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Speaker 1: Tonight, will a lack of government data impact what happens

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Speaker 1: to your portfolio by the end of the year. We're

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Speaker 1: going to investigate that. Right now, you're listening to Simply

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Speaker 1: Money presented by all Worth Financial on Bob's sponseller along

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Speaker 1: with Brian James. Well, as we all know, the government

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Speaker 1: is back open, but there might be some economic data

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Speaker 1: that the Federal Reserve will possibly never see, data that

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Speaker 1: it uses to determine where to set interest rates. All

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Speaker 1: Worth Chief investment Officer Andy Stout joins us tonight. Andy,

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Speaker 1: thanks as always for being with us. And Andy, is

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Speaker 1: it possible that we may never find out what the

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Speaker 1: October inflation rate in October unemployment rate even were And

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Speaker 1: if that's the case, how big of a deal is that?

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Speaker 2: Here?

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Speaker 1: Moving forward as we get into Thanksgiving and quickly approaching

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Speaker 1: the end of twenty twenty five.

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Speaker 3: Yeah, Bob, wouldn't you look at what's been going on?

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Speaker 3: I mean, the government has been shut down. Workers have

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Speaker 3: not you know, been there and putting all of you know,

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Speaker 3: the obvious ripple effects aside. What that means for economists

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Speaker 3: is that there weren't employees there to actually collect the data.

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Speaker 3: They look at this data, and when they collected they

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Speaker 3: collected during certain periods. So if no one's at work

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Speaker 3: during those periods where they would literally like call up

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Speaker 3: and talk to people and reach out to individuals asking

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Speaker 3: them if they have a job, well, they can't go

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Speaker 3: back in time and say hey, did you have a

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Speaker 3: job when they would be normally.

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Speaker 2: Collecting this data.

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Speaker 3: I mean they could possibly, you know, reach out and

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Speaker 3: say hey, did you have a job during this period

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Speaker 3: of time, but it's going to be a little bit

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Speaker 3: more flawed than what it would normally be. And there

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Speaker 3: is certainly some speculation in the White House even put

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Speaker 3: this out last week saying that we may never get.

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Speaker 2: The October unemployment rate.

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Speaker 3: So how big of a deal is that, Well, I mean,

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Speaker 3: right around right now, we're around a four point three

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Speaker 3: percent unemployment rate, And when we get the November data,

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Speaker 3: which in theory we should get eventually, and if there's

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Speaker 3: not a big gap between the September and November data

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Speaker 3: in terms of like a spread of what it was

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Speaker 3: in September versus what it was in November, then it's

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Speaker 3: probably not a huge deal in all honesty, but it

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Speaker 3: does make things a little bit more challenging for the

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Speaker 3: Federal Reserve, because I mean, they want this data to

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Speaker 3: be able to say, hey, where is the labor market.

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Speaker 3: We've been hearing about these cracks. We're seeing a few

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Speaker 3: things here and there, but we would like to know

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Speaker 3: this actual official data. And if they don't have it,

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Speaker 3: it certainly makes their job more challenging.

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Speaker 4: Well, I would say it makes their job just about impossible,

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Speaker 4: because what are you going to make a decision off

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Speaker 4: of if you don't know what you're shooting at. I'm

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Speaker 4: picturing Andy, what are these charts going to look like,

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Speaker 4: you know, say two or three years from now. I'm

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Speaker 4: looking at a line graph and there's a big question

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Speaker 4: mark right in the middle of it because we just

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Speaker 4: didn't bother to collect the data. Well anyway, so it

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Speaker 4: looks like we had some switching to the markets. We

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Speaker 4: had a little bit of bumping this on Thursday and

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Speaker 4: kind of felt like it came out of nowhere. Did

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Speaker 4: that have anything to do with this lack of visiBel

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Speaker 4: to what's happening, you know, under the surface?

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Speaker 5: Can you can you talk about that a little bit?

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Speaker 3: Yeah, when when you look at what's been going on

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Speaker 3: over the past week or so and driving markets, I mean,

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Speaker 3: first off.

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Speaker 2: There was a lot of.

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Speaker 3: Volatility between the opening and closing of the week, but

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Speaker 3: when you looked at it when it was all said done,

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Speaker 3: there really wasn't too much moving movement. I know you

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Speaker 3: probably saw some eye popping numbers, you know, Dow down

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Speaker 3: eight hundred points and things like that, But did you

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Speaker 3: know the doll was actually up for the week. It

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Speaker 3: was up point four percent last week in spite of

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Speaker 3: all this volatility. So was the S and P five hundred.

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Speaker 3: It was up like a tenth of a percent. Now,

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Speaker 3: the Nasdaq fell a little bit, and there's some AI

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Speaker 3: concerns there and we'll talk about that in a minute.

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Speaker 3: Then small caps were off a little bit more. But

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Speaker 3: when we look at what's driving the market really over

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Speaker 3: the past week, I would say it's a couple of things.

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Speaker 2: One is the.

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Speaker 3: Fact that, yeah, we may not have some of this data.

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Speaker 1: Uh.

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Speaker 3: The second is what would the FED actually be doing

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Speaker 3: into some and how would that data inform them?

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Speaker 2: And three, what's going.

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Speaker 3: On in the world of AI and sticking with you

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Speaker 3: know the numbers one and two on that in terms

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Speaker 3: of the data, in terms of the Federal Reserve, Yeah,

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Speaker 3: that is having an impact. I mean, I want to

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Speaker 3: rewind back to the fed's last meeting at the end

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Speaker 3: of October. Heading into that meeting, the market was pricing

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Speaker 3: in a one hundred percent chance of a or almost

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Speaker 3: one hundred percent chance of another quarter point rate cut

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Speaker 3: at the FED December meeting. After last week, after some

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Speaker 3: comments from a lot of Federal Reserve officials, we're now

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Speaker 3: sitting at a forty one percent chance of a rate

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Speaker 3: cut in December. So we went from about one hundred

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Speaker 3: down to forty one percent, And that's certainly been a

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Speaker 3: part of that, you know, volatility, because the market had

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Speaker 3: expected aurey cut and now the FED saying, yay, let's

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Speaker 3: let's pull back here a little bit. First off, we

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Speaker 3: don't have the data, we don't know where we're at,

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Speaker 3: and we're still worried about inflation. And this backpedaling has

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Speaker 3: certainly added to that volatility that we saw last week.

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Speaker 1: Andy, as recently as you correct me if I'm wrong,

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Speaker 1: I'm saying, like seven to ten days ago, the probability

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Speaker 1: of a FED rate cut in December was around ninety

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Speaker 1: five percent. What moved that percentage down to forty Is

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Speaker 1: it concerns about the labor market. Is it concerns about

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Speaker 1: not getting that data that we already you know, talked about,

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Speaker 1: or is there something else going out there going on

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Speaker 1: out there that's spooking the market. I understand the volatility

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Speaker 1: on Thursday around you know, people questioning the valuation of

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Speaker 1: AI stocks, which, as you said, we'll get into it

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Speaker 1: a minute, but I want to stick with FED policy

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Speaker 1: right now. What caused that, you know, chance of a

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Speaker 1: FED rate cut in December to drop all the way

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Speaker 1: to forty percent really quickly?

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Speaker 2: Well, to be.

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Speaker 3: Fair, it was it really started to change on October

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Speaker 3: twenty nine, that was the fed's last meeting. That's when

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Speaker 3: it was around that ninety five to one hundred percent.

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Speaker 3: And then what happened was FED Shared's Rompal came out

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Speaker 3: even before taking Q and A basically told orders a

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Speaker 3: doll of aall Street that a December rate cut is

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Speaker 3: not a four gone conclusion. He usually doesn't come out

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Speaker 3: that bluntly with that sort of detail that's usually uncovered

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Speaker 3: during the Q and A. But for him to front

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Speaker 3: run that, that was pretty aggressive for the Federal reserve standpoint,

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Speaker 3: So that spook markets. That immediately caused essentially the chances

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Speaker 3: of a December rate cut to go from that ninety

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Speaker 3: five percent to about sixty sixty five percent, so a

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Speaker 3: quick drop there. That was on October twenty ninth, and

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Speaker 3: then just last week that's when we've seen more Federal

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Speaker 3: Reserve officials come out.

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Speaker 2: And when you look at.

