1 00:00:05,040 --> 00:00:08,960 Speaker 1: Tonight, the market hits a major milestone, Bitcoin goes backwards 2 00:00:08,960 --> 00:00:11,480 Speaker 1: and questions to ask yourself if you want to stop 3 00:00:11,520 --> 00:00:15,600 Speaker 1: working before sixty five. You're listening to Simply Money presented 4 00:00:15,640 --> 00:00:19,040 Speaker 1: by Alworth Financial on Brian James. Did you know on 5 00:00:19,079 --> 00:00:21,680 Speaker 1: February ninth of the year two thousand, the Dow Jones 6 00:00:21,720 --> 00:00:24,840 Speaker 1: industrial leverage closed at ten thousand and six ninety nine. 7 00:00:24,880 --> 00:00:27,040 Speaker 1: Here we are twenty five years later, and we're going 8 00:00:27,120 --> 00:00:30,240 Speaker 1: to talk about the Dow Jones crossing the fifty thousand mark. 9 00:00:30,760 --> 00:00:34,800 Speaker 1: Joining us now is all Worth chief investment Officer Andy Stout. Andy, 10 00:00:34,840 --> 00:00:36,959 Speaker 1: big day in the markets on Friday? Can you bring 11 00:00:37,040 --> 00:00:39,000 Speaker 1: us up to speed on what happened and why? 12 00:00:40,400 --> 00:00:42,400 Speaker 2: Yeah, when you look at what's happened in the markets, 13 00:00:42,440 --> 00:00:44,519 Speaker 2: I mean, we saw a lot of volatility early in 14 00:00:44,560 --> 00:00:47,440 Speaker 2: the week, but we certainly closed the week out strong 15 00:00:47,840 --> 00:00:52,120 Speaker 2: with the Dow Jones climbing twelve hundred points on Friday, 16 00:00:52,200 --> 00:00:54,600 Speaker 2: so it was it was nice dating and actually the 17 00:00:54,680 --> 00:00:56,640 Speaker 2: Dow ended positive for the week for two and a 18 00:00:56,680 --> 00:00:59,840 Speaker 2: half percent. And now there were certainly pockets of weakness 19 00:00:59,840 --> 00:01:03,680 Speaker 2: that uh, you know, work overcome by Friday's rally, especially 20 00:01:03,720 --> 00:01:06,640 Speaker 2: around what we're seeing out there with what's called the 21 00:01:07,120 --> 00:01:10,680 Speaker 2: you know, AI software trade. So when you look at 22 00:01:10,720 --> 00:01:14,000 Speaker 2: it from you know, that perspective, we saw some really 23 00:01:14,000 --> 00:01:17,520 Speaker 2: good news on Friday, and it definitely highlights the idea 24 00:01:17,520 --> 00:01:21,039 Speaker 2: of wanting to stay disciplined because discipline you know, pays 25 00:01:21,040 --> 00:01:23,720 Speaker 2: out over the long run. But that doesn't mean there 26 00:01:23,800 --> 00:01:25,199 Speaker 2: still isn't concerns out there. 27 00:01:26,000 --> 00:01:27,720 Speaker 3: So yeah, I want to talk about that a little bit. 28 00:01:27,760 --> 00:01:29,880 Speaker 1: Do we do we feel like, you know, because the 29 00:01:30,080 --> 00:01:34,760 Speaker 1: big question from last week was Anthropic and its new tool, Claude, 30 00:01:35,080 --> 00:01:39,400 Speaker 1: and the concern was that Claude is probably is possibly 31 00:01:39,600 --> 00:01:42,560 Speaker 1: the the new, big, powerful tool that really could knit 32 00:01:42,600 --> 00:01:45,479 Speaker 1: together a lot of different workflows and uh and save 33 00:01:45,560 --> 00:01:48,520 Speaker 1: a lot of money for companies, which would which could 34 00:01:48,520 --> 00:01:51,200 Speaker 1: potentially and I believe this was the big panic, could 35 00:01:51,240 --> 00:01:54,640 Speaker 1: potentially result in other existing long time uh you know 36 00:01:54,760 --> 00:01:56,680 Speaker 1: technological tools being unnecessary. 37 00:01:56,720 --> 00:01:58,600 Speaker 3: That's why Microsoft took a big hit last week. As 38 00:01:58,640 --> 00:01:59,640 Speaker 3: my understanding, do. 39 00:01:59,640 --> 00:02:01,720 Speaker 1: We we really really really think that's the case. And 40 00:02:01,720 --> 00:02:04,040 Speaker 1: the reason I'm asking that is because not too long ago, 41 00:02:04,360 --> 00:02:08,360 Speaker 1: there was a Chinese competitor to open AI's chat GPT 42 00:02:08,400 --> 00:02:11,080 Speaker 1: that came and went as fast as it came, it 43 00:02:11,120 --> 00:02:13,240 Speaker 1: was supposedly going to be cheaper and ten times more 44 00:02:13,280 --> 00:02:15,200 Speaker 1: wonderful and all this other stuff, but then it just 45 00:02:15,240 --> 00:02:18,600 Speaker 1: went poof. So is this a similar situation anthropic versus 46 00:02:18,639 --> 00:02:19,880 Speaker 1: the deep whatever that was? 47 00:02:21,280 --> 00:02:23,960 Speaker 2: Uh yeah, so Deep Seak last year certainly was a 48 00:02:24,000 --> 00:02:26,079 Speaker 2: flash in the pan. Now there were certain there were 49 00:02:26,120 --> 00:02:28,680 Speaker 2: some interesting things about Deep Seak stuck around a little 50 00:02:28,680 --> 00:02:30,960 Speaker 2: bit for a few of their features, you know, but 51 00:02:31,040 --> 00:02:34,720 Speaker 2: bigger picture, when we look at Claude, which Claude's actually 52 00:02:34,800 --> 00:02:38,079 Speaker 2: been around a while, it's what what's new is there? 53 00:02:38,120 --> 00:02:40,480 Speaker 2: Like their ad ins within their like co work, it's 54 00:02:40,480 --> 00:02:43,960 Speaker 2: called Claude's Cowork. They have an agent, which means it 55 00:02:44,000 --> 00:02:45,799 Speaker 2: goes out and does things for you. So think of 56 00:02:45,800 --> 00:02:48,440 Speaker 2: it like your own personal assistant if you will. Anyway, 57 00:02:48,480 --> 00:02:52,760 Speaker 2: it does a lot this the Cowork Italian with you know, 58 00:02:52,840 --> 00:02:56,120 Speaker 2: some very specific things that raise the concern especially like 59 00:02:56,440 --> 00:02:58,160 Speaker 2: what we saw last week. A lot of it was 60 00:02:58,200 --> 00:03:01,840 Speaker 2: in the legal area, for like legal software, where it 61 00:03:01,880 --> 00:03:05,480 Speaker 2: would you know, make some of those that stuff obsolete potentially. 62 00:03:06,000 --> 00:03:09,440 Speaker 2: Now you know, there is some real concerns out there, 63 00:03:09,639 --> 00:03:12,720 Speaker 2: and I don't think you can just you know, you know, 64 00:03:12,760 --> 00:03:16,320 Speaker 2: breeze past that you have to look at them and 65 00:03:16,520 --> 00:03:19,560 Speaker 2: see where the risks are. But also you can't just 66 00:03:19,760 --> 00:03:23,280 Speaker 2: lump it all together and say software is bad, stay 67 00:03:23,320 --> 00:03:26,480 Speaker 2: away from software. I mean that's software isn't going away. 68 00:03:26,720 --> 00:03:29,520 Speaker 2: I mean, if you think about it, what it's ultimately 69 00:03:29,520 --> 00:03:32,160 Speaker 2: trying to do, or what the concern is I should 70 00:03:32,200 --> 00:03:34,960 Speaker 2: say with like a Claud cowork is that you would 71 00:03:35,000 --> 00:03:37,800 Speaker 2: just hire some person who knows AI and they can 72 00:03:37,840 --> 00:03:42,080 Speaker 2: write these AI applications and replace the software that you have. Well, 73 00:03:42,080 --> 00:03:44,440 Speaker 2: I'm sorry, you're probably not going to trust one or 74 00:03:44,440 --> 00:03:47,080 Speaker 2: even a group of people to go ahead and write 75 00:03:47,120 --> 00:03:51,160 Speaker 2: some sort of AI model that does the payroll for you. 76 00:03:52,040 --> 00:03:53,520 Speaker 2: I mean when you look at some of these like 77 00:03:53,640 --> 00:03:59,200 Speaker 2: broader applications that companies rely on things like that, that's 78 00:03:59,600 --> 00:04:01,920 Speaker 2: pretty safe. You know, it might be some of these 79 00:04:02,000 --> 00:04:05,320 Speaker 2: fringe things you see where you know, the Claud cowork 80 00:04:05,360 --> 00:04:08,400 Speaker 2: agent can actually you know, make some things obsolete. But 81 00:04:08,440 --> 00:04:10,600 Speaker 2: it's not just you know, throw the whole thing out. 82 00:04:10,600 --> 00:04:12,480 Speaker 2: You're not going to throw the you know, the baby 83 00:04:12,520 --> 00:04:15,120 Speaker 2: out with the bathwater, as they say. So you got 84 00:04:15,160 --> 00:04:19,720 Speaker 2: to really think about what's at risk, what's so embedded 85 00:04:19,960 --> 00:04:24,560 Speaker 2: and it has you know, compliance and regulatory requirements to 86 00:04:24,600 --> 00:04:26,920 Speaker 2: where you have to follow certain ways to where if 87 00:04:26,920 --> 00:04:29,600 Speaker 2: you rely on AI, you know you are running a risk. 88 00:04:29,600 --> 00:04:31,400 Speaker 2: I mean, if anybody is used an AI tool and 89 00:04:31,480 --> 00:04:33,800 Speaker 2: asked the question, then some of the answers you get 90 00:04:33,800 --> 00:04:36,040 Speaker 2: you might be coming back with like scratching your head, 91 00:04:36,120 --> 00:04:38,320 Speaker 2: like what does this mean? Where are you talking about? 92 00:04:38,360 --> 00:04:40,599 Speaker 2: That doesn't make any sense? I actually know you know 93 00:04:40,640 --> 00:04:42,800 Speaker 2: the real world and what makes sense, So you're not 94 00:04:42,839 --> 00:04:45,720 Speaker 2: going to trust it, you know fully from that perspective. 95 00:04:46,480 --> 00:04:49,680 Speaker 1: So this seems like we're looking at or at least 96 00:04:49,680 --> 00:04:51,920 Speaker 1: the market looked at one company and said, Wow, they've 97 00:04:51,920 --> 00:04:53,960 Speaker 1: got a pretty powerful tool out there, and then dragged 98 00:04:53,960 --> 00:04:56,800 Speaker 1: a bunch of other companies down. So you know, Amazon 99 00:04:56,839 --> 00:04:59,479 Speaker 1: took a big hit, Microsoft, Google, And this is why 100 00:04:59,520 --> 00:05:02,240 Speaker 1: the end has got hit so badly because this is 101 00:05:02,240 --> 00:05:02,720 Speaker 1: the index. 102 00:05:02,800 --> 00:05:02,920 Speaker 2: Right. 