinclair is the saying that a 306 00:14:39,360 --> 00:14:42,080 Speaker 2: transaction is going to result in Script shareholders getting an 307 00:14:42,120 --> 00:14:44,880 Speaker 2: ownership stake in the combined company that's valued at about 308 00:14:44,920 --> 00:14:48,120 Speaker 2: three times the Script's recent stock price. So in other words, yes, 309 00:14:48,120 --> 00:14:51,400 Speaker 2: if you're a Script shareholder, then they are purporting that 310 00:14:51,440 --> 00:14:54,320 Speaker 2: you'll get about three times return if this thing goes through. 311 00:14:54,600 --> 00:14:56,320 Speaker 2: And so that's what we want to talk about. When 312 00:14:56,400 --> 00:14:58,080 Speaker 2: is the right time to sell this stock? If you're 313 00:14:58,120 --> 00:15:01,280 Speaker 2: not married to it and it sieves a windfall like that, 314 00:15:01,760 --> 00:15:03,400 Speaker 2: that might be something you're thinking about. So here's a 315 00:15:03,400 --> 00:15:06,480 Speaker 2: little bit of history, and early twenty two, scripstock was 316 00:15:06,520 --> 00:15:07,960 Speaker 2: above twenty bucks a share. 317 00:15:08,360 --> 00:15:09,960 Speaker 1: Last week it was below three. 318 00:15:10,040 --> 00:15:12,280 Speaker 2: So it's been a bit of a bumpy ride, and 319 00:15:12,320 --> 00:15:14,680 Speaker 2: of course it has written quite a bit since Monday's news, 320 00:15:14,680 --> 00:15:16,480 Speaker 2: and that's probably leading some of you out there to 321 00:15:16,480 --> 00:15:18,960 Speaker 2: think they need to pull the trigger if you do own. 322 00:15:18,800 --> 00:15:22,720 Speaker 1: Some you know. So the question everybody asked is should 323 00:15:22,800 --> 00:15:25,880 Speaker 1: I do something? And we'll use Scripts as an example, 324 00:15:26,000 --> 00:15:28,080 Speaker 1: say you had a lot of money in script stock 325 00:15:28,160 --> 00:15:30,480 Speaker 1: when it was above twenty and you did nothing with 326 00:15:30,560 --> 00:15:33,560 Speaker 1: it because you didn't have to, or maybe because you 327 00:15:33,680 --> 00:15:35,880 Speaker 1: know you can't time the market, and you said, yeah, 328 00:15:35,920 --> 00:15:38,480 Speaker 1: it'll come back, it'll come back long term holding in 329 00:15:38,520 --> 00:15:41,800 Speaker 1: my portfolio. Then you watched it continue to drop and 330 00:15:41,920 --> 00:15:44,880 Speaker 1: drop to where it was last week, you know, at 331 00:15:45,640 --> 00:15:48,320 Speaker 1: or below three dollars a share, But since you had 332 00:15:48,400 --> 00:15:51,000 Speaker 1: other assets and you didn't need the money, you still 333 00:15:51,000 --> 00:15:55,320 Speaker 1: did nothing. Perhaps over this time you periodically asked, well, 334 00:15:55,360 --> 00:15:58,400 Speaker 1: maybe I should sell before it goes down further again 335 00:15:58,480 --> 00:16:01,880 Speaker 1: from above twenty to below three, but you still did 336 00:16:01,920 --> 00:16:04,760 Speaker 1: nothing because you didn't need the money. That could be 337 00:16:04,800 --> 00:16:06,760 Speaker 1: a good thing, you know, based on this news we 338 00:16:06,880 --> 00:16:10,760 Speaker 1: just got sounds like a smart decision. You know, you 339 00:16:10,840 --> 00:16:13,120 Speaker 1: can't time the market. But now, for the first time 340 00:16:13,160 --> 00:16:15,920 Speaker 1: in a couple of years, the stock is finally heading 341 00:16:16,200 --> 00:16:19,080 Speaker 1: in the right direction. There's a lot of attention being 342 00:16:19,120 --> 00:16:23,000 Speaker 1: given to it, and you might once again ask yourself, 343 00:16:23,480 --> 00:16:26,520 Speaker 1: should I do something with it now? Brian, I feel 344 00:16:26,560 --> 00:16:31,440 Speaker 1: obligated to say here. Oftentimes in our industry, people use 345 00:16:31,600 --> 00:16:34,480 Speaker 1: market timing like it's you know, a sin or a 346 00:16:34,480 --> 00:16:37,040 Speaker 1: dirty word or something you should never do. And I 347 00:16:37,920 --> 00:16:42,120 Speaker 1: vehemently disagree with that. And let me give you an example. 348 00:16:42,160 --> 00:16:44,840 Speaker 1: If you've got you know, a company like Scripts or 349 00:16:44,880 --> 00:16:49,440 Speaker 1: any other individual stock, the decision to buy seller holds 350 00:16:49,440 --> 00:16:52,360 Speaker 1: should be based on your financial plan, not trying to 351 00:16:52,520 --> 00:16:55,000 Speaker 1: predict what's going to happen to the stock. But be 352 00:16:55,120 --> 00:16:57,480 Speaker 1: that as it may. You can still put you know, 353 00:16:57,760 --> 00:17:00,360 Speaker 1: orders around this stock. You can you can put a 354 00:17:00,800 --> 00:17:03,000 Speaker 1: bracket order on it saying, hey, if it gets to 355 00:17:03,080 --> 00:17:05,919 Speaker 1: this price on the upside, I'm gonna sell it, and 356 00:17:05,960 --> 00:17:09,000 Speaker 1: if it falls below a certain price on the downside, 357 00:17:09,040 --> 00:17:10,920 Speaker 1: I've got a stop loss order on it. I mean, 358 00:17:10,920 --> 00:17:14,280 Speaker 1: it's not that hard to do. Any good financial advisor 359 00:17:14,359 --> 00:17:17,600 Speaker 1: can set you know, an order structure like that. You're 360 00:17:17,640 --> 00:17:20,720 Speaker 1: not predicting or timing the market. You're just protecting your 361 00:17:20,760 --> 00:17:24,720 Speaker 1: investment so something doesn't fall to from twenty two dollars 362 00:17:24,800 --> 00:17:28,200 Speaker 1: a share down to below three What say you? Yeah? 363 00:17:28,280 --> 00:17:30,080 Speaker 2: And I think when you when you when you talk 364 00:17:30,119 --> 00:17:33,280 Speaker 2: about market timing in that particular example, I think I 365 00:17:33,320 --> 00:17:35,400 Speaker 2: think that's a little bit different because you're not really 366 00:17:35,400 --> 00:17:38,000 Speaker 2: timing the market. You're kind of timing an individual stock, 367 00:17:38,320 --> 00:17:40,880 Speaker 2: which the individual stocks move like a flock of birds. 