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Speaker 3: It, basically it was on it was on Thursday when

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Speaker 3: that started to change. We started to drift from that

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Speaker 3: sixty five percent chance of a rate cut down to

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Speaker 3: fifty percent by the end of Thursday, and by the

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Speaker 3: end of Friday. You know, that's when we were right

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Speaker 3: around this forty one forty two percent chance of a

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Speaker 3: rate cut in December. So now what looked like a

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Speaker 3: coin better than a coin flips chance for a cut

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Speaker 3: in December is now a little bit worse than a

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Speaker 3: coin flips chance of having a rate cut. So it

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Speaker 3: was really the Federal Reserve officials pushing back. And when

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Speaker 3: you look at the actual voting from that October meeting,

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Speaker 3: it was really interesting because you had the sense, which

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Speaker 3: has become a little bit more normal lately, meaning that

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Speaker 3: some voters didn't want to do what the committee as

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Speaker 3: a whole wanted to do, and it was what the

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Speaker 3: most interesting thing though, was is that there were sins

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Speaker 3: in both directions. Someone wanted a fifty basis point cut

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Speaker 3: or a half a percent. Another person wanted to do

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Speaker 3: nothing at all, and what they ended up doing was

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Speaker 3: a quarter point rate cut.

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Speaker 2: Now, the question is what.

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Speaker 3: Does the future old when you look at the you know,

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Speaker 3: the FED fund rates and in terms of you know,

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Speaker 3: what the rate cuts may or may not be, and

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Speaker 3: it's certainly, you know, definitely been a lot less aggressive

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Speaker 3: in terms of future rate cuts. And I think what's

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Speaker 3: really going to matter though it's not necessarily the committee

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Speaker 3: composition today, but what's that committee composition going to look

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Speaker 3: like six seven months from now? We have someone who

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Speaker 3: just announced they're going to let their term expire in February.

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Speaker 2: We know there's.

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Speaker 3: Another outstanding position with another governor who's been under some

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Speaker 3: scrutiny regarding some mortgages. And then, more importantly than all

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Speaker 3: of that FED sharge, your own pal will be stepping

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Speaker 3: down in the middle of next year. That allows President

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Speaker 3: Trump to really nominate some Federal Reserve members who are

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Speaker 3: more aligned with where he wants the economy to go

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Speaker 3: in terms of interest rates. So I would be thinking

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Speaker 3: about the FED policy and like two.

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Speaker 2: Different regimes regime.

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Speaker 3: DAY, which is the one today and for the next

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Speaker 3: few months, and as it you know, starts to slowly

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Speaker 3: migrate into something different than to Regime B, which is

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Speaker 3: probably going to be more dubvish than what we're used.

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Speaker 4: To any The whole reason we do this, of course,

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Speaker 4: with interest rate cuts, one of the things that we need,

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Speaker 4: we want to do with the.

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Speaker 5: Federal Reserve is a control inflation. So TERR.

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Speaker 4: Powell was not super excited about the first rate cut.

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Speaker 4: He seemed to at least been somewhat bullied into it

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Speaker 4: when we kind of shifted gears here several months ago.

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Speaker 4: Now that we're a little into this, do you do

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Speaker 4: you feel like there's any risk of really reigniting inflation.

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Speaker 3: I mean, that's what they're worried about, because when you

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Speaker 3: look at inflation in general, I mean, obviously, you go

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Speaker 3: back a couple of years, the CPI or consumer Price

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Speaker 3: Index was around nine percent. I mean, that was just

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Speaker 3: obviously terrible on many fronts, right, and we quickly got.

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Speaker 2: Back down to more normal readings.

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Speaker 3: But we've been stuck around three percent for really the.

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Speaker 2: Past like year year and a half.

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Speaker 3: And what the Federal Reserve looks at and First of all,

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Speaker 3: they do look at a slightly different inflation measure and

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Speaker 3: PCE core PCE actually, which is broader, but that's also

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Speaker 3: right around three percent set two point nine percent right now.

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Speaker 3: What they target, though, is a two percent inflation rate,

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Speaker 3: and we've been at this three percent level for a

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Speaker 3: year or so. It's this last leg of inflation that

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Speaker 3: the Federal Reserve has not been able to be and

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Speaker 3: that's what's giving them pause because they've had this restrictive

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Speaker 3: policy and there hasn't been any movement, and that's what

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Speaker 3: has them worried. And Chair Pale, he's I mean, like

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Speaker 3: it or not, he's worried about his legacy. He doesn't

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Speaker 3: not want to be remembered as the Chair who caved

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Speaker 3: because he was afraid of something and then all of

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Speaker 3: a sudden reignited inflation. He's more worried about, I would say,

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Speaker 3: keeping inflation under control so he doesn't go out as

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Speaker 3: the person who brought back raging inflation.

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Speaker 1: All right, Switching gears here to corporate earnings. There's some

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Speaker 1: major companies reporting earnings this week, and Andy, obviously those

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Speaker 1: results are likely going to move this market one way

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Speaker 1: or the other. Please talk about that what you see

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Speaker 1: coming up this week in terms of earnings, and then

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Speaker 1: is there anything else keeping you up at night?

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Speaker 5: Right now?

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Speaker 1: That's the question, Brian and I always ask you on

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Speaker 1: Monday because you're always on top of a whole bunch

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Speaker 1: of data and you keep that beautiful recession scorecard for

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Speaker 1: us in the background. So we want to know what

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Speaker 1: you think of earnings and announcements this week and then

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Speaker 1: anything else keeping you up at night as we venture

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Speaker 1: into another week here.

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Speaker 3: Yeah, I mean so far for earning system overall, I mean,

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Speaker 3: earning season is mostly done. There are some big names

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Speaker 3: this week, as you mentioned there, Bob, but we are about,

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Speaker 3: you know, ninety two percent of the way through earning season,

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Speaker 3: and overall it's been very solid, with almost eighty two

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Speaker 3: percent of companies reporting better than expected profits in the

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Speaker 3: year of a year growth rate sitting almost at fifteen percent,

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Speaker 3: which is about double what Wall Street expected heading into

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Speaker 3: earning season.

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Speaker 2: So by and large, it's been a very good earning season.

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Speaker 3: That's really helped to you know, keep markets growing, you know,

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Speaker 3: as they have it and when you look at what's

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Speaker 3: on the horizon, though, yeah, we got some big names.

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Speaker 3: Tomorrow is where it really starts to kick off. You

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Speaker 3: got Home deep O tomorrow, then you have Target and

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Speaker 3: Lows on Wednesday, and then you have on Thursday Walmart.

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Speaker 3: So you got some big retailers and that's really going

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Speaker 3: to show us how the consumer is handling everything going on.

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Speaker 2: And then probably one of the tiny little.

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Speaker 3: Out there is Navidia. Navidia is like the AI darling.

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Speaker 3: And when you look at what's been going on with

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Speaker 3: a market and the ballatility out there, it's really driven

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Speaker 3: by recently last week, a lot of it is AI valuations.

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Speaker 3: How are companies suspending what's their infrastructure on AI? And

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Speaker 3: so Navidia that is the AI company. I mean you

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Speaker 3: might think about, you know, other things that move markets,

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Speaker 3: but Navidia is the one that probably matters the most

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Speaker 3: right now. So we'll get some we'll get some good

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Speaker 3: guidance coming out on Thursday from them.

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Speaker 1: All right, sounds great? Hey, thanks as always for joining

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Speaker 1: us tonight. Andy. Coming out next, we've got the new

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Speaker 1: retirement account contribution limits for twenty twenty six and why

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Speaker 1: your advisor should be your first call before you put

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Speaker 1: your hands on any new payroll forms. You're listening to

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Speaker 1: simply money presented by all Worth Financial on fifty five KRC,

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Speaker 1: the talk station you're listening to Simply Money, presented by

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Speaker 1: all Worth Financial, Umbop sponsler along with Brian James. If

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Speaker 1: you can't listen to Simply Money live every night, subscribe

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Speaker 1: and get our daily podcasts. Just search Simply Money on

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Speaker 1: the iHeart app or wherever you find your podcast. Straight

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Speaker 1: ahead of six forty three, How to spot unnecessary duplication

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Speaker 1: in your portfolio, how to possibly rethink dividend reinvestments, and

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Speaker 1: just overall make sure your money's truly working as hard

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Speaker 1: as it can for you. All right, if you're sort

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Speaker 1: of paying attention to the show right now, and Brian

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Speaker 1: this includes you want we want you to lock in

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Speaker 1: here because we just got the new contribution limits for

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Speaker 1: twenty twenty six for retirement accounts. Let's start with tax

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Speaker 1: deferred accounts. In twenty twenty six, you can save up

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Speaker 1: to twenty four thousan five hundred dollars in four to

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Speaker 1: one k's four or three b's fifty seven plans and

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Speaker 1: the federal government's Thrift Savings plan. That's an increase of

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Speaker 1: one thousand dollars over and above what you could put

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Speaker 1: away pre tax in twenty twenty five, and if you

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Speaker 1: are between fifty to fifty nine years old, you can

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Speaker 1: add an additional eight thousand dollars to that. It's called

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Speaker 1: the catch up contribution. So up to thirty two thousand,

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Speaker 1: five hundred dollars total for the folks between age fifty

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Speaker 1: and fifty nine heading into twenty twenty six.