103 00:05:02,920 --> 00:05:05,320 Speaker 1: We talk all the time on these airwaves about the 104 00:05:05,360 --> 00:05:08,400 Speaker 1: mag seven. I think we say that phrase probably twelve 105 00:05:08,400 --> 00:05:12,080 Speaker 1: times every time we're on air here. But anyway, something 106 00:05:12,160 --> 00:05:16,320 Speaker 1: finally hit those seven stocks that was kind of good 107 00:05:16,360 --> 00:05:18,440 Speaker 1: gets at the core of what they do. So do 108 00:05:18,520 --> 00:05:22,640 Speaker 1: you think this was an overreaction? Where is this legitimately? 109 00:05:22,800 --> 00:05:25,039 Speaker 1: You know a concern? And the reason I'm asking is 110 00:05:25,040 --> 00:05:27,520 Speaker 1: because this is capitalism at work, right, somebody else came 111 00:05:27,560 --> 00:05:29,640 Speaker 1: with a better tool, and survival of the fittest that's 112 00:05:29,680 --> 00:05:32,000 Speaker 1: what this country in the stock market is certainly all about. 113 00:05:32,320 --> 00:05:35,000 Speaker 3: So are there real concerns. 114 00:05:34,480 --> 00:05:37,719 Speaker 1: That Claude could outpace some of the tools that Google, 115 00:05:37,760 --> 00:05:40,039 Speaker 1: Amazon and all those other big names are putting out there. 116 00:05:41,440 --> 00:05:45,200 Speaker 2: So in terms of like just the broad software, I 117 00:05:45,240 --> 00:05:47,280 Speaker 2: think part of it is at risk. I don't think 118 00:05:47,360 --> 00:05:50,840 Speaker 2: the majority of it is at risk. What you're seeing 119 00:05:50,960 --> 00:05:53,960 Speaker 2: right now, it's more of a repricing of what the 120 00:05:54,040 --> 00:05:57,880 Speaker 2: growth rate for these companies are. You're going from some 121 00:05:58,360 --> 00:06:01,200 Speaker 2: of the applications being priced out there with the double 122 00:06:01,560 --> 00:06:04,880 Speaker 2: digit growth essentially zero growth, and some of it's warranted, 123 00:06:04,960 --> 00:06:06,840 Speaker 2: some of it's probably not. You know, I don't think 124 00:06:06,880 --> 00:06:08,680 Speaker 2: we're fully out of the woods at all. I mean, 125 00:06:08,720 --> 00:06:13,839 Speaker 2: whenever you look at periods like this, they don't just 126 00:06:14,520 --> 00:06:17,920 Speaker 2: get better overnight. You're going to look for, you know, 127 00:06:18,000 --> 00:06:20,599 Speaker 2: getting some clarity out there. But here's the thing, Brian, 128 00:06:20,920 --> 00:06:23,000 Speaker 2: if you wait for that clarity, guess what the market's 129 00:06:23,040 --> 00:06:26,000 Speaker 2: already moved past that. I can't tell you how many times, 130 00:06:26,200 --> 00:06:28,520 Speaker 2: you know, I've talked with investors when they were worried 131 00:06:28,520 --> 00:06:32,520 Speaker 2: about you know, COVID and twenty twenty one, Russia invading Ukraine, 132 00:06:32,560 --> 00:06:35,560 Speaker 2: and you know twenty twenty two, you know, inflation in 133 00:06:35,600 --> 00:06:37,839 Speaker 2: twenty twenty one, When you put look at all those 134 00:06:38,360 --> 00:06:41,279 Speaker 2: I talked to investors like, you know, I'm really worried. 135 00:06:41,279 --> 00:06:43,000 Speaker 2: I know it's going to be okay to long. I'm 136 00:06:43,000 --> 00:06:45,000 Speaker 2: going to wait for some clarity. By the time you 137 00:06:45,000 --> 00:06:47,560 Speaker 2: get that clarity, the market's already well past that and 138 00:06:47,640 --> 00:06:49,440 Speaker 2: you missed out on some huge games. So I'm not 139 00:06:49,480 --> 00:06:51,960 Speaker 2: saying you know the market's going to recover right now, 140 00:06:52,160 --> 00:06:54,440 Speaker 2: but I'm well, I'm saying is that when you think 141 00:06:54,480 --> 00:06:57,160 Speaker 2: about investing and you think about the risks that are 142 00:06:57,200 --> 00:06:59,080 Speaker 2: out there, you need to put it in perspective and 143 00:06:59,120 --> 00:07:01,080 Speaker 2: look at history as like, yeah, there's going to be 144 00:07:01,120 --> 00:07:04,680 Speaker 2: some losers, there's going to be some winners, and trying 145 00:07:04,720 --> 00:07:07,640 Speaker 2: to pick the best winner and the worst loser and 146 00:07:07,680 --> 00:07:12,040 Speaker 2: position all exactly and waiting for clarity usually is a 147 00:07:12,080 --> 00:07:13,960 Speaker 2: recipe for disaster. 148 00:07:14,320 --> 00:07:16,680 Speaker 3: Do you feel like what about valuations? 149 00:07:16,680 --> 00:07:18,840 Speaker 1: Do you feel like we often hear this bubble right, 150 00:07:18,880 --> 00:07:22,120 Speaker 1: and there's always a definition or a trigger behind the bubble, 151 00:07:22,160 --> 00:07:24,200 Speaker 1: and this time around it's ai you know, two thousand 152 00:07:24,200 --> 00:07:25,600 Speaker 1: and eight it was real estate, and then way back 153 00:07:25,600 --> 00:07:28,160 Speaker 1: when it was the original version of the Internet and 154 00:07:28,200 --> 00:07:30,000 Speaker 1: so forth. But everything becomes a bubble at some point. 155 00:07:30,000 --> 00:07:33,040 Speaker 1: It seems like are you concerned about valuations and was 156 00:07:33,080 --> 00:07:34,880 Speaker 1: this kind of the first shot across the bow that 157 00:07:34,920 --> 00:07:37,080 Speaker 1: maybe we've let these companies run too far? Or do 158 00:07:37,920 --> 00:07:40,720 Speaker 1: do you feel like this will come out in the wash. 159 00:07:40,960 --> 00:07:44,720 Speaker 2: I think the valuations are a concern. I think you 160 00:07:44,760 --> 00:07:46,720 Speaker 2: need to watch them, but I don't think they're going 161 00:07:46,800 --> 00:07:49,840 Speaker 2: to matter too much until we have a risk to 162 00:07:50,480 --> 00:07:55,440 Speaker 2: broader earnings growth. So yeah, some sectors like software there 163 00:07:55,480 --> 00:08:00,000 Speaker 2: it's being trading at levels or like, you know, zero 164 00:08:00,240 --> 00:08:03,400 Speaker 2: to no growth in that area right now. When you 165 00:08:03,400 --> 00:08:05,280 Speaker 2: look at just the market as a whole, you know, 166 00:08:05,360 --> 00:08:09,040 Speaker 2: there are certainly other areas where you don't have as 167 00:08:09,120 --> 00:08:12,960 Speaker 2: much from a valuation concern. From an aggurgate perspective, you know, 168 00:08:13,000 --> 00:08:16,160 Speaker 2: it is a bit richly valued, there's no question about that. 169 00:08:16,280 --> 00:08:17,880 Speaker 2: And then that's why you want to stay diversified. That's 170 00:08:17,880 --> 00:08:19,120 Speaker 2: why you don't want to put all of your eggs 171 00:08:19,160 --> 00:08:22,440 Speaker 2: in one software basket and you just have everything in 172 00:08:22,520 --> 00:08:24,960 Speaker 2: you know, salesforce. You know, that's one of the software 173 00:08:24,960 --> 00:08:27,080 Speaker 2: companies that took a big hit last week. You want 174 00:08:27,080 --> 00:08:30,400 Speaker 2: to be more broadly diversified, and there are valuation and 175 00:08:30,440 --> 00:08:33,240 Speaker 2: concerns even from that perspective. But with that being said, 176 00:08:33,559 --> 00:08:37,400 Speaker 2: that typically won't matter until you have a hit to 177 00:08:37,679 --> 00:08:41,400 Speaker 2: the expected earnings growth at a broad level. So when 178 00:08:41,400 --> 00:08:44,360 Speaker 2: you think about it from that, what's going to affect earnings? 179 00:08:44,360 --> 00:08:47,840 Speaker 2: What's going to affect earnings growth? Well, usually it's a recession, 180 00:08:47,920 --> 00:08:51,360 Speaker 2: right That's when you see earnings get repriced. Right now, 181 00:08:51,400 --> 00:08:56,040 Speaker 2: when we look at recession risk, i'll call it medium low, medium, 182 00:08:56,280 --> 00:08:58,960 Speaker 2: certainly not high right now when you look out over 183 00:08:59,000 --> 00:09:03,559 Speaker 2: the next six to nine. So, yes, brant valuations absolutely matter, 184 00:09:04,040 --> 00:09:06,120 Speaker 2: but they don't matter until they matter, and I don't 185 00:09:06,120 --> 00:09:07,240 Speaker 2: think they matter quite yet. 186 00:09:07,559 --> 00:09:09,120 Speaker 3: Good to hear. Good here, All right, let's pivot a 187 00:09:09,160 --> 00:09:11,640 Speaker 3: little bit. Let's talk about labor and employment. 188 00:09:11,640 --> 00:09:13,960 Speaker 1: We've got some new numbers coming out, and let us 189 00:09:14,000 --> 00:09:15,800 Speaker 1: know what your thoughts are going forward on what we're 190 00:09:15,800 --> 00:09:16,440 Speaker 1: seeing right now. 191 00:09:17,440 --> 00:09:21,000 Speaker 2: Yeah, so last week we were supposed to get the 192 00:09:21,080 --> 00:09:25,959 Speaker 2: labor market report on Friday, the big monthly report for January. Unfortunately, 193 00:09:26,000 --> 00:09:29,400 Speaker 2: because of the very brief shutdown, that got delayed a 194 00:09:29,440 --> 00:09:31,400 Speaker 2: few days and we're going to get that this week. 195 00:09:31,480 --> 00:09:35,360 Speaker 2: So what the market is looking for, it's looking for 196 00:09:35,640 --> 00:09:38,360 Speaker 2: payrolls or the number of jobs that employers added to 197 00:09:38,360 --> 00:09:41,320 Speaker 2: be seventy five thousand for the month of January, which 198 00:09:41,360 --> 00:09:44,600 Speaker 2: would be better than kind of where it has been recently, 199 00:09:45,080 --> 00:09:47,400 Speaker 2: and for the unemployment rate to remain at four point 200 00:09:47,400 --> 00:09:49,959 Speaker 2: four percent. When we look at what happened last week, Brian, 201 00:09:50,280 --> 00:09:53,280 Speaker 2: you know, there were a few things that we're a 202 00:09:53,280 --> 00:09:56,560 Speaker 2: little bit ipopping for some on Wall Street. Start with 203 00:09:56,679 --> 00:09:59,960 Speaker 2: job openings, they actually felled a six point five million 204 00:10:00,720 --> 00:10:03,240 Speaker 2: that was as in the month of December, and that 205 00:10:03,360 --> 00:10:06,840 Speaker 2: was the lowest level since late twenty twenty. So we're 206 00:10:06,840 --> 00:10:09,800 Speaker 2: seeing fewer job openings out there, and some people are 207 00:10:09,840 --> 00:10:13,079 Speaker 2: making that connection to you know AI where you know, 208 00:10:13,120 --> 00:10:15,920 Speaker 2: a lot of the software companies that you see out there, 209 00:10:16,160 --> 00:10:19,880 Speaker 2: maybe they're putting some hiring on pause because they don't know, 210 00:10:20,400 --> 00:10:23,199 Speaker 2: you know, how much they're going to need a hire 211 00:10:23,280 --> 00:10:25,200 Speaker 2: people because you might be able to get AI to 212 00:10:25,240 --> 00:10:26,880 Speaker 2: do a lot of that work. It's not as if 213 00:10:26,880 --> 00:10:29,160 Speaker 2: you're seeing a lot of layoffs. I mean a job 214 00:10:29,240 --> 00:10:31,480 Speaker 2: was claims. When you look at that, they peaked up 215 00:10:31,520 --> 00:10:32,920 Speaker 2: a little or picked up a little bit to two 216 00:10:32,960 --> 00:10:36,839 Speaker 2: hundred and thirty thousand, and that is still relatively low 217 00:10:37,320 --> 00:10:40,280 Speaker 2: when you look at job cuts. So that's like the 218 00:10:40,320 --> 00:10:43,040 Speaker 2: initial layoffs when you look at like job cut announcements. 