368 00:17:40,880 --> 00:17:43,320 Speaker 1: They're gonna move one direction and then the other direction. 369 00:17:43,400 --> 00:17:43,919 Speaker 1: You're not gonna be. 370 00:17:43,920 --> 00:17:47,000 Speaker 2: Able to predict any of it versus a diversified portfolio, 371 00:17:47,000 --> 00:17:48,720 Speaker 2: which is gonna be a lot more steady and a 372 00:17:48,760 --> 00:17:50,840 Speaker 2: lot more predictable. So I don't think you're talking about 373 00:17:50,840 --> 00:17:53,439 Speaker 2: when when you say that you're vehemently opposed that to 374 00:17:53,480 --> 00:17:56,240 Speaker 2: the idea that timing the market is a bad idea. 375 00:17:56,480 --> 00:17:58,760 Speaker 2: I think you're just talking about what an individual stock 376 00:17:58,800 --> 00:18:00,720 Speaker 2: can do, and you should pay attention to that company 377 00:18:00,960 --> 00:18:03,040 Speaker 2: and get to know it and protect yourself on the 378 00:18:03,119 --> 00:18:05,040 Speaker 2: upside of the downside. I think that's a great idea, 379 00:18:06,080 --> 00:18:09,159 Speaker 2: And like you say, it's not hard to do. You 380 00:18:09,280 --> 00:18:11,280 Speaker 2: just have to be okay with the idea that I 381 00:18:11,960 --> 00:18:14,040 Speaker 2: may not be right. This stock can go to the moon, 382 00:18:14,080 --> 00:18:16,399 Speaker 2: it can go through the floor, and I would spend 383 00:18:16,400 --> 00:18:18,600 Speaker 2: some time picturing what will it feel like if this 384 00:18:18,640 --> 00:18:21,000 Speaker 2: stock goes up twenty five percent here in the relative 385 00:18:21,040 --> 00:18:23,840 Speaker 2: short term, which is an extremely good return, How will 386 00:18:23,840 --> 00:18:27,480 Speaker 2: I feel? Will I feel more passionately positive? Then I 387 00:18:27,560 --> 00:18:30,359 Speaker 2: will be angry if it drops by fifty percent? Because 388 00:18:30,400 --> 00:18:33,080 Speaker 2: both of those outcomes are very possible with any individual 389 00:18:33,119 --> 00:18:36,200 Speaker 2: stock over relatively short period of time. A diversified portfolio 390 00:18:36,320 --> 00:18:37,840 Speaker 2: not so much, because you got a little bit of 391 00:18:37,840 --> 00:18:40,480 Speaker 2: everything doing its own thing, on and on. So you 392 00:18:40,520 --> 00:18:43,040 Speaker 2: have to think about what will I be more passionate about. 393 00:18:43,200 --> 00:18:45,040 Speaker 2: And if you're going to set stop lost orders, like 394 00:18:45,080 --> 00:18:45,840 Speaker 2: Bob says. 395 00:18:45,880 --> 00:18:48,920 Speaker 1: Break it into chunks. If you've got five hundred excuse. 396 00:18:48,560 --> 00:18:50,399 Speaker 2: Me, five hundred shares is something, then maybe you have 397 00:18:50,520 --> 00:18:53,320 Speaker 2: five different orders selling one hundred shares at a time 398 00:18:53,359 --> 00:18:56,200 Speaker 2: at various prices, and don't get married to any one 399 00:18:56,200 --> 00:18:56,439 Speaker 2: of them. 400 00:18:56,480 --> 00:18:57,160 Speaker 1: Don't get greedy. 401 00:18:57,160 --> 00:18:58,680 Speaker 2: If it's been on a good run, don't try to 402 00:18:58,680 --> 00:19:00,560 Speaker 2: squeeze another couple bucks out of it because it may 403 00:19:00,680 --> 00:19:02,760 Speaker 2: just hit its peak. You know, you can sell a 404 00:19:02,800 --> 00:19:04,800 Speaker 2: little bit now and then hang on to another chunk 405 00:19:04,840 --> 00:19:05,520 Speaker 2: for a better time. 406 00:19:06,119 --> 00:19:07,919 Speaker 1: Yeah. The only point I'm trying to make in this 407 00:19:08,720 --> 00:19:12,000 Speaker 1: specific example is the person that sold their script stock 408 00:19:12,160 --> 00:19:15,359 Speaker 1: at twenty two dollars a share. They've moved on. They 409 00:19:15,400 --> 00:19:17,920 Speaker 1: don't care what's going to happen next with the stock 410 00:19:17,960 --> 00:19:20,639 Speaker 1: at three and hopefully coming back. They've moved on to 411 00:19:20,720 --> 00:19:24,040 Speaker 1: something else, and they're probably have been making money for 412 00:19:24,080 --> 00:19:27,160 Speaker 1: several years in a diversified portfolio. So let's talk about 413 00:19:27,240 --> 00:19:29,719 Speaker 1: quickly when it does make sense to sell a stock. 414 00:19:30,040 --> 00:19:32,520 Speaker 1: It's when your financial goals maybe have changed. You need 415 00:19:32,520 --> 00:19:35,160 Speaker 1: to fund your retirement, pay for college, you know, buy 416 00:19:35,160 --> 00:19:38,200 Speaker 1: a vacation home, or just shift from growth to income. Again, 417 00:19:38,280 --> 00:19:43,760 Speaker 1: it's financial planning based, not prediction based. And another example 418 00:19:43,920 --> 00:19:46,679 Speaker 1: is if the stock no longer fits your strategy. If 419 00:19:46,720 --> 00:19:50,840 Speaker 1: your portfolio is now overweight in one sector let's say technology, 420 00:19:50,840 --> 00:19:53,800 Speaker 1: for example, or if a stock you bought for growth 421 00:19:53,920 --> 00:19:56,840 Speaker 1: is now stagnant, it might be time to simply trim 422 00:19:56,920 --> 00:20:00,399 Speaker 1: some and rebalance. Or the fundamentals of the company change, 423 00:20:00,440 --> 00:20:03,280 Speaker 1: the reason you bought the stock no longer exists, or 424 00:20:03,280 --> 00:20:06,359 Speaker 1: that's changed, maybe the leadership of the company has changed, 425 00:20:06,440 --> 00:20:12,760 Speaker 1: Earnings have now become inconsistently poor or inconsistently good, you know, 426 00:20:12,920 --> 00:20:15,480 Speaker 1: or there's a major disruption in the industry. That's a 427 00:20:15,560 --> 00:20:18,440 Speaker 1: sign it might be time to exit. Here's the all 428 00:20:18,440 --> 00:20:23,600 Speaker 1: Worth advice. Sell based on strategy, not speculation. Let