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Speaker 4: Brian, and let's yeah, let's not forget there's a new

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Speaker 4: secret catch up here for a little while. As part

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Speaker 4: of the One Big Beautiful Bill, if you're between sixty

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Speaker 4: and sixty three years old, you get to put an

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Speaker 4: extra eleven two hundred and fifty on top of all

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Speaker 4: the extra things that Bob just mentioned. And so if

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Speaker 4: you're sixty four and older, you go back to the

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Speaker 4: fifty and younger boat, because that makes all the sense

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Speaker 4: in the world. Of course, remember these the deadline for

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Speaker 4: these contributions is always December thirty. First, this is the

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Speaker 4: stuff you're doing through payroll. This is your four h

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Speaker 4: one case. You got to go through your payroll department.

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Speaker 4: You're not writing a check, so you want to do it,

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Speaker 4: you have to do. You need to go to your

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Speaker 4: payroll people and log in your website or do whatever

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Speaker 4: you want, but it's got to go through your paycheck.

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Speaker 4: And one final thought, remember these limits apply across all

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Speaker 4: four oh one ks four h three b's that you've had.

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Speaker 4: If you had multiple jobs during the year, you are

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Speaker 4: the only one who knows how much has flowed into

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Speaker 4: these accounts. You will need to make sure you don't

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Speaker 4: go over these limits or you'll have a little bit

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Speaker 4: of a messic cleanup by tax time. Not the end

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Speaker 4: of the world, but definitely an unnecessary pain in the

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Speaker 4: rear end.

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Speaker 1: All right, In terms of traditional iras, both regular and

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Speaker 1: roth people putting money into regular iras and rath iras well,

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Speaker 1: you can contribute up to seven five hundred dollars in

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Speaker 1: twenty twenty six. That's an increase from seven thousand dollars

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Speaker 1: maximum in twenty twenty five, so you get an extra

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Speaker 1: five hundred bucks to put away, and if you're age

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Speaker 1: fifty or older, you get to contribute an additional one thousand,

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Speaker 1: one hundred dollars. And those contribution limits are the same

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Speaker 1: for traditional iras and rath iras. Keep in mind that

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Speaker 1: for iras there is a phase out, especially for wroth iras,

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Speaker 1: and we'll go through these numbers it's a lot of numbers,

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Speaker 1: but the phase out range for WROTH iras increase to

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Speaker 1: between one hundred and fifty three thousand and one hundred

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Speaker 1: and sixty eight thousand dollars for a single or head

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Speaker 1: of household filing status. That's up a little bit, you know,

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Speaker 1: three or four thousand dollars higher than it was in

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Speaker 1: twenty twenty five. Remember, if you start to get phased out,

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Speaker 1: you can still make partial WROTH contributions. So just know

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Speaker 1: that the the you know, these contribution limits are going

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Speaker 1: up a little bit, and make sure to take full

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Speaker 1: advantage of that heading into twenty twenty six.

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Speaker 5: That's right.

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Speaker 4: So and we've got you've got limits of course to

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Speaker 4: worry about with regard to the twenty twenty six year too.

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Speaker 4: And for traditional iras, right, there's there's always limits, and

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Speaker 4: the limits on a traditional IRA or whether you can deduct,

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Speaker 4: not whether you can contribute with the WROTH. You you

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Speaker 4: either can contribute or you cannot. So for twenty twenty six,

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Speaker 4: if you're looking to take that pre tax contribution and

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Speaker 4: you're a single taxpayer, if you have a four to

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Speaker 4: oh one K, if you have a retirement plan through

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Speaker 4: your workplace, that's going to limit you to eighty one

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Speaker 4: to ninety one thousand dollars. Merely married filing joint phases

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Speaker 4: out completely up to one hundred and fifty thousand dollars,

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Speaker 4: and there are some other limits there too, so just

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Speaker 4: be paying attention to those items because you don't want

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Speaker 4: to have to undo things by around tax time. That's

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Speaker 4: why you have all the way until tax time to

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Speaker 4: make a prior year contribution because a lot of people

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Speaker 4: don't know what their income is. They're modified adjusted gross

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Speaker 4: income until they've actually done their taxes, so you might

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Speaker 4: wait and take a breath, make sure that you can

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Speaker 4: get away with it.

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Speaker 1: If you do find yourself, you know, in a situation

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Speaker 1: where you earn too much money and you get phased

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Speaker 1: out from these traditional contributions, remember you can still do

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Speaker 1: the you know, backdoor wroth contributions or in some cases,

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Speaker 1: if your plan allows it, these megabackdoor wroth conversions. Something

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Speaker 1: to check with your HR department if your plan allows

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Speaker 1: for that. Heading into twenty twenty six, and then there

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Speaker 1: are a hand full of new tax breaks from the

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Speaker 1: tax legislation passed earlier this year, otherwise known as the

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Speaker 1: One Big, Beautiful bill that will impact tip income over time,

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Speaker 1: and state and local tax bills, and those all have

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Speaker 1: income thresholds to come with them as well. Once your

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Speaker 1: income gets above a certain level, those deductions either disappear

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Speaker 1: entirely or get phased out. And that also dovetails with

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Speaker 1: how Social Security is taxed, and then the senior deduction

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Speaker 1: that impacts the taxability of your Social Security. So be

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Speaker 1: sure to review all of this stuff carefully with your advisor,

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Speaker 1: your financial advisor, your fiduciary advisor, your CPA heading into

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Speaker 1: twenty twenty six, and make sure you're taking a holistic

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Speaker 1: view at everything here based on what your personal situation is,

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Speaker 1: what your income needs are, and just make sure that

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Speaker 1: you can be as tax efficient as possible heading into

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Speaker 1: twenty twenty six.

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Speaker 4: Yeah, I think some good things to remember too is

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Speaker 4: you are allowed if you have some cash laying around

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Speaker 4: and you've got the ability to pay your bills, there's

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Speaker 4: nothing wrong with putting one hundred percent of your paycheck

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Speaker 4: into your foura. Okay, you can do that and it

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Speaker 4: will not interfere with your healthcare insurance premiums and.

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Speaker 5: All that kind of stuff. You can do that.

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Speaker 4: So if that's something it will be advantageous for you.

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Speaker 4: Go ahead and pull that trigger.

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Speaker 5: Why not? Here's the all Worth advice.

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Speaker 1: See the increase limits as a tool, not just a target.

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Speaker 1: Use it in concert and in coordination with your overall

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Speaker 1: broad strategy. Coming up next, the questions high net worth

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Speaker 1: investors should ask to make sure their portfolio is built

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Speaker 1: for the next ten years, not the last ten. You're

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Speaker 1: listening to Simply Money, presented by all Worth Financial on

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Speaker 1: fifty five KRC, the talk station. You're listening to Simply

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Speaker 1: Money presented by all Worth Financial. I'm Bob spon Seller

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Speaker 1: along with Brian James. You and I both know and

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Speaker 1: have worked with and talk to a bunch of successful investors,

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Speaker 1: folks who've built multimillion dollar portfolios over the years, and

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Speaker 1: from time to time, you know, we find what's what's

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Speaker 1: really interesting is a lot of these portfolios are still structured.

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Speaker 2: For what worked.

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Speaker 1: Five, ten, fifteen, twenty years ago. They're still heavy. For example,

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Speaker 1: in US large cap you know, tech stocks still relying

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Speaker 1: on those same mutual funds that can really become very

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Speaker 1: tax inefficient at this point, or ETFs that help them

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Speaker 1: build their wealth. But markets do change, and we've seen

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Speaker 1: some of that change even happen this year during twenty

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Speaker 1: twenty five. Let's break this down into some questions folks

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Speaker 1: should be asking, because the next decade could look nothing

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Speaker 1: like the last one, and we see this happen, you know,

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Speaker 1: over the course of time, all right over.

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Speaker 5: You know, you and I have been doing this.

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Speaker 4: I think we've got sixty to seventy years between us

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Speaker 4: of experience guiding people through this, So we've seen some stuff.

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Speaker 4: But I think some of the things to look at

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Speaker 4: is are you overweight anywhere? The winners of the last

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Speaker 4: cycle tend to kind of linger in portfolios, and allowing

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Speaker 4: your portfolio to stay overweighted in these positions, you can

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Speaker 4: let it run for a little while, but eventually that

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Speaker 4: becomes like betting on the team that won last year's

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Speaker 4: World Series solely because that happened, to bet on them

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Speaker 4: again this year. Things do move around, as Bob just mentioned.