219 00:10:43,400 --> 00:10:46,160 Speaker 2: The announcements that we saw in the month of January 220 00:10:46,480 --> 00:10:50,320 Speaker 2: were actually pretty large, but they again came from you know, 221 00:10:50,600 --> 00:10:54,120 Speaker 2: mostly not mostly, but a lot of it was related 222 00:10:54,120 --> 00:10:57,040 Speaker 2: to kind of software area. So again that's that we're 223 00:10:57,080 --> 00:10:59,360 Speaker 2: talking about. You got some weakness that there are some 224 00:10:59,360 --> 00:11:01,600 Speaker 2: real concern out there, but when you look bigger picture, 225 00:11:01,640 --> 00:11:03,520 Speaker 2: it might be a little bit different story. But most 226 00:11:03,559 --> 00:11:07,320 Speaker 2: of the job cut announcements were you know, from three 227 00:11:07,360 --> 00:11:11,680 Speaker 2: companies Ups, Amazon and now Chemical. That really suggests it's 228 00:11:11,720 --> 00:11:14,600 Speaker 2: more like corporate specific than any sort of broad you know, 229 00:11:14,720 --> 00:11:16,120 Speaker 2: restructuring of it. 230 00:11:16,360 --> 00:11:19,880 Speaker 1: So unemployment is still relatively low. So we see these 231 00:11:20,120 --> 00:11:22,439 Speaker 1: headlines about layoffs. You know, I think we get overly 232 00:11:22,440 --> 00:11:24,680 Speaker 1: excited about things because we're always looking for that big 233 00:11:24,720 --> 00:11:27,200 Speaker 1: blinking light that says, hey react to something, because we 234 00:11:27,240 --> 00:11:29,600 Speaker 1: can't resist as human beings. So we hear these stories 235 00:11:29,600 --> 00:11:31,840 Speaker 1: about laoffs like you just mentioned, But what sectors are 236 00:11:31,880 --> 00:11:34,439 Speaker 1: actually hiring? If I'm looking for a job, is there 237 00:11:34,480 --> 00:11:37,319 Speaker 1: some area that I should focus on, is everything flowing 238 00:11:37,360 --> 00:11:37,720 Speaker 1: down a bit? 239 00:11:38,480 --> 00:11:42,440 Speaker 2: Well, when you look at the areas of like what 240 00:11:42,559 --> 00:11:46,920 Speaker 2: sectors are hiring. What we have seen pretty regular over 241 00:11:47,000 --> 00:11:53,000 Speaker 2: the past few years, healthcare, which has been very recession resistant. 242 00:11:53,040 --> 00:11:55,360 Speaker 2: That's kind of been, you know, a big one because 243 00:11:55,120 --> 00:11:57,480 Speaker 2: you typically see a lot of payrolls being added in 244 00:11:57,520 --> 00:12:02,320 Speaker 2: the healthcare, education sector as well, and surprisingly and it 245 00:12:02,400 --> 00:12:04,960 Speaker 2: kind of comes and goes in spurts. But leisure and hospitality, 246 00:12:05,640 --> 00:12:09,280 Speaker 2: so you know, those three areas have seen some decent 247 00:12:09,320 --> 00:12:12,439 Speaker 2: growth over the past year and still see it here recently. 248 00:12:13,080 --> 00:12:14,880 Speaker 3: All right, Andy, let's wrap it up with what what 249 00:12:14,920 --> 00:12:16,960 Speaker 3: do we expect this week? What's on tap? What are 250 00:12:17,000 --> 00:12:18,000 Speaker 3: you going to be paying attention to. 251 00:12:19,200 --> 00:12:22,760 Speaker 2: Well, already mentioned the jobs report for the month of January, 252 00:12:22,840 --> 00:12:25,640 Speaker 2: where four point four percent is the expected unemployment rate. 253 00:12:26,320 --> 00:12:29,600 Speaker 2: When you look at some of the other economic news 254 00:12:29,600 --> 00:12:32,600 Speaker 2: coming out, the big one besides the jobs report is 255 00:12:32,640 --> 00:12:36,640 Speaker 2: going to be inflation, consumer inflation or CPI. What that's 256 00:12:36,679 --> 00:12:39,320 Speaker 2: expected to show is at an increase of point three 257 00:12:39,400 --> 00:12:42,080 Speaker 2: percent for January and a year over year reading up 258 00:12:42,080 --> 00:12:44,280 Speaker 2: two point five percent. Its still a little higher than 259 00:12:44,280 --> 00:12:46,360 Speaker 2: where the Fed wants it to be to be clear, 260 00:12:46,920 --> 00:12:49,760 Speaker 2: but it's moving in the right direction, so that is good. 261 00:12:49,920 --> 00:12:53,680 Speaker 2: The other thing is earnings. We're still in the midst 262 00:12:53,720 --> 00:12:57,839 Speaker 2: of earning season. So far, so good. Who we're getting 263 00:12:57,840 --> 00:13:02,800 Speaker 2: this week? We got McDonald's, Humanag and Coca Cola, so 264 00:13:02,840 --> 00:13:06,240 Speaker 2: there's still a decent amount of companies reporting earnings, and 265 00:13:06,320 --> 00:13:10,040 Speaker 2: earnings are really again what drives markets over the longer run. 266 00:13:10,400 --> 00:13:11,000 Speaker 3: Got it all right? 267 00:13:11,040 --> 00:13:14,720 Speaker 1: We'll leave it there for this week's installment of Breakfast 268 00:13:14,720 --> 00:13:18,360 Speaker 1: with Andy, but stay tuned because Bitcoin just dropped nearly 269 00:13:18,400 --> 00:13:21,200 Speaker 1: fifty percent from his highs then started bouncing back. Is 270 00:13:21,240 --> 00:13:23,880 Speaker 1: this a buying opportunity or does crypto belong in your 271 00:13:23,920 --> 00:13:25,640 Speaker 1: financial plan? And all Andy and I are going to 272 00:13:25,679 --> 00:13:28,800 Speaker 1: discuss next. You're listening to Simply Money presented by Allworth 273 00:13:28,800 --> 00:13:37,120 Speaker 1: Financial on fifty five KRC, the talk station. You're listening 274 00:13:37,120 --> 00:13:40,480 Speaker 1: to Simply Money presented by all Worth Financial. I'm Brian James. 275 00:13:40,520 --> 00:13:42,760 Speaker 1: If you can't listen to Simply Money every night, subscribe 276 00:13:42,760 --> 00:13:45,080 Speaker 1: to get our daily podcast. You can listen the following 277 00:13:45,120 --> 00:13:47,679 Speaker 1: morning during your commuter at the gym. If you think 278 00:13:47,720 --> 00:13:49,720 Speaker 1: your good friend your friends could use some financial advice, 279 00:13:49,840 --> 00:13:52,520 Speaker 1: tell them to search Simply Money on the iHeart app 280 00:13:52,640 --> 00:13:55,760 Speaker 1: or wherever you find your podcasts. Well, a lot of 281 00:13:55,760 --> 00:13:58,320 Speaker 1: buzz over bitcoin tonight, and Andy Stout is here with 282 00:13:58,400 --> 00:13:59,840 Speaker 1: me to talk about that. We're going to talk about 283 00:13:59,880 --> 00:14:02,760 Speaker 1: some recent developments and crypto in general, but anyone, I 284 00:14:02,760 --> 00:14:04,080 Speaker 1: want to kick it off a little because we get 285 00:14:04,080 --> 00:14:07,400 Speaker 1: this question regularly. Crypto is frequently in the headlines, and 286 00:14:07,440 --> 00:14:09,200 Speaker 1: it is a real thing. This isn't something that's going 287 00:14:09,240 --> 00:14:10,760 Speaker 1: to be a flash in the pan and go away 288 00:14:10,840 --> 00:14:13,160 Speaker 1: like beanie babies where investments thirty years ago. 289 00:14:13,800 --> 00:14:15,920 Speaker 3: It's a real thing. So what let's start with this? 290 00:14:16,000 --> 00:14:18,520 Speaker 1: What role do you feel crypto plays in a in 291 00:14:18,559 --> 00:14:21,920 Speaker 1: a properly balanced portfolio that is driven by a financial plan. 292 00:14:22,000 --> 00:14:23,120 Speaker 3: Can you share your thoughts on that? 293 00:14:24,040 --> 00:14:28,320 Speaker 2: No, I think it can play a role in all honesty, However, 294 00:14:28,720 --> 00:14:31,640 Speaker 2: investors really need to understand their risks. It's not as 295 00:14:31,720 --> 00:14:34,040 Speaker 2: if this thing moves in a straight line and you're 296 00:14:34,080 --> 00:14:36,520 Speaker 2: thinking about you know, markets have an average long term 297 00:14:36,560 --> 00:14:38,680 Speaker 2: return of you know, eight to ten percent or whatever 298 00:14:38,760 --> 00:14:40,840 Speaker 2: time period you happen to be looking at. I mean, 299 00:14:40,920 --> 00:14:44,400 Speaker 2: this asset class, it's all over the place. Now, there 300 00:14:44,480 --> 00:14:48,080 Speaker 2: is certainly, you know, some potential from that, but when 301 00:14:48,080 --> 00:14:51,000 Speaker 2: you think about it. It is very speculative and it's 302 00:14:51,160 --> 00:14:55,000 Speaker 2: it's emotionally charged. So when you think about how it 303 00:14:55,040 --> 00:14:58,040 Speaker 2: plays a role, I think position size matters a lot. 304 00:14:58,760 --> 00:15:01,640 Speaker 2: You want to make sure that you're not overexposed. And 305 00:15:01,640 --> 00:15:03,880 Speaker 2: if it works, you know, great, you have some upside. 