your goals, 429 00:20:23,800 --> 00:20:26,720 Speaker 1: your risk tolerance, and the reason you bought the stock 430 00:20:26,800 --> 00:20:30,439 Speaker 1: in the first place, not the current headlines tell you 431 00:20:30,520 --> 00:20:33,840 Speaker 1: when it's time to walk away. Coming up next, how 432 00:20:33,880 --> 00:20:37,440 Speaker 1: to actually prepare your kids for a future where AI 433 00:20:37,720 --> 00:20:42,080 Speaker 1: changes potentially everything about work. You're listening to Simply Money, 434 00:20:42,160 --> 00:20:45,000 Speaker 1: presented by all Worth Financial on fifty five KRC The 435 00:20:45,320 --> 00:20:54,600 Speaker 1: Talk Stam. You're listening to Simply Money, presented by all 436 00:20:54,640 --> 00:20:58,000 Speaker 1: Worth Financial on Bob Sponseller along with Brian James. Joined 437 00:20:58,000 --> 00:21:02,040 Speaker 1: tonight by our career expert Bouch and Julie. Thanks as 438 00:21:02,040 --> 00:21:05,000 Speaker 1: always for joining us tonight. And you've got a pretty 439 00:21:05,040 --> 00:21:08,080 Speaker 1: important topic to cover. I'm real interested in your thoughts 440 00:21:08,560 --> 00:21:11,800 Speaker 1: and the topic is, let's face it, giving career advice 441 00:21:11,920 --> 00:21:15,760 Speaker 1: to kids has never been more difficult. Walk us through 442 00:21:15,800 --> 00:21:18,520 Speaker 1: what's going on out there in the real world with 443 00:21:18,600 --> 00:21:22,200 Speaker 1: respect to helping our kids get gainfully employed. 444 00:21:23,800 --> 00:21:25,480 Speaker 3: No, I had to laugh when I saw that title 445 00:21:25,520 --> 00:21:28,040 Speaker 3: because my first thought was, as if they listen anyway, 446 00:21:29,800 --> 00:21:31,560 Speaker 3: my kids. I know what I'm doing, and my kids 447 00:21:31,560 --> 00:21:33,359 Speaker 3: don't listen. One of them does, one of them doesn't. 448 00:21:33,640 --> 00:21:34,840 Speaker 3: But yeah, it's it's. 449 00:21:34,760 --> 00:21:36,679 Speaker 1: And hopefully they're both listening this morning. 450 00:21:39,400 --> 00:21:43,600 Speaker 3: So the back in the day, it was it was 451 00:21:43,760 --> 00:21:48,120 Speaker 3: very easy to say go to college, something great will 452 00:21:48,160 --> 00:21:51,720 Speaker 3: be waiting for you. It's the path, it's the firm 453 00:21:51,880 --> 00:21:55,000 Speaker 3: path to success and to having the life you want. 454 00:21:55,640 --> 00:21:58,439 Speaker 3: And that is completely smashed at this point. And so 455 00:21:58,560 --> 00:22:02,720 Speaker 3: now as parents have kids in high school, kids thinking 456 00:22:02,760 --> 00:22:05,840 Speaker 3: about what sort of post high school education do I want, 457 00:22:06,440 --> 00:22:09,159 Speaker 3: be it trade school or just something post high school, 458 00:22:09,160 --> 00:22:13,720 Speaker 3: which pretty much everyone needs, we're at a loss as 459 00:22:13,840 --> 00:22:18,240 Speaker 3: to how to be helpful in that conversation because that 460 00:22:18,400 --> 00:22:23,960 Speaker 3: path has completely been smashed. Whether it is just gigantic debt, 461 00:22:24,200 --> 00:22:29,560 Speaker 3: a job market disconnect between what your kids want to 462 00:22:29,600 --> 00:22:33,560 Speaker 3: do and what's available, just lack of job search skills. 463 00:22:33,600 --> 00:22:37,920 Speaker 3: So it's everything has changed when it comes to this area. 464 00:22:38,000 --> 00:22:41,800 Speaker 3: But I think it's an opportunity because what is going 465 00:22:41,840 --> 00:22:45,760 Speaker 3: to allow us to do is allow our kids to 466 00:22:45,760 --> 00:22:48,960 Speaker 3: be more involved in the conversation. And the challenge here 467 00:22:49,160 --> 00:22:55,679 Speaker 3: is going to be as parents believing that they know themselves, 468 00:22:56,760 --> 00:23:00,640 Speaker 3: understanding that we may have this dream. If they're really 469 00:23:00,640 --> 00:23:03,159 Speaker 3: great with their hands, it might be the Boomer or 470 00:23:03,240 --> 00:23:05,879 Speaker 3: gen X response might be, oh great, you could be 471 00:23:05,960 --> 00:23:08,960 Speaker 3: a mechanical engineer. And I think what we've got to 472 00:23:09,000 --> 00:23:12,320 Speaker 3: say as an example in that case is or you 473 00:23:12,359 --> 00:23:14,960 Speaker 3: could be a technician, you could be an hvac you 474 00:23:14,960 --> 00:23:16,639 Speaker 3: could own an HVAC company. You could be an he 475 00:23:16,680 --> 00:23:20,480 Speaker 3: back repair person, you could be an auto repair you could, 476 00:23:20,560 --> 00:23:25,440 Speaker 3: you know, So there's to not just pigeonhole your kids 477 00:23:25,440 --> 00:23:29,919 Speaker 3: into something that feels like a path that felt safe 478 00:23:29,960 --> 00:23:34,280 Speaker 3: to us. Is going to be really critical because you 479 00:23:34,320 --> 00:23:38,760 Speaker 3: shouldn't be giving advice that worked decades ago or even 480 00:23:38,840 --> 00:23:43,280 Speaker 3: a decade ago to today because it's entirely different and so, 481 00:23:44,200 --> 00:23:46,320 Speaker 3: you know, it's I think the first thing in this 482 00:23:46,520 --> 00:23:50,359 Speaker 3: in this is to recognize that the advice that we 483 00:23:50,480 --> 00:23:53,320 Speaker 3: got that worked for us and worked for many others 484 00:23:53,920 --> 00:23:57,800 Speaker 3: isn't necessarily as relevant anymore. It's not that it's irrelevant, 485 00:23:57,840 --> 00:24:01,440 Speaker 3: but it's not as relevant. The kids have more options 486 00:24:02,000 --> 00:24:04,440 Speaker 3: than they used to and it's exciting, but it can 487 00:24:04,440 --> 00:24:06,439 Speaker 3: also be overwhelming. So I think our role as a 488 00:24:06,480 --> 00:24:11,199 Speaker 3: parent can be exposed them to as many opportunities, conversations, 489 00:24:11,200 --> 00:24:14,480 Speaker 3: and places and people as possible and help them start 490 00:24:14,520 --> 00:24:19,040 Speaker 3: to discern what sounds interesting, what they might want to 491 00:24:19,080 --> 00:24:23,320 Speaker 3: learn more about, and then explore all the various education 492 00:24:23,520 --> 00:24:26,280 Speaker 3: paths and experience paths to get there, because it's not 493 00:24:26,760 --> 00:24:28,920 Speaker 3: it's not a one and done anymore that these those 494 00:24:28,960 --> 00:24:29,600 Speaker 3: days are gone. 495 00:24:29,760 --> 00:24:32,359 Speaker 2: Hey, Julie, So one of the topics that I wanted 496 00:24:32,359 --> 00:24:35,080 Speaker 2: to hear from you on and that's great that I 497 00:24:35,160 --> 00:24:36,199 Speaker 2: appreciate that update. 