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Speaker 1: Are going to have shutdown.

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Speaker 2: ANTIFA would be Trump assas and Ryan Ruth guilty on

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Speaker 2: all mine.

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Speaker 1: I forgive him fifty five krs. The talk station.

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Speaker 3: Tonight. Are you truly.

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Speaker 4: Well off financially or just tied to the current market momentum?

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Speaker 4: You're listening to Simply Money presented by all Worth Financial.

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Speaker 4: I'm Bob Sponseller along with Brian James. When the market's

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Speaker 4: hitting record highs like it is now, it feels awfully good.

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Speaker 4: You log into your account, you see the numbers are up,

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Speaker 4: and you think, wow, we are doing great, We're rich.

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Speaker 4: But the question is are you really that well off?

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Speaker 4: And is your long term financial plan really gonna work

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Speaker 4: just because the stock market is up right now and

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Speaker 4: the value of your investment accounts are up. Brian, we

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Speaker 4: see this all the time and we call this the

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Speaker 4: paper wealth trap. Yeah, So here's what happens.

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Speaker 5: When that market goes up, your account grows and you

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Speaker 5: start to feel wealthier. And anybody who didn't panic in

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Speaker 5: twenty twenty two should should be sitting on a pile

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Speaker 5: on the largest pile of money they've ever seen. Because

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Speaker 5: the market has continued to grow. We've had some fantastic

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Speaker 5: years and including this one. So the reaction, the human

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Speaker 5: reaction to that, what do we do. We loosened the

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Speaker 5: belt a little bit, maybe spend a little more, maybe

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Speaker 5: stop paying as much attention, kind of lose sight of

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Speaker 5: the portfolio a little and we assume we're diversified. You know,

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Speaker 5: I got ten different mutual funds out there, but all

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Speaker 5: ten are still tied to the same market. That means

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Speaker 5: that there's nothing that's going to kind of offset any

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Speaker 5: of the bumps and things that we're going to hit.

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Speaker 6: We saw this, you know, about twenty five years ago.

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Speaker 5: I remember there was there was a mutual fund company

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Speaker 5: called Janis, and they had four funds that, for about

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Speaker 5: two or three years, were the only things that anybody

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Speaker 5: wanted to deal with. And then finally in two thousand

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Speaker 5: and two, the market kind of hit the skids a

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Speaker 5: little bit and all four of them collapsed at one

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Speaker 5: time because they were all invested the exact same way.

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Speaker 5: So don't assume just because you've got five unique ticker

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Speaker 5: symbols in your portfolio that you have five unique investments.

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Speaker 6: You got to look under the hood a little bit,

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Speaker 6: don't you, Bomp.

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Speaker 4: You certainly do, so that covers the topic of diversification,

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Speaker 4: and what we really want to talk about as well

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Speaker 4: is just this whole mindset shift. And the thing we

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Speaker 4: got to watch out for here is lifestyle creep, meaning

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Speaker 4: there is a difference between experiencing a good market in

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Speaker 4: the midst of having a true financial plan where you've

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Speaker 4: looked at your long term goals, you've actually looked at

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Speaker 4: what you spend every month or every year, and you

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Speaker 4: make sure your plan is intact whether the market is

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Speaker 4: going up, down, or sideways, versus just assuming it's.

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Speaker 3: All going to work out.

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Speaker 4: And if you get you know, two three, four hundred

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Speaker 4: thousand dollars of gain in a current year, you say, Wow,

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Speaker 4: the market's up. I can go buy a more expensive

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Speaker 4: car than I can really afford, or take two or

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Speaker 4: three cruises that I can't afford, or eat out at

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Speaker 4: more expensive restaurants. We're not saying don't enjoy your life

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Speaker 4: and all that. We're saying do it within the context

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Speaker 4: of a well constructed financial plan. Don't let the current

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Speaker 4: em motions of the moment run your spending habits, because

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Speaker 4: that can backfire real quickly if you're not really paying attention.

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Speaker 5: Yeah, it's kind of like looking at Zillo to see

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Speaker 5: what your house is worth. Knowing that that doesn't really

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Speaker 5: do you any good. It's fun to look at, and

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Speaker 5: it should be. That's probably at an all time high

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Speaker 5: as well. But that's not money you can touch unless

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Speaker 5: you're gonna rent out some of your rooms or carve

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Speaker 5: off a chunk of the house and sell it off

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Speaker 5: to somebody. That's not realistic. It's just paper wealth. It

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Speaker 5: doesn't help you pay your bills. So let's talk about

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Speaker 5: what durable wealth looks like. So what is this Durable

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Speaker 5: wealth is the part we're looking for. This is the

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Speaker 5: part of your balance sheet that survives the storm. These

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Speaker 5: are your actual dollars, cash reserves, diversified income sources, real

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Speaker 5: estate insurance, things that don't move one for one and

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Speaker 5: lockstep with the S and P five hundred. We're very

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Speaker 5: focused on the stock market, but we want to make

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Speaker 5: sure we have some things out there that are not

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Speaker 5: affected by it. So one big example there, Bob, is liquidity.

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Speaker 5: This is money you can actually get to without selling

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Speaker 5: at a loss. That's the buffer and bad markets. Liquidity

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Speaker 5: is a fancy word for emergency fund. We got to

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Speaker 5: make sure there's some oil in the engine. So that

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Speaker 5: if something goes wrong we need to fix the car,

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Speaker 5: or we need to help a kid with something. We've

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Speaker 5: got dollars that are not impacted by the stock market

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Speaker 5: that we can tap into.

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Speaker 4: Yeah, and we're not trying to take growth oriented investors

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Speaker 4: and saying, hey, don't have all your your money in

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Speaker 4: the stock market.

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Speaker 3: We're not saying that at all. What we are saying.

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Speaker 4: Is we've got to remind folks that the market on

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Speaker 4: average corrects at least twelve percent every year. We already

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Speaker 4: have more than that kind of a correction back in

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Speaker 4: early April, when you know, we had Liberation Day and

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Speaker 4: the whole world got introduced to tariffs on steroids and

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Speaker 4: things recovered. But the point is, if you had to go,

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Speaker 4: you know, write a tuition check or you know, some

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Speaker 4: other major expense you know you're trying to you know,

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Speaker 4: redo your kitchen or buy a vehicle, you do not

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Speaker 4: want to have to sell stocks in a down market

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Speaker 4: in order to come up with short term liquidity. And so,

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Speaker 4: you know, it's countering inuitive right now, Why would I

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Speaker 4: want to have any money parked in the s on

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Speaker 4: the sidelines earning two three four percent in a quote

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Speaker 4: unquote safe savings account or money market account when the

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Speaker 4: when tech stops are going gangbusters. Historically, Brian, you know this,

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Speaker 4: I know this. We've experienced this umpteen different times.

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Speaker 2: Uh.

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Speaker 4: When we do get these corrections, no one sees it coming.

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Speaker 4: It usually comes as a result of something no one

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Speaker 4: saw coming.

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Speaker 3: And that's why we have to remind folks.

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Speaker 4: The responsible thing to do is make sure you've got

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Speaker 4: money set aside for the time frame in which you

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Speaker 4: plan or want to use it to avoid having to

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Speaker 4: sell when you have to, not when you want to.

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Speaker 6: Yeah, and I think now's the time to do that.

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Speaker 6: This is a great thing to do here in Q four.

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Speaker 5: Look at what's coming up over the next twelve maybe

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Speaker 5: twenty four months. If you for sure know you're going

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Speaker 5: to pull a chunk out for one of these reasons,

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Speaker 5: got to buy a car, or helping kids and whatever,

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Speaker 5: all the things that we've listed, this is a great

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Speaker 5: time to carve that out. That doesn't mean you have

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Speaker 5: to take it out of let's say it's an IRA.

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Speaker 5: If this is tax advantage money, you can protect those

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Speaker 5: dollars from the market without actually pulling it out of

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Speaker 5: the IRA. Every IRA should have something like a core position,

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Speaker 5: or what's called a suite fund where all liquid cash lands,

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Speaker 5: or failing that, buy a money market fund. You can

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Speaker 5: buy a money market fund just like you can any

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Speaker 5: other exchange traded fund or a mutual fund or whatever,

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Speaker 5: something that will spit out a little bit of interest.

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Speaker 5: You might still be able to get three and a

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Speaker 5: half four and a half percent. It should still be

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Speaker 5: in that range anyway, and you can carve those dollars

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Speaker 5: out with the intention of actually taking them out sometime

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Speaker 5: in the future, but at least you will have protected

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Speaker 5: them when the market's at an all time high. So

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Speaker 5: the point is, have a plan, know what you're going

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Speaker 5: to be shooting for over the next couple of years,

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Speaker 5: and figure out maybe maybe you should take some of

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Speaker 5: the risk off the table so that you can still

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Speaker 5: make those commitments without worrying whatever the.