306 00:15:03,960 --> 00:15:05,800 Speaker 2: But if it doesn't, like you were saying, Ryan, you 307 00:15:05,800 --> 00:15:09,120 Speaker 2: don't want your financial plan, you know, to fall apart. 308 00:15:09,200 --> 00:15:11,320 Speaker 2: It still needs to hold tree. You still need to 309 00:15:11,080 --> 00:15:14,240 Speaker 2: be able to meet your long term goals. In dumping 310 00:15:14,280 --> 00:15:16,680 Speaker 2: all of your money or a large portion or even 311 00:15:16,720 --> 00:15:21,920 Speaker 2: a somewhat material portion into a crypto is something where 312 00:15:22,120 --> 00:15:24,560 Speaker 2: it could work out, but you're also maybe putting yourself 313 00:15:24,640 --> 00:15:26,600 Speaker 2: really at rest. So I kind of think of it 314 00:15:26,640 --> 00:15:29,239 Speaker 2: as more optional rather than foundational. 315 00:15:29,520 --> 00:15:29,880 Speaker 3: Gotcha. 316 00:15:29,960 --> 00:15:32,320 Speaker 1: So yeah, I mean my feeling right now and your 317 00:15:32,400 --> 00:15:33,440 Speaker 1: brain is bigger. 318 00:15:33,120 --> 00:15:34,040 Speaker 3: Than mine on this one. 319 00:15:34,080 --> 00:15:38,600 Speaker 1: But it behaves like a speculative asset. It's still only 320 00:15:38,640 --> 00:15:40,960 Speaker 1: worth The price of a piece of crypto is still 321 00:15:41,000 --> 00:15:43,040 Speaker 1: only worth what the crowd says it is. That makes it, 322 00:15:43,080 --> 00:15:45,360 Speaker 1: in my mind, similar to wheat or gold or silver 323 00:15:45,720 --> 00:15:48,640 Speaker 1: or something that doesn't produce anything on its own. Granted, 324 00:15:48,680 --> 00:15:50,680 Speaker 1: it's a little different because it could be used as 325 00:15:50,680 --> 00:15:53,240 Speaker 1: a tool somehow someday, but that is not how investors 326 00:15:53,240 --> 00:15:56,160 Speaker 1: are treating it right now. It's simply a speculative asset. 327 00:15:57,160 --> 00:15:58,440 Speaker 3: So anyway, the reason. 328 00:15:58,160 --> 00:16:00,400 Speaker 1: We're talking about it it is obviously in the deadlines 329 00:16:00,400 --> 00:16:02,760 Speaker 1: because last week was a bumpy one for crypto. Bitcoin 330 00:16:02,880 --> 00:16:05,360 Speaker 1: is now down forty six percent from its record hive 331 00:16:05,400 --> 00:16:07,800 Speaker 1: about one hundred and twenty six thousand dollars per coin 332 00:16:08,080 --> 00:16:10,680 Speaker 1: that was from last October. That's not a pullback, and 333 00:16:10,720 --> 00:16:13,360 Speaker 1: that's not a normal correction. That's kind of a reminder 334 00:16:13,440 --> 00:16:15,840 Speaker 1: of what volatility actually looks like. And to my point, 335 00:16:15,880 --> 00:16:17,440 Speaker 1: and Andy, I, I want to get your feedback on 336 00:16:17,480 --> 00:16:20,160 Speaker 1: what I just said. To my point, the herd stampeded 337 00:16:20,240 --> 00:16:23,200 Speaker 1: away from from bitcoin, but a lot of these others too. 338 00:16:23,280 --> 00:16:26,800 Speaker 1: Ethereum was involved. That's the second largest one down about 339 00:16:26,800 --> 00:16:29,840 Speaker 1: three percent, dropped under two thousand, So a lot of 340 00:16:29,840 --> 00:16:32,600 Speaker 1: these took a shot last week. Is this Am I 341 00:16:32,760 --> 00:16:35,240 Speaker 1: correct in thinking that this is just the reflection of 342 00:16:35,240 --> 00:16:38,360 Speaker 1: the herbs herd stampeding into and out of these assets, 343 00:16:38,440 --> 00:16:39,480 Speaker 1: or am I oversimplifying? 344 00:16:40,080 --> 00:16:41,680 Speaker 2: No? I think you're right. I mean, if you just 345 00:16:41,680 --> 00:16:45,320 Speaker 2: look at the returns on crypto, you have some really 346 00:16:45,360 --> 00:16:48,920 Speaker 2: great years, then you have some pullback that just make 347 00:16:49,000 --> 00:16:51,920 Speaker 2: you feeling sick to your stomach. I mean, let's just 348 00:16:51,960 --> 00:16:55,320 Speaker 2: look at just recent pass for year today, like bitcoin 349 00:16:55,360 --> 00:16:58,320 Speaker 2: through Friday was down about twenty percent. That's not good. 350 00:16:58,440 --> 00:17:00,760 Speaker 2: Twenty twenty five. It was actually a little bit for 351 00:17:00,760 --> 00:17:04,159 Speaker 2: the entire year six percent. But when you look and 352 00:17:04,200 --> 00:17:06,960 Speaker 2: you might be thinking, okay, well, why whatever investing bitcoin? Well, 353 00:17:07,000 --> 00:17:09,600 Speaker 2: the two years prior to that, Brian, there's one hundred 354 00:17:09,640 --> 00:17:11,600 Speaker 2: and fifty seven percent on the upside. In one hundred 355 00:17:11,640 --> 00:17:14,280 Speaker 2: and twenty percent on in the upside. So that was 356 00:17:14,320 --> 00:17:17,240 Speaker 2: in twenty three and twenty four. Of course, the year 357 00:17:17,280 --> 00:17:19,720 Speaker 2: prior to that was negative sixty four percent. So here's 358 00:17:19,720 --> 00:17:23,600 Speaker 2: the thing. Volatility is common. I mean, this is not 359 00:17:23,720 --> 00:17:26,040 Speaker 2: something where you think about, oh, no, I give you know, 360 00:17:26,160 --> 00:17:29,439 Speaker 2: bear market soft go down twenty percent, World's coming to 361 00:17:29,480 --> 00:17:32,639 Speaker 2: an end, twenty percent moving bitcoin. You could see that 362 00:17:32,680 --> 00:17:35,119 Speaker 2: in a couple of days. I mean, that's just part 363 00:17:35,160 --> 00:17:38,399 Speaker 2: of doing business. I mean, what you're thinking about with 364 00:17:38,760 --> 00:17:42,840 Speaker 2: any sort of cryptocurrency is really what's that long term upside? 365 00:17:42,960 --> 00:17:44,880 Speaker 2: And you know, to your point, Brian, I think that's 366 00:17:44,880 --> 00:17:46,920 Speaker 2: what a lot of investors are focusing on. But that's 367 00:17:47,040 --> 00:17:49,479 Speaker 2: very speculative, and in the meantime you're going to have 368 00:17:49,520 --> 00:17:51,720 Speaker 2: these whip saw moments like we're having right now. 369 00:17:52,680 --> 00:17:54,359 Speaker 3: Yeah, so, yeah, I think it's helpful. 370 00:17:54,440 --> 00:17:56,439 Speaker 1: Let's go through some of the pros and cons here, right, 371 00:17:56,480 --> 00:17:59,159 Speaker 1: you just described some of them. Obviously, the crypto can 372 00:17:59,240 --> 00:18:01,879 Speaker 1: move quickly, but it's a supply and demand game, right. 373 00:18:01,920 --> 00:18:04,680 Speaker 1: Crypto doesn't invent a new product that everybody has to have. 374 00:18:05,359 --> 00:18:07,840 Speaker 1: It simply every now and then attracts the herd to 375 00:18:07,920 --> 00:18:11,080 Speaker 1: come by and to come buy and droves, and that 376 00:18:11,119 --> 00:18:11,960 Speaker 1: comes from scarcity. 377 00:18:12,040 --> 00:18:15,159 Speaker 3: Right. So there's the notion that. 378 00:18:14,800 --> 00:18:16,479 Speaker 1: You know, people don't have it yet and that are 379 00:18:16,480 --> 00:18:18,520 Speaker 1: therefore I should have it, and if so and so 380 00:18:18,600 --> 00:18:21,000 Speaker 1: bought it, I probably should buy some too. And again 381 00:18:21,040 --> 00:18:23,760 Speaker 1: that is oversimplifying for sure, But at the same time, 382 00:18:23,840 --> 00:18:25,960 Speaker 1: that's what drives the price of anything, a whole bunch 383 00:18:26,000 --> 00:18:27,960 Speaker 1: of people buying it. Well, then that's that's where we 384 00:18:28,000 --> 00:18:30,439 Speaker 1: get the price run up. So bitcoin does have a 385 00:18:30,480 --> 00:18:32,720 Speaker 1: fixed supply, right. You can only mind so much at 386 00:18:32,720 --> 00:18:35,240 Speaker 1: a time, and that can be kind of compelling. In 387 00:18:35,240 --> 00:18:37,840 Speaker 1: a world where governments are running deficits, central banks are 388 00:18:37,840 --> 00:18:40,200 Speaker 1: expanding balance sheets, it feels like something I can put 389 00:18:40,200 --> 00:18:43,080 Speaker 1: my money into that might be a little safer some 390 00:18:43,160 --> 00:18:46,399 Speaker 1: you know, some investors often compare bitcoin to digital gold. 391 00:18:46,840 --> 00:18:48,560 Speaker 1: That's not a bad thing, but at the same time, 392 00:18:48,600 --> 00:18:51,200 Speaker 1: you know, the gold goes up and down. Two we've 393 00:18:51,240 --> 00:18:53,600 Speaker 1: seen that very recently, you know, with some of the 394 00:18:53,600 --> 00:18:55,960 Speaker 1: other precious metals as well, So to me, it kind 395 00:18:55,960 --> 00:18:57,080 Speaker 1: of plays that same role. 396 00:18:57,119 --> 00:18:58,000 Speaker 3: Again, not a bad thing. 397 00:18:58,000 --> 00:19:00,479 Speaker 1: Those are the pros, but there are con that come 398 00:19:00,520 --> 00:19:02,640 Speaker 1: along with it, and that's the volatility risk. And we're 399 00:19:02,680 --> 00:19:05,000 Speaker 1: just talking about a forty six percent draw down in 400 00:19:05,119 --> 00:19:07,280 Speaker 1: less than a year. That's not a bug, it's a feature. 401 00:19:07,320 --> 00:19:09,119 Speaker 1: Get used to it. This is how it works. So 402 00:19:09,160 --> 00:19:11,200 Speaker 1: if your financial plan kind of what Andy said there 403 00:19:11,200 --> 00:19:14,760 Speaker 1: depends on that asset behaving rationally, you're building your foundation 404 00:19:14,880 --> 00:19:17,560 Speaker 1: on sand So make sure that you know what that 405 00:19:17,359 --> 00:19:20,040 Speaker 1: that risk is. Andy, can you just kind of weigh 406 00:19:20,040 --> 00:19:22,399 Speaker 1: in a little bit on how bitcoin is different from 407 00:19:22,560 --> 00:19:25,080 Speaker 1: your typical type of investment with it has you know, 408 00:19:25,119 --> 00:19:27,879 Speaker 1: profit margins to make and earnings reports and that kind 409 00:19:27,920 --> 00:19:28,160 Speaker 1: of thing. 