498 00:24:37,000 --> 00:24:39,960 Speaker 1: But with regard to AI, so that's everywhere. 499 00:24:39,560 --> 00:24:42,040 Speaker 2: And I kind of feel like, yeah, you can identify 500 00:24:42,040 --> 00:24:44,280 Speaker 2: some jobs they clearly could be done by AI right now. 501 00:24:44,480 --> 00:24:46,320 Speaker 2: But I have a feeling that that label is getting 502 00:24:46,359 --> 00:24:49,320 Speaker 2: slapped on a lot of jobs where you know, maybe 503 00:24:49,359 --> 00:24:52,800 Speaker 2: parents are kind of prematurely discouraging their kids. 504 00:24:52,800 --> 00:24:54,000 Speaker 1: Do you see that happening. 505 00:24:54,000 --> 00:24:55,760 Speaker 2: Do you find yourself, you know, a position where you've 506 00:24:55,760 --> 00:24:57,560 Speaker 2: got to say no, hold on, there are still paths 507 00:24:57,560 --> 00:25:00,320 Speaker 2: to go do this for a living without aibing factor or. 508 00:25:00,320 --> 00:25:01,720 Speaker 1: Yeah, yeah. 509 00:25:01,840 --> 00:25:04,680 Speaker 3: So here's what I think is true. When we hear 510 00:25:04,720 --> 00:25:06,840 Speaker 3: the phrase all these jobs are going to be replaced 511 00:25:06,840 --> 00:25:09,560 Speaker 3: by AI, I think it's more. I think it's more 512 00:25:09,600 --> 00:25:12,640 Speaker 3: true to say almost every job or every job will 513 00:25:12,680 --> 00:25:15,800 Speaker 3: be affected in some way by AI, and it might 514 00:25:15,880 --> 00:25:18,560 Speaker 3: just affect the way you do the job. It might 515 00:25:18,600 --> 00:25:20,360 Speaker 3: not take the job, but it might affect the way 516 00:25:20,359 --> 00:25:22,080 Speaker 3: you do the job. So when you look at what 517 00:25:22,200 --> 00:25:26,560 Speaker 3: are the things that we know to be true as 518 00:25:26,600 --> 00:25:29,879 Speaker 3: we look forward, everyone entering the job market, in the 519 00:25:29,960 --> 00:25:32,840 Speaker 3: job market has to have a comfort level with technology, 520 00:25:33,040 --> 00:25:39,760 Speaker 3: with learning technology. They have to have really strong people skills, 521 00:25:40,200 --> 00:25:47,920 Speaker 3: soft skills listening, communicating, presenting, influencing, working across, working with customers. 522 00:25:48,400 --> 00:25:52,840 Speaker 3: They have to have those what we call soft skills. Now, 523 00:25:52,880 --> 00:25:55,679 Speaker 3: really those saft skills are becoming the most important. And 524 00:25:55,760 --> 00:25:58,440 Speaker 3: so as you look at how do you prepare your 525 00:25:58,480 --> 00:26:01,920 Speaker 3: son or daughter for what's next. The three buckets I 526 00:26:01,920 --> 00:26:06,600 Speaker 3: would focus on is technology. Now they're digital natives, but 527 00:26:06,800 --> 00:26:09,560 Speaker 3: you are not. Everybody is as comfortable as everybody else. 528 00:26:09,600 --> 00:26:12,760 Speaker 3: But are they getting exposed to the different ways that 529 00:26:12,800 --> 00:26:16,200 Speaker 3: technology help us work and do and live our lives better. 530 00:26:16,840 --> 00:26:20,479 Speaker 3: And the second is really, you know, the soft skills 531 00:26:20,480 --> 00:26:23,040 Speaker 3: of communicating, getting along with people. You can be brilliant, 532 00:26:23,119 --> 00:26:25,640 Speaker 3: but if you're difficult to work with, you know you're 533 00:26:25,640 --> 00:26:27,320 Speaker 3: not going to have the career you want. And the 534 00:26:27,359 --> 00:26:31,679 Speaker 3: third is really an openness to learning, to taking feedback, 535 00:26:32,280 --> 00:26:35,359 Speaker 3: to getting excited about what else can I learn? What 536 00:26:35,440 --> 00:26:37,520 Speaker 3: else can I do? Those are the kind of people 537 00:26:37,720 --> 00:26:40,119 Speaker 3: and really that applies to us of all ages. The 538 00:26:40,200 --> 00:26:43,000 Speaker 3: companies are really looking for anything that smacks up I've 539 00:26:43,040 --> 00:26:45,960 Speaker 3: always done it this way. No matter how old you are, 540 00:26:46,119 --> 00:26:48,720 Speaker 3: is going to you know, is going to is really 541 00:26:48,760 --> 00:26:51,399 Speaker 3: going to limit I would say, you're your opportunities for growth. 542 00:26:52,760 --> 00:26:55,000 Speaker 1: Julie. When I listen to you talk here, I think, 543 00:26:55,080 --> 00:26:57,040 Speaker 1: you know, I agree with you. I think the whole 544 00:26:57,040 --> 00:26:59,920 Speaker 1: paradigm here for the last five, ten, fifteen, twenty years 545 00:27:00,080 --> 00:27:04,159 Speaker 1: has been this specialization into certain areas. And what I 546 00:27:04,200 --> 00:27:06,879 Speaker 1: mean by that is we tell our kids to, you know, 547 00:27:06,960 --> 00:27:10,640 Speaker 1: get a STEM degree. Well, you know you mentioned technology. 