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Speaker 1: Tonight. The biggest money mistakes that are still happening even

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Speaker 1: in twenty twenty five. This is simply money was out

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Speaker 1: of my all worth financial I'm Bob Sponseller along with

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Speaker 1: Brian James. You know, Brian. Every year we think to ourselves, maybe,

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Speaker 1: just maybe people will stop making the same money mistakes

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Speaker 1: year after year after year. But here we are, it's

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Speaker 1: November twenty twenty five. We are still seeing the same

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Speaker 1: issues crop up again and again. I know you like

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Speaker 1: to say that's what creates job securities for people like

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Speaker 1: you and I. It's like the financial equivalent of trying

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Speaker 1: to stop people from speeding on I seventy five. The

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Speaker 1: signs are everywhere, and yet people pick whatever speed they

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Speaker 1: want to drive. Let's get into some of the basic

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Speaker 1: mistakes that are we could cover quickly, and let's get

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Speaker 1: into some of the more nuanced advanced mistakes that are

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Speaker 1: still tripping people up.

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Speaker 2: So one of the most basic mistakes that people can make,

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Speaker 2: and we're at this time period right now, whenever the

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Speaker 2: markets had a good run, well then a lot of

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Speaker 2: times we'll start with a classic of chasing returns. You know,

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Speaker 2: you'd think we'd have figured this out after two thousand

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Speaker 2: and eight and after twenty twenty two and all of

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Speaker 2: the crazy we've seen over.

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Speaker 3: The last couple decades.

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Speaker 2: But people still will chase whatever is doing well. And

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Speaker 2: the problem with that is it works for a little while,

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Speaker 2: because you know, things like artificial intelligence AI stocks are

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Speaker 2: still drawing people in like moss to a flame.

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Speaker 3: But it wasn't that long ago we saw all this.

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Speaker 2: Exact same situation with you know, for example, real estate

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Speaker 2: companies in two thousand and eight. You know, and whatever

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Speaker 2: whatever was doing really well, it must continue to be

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Speaker 2: doing well because people forget just because something doubled last

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Speaker 2: year doesn't mean it's going to do it again. If

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Speaker 2: you're buying last year's winners, that's like betting on the

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Speaker 2: World Series winner last year just because of that. That's

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Speaker 2: not investing, that's reacting. So if your financial plan relies

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Speaker 2: on hitting a home run every year, you really don't

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Speaker 2: have a plan. You just kind of have a wish

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Speaker 2: and you're and you're simply betting the farm on things

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Speaker 2: that don't really have a high likelihood of continuing.

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Speaker 1: Let's talk about the next one, because this crops up

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Speaker 1: all the time too, and that's what we'll call emotional

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Speaker 1: investing or making emotional decisions. People are still reacting to headlines,

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Speaker 1: and let's face it, headlines are everywhere. People react to

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Speaker 1: headlines instead of their long term plan, inflation news, they

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Speaker 1: panic fed news, They chase risk political headlines. Some people

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Speaker 1: just freeze deer in the headlines. Emotional investing leads to

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Speaker 1: bad timing, and bad timing leads to bad returns and

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Speaker 1: oftentimes brian mistakes that people just can't recover from. It

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Speaker 1: takes a long time to recover from some of these

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Speaker 1: emotional mistakes.

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Speaker 2: Yeah, and there's another one here is ignoring taxes right,

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Speaker 2: not paying attention to the steps that you're taking. We

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Speaker 2: still see investors putting tax inefficient investments into taxable accounts.

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Speaker 3: This is the for.

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Speaker 2: Those of you who are who are own mutual funds

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Speaker 2: and taxable accounts. This is that time of year where

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Speaker 2: sometimes they sneak up on you and send you a

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Speaker 2: gigantic capital gains distribution you're gonna have to pay for

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Speaker 2: come April. That's leaving money on the table if you've

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Speaker 2: got bonds or high turnover mutual funds, creating a lot

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Speaker 2: of taxable activity in that brokerage account while your wroth

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Speaker 2: is sitting in cash. That's the one that drives me

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Speaker 2: the most nuts when somebody comes in having converted a

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Speaker 2: WROTH and it's still sitting in cash. A ROTH conversion,

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Speaker 2: for example, that's great that you pay taxes and moves

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Speaker 2: it to tax free, but the whole point of it

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Speaker 2: was to get it to generate some kind of tax

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Speaker 2: free growth. And if you've got it invested conservatively, you're

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Speaker 2: really leaving money on the table because you already sacrificed

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Speaker 2: a bunch to get it there in the first place.

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Speaker 2: So lots of people out there with multimillion dollar portfolios

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Speaker 2: who had never had a real conversation about asset location,

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Speaker 2: meaning what type of assets should I own in what

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Speaker 2: type of tax tax account? That is a massive, massive

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Speaker 2: planning gap.

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Speaker 1: Another big mistake is having no retirement withdrawal strategy, and Brian,

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Speaker 1: we see this people entering retirement with no real plan

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Speaker 1: on how they're going to pull money out of their accounts.

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Speaker 1: They're just winging it, for example, taking rmds when they're

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Speaker 1: forced to, instead of getting out in front of it,

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Speaker 1: maybe years in advance, you know, and in doing this strategically

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Speaker 1: when they can or want to in mitigating that tax

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Speaker 1: bill down the road, or just guessing what to sell

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Speaker 1: when the market dips. That is not a portfolio withdraw strategy.