410 00:19:29,160 --> 00:19:31,960 Speaker 2: Yeah, I mean, to your point, bitcoin is like gold, right, 411 00:19:32,040 --> 00:19:34,840 Speaker 2: it's not generating cash flow, it's not generating earnings. There 412 00:19:34,840 --> 00:19:37,200 Speaker 2: are no profit margins really just supplying to man. When 413 00:19:37,200 --> 00:19:39,560 Speaker 2: you think about it, people gravitate toward it because it's 414 00:19:39,560 --> 00:19:41,520 Speaker 2: that digital gold. It can be an inflation head with 415 00:19:41,520 --> 00:19:43,679 Speaker 2: what's everything going on, you know, with a government. But 416 00:19:43,720 --> 00:19:45,960 Speaker 2: there is those risks out there, like no cash flow 417 00:19:46,280 --> 00:19:48,800 Speaker 2: correlation risk. Right now, it's moving in line with every 418 00:19:48,840 --> 00:19:51,119 Speaker 2: other risky out there, but risky asset out there, but 419 00:19:51,240 --> 00:19:53,920 Speaker 2: doing doing so in a much more volatile way. 420 00:19:54,080 --> 00:19:54,280 Speaker 3: Yeah. 421 00:19:54,320 --> 00:19:56,480 Speaker 1: So I think the real question investors should be asking 422 00:19:56,600 --> 00:19:59,280 Speaker 1: isn't it's crypto coming back? It's how much risk am 423 00:19:59,280 --> 00:20:01,800 Speaker 1: I actually and am I being paid for it? So 424 00:20:01,840 --> 00:20:04,280 Speaker 1: here's the all Worth advice. Crypto may have a place, 425 00:20:04,320 --> 00:20:08,520 Speaker 1: but never let speculation replace a discipline diversified financial plan. 426 00:20:09,400 --> 00:20:12,760 Speaker 1: Coming up next, it's the most emotional and overlooked retirement decision. 427 00:20:12,800 --> 00:20:15,040 Speaker 1: We'll talk about it next. You're listening to Simply Money, 428 00:20:15,080 --> 00:20:18,119 Speaker 1: presented by all Worth Financial on fifty five KRC the 429 00:20:18,680 --> 00:20:19,200 Speaker 1: talk station. 430 00:20:24,960 --> 00:20:27,840 Speaker 4: You're listening to Simply Money presented by all Worth Financial 431 00:20:27,840 --> 00:20:31,439 Speaker 4: on Bob's Sponsller along with Brian James. We talk a 432 00:20:31,560 --> 00:20:36,200 Speaker 4: lot about how to downsize your portfolio, but today we 433 00:20:36,240 --> 00:20:41,199 Speaker 4: want to talk about downsizing something far more emotional and 434 00:20:41,280 --> 00:20:44,760 Speaker 4: Brian we run into this often with clients, the whole 435 00:20:44,880 --> 00:20:47,359 Speaker 4: topic of downsizing your home. 436 00:20:47,680 --> 00:20:49,600 Speaker 1: Yeah, so this comes up in a lot of ways 437 00:20:49,640 --> 00:20:50,679 Speaker 1: during financial planning. 438 00:20:51,160 --> 00:20:52,639 Speaker 3: It comes up in a form. 439 00:20:52,480 --> 00:20:55,160 Speaker 1: Of, you know, people will realize that, you know what, 440 00:20:55,160 --> 00:20:57,400 Speaker 1: we don't do we want to be in this house anymore. 441 00:20:57,440 --> 00:20:59,159 Speaker 1: The kids are up and out and now it's just 442 00:20:59,200 --> 00:21:01,520 Speaker 1: a bunch of bedrooms, got a clean and that kind 443 00:21:01,520 --> 00:21:03,800 Speaker 1: of thing. But what I find, Bob, is frequently people 444 00:21:03,840 --> 00:21:06,560 Speaker 1: who have come to that conclusion will decide to move, 445 00:21:06,640 --> 00:21:08,000 Speaker 1: and then they move into a house that is the 446 00:21:08,000 --> 00:21:10,000 Speaker 1: same size. I think we get into our heads that, well, 447 00:21:10,040 --> 00:21:12,360 Speaker 1: if I've always lived in a in a five bedroom house, 448 00:21:12,400 --> 00:21:13,360 Speaker 1: that's just kind of what I need. 449 00:21:13,400 --> 00:21:14,920 Speaker 3: Was just you know, I don't want to it's too 450 00:21:14,920 --> 00:21:16,080 Speaker 3: scary to go smaller. 451 00:21:16,560 --> 00:21:19,320 Speaker 1: But then inevitably we'll find people, you know, talking about 452 00:21:19,320 --> 00:21:21,680 Speaker 1: how they bought too much house in heaven forbid. You 453 00:21:21,720 --> 00:21:23,000 Speaker 1: know a lot of times there winds up being a 454 00:21:23,000 --> 00:21:24,800 Speaker 1: mortgage against it. Don't be one of those people who 455 00:21:24,800 --> 00:21:26,840 Speaker 1: retires and then puts a thirty year mortgage in place 456 00:21:26,880 --> 00:21:28,960 Speaker 1: for a bigger home that you you're just gonna fill 457 00:21:28,960 --> 00:21:30,639 Speaker 1: with stuff that someday you're gonna have to drag a 458 00:21:30,720 --> 00:21:31,160 Speaker 1: good will. 459 00:21:31,960 --> 00:21:35,680 Speaker 4: Well, we also talk with families that are struggling with Hey, 460 00:21:35,480 --> 00:21:38,560 Speaker 4: they deep down know that this big house that they 461 00:21:38,640 --> 00:21:41,160 Speaker 4: raise their kids in and where they've got a ton 462 00:21:41,240 --> 00:21:44,919 Speaker 4: of memories and it's been paid off for years, and 463 00:21:44,960 --> 00:21:47,720 Speaker 4: they kind of swore to each other they never leave 464 00:21:47,800 --> 00:21:50,560 Speaker 4: the house, you know, they just feel like they can't 465 00:21:50,680 --> 00:21:53,520 Speaker 4: leave because of all these memories. They want to have 466 00:21:53,560 --> 00:21:56,000 Speaker 4: a place where their kids to come back, all good stuff, 467 00:21:56,600 --> 00:22:01,760 Speaker 4: but sometimes those maintenance costs, taxes upkeep, it just becomes 468 00:22:01,800 --> 00:22:05,480 Speaker 4: a huge burden to them that prevents them from traveling 469 00:22:06,000 --> 00:22:09,080 Speaker 4: and doing some other things that they might otherwise like 470 00:22:09,160 --> 00:22:11,159 Speaker 4: to do if they didn't have this huge. 471 00:22:10,920 --> 00:22:11,879 Speaker 3: House to take care of it. 472 00:22:11,880 --> 00:22:13,840 Speaker 1: And Bob, I think this is where some war stories 473 00:22:13,880 --> 00:22:16,280 Speaker 1: from our financial planning tables here at all Worth can 474 00:22:16,280 --> 00:22:16,639 Speaker 1: come in. 475 00:22:16,720 --> 00:22:19,720 Speaker 3: So what I'm speaking about is when we've got. 476 00:22:19,920 --> 00:22:23,040 Speaker 1: You know, the heirs of their parents, my mom and 477 00:22:23,080 --> 00:22:25,160 Speaker 1: dad have passed away, it's time to settle the estate, 478 00:22:25,240 --> 00:22:28,680 Speaker 1: and it's time for everybody has received their distributions, and 479 00:22:28,960 --> 00:22:31,159 Speaker 1: the very first thing that they wind up talking about 480 00:22:31,600 --> 00:22:33,000 Speaker 1: is we're gonna get rid of this house. 481 00:22:33,040 --> 00:22:34,760 Speaker 3: Mom and dad were convinced that we wanted it. We 482 00:22:34,840 --> 00:22:36,040 Speaker 3: just didn't know. 483 00:22:36,240 --> 00:22:38,800 Speaker 1: None of us, the siblings, nobody wanted this house because 484 00:22:38,800 --> 00:22:40,520 Speaker 1: we've all got our own houses and we're happy where 485 00:22:40,560 --> 00:22:43,600 Speaker 1: we are. I think people tend to convince themselves that 486 00:22:43,640 --> 00:22:45,879 Speaker 1: I have these warm, wonderful memories and this isn't to 487 00:22:45,920 --> 00:22:47,680 Speaker 1: take any of that away. That is important stuff, But 488 00:22:47,720 --> 00:22:50,880 Speaker 1: I have these warm, wonderful memories in this structure. Therefore 489 00:22:50,920 --> 00:22:53,800 Speaker 1: it must be maintained and passed down. And your kids 490 00:22:53,840 --> 00:22:55,959 Speaker 1: have those warm wonderful memories too, and they know it's 491 00:22:56,000 --> 00:22:58,320 Speaker 1: important to you. They may not be being upfront with 492 00:22:58,359 --> 00:23:00,880 Speaker 1: you as to whether they really want this house. Most 493 00:23:00,880 --> 00:23:02,520 Speaker 1: of the time, one of the very first calls that 494 00:23:02,520 --> 00:23:04,439 Speaker 1: happens during the settlement of a state is a real 495 00:23:04,560 --> 00:23:06,720 Speaker 1: estate agent, because we can't let that house sit empty. 496 00:23:06,760 --> 00:23:07,600 Speaker 3: We got to deal with it. 497 00:23:07,840 --> 00:23:09,640 Speaker 1: Something's going to go wrong with it if nobody's paying 498 00:23:09,640 --> 00:23:11,840 Speaker 1: attention to it, and we're going to eat property taxes 499 00:23:11,840 --> 00:23:13,960 Speaker 1: and expenses as long as we have it. So they're 500 00:23:13,960 --> 00:23:16,280 Speaker 1: going to sell it relatively quickly, so you know, we 501 00:23:16,480 --> 00:23:19,240 Speaker 1: make make decisions based on that knowledge as you move 502 00:23:19,280 --> 00:23:20,240 Speaker 1: forward on your own plan. 503 00:23:20,720 --> 00:23:22,840 Speaker 4: Well, the other thing to keep in mind, Brian is 504 00:23:22,840 --> 00:23:26,120 Speaker 4: the larger the house and the longer you've lived there. 505 00:23:26,160 --> 00:23:29,199 Speaker 4: And my wife and I went through this personally, you know, 506 00:23:29,240 --> 00:23:33,200 Speaker 4: about four years ago. The more accumulated crap you've got 507 00:23:33,200 --> 00:23:36,040 Speaker 4: in that house to use your garage and tool example. 508 00:23:36,240 --> 00:23:39,440 Speaker 4: I mean, you stay in a house for seventeen eighteen 509 00:23:39,560 --> 00:23:41,879 Speaker 4: twenty years, you raise a few kids there, and all 510 00:23:42,000 --> 00:23:44,600 Speaker 4: you got a whole bunch of stuff laying around in 511 00:23:44,640 --> 00:23:48,800 Speaker 4: there that you don't need and nobody wants. And if 512 00:23:48,840 --> 00:23:51,880 Speaker 4: you end up dying with that big house and all 513 00:23:51,920 --> 00:23:54,920 Speaker 4: the crud that's in it, that can create a whole 514 00:23:54,920 --> 00:23:57,520 Speaker 4: other set of burdens for your kids, Like what are 515 00:23:57,560 --> 00:23:58,840 Speaker 4: we how are we going to get rid of all 516 00:23:58,840 --> 00:23:59,359 Speaker 4: this stuff? 