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Speaker 6: Market has done.

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Speaker 5: And also I throw out, do a plan and make

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Speaker 5: sure you have a stress test. Right, So I think

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Speaker 5: you were just about to go down this path anyway, Yeah,

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Speaker 5: go ahead.

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Speaker 3: Now what we're saying, we're saying the same things.

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Speaker 4: But it's just you know, this durable wealth for most

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Speaker 4: people involves Hey, at some point in time, I got

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Speaker 4: to replace my job with an income stream from my portfolio.

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Speaker 4: And people want to know before they head into retirement

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Speaker 4: whether this thing's going to work. And I think a

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Speaker 4: lot of people get emotionally upset, you know, at the

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Speaker 4: thought of the market going down three or five percent,

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Speaker 4: to say nothing of fifteen twenty twenty five percent. And

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Speaker 4: for people that don't have a plan and have not

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Speaker 4: stress tests their portfolio, fear tends to take over and

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Speaker 4: they tend to be under allocated to the stock market,

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Speaker 4: where you need to be long term in order to

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Speaker 4: outpace inflation. But to the point I think you were

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Speaker 4: starting to go down, there's ways to do this, Brian.

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Speaker 4: There's ways to create different sleeves in your portfolio, whether

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Speaker 4: those are cash equivalents or buffer detf strategies. There are

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Speaker 4: things where you can mitigate some of this volume relatility

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Speaker 4: and still keep a long term wealth, you know, slash

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Speaker 4: income replacement plan intact to get you the return that

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Speaker 4: you need to uh to get all within the context

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Speaker 4: of a risk tolerance that you can sleep at night with.

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Speaker 4: But you gotta have those discussions, You got to stress

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Speaker 4: test it, you got to run some numbers and arrive

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Speaker 4: at a plan that's gonna work.

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Speaker 3: For you, yep.

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Speaker 5: And that plan basically means looking at all of your resources.

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Speaker 5: What are your income streams? That might be social Security,

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Speaker 5: it could be pensions, it could be part time work.

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Speaker 5: Perhaps you have the old deferred compensation plans that are

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Speaker 5: going to kick in, and uh, you know, figuring out

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Speaker 5: what those streams of incomes are. That's what I like

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Speaker 5: to call o PM. Other people's money, simply meaning money

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Speaker 5: that I get on a regular basis that comes from

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Speaker 5: an outside source, not my own internal piles.

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Speaker 4: Brian, I earned my social Security, don't don't try. Don't

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Speaker 4: try to imply that I didn't.

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Speaker 5: But I'm not implying that at all. I'm just talking

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Speaker 5: about how how we have an urge. We all have

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Speaker 5: a human urge to try to fit as many of

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Speaker 5: our bills into money we didn't have at the beginning

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Speaker 5: of the month. I want somebody else to give me

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Speaker 5: money because that's what I've become.

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Speaker 3: Used to that.

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Speaker 5: So that's that's the you know, the outside income sources.

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Speaker 5: And then and then you do have your your your

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Speaker 5: you're of course you have your nest egg, which is

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Speaker 5: going to have different tax treatments. That's a question in

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Speaker 5: and of itself. Do I want to hit my pre

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Speaker 5: tax money in my iras? Perhaps I have wroth IRA

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Speaker 5: four oh one k in the mix, or maybe there

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Speaker 5: are after tax investments, meaning simply something that's in a

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Speaker 5: joint or individual account that's exposed to taxes on an

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Speaker 5: annual basis. Each of those three things is going to

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Speaker 5: have its own type of tax treatment. And uh, for

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Speaker 5: whatever needs you have, you need to match up the

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Speaker 5: need with the resource for the most tax efficient manner

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Speaker 5: to get to those dollars.

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Speaker 6: And that can mean, uh, you know.

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Speaker 5: That that doesn't mean always avoid the highest taxes, right,

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Speaker 5: that's usually that's that's not always the way to go.

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Speaker 3: Uh.

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Speaker 5: Sometimes you know, we want to hit those pre tax dollars.

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Speaker 5: If we are in a situation where we're in we're

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Speaker 5: in the lowest bracket we've seen, and this is the

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Speaker 5: window that people hit before or after right just after retirement,

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Speaker 5: when salaries in the longer part of the mix, and

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Speaker 5: maybe they haven't turned on their social securities bigots yet,

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Speaker 5: therefore they're in their lowest brackets. Ever, that might be

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Speaker 5: the time to go ahead and hit that pre tax money.

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Speaker 5: You're gonna pay taxes eventually. The more you push it out,

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Speaker 5: the higher your taxes are gonna be, probably when you're

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Speaker 5: in your mid seventies and require minimum distributions kick in.

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Speaker 4: Yeah, you've mentioned taxes three or four times in your

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Speaker 4: last comment, and that's an important topic that so many

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Speaker 4: people overlook, and that's just doing proactive tax planning. I mean,

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Speaker 4: let's say you've got some positions in your portfolio, your

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Speaker 4: non IRA portfolio, with a low cost basis and potentially

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Speaker 4: high capital gains. Look at ways and strategies that are

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Speaker 4: out there, like putting callers on those positions, or using

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Speaker 4: a donor advised fund for your charitable giving, or gradually

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Speaker 4: taking a piece off if you could keep your tax

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Speaker 4: rate at a low rate and you know, up to

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Speaker 4: a certain numbers zero on capital gains right now, there's

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Speaker 4: ways to mitigate the tax burden while getting your portfolio

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Speaker 4: position the way that it needs to be.

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Speaker 3: But you got to sit down with some people, you know.

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Speaker 4: A good fiduciary advisor, couple with a good CPA, and

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Speaker 4: map out a strategy. The people that run into trouble, Brian,

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Speaker 4: or the people that just set it and forget it

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Speaker 4: and put it on autopilot and bury their head in

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Speaker 4: the sane and say there's nothing I can do about it,

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Speaker 4: so let's just hope it all works out. You know,

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Speaker 4: for people that go in and do the planning, oftentimes

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Speaker 4: they're amazed at the kind of results that could come

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Speaker 4: just by being proactive and getting in a room with

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Speaker 4: some professionals that know how to do this for you.

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Speaker 5: And a lot of it has to do with just

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Speaker 5: understanding the tax code for what it is and knowing

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Speaker 5: what the changes are that come every few years as

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Speaker 5: we put new laws on things in place. Most people

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Speaker 5: just operate off the assumptions they had thirty years ago

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Speaker 5: the last time they looked at all these rules. Things change.

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Speaker 5: Make sure you keep up with it and you're taking

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Speaker 5: advantage of what's given to you.

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Speaker 3: Here's the all Worth advice.

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Speaker 4: If your sense of security rises and falls with the

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Speaker 4: perform of the stock market, you're not just building wealth.

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Speaker 4: You may not be building permanent wealth at all. You

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Speaker 4: might just be renting it short term. Convert paper games

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Speaker 4: into durable assets durable income replacement before the market does

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Speaker 4: it for you. Investors are pouring billions of dollars into

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Speaker 4: quote unquote say funds that promise to cushion the next

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Speaker 4: market drop, but do they really work? We're going to

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Speaker 4: break that down next. You're listening to Simply Money, presented

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Speaker 4: by all Worth Financial on fifty five KRC.

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Speaker 3: The talk station.

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Speaker 1: Life Advice is where do I want to be in

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Speaker 1: ten years or twenty years? Right from real life experience

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Speaker 1: The Dave Ramsey Show What will have to be true

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Speaker 1: about me that is not true? Today tonight at seven

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Speaker 1: point five KRC.

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Speaker 7: All Worth Financial a registered investment advisory firm. Any ideas

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Speaker 7: presented during this program are not intended to provide specific

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Speaker 7: financial advice. You should consult your own financial advisor, tax consultant,

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Speaker 7: or a state planning attorney to conduct your own due diligence.

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Speaker 3: You're listening to.

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Speaker 4: Simply Money is noted by all Worth Financial, umbob sponseller

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Speaker 4: along with Brian James. If you can't listen to Simply

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Speaker 4: Money live every night, subscribe to get our daily podcasts.

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Speaker 4: And if you think your friends or family or both

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Speaker 4: could use some financial advice, and let's face it, who couldn't.

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Speaker 3: Tell them about us as well?

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Speaker 4: Just search Simply Money on the iHeart app or wherever

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Speaker 3: Straight Ahead at six forty three.

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Speaker 4: How to Handle a deferred compensation plan, what to do

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Speaker 4: when your rental properties have skyrocketed value, and where to

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Speaker 4: put your money once you've maxed out your retirement accounts.