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Speaker 4: So if you have a huge position in Apple, Microsoft, Amazon,

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Speaker 4: or Nvidia is probably the big one. Now, that's been

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Speaker 4: phenomenal for you, But how many portfolios are way overweighted

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Speaker 4: to those names right now? And how many are susceptible

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Speaker 4: to the first hiccup that any of those actually have.

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Speaker 4: And another one that I think is really really prevalent

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Speaker 4: right now is international stocks. And I've mentioned this before,

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Speaker 4: but as we review portfolios, the international positions are really

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Speaker 4: running away and extending their lead this year over and

438
00:21:48,800 --> 00:21:52,520
Speaker 4: above the American stocks. This is a catalyst provided by

439
00:21:52,560 --> 00:21:56,480
Speaker 4: our current political situation where we've decided to basically play

440
00:21:56,480 --> 00:21:59,359
Speaker 4: a little more hardball with other countries, and rather than

441
00:21:59,400 --> 00:22:02,919
Speaker 4: play balls, some of them are building relationships between themselves

442
00:22:03,119 --> 00:22:05,679
Speaker 4: and working around the United States. So the market is

443
00:22:05,720 --> 00:22:08,919
Speaker 4: recognizing that that's an opportunity. If you don't have international stocks,

444
00:22:08,960 --> 00:22:11,159
Speaker 4: because there was a big movement toward the heck, with

445
00:22:11,200 --> 00:22:12,720
Speaker 4: everything else, all I need is the S and P

446
00:22:12,840 --> 00:22:16,280
Speaker 4: five hundred, then you are currently missing the boat. And

447
00:22:16,520 --> 00:22:18,560
Speaker 4: I'm gonna go ahead and say that I think that

448
00:22:18,600 --> 00:22:20,520
Speaker 4: relationship is going to stick around for a while. We've

449
00:22:20,560 --> 00:22:22,800
Speaker 4: been so proactive with these tariffs and all these things.

450
00:22:23,000 --> 00:22:26,000
Speaker 4: Countries are finding ways to work between themselves and work

451
00:22:26,040 --> 00:22:28,040
Speaker 4: around the United States. This is not ringing the bell

452
00:22:28,080 --> 00:22:30,440
Speaker 4: for alarm. I'm just saying you better have an allocation

453
00:22:30,480 --> 00:22:31,040
Speaker 4: in there for it.

454
00:22:31,960 --> 00:22:34,040
Speaker 1: Well, Brian, you miss you mentioned the S and P

455
00:22:34,160 --> 00:22:36,919
Speaker 1: five hundred, and you know the winners of the past.

456
00:22:36,960 --> 00:22:40,480
Speaker 1: I mean, let's face it, regardless of the political situation,

457
00:22:40,680 --> 00:22:42,919
Speaker 1: right now, you know, just sitting on an S and

458
00:22:42,960 --> 00:22:46,600
Speaker 1: P five hundred index fund and thinking that's going to

459
00:22:46,680 --> 00:22:48,920
Speaker 1: get you where you need to go over the next

460
00:22:49,000 --> 00:22:51,680
Speaker 1: ten years. I mean, the S and P five hundred

461
00:22:51,720 --> 00:22:55,399
Speaker 1: now is well over thirty five percent almost forty percent

462
00:22:55,480 --> 00:22:59,120
Speaker 1: weighted to those magnificent seven tech stocks. And we talk

463
00:22:59,160 --> 00:23:03,119
Speaker 1: about this off and on this show. And as you said,

464
00:23:03,200 --> 00:23:05,960
Speaker 1: it doesn't mean you know, sell all your big cab

465
00:23:06,040 --> 00:23:08,919
Speaker 1: tech stocks. But if you're just sitting there, you know,

466
00:23:09,040 --> 00:23:13,439
Speaker 1: in an index fund, you are already way overweighted, you know,

467
00:23:13,520 --> 00:23:17,120
Speaker 1: from a volatility standpoint, to these large cap tech stocks.

468
00:23:17,160 --> 00:23:20,000
Speaker 1: And it is a good time as we enter into

469
00:23:20,000 --> 00:23:22,680
Speaker 1: twenty twenty six to take a look at your portfolio,

470
00:23:22,840 --> 00:23:26,040
Speaker 1: see what your allocation is to certain sectors of the

471
00:23:26,080 --> 00:23:29,040
Speaker 1: market in the US and to your point, whether you

472
00:23:29,080 --> 00:23:32,440
Speaker 1: have any exposure overseas at all, and if you can

473
00:23:32,520 --> 00:23:35,440
Speaker 1: do so, especially on a tax efficient basis, and there's

474
00:23:35,480 --> 00:23:37,880
Speaker 1: ways to do that. You know, now's a good time

475
00:23:37,920 --> 00:23:43,159
Speaker 1: to kind of rebalance, reallocate, and kind of stress tests

476
00:23:43,320 --> 00:23:47,840
Speaker 1: and volatility proof to some extent your portfolio. Here so

477
00:23:47,920 --> 00:23:51,320
Speaker 1: you don't get whipsawed if we do see a pullback

478
00:23:51,480 --> 00:23:53,879
Speaker 1: or sell off in some of these big names that

479
00:23:53,920 --> 00:23:57,240
Speaker 1: have really made headlines over the last you know, three four,

480
00:23:57,320 --> 00:23:58,119
Speaker 1: five years.

481
00:23:58,280 --> 00:24:01,000
Speaker 4: Yeah, And another point to that making sure that you've

482
00:24:01,000 --> 00:24:03,120
Speaker 4: got all the you know, your ducks in a row

483
00:24:03,160 --> 00:24:05,919
Speaker 4: here is interest rates. So for a long time, you know,

484
00:24:05,960 --> 00:24:09,040
Speaker 4: many many investors who have a significant amount of wealth,

485
00:24:09,119 --> 00:24:11,760
Speaker 4: now did that during an environment where nobody cared about

486
00:24:11,760 --> 00:24:12,840
Speaker 4: interest rates because they were.

487
00:24:12,720 --> 00:24:13,240
Speaker 5: On the floor.

488
00:24:13,280 --> 00:24:14,800
Speaker 4: And all it meant was I could get really cheap

489
00:24:14,800 --> 00:24:17,000
Speaker 4: debt for my business or for my mortgage. But beyond that,

490
00:24:17,040 --> 00:24:19,480
Speaker 4: it really kind of robbed the ability of interest rate

491
00:24:19,480 --> 00:24:22,320
Speaker 4: based investments to really give me much that I cared about.

492
00:24:22,359 --> 00:24:24,440
Speaker 4: So then now that's not really the case. We're off

493
00:24:24,440 --> 00:24:27,160
Speaker 4: the mat with interest rates. They're back to a somewhat

494
00:24:27,200 --> 00:24:30,560
Speaker 4: respectable area where you can actually generate some yield out

495
00:24:30,560 --> 00:24:32,720
Speaker 4: of it. So the important question to ask is what

496
00:24:32,880 --> 00:24:35,320
Speaker 4: interest rate world are you built for? Because we were

497
00:24:35,359 --> 00:24:37,560
Speaker 4: in a rising rate environment, we're kind of back into

498
00:24:37,560 --> 00:24:39,919
Speaker 4: a declining rate environment. That means you're going to want

499
00:24:39,920 --> 00:24:42,080
Speaker 4: to pay attention to the duration of your bonds. You're

500
00:24:42,080 --> 00:24:43,879
Speaker 4: going to want to pay attention to the credit quality

501
00:24:43,920 --> 00:24:46,400
Speaker 4: those kinds of things. How do these companies borrow? What

502
00:24:46,480 --> 00:24:49,919
Speaker 4: sectors are you in? It really changes the attractiveness of

503
00:24:49,960 --> 00:24:52,960
Speaker 4: cash and CDs versus equities because now we might want

504
00:24:53,000 --> 00:24:55,000
Speaker 4: those things for a long time we spent you know,

505
00:24:55,119 --> 00:24:58,120
Speaker 4: kind of leaning away from that because of where where

506
00:24:58,160 --> 00:24:59,120
Speaker 4: interest rates actually were.

507
00:24:59,160 --> 00:24:59,840
Speaker 5: So that's something else to.