517 00:23:59,560 --> 00:23:59,760 Speaker 3: Yeah? 518 00:24:00,080 --> 00:24:02,760 Speaker 1: I always think back to seventh grade chemistry over at 519 00:24:02,760 --> 00:24:04,720 Speaker 1: Sainting Nation's on there on the west side when I 520 00:24:04,720 --> 00:24:08,119 Speaker 1: think about this a gaseous element. One of the characteristics 521 00:24:08,160 --> 00:24:10,320 Speaker 1: of a gasious element is that it expands to fill 522 00:24:10,359 --> 00:24:12,320 Speaker 1: the container it's in. And I got news for you 523 00:24:12,400 --> 00:24:14,280 Speaker 1: about so do we If I have a big house, 524 00:24:14,320 --> 00:24:16,240 Speaker 1: I'm gonna fill it with stuff I probably don't need, 525 00:24:16,240 --> 00:24:17,119 Speaker 1: but I got the room for it. 526 00:24:17,160 --> 00:24:17,600 Speaker 3: So why not? 527 00:24:18,280 --> 00:24:21,160 Speaker 4: You're listening to simply money presented by all worth Financial 528 00:24:21,200 --> 00:24:25,320 Speaker 4: Lumbob sponseller along with Brian James. Let's get into taxes 529 00:24:25,359 --> 00:24:27,320 Speaker 4: and numbers a little bit. Brian, what are some of 530 00:24:27,359 --> 00:24:31,520 Speaker 4: the benefits in addition to unburdening yourself with the huge 531 00:24:31,560 --> 00:24:33,800 Speaker 4: house and all the stuff that's in it, let's talk 532 00:24:33,840 --> 00:24:37,040 Speaker 4: about tax planning opportunities if you decide to make a change. 533 00:24:37,160 --> 00:24:37,360 Speaker 3: Yeah. 534 00:24:37,359 --> 00:24:39,360 Speaker 1: So, one of the things that most people are comfortable 535 00:24:39,400 --> 00:24:42,280 Speaker 1: is the concept of well, if I own something anything 536 00:24:42,359 --> 00:24:46,440 Speaker 1: a stock, a mutual fund, collectibles, crypto, whatever, if I'm 537 00:24:46,440 --> 00:24:48,320 Speaker 1: gonna sell it at a gain, then the irs is 538 00:24:48,520 --> 00:24:50,200 Speaker 1: going to come sniffing around for some taxes. 539 00:24:50,200 --> 00:24:52,439 Speaker 3: And that is true most of the time, but not 540 00:24:52,560 --> 00:24:53,120 Speaker 3: in this case. 541 00:24:53,160 --> 00:24:55,240 Speaker 1: So if you're sitting on a house that has a 542 00:24:55,240 --> 00:24:58,199 Speaker 1: good chunk of equity built into it, and there's some 543 00:24:58,280 --> 00:25:01,439 Speaker 1: rules you gotta follow, but basically, with the moment you 544 00:25:01,520 --> 00:25:04,439 Speaker 1: downsize that home to a smaller house, you will have 545 00:25:04,560 --> 00:25:06,720 Speaker 1: incurred a gain. You can always roll the gain forward 546 00:25:06,720 --> 00:25:08,440 Speaker 1: when you're buying a bigger house, that's never a thing. 547 00:25:09,000 --> 00:25:11,320 Speaker 1: But when you are by buying a smaller house, you 548 00:25:11,320 --> 00:25:14,120 Speaker 1: get a one time, lifetime exemption where you can take 549 00:25:14,440 --> 00:25:16,360 Speaker 1: up to a two hundred and fifty thousand dollars gain 550 00:25:16,359 --> 00:25:19,639 Speaker 1: if you're an individual, a half million dollar gain per couple, 551 00:25:20,440 --> 00:25:23,320 Speaker 1: and you can avoid paying any capital tax capital gain 552 00:25:23,359 --> 00:25:25,720 Speaker 1: taxes on that at all. And again this is specific 553 00:25:25,760 --> 00:25:27,560 Speaker 1: to a house. You have to have lived in it 554 00:25:27,600 --> 00:25:29,800 Speaker 1: for two of the previous five years and that right, 555 00:25:30,160 --> 00:25:32,160 Speaker 1: there's no flipping of property here in the short term. 556 00:25:32,200 --> 00:25:33,800 Speaker 1: It has to be really be your house. And so 557 00:25:33,800 --> 00:25:35,480 Speaker 1: there's a poops you got to jump through there. But 558 00:25:35,560 --> 00:25:37,399 Speaker 1: the point is you can get out from under that 559 00:25:37,440 --> 00:25:39,320 Speaker 1: home and avoid capital gain taxes. 560 00:25:39,760 --> 00:25:42,920 Speaker 4: Yeah, one more thing to throw out there if you're thinking, 561 00:25:43,080 --> 00:25:45,600 Speaker 4: and we're not trying to sell people on, you know, 562 00:25:45,680 --> 00:25:48,480 Speaker 4: liquidating their home, but a lot of times people I 563 00:25:48,480 --> 00:25:50,920 Speaker 4: think they want to make a change, they just don't 564 00:25:50,960 --> 00:25:53,040 Speaker 4: know how to go about it. You know, you talked 565 00:25:53,040 --> 00:25:56,000 Speaker 4: about the tax implications. One other thing, just from an 566 00:25:56,000 --> 00:26:00,879 Speaker 4: emotional and lifestyle standpoint is test it out. Go rent 567 00:26:01,000 --> 00:26:04,520 Speaker 4: something that for three to six months or a year 568 00:26:04,640 --> 00:26:07,560 Speaker 4: that might be in your wheelhouse or where you think 569 00:26:07,600 --> 00:26:10,080 Speaker 4: you might want to live from a lifestyle standpoint and 570 00:26:10,119 --> 00:26:13,240 Speaker 4: home standpoint, and see how it works before you pull 571 00:26:13,280 --> 00:26:16,440 Speaker 4: the trigger and buy something else or sell that home 572 00:26:16,480 --> 00:26:19,520 Speaker 4: that you've been in for twenty years, test it out, 573 00:26:19,960 --> 00:26:22,359 Speaker 4: make sure it's the right move, and then you're not 574 00:26:22,400 --> 00:26:24,160 Speaker 4: going to regret your decision down the road. 575 00:26:24,200 --> 00:26:25,360 Speaker 3: Here's the all Worth advice. 576 00:26:25,960 --> 00:26:30,160 Speaker 4: Your home has served your family, perhaps for decades now, 577 00:26:30,200 --> 00:26:34,520 Speaker 4: it's time to ask is it's still serving you? Coming 578 00:26:34,600 --> 00:26:37,760 Speaker 4: up next, how a retirement time machine can keep you 579 00:26:37,800 --> 00:26:41,520 Speaker 4: from making bad financial decisions. You're listening to Simply Money 580 00:26:41,600 --> 00:26:45,119 Speaker 4: presented by all Worth Financial on fifty five KRC the 581 00:26:45,560 --> 00:26:53,800 Speaker 4: talk station. You're listening to Simply Money presented by all 582 00:26:53,800 --> 00:26:57,600 Speaker 4: Worth Financial. I'm Bob Sponseller along with Brian James. You 583 00:26:57,600 --> 00:27:00,360 Speaker 4: have a financial question you'd like for us to answer, Well, 584 00:27:00,440 --> 00:27:02,919 Speaker 4: there's a red button you can click while you're listening 585 00:27:03,000 --> 00:27:05,840 Speaker 4: to the show right there on the iHeart app. Simply 586 00:27:05,880 --> 00:27:08,720 Speaker 4: record your question and it will come straight to us. 587 00:27:09,760 --> 00:27:12,119 Speaker 3: We all want to know what retirement. 588 00:27:11,680 --> 00:27:14,840 Speaker 4: Will look like, but most of us are making choices 589 00:27:14,880 --> 00:27:18,520 Speaker 4: today without fully understanding the future impact at all. 590 00:27:19,080 --> 00:27:21,240 Speaker 3: What if you could climb into a time. 591 00:27:21,000 --> 00:27:25,520 Speaker 4: Machine, Brian and see the results of your decisions fifteen 592 00:27:25,560 --> 00:27:26,639 Speaker 4: to twenty years down the road. 593 00:27:26,680 --> 00:27:28,160 Speaker 3: Wouldn't that be fun? Yeah? 594 00:27:28,160 --> 00:27:30,560 Speaker 1: This is really an important part of financial planning. So 595 00:27:30,680 --> 00:27:32,320 Speaker 1: I think a lot of people get hung up on 596 00:27:32,359 --> 00:27:35,040 Speaker 1: the idea that you know that I don't know. I 597 00:27:35,040 --> 00:27:37,040 Speaker 1: can't predict the future. I don't know what's going to happen. 598 00:27:37,040 --> 00:27:40,240 Speaker 1: Therefore I shouldn't bother making any decisions right now. And 599 00:27:40,320 --> 00:27:42,520 Speaker 1: that impacts things from how much should I be saving 600 00:27:42,560 --> 00:27:42,840 Speaker 1: my four? 601 00:27:42,840 --> 00:27:43,000 Speaker 2: Oh? 602 00:27:43,040 --> 00:27:45,240 Speaker 3: Okay, when do I turn on my social security? 603 00:27:45,480 --> 00:27:48,399 Speaker 1: Can we afford to take this big vacation or you know, 604 00:27:48,640 --> 00:27:50,040 Speaker 1: retire at a certain time or whatever. 605 00:27:50,200 --> 00:27:51,520 Speaker 3: It's never about right now. 606 00:27:51,560 --> 00:27:53,320 Speaker 1: Most people are able to make the decision that they 607 00:27:53,320 --> 00:27:55,240 Speaker 1: want and do what their gut tells them they want 608 00:27:55,280 --> 00:27:57,439 Speaker 1: to do right now. But we can't pull the trigger 609 00:27:57,480 --> 00:28:00,200 Speaker 1: because we cannot see fifteen twenty years into the fut. 610 00:28:00,560 --> 00:28:03,280 Speaker 1: So let's go through some mathematical examples here to kind 611 00:28:03,280 --> 00:28:05,080 Speaker 1: of help people understand what this is about. 612 00:28:05,400 --> 00:28:06,520 Speaker 3: First, we'll take a Mike. 613 00:28:06,600 --> 00:28:09,720 Speaker 1: Mike is young guy, he's established in his career, married, 614 00:28:09,720 --> 00:28:11,879 Speaker 1: he's got a couple kids, brings in one hundred and 615 00:28:11,880 --> 00:28:13,960 Speaker 1: fifty thousand dollars a year. Mike's big question this is 616 00:28:14,000 --> 00:28:15,960 Speaker 1: we get this all the time? Am I putting enough 617 00:28:15,960 --> 00:28:17,960 Speaker 1: away in my four to oh one k? And the 618 00:28:18,480 --> 00:28:19,760 Speaker 1: answer to that is, well, what are you trying to 619 00:28:19,800 --> 00:28:22,159 Speaker 1: accomplish with it. Are you one of these fire people 620 00:28:22,240 --> 00:28:24,760 Speaker 1: you know financial independence, retire early? Well, then the answer 621 00:28:24,840 --> 00:28:26,480 Speaker 1: is put as much as you can possibly afford and 622 00:28:26,520 --> 00:28:28,920 Speaker 1: not mess up your current bills. Or are you somebody 623 00:28:28,920 --> 00:28:30,520 Speaker 1: who wants to live a certain lifestyle. You're just trying 624 00:28:30,520 --> 00:28:32,440 Speaker 1: to make sure you're putting away a minimum of enough. 