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Speaker 3: We see it all the time.

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Speaker 4: Investors are increasingly searching for ways to stay invested in

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Speaker 4: equities or stocks. But they want to built in shield.

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Speaker 4: They want exposure without that gut punch that invariably come

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Speaker 4: when the markets go down, and they don't want to

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Speaker 4: be sold products with high commissions and fees.

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Speaker 3: So what do they do? Brian, Well, what.

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Speaker 5: We look at is we look at let's start with

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Speaker 5: the data here what actually happens. So in twenty twenty

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Speaker 5: five so far, we talk about these from time to time,

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Speaker 5: but buffer style ETFC, these are exchange traded funds that

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Speaker 5: look to limit downside losses.

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Speaker 6: While they've drawn in about nine point.

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Speaker 5: Seven billion in inflows and more the more traditional low

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Speaker 5: volatility or kind of growth index arrangements that we're more

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Speaker 5: comfortable with, those have seen only about two and a

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Speaker 5: half billion in outflows. So now what we're seeing is

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Speaker 5: obviously more flowing into the buffer side and it's kind

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Speaker 5: of coming out of the low volatility index stuff. The

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Speaker 5: reason for this is because of what they do so

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Speaker 5: a buffer or what's called a defined outcome exchange traded fund.

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Speaker 5: These are the types of funds that blend equity exposure,

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Speaker 5: so that's the growth that we all come to love

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Speaker 5: with a bit of an option's overlay, meaning that yes

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Speaker 5: they are trading options. This is not an aggressive speculative.

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Speaker 5: This is in a sort of portfolio insurance manner, and

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Speaker 5: they're looking to buffer or reduce those losses over over

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Speaker 5: a specific range, so kind of think of as a

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Speaker 5: safety net. You're going to give up some of the upside,

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Speaker 5: of course, but that's in exchange for some of the

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Speaker 5: some protection on the downside. For example, the first ten

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Speaker 5: percent of losses might be absorbed, so if the market

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Speaker 5: drops eight percent, that ETF may only decline two percent,

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Speaker 5: depending on the structure.

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Speaker 6: But on the flip side, that's the good part.

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Speaker 5: On the flip side, Bob, often there's a gain, there's

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Speaker 5: a cap on the gain. So if the market actually

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Speaker 5: goes up twenty percent, that exchange traded fund might not

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Speaker 5: get any more than fifteen percent. So you're going to

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Speaker 5: give up some of the upside in exchange for a

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Speaker 5: little bit of protection on the downside. Over a fixed

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Speaker 5: period of time, and it's usually about a year after

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Speaker 5: which that that buffer is going to reset into a

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Speaker 5: new frame or there's some kind of new time structure, all.

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Speaker 3: Right, Brian.

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Speaker 4: I love these things for the right kind of investor,

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Speaker 4: you know, the folks that know they need to be

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Speaker 4: involved in the market to get that return to hit

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Speaker 4: their long term financial goals that we talked about all

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Speaker 4: the time as of a financial plan, but they just

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Speaker 4: can't emotionally stomach the historical volatility of being all in stocks.

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Speaker 4: These are great options for those kind of people. And

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Speaker 4: let's just put you know, put the cards on the

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Speaker 4: table here this strategy. What is it competing with these

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Speaker 4: indexed annuities that are being sold left and right by

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Speaker 4: non fiduciary, commission based people where huge commissions are involved.

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Speaker 4: The lock up periods, surrender charges are huge. The thing

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Speaker 4: I love about these buffer ETF strategies, and you already

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Speaker 4: said it. You typically, if you're going a good, responsibly constructed,

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Speaker 4: you know strategy around these things, you can reset it

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Speaker 4: after one year. You can get out at any time.

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Speaker 4: It's liquid, so you got a lot of options if

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Speaker 4: your goals and these change, and as the market changes,

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Speaker 4: the buffers, and the changes and the index by which

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Speaker 4: you want to tie these things.

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Speaker 3: Too can change.

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Speaker 4: You have a lot of flexibility if you're working with

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Speaker 4: a good fiduciary advisor and an actual strategy versus just

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Speaker 4: being sold a product by a commissioned salesperson.

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Speaker 3: How about that for a Thursday morning rant?

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Speaker 5: Oh you know how we love your rants, Bob rants

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Speaker 5: are a great way to start the day. So, yeah,

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Speaker 5: these are in the right situation, I think I want

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Speaker 5: to drill into you know what you just said there,

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Speaker 5: In the right situation.

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Speaker 6: These can make some sense.

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Speaker 5: But at the same time, if you are somebody who

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Speaker 5: has you understand market history and you don't panic when

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Speaker 5: the market wobbles, and you know that there's a cycle

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Speaker 5: to things and things come and go, then you might

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Speaker 5: be leaving money on the table just for the exchange

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Speaker 5: of protecting yourself during a period of time you probably

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Speaker 5: weren't going to panic and sell anyway. So just recognize

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Speaker 5: there is a bit of a sacrifice involved here, And

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Speaker 5: I think this is important to call that because these

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Speaker 5: things are getting out there. As we said, there's there's

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Speaker 5: a lot more. The big players out there are are

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Speaker 5: launching bigger versions of this, it's becoming more popular. So

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Speaker 5: black Rock just launched one called the Ice Shares Large

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Speaker 5: Cap ten percent Target Buffer and that's the whole the

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Speaker 5: whole point of it, obviously, is it's supposed to protect

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Speaker 5: you against the first ten percent of losses against the

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Speaker 5: S and P five hundred ark arc is. That's run

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Speaker 5: by Kathy Wood. Her name pops up in financial media

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Speaker 5: all the time. She's got one coming out as well.

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Speaker 5: And investors are throwing money into these things. As we

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Speaker 5: said earlier, there's more flowing under the buffer side most

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Speaker 5: recently than there is on the on the more traditional side.

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Speaker 5: So just understand what you're getting into if you choose

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Speaker 5: to get into these, understand what they do, and more importantly,

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Speaker 5: understand what they do not do well.

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Speaker 4: And then there's actual portfolio strategies, you know, where you

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Speaker 4: take a bunch of these different buffer at ETFs and

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Speaker 4: pair them together, so you've got access to a lot

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Speaker 4: of different indices, and you do have an actual manager

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Speaker 4: in the background taking a look at when it's the

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Speaker 4: right time to reset the strategy. Again, this comes down

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Speaker 4: just to boil it down real simply, Brian, and you

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Speaker 4: know this when we sit down with somebody and actually

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Speaker 4: do a financial plan and an asset allocation strategy. It

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Speaker 4: comes down to this, there's an amount of risk you

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Speaker 4: have to take in your portfolio to get the return

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Speaker 4: you need to get to achieve your goals.

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Speaker 3: That's one part of it.

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Speaker 4: And then there's the emotional amount of risk that somebody's

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Speaker 4: willing to take to keep from waking up in the

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Speaker 4: middle of the night worrying about the stock market.

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Speaker 3: So, like you said, in situations like.

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Speaker 4: This where we've got to have people involved in the market,

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Speaker 4: but we got to buffer that emotional risk by knowing

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Speaker 4: upfront what our downside limitations are, these can work wonderfully

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Speaker 4: get people where they need to be in terms of

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Speaker 4: an asset allocation without them feeling like they're just getting

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Speaker 4: thrown to the wolves without any downside protection whatsoever. And

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Speaker 4: it's in those situations where these can work out great

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Speaker 4: because the phone call no client ever wants to make

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Speaker 4: and no advisor wants to get is that phone call

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Speaker 4: that says, hey, I can't take it anymore, get me out,

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Speaker 4: move me to cash, and I'll wait until things are

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Speaker 4: quote unquote better. If that situation ever happens, the advisor

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Speaker 4: didn't do his or her job. The client didn't do

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Speaker 4: their job, and it can end up in a disaster.

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Speaker 3: So that's where these things.

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Speaker 4: Can really work out, as you said, if they're fitted

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Speaker 4: to the right situation in a truly comprehensive financial plan.

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Speaker 4: All right, here's the all Worth advice. Protect what matters,

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Speaker 4: don't lock away your upside though, use buffer ETF smartly

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Speaker 4: and selectively, always informed of their boundaries and their costs.

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Speaker 4: It's a question many people will ask on the path

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Speaker 4: to financial freedom. Should I rent or buy a home?

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Speaker 4: We'll help you answer that question coming up next. You're

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Speaker 4: listening to Simply Money, presented by all Worth Financial on

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Speaker 4: fifty five KRC the talk station.