508
00:25:01,320 --> 00:25:04,600
Speaker 1: Well when speaking of bonds and just credit based investments,

509
00:25:04,680 --> 00:25:06,920
Speaker 1: you know, in general. You know what we're talking about

510
00:25:06,920 --> 00:25:09,800
Speaker 1: too here is take a look at your credit risk

511
00:25:09,960 --> 00:25:12,720
Speaker 1: exposure in the duration of your bonds, and let's stick

512
00:25:12,720 --> 00:25:15,159
Speaker 1: with credit for a little bit. You know, let's face it,

513
00:25:15,200 --> 00:25:18,520
Speaker 1: when yields go down, interest rates go down, people invariably

514
00:25:18,600 --> 00:25:23,399
Speaker 1: will chase yield, and oftentimes they will embed more credit

515
00:25:23,520 --> 00:25:26,640
Speaker 1: risk into their portfolio than they might have imagined because

516
00:25:26,640 --> 00:25:29,760
Speaker 1: they really, you know, it's very hard to manage. You

517
00:25:29,760 --> 00:25:33,119
Speaker 1: think managing an individual portfolio of stocks is hard, it

518
00:25:33,240 --> 00:25:37,440
Speaker 1: is very difficult to manage both interest rate and movement

519
00:25:37,680 --> 00:25:41,560
Speaker 1: and credit quality of bonds on an individual basis. So

520
00:25:41,680 --> 00:25:43,520
Speaker 1: you've got to have somebody take a look at this

521
00:25:44,040 --> 00:25:47,080
Speaker 1: and just make sure there's not more credit risk embedded

522
00:25:47,119 --> 00:25:50,680
Speaker 1: into your bond or fixed income portfolio than you might

523
00:25:50,800 --> 00:25:54,119
Speaker 1: have bargained for, because Brian, I can remember, you know,

524
00:25:54,200 --> 00:25:57,560
Speaker 1: points in time historically where people just went to sleep

525
00:25:57,560 --> 00:26:00,720
Speaker 1: on some of these even short term I yield bond

526
00:26:00,720 --> 00:26:03,720
Speaker 1: funds and really got their you know, rear in handed

527
00:26:03,800 --> 00:26:07,200
Speaker 1: to them if the economy declined at all, because these

528
00:26:07,240 --> 00:26:10,240
Speaker 1: bond funds can get whacked almost as much as the

529
00:26:10,280 --> 00:26:12,200
Speaker 1: stock market in a recession.

530
00:26:12,560 --> 00:26:13,240
Speaker 5: Yeah, that's right.

531
00:26:13,520 --> 00:26:15,600
Speaker 4: And again, you know some of the other things to

532
00:26:15,760 --> 00:26:17,800
Speaker 4: pivot a little bit here, make sure you're paying attention

533
00:26:17,840 --> 00:26:19,560
Speaker 4: to your tax and estate planning tools.

534
00:26:19,680 --> 00:26:21,320
Speaker 5: Are you ready for that next decade?

535
00:26:21,359 --> 00:26:22,960
Speaker 4: So we're gonna we're going to imagine that the tax

536
00:26:23,000 --> 00:26:24,600
Speaker 4: code is going to change just a bit over the

537
00:26:24,680 --> 00:26:27,560
Speaker 4: next ten years. Decent chance that tax rates could rise.

538
00:26:27,560 --> 00:26:29,960
Speaker 4: You need a portfolio that's going to anticipate these things.

539
00:26:30,240 --> 00:26:32,760
Speaker 4: And so that means thinking ahead, be thinking about roth

540
00:26:32,840 --> 00:26:35,359
Speaker 4: conversions so that you can protect yourself from those require

541
00:26:35,400 --> 00:26:38,920
Speaker 4: minimum distributions. You're not avoiding taxation, you're pulling it forward

542
00:26:39,080 --> 00:26:41,280
Speaker 4: so that you can spread yourself over time into a

543
00:26:41,600 --> 00:26:44,680
Speaker 4: higher than current but still lower overall tax bracket as

544
00:26:44,680 --> 00:26:46,760
Speaker 4: opposed to getting hit by the tax truck when you're

545
00:26:46,800 --> 00:26:48,160
Speaker 4: age seventy three or seventy five.

546
00:26:48,840 --> 00:26:51,040
Speaker 1: Yeah, what we're really trying to call out here right

547
00:26:51,080 --> 00:26:53,879
Speaker 1: now is just your portfolio. You know. Don't treat it

548
00:26:53,920 --> 00:26:56,320
Speaker 1: like a crock pot. Don't just set it and forget

549
00:26:56,359 --> 00:27:00,520
Speaker 1: it for a decade, because markets do evolve, polished shift

550
00:27:00,800 --> 00:27:04,679
Speaker 1: your life changes, make sure your investments are keeping up.

551
00:27:04,720 --> 00:27:07,360
Speaker 1: And this is where a good fiduciary advisor can make

552
00:27:07,520 --> 00:27:10,760
Speaker 1: all the difference, because a good advisor is thinking about

553
00:27:10,760 --> 00:27:14,959
Speaker 1: the next ten years rather than the last ten years,

554
00:27:15,280 --> 00:27:18,080
Speaker 1: so you don't have to navigate all of this potential

555
00:27:18,160 --> 00:27:21,960
Speaker 1: volatility alone. Here's the all Worth advice. Build your portfolio

556
00:27:22,000 --> 00:27:25,159
Speaker 1: for the road ahead, not just the one that you

557
00:27:25,320 --> 00:27:30,320
Speaker 1: recently traveled. Coming up next, from overlapping ETFs to dividend

558
00:27:30,320 --> 00:27:35,080
Speaker 1: reinvestments to planning, from maybe even Florida, the real world

559
00:27:35,119 --> 00:27:38,919
Speaker 1: portfolio blind spots you might not even realize you have.

560
00:27:39,040 --> 00:27:41,600
Speaker 1: You're listening to Simply Money presented by all Worth Financial

561
00:27:41,680 --> 00:27:50,040
Speaker 1: on fifty five KRC the talk station. You're listening to

562
00:27:50,080 --> 00:27:53,280
Speaker 1: Simply Money presented by Allworth Financial on Bob Sponseller along

563
00:27:53,320 --> 00:27:54,320
Speaker 1: with Brian James.

564
00:27:54,680 --> 00:27:56,400
Speaker 2: If you have a financial question you'd.

565
00:27:56,240 --> 00:27:58,280
Speaker 1: Like for us to answer, there is a red button

566
00:27:58,320 --> 00:28:00,119
Speaker 1: you can click while you're listening to the show. Oh,

567
00:28:00,320 --> 00:28:02,840
Speaker 1: if you're listening to the show on the iHeart app,

568
00:28:02,920 --> 00:28:06,280
Speaker 1: simply record your question and it will come straight to us.

569
00:28:06,960 --> 00:28:09,920
Speaker 1: All right, Brian Mark and Kinwood leads us off tonight.

570
00:28:10,000 --> 00:28:13,119
Speaker 1: He says, we've always used dollar cost averaging, but with

571
00:28:13,240 --> 00:28:17,120
Speaker 1: markets at all time highs, are there situations where investing

572
00:28:17,160 --> 00:28:19,800
Speaker 1: a lump sum actually makes more sense?

573
00:28:20,560 --> 00:28:23,000
Speaker 4: Yeah, there can be, and there's This is really a

574
00:28:23,040 --> 00:28:25,879
Speaker 4: good You're not choosing the right path, You're choosing the

575
00:28:25,880 --> 00:28:29,000
Speaker 4: path that makes you the most comfortable. But history says

576
00:28:29,040 --> 00:28:32,040
Speaker 4: that lump sum investing usually wins about seventy five percent

577
00:28:32,040 --> 00:28:34,880
Speaker 4: of the time. Markets are higher twelve months after any

578
00:28:34,960 --> 00:28:37,520
Speaker 4: random day, even when they're already at all time highs.

579
00:28:37,640 --> 00:28:39,640
Speaker 4: Think of this anytime over the past three years. If

580
00:28:39,680 --> 00:28:41,920
Speaker 4: you face this question, the answer was throw the lump in.

581
00:28:42,120 --> 00:28:44,440
Speaker 4: It wasn't dollar cost average. Because the market has gone

582
00:28:44,480 --> 00:28:47,160
Speaker 4: up mostly steadily for three straight years.

583
00:28:47,440 --> 00:28:49,000
Speaker 5: All time highs aren't all that rare.

584
00:28:49,120 --> 00:28:51,480
Speaker 4: One out of every fifteen trading days is a new

585
00:28:51,520 --> 00:28:54,560
Speaker 4: record high. So waiting for that dip often more often

586
00:28:54,560 --> 00:28:56,880
Speaker 4: than that, means you're actually missing returns, not avoiding any

587
00:28:56,960 --> 00:28:59,920
Speaker 4: risk that said, dollar cost averaging isn't a bad thing.