625 00:28:32,520 --> 00:28:35,159 Speaker 1: So Mike right now is putting ten percent into his 626 00:28:35,160 --> 00:28:35,680 Speaker 1: four oh one K. 627 00:28:35,760 --> 00:28:37,399 Speaker 3: That's pretty average. That's pretty pretty standard. 628 00:28:37,400 --> 00:28:38,920 Speaker 1: We try to get everybody to double digits, and then 629 00:28:38,920 --> 00:28:42,000 Speaker 1: you'll be in the ballpark of OK. But he's wondering, well, 630 00:28:42,000 --> 00:28:44,520 Speaker 1: what if we sacrifice some things now and instead of ten, 631 00:28:44,640 --> 00:28:47,040 Speaker 1: I put twenty percent in and my pay drops, my 632 00:28:47,120 --> 00:28:49,480 Speaker 1: take on pay drops now. But at the same time 633 00:28:49,600 --> 00:28:52,520 Speaker 1: I'm putting away more money. So his original plan, Bob. 634 00:28:52,520 --> 00:28:54,360 Speaker 1: If he's putting away ten percent and we get a 635 00:28:54,400 --> 00:28:56,880 Speaker 1: seven percent annual return, right that is that's kind of 636 00:28:56,920 --> 00:28:57,720 Speaker 1: the Goldilock zone. 637 00:28:57,760 --> 00:28:58,880 Speaker 3: That's not too high, not too low. 638 00:28:58,920 --> 00:29:02,440 Speaker 4: It's not unreasonable, good balance portfolio for a long term, 639 00:29:02,560 --> 00:29:05,560 Speaker 4: not super responsible, responsible return of something. 640 00:29:05,640 --> 00:29:07,680 Speaker 1: Yeah, now a forty year old guy could be more aggressive. 641 00:29:07,680 --> 00:29:09,000 Speaker 1: That's a little bit of a different story. So we're 642 00:29:09,000 --> 00:29:10,760 Speaker 1: just trying to keep the number simple. So if Mike 643 00:29:10,840 --> 00:29:13,160 Speaker 1: does that, he works for twenty five years, and now 644 00:29:13,160 --> 00:29:15,760 Speaker 1: he's got roughly nine hundred thousand dollars in today's dollars. 645 00:29:15,760 --> 00:29:18,440 Speaker 1: That's a nice pile. He's doing sixty five and he's 646 00:29:18,440 --> 00:29:20,320 Speaker 1: sixty five, so he's forty. Now we did this for 647 00:29:20,360 --> 00:29:24,160 Speaker 1: twenty years. What's the difference. So he right now could 648 00:29:24,160 --> 00:29:27,080 Speaker 1: generate about maybe a reliable fifty thousand dollars a year 649 00:29:27,120 --> 00:29:28,840 Speaker 1: worth of income off of that. On top of his 650 00:29:28,920 --> 00:29:30,800 Speaker 1: he'll have so security and some other things as well, 651 00:29:30,920 --> 00:29:32,840 Speaker 1: and that's pretty good, but it might limit them. They 652 00:29:32,840 --> 00:29:35,680 Speaker 1: may maybe back off on the travel, or maybe there's 653 00:29:35,680 --> 00:29:37,320 Speaker 1: not as much going to the grandkids the rest of 654 00:29:37,320 --> 00:29:37,760 Speaker 1: the family. 655 00:29:38,120 --> 00:29:39,160 Speaker 3: So let's look at it again. 656 00:29:39,280 --> 00:29:41,960 Speaker 1: Mike, who is again now forty, decides, you know what, 657 00:29:42,080 --> 00:29:43,840 Speaker 1: let's let's forego some of the take home pay. 658 00:29:43,840 --> 00:29:45,240 Speaker 3: I'm going to bump to twenty percent. 659 00:29:45,360 --> 00:29:48,280 Speaker 1: What does that result in now putting twenty percent of 660 00:29:48,280 --> 00:29:51,040 Speaker 1: his salary away for twenty five years, now he's got 661 00:29:51,040 --> 00:29:52,360 Speaker 1: one point eight million. 662 00:29:52,640 --> 00:29:54,720 Speaker 3: This is just math. This is the snowball effect. 663 00:29:55,000 --> 00:29:57,560 Speaker 1: The you know, the bigger the numbers, the larger the 664 00:29:57,600 --> 00:29:59,680 Speaker 1: snowball gets and This really starts to change the game 665 00:29:59,720 --> 00:30:03,920 Speaker 1: because now we're talking ninety thousand dollars in sustainable retirement income. Again, 666 00:30:03,920 --> 00:30:06,560 Speaker 1: that's in addition to Social Security, all that stuff. Bob 667 00:30:06,640 --> 00:30:09,480 Speaker 1: is back on the table, retiring earlier, taking the bigger trips, 668 00:30:09,480 --> 00:30:10,240 Speaker 1: helping the grandkids. 669 00:30:10,280 --> 00:30:13,360 Speaker 4: All of it's back well, and we we we need 670 00:30:13,400 --> 00:30:16,080 Speaker 4: to talk about one thing, and I'm going back in time, 671 00:30:16,600 --> 00:30:19,920 Speaker 4: you know, reverse time machine. Remember Mike's forty and he 672 00:30:19,960 --> 00:30:23,880 Speaker 4: has two kids. Uh, those two kids cost money. So 673 00:30:24,000 --> 00:30:28,520 Speaker 4: Mike's probably right in the middle of travel, sports, music lessons, 674 00:30:28,600 --> 00:30:32,120 Speaker 4: you know, ballet lessons, all that stuff. He's probably saying, yeah, 675 00:30:32,160 --> 00:30:34,680 Speaker 4: Bob and Brian, it'd be great to put twenty percent 676 00:30:34,720 --> 00:30:37,000 Speaker 4: of my income away, but I got bills, you know, 677 00:30:37,040 --> 00:30:37,920 Speaker 4: to cover today. 678 00:30:38,160 --> 00:30:39,800 Speaker 3: So it is a balancing act. 679 00:30:39,840 --> 00:30:43,000 Speaker 4: It's easy for us to pull out a calculator and say, yep, 680 00:30:43,080 --> 00:30:45,680 Speaker 4: you could have one point eight billion dollars if you 681 00:30:46,160 --> 00:30:48,440 Speaker 4: save all this money. I think the point we're trying 682 00:30:48,480 --> 00:30:52,440 Speaker 4: to make is at least run some numbers and just 683 00:30:52,520 --> 00:30:55,120 Speaker 4: don't hope all this works out. At age sixty five, 684 00:30:55,240 --> 00:30:58,080 Speaker 4: seventy seventy five, run some numbers when you're early in 685 00:30:58,160 --> 00:31:02,280 Speaker 4: your early forties, and you can make some informed decisions 686 00:31:02,320 --> 00:31:05,640 Speaker 4: on Hey, if I sacrifice a little bit, now, here's 687 00:31:05,680 --> 00:31:07,840 Speaker 4: the benefit that it's going to pay down there. And 688 00:31:07,880 --> 00:31:10,080 Speaker 4: as a financial advisor, I would say to Mike, yes, 689 00:31:10,160 --> 00:31:11,120 Speaker 4: that's exactly correct. 690 00:31:11,160 --> 00:31:13,520 Speaker 1: You've got stuff screaming for money now. But I would say, Mike, 691 00:31:13,600 --> 00:31:15,720 Speaker 1: do you know your own worth? You've been at your 692 00:31:15,800 --> 00:31:17,640 Speaker 1: job for a couple of decades now, and you're a 693 00:31:17,680 --> 00:31:19,920 Speaker 1: loyal guy and so forth. Are you sure you're being 694 00:31:19,960 --> 00:31:22,720 Speaker 1: paid what your experience says your worth? Have you looked 695 00:31:22,720 --> 00:31:24,640 Speaker 1: at other opportunities out there? Have you talked to your 696 00:31:24,680 --> 00:31:27,000 Speaker 1: bosses about you know where you are? So sometimes you 697 00:31:27,040 --> 00:31:29,200 Speaker 1: can simply increase what's coming in at the top. 698 00:31:29,560 --> 00:31:30,760 Speaker 3: Then you can find extra dollars. 699 00:31:30,800 --> 00:31:32,760 Speaker 1: But again that comes back to knowing what your value 700 00:31:32,840 --> 00:31:34,840 Speaker 1: is and not wasting a bunch of time getting underpaid. 701 00:31:35,240 --> 00:31:37,880 Speaker 4: You're listening to simply Money, presented by all Worth Financial 702 00:31:37,880 --> 00:31:41,600 Speaker 4: on Bob Sponseller along with Brian James. Brian introduced us 703 00:31:41,640 --> 00:31:44,920 Speaker 4: to Lisa. Let's look at another test case here. Okay, 704 00:31:44,960 --> 00:31:47,120 Speaker 4: so a little bit of a different situation. So Lisa's 705 00:31:47,160 --> 00:31:50,600 Speaker 4: got she is a little bit nervous, and so she's 706 00:31:50,640 --> 00:31:53,000 Speaker 4: got a half million dollars that she has put away, 707 00:31:53,040 --> 00:31:54,120 Speaker 4: but we don't know where it came from. 708 00:31:54,120 --> 00:31:56,000 Speaker 3: Of course, maybe she inherited it. She just let it 709 00:31:56,000 --> 00:31:56,880 Speaker 3: build up over time. 710 00:31:57,040 --> 00:31:59,600 Speaker 1: This is not retirement money, but it's just sitting in 711 00:31:59,600 --> 00:32:02,280 Speaker 1: a money mar fun earning about three percent. So she's 712 00:32:02,280 --> 00:32:05,160 Speaker 1: got about thirteen years until retirement, which means at that 713 00:32:05,240 --> 00:32:08,080 Speaker 1: three percent good safe rate, that's going to grow to 714 00:32:08,080 --> 00:32:10,760 Speaker 1: about seven hundred and twenty five thousand dollars. And she's 715 00:32:10,800 --> 00:32:12,880 Speaker 1: also in her retirement account she's got an extra two 716 00:32:13,000 --> 00:32:16,160 Speaker 1: fifty So now she's got about nine to seventy five total, 717 00:32:16,200 --> 00:32:19,040 Speaker 1: and that's not terrible, but she's drawing down that principle 718 00:32:19,080 --> 00:32:21,840 Speaker 1: pretty quickly, and so mathematically Lisa will be out of 719 00:32:21,880 --> 00:32:24,400 Speaker 1: money by the time she's eighty or thereabouts. 720 00:32:24,600 --> 00:32:25,800 Speaker 3: So let's do this again. 721 00:32:25,960 --> 00:32:28,680 Speaker 1: Let's say that she takes that half million and doesn't 722 00:32:28,680 --> 00:32:30,680 Speaker 1: buy into the notion that the stock market could go 723 00:32:30,720 --> 00:32:31,320 Speaker 1: poof tomorrow. 