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Speaker 8: Chicago is a hell all right now, Democrats free healthcare

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Speaker 8: to illegal alien piece in the Middle East Gartlands just

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Speaker 8: can't fire.

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Speaker 4: Listen here, Craws are Republicans know everything.

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Speaker 1: You never know what's going to happen. Fifty five KRS

441
00:21:04,960 --> 00:21:05,879
Speaker 1: the talk station.

442
00:21:06,640 --> 00:21:08,320
Speaker 3: If you're looking for a financial partner.

443
00:21:08,080 --> 00:21:09,959
Speaker 1: Who an iHeartRadio station.

444
00:21:14,400 --> 00:21:16,920
Speaker 3: You're listening to Simply Money? Is that about all Worth Financial?

445
00:21:16,960 --> 00:21:20,280
Speaker 4: Unbomp sponseller along with Brian James, joined tonight by our

446
00:21:20,400 --> 00:21:25,080
Speaker 4: real estate expert Michelle Sloan, owner of Remax Time. Michelle,

447
00:21:25,119 --> 00:21:28,120
Speaker 4: thanks again for spending time with us tonight, And you

448
00:21:28,160 --> 00:21:31,639
Speaker 4: want to talk about something that's always a fascinating topic

449
00:21:31,720 --> 00:21:34,080
Speaker 4: to me, and I know Brian loves this as well,

450
00:21:34,720 --> 00:21:38,600
Speaker 4: just the conversations that we all get into nowadays on hey,

451
00:21:38,600 --> 00:21:41,159
Speaker 4: does it make more sense to rent a home or

452
00:21:41,320 --> 00:21:42,080
Speaker 4: buy a home?

453
00:21:42,720 --> 00:21:44,000
Speaker 3: And what are the pros.

454
00:21:43,720 --> 00:21:47,160
Speaker 4: And cons from a financial standpoint and a cost standpoint.

455
00:21:47,200 --> 00:21:49,000
Speaker 4: And I know you've got a lot to offer on

456
00:21:49,080 --> 00:21:51,040
Speaker 4: this topic. Walk us through it tonight.

457
00:21:52,560 --> 00:21:55,679
Speaker 2: You know, it would be smart of me as a

458
00:21:55,720 --> 00:22:00,760
Speaker 2: salesperson to always say you should buy a home, but

459
00:22:01,200 --> 00:22:05,679
Speaker 2: you know, after doing the twenty years, you know I

460
00:22:05,880 --> 00:22:10,159
Speaker 2: have to be so realistic when I sit down with

461
00:22:11,359 --> 00:22:15,320
Speaker 2: clients who are interested in buying a home, because there

462
00:22:15,480 --> 00:22:18,199
Speaker 2: is a lot to consider when it comes to buying

463
00:22:18,240 --> 00:22:23,639
Speaker 2: a home, and maybe, depending on your specific situation, renting

464
00:22:24,400 --> 00:22:28,119
Speaker 2: is the better move. So we'll break it down a

465
00:22:28,119 --> 00:22:32,240
Speaker 2: little bit with our pros of renting, our cons of renting,

466
00:22:32,400 --> 00:22:34,520
Speaker 2: the pros of buying, et cetera.

467
00:22:34,640 --> 00:22:36,280
Speaker 6: Are you ready, I'm ready?

468
00:22:37,920 --> 00:22:42,800
Speaker 2: Okay, all right, Well, the first pro of renting is

469
00:22:42,880 --> 00:22:47,800
Speaker 2: there is a lower upfront cost. The barrier to entry. Basically,

470
00:22:47,840 --> 00:22:53,880
Speaker 2: you only need likely a security deposit, maybe first month's rent,

471
00:22:54,200 --> 00:22:58,040
Speaker 2: an application fee of fifty dollars, and you can live

472
00:22:58,080 --> 00:23:01,760
Speaker 2: in a property. That's a good thing. That's a pro

473
00:23:02,000 --> 00:23:06,240
Speaker 2: for renting. When it comes to buying, certainly you're going

474
00:23:06,320 --> 00:23:09,000
Speaker 2: to need a much larger down payment. You're going to

475
00:23:09,720 --> 00:23:13,160
Speaker 2: pitch of a couple hundred thousand dollars, so you might

476
00:23:13,200 --> 00:23:15,720
Speaker 2: need twenty thousand dollars. You may and a lot of

477
00:23:15,760 --> 00:23:18,440
Speaker 2: people don't have that in their bank account. So that's

478
00:23:18,920 --> 00:23:23,840
Speaker 2: that's the first barrier to buying a home is having

479
00:23:23,880 --> 00:23:28,560
Speaker 2: some cash on hand. And so saving is so important

480
00:23:28,680 --> 00:23:31,920
Speaker 2: when I can when I consult with buyers or want

481
00:23:31,920 --> 00:23:35,720
Speaker 2: to be buyers, is you know what, it takes time

482
00:23:36,000 --> 00:23:39,840
Speaker 2: to build up the savings that you need to buy

483
00:23:39,880 --> 00:23:43,400
Speaker 2: a home. So number one, if you don't have that,

484
00:23:43,960 --> 00:23:47,960
Speaker 2: renting may be your only option. And that's okay, as

485
00:23:48,000 --> 00:23:50,040
Speaker 2: long as you can try to find a way to

486
00:23:50,160 --> 00:23:54,119
Speaker 2: start saving because in the end, and this is the

487
00:23:54,119 --> 00:23:56,280
Speaker 2: way sort of the world goes.

488
00:23:56,040 --> 00:23:56,920
Speaker 8: Around and around.

489
00:23:57,680 --> 00:23:59,960
Speaker 2: As you're younger, you don't have a lot of savings

490
00:24:00,040 --> 00:24:02,080
Speaker 2: and you're not making as much money. As you get

491
00:24:02,080 --> 00:24:05,600
Speaker 2: a little bit older and your job becomes more stable,

492
00:24:06,080 --> 00:24:08,879
Speaker 2: then you're thinking about Okay, I mean to start a family.

493
00:24:09,280 --> 00:24:12,280
Speaker 2: Now it's time to start thinking about buying and having

494
00:24:12,280 --> 00:24:15,480
Speaker 2: that nestech is so very important.

495
00:24:15,760 --> 00:24:18,919
Speaker 5: Well, Michelle, what would you say that the average time

496
00:24:19,160 --> 00:24:22,320
Speaker 5: is if somebody knows they're going to be somewhere, you know,

497
00:24:22,800 --> 00:24:24,160
Speaker 5: for a certain amount of time.

498
00:24:24,160 --> 00:24:26,440
Speaker 6: When when is that that sort of break even point?

499
00:24:26,440 --> 00:24:27,560
Speaker 5: If you're going to if you know you're going to

500
00:24:27,600 --> 00:24:29,560
Speaker 5: stay put for this many years, then it's safe to buy,

501
00:24:29,680 --> 00:24:31,119
Speaker 5: versus if you may have to move in two or

502
00:24:31,119 --> 00:24:31,480
Speaker 5: three years.

503
00:24:31,520 --> 00:24:33,520
Speaker 6: That's a little bit dice. You might want to consider renting.

504
00:24:33,520 --> 00:24:34,600
Speaker 6: Do you have a break even for that?

505
00:24:35,280 --> 00:24:35,560
Speaker 2: Yeah?

506
00:24:35,640 --> 00:24:36,040
Speaker 4: I do.

507
00:24:36,200 --> 00:24:41,359
Speaker 2: Actually, that's a great question. Because mortgage rates are high

508
00:24:41,400 --> 00:24:45,280
Speaker 2: and home prices are high, it often takes longer for

509
00:24:45,400 --> 00:24:48,600
Speaker 2: the benefits of buying to actually catch up with renting.

510
00:24:49,200 --> 00:24:53,040
Speaker 2: So for that break even time, it's anywhere between six

511
00:24:53,119 --> 00:24:56,760
Speaker 2: and eight years. So if you're planning on staying in

512
00:24:56,800 --> 00:25:01,400
Speaker 2: your home for six to eight years, that's when it's

513
00:25:01,480 --> 00:25:04,679
Speaker 2: definitely time for you to consider buying. If you're going

514
00:25:04,760 --> 00:25:06,679
Speaker 2: to be bouncing around and you don't know if your

515
00:25:06,760 --> 00:25:10,080
Speaker 2: job's going to be stable, or if you personally, are

516
00:25:10,200 --> 00:25:12,679
Speaker 2: just not sure you want to live in a particular

517
00:25:12,760 --> 00:25:15,400
Speaker 2: area and you're going to move within a year or two,

518
00:25:16,160 --> 00:25:19,639
Speaker 2: Guess what you're likely to lose money on that investment

519
00:25:19,800 --> 00:25:24,640
Speaker 2: and buying a home. Although it's very emotional and it's

520
00:25:24,680 --> 00:25:27,239
Speaker 2: where you live, and it's where you it's all of

521
00:25:27,280 --> 00:25:30,280
Speaker 2: the things that go along with buying a home, it

522
00:25:30,359 --> 00:25:33,359
Speaker 2: is an investment and it's one of the biggest and

523
00:25:33,480 --> 00:25:37,080
Speaker 2: most important investments that you're ever going to make. So

524
00:25:37,200 --> 00:25:40,040
Speaker 2: when you make it with the and you're very thoughtful

525
00:25:40,080 --> 00:25:44,280
Speaker 2: about it, that's so important. So if you're planning on

526
00:25:44,359 --> 00:25:48,240
Speaker 2: staying in a home for less than six to eight years,

527
00:25:48,320 --> 00:25:51,399
Speaker 2: you may consider renting. Now, No, you're never going to

528
00:25:51,480 --> 00:25:55,840
Speaker 2: build equity when you're renting. That's the other con of renting.