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Speaker 1: Without a real distribution plan, you risk overspending or underliving,

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Speaker 1: meaning just accumulating all this money and never enjoying it.

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Speaker 1: Both can be dangerous things to undertake, and again we

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Speaker 1: find this with people that have no strategy, no advice,

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Speaker 1: no advisor helping them walk through these kind of you know,

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Speaker 1: retirement income with draw strategies. Brian talk about a state

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Speaker 1: planning because this is a big one as well.

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Speaker 2: Well, if you haven't had a discussion about what's going

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Speaker 2: to happen to all this when I or WE is

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Speaker 2: no longer here, then you have no plan. In fact,

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Speaker 2: what you do have is a plan put together by

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Speaker 2: the county that you live in, because that means you've

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Speaker 2: died intestate with with no will, no nothing, and the

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Speaker 2: county will decide who gets everything. So lots of situations

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Speaker 2: out there where we've got clients that just haven't taken

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Speaker 2: the time to figure out how are we going to

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Speaker 2: get this correctly and efficiently to these individual people that

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Speaker 2: you know, most people have at least some vague idea

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Speaker 2: of who the individuals are that they want, but they've

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Speaker 2: never taken that step to actually put it all down

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Speaker 2: on paper and get the accounts set up appropriately to

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Speaker 2: route those assets the right direction. The counting may or

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Speaker 2: may not conclude the same thing that you have, and

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Speaker 2: so you know, you need to make sure you're talking

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Speaker 2: about trust, possibly gifting strategies, even legacy planning. Without that,

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Speaker 2: you don't have a plan. And some of these strategies

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Speaker 2: are really easy to put in place. Oftentimes the hardest

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Speaker 2: part is nailing down who the individuals you are, however

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Speaker 2: your family works, who are the people that you want

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Speaker 2: to benefit, and what percentages are you looking to do

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Speaker 2: that kind of thing. That can be a little bit

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Speaker 2: that's not necessarily the hard part, but then it's the

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Speaker 2: painful part of getting to retitle the assets, put the

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Speaker 2: trust in place.

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Speaker 3: So on and so forth.

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Speaker 2: But if these things go neglected, you could become a

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Speaker 2: cautionary tale that advisors like Bob and I will use

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Speaker 2: in the future to make sure that other people don't

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Speaker 2: make the same mistakes.

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Speaker 1: You're listening to. Simply money presented by all Worth Financial

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Speaker 1: on bob'spondseller along with Brian James. Brian let's get into

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Speaker 1: some of the more complicated mistakes that we're seeing crop

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Speaker 1: up now here in twenty twenty five. The first one

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Speaker 1: we want to talk about is not understanding alternative investments.

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Speaker 1: This is somewhat of a newer mistake that we're seeing

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Speaker 1: people do, you know, they load up on private credit

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Speaker 1: or alternative investments that they don't fully understand. We talk

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Speaker 1: about this all the time. This can come with you know,

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Speaker 1: lock up periods, high fees and commissions, or higher risk

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Speaker 1: than people might have understood when they bought it, and

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Speaker 1: it can add volatility to the portfolio, ad fees, you know,

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Speaker 1: not being able to access your money, on and on

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Speaker 1: and on because that high yield if some of these

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Speaker 1: instruments sounds great when they're being pitched to you by

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Speaker 1: a product salesperson until you realize that it does come

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Speaker 1: with low liquidity, high fees, or no transparency. That can

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Speaker 1: become a real problem if and when you need to

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Speaker 1: access your money, or if markets, you know, suddenly tighten

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Speaker 1: up and we're looking for things to access. It's something

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Speaker 1: to really pay attention to and make sure you understand

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Speaker 1: what you're buying ahead of time.

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Speaker 2: Yeah, and then another another situation that crops up regularly

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Speaker 2: is the idea that some things, some of these financial

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Speaker 2: planning solutions work against each other, and I need to

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Speaker 2: prioritize what I want to do. And I'm referring to

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Speaker 2: one example of asset location when there's a trust involved.

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Speaker 2: So you know a lot of people say, well, I'm

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Speaker 2: just going to get a trust and I'll just take

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Speaker 2: all these assets and throw them in there, and that

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Speaker 2: means that a lot of times you lose the ability.

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Speaker 2: Of course, a trust cannot own a roth ira, it

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Speaker 2: cannot own a traditional ira. So anything you're going to

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Speaker 2: put into a trust is going to be taxed. If

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Speaker 2: it's a revocable trust, that can be you know that

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Speaker 2: that is taxed at your bracket because it's revocable. But

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Speaker 2: if it's an errevocable trust, meaning something you've permanently given away,

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Speaker 2: is maybe some kind of a different family structure you're

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Speaker 2: trying to pursue there, those can get taxed at a

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Speaker 2: lot higher trust rates in that top federal bracket kicks

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Speaker 2: in at fifteen thousand dollars worth of income. Trusts are

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Speaker 2: often set up to avoid a state tax, but they're

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Speaker 2: inefficient before that happens because they can. If you have

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Speaker 2: a lot of bond funds or income generating assets that's

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Speaker 2: going to get taxed that are really really high rate.

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Speaker 2: Because irrevocable trusts do, you have a different set of

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Speaker 2: marginal brackets than the personal ones we're all kind of

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Speaker 2: accustomed to. So the way to fix this is, if

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Speaker 2: you're in this situation, get those tax and efficient assets

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Speaker 2: out of the trust. Right that might mean you need

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Speaker 2: to sell things and rebuy something else that's more appropriate,

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Speaker 2: or go ahead and distribute the income to the beneficiaries

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Speaker 2: if that's appropriate for the trust to lower the tax

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Speaker 2: bill that the trust itself pays.