548 00:27:10,720 --> 00:27:13,680 Speaker 1: What can tend to happen is people bury themselves behind 549 00:27:13,720 --> 00:27:16,840 Speaker 1: a computer screen and just work with numbers all day 550 00:27:16,880 --> 00:27:19,919 Speaker 1: and they have zero people skills. They've never interacted with 551 00:27:20,000 --> 00:27:24,760 Speaker 1: a customer, They've never had to critically think and engage 552 00:27:24,800 --> 00:27:28,320 Speaker 1: in God forbid, a disagreement with another human being, and 553 00:27:28,359 --> 00:27:31,040 Speaker 1: how to resolve that. That kind of stuff is not 554 00:27:31,119 --> 00:27:33,120 Speaker 1: going to get solved by AI. You got to get 555 00:27:33,119 --> 00:27:35,800 Speaker 1: out there and mix it up in the world. I mean, shoot, 556 00:27:35,880 --> 00:27:39,439 Speaker 1: even standing behind a cash register at McDonald's for a 557 00:27:39,440 --> 00:27:41,520 Speaker 1: couple of years when you're in high school, you learn 558 00:27:41,960 --> 00:27:46,520 Speaker 1: incredible skills that are transferable to any job moving forward. 559 00:27:46,720 --> 00:27:50,320 Speaker 1: I think we've lost sight of that in society today. 560 00:27:51,560 --> 00:27:55,399 Speaker 3: We have and I just you know it's we have aired. 561 00:27:55,520 --> 00:27:58,320 Speaker 3: We have moved over to the side of I want 562 00:27:58,320 --> 00:28:01,000 Speaker 3: my kids to take as many AP classes as possible. Yes, 563 00:28:01,240 --> 00:28:03,520 Speaker 3: and then we send them off to a prestigious college 564 00:28:03,680 --> 00:28:06,679 Speaker 3: and say, Okay, they're good now, No they're not. And 565 00:28:06,720 --> 00:28:09,720 Speaker 3: I think we see the numbers of how young people 566 00:28:09,720 --> 00:28:12,960 Speaker 3: are really struggling. They're struggling because they don't know how 567 00:28:12,960 --> 00:28:16,520 Speaker 3: to navigate this world right now and it is very challenging. 568 00:28:16,560 --> 00:28:19,760 Speaker 3: It's easy for us as boomers to say a toughen up, 569 00:28:20,200 --> 00:28:23,480 Speaker 3: but it's bigger than that. And so what anything you 570 00:28:23,520 --> 00:28:27,440 Speaker 3: can do to expose your kids to difficult conversations. Don't 571 00:28:27,600 --> 00:28:30,200 Speaker 3: order their food for them, don't call their teachers, don't 572 00:28:30,440 --> 00:28:34,000 Speaker 3: make them step out and step into uncomfortable situations, and 573 00:28:34,000 --> 00:28:35,480 Speaker 3: don't get in there with a rag and try to 574 00:28:35,480 --> 00:28:38,440 Speaker 3: clean up messas that's the kind of stuff that employers 575 00:28:38,480 --> 00:28:41,280 Speaker 3: are really struggling with. You might be making yourself feel 576 00:28:41,280 --> 00:28:44,760 Speaker 3: better in the moment, but you're really hurting your child's 577 00:28:44,840 --> 00:28:46,240 Speaker 3: chances for career success. 578 00:28:46,880 --> 00:28:49,160 Speaker 1: All right, good stuff as always, Julie, thanks again for 579 00:28:49,240 --> 00:28:51,800 Speaker 1: joining us. You're listening to Simply Money presented by all 580 00:28:51,840 --> 00:28:58,880 Speaker 1: Worth Financial on fifty five KRC, the talk station. You're 581 00:28:58,920 --> 00:29:01,800 Speaker 1: listening to Simply Money about all Worth Financial. I'm Bob 582 00:29:01,880 --> 00:29:05,200 Speaker 1: Sponseller along with Brian James. If you have a financial 583 00:29:05,240 --> 00:29:07,200 Speaker 1: question you'd like for us to answer. There is a 584 00:29:07,240 --> 00:29:09,560 Speaker 1: red button you can click while you're listening to the show. 585 00:29:09,640 --> 00:29:12,800 Speaker 1: If you're listening on the iHeart app, simply record your 586 00:29:12,880 --> 00:29:16,680 Speaker 1: question and it will come straight to us. Mark in 587 00:29:16,800 --> 00:29:19,640 Speaker 1: Lovelin leads us off tonight Brian. He says, we've held 588 00:29:19,680 --> 00:29:22,080 Speaker 1: on to a lot of our winners for years, but 589 00:29:22,240 --> 00:29:26,480 Speaker 1: now we're worried they'll become quote unquote too big to sell. 590 00:29:27,360 --> 00:29:31,360 Speaker 1: How do you unwind games without blowing up your tax return? Brian, Yeah, 591 00:29:31,360 --> 00:29:32,480 Speaker 1: that's a very common problem. 592 00:29:32,520 --> 00:29:34,560 Speaker 2: And we're talking about a taxable account here, so not 593 00:29:34,640 --> 00:29:37,280 Speaker 2: an IRA, not a ROTH, not any kind of retirement plan, 594 00:29:37,440 --> 00:29:39,800 Speaker 2: just a just a regular old brokers account that spits 595 00:29:39,840 --> 00:29:41,280 Speaker 2: out of ten ninety nine every year. 596 00:29:41,600 --> 00:29:42,920 Speaker 1: And so this is a good problem to have. 597 00:29:43,000 --> 00:29:45,320 Speaker 2: Of course, Mark and his family owned some investments that 598 00:29:45,360 --> 00:29:47,880 Speaker 2: have done well, and obviously they've gotten to a point 599 00:29:47,880 --> 00:29:50,320 Speaker 2: where they're just concerned about. 600 00:29:50,000 --> 00:29:52,080 Speaker 1: How to unwind them. So what referring to here is 601 00:29:52,080 --> 00:29:53,000 Speaker 1: capital gains tax. 602 00:29:53,120 --> 00:29:55,520 Speaker 2: Capital gains tax isn't as painful and scary as you 603 00:29:55,600 --> 00:29:56,120 Speaker 2: might be thinking. 604 00:29:56,160 --> 00:29:57,400 Speaker 1: Nobody wants to pay taxes. 605 00:29:57,440 --> 00:29:59,320 Speaker 2: But once you get over the idea that that's not 606 00:29:59,400 --> 00:30:02,360 Speaker 2: ever gonna happen, and that's not a not an option. 607 00:30:03,040 --> 00:30:04,440 Speaker 2: Then you can kind of look a little more in 608 00:30:04,480 --> 00:30:07,280 Speaker 2: depth at this. So what you can do here in 609 00:30:07,360 --> 00:30:09,840 Speaker 2: terms of taking some of this risk off the table, right, 610 00:30:09,840 --> 00:30:11,880 Speaker 2: we've got big positions in individual stocks. 