588
00:29:00,160 --> 00:29:01,320
Speaker 5: It's a behavioral tool.

589
00:29:01,640 --> 00:29:03,840
Speaker 4: It's good if it will really really hurt you to

590
00:29:03,960 --> 00:29:06,040
Speaker 4: have gone in just before the market took a dip.

591
00:29:06,080 --> 00:29:09,040
Speaker 4: Think back in April when we panicked about tariffs initially.

592
00:29:09,640 --> 00:29:11,120
Speaker 4: You know, then that would have you know what, you

593
00:29:11,200 --> 00:29:12,880
Speaker 4: might have seen your lump sum get invested in and

594
00:29:12,880 --> 00:29:15,360
Speaker 4: then drop ten fifteen percent maybe more pretty quickly.

595
00:29:15,400 --> 00:29:16,520
Speaker 5: It did recover quickly.

596
00:29:16,680 --> 00:29:18,120
Speaker 4: But if that's the kind of thing that you don't

597
00:29:18,160 --> 00:29:20,880
Speaker 4: react to that you can't stay home about, then dollar

598
00:29:20,920 --> 00:29:23,560
Speaker 4: cost averaging will protect you from from throwing it all

599
00:29:23,560 --> 00:29:26,520
Speaker 4: at once and having to go through that now mathematically financially,

600
00:29:26,560 --> 00:29:28,719
Speaker 4: over the long run, it really doesn't make much difference.

601
00:29:28,720 --> 00:29:31,640
Speaker 4: I usually encourage my clients to go with a lump

602
00:29:31,720 --> 00:29:34,880
Speaker 4: sum unless unless we just really think that emotionally that's

603
00:29:34,920 --> 00:29:36,520
Speaker 4: not going to work. Should it should be in the

604
00:29:36,600 --> 00:29:38,480
Speaker 4: rare instance that it actually is going to go wrong.

605
00:29:38,760 --> 00:29:41,560
Speaker 4: Market goes up, not down, though, So don't don't don't

606
00:29:41,560 --> 00:29:44,600
Speaker 4: overthink it all right, Moving on to Jeff in Newtown,

607
00:29:44,720 --> 00:29:47,480
Speaker 4: Jeff says his portfolio looks balanced, but he keeps hearing

608
00:29:47,520 --> 00:29:50,800
Speaker 4: about hidden leverage in certain bonds and alternative fund So, Bob,

609
00:29:51,040 --> 00:29:53,880
Speaker 4: how do you uncover risk that's not obvious from the surface.

610
00:29:55,160 --> 00:29:57,520
Speaker 1: Well, Jeff, this is how i'd answered this question. I mean,

611
00:29:57,520 --> 00:30:00,760
Speaker 1: when you get into the whole alternative space, especially in

612
00:30:00,800 --> 00:30:03,840
Speaker 1: the credit space, and you talked about bond funds, alternative funds.

613
00:30:03,880 --> 00:30:06,440
Speaker 1: I already mentioned, you know, in the prior segment about

614
00:30:06,520 --> 00:30:10,320
Speaker 1: high yield corporate bond funds, when you mentioned hidden leverage,

615
00:30:10,320 --> 00:30:14,040
Speaker 1: Oftentimes that can mean there are some option strategies embedded

616
00:30:14,040 --> 00:30:17,680
Speaker 1: in these investments, you know, and options can work to

617
00:30:17,720 --> 00:30:21,040
Speaker 1: your advantage or your disadvantage, depending on how they're being used.

618
00:30:21,080 --> 00:30:24,200
Speaker 1: So I think the important thing here is to sit

619
00:30:24,280 --> 00:30:27,560
Speaker 1: down with your fiduciary advisor, assume you have one, and

620
00:30:27,680 --> 00:30:31,240
Speaker 1: just look under the hood and see what the components

621
00:30:31,280 --> 00:30:35,680
Speaker 1: of your bond and alternative investment assets are and make

622
00:30:35,720 --> 00:30:39,160
Speaker 1: sure that you're comfortable with the amount of risk being taken.

623
00:30:39,240 --> 00:30:42,400
Speaker 1: Because again, as I mentioned in the prior segment, it's

624
00:30:42,480 --> 00:30:46,760
Speaker 1: awfully fun to reach for yield or more return, especially

625
00:30:46,800 --> 00:30:49,880
Speaker 1: when the when the c's look relatively calm. But I'm

626
00:30:49,920 --> 00:30:52,480
Speaker 1: telling you if and when, and it's not a matter

627
00:30:52,480 --> 00:30:55,360
Speaker 1: of if, it's a matter of when. We get into

628
00:30:55,400 --> 00:30:58,400
Speaker 1: a period of maybe a slight recession or a lot

629
00:30:58,480 --> 00:31:01,920
Speaker 1: of market volatility. You want to make sure you're comfortable

630
00:31:02,040 --> 00:31:06,280
Speaker 1: with what you own prior to volatility hitting the markets,

631
00:31:06,400 --> 00:31:09,320
Speaker 1: so you don't get whipsawed around and end up being

632
00:31:09,400 --> 00:31:12,080
Speaker 1: sorry that you bought what you own. And then what

633
00:31:12,120 --> 00:31:15,280
Speaker 1: we never want to see happen is somebody make that

634
00:31:15,400 --> 00:31:18,520
Speaker 1: phone call and say get me out, move me to cash.

635
00:31:18,640 --> 00:31:21,440
Speaker 1: Because to the extent that phone call needs to come

636
00:31:21,520 --> 00:31:25,360
Speaker 1: in for whatever reason, in my opinion, that means that

637
00:31:25,960 --> 00:31:28,840
Speaker 1: your advisor did not do his or her job to

638
00:31:29,080 --> 00:31:32,680
Speaker 1: educate you in advance about what you actually own and

639
00:31:32,800 --> 00:31:36,040
Speaker 1: have a good, honest conversation about whether you're comfortable with

640
00:31:36,120 --> 00:31:38,680
Speaker 1: the amount of risk being taken in your portfolio. I

641
00:31:38,760 --> 00:31:41,840
Speaker 1: hope that helps. Jeff, all right, Charlie and Bridgetown says,

642
00:31:41,880 --> 00:31:46,440
Speaker 1: we're holding several ETFs to track similar sectors. How can

643
00:31:46,480 --> 00:31:51,240
Speaker 1: you identify brian when you've accidentally created overlap or are

644
00:31:51,320 --> 00:31:52,960
Speaker 1: you just doubling up on risk?

645
00:31:53,800 --> 00:31:55,600
Speaker 4: Well, you got to look under the hood, so sometimes

646
00:31:55,600 --> 00:31:58,760
Speaker 4: that overlap really can't hide in plain sight. To give

647
00:31:58,760 --> 00:32:01,480
Speaker 4: an ETFs exchange funds, they may have different tickers, but

648
00:32:01,520 --> 00:32:04,239
Speaker 4: they could own the same ten top stocks, especially with

649
00:32:04,360 --> 00:32:07,880
Speaker 4: in areas like technology, dividend growth or broader US indexes.

650
00:32:08,040 --> 00:32:10,520
Speaker 4: So in other words, if you're looking at Apple, Microsoft,

651
00:32:10,560 --> 00:32:14,280
Speaker 4: and Video those kinds of holdings inside your funds, that

652
00:32:14,560 --> 00:32:16,800
Speaker 4: is overlap. That's exactly what we're getting at here. So

653
00:32:17,200 --> 00:32:19,320
Speaker 4: look at the weight, not just the list. Don't just

654
00:32:19,360 --> 00:32:21,840
Speaker 4: do a quick glance of the top ten holdings and

655
00:32:21,880 --> 00:32:24,080
Speaker 4: then call it a day. You've got to understand how

656
00:32:24,160 --> 00:32:28,120
Speaker 4: much of the portfolio that stock makes up, because most

657
00:32:28,160 --> 00:32:31,080
Speaker 4: of them are capitalization weighted, meaning the bigger the company,

658
00:32:31,600 --> 00:32:32,880
Speaker 4: the larger portion of the.

659
00:32:32,800 --> 00:32:35,200
Speaker 5: Portfolio makes up. Versus let's just throw.

660
00:32:35,000 --> 00:32:37,520
Speaker 4: One hundred companies in here and then each company has

661
00:32:37,520 --> 00:32:38,840
Speaker 4: one percent of this portfolio.

662
00:32:38,840 --> 00:32:39,680
Speaker 5: That's not how it works.