529
00:25:56,480 --> 00:26:00,640
Speaker 2: You're not paying yourself. You're actually paying the person who

530
00:26:00,680 --> 00:26:04,719
Speaker 2: owns that property, and you're paying for them to build wealth.

531
00:26:05,200 --> 00:26:10,520
Speaker 2: And so wealth building is extremely important in the real

532
00:26:10,640 --> 00:26:14,439
Speaker 2: estate industry, and it's important in your industry too, right

533
00:26:14,560 --> 00:26:17,080
Speaker 2: because you look at those kinds of folks that have

534
00:26:17,240 --> 00:26:21,480
Speaker 2: homes or multiple properties, and we look at how the

535
00:26:21,720 --> 00:26:26,520
Speaker 2: increase in value of those properties will continue from year

536
00:26:26,560 --> 00:26:30,480
Speaker 2: to year, and you know that's part of your portfolio.

537
00:26:31,720 --> 00:26:34,080
Speaker 5: Okay, So falling off the timing question again, do you

538
00:26:34,119 --> 00:26:37,400
Speaker 5: see people relying on arms on adjustable rate mortgages now,

539
00:26:37,440 --> 00:26:39,320
Speaker 5: now that we're in a declining rate environment, are people

540
00:26:39,359 --> 00:26:41,480
Speaker 5: kind of taking that risk of needing to refinance in

541
00:26:41,560 --> 00:26:43,399
Speaker 5: three or five years or do you see people locking

542
00:26:43,400 --> 00:26:44,880
Speaker 5: them in for longer term fix.

543
00:26:46,280 --> 00:26:50,239
Speaker 2: Most of my clients, you know, like the stability of

544
00:26:50,359 --> 00:26:54,040
Speaker 2: either a fifteen or a thirty year the arms in

545
00:26:54,080 --> 00:26:57,480
Speaker 2: my opinion, and again I don't do the mortgage side

546
00:26:57,520 --> 00:27:00,439
Speaker 2: of things every single day. I think it's an option

547
00:27:00,560 --> 00:27:03,359
Speaker 2: and an opportunity, but there's a lot of people who don't.

548
00:27:03,480 --> 00:27:06,320
Speaker 2: They feel like if you do a five to one

549
00:27:06,440 --> 00:27:08,399
Speaker 2: arm or a seven to one arm or whatever that

550
00:27:08,600 --> 00:27:11,359
Speaker 2: is knowing that we don't know what the future looks

551
00:27:11,400 --> 00:27:13,800
Speaker 2: like in five years, it could be worse than it

552
00:27:13,880 --> 00:27:17,680
Speaker 2: is today. And if you're doing an interest only loan

553
00:27:18,240 --> 00:27:21,960
Speaker 2: and you're only paying the interest, you're never really you're

554
00:27:22,040 --> 00:27:25,840
Speaker 2: just again sort of spinning your wheels. So you definitely

555
00:27:25,920 --> 00:27:29,560
Speaker 2: want to talk to an expert in the financing side

556
00:27:29,560 --> 00:27:34,679
Speaker 2: of it, the mortgage industry, and really see what is

557
00:27:34,800 --> 00:27:38,920
Speaker 2: best suited for your budget and your personal situation.

558
00:27:40,040 --> 00:27:41,840
Speaker 4: Michelle, I want to go back to your example, and

559
00:27:41,880 --> 00:27:43,280
Speaker 4: first of all, I want to call out and just

560
00:27:43,359 --> 00:27:46,960
Speaker 4: say thank you for your transparency and your honesty and

561
00:27:47,000 --> 00:27:51,119
Speaker 4: being willing to well. I'm being sincere because I know

562
00:27:51,160 --> 00:27:54,080
Speaker 4: the way you operate. You're you truly operate like a

563
00:27:54,119 --> 00:27:58,879
Speaker 4: good fiduciary advisor, not just a real estate salesperson. And

564
00:27:58,920 --> 00:28:01,119
Speaker 4: that's why we, you know, think so highly of you

565
00:28:01,160 --> 00:28:03,080
Speaker 4: and trust you and love having you on the show.

566
00:28:03,240 --> 00:28:04,720
Speaker 3: So I mean that sincerely.

567
00:28:04,840 --> 00:28:05,159
Speaker 8: Thank you.

568
00:28:05,760 --> 00:28:07,800
Speaker 4: The point I want to add to your prior comment

569
00:28:07,960 --> 00:28:10,200
Speaker 4: is for those folks that maybe aren't in that six

570
00:28:10,240 --> 00:28:13,000
Speaker 4: to eight year window now, the key thing is to

571
00:28:13,040 --> 00:28:16,160
Speaker 4: not go through lifestyle creep and just because you're renting,

572
00:28:16,600 --> 00:28:19,760
Speaker 4: spend one hundred percent of your discretionary income so you

573
00:28:19,880 --> 00:28:23,400
Speaker 4: don't build up that emergency fund earmarked for a home

574
00:28:23,480 --> 00:28:26,159
Speaker 4: down payment, right, And is that what you talk about

575
00:28:26,440 --> 00:28:29,199
Speaker 4: to your clients that maybe aren't ready yet, but you

576
00:28:29,320 --> 00:28:34,280
Speaker 4: know need to be ready in four or five years.

577
00:28:33,160 --> 00:28:35,719
Speaker 2: One hundred percent. You always want to be planning for

578
00:28:35,760 --> 00:28:40,080
Speaker 2: your future, so finding ways to save, even if it's

579
00:28:40,120 --> 00:28:42,560
Speaker 2: a couple of bucks some months or you know, one

580
00:28:42,640 --> 00:28:48,080
Speaker 2: hundred dollars here fifty dollars there definitely setting that money aside,

581
00:28:48,560 --> 00:28:51,680
Speaker 2: not only for buying a home, but you know, just life.

582
00:28:52,320 --> 00:28:54,800
Speaker 2: You never know what's going to happen along the way,

583
00:28:55,320 --> 00:28:59,600
Speaker 2: and if you are prepared for any you know, your

584
00:28:59,600 --> 00:29:04,080
Speaker 2: cars down, okay, if you have no emergency fund, you

585
00:29:04,560 --> 00:29:07,760
Speaker 2: can't fix your car, you can't get around. So it's

586
00:29:07,760 --> 00:29:11,480
Speaker 2: the same thing with the house, and it definitely is

587
00:29:11,520 --> 00:29:14,720
Speaker 2: starting to put money away is so important. The other

588
00:29:14,840 --> 00:29:17,120
Speaker 2: thing that I'd like to tell buyers real quick, and

589
00:29:17,200 --> 00:29:20,960
Speaker 2: I know that we're up against the clock, is checking

590
00:29:21,160 --> 00:29:25,640
Speaker 2: your credit because having good credit will go a long

591
00:29:25,720 --> 00:29:28,560
Speaker 2: way for getting the best rates when it does come

592
00:29:28,600 --> 00:29:29,880
Speaker 2: time for you to buy a house.

593
00:29:30,600 --> 00:29:34,640
Speaker 3: Great point and very important point. Thanks as always so much, Michelle.

594
00:29:34,640 --> 00:29:37,160
Speaker 4: You're listening to Simply Money, presented by all Worth Financial

595
00:29:37,200 --> 00:29:39,760
Speaker 4: on fifty five KRC the Talk station.

596
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Speaker 11: stove to boil water or cook food without.

660
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Speaker 1: Electricity or propane.

661
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666
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00:32:52,600 --> 00:32:56,240
Speaker 11: my patriots supply dot com mark.

668
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Speaker 3: Your opinions are welcome to here. I do think he

669
00:32:59,280 --> 00:33:00,520
Speaker 3: is too old to run.