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Speaker 1: Let's talk next about Roth conversions, and Brian, this is

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Speaker 1: something that's coming up all the time in client meetings

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Speaker 1: we have in our office, and it's going to continue

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Speaker 1: to crop up, you know, year after year here and

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Speaker 1: what I'm talking about here is doing roth conversions and

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Speaker 1: just winging it without a multi year strategy. Here's why

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Speaker 1: that can be a problem. You might save on future taxes,

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Speaker 1: but you might blow up your current year tax return

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Speaker 1: or lose thousands to increase you know, IRMA or Medicare

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Speaker 1: taxes down the road. If you do this incorrectly. How

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Speaker 1: to fix it? Actually have a financial plan and sit

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Speaker 1: down with a good fiduciary advisor who can say, hey,

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Speaker 1: this is not only how twenty twenty five or twenty

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Speaker 1: twenty six is going to look if you do X,

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Speaker 1: Y and Z, but also have a good estimate of

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Speaker 1: what the next five to ten fifteen years look like

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Speaker 1: in terms of potential, require minimum distributions, and actually have

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Speaker 1: a multi year strategy that takes into account not only

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Speaker 1: income taxes but Social Security taxes we talk about, and

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Speaker 1: this is something that's going to come up, you know,

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Speaker 1: over the next three years here with this potential phase

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Speaker 1: out of this new senior you know what we'll call

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Speaker 1: Social Security credit or deduction. You really need to look

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Speaker 1: at this with a multi year strategy in view before

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Speaker 1: you just wing it and start converting iras to wroth,

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Speaker 1: because it could bite you down the road.

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Speaker 2: Yeah, have an end goal, right, so understand what it

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Speaker 2: might look like. You want to look at the timing

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Speaker 2: of that whole thing and figuring out how many years

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Speaker 2: you've got to get away with making these roth conversions

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Speaker 2: without pushing yourself into a higher bracket, and just recognize

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Speaker 2: the fact that yes, you are purposely increasing your taxes

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Speaker 2: now in exchange for lower taxes in the future when

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Speaker 2: you're in those requirementum distribution years. So speaking of retirement,

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Speaker 2: So one other issue that pops up here is not

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Speaker 2: understanding the risk of sequence of returns if you're an

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Speaker 2: early retiree, So a few bad years early in retirement,

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Speaker 2: that's what sequence of returns risk means? When do I

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Speaker 2: get the bad years? If it's early in retirement, that

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Speaker 2: hurts a lot. If those crazy years like twenty two

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Speaker 2: or two thousand and eight, which are coming around again, right,

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Speaker 2: that's one of the few guarantees we get to give

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Speaker 2: is sometimes the market's going to fall apart and have

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Speaker 2: to recover, and we've been through that before. But if

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Speaker 2: that happens later in retirement, that's less impactful than it

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Speaker 2: happens right up front. This is the important This is

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Speaker 2: where stress testing is really important. Run your financial plan

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Speaker 2: and understand what it looks like if nothing bad ever

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Speaker 2: happens again, and then do the exact same thing, but

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Speaker 2: knock off twenty to twenty five percent of your financial assets,

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Speaker 2: which kind of represents here's what would happen. What happened

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Speaker 2: to anybody who retired in say twenty twenty one, and

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Speaker 2: then immediately went over the cliff a little bit in

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Speaker 2: twenty two or seven to eight where the same thing happened.

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Speaker 3: So that's called stress testing.

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Speaker 2: And if your plan works under both scenarios, then you're

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Speaker 2: gonna be okay and you know you don't have to

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Speaker 2: panic if and when that situation happens. Doesn't happen everybody,

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Speaker 2: but it does happen to some.

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Speaker 1: All right. And then a last one we want to

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Speaker 1: touch on in Brian, it feels like you and I

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Speaker 1: talk about this often because it really needs to be discussed,

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Speaker 1: and that's overweighting a portfolio to these megacap tech stocks

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Speaker 1: in thinking you're in it diversified portfolio because you own

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Speaker 1: you know, sixteen different ETFs that if you really look

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Speaker 1: under the hood, they own the same tech stocks. I mean,

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Speaker 1: let's face it, the Magnificent seven stocks, they make up

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Speaker 1: between thirty and forty percent of the s and P

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Speaker 1: five hundred. Now, I mean as recently as this week,

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Speaker 1: I think Navidia Brian made up eight percent of the

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Speaker 1: SMP five hundred. So you might think you're diversified, but

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Speaker 1: if you actually look at the components of your portfolio.

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Speaker 1: You can unknowingly be overly weighted to these megacap tech

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Speaker 1: stocks that can and will decline, either in a general

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Speaker 1: market decline or if you know in the day will

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Speaker 1: come when the earnings growth starts to slow down. You

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Speaker 1: got to get out in front of this and make

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Speaker 1: sure your portfolio to your prior point, stress tests this

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Speaker 1: thing and make sure you're not setting yourself up for

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Speaker 1: a shock coming down the road that you had not

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Speaker 1: prepared for. Here's the r with advice, even in twenty

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Speaker 1: twenty five, the biggest money mistakes aren't about products. They're

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Speaker 1: about behavior. Build a plan, understand your accounts and what's

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Speaker 1: in them, and avoid the traps that are still tripping

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Speaker 1: people up. Did your spare change just get more valuable?