724 00:32:31,480 --> 00:32:33,360 Speaker 3: I always love that argument, Bob or people, so well, 725 00:32:33,360 --> 00:32:35,200 Speaker 3: the stock market it goes down because so and so 726 00:32:35,280 --> 00:32:37,040 Speaker 3: lost all his money. I'm looking at the S and 727 00:32:37,040 --> 00:32:39,360 Speaker 3: P five hundred right now, it still exists. Kroger is 728 00:32:39,400 --> 00:32:40,960 Speaker 3: still open, P and g is still open. 729 00:32:41,200 --> 00:32:43,120 Speaker 1: Stock market doesn't go away, So if she puts it 730 00:32:43,160 --> 00:32:45,640 Speaker 1: in a conservative balanced portfolio, that would earn about six 731 00:32:45,720 --> 00:32:49,040 Speaker 1: and a half percent by average on by about eight 732 00:32:49,160 --> 00:32:51,760 Speaker 1: sixty five. Now her half million is one point one 733 00:32:51,880 --> 00:32:54,800 Speaker 1: million dollars. Add her existing two fifty to that. Now 734 00:32:54,800 --> 00:32:56,600 Speaker 1: she's retiring with a net worth of a one and 735 00:32:56,640 --> 00:32:59,280 Speaker 1: a half million dollars. That is a big difference between 736 00:32:59,280 --> 00:33:01,200 Speaker 1: scraping and by just paying the bills and have a nice, 737 00:33:01,200 --> 00:33:01,959 Speaker 1: comfortable life. 738 00:33:02,280 --> 00:33:04,120 Speaker 3: Well, and it's a huge change. 739 00:33:04,200 --> 00:33:07,280 Speaker 4: And the nice thing is it didn't require any sacrifice. 740 00:33:07,320 --> 00:33:09,400 Speaker 4: She didn't have to earn more money, she didn't have 741 00:33:09,480 --> 00:33:11,960 Speaker 4: to cut back on her current spending. 742 00:33:12,040 --> 00:33:13,960 Speaker 3: All she had to do was change her. 743 00:33:13,840 --> 00:33:17,520 Speaker 4: Investment strategy and be open to something that has worked 744 00:33:17,560 --> 00:33:21,240 Speaker 4: for decades and decades and decades and just take advantage 745 00:33:21,280 --> 00:33:23,720 Speaker 4: of what the markets give you over a long period 746 00:33:23,760 --> 00:33:27,200 Speaker 4: of time. And again, she didn't get an extra twenty 747 00:33:27,320 --> 00:33:28,880 Speaker 4: years to save her money. 748 00:33:28,880 --> 00:33:31,960 Speaker 3: She didn't win the lottery. She just made smarter, more. 749 00:33:31,800 --> 00:33:35,960 Speaker 4: Intentional choices now in order to get those huge dividends 750 00:33:36,000 --> 00:33:38,800 Speaker 4: down the road, with making no other changes in her lifestyle. 751 00:33:39,400 --> 00:33:42,400 Speaker 4: Here's the all Worth advice the future isn't a mystery. 752 00:33:42,880 --> 00:33:46,520 Speaker 4: Oftentimes it's a math problem, and the earlier you solve it, 753 00:33:46,800 --> 00:33:51,080 Speaker 4: the better your retirement story will probably end. You're listening 754 00:33:51,080 --> 00:33:54,360 Speaker 4: to Simply Money presented by all Worth Financial on fifty 755 00:33:54,360 --> 00:34:01,800 Speaker 4: five KRC, the talk station. You're listening to Simply Money 756 00:34:01,880 --> 00:34:04,640 Speaker 4: presented by all Worth Financial on Bob Sponseller along with 757 00:34:04,680 --> 00:34:08,120 Speaker 4: Brian James and Brian on my two I'm gonna give 758 00:34:08,120 --> 00:34:11,600 Speaker 4: you my two cents here, just another story on this 759 00:34:11,760 --> 00:34:15,160 Speaker 4: whole Should I switch to a different house scenario? We 760 00:34:15,239 --> 00:34:17,880 Speaker 4: talked about a couple of them during the prior segment. 761 00:34:18,520 --> 00:34:21,040 Speaker 4: I'm gonna share one that I've run across more often 762 00:34:21,080 --> 00:34:23,080 Speaker 4: than not, and I want to spend a few minutes 763 00:34:23,080 --> 00:34:24,520 Speaker 4: on it, get your take on it, and it's. 764 00:34:24,440 --> 00:34:27,920 Speaker 3: Story time with Bob's bondsor story time. A lot of 765 00:34:27,920 --> 00:34:30,680 Speaker 3: times people say, Hey, Bob, we want to downsize. 766 00:34:31,239 --> 00:34:33,439 Speaker 4: We want to sell our big house and we want 767 00:34:33,440 --> 00:34:36,720 Speaker 4: to buy a ranch with everything on the first floor 768 00:34:37,200 --> 00:34:39,520 Speaker 4: in a big great room. And so we're gonna sell 769 00:34:39,560 --> 00:34:43,120 Speaker 4: our four or five bedroom house. We're gonna pocket all 770 00:34:43,160 --> 00:34:44,919 Speaker 4: that money and we're gonna be able to go out 771 00:34:44,920 --> 00:34:47,480 Speaker 4: and get this beautiful ranch that has everything on the 772 00:34:47,520 --> 00:34:50,880 Speaker 4: first floor and that'll solve all our problems going forward. 773 00:34:51,280 --> 00:34:54,239 Speaker 4: What they find, what I find oftentimes, is they have 774 00:34:54,360 --> 00:34:56,640 Speaker 4: not gone out and looked at the cost of this 775 00:34:56,800 --> 00:35:01,960 Speaker 4: ranch home. Factored in the part everybody wants a ranch 776 00:35:02,040 --> 00:35:05,840 Speaker 4: home with the main bedroom and bathroom on the first floor, 777 00:35:05,880 --> 00:35:07,120 Speaker 4: in the big great room. 778 00:35:07,520 --> 00:35:09,880 Speaker 3: And those houses cost a lot of money. 779 00:35:09,920 --> 00:35:12,160 Speaker 4: And when people go out and start looking at it, 780 00:35:12,200 --> 00:35:15,200 Speaker 4: they find that they're really not going to save any money. 781 00:35:15,560 --> 00:35:18,960 Speaker 4: And oftentimes by the time they fix up that ranch house, 782 00:35:19,360 --> 00:35:22,759 Speaker 4: they're looking at spending more money than the what their 783 00:35:22,800 --> 00:35:26,760 Speaker 4: current house is worth. And it was they rationalized making 784 00:35:26,800 --> 00:35:32,440 Speaker 4: a decision quote unquote downsizing, and they didn't really downsize 785 00:35:32,480 --> 00:35:32,719 Speaker 4: at all. 786 00:35:32,760 --> 00:35:34,840 Speaker 3: Have you ever seen that one come down the Absolutely? 787 00:35:34,880 --> 00:35:36,600 Speaker 1: And I think this is a big supply and demand 788 00:35:36,600 --> 00:35:39,000 Speaker 1: discussion because there's tons of You can drive anywhere around 789 00:35:39,000 --> 00:35:41,120 Speaker 1: Cincinnati and see new subdivisions going up. How many of 790 00:35:41,200 --> 00:35:42,880 Speaker 1: them are full of ranch homes, right, And I'm not 791 00:35:42,920 --> 00:35:45,480 Speaker 1: referring to the ones where are all patio homes retirement 792 00:35:45,520 --> 00:35:47,320 Speaker 1: type communities. A lot of people aren't quite ready to 793 00:35:47,320 --> 00:35:49,320 Speaker 1: take that step yet. They want a ranch home in 794 00:35:49,320 --> 00:35:51,439 Speaker 1: a more traditional neighborhood. But those don't exist anymore because 795 00:35:51,440 --> 00:35:52,520 Speaker 1: the builders can't make as much. 796 00:35:52,480 --> 00:35:53,000 Speaker 3: To build them. 797 00:35:53,440 --> 00:35:55,279 Speaker 4: Yeah, and here's the point I'm trying to make here. 798 00:35:55,440 --> 00:35:58,560 Speaker 4: Count the cost and take your time before you delve 799 00:35:58,600 --> 00:36:01,840 Speaker 4: into this. Oftentimes, if you spend a little bit of 800 00:36:01,920 --> 00:36:05,440 Speaker 4: money on an architect and take your existing four bedroom 801 00:36:05,440 --> 00:36:08,400 Speaker 4: home with the master bedroom and bath on the second floor, 802 00:36:08,880 --> 00:36:11,920 Speaker 4: and convert your first floor to accommodate all that, you 803 00:36:11,960 --> 00:36:15,120 Speaker 4: can find that you can spend less money staying put, 804 00:36:15,480 --> 00:36:19,240 Speaker 4: putting a little money into that is existing home, staying 805 00:36:19,280 --> 00:36:21,840 Speaker 4: in that neighborhood that you love and have been there forever, 806 00:36:22,120 --> 00:36:26,040 Speaker 4: and really win as opposed to just making a rational 807 00:36:26,400 --> 00:36:29,560 Speaker 4: short term decision that you might be surprised at how 808 00:36:29,640 --> 00:36:31,360 Speaker 4: much money and aggravation it costs you. 809 00:36:31,480 --> 00:36:31,640 Speaker 2: Yeah. 810 00:36:31,640 --> 00:36:33,319 Speaker 1: I've had some clients go through this where and I 811 00:36:33,400 --> 00:36:35,319 Speaker 1: joke with them, and there's more than one where they 812 00:36:35,360 --> 00:36:37,799 Speaker 1: almost financially speaking, built a house inside of a house. 813 00:36:37,800 --> 00:36:40,480 Speaker 1: They spent a significant amount of money improving their place 814 00:36:40,600 --> 00:36:43,200 Speaker 1: for this exact reason, but it prevented them from having 815 00:36:43,239 --> 00:36:45,360 Speaker 1: to buy a whole new place and incurring those expenses. 816 00:36:45,400 --> 00:36:47,919 Speaker 1: So even though it was significant to reconfigure their house 817 00:36:47,960 --> 00:36:49,919 Speaker 1: to something that would make them happy it wasn't near 818 00:36:50,000 --> 00:36:51,160 Speaker 1: what a brand new house would cost. 819 00:36:51,400 --> 00:36:54,040 Speaker 4: Well, and a lot of people like all that first 820 00:36:54,080 --> 00:36:56,640 Speaker 4: floor stuff, the master bath, the master. 821 00:36:56,440 --> 00:36:57,719 Speaker 3: Bedroom, the great room. 822 00:36:57,800 --> 00:37:00,200 Speaker 4: And if you do take the time to reconfigure, you're 823 00:37:00,200 --> 00:37:02,839 Speaker 4: a current home. If you stay in it and your 824 00:37:02,880 --> 00:37:05,320 Speaker 4: heirs do decide to sell it down the road, this 825 00:37:05,560 --> 00:37:08,040 Speaker 4: sell it a lot quicker because it's been fixed up 826 00:37:08,040 --> 00:37:10,600 Speaker 4: the way to meet that supply and demand that we 827 00:37:10,640 --> 00:37:11,160 Speaker 4: talk about. 828 00:37:11,560 --> 00:37:12,720 Speaker 3: All Right, thanks for listening. 829 00:37:12,760 --> 00:37:15,560 Speaker 4: You've been listening to Simply Money, presented by all Worth 830 00:37:15,600 --> 00:37:19,040 Speaker 4: Financial on fifty five KRC, the talk station