670
00:33:00,680 --> 00:33:01,880
Speaker 2: In twenty twenty four.

671
00:33:01,800 --> 00:33:04,920
Speaker 1: Fifty five krs. The talkstation.

672
00:33:08,720 --> 00:33:10,840
Speaker 4: You're listening to simply Money percent of my all Worth

673
00:33:10,880 --> 00:33:14,440
Speaker 4: Financial on Bob spon Seller along with Brian Jains. Do

674
00:33:14,440 --> 00:33:16,760
Speaker 4: you have a financial question you'd like for us to answer.

675
00:33:16,840 --> 00:33:19,120
Speaker 4: There's a red button you can click while you're listening

676
00:33:19,160 --> 00:33:21,400
Speaker 4: to the show right on the iHeart app.

677
00:33:21,480 --> 00:33:23,240
Speaker 3: Simply record your question.

678
00:33:23,120 --> 00:33:26,840
Speaker 4: And it will come straight to us Brian, Jason or

679
00:33:27,000 --> 00:33:30,480
Speaker 4: John excuse me, and Mason leads us off tonight, he says,

680
00:33:30,480 --> 00:33:33,520
Speaker 4: we've been building cash reserves waiting.

681
00:33:33,200 --> 00:33:36,080
Speaker 3: For a market ball back, but it never seems to come.

682
00:33:36,600 --> 00:33:39,160
Speaker 4: How do we decide when to put that money back

683
00:33:39,200 --> 00:33:41,400
Speaker 4: to work without guessing wrong?

684
00:33:42,280 --> 00:33:46,120
Speaker 5: Well, I hope you haven't set aside too much because

685
00:33:46,520 --> 00:33:48,760
Speaker 5: this is kind of the what we're living through right now,

686
00:33:48,800 --> 00:33:50,360
Speaker 5: the reason that we don't want to do those kinds

687
00:33:50,360 --> 00:33:52,280
Speaker 5: of things. At the end of the day, what you're

688
00:33:52,280 --> 00:33:54,520
Speaker 5: trying to do is time the market. And you know,

689
00:33:54,600 --> 00:33:57,280
Speaker 5: whether that's done out of fear or greed, it's still

690
00:33:57,400 --> 00:33:59,640
Speaker 5: timing and it's not something we can control. We can

691
00:33:59,680 --> 00:34:01,600
Speaker 5: be right nine times in a row, and that tenth

692
00:34:01,640 --> 00:34:04,080
Speaker 5: time comes back around to get you. So, you know,

693
00:34:04,680 --> 00:34:07,000
Speaker 5: even even with money paying four or five percent on

694
00:34:07,040 --> 00:34:09,880
Speaker 5: money markets, inflation is still eating away. You're purchasing power

695
00:34:09,920 --> 00:34:13,400
Speaker 5: over time, So missing just the ten best days in

696
00:34:13,440 --> 00:34:15,960
Speaker 5: the market over twenty years can cut that return in half.

697
00:34:16,280 --> 00:34:17,680
Speaker 6: So really, what should you do now?

698
00:34:17,760 --> 00:34:20,040
Speaker 5: I'd say stop paying attention to the market, you know,

699
00:34:20,400 --> 00:34:22,279
Speaker 5: maybe do maybe do a little quick math and figure

700
00:34:22,280 --> 00:34:24,040
Speaker 5: out exactly how much has been left on the table

701
00:34:24,080 --> 00:34:25,879
Speaker 5: over whatever this time period is that you've been sitting

702
00:34:25,920 --> 00:34:28,400
Speaker 5: in cash, Just so you can be reminded not to,

703
00:34:28,640 --> 00:34:30,319
Speaker 5: you know, not to try to pull the strategy too

704
00:34:30,360 --> 00:34:32,880
Speaker 5: many times. But if you're nervous about putting it all

705
00:34:32,880 --> 00:34:34,480
Speaker 5: into once because you feel like the train has left

706
00:34:34,480 --> 00:34:37,040
Speaker 5: the station, spread it out over time, you know, maybe

707
00:34:37,080 --> 00:34:39,120
Speaker 5: divide it by six a little bit over over the

708
00:34:39,200 --> 00:34:40,840
Speaker 5: next six months and then let it go. Let it

709
00:34:40,880 --> 00:34:43,040
Speaker 5: do its job. Don't be surprised when the market pulls back.

710
00:34:43,080 --> 00:34:45,040
Speaker 5: That's a guarantee I can give you it's gonna happen.

711
00:34:45,360 --> 00:34:47,520
Speaker 5: But this is you know, I hate to see people

712
00:34:47,920 --> 00:34:51,200
Speaker 5: thinking they're making responsible financial decisions. Then they wind up

713
00:34:51,200 --> 00:34:53,640
Speaker 5: throwing the money in, and the market does take a downturn,

714
00:34:53,680 --> 00:34:55,720
Speaker 5: and then those people tend to decide that the market

715
00:34:55,760 --> 00:34:58,359
Speaker 5: has targeted them for failure. The market could care less

716
00:34:58,360 --> 00:35:00,719
Speaker 5: about you, or your goals or your money. It's going

717
00:35:00,800 --> 00:35:02,480
Speaker 5: to do what it does. You have to learn to

718
00:35:02,560 --> 00:35:04,360
Speaker 5: let it do what it to, how to ride it

719
00:35:04,400 --> 00:35:06,360
Speaker 5: and not try to tap dance in and out of it.

720
00:35:06,880 --> 00:35:08,719
Speaker 6: So let's move on to Greg in Westchester.

721
00:35:08,800 --> 00:35:11,279
Speaker 5: So Greg's got a slug of company stock and his

722
00:35:11,560 --> 00:35:15,000
Speaker 5: retirement plan. He's concerned that it's become a pretty big

723
00:35:15,040 --> 00:35:18,080
Speaker 5: part of his portfolio, and he's asking Bob, are those

724
00:35:18,120 --> 00:35:21,200
Speaker 5: option strategies like Collers protective puts? Is that realistic for

725
00:35:21,239 --> 00:35:22,120
Speaker 5: an individual investor?

726
00:35:22,200 --> 00:35:22,279
Speaker 8: Or?

727
00:35:22,280 --> 00:35:23,719
Speaker 6: Is that better left to the institutions.

728
00:35:24,960 --> 00:35:28,279
Speaker 4: I think they're absolutely appropriate for individual investors, and I

729
00:35:28,320 --> 00:35:32,760
Speaker 4: wish more individual investors knew about them and actually use that.

730
00:35:32,760 --> 00:35:37,480
Speaker 4: That being said, they're awfully helpful if you're working with

731
00:35:37,520 --> 00:35:40,959
Speaker 4: a good fiduciary advisor that even knows what things these

732
00:35:41,000 --> 00:35:42,759
Speaker 4: things are and how to deploy them.

733
00:35:42,840 --> 00:35:46,000
Speaker 3: So let's get into that a little bit. A protective put.

734
00:35:46,080 --> 00:35:48,880
Speaker 4: I mean, sometimes our industry does a great job of

735
00:35:48,920 --> 00:35:52,400
Speaker 4: making this stuff you know, seem way more complicated than

736
00:35:52,440 --> 00:35:56,640
Speaker 4: it is. Think about if you've got a million dollar home, Okay,

737
00:35:57,080 --> 00:35:59,759
Speaker 4: you would not sit out there with that home and

738
00:35:59,800 --> 00:36:02,880
Speaker 4: have no insurance on the house. Right if it burns down,

739
00:36:03,400 --> 00:36:05,480
Speaker 4: you know, or a flood comes through or whatever and

740
00:36:05,560 --> 00:36:08,080
Speaker 4: wipes it out, you're you're eliminating a big chunk of

741
00:36:08,080 --> 00:36:08,760
Speaker 4: your net worth.

742
00:36:08,960 --> 00:36:12,760
Speaker 3: Same thing with the stock. All the protective put is is.

743
00:36:12,680 --> 00:36:16,480
Speaker 4: I am buying an option to sell that stock at

744
00:36:16,520 --> 00:36:19,919
Speaker 4: this price by this set date, and you got to pay,

745
00:36:20,320 --> 00:36:23,000
Speaker 4: you know, a premium to do that. You know, just

746
00:36:23,200 --> 00:36:26,440
Speaker 4: treat it like an insurance premium. If the stock keeps

747
00:36:26,480 --> 00:36:29,560
Speaker 4: going up and you hold that put to expiration, it

748
00:36:29,600 --> 00:36:33,560
Speaker 4: goes away and that's a lost you know cost to

749
00:36:33,719 --> 00:36:37,040
Speaker 4: ensure that stock, just like you know, premiums you pay

750
00:36:37,080 --> 00:36:39,719
Speaker 4: on your home. If the stock starts to go down,

751
00:36:39,760 --> 00:36:41,799
Speaker 4: you don't have to hold the put to expiration.