663
00:32:39,800 --> 00:32:41,960
Speaker 4: So in other words, if a given company is seven

664
00:32:42,000 --> 00:32:44,720
Speaker 4: percent of the first ETF and that same company makes

665
00:32:44,800 --> 00:32:47,160
Speaker 4: up six percent of the second ETF, you're not really

666
00:32:47,160 --> 00:32:51,080
Speaker 4: diversifying by owning two of the same but two different ETFs.

667
00:32:51,160 --> 00:32:53,840
Speaker 4: You're just adding more of that same exposure. Remember those

668
00:32:53,880 --> 00:32:55,760
Speaker 4: top ten holdings in each one of those is going

669
00:32:55,800 --> 00:32:58,320
Speaker 4: to drive almost half of that fund's behavior. So if

670
00:32:58,320 --> 00:33:00,280
Speaker 4: you really want to get into this, lots of fun

671
00:33:00,320 --> 00:33:03,400
Speaker 4: companies out there will publish this sort of free portfolio

672
00:33:03,440 --> 00:33:05,840
Speaker 4: overlap calculated look on their websites. So there's plenty of

673
00:33:05,840 --> 00:33:08,000
Speaker 4: them out there, and it'll show you if you smush

674
00:33:08,040 --> 00:33:10,480
Speaker 4: these things together, what does your ultimate portfolio look like

675
00:33:10,880 --> 00:33:14,120
Speaker 4: under that surface. Anything that shows an overlap of above,

676
00:33:14,200 --> 00:33:17,160
Speaker 4: you know, say even twenty thirty percent, that's kind of

677
00:33:17,160 --> 00:33:18,920
Speaker 4: worth double checking and make sure it's going to match

678
00:33:18,920 --> 00:33:21,640
Speaker 4: with the other stuff in your portfolio. So, yeah, you're

679
00:33:21,680 --> 00:33:23,560
Speaker 4: right to be thinking about these things. Just because something

680
00:33:23,600 --> 00:33:26,160
Speaker 4: has a different name does not mean you are diversified.

681
00:33:26,160 --> 00:33:27,160
Speaker 5: Look under that hood.

682
00:33:28,120 --> 00:33:30,760
Speaker 4: One more, another one here from a Nina and Mason.

683
00:33:30,840 --> 00:33:34,080
Speaker 4: Nina's talking about dividend reinvestment today. She says they've always

684
00:33:34,080 --> 00:33:36,840
Speaker 4: done that automatically, but now they're wondering if they should

685
00:33:36,840 --> 00:33:39,280
Speaker 4: start taking them in cash instead. And what's the trade

686
00:33:39,320 --> 00:33:41,400
Speaker 4: off if I turn on my dividends bigot for a

687
00:33:41,400 --> 00:33:42,000
Speaker 4: little bit of income.

688
00:33:42,080 --> 00:33:43,280
Speaker 5: Is there any sacrifice there?

689
00:33:43,280 --> 00:33:46,480
Speaker 1: Bob Well, Nina, I think it all comes down to

690
00:33:46,520 --> 00:33:49,880
Speaker 1: what your income needs are, and this is where it

691
00:33:49,960 --> 00:33:53,440
Speaker 1: might be time to look at an overall income strategy

692
00:33:54,040 --> 00:33:57,920
Speaker 1: rather than just looking at an investment strategy in a silo.

693
00:33:58,040 --> 00:34:01,280
Speaker 1: Here's what I mean there are. What it really comes

694
00:34:01,320 --> 00:34:04,640
Speaker 1: down to here is how tax efficient your portfolio is

695
00:34:04,840 --> 00:34:08,120
Speaker 1: and make sure that you're getting you know, everybody needs

696
00:34:08,120 --> 00:34:10,120
Speaker 1: and wants a certain amount of cash flow coming in.

697
00:34:10,480 --> 00:34:13,120
Speaker 1: It all comes down to how do we create that

698
00:34:13,280 --> 00:34:18,040
Speaker 1: cash flow on the best blend of tax efficiency and

699
00:34:18,400 --> 00:34:22,680
Speaker 1: risk adjusted investing. So you know, for example, sometimes if

700
00:34:22,719 --> 00:34:25,360
Speaker 1: you've got these you know, divinends coming in, you know,

701
00:34:25,400 --> 00:34:27,920
Speaker 1: we first need to determine are they qualified dividends or

702
00:34:27,920 --> 00:34:30,279
Speaker 1: non qualified dividends. If you don't need or want the

703
00:34:30,320 --> 00:34:33,640
Speaker 1: income at all from a cash flow standpoint to spend,

704
00:34:34,120 --> 00:34:37,200
Speaker 1: those dividends might be better placed in your I RA

705
00:34:37,360 --> 00:34:40,320
Speaker 1: or qualified accounts so you're not taxed on them right away.

706
00:34:40,520 --> 00:34:43,799
Speaker 1: So uh, it comes down again looking at what your

707
00:34:43,800 --> 00:34:47,680
Speaker 1: income needs and wants are in structure structuring the components

708
00:34:47,680 --> 00:34:52,080
Speaker 1: of your investment portfolio accordingly. All right, we've got time

709
00:34:52,080 --> 00:34:54,879
Speaker 1: for one more. Brian Kevin and Florida. He says he's

710
00:34:54,920 --> 00:34:58,680
Speaker 1: a long time listener and a Cincinnati snowbird. He's starting

711
00:34:58,719 --> 00:35:02,120
Speaker 1: to notice how taxes interact with investment returns, kind of

712
00:35:02,160 --> 00:35:04,160
Speaker 1: what I was talking about here just a minute ago.

713
00:35:04,719 --> 00:35:06,879
Speaker 1: And he brings up the example and it's a good one.

714
00:35:06,920 --> 00:35:10,279
Speaker 1: How capital gains can push up Medicare premiums. How do

715
00:35:10,320 --> 00:35:12,759
Speaker 1: you plan these for these investments in these what he

716
00:35:12,880 --> 00:35:15,680
Speaker 1: calls stealth taxes that come up from time to time.

717
00:35:15,880 --> 00:35:18,320
Speaker 4: Always good to hear from a podcast listener. Are I

718
00:35:18,320 --> 00:35:20,480
Speaker 4: don't think our radio waves reach all the way down there.

719
00:35:20,520 --> 00:35:22,680
Speaker 4: So he's downloading that poscat podcast every day.

720
00:35:22,719 --> 00:35:23,080
Speaker 5: We love it.

721
00:35:23,800 --> 00:35:25,840
Speaker 4: But yeah, stealth taxes. This is the stuff that sneaks

722
00:35:25,920 --> 00:35:28,040
Speaker 4: up on you when you're not paying attention. Capital gains,

723
00:35:28,120 --> 00:35:32,120
Speaker 4: roth conversions, requirementum distributions, all of these things, big mutual

724
00:35:32,120 --> 00:35:35,080
Speaker 4: fund distributions that happen to December can quietly shove you

725
00:35:35,120 --> 00:35:36,720
Speaker 4: into places you don't want to be with your taxes.

726
00:35:36,719 --> 00:35:40,040
Speaker 4: The big one is called IRMA. I AREMAA, and that's

727
00:35:40,160 --> 00:35:43,000
Speaker 4: your Medicare premiums. That means you your monthly part D

728
00:35:43,239 --> 00:35:46,240
Speaker 4: and B premiums might climb eight hundred bucks two thousand

729
00:35:46,320 --> 00:35:48,520
Speaker 4: more per year depending on the bracket.

730
00:35:48,520 --> 00:35:50,920
Speaker 5: It's based on your income from two years earlier.

731
00:35:51,000 --> 00:35:53,719
Speaker 4: Right, So if you're looking at IRMA now, it's based

732
00:35:53,760 --> 00:35:56,080
Speaker 4: off of something that happened in twenty twenty three, and

733
00:35:56,160 --> 00:35:58,919
Speaker 4: whatever you're doing now will surface in twenty twenty seven,

734
00:35:59,000 --> 00:36:01,920
Speaker 4: so it does change, not locked in at anytime. Also,

735
00:36:02,360 --> 00:36:05,239
Speaker 4: you might have a tax torpedo from Social Security. This

736
00:36:05,280 --> 00:36:07,640
Speaker 4: is when your investment income mixes with your Social Security

737
00:36:07,680 --> 00:36:10,319
Speaker 4: benefits and you might get a hit that zone where

738
00:36:10,320 --> 00:36:13,120
Speaker 4: every dollar of gain effectsive effectively gets taxed like two

739
00:36:13,160 --> 00:36:15,440
Speaker 4: dollars of gain because it makes more of your Social

740
00:36:15,440 --> 00:36:18,239
Speaker 4: Security taxbile. There's this re threshold in there too, So

741
00:36:18,360 --> 00:36:21,239
Speaker 4: the fix is planning out that income, understand where it's

742
00:36:21,239 --> 00:36:24,400
Speaker 4: coming from, spread out those ROTH conversions over several years,

743
00:36:24,640 --> 00:36:27,359
Speaker 4: harvest those gains in years with low income municipal bonds

744
00:36:27,400 --> 00:36:31,239
Speaker 4: that are tax free, or favoring ETFs over active funds.