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Speaker 1: We got a penny for our thoughts. Next, plus, a

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Speaker 1: financial company actually wants to deliver cash right to your doorstep.

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Speaker 1: Is that innovation or absurdity? You're listening to Simply Money

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Speaker 1: presented by all Worth Financial on fifty five KRC the

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Speaker 1: talk station. You're listening to Simply Money presented by Allworth

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Speaker 1: Financial on Bob Sponseller along with Brian James straight ahead

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Speaker 1: of six forty three. How to handle a deferred compensation plan,

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Speaker 1: what to do in your rental properties of skyrocket in value,

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Speaker 1: and where to put your money once you've maxed out

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Speaker 1: your retirement accounts. Well, Brian, the end of an era

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Speaker 1: has officially arrived. The US mint struck its final penny

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Speaker 1: ever last week. That's it, no more Lincoln sense, And

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Speaker 1: now everyone has the same question. Are my old pennies

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Speaker 1: worth anything now?

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Speaker 2: Well, Bob, I know you like to change the pennies

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Speaker 2: in your penny loafers about once a week, if not

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Speaker 2: more frequently than that, to keep that nice copper sheen

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Speaker 2: going there, So you're gonna have to stock up a

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Speaker 2: little bit.

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Speaker 1: I like them looking shiny and new, Brian.

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Speaker 3: Love those penny loafers.

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Speaker 2: But to the question of my old penny's worth anything new,

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Speaker 2: it's in anything now. It's a great question to ask,

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Speaker 2: is supply and demand right? If we're not making anything

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Speaker 2: more any more of them, then the value should go up.

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Speaker 2: But the short answer, unfortunately, probably not. So let's walk

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Speaker 2: through what's actually happening here. This came directly from the

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Speaker 2: White House.

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Speaker 3: A while back.

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Speaker 2: President Trump ordered the Treasury to stop mint minting pennies

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Speaker 2: as a cost savings measure, because the reason for that

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Speaker 2: is costs about three point seven cents to produce just

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Speaker 2: one penny. We've been losing money on these for a

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Speaker 2: very long time, but that's it. Just because they're no

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Speaker 2: longer making them doesn't mean that jar that's been sitting

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Speaker 2: in your bedroom for thirty years suddenly he turned into gold.

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Speaker 2: Most old pennies are still worth exactly what it says

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Speaker 2: right on the label one cent, especially anything made in

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Speaker 2: the last fifty years.

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Speaker 3: Now, not all of them.

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Speaker 2: For coin collectors out there, you might know there's a

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Speaker 2: few out there that there still have value, but it's not.

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Speaker 2: It's got nothing to do with the fact that we're

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Speaker 2: not making anymore. The most famous one is the nineteen

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Speaker 2: forty three copper wheat penny because that year pennies were

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Speaker 2: supposed to be made a steel wet we were at war.

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Speaker 2: The copper needed to be sent for the war efforts,

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Speaker 2: but a few copper blanks did slip through.

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Speaker 3: One of them sold for over.

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Speaker 2: Two hundred thousand dollars a few years ago. Now that's

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Speaker 2: worth a little more than one cent. Another one floating

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Speaker 2: around out there has been estimated to be worth over

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Speaker 2: a million, but again, those are the ones that are

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Speaker 2: worth money. There's a story behind them, not simply all

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Speaker 2: pennies because we have quit making them.

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Speaker 1: Brian, I'm curious, what do you do with the pennies

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Speaker 1: that are in your pocket or laying around your house?

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Speaker 1: What do you actually do with those?

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Speaker 3: Well?

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Speaker 2: I store them because I'm worried that Bob is going

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Speaker 2: to run out of pennies for his penny loafers. And

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Speaker 2: I don't want you to have a morning like that

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Speaker 2: where you can't get out the door because you have

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Speaker 2: dull pennies, your penny lovers.

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Speaker 1: I can't remember the last time I even saw a penny,

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Speaker 1: And I think my dear wife finds a way to

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Speaker 1: just find all this spare change laying around, and she

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Speaker 1: does something with it that's probably very productive. But I'm

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Speaker 1: glad to see this stuff go away. I mean, if

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Speaker 1: it's costing us almost four cents to create a penny

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Speaker 1: that's worth one cent, I think it's way past time

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Speaker 1: that we get out of that.

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Speaker 2: I am curious, though, on a serious note, I'm curious

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Speaker 2: there are some business out there that are gonna be

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Speaker 2: affected by this, because what do I do if I

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Speaker 2: owe some if I'm a cash business, and I owe

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Speaker 2: somebody a couple of pennies?

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Speaker 3: Do I round up for me or do I round

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Speaker 3: down for them? You know, because that stuff does add

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Speaker 3: up over time.

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Speaker 1: I think we already know the answer to that, right.

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Speaker 1: They'll be a round up or round down fee, and

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Speaker 1: they'll find a way to convert all that to a

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Speaker 1: nickel and put it in their pocket. That's what's gonna happen,

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Speaker 1: all right. Speaking of cash, Robinhood is rolling out a

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Speaker 1: service where they will actually deliver physical cash to your house. Yes,

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Speaker 1: they want to bring wads of bills and cash to

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Speaker 1: your doorstep, because apparently waiting for the ATM is too

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Speaker 1: much effort. Now, Brian, this is bizarre to me, crazy,

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Speaker 1: but walk us through it.