752
00:36:41,960 --> 00:36:42,680
Speaker 3: You can sell it.

753
00:36:42,719 --> 00:36:45,839
Speaker 4: If you get that eight ten percent pullback, what have

754
00:36:45,960 --> 00:36:49,319
Speaker 4: you. You can always sell the put for a profit. But

755
00:36:49,440 --> 00:36:51,680
Speaker 4: you got the protection, and if you were right and

756
00:36:51,719 --> 00:36:54,400
Speaker 4: the stock went down, you were protected and made a

757
00:36:54,400 --> 00:36:56,160
Speaker 4: little money on the down on the you know, with

758
00:36:56,239 --> 00:36:59,799
Speaker 4: your downside protection. All a collar is is an a

759
00:37:00,239 --> 00:37:02,919
Speaker 4: to help get some of that insurance paid for.

760
00:37:03,280 --> 00:37:04,799
Speaker 3: Meaning you sell a.

761
00:37:04,719 --> 00:37:08,000
Speaker 4: Call option, meaning you're you are willing to sell your

762
00:37:08,040 --> 00:37:12,040
Speaker 4: stock by a certain date at a certain price, and

763
00:37:12,120 --> 00:37:15,320
Speaker 4: you receive a premium in order, you know, in return

764
00:37:15,440 --> 00:37:18,319
Speaker 4: for selling that call option, and that helps pay for

765
00:37:18,400 --> 00:37:21,400
Speaker 4: the call op or the put protection. So you know,

766
00:37:21,520 --> 00:37:23,880
Speaker 4: in a caller strategy, you want to spread these things

767
00:37:23,880 --> 00:37:27,560
Speaker 4: apart a little bit and usually you know that way,

768
00:37:27,760 --> 00:37:30,319
Speaker 4: you have a little bit more upside left. You know,

769
00:37:30,440 --> 00:37:33,400
Speaker 4: things continue to go up, but you're helping pay for

770
00:37:33,600 --> 00:37:34,800
Speaker 4: some downside protection.

771
00:37:34,960 --> 00:37:36,680
Speaker 3: It's a wonderful strategy.

772
00:37:37,160 --> 00:37:39,879
Speaker 4: Unfortunately, a lot of people have no idea what I'm

773
00:37:39,920 --> 00:37:43,280
Speaker 4: talking about, including advisors, and don't know how to put

774
00:37:43,280 --> 00:37:46,080
Speaker 4: this into a responsible financial plan.

775
00:37:46,360 --> 00:37:47,440
Speaker 3: Hope that helps.

776
00:37:47,160 --> 00:37:50,160
Speaker 4: Greg, all right, Michael and Hyde Park says, I'm being

777
00:37:50,200 --> 00:37:54,839
Speaker 4: offered a deferred compensation plan, but I'm worried about company solvency.

778
00:37:55,239 --> 00:37:58,719
Speaker 4: How do you evaluate that kind of risk before committing

779
00:37:58,760 --> 00:38:01,399
Speaker 4: to even get involve the deferred comp plan?

780
00:38:01,960 --> 00:38:03,520
Speaker 6: So yeah, Michael, congratulations.

781
00:38:03,520 --> 00:38:05,680
Speaker 5: Obviously you're you're working for an employer that has put

782
00:38:05,719 --> 00:38:08,640
Speaker 5: together some great benefit plans for their for the employees,

783
00:38:08,680 --> 00:38:11,160
Speaker 5: for those who might not know a deferred compensation plan.

784
00:38:11,239 --> 00:38:12,520
Speaker 6: This is not a four to oh one K. This

785
00:38:12,600 --> 00:38:14,319
Speaker 6: is something in addition to a four oh one K.

786
00:38:14,719 --> 00:38:16,719
Speaker 5: Four oh one K, of course, has its own limitations

787
00:38:16,760 --> 00:38:19,680
Speaker 5: of how much money can go in somewhere between twenty

788
00:38:19,680 --> 00:38:21,960
Speaker 5: three and thirty thousand dollars depending on your age. That

789
00:38:22,080 --> 00:38:25,320
Speaker 5: is available to everybody out there. A deferred comp plan

790
00:38:25,800 --> 00:38:29,160
Speaker 5: is different. It's not made available to everybody, to absolutely everybody.

791
00:38:29,160 --> 00:38:31,480
Speaker 5: It's usually an executive type of a plan, something for

792
00:38:31,560 --> 00:38:36,279
Speaker 5: higher income owners generally speaking, but also the big risk

793
00:38:36,280 --> 00:38:37,520
Speaker 5: and Michaels already clued into this.

794
00:38:38,840 --> 00:38:40,520
Speaker 6: These are assets of the company.

795
00:38:40,560 --> 00:38:43,239
Speaker 5: What that means is that a deferred comp plan is

796
00:38:43,320 --> 00:38:45,880
Speaker 5: it's a it could be a acclaimed by a creditor.

797
00:38:45,880 --> 00:38:48,920
Speaker 5: If that company ever gets sued by somebody or or

798
00:38:48,920 --> 00:38:52,520
Speaker 5: goes bankrupt or whatever. That basically means that these assets

799
00:38:52,560 --> 00:38:54,600
Speaker 5: are exposed. You're four oh one K. That is not

800
00:38:54,840 --> 00:38:57,120
Speaker 5: that is very clearly walled off. Nobody can touch it.

801
00:38:57,360 --> 00:38:58,440
Speaker 6: So what do you have to do?

802
00:38:58,480 --> 00:39:00,560
Speaker 5: You have to treat this like any other company. Forget

803
00:39:00,560 --> 00:39:03,000
Speaker 5: the fact that you work there. Make sure you understand

804
00:39:03,040 --> 00:39:05,640
Speaker 5: your own company's credit ratings. If it's publicly traded, What

805
00:39:05,719 --> 00:39:08,560
Speaker 5: is their debt load, what are their financial statements look like?

806
00:39:08,840 --> 00:39:11,600
Speaker 5: Look at trends and cash flow profit margins, have they

807
00:39:11,640 --> 00:39:14,480
Speaker 5: made layoffs recently? And you can even ask HR for

808
00:39:14,840 --> 00:39:17,960
Speaker 5: planned documents that they should be shoving them in your

809
00:39:18,000 --> 00:39:20,000
Speaker 5: face anyway, if you've got this as an option, but

810
00:39:20,000 --> 00:39:22,120
Speaker 5: make sure you understand exactly where that goes.

811
00:39:22,120 --> 00:39:23,839
Speaker 6: So, yes, you're right to identify some risk.

812
00:39:23,880 --> 00:39:25,919
Speaker 5: There could be a good opportunity here, but it could

813
00:39:25,960 --> 00:39:27,800
Speaker 5: also be risky as well, so just make sure you

814
00:39:27,880 --> 00:39:29,719
Speaker 5: understand what you're getting into. But otherwise those can be

815
00:39:29,719 --> 00:39:34,000
Speaker 5: really beneficial programs. So one more quick one. Alison and

816
00:39:34,040 --> 00:39:36,799
Speaker 5: Lovelin's got some rental properties. They've gone up, but the

817
00:39:36,840 --> 00:39:39,560
Speaker 5: maintenance is wearing them out. So would she asks Bob

818
00:39:39,600 --> 00:39:41,600
Speaker 5: what are their best exit strategies? How can they get

819
00:39:41,600 --> 00:39:44,200
Speaker 5: out without triggering these massive capital gains of real estate?

820
00:39:44,719 --> 00:39:46,440
Speaker 3: Well, I got to move quick here, Alison.

821
00:39:46,480 --> 00:39:49,560
Speaker 4: The most popular option is to use if you don't

822
00:39:49,560 --> 00:39:52,880
Speaker 4: want to have maintenance headaches and be a landlord anymore,

823
00:39:52,920 --> 00:39:56,719
Speaker 4: at Delaware statutory trust better known as a passive ten

824
00:39:56,880 --> 00:40:01,520
Speaker 4: thirty one alternatives. So you basically put your property in there,

825
00:40:01,600 --> 00:40:05,440
Speaker 4: it gets sold and you get diversified into a professionally

826
00:40:05,520 --> 00:40:09,600
Speaker 4: managed portfolio of real estate. You defer the capital gains

827
00:40:09,680 --> 00:40:12,239
Speaker 4: and you convert this to an income stream. The only

828
00:40:12,360 --> 00:40:15,000
Speaker 4: thing is they're typically a little bit illiquid. You got

829
00:40:15,000 --> 00:40:17,280
Speaker 4: to be willing to hold them for five or ten years.