745
00:36:30,920 --> 00:36:33,120
Speaker 5: So you can reduce those surprise capital gains.

746
00:36:34,280 --> 00:36:36,640
Speaker 1: Good stuff, all right, before you spend that year end

747
00:36:36,680 --> 00:36:40,719
Speaker 1: bonus on a last minute getaway or even the newest iPhone,

748
00:36:40,719 --> 00:36:43,239
Speaker 1: we'll talk about how to really put that money to work.

749
00:36:43,520 --> 00:36:46,160
Speaker 1: Coming up next. You're listening to Simply Money started by

750
00:36:46,160 --> 00:36:49,600
Speaker 1: all Worth Financial on fifty five KRC the talk station.

751
00:36:54,640 --> 00:36:57,120
Speaker 1: You're listening to Simply Money presented by all Worth Financial

752
00:36:57,200 --> 00:36:59,360
Speaker 1: on Bob Sponsller along with Brian Chains.

753
00:37:00,239 --> 00:37:01,480
Speaker 5: So you just got a year.

754
00:37:01,440 --> 00:37:04,920
Speaker 1: End bonus or you're expecting to receive one very soon.

755
00:37:05,200 --> 00:37:10,200
Speaker 1: First off, congratulations, Whether that's a small surprise or maybe

756
00:37:10,280 --> 00:37:13,680
Speaker 1: a hefty chunk of change, a bonus can be a

757
00:37:13,840 --> 00:37:18,040
Speaker 1: powerful financial tool if you treat it right. Brian, why

758
00:37:18,040 --> 00:37:19,840
Speaker 1: don't you walk us through how to take all the

759
00:37:19,920 --> 00:37:22,200
Speaker 1: fun out of receiving a year end bonus and be

760
00:37:22,320 --> 00:37:24,960
Speaker 1: responsible with it. Be the adult in the room.

761
00:37:24,920 --> 00:37:27,160
Speaker 4: Only be happy for the instant that that money is

762
00:37:27,200 --> 00:37:29,879
Speaker 4: hitting the bank, and then start the worry machine, of course,

763
00:37:29,880 --> 00:37:31,839
Speaker 4: because that's how we call those human beings right now,

764
00:37:31,840 --> 00:37:34,879
Speaker 4: I'm kidding, but yeah, this is These kinds of nice

765
00:37:34,880 --> 00:37:37,600
Speaker 4: little windfalls are always they always come along with little

766
00:37:37,600 --> 00:37:39,440
Speaker 4: stress because you want to say, okay, what's the right

767
00:37:39,480 --> 00:37:39,840
Speaker 4: thing to do?

768
00:37:39,920 --> 00:37:41,359
Speaker 5: Yeah, First off, I'll tell.

769
00:37:41,239 --> 00:37:43,240
Speaker 4: You if your situation is, if you're in a pretty

770
00:37:43,239 --> 00:37:46,279
Speaker 4: good situation and you've been a responsible adult, do something

771
00:37:46,320 --> 00:37:48,560
Speaker 4: fun with ten percent of it or something like that.

772
00:37:48,760 --> 00:37:50,960
Speaker 4: We are not here on this planet to stare at

773
00:37:51,000 --> 00:37:53,600
Speaker 4: a pile of money and not spend it. Nobody's going

774
00:37:53,640 --> 00:37:55,680
Speaker 4: to talk on your deathbed about that time you didn't

775
00:37:55,719 --> 00:37:57,800
Speaker 4: spend that money, So go do something fun with a

776
00:37:57,880 --> 00:38:00,880
Speaker 4: portion it now beyond that, or by asking what's my

777
00:38:00,920 --> 00:38:03,240
Speaker 4: weak spot? Do I have high interest debt hanging around.

778
00:38:03,239 --> 00:38:05,120
Speaker 4: Do I have that one credit card with several thousand

779
00:38:05,200 --> 00:38:07,040
Speaker 4: dollars on it that was maybe it was part of

780
00:38:07,080 --> 00:38:10,680
Speaker 4: a zero percent balance transfer situation and I took advantage

781
00:38:10,719 --> 00:38:12,400
Speaker 4: of that that I've kind of forgotten about it, and

782
00:38:12,400 --> 00:38:14,440
Speaker 4: now I'm paying twenty eight percent. That happens more often

783
00:38:14,480 --> 00:38:16,759
Speaker 4: than you might think, So you know, pay that down.

784
00:38:16,920 --> 00:38:18,520
Speaker 4: Just just blow it out of the water with a

785
00:38:18,520 --> 00:38:20,920
Speaker 4: few thousand bucks something like that. If you're behind on

786
00:38:21,000 --> 00:38:23,000
Speaker 4: retirement savings, maybe put a chunk of it into your

787
00:38:23,000 --> 00:38:25,880
Speaker 4: IRA or boost your four oh one K contributions for

788
00:38:25,920 --> 00:38:28,080
Speaker 4: the remainder of this year. There's not that much time left,

789
00:38:28,200 --> 00:38:30,400
Speaker 4: but if you've got those dollars sitting in your bank account,

790
00:38:30,400 --> 00:38:32,560
Speaker 4: you have a little more than usual. You can simply

791
00:38:32,560 --> 00:38:34,600
Speaker 4: crank up your four to one K contributions all the

792
00:38:34,640 --> 00:38:37,200
Speaker 4: way up to one hundred percent, knowing that you've already

793
00:38:37,200 --> 00:38:38,960
Speaker 4: got money in the bank to actually pay the bills.

794
00:38:39,000 --> 00:38:40,839
Speaker 4: That's a sneaky way to put a lump sum into

795
00:38:40,840 --> 00:38:42,879
Speaker 4: a four toh one K. You cannot write a check

796
00:38:42,880 --> 00:38:45,040
Speaker 4: into it, but you can filter it through your payroll

797
00:38:45,160 --> 00:38:46,840
Speaker 4: as long as you've got money to pay the bills.

798
00:38:47,040 --> 00:38:49,680
Speaker 4: So anyway, then beyond that, if you've got the debt

799
00:38:49,840 --> 00:38:52,520
Speaker 4: in retirement on track, then start to think tax strategy.

800
00:38:52,680 --> 00:38:54,760
Speaker 4: Maybe you use this bonus to fund a donor advice

801
00:38:54,840 --> 00:38:57,240
Speaker 4: fund before December thirty first, that'll give you a nice deduction.

802
00:38:57,360 --> 00:39:00,920
Speaker 4: If you are contributing to charities anyway, pull that forward

803
00:39:00,960 --> 00:39:04,840
Speaker 4: many years of contributions into one account, and the church

804
00:39:04,960 --> 00:39:06,680
Speaker 4: or the charity behind it doesn't have to know that

805
00:39:06,719 --> 00:39:07,440
Speaker 4: you're aware of that.

806
00:39:07,640 --> 00:39:09,719
Speaker 5: And I'm not saying don't enjoy any of it. Treat

807
00:39:09,760 --> 00:39:12,200
Speaker 5: yourself a little bit, but put some guardrails on it.

808
00:39:12,239 --> 00:39:14,000
Speaker 5: Take ten percent for fun and the rest of it.

809
00:39:14,040 --> 00:39:14,960
Speaker 5: Look at the weak spots.

810
00:39:15,480 --> 00:39:18,080
Speaker 1: Brian, you already brought up the big guardrail, and again

811
00:39:18,120 --> 00:39:20,239
Speaker 1: it bears repeating. If you are sitting out there with

812
00:39:20,280 --> 00:39:23,640
Speaker 1: a credit card balance or this zero interest loan that

813
00:39:23,760 --> 00:39:26,640
Speaker 1: turns into a pumpkin here in the next month, where

814
00:39:26,640 --> 00:39:29,839
Speaker 1: you will be paying high interest rates, you do need

815
00:39:29,880 --> 00:39:33,160
Speaker 1: to forego the fun here and get that stuff taken

816
00:39:33,200 --> 00:39:35,839
Speaker 1: care of, make it, make that debt go away. Thanks

817
00:39:35,880 --> 00:39:38,160
Speaker 1: for listening. You've been listening to Simply Money, presented by

818
00:39:38,160 --> 00:39:41,600
Speaker 1: all Worth Financial on fifty five KRC, the talk station