611 00:30:12,400 --> 00:30:15,400 Speaker 1: Well, then what you can do is. 612 00:30:14,880 --> 00:30:17,120 Speaker 2: First of all, make sure you understand what your actual 613 00:30:17,120 --> 00:30:20,040 Speaker 2: capital gains hit will be. It's possible if you arrange 614 00:30:20,080 --> 00:30:22,120 Speaker 2: your finances the right way. We don't know much about 615 00:30:22,160 --> 00:30:24,960 Speaker 2: mark situation other than this question, but remember it's always 616 00:30:25,000 --> 00:30:28,080 Speaker 2: possible to sell things, possibly without having any capital gains 617 00:30:28,120 --> 00:30:30,400 Speaker 2: at all, if your income is relatively low. And this 618 00:30:30,440 --> 00:30:33,040 Speaker 2: happens for people who are who maybe have retired, there's 619 00:30:33,080 --> 00:30:35,840 Speaker 2: no salary anymore. They're living off of savings accounts for 620 00:30:35,840 --> 00:30:38,120 Speaker 2: a little while before they turn on social Security and 621 00:30:38,160 --> 00:30:40,320 Speaker 2: pensions and things, and they're just in a lower bracket. 622 00:30:40,320 --> 00:30:42,440 Speaker 2: There can be a window, depending on Mark's age, which 623 00:30:42,480 --> 00:30:45,640 Speaker 2: we don't know, where he might be able to escape 624 00:30:45,640 --> 00:30:47,120 Speaker 2: without paying much in capital gains. 625 00:30:47,400 --> 00:30:49,000 Speaker 1: Worst case scenario, most. 626 00:30:48,880 --> 00:30:50,960 Speaker 2: People are going to wind up paying a fixed fifteen 627 00:30:51,000 --> 00:30:54,160 Speaker 2: percent If you've got over four hundred some five hundred 628 00:30:54,160 --> 00:30:56,120 Speaker 2: one thousand dollars in income, then you might sneak up 629 00:30:56,120 --> 00:30:58,760 Speaker 2: into the twenty percent bracket. But regardless, most people are 630 00:30:58,800 --> 00:31:01,200 Speaker 2: going to wind up paying fifteen percent on the gain alone. 631 00:31:01,360 --> 00:31:04,320 Speaker 2: And remember we are sitting here in November. You're only 632 00:31:04,360 --> 00:31:06,960 Speaker 2: six weeks away from another tax here. So if you 633 00:31:07,000 --> 00:31:08,960 Speaker 2: do want to back off on a position, you could 634 00:31:08,960 --> 00:31:10,680 Speaker 2: sell some now, in a month and a half later, 635 00:31:10,960 --> 00:31:13,240 Speaker 2: sell another chunk, and you now spread that gain into 636 00:31:13,240 --> 00:31:16,200 Speaker 2: two tax hears. And there's always charitable donations. If you 637 00:31:16,280 --> 00:31:19,280 Speaker 2: are charitably inclined, donate some of those shares. If you're 638 00:31:19,320 --> 00:31:21,840 Speaker 2: doing if you are doing things anyway to benefit charities, 639 00:31:22,040 --> 00:31:24,120 Speaker 2: then don't write them a check, give them shares of 640 00:31:24,160 --> 00:31:26,080 Speaker 2: the company. Trust me, they know what to do with them. 641 00:31:26,080 --> 00:31:27,800 Speaker 2: They're going to send you a brochure with their church 642 00:31:27,880 --> 00:31:30,640 Speaker 2: logo or whatever on it and something called a DTC number, 643 00:31:30,640 --> 00:31:32,120 Speaker 2: which is how you're going to get those shares to 644 00:31:32,160 --> 00:31:35,080 Speaker 2: their account. So you'll be on something, you'll be on 645 00:31:35,160 --> 00:31:37,800 Speaker 2: their mailing list from here to eternity exactly. 646 00:31:37,800 --> 00:31:38,280 Speaker 1: They'll love you. 647 00:31:38,360 --> 00:31:40,360 Speaker 2: But but if this is where, if you're already giving anyway, 648 00:31:40,400 --> 00:31:41,720 Speaker 2: it's just a more efficient way to do it. You 649 00:31:41,720 --> 00:31:44,000 Speaker 2: can dodge the gain, not give up some of your 650 00:31:44,000 --> 00:31:46,040 Speaker 2: cash and also reduce your risk at the same time. 651 00:31:46,280 --> 00:31:47,960 Speaker 1: So let's move on to Dan and Anderson. 652 00:31:48,040 --> 00:31:50,680 Speaker 2: Dan says, hey, hey, Bob, We've always invested in these 653 00:31:50,720 --> 00:31:53,440 Speaker 2: broad indices, but I'm starting to wonder if we're missing 654 00:31:53,480 --> 00:31:56,280 Speaker 2: opportunities in these smaller, you know, less followed areas. How 655 00:31:56,280 --> 00:31:57,920 Speaker 2: do you know when to go off the beaten path 656 00:31:58,080 --> 00:31:59,600 Speaker 2: and when to stick to the main road. 657 00:32:01,000 --> 00:32:03,000 Speaker 1: Well, Dan, a couple things you know off the top 658 00:32:03,040 --> 00:32:04,840 Speaker 1: of my head here, and Brian, you know, did a 659 00:32:04,840 --> 00:32:07,360 Speaker 1: great job of covering this yesterday on the show. I mean, 660 00:32:07,400 --> 00:32:09,600 Speaker 1: I think where a lot of investors that don't work 661 00:32:09,640 --> 00:32:13,200 Speaker 1: with a good advisor have been underweighted for years now, 662 00:32:13,240 --> 00:32:15,960 Speaker 1: I would say is international stocks, and you know, take 663 00:32:15,960 --> 00:32:18,880 Speaker 1: a look at how those have done this year. So 664 00:32:20,160 --> 00:32:24,480 Speaker 1: don't don't abandon those broad large cap US bond or 665 00:32:24,640 --> 00:32:28,600 Speaker 1: US stock indices. Obviously, those are what have carried the 666 00:32:28,680 --> 00:32:31,840 Speaker 1: weight here for return wise for decades and decades and 667 00:32:31,840 --> 00:32:34,720 Speaker 1: will likely continue to do so. But if you're talking 668 00:32:34,760 --> 00:32:38,960 Speaker 1: about other opportunities or just diversifying some of your risk away, 669 00:32:39,040 --> 00:32:41,680 Speaker 1: I would look at international stocks. And I think another 670 00:32:41,760 --> 00:32:44,240 Speaker 1: area to start to look at, if you have not already, 671 00:32:44,480 --> 00:32:48,040 Speaker 1: is private equity tread lightly in that area, get with 672 00:32:48,120 --> 00:32:51,040 Speaker 1: a good fiduciary advisors who can give you the pros 673 00:32:51,040 --> 00:32:54,000 Speaker 1: and cons and do some research on where to venture 674 00:32:54,040 --> 00:32:56,760 Speaker 1: into private equity. But those are a couple of areas, 675 00:32:57,160 --> 00:33:00,080 Speaker 1: you know, off the