830
00:40:17,280 --> 00:40:20,640
Speaker 4: But it can be a good strategy to defer and

831
00:40:20,800 --> 00:40:24,960
Speaker 4: spread out that capital gains, headache, and also get yourself

832
00:40:25,000 --> 00:40:29,279
Speaker 4: out of the landlord and you know maintenance business, which

833
00:40:29,280 --> 00:40:31,680
Speaker 4: a lot of people want to do is they head

834
00:40:31,719 --> 00:40:34,960
Speaker 4: toward retirement. All right, coming up next, some advice on

835
00:40:35,160 --> 00:40:39,360
Speaker 4: keeping money from wrecking your relationships. You're listening to Simply Money,

836
00:40:39,400 --> 00:40:42,640
Speaker 4: presented by all Worth Financial on fifty five krz the

837
00:40:42,960 --> 00:40:47,920
Speaker 4: talk station, Mark Levin reliable information and of course not

838
00:40:48,080 --> 00:40:49,840
Speaker 4: just one sided view us.

839
00:40:49,760 --> 00:40:51,759
Speaker 1: That affects you at the top end to bottom of

840
00:40:51,800 --> 00:40:55,120
Speaker 1: the hour, fifty five krz the talk station.

841
00:40:59,160 --> 00:41:01,160
Speaker 4: You're listening to some money It's not up by all

842
00:41:01,160 --> 00:41:04,240
Speaker 4: Worth Financial on Bob's Fond Seller along with Brian James.

843
00:41:04,880 --> 00:41:06,719
Speaker 3: Did you know that more than one in.

844
00:41:06,800 --> 00:41:11,000
Speaker 4: Three Americans say they have lost a friendship because of money,

845
00:41:11,719 --> 00:41:15,040
Speaker 4: according to a new survey from lending Tree. They say

846
00:41:15,120 --> 00:41:20,239
Speaker 4: financial stress, disputes, or mismatch spending expectations have driven a

847
00:41:20,360 --> 00:41:23,920
Speaker 4: wedge between people they once called friends.

848
00:41:24,000 --> 00:41:26,520
Speaker 3: Brian, this is a shame. Walk us through it, well, Bob.

849
00:41:26,560 --> 00:41:28,680
Speaker 5: We've got a survey here showing four out of ten

850
00:41:29,040 --> 00:41:31,799
Speaker 5: admit having had disagreements with friends over money, and about

851
00:41:31,800 --> 00:41:34,400
Speaker 5: a third of them feel pressure to match their friends spending,

852
00:41:34,440 --> 00:41:36,799
Speaker 5: and about one in three, Bob, have lied about how

853
00:41:36,840 --> 00:41:39,200
Speaker 5: well they're doing financially. Well, this shows us that money

854
00:41:39,239 --> 00:41:41,080
Speaker 5: can be a bit of a minefield. This is one

855
00:41:41,080 --> 00:41:44,040
Speaker 5: of the last domains where we actually reveal our vulnerabilities

856
00:41:44,040 --> 00:41:48,240
Speaker 5: because people can see what we spend money on, income, debt, our, fears, aspirations.

857
00:41:48,400 --> 00:41:50,480
Speaker 5: When all of our friends are at different stages or

858
00:41:50,520 --> 00:41:52,960
Speaker 5: just have different attitudes for how this is working for him,

859
00:41:53,200 --> 00:41:56,080
Speaker 5: these differences can really magnify between people, and it can

860
00:41:56,239 --> 00:41:58,799
Speaker 5: drive a wedge between between people who otherwise we're good

861
00:41:58,800 --> 00:41:59,840
Speaker 5: family members and friends.

862
00:42:01,200 --> 00:42:04,160
Speaker 3: Well, Brian, what this comes down to me is just uh,

863
00:42:04,640 --> 00:42:06,400
Speaker 3: I'll just say it. Insecurity.

864
00:42:06,560 --> 00:42:08,560
Speaker 4: You know, you've got people that have a lot of

865
00:42:08,600 --> 00:42:11,279
Speaker 4: money where their whole identity is tied up in their

866
00:42:11,280 --> 00:42:13,880
Speaker 4: wealth or you know, their income, and they like to

867
00:42:14,040 --> 00:42:14,319
Speaker 4: you know.

868
00:42:14,520 --> 00:42:15,640
Speaker 3: Lord it over people.

869
00:42:15,719 --> 00:42:20,000
Speaker 4: They talk about their country club membership or their expensive vacation.

870
00:42:20,160 --> 00:42:23,000
Speaker 4: You know, they they want to make everybody know that

871
00:42:23,120 --> 00:42:26,680
Speaker 4: they've made it and they're doing great. If you're if

872
00:42:26,719 --> 00:42:29,319
Speaker 4: you're around people like that, you got to question whether

873
00:42:29,400 --> 00:42:32,239
Speaker 4: they are truly your friend, because if they're gonna if

874
00:42:32,239 --> 00:42:34,239
Speaker 4: they're going to hang that over your head and make

875
00:42:34,280 --> 00:42:36,680
Speaker 4: you feel like less of a person, I would say

876
00:42:36,960 --> 00:42:40,080
Speaker 4: that's not really a friend. On the flip side, if

877
00:42:40,080 --> 00:42:42,440
Speaker 4: you've got people that hang out with folks that have

878
00:42:42,520 --> 00:42:45,480
Speaker 4: some money and you've got less money, and you're expecting

879
00:42:45,520 --> 00:42:49,000
Speaker 4: that person to pay for your stuff, pay for your dinner,

880
00:42:49,320 --> 00:42:50,720
Speaker 4: you know, all that kind of stuff.

881
00:42:50,800 --> 00:42:52,000
Speaker 3: You know, that's not good either.

882
00:42:52,160 --> 00:42:54,960
Speaker 4: So I think it comes down to not tying your

883
00:42:55,000 --> 00:42:56,400
Speaker 4: identity to money.

884
00:42:57,040 --> 00:42:59,360
Speaker 3: True friendships, UH can.

885
00:42:59,280 --> 00:43:01,520
Speaker 4: Put all that kind of stuff aside, have a little

886
00:43:01,520 --> 00:43:04,040
Speaker 4: bit of a feel for where your friend really is

887
00:43:04,120 --> 00:43:08,480
Speaker 4: financially and treat treat one another with you know, mutual

888
00:43:08,560 --> 00:43:12,520
Speaker 4: respect and dignity and uh, keep from getting into you know,

889
00:43:12,560 --> 00:43:15,520
Speaker 4: all these kind of messes. I hate to see relationships

890
00:43:15,640 --> 00:43:18,440
Speaker 4: end because of money. Here's the all Worth advice. Prevent

891
00:43:18,600 --> 00:43:22,240
Speaker 4: money from becoming that silent wedge. To find your terms,

892
00:43:22,360 --> 00:43:26,560
Speaker 4: talk early, protect both your financial peace and your friendships.

893
00:43:26,560 --> 00:43:29,560
Speaker 4: Thanks for listening tonight. You've been listening to Simply Money,

894
00:43:29,560 --> 00:43:32,600
Speaker 4: presented by all Worth Financial on fifty five KRC The

895
00:43:33,000 --> 00:43:33,560
Speaker 4: Talk Station.

896
00:43:34,440 --> 00:43:35,440
Speaker 1: I want to know what's happening.

897
00:43:35,520 --> 00:43:38,879
Speaker 11: I know what's going on around town, around the country.

898
00:43:38,280 --> 00:43:41,280
Speaker 1: I need to know the weather, in traffic.

899
00:43:41,440 --> 00:43:43,680
Speaker 11: I want to know what's happening on my local school boards.

900
00:43:43,719 --> 00:43:44,480
Speaker 1: I want to know that too.

901
00:43:44,560 --> 00:43:47,799
Speaker 2: If I don't know what's going on, how can I

902
00:43:47,840 --> 00:43:48,760
Speaker 2: have a valid opinion.

903
00:43:48,960 --> 00:43:52,520
Speaker 11: Knowing is like massaging your brain, and it's pretty easy

904
00:43:52,560 --> 00:43:53,319
Speaker 11: to do, right.

905
00:43:53,440 --> 00:43:54,160
Speaker 1: I do it every.

906
00:43:54,000 --> 00:43:56,879
Speaker 4: Day, and then I listen on the way to work

907
00:43:57,120 --> 00:44:00,399
Speaker 4: every day the home, and then.

908
00:44:00,360 --> 00:44:01,120
Speaker 3: You'll know much.

909
00:44:01,160 --> 00:44:05,320
Speaker 1: Fifty five KRZ The Talk Station The Guru of