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Speaker 3: This is stupid, Bob. Let's call it what it is.

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Speaker 3: I'm gonna blunt mood today. All right, here's the kicker.

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Speaker 3: Guess what.

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Speaker 2: There's a delivery fee involved, even for your own money.

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Speaker 2: If you've got over one hundred thousand dollars in assets,

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Speaker 2: the fee drops, but still three bucks maybe seven bucks

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Speaker 2: to skip the ATM.

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Speaker 3: This is just all This is just.

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Speaker 2: An extra way to squeeze money out out of your wallet.

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Speaker 2: They've got a few more attachments here. You have to

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Speaker 2: be a robin Hood Gold member, which already has a

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Speaker 2: subscription fee you're already paying for this, have direct deposit

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Speaker 2: going in, etc. So this is just about convenience when

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Speaker 2: you already have met a package of the criteria, the

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Speaker 2: different rules and things that they require. But thinking through this, Bob,

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Speaker 2: I can't spend cash in my own house unless I'm

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Speaker 2: gonna give it to my family for some reason. But otherwise,

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Speaker 2: if I want cash in my wallet, aren't I going

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Speaker 2: to be out and about anyway? And haven't they spent

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Speaker 2: the last several decades putting ATMs on every street corner.

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Speaker 2: So I in the world, am I gonna go pay,

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Speaker 2: you know, pay three to seven dollars just to get

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Speaker 2: my own money to stick in my wallet and then.

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Speaker 3: Walk right back out the door. This makes zero sense to.

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Speaker 1: Me, Bob. I'm gonna give you the answer. If you're

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Speaker 1: sitting in your basement on your couch playing Call of

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Speaker 1: Duty with your headset on, and you're already willing to

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Speaker 1: pay a four dollars six six dollars delivery fee to

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Speaker 1: have a McDonald's you know, big mac value meal delivered

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Speaker 1: to your door, why would you ever take the time

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Speaker 1: to interrupt your video game and go to an ATM.

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Speaker 2: That's why you sound a little grumpy this morning, Bob,

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Speaker 2: you're sounding a little old guy this morning.

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Speaker 3: This is Hey.

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Speaker 1: It's all about supply and demand. If people are dumb

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Speaker 1: enough to pay the fee, someone will come up with

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Speaker 1: a service to take your money.

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Speaker 3: All right.

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Speaker 1: Every Sunday you'll find our all Worth Advice in the

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Speaker 1: Cincinnati Inquire. Here's a preview. Here's an actual financial question

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Speaker 1: for you, Brian, Mike and Bracken County says. I've been

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Speaker 1: contributing to an HSA for a few years, and I'll

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Speaker 1: be enrolling in Medicare soon. But I've heard I can't

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Speaker 1: use my HSA I'm on Medicare. Is that right, Brian?

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Speaker 3: Now that's well you might be thinking of.

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Speaker 2: You can't contribute to your AHSA when you're on Medicare,

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Speaker 2: and in fact, you need to stop your contributions to

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Speaker 2: your HSA six months before Medicare kicks in, because Medicare

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Speaker 2: is retroactive for half a year.

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Speaker 3: So it's not that you can't use the HSA.

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Speaker 2: It's available to you, you know, to spend on whatever

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Speaker 2: you need.

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Speaker 3: But you can't contribute. That's what you're running into.

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Speaker 1: All right, good clarification there, All right, it's a question

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Speaker 1: many people will ask on the path to financial freedom.

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Speaker 1: Should I buy or should I rent? Will help you

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Speaker 1: answer that question. Next, you're listening to Simply Money presided

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Speaker 1: by all Worth Financial on fifty five KRC. The talk

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Speaker 1: station you're listening to Simply Money is that by all

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Speaker 1: Worth Financial. Un bomp spun Seller along with Brian James,

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Speaker 1: joined tonight by our real estate expert Michelle Sloan, owner

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Speaker 1: of Remax Time. Michelle, thanks again for spending time with

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Speaker 1: us tonight. And you want to talk about something that's

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Speaker 1: always a fascinating topic to me, and I know Brian

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Speaker 1: loves this as well, just the conversations that we all

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Speaker 1: get into nowadays on hey, does it make more sense

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Speaker 1: to rent a home or buy a home? And what

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Speaker 1: are the pros and cons from a financial standpoint and

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Speaker 1: a cost standpoint? And I know you've got a lot

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Speaker 1: to offer on this topic, walk us through it tonight.

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Speaker 4: You know it would be smart of me as a

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Speaker 4: salesperson to always say you should buy a home, but

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Speaker 4: you know, after doing the twenty years, you know I

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Speaker 4: have to be so realistic when I sit down with

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Speaker 4: clients who are interested in buying a home, because there

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Speaker 4: is a lot to consider when it comes to buying

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Speaker 4: a home, and maybe, depending on your specific situation, renting

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Speaker 4: is the better move. So we'll break it down a

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Speaker 4: little bit with our pros of renting, our pro our

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Speaker 4: cons of renting, the pros of buying, et cetera.

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Speaker 1: Are you ready, I'm ready?

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Speaker 3: I want to learn.

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Speaker 4: Okay, all right, Well, the first pro of renting is

438
00:21:14,320 --> 00:21:19,280
Speaker 4: there is a lower upfront cost, the barrier to entry. Basically,

439
00:21:19,320 --> 00:21:25,320
Speaker 4: you only need likely a security deposit, maybe first month's rent,

440
00:21:25,640 --> 00:21:29,639
Speaker 4: an application via fifty dollars, and you can live in

441
00:21:29,680 --> 00:21:34,040
Speaker 4: a property. That's a good thing. That's a pro for renting.