proverbial beaten path, as you say, 676 00:33:00,120 --> 00:33:02,160 Speaker 1: which might you know, make some sense to take a 677 00:33:02,200 --> 00:33:04,720 Speaker 1: look at here, you know, as we close out twenty 678 00:33:04,760 --> 00:33:08,280 Speaker 1: twenty five and head into twenty twenty six. All right, 679 00:33:08,320 --> 00:33:11,959 Speaker 1: Brian and Florence says, we own both ETFs and mutual 680 00:33:12,000 --> 00:33:14,920 Speaker 1: funds in a taxable account. Is it worth it to 681 00:33:15,000 --> 00:33:19,480 Speaker 1: switch entirely to ETFs for tax efficiency or are there 682 00:33:19,600 --> 00:33:20,640 Speaker 1: hidden trade offs? 683 00:33:20,680 --> 00:33:24,440 Speaker 2: Brian, lots of capital gains tax questions without being specifically 684 00:33:24,520 --> 00:33:26,760 Speaker 2: named capital gains tax questions. But that's really what we're 685 00:33:26,800 --> 00:33:29,440 Speaker 2: talking about, So so a mutual fund, those are these are. 686 00:33:29,400 --> 00:33:30,760 Speaker 1: The kind of things, of course, we've had for a 687 00:33:30,840 --> 00:33:31,480 Speaker 1: very long time. 688 00:33:31,480 --> 00:33:35,160 Speaker 2: If you own them outside of a retirement plan, outside 689 00:33:35,160 --> 00:33:37,960 Speaker 2: an IRA roth Ara four O one K, then they 690 00:33:37,960 --> 00:33:41,240 Speaker 2: spit out capital gain distributions and dividends and things like that. 691 00:33:41,400 --> 00:33:42,520 Speaker 1: Those are good things, of course. 692 00:33:42,560 --> 00:33:45,560 Speaker 2: That's if I have a capital gain distribution, it means 693 00:33:45,600 --> 00:33:47,360 Speaker 2: I must have had a capital gain, so we want that. 694 00:33:48,120 --> 00:33:51,120 Speaker 2: But what happens is with a mutual fund structure, if 695 00:33:51,160 --> 00:33:53,680 Speaker 2: that fund decides to sell off a position that it 696 00:33:53,760 --> 00:33:56,680 Speaker 2: has owned for decades, and you've owned that fund for 697 00:33:56,760 --> 00:34:01,320 Speaker 2: six months, well congratulations, you get that decade long gain 698 00:34:01,440 --> 00:34:04,400 Speaker 2: passed along through to you. That is the capital gain distribution. 699 00:34:04,520 --> 00:34:06,360 Speaker 2: And this is the time of year that it happens. 700 00:34:06,600 --> 00:34:08,319 Speaker 2: And there's a lot of people out there nodding their 701 00:34:08,320 --> 00:34:11,839 Speaker 2: heads because they have PTSD from these capital gain distributions. 702 00:34:11,920 --> 00:34:12,759 Speaker 1: You don't see it coming. 703 00:34:12,840 --> 00:34:17,040 Speaker 2: It doesn't necessarily profit you instantly, but it does hit 704 00:34:17,040 --> 00:34:18,880 Speaker 2: your ten ninety nine, meaning you got to pay taxes 705 00:34:18,880 --> 00:34:21,640 Speaker 2: on it. So the benefit of exchange traded fund is 706 00:34:21,920 --> 00:34:25,400 Speaker 2: it has a different structure. Exchange traded funds have a 707 00:34:25,440 --> 00:34:28,279 Speaker 2: different way of building themselves where you do not bring 708 00:34:28,320 --> 00:34:31,320 Speaker 2: on the gain that that fund has had for thirty years. 709 00:34:31,400 --> 00:34:34,160 Speaker 2: When you purchase an exchange traded fund, it is created 710 00:34:34,239 --> 00:34:37,040 Speaker 2: and all the assets underneath it are purchased at the 711 00:34:37,080 --> 00:34:41,360 Speaker 2: moment that you purchase it in your account, So therefore 712 00:34:41,400 --> 00:34:43,719 Speaker 2: you don't have that risk. Anyway, back to Brian's question, 713 00:34:44,160 --> 00:34:46,040 Speaker 2: Brian probably gets this and he's saying, should I bother 714 00:34:46,080 --> 00:34:48,000 Speaker 2: switching to all this, and I think the answer is yes, 715 00:34:48,040 --> 00:34:50,680 Speaker 2: we've got a sizeable enough account. It is definitely worth 716 00:34:50,680 --> 00:34:53,319 Speaker 2: looking at. Don't go cold turkey, though, you don't want 717 00:34:53,320 --> 00:34:55,279 Speaker 2: to do this all at once. Remember you could, just 718 00:34:55,320 --> 00:34:58,040 Speaker 2: as we were saying earlier, you could slowly change this 719 00:34:58,160 --> 00:35:00,719 Speaker 2: over over a fourteen month period. You can get into 720 00:35:00,800 --> 00:35:03,040 Speaker 2: three tax years. So if you figure out what your 721 00:35:03,080 --> 00:35:05,520 Speaker 2: overall gains hit is, do a little bit now, a 722 00:35:05,520 --> 00:35:07,479 Speaker 2: little bit anytime in twenty six, and then a little 723 00:35:07,480 --> 00:35:09,640 Speaker 2: bit in twenty seven. I do think that he exchange 724 00:35:09,640 --> 00:35:12,480 Speaker 2: traded funds are a better way to go for the 725 00:35:12,480 --> 00:35:15,080 Speaker 2: coming decades than mutual funds, but not so badly that 726 00:35:15,120 --> 00:35:16,000 Speaker 2: I want you to tear off. 727 00:35:15,880 --> 00:35:16,359 Speaker 1: The band aids. 728 00:35:16,400 --> 00:35:19,640 Speaker 2: Spread out that tax hit quick one. For Melissa and Madisonville, 729 00:35:19,719 --> 00:35:21,439 Speaker 2: she says they've got a wroth, Ira, Bob. They haven't 730 00:35:21,480 --> 00:35:22,240 Speaker 2: touched it in years. 731 00:35:22,400 --> 00:35:22,960 Speaker 1: Should it be. 732 00:35:23,000 --> 00:35:25,480 Speaker 2: Higher growth oriented or higher risk maybe in the wroth 733 00:35:25,520 --> 00:35:26,920 Speaker 2: to amplify that tax free growth. 734 00:35:26,920 --> 00:35:29,880 Speaker 1: What do you think, well, in the spirit of not 735 00:35:31,440 --> 00:35:34,520 Speaker 1: fixing it if it ain't broken, Melissa, I think you're 736 00:35:34,520 --> 00:35:37,920 Speaker 1: spot on here. The answer is yes, put your higher 737 00:35:37,960 --> 00:35:41,120 Speaker 1: growth stuff in your wrath. These are probably the last 738 00:35:41,160 --> 00:35:43,719 Speaker 1: assets you're going to touch. If you're a long term investor, 739 00:35:43,800 --> 00:35:46,399 Speaker 1: I think you are spot on here. That's exactly what 740 00:35:46,440 --> 00:35:49,720 Speaker 1: you should be doing with your wroth Ira. Great question, 741 00:35:49,800 --> 00:35:53,840 Speaker 1: and I think you're already on the right track. Good job, Melissa. Next, 742 00:35:53,880 --> 00:35:56,680 Speaker 1: I've got my two cents for folks that might be 743 00:35:56,760 --> 00:36:00,960 Speaker 1: retiring from a company where they company stop between now 744 00:36:00,960 --> 00:36:03,720 Speaker 1: and the end of the year. You're listening to Simply 745 00:36:03,760 --> 00:36:06,840 Speaker 1: Money presented by Allworth Financial and fifty five KRC the 746 00:36:07,080 --> 00:36:13,760 Speaker 1: talk station. You're listening to Simply Money to buy Allworth 747 00:36:13,800 --> 00:36:17,960 Speaker 1: Financial lumppspond seller along with Brian James. Tonight, I want 748 00:36:18,000 --> 00:36:20,719 Speaker 1: to talk to folks that might be retiring between now 749 00:36:20,719 --> 00:36:23,600 Speaker 1: and the end of the year, especially if you own 750 00:36:23,880 --> 00:36:26,799 Speaker 1: company stock in your retirement plan. And I'm just going 751 00:36:26,840 --> 00:36:29,840 Speaker 1: to give you an actual case example with a lady 752 00:36:29,880 --> 00:36:32,800 Speaker 1: that I have been working with over the last few months, 753 00:36:33,440 --> 00:36:36,560 Speaker 1: and she just retired from a local company and has 754 00:36:36,680 --> 00:36:40,840 Speaker 1: a bunch of company stock in her retirement plan. She 755 00:36:40,960 --> 00:36:44,000 Speaker 1: mates a good income, had a almost her full salary 756 00:36:44,040 --> 00:36:46,160 Speaker 1: this year because she worked through the middle of November, 757 00:36:46,160 --> 00:36:50,279 Speaker 1: and is actually getting a fairly large severance check that's 758 00:36:50,320 --> 00:36:52,799 Speaker 1: also going to be coming in twenty twenty five. So, 759 00:36:52,920 --> 00:36:55,359 Speaker 1: needless to say, she's going to be in a much 760 00:36:55,400 --> 00:36:58,239 Speaker 1: lower tax bracket in twenty twenty six than she is 761 00:36:58,280 --> 00:37:01,000 Speaker 1: in twenty twenty five. So the question came up in 762 00:37:01,040 --> 00:37:03,799 Speaker 1: our meetings, what do I do about rolling over my 763 00:37:03,920 --> 00:37:05,920 Speaker 1: four oh one K plan? And we were able to 764 00:37:05,920 --> 00:37:08,680 Speaker 1: take a look at that, and she has some company 765 00:37:08,719 --> 00:37:11,960 Speaker 1: stock with very low basis in it, so you know. 766 00:37:12,000 --> 00:37:14,759 Speaker 1: The concept here for those that don't already know about it, 767 00:37:14,800 --> 00:37:19,560 Speaker 1: is something called net unrealized appreciation, meaning you can pull 768 00:37:19,560 --> 00:37:22,720 Speaker 1: that company stock, do not roll it to an IRA. 769 00:37:23,040 --> 00:37:26,600 Speaker 1: You can move that company stock to a taxable brokerage 770 00:37:26,600 --> 00:37:29,959 Speaker 1: account and your only tax liabilities. You have to pay 771 00:37:30,080 --> 00:37:33,719 Speaker 1: ordinary income taxes on your basis in that stock, in 772 00:37:33,760 --> 00:37:36,080 Speaker 1: other words, what you paid for the stock. It's a 773 00:37:36,120 --> 00:37:41,520 Speaker 1: tremendous opportunity to save on income taxes. However, you still 774 00:37:41,560 --> 00:37:44,360 Speaker 1: do have to pay the taxes on your cost basis 775 00:37:44,360 --> 00:37:47,560 Speaker 1: in that stock. So you know, this lady was asking me, Bob, 776 00:37:47,560 --> 00:37:49,600 Speaker 1: are we ready to do this? Open up the accounts, 777 00:37:49,680 --> 00:37:52,239 Speaker 1: get everything rolled over, and I said, nope, we're going 778 00:37:52,320 --> 00:37:55,680 Speaker 1: to wait till January. She's like what I said, Yeah, 779 00:37:55,719 --> 00:37:57,680 Speaker 1: you're going to be in a very low tax bracket 780 00:37:57,719 --> 00:38:00,880 Speaker 1: next year, wouldn't you rather pay you know, taxes on 781 00:38:00,920 --> 00:38:03,840 Speaker 1: the cost basis that stock in you know, twenty twenty 782 00:38:03,880 --> 00:38:07,000 Speaker 1: six versus twenty twenty five. Showed her the reasons why 783 00:38:07,040 --> 00:38:09,919 Speaker 1: with you know, actual tax software, and the light bulb 784 00:38:09,960 --> 00:38:12,640 Speaker 1: went off. She was worried about, you know, getting started, 785 00:38:12,680 --> 00:38:14,600 Speaker 1: and she's like, Bob, how am I going to pay you? 786 00:38:14,600 --> 00:38:16,160 Speaker 1: You know, don't you need to be paid for what 787 00:38:16,200 --> 00:38:18,799 Speaker 1: you do? And I'm like, we're good. You've already made 788 00:38:18,840 --> 00:38:21,480 Speaker 1: an agreement to come over and work with us. Our 789 00:38:21,600 --> 00:38:24,520 Speaker 1: job is a fiduciary is wait to move this money over, 790 00:38:25,040 --> 00:38:27,960 Speaker 1: you know, to a timeframe that is your best interest, 791 00:38:28,400 --> 00:38:31,719 Speaker 1: not ours. Brian, I know you run into situations like this, 792 00:38:32,160 --> 00:38:34,160 Speaker 1: you know all the time as well all the time. 793 00:38:34,280 --> 00:38:36,680 Speaker 2: And remember what you're doing is you're swapping income taxation 794 00:38:36,760 --> 00:38:39,400 Speaker 2: for capital gains taxation, A much more efficient way to go. 795 00:38:39,480 --> 00:38:41,280 Speaker 2: Great thing to look at if you have the opportunity 796 00:38:41,280 --> 00:38:41,799 Speaker 2: in your four o one. 797 00:38:41,840 --> 00:38:45,319 Speaker 1: Kay, thanks for listening tonight. You've been listening to Simply Money, 798 00:38:45,400 --> 00:38:48,560 Speaker 1: presented by all Worth Financial on fifty five KRC, the 799 00:38:48,920 --> 00:38:49,439 Speaker 1: talk station