442
00:21:34,480 --> 00:21:38,280
Speaker 4: When it comes to buying, certainly you're going to need

443
00:21:38,400 --> 00:21:42,040
Speaker 4: a much larger down payment. You're going to pitch of

444
00:21:42,600 --> 00:21:45,320
Speaker 4: a couple hundred thousand dollars, so you might need twenty

445
00:21:45,359 --> 00:21:48,000
Speaker 4: thousand dollars. You may and a lot of people don't

446
00:21:48,000 --> 00:21:50,880
Speaker 4: have that in their bank account. So that's that's the

447
00:21:50,920 --> 00:21:56,080
Speaker 4: first barrier to buying a home is having some cash

448
00:21:56,119 --> 00:22:00,600
Speaker 4: on hand, and so saving is so important when I

449
00:22:00,640 --> 00:22:04,240
Speaker 4: can when I consult with buyers or want to be buyers.

450
00:22:04,520 --> 00:22:08,560
Speaker 4: Is you know what, it takes time to build up

451
00:22:09,200 --> 00:22:12,159
Speaker 4: the savings that you need to buy a home. So

452
00:22:12,880 --> 00:22:16,120
Speaker 4: number one, if if you don't have that, renting may

453
00:22:16,119 --> 00:22:20,040
Speaker 4: be your only option. And that's okay, as long as

454
00:22:20,080 --> 00:22:22,760
Speaker 4: you can try to find a way to start saving

455
00:22:23,160 --> 00:22:26,480
Speaker 4: because in the end, and this is the way sort

456
00:22:26,520 --> 00:22:30,119
Speaker 4: of the world goes around and around. As you're younger,

457
00:22:30,200 --> 00:22:32,000
Speaker 4: you don't have a lot of savings and you're not

458
00:22:32,119 --> 00:22:34,200
Speaker 4: making as much money. As you get a little bit

459
00:22:34,240 --> 00:22:39,240
Speaker 4: older and your job becomes more stable than you're thinking about. Okay,

460
00:22:39,400 --> 00:22:41,639
Speaker 4: I mean you start a family, now it's time to

461
00:22:41,720 --> 00:22:45,199
Speaker 4: start thinking about buying and having that nesteche is so

462
00:22:45,680 --> 00:22:47,120
Speaker 4: very important.

463
00:22:47,400 --> 00:22:50,600
Speaker 2: Well, Michelle, what would you say that the average time

464
00:22:50,840 --> 00:22:53,960
Speaker 2: is if somebody knows they're going to be somewhere, you know,

465
00:22:54,440 --> 00:22:56,960
Speaker 2: for a certain amount of time, when when is that

466
00:22:56,960 --> 00:22:58,560
Speaker 2: that sort of break even point? If you're going to

467
00:22:58,600 --> 00:23:00,360
Speaker 2: if you know you're gonna stay put for this man years,

468
00:23:00,400 --> 00:23:02,159
Speaker 2: then it's safe to buy, versus if you may have

469
00:23:02,200 --> 00:23:03,640
Speaker 2: to move in two or three years, that's a little

470
00:23:03,680 --> 00:23:04,080
Speaker 2: bit dicey.

471
00:23:04,040 --> 00:23:05,560
Speaker 3: You might want to consider renting. Do you have a

472
00:23:05,560 --> 00:23:06,360
Speaker 3: break even for that.

473
00:23:07,000 --> 00:23:12,240
Speaker 4: Yeah, I do. Actually, that's a great question. Because mortgage

474
00:23:12,320 --> 00:23:15,359
Speaker 4: rates are high and home prices are high, it often

475
00:23:15,400 --> 00:23:19,240
Speaker 4: takes longer for the benefits of buying to actually catch

476
00:23:19,320 --> 00:23:23,480
Speaker 4: up with renting. So for that break even time, it's

477
00:23:23,520 --> 00:23:27,640
Speaker 4: anywhere between six and eight years. So if you're planning

478
00:23:27,680 --> 00:23:31,160
Speaker 4: on staying in your home for six to eight years,

479
00:23:32,359 --> 00:23:35,880
Speaker 4: that's when it's definitely time for you to consider buying.

480
00:23:36,000 --> 00:23:38,040
Speaker 4: If you're going to be bouncing around and you don't

481
00:23:38,080 --> 00:23:40,280
Speaker 4: know if your job is going to be stable, or

482
00:23:40,359 --> 00:23:43,440
Speaker 4: if you personally are just not sure you want to

483
00:23:43,480 --> 00:23:46,080
Speaker 4: live in a particular area and you're going to move

484
00:23:46,200 --> 00:23:49,359
Speaker 4: within a year or two, guess what you're likely to

485
00:23:49,520 --> 00:23:53,679
Speaker 4: lose money on that investment and buying a home. Although

486
00:23:53,720 --> 00:23:57,680
Speaker 4: it's very emotional and it's where you live, and it's

487
00:23:57,760 --> 00:24:00,480
Speaker 4: where you it's all of the things that go along

488
00:24:00,480 --> 00:24:03,920
Speaker 4: with buying a home, it is an investment and it's

489
00:24:04,040 --> 00:24:07,240
Speaker 4: one of the biggest and most important investments that you're

490
00:24:07,280 --> 00:24:09,960
Speaker 4: ever going to make. So when you make it with

491
00:24:10,040 --> 00:24:14,520
Speaker 4: the and you're very thoughtful about it, that's so important.

492
00:24:14,640 --> 00:24:17,520
Speaker 4: So if you're planning on staying a home for less

493
00:24:17,520 --> 00:24:22,359
Speaker 4: than six to eight years, you may consider renting. Now, no,

494
00:24:22,560 --> 00:24:25,800
Speaker 4: you're never going to build equity when you're renting. That's

495
00:24:25,880 --> 00:24:30,840
Speaker 4: the other con of renting. You're not paying yourself. You're

496
00:24:30,880 --> 00:24:34,600
Speaker 4: actually paying the person who owns that property, and you're

497
00:24:34,640 --> 00:24:38,400
Speaker 4: paying for them to build wealth. And so wealth building

498
00:24:39,280 --> 00:24:44,600
Speaker 4: is extremely important in the real estate industry, and it's

499
00:24:44,640 --> 00:24:47,359
Speaker 4: important in your industry too, right because you look at

500
00:24:47,400 --> 00:24:51,360
Speaker 4: those kinds of folks that have homes or multiple properties,

501
00:24:51,600 --> 00:24:55,520
Speaker 4: and we look at how the increase in value of

502
00:24:55,600 --> 00:25:00,280
Speaker 4: those properties will continue from year to year, and you

503
00:25:00,280 --> 00:25:02,200
Speaker 4: know that's part of your portfolio.

504
00:25:03,680 --> 00:25:06,040
Speaker 2: Okay, So falling off the timing question again, do you

505
00:25:06,080 --> 00:25:09,360
Speaker 2: see people relying on arms on adjustable rate mortgages now

506
00:25:09,400 --> 00:25:11,280
Speaker 2: now that we're in a declining rate environment, or people

507
00:25:11,320 --> 00:25:13,480
Speaker 2: kind of taking that risk of needing to refinance in

508
00:25:13,520 --> 00:25:15,359
Speaker 2: three or five years, or do you see people locking

509
00:25:15,359 --> 00:25:16,880
Speaker 2: them in for longer term fixed.

510
00:25:18,280 --> 00:25:22,239
Speaker 4: Most of my clients, you know, like the stability of

511
00:25:22,320 --> 00:25:26,040
Speaker 4: either a fifteen or a thirty year the arms in

512
00:25:26,119 --> 00:25:29,480
Speaker 4: my opinion, and again, I don't do the mortgage side

513
00:25:29,520 --> 00:25:32,439
Speaker 4: of things every single day. I think it's an option

514
00:25:32,560 --> 00:25:35,399
Speaker 4: and an opportunity. But there's a lot of people who don't.

515
00:25:35,480 --> 00:25:38,320
Speaker 4: They feel like if you do a five to one

516
00:25:38,440 --> 00:25:40,840
Speaker 4: arm or a seven to one arm or whatever that is,

517
00:25:40,960 --> 00:25:43,520
Speaker 4: knowing that we don't know what the future looks like

518
00:25:43,600 --> 00:25:46,439
Speaker 4: in five years. It could be worse than it is today.

519
00:25:47,119 --> 00:25:50,640
Speaker 4: And if you're doing an interest only loan and you're

520
00:25:50,680 --> 00:25:54,960
Speaker 4: only paying the interest, you're never really you're just again

521
00:25:55,080 --> 00:25:58,240
Speaker 4: sort of spinning your wheels. So you definitely want to

522
00:25:58,280 --> 00:26:01,840
Speaker 4: talk to an expert in the financing side of it,

523
00:26:01,960 --> 00:26:07,760
Speaker 4: the mortgage industry, and really see what is best suited

524
00:26:07,840 --> 00:26:10,520
Speaker 4: for your budget and your personal situation.

525
00:26:12,119 --> 00:26:13,919
Speaker 1: Michelle, I want to go back to your example, and

526
00:26:13,960 --> 00:26:15,439
Speaker 1: first of all, I want to call out and just

527
00:26:15,480 --> 00:26:19,080
Speaker 1: say thank you for your transparency and your honesty and

528
00:26:19,119 --> 00:26:23,240
Speaker 1: be willing to well. I'm being sincere because I know

529
00:26:23,280 --> 00:26:26,239
Speaker 1: the way you operate. You're you truly operate like a

530
00:26:26,280 --> 00:26:31,040
Speaker 1: good fiduciary advisor, not just a real estate salesperson. And

531
00:26:31,040 --> 00:26:33,760
Speaker 1: that's why we think so highly of you and trust

532
00:26:33,800 --> 00:26:35,959
Speaker 1: you and love having you on the show. So I

533
00:26:36,000 --> 00:26:36,879
Speaker 1: mean that sincerely.

534
00:26:37,000 --> 00:26:37,320
Speaker 4: Thank you.

535
00:26:37,920 --> 00:26:40,000
Speaker 1: The point I want to add to your prior comment

536
00:26:40,160 --> 00:26:42,359
Speaker 1: is for those folks that maybe aren't in that six

537
00:26:42,400 --> 00:26:45,160
Speaker 1: to eight year window now, the key thing is to

538
00:26:45,200 --> 00:26:48,360
Speaker 1: not go through lifestyle creep and just because you're renting,

539
00:26:48,800 --> 00:26:51,960
Speaker 1: spend one hundred percent of your discretionary income, so you

540
00:26:52,080 --> 00:26:55,600
Speaker 1: don't build up that emergency fund earmarked for a home

541
00:26:55,680 --> 00:26:58,359
Speaker 1: down payment, right, And is that what you talk about

542
00:26:58,640 --> 00:27:01,399
Speaker 1: to your clients that maybe aren't ready yet, but you

543
00:27:01,520 --> 00:27:05,199
Speaker 1: know need to be ready in four or five years

544
00:27:05,359 --> 00:27:06,240
Speaker 1: one hundred percent.

545
00:27:06,320 --> 00:27:08,960
Speaker 4: You always want to be planning for your future, So

546
00:27:09,480 --> 00:27:12,840
Speaker 4: finding ways to save, even if it's a couple of

547
00:27:12,840 --> 00:27:15,840
Speaker 4: bucks some months, or you know, one hundred dollars here,

548
00:27:16,440 --> 00:27:21,320
Speaker 4: fifty dollars there, definitely setting that money aside, not only

549
00:27:21,359 --> 00:27:24,679
Speaker 4: for buying a home, but you know, just life, you

550
00:27:24,760 --> 00:27:27,760
Speaker 4: never know what's going to happen along the way, and

551
00:27:28,119 --> 00:27:32,120
Speaker 4: if you are prepared for any you know, your car

552
00:27:32,200 --> 00:27:36,720
Speaker 4: breaks down, okay, if you have no emergency fund, you

553
00:27:36,720 --> 00:27:39,760
Speaker 4: you can't fix your car, you can't get around. So

554
00:27:39,880 --> 00:27:42,320
Speaker 4: it's the same thing with the house, and it definitely

555
00:27:43,119 --> 00:27:46,760
Speaker 4: is starting to put money away is so important. The

556
00:27:46,840 --> 00:27:49,320
Speaker 4: other thing that I'd like to tell buyers real quick,

557
00:27:49,359 --> 00:27:52,199
Speaker 4: and I know that we're up against the clock, is

558
00:27:52,800 --> 00:27:57,560
Speaker 4: checking your credit because having good credit will go a

559
00:27:57,680 --> 00:28:00,640
Speaker 4: long way for getting the best rates when it does

560
00:28:00,720 --> 00:28:02,240
Speaker 4: come time for you to buy a house.

561
00:28:02,960 --> 00:28:05,040
Speaker 3: Great point and very important point.

562
00:28:05,119 --> 00:28:07,919
Speaker 1: Thanks as always so much, Michelle. You're listening to Simply

563
00:28:07,960 --> 00:28:10,639
Speaker 1: Money presented by all Worth Financial on fifty five KRC

564
00:28:11,160 --> 00:28:18,400
Speaker 1: the talk station. You're listening to Simply Money presented by

565
00:28:18,400 --> 00:28:21,720
Speaker 1: all Worth Financial on Bob Sponseller along with Brian James.

566
00:28:22,240 --> 00:28:24,280
Speaker 1: Do you have a financial question you'd like for us

567
00:28:24,320 --> 00:28:26,440
Speaker 1: to answer. There's a red button you can click while

568
00:28:26,480 --> 00:28:29,320
Speaker 1: you're listening to the show right on the iHeart app.

569
00:28:29,400 --> 00:28:32,679
Speaker 1: Simply record your question and it will come straight to

570
00:28:32,760 --> 00:28:37,280
Speaker 1: us Brian, Jason or John excuse me, and Mason leads

571
00:28:37,320 --> 00:28:40,200
Speaker 1: us off tonight. He says, we've been building cash reserves

572
00:28:40,680 --> 00:28:43,680
Speaker 1: waiting for a market ball back, but it never seems

573
00:28:43,680 --> 00:28:46,400
Speaker 1: to come. How do we decide when to put that

574
00:28:46,520 --> 00:28:49,360
Speaker 1: money back to work without guessing wrong?

575
00:28:50,280 --> 00:28:54,080
Speaker 2: Well, I hope you haven't set aside too much because

576
00:28:54,480 --> 00:28:56,720
Speaker 2: this is kind of the what we're living through right now,

577
00:28:56,760 --> 00:28:58,360
Speaker 2: the reason that we don't want to do those kinds

578
00:28:58,360 --> 00:28:58,640
Speaker 2: of things.

579
00:28:59,240 --> 00:29:00,560
Speaker 3: At the end of the day, what you're trying to

580
00:29:00,600 --> 00:29:01,719
Speaker 3: do is time the market.

581
00:29:02,080 --> 00:29:04,640
Speaker 2: And you know, whether that's done out of fear or greed,

582
00:29:04,760 --> 00:29:07,440
Speaker 2: it's still timing and it's not something we can control.

583
00:29:07,480 --> 00:29:09,160
Speaker 2: You can be right nine times in a row and

584
00:29:09,200 --> 00:29:11,480
Speaker 2: that tenth time comes back around to get you. So,

585
00:29:11,920 --> 00:29:14,600
Speaker 2: you know, even even with money paying four or five

586
00:29:14,640 --> 00:29:16,960
Speaker 2: percent on money market, it's inflation is still eating away.

587
00:29:17,000 --> 00:29:20,680
Speaker 2: You're purchasing power over time, So missing just the ten

588
00:29:20,800 --> 00:29:23,040
Speaker 2: best days in the market over twenty years can cut

589
00:29:23,040 --> 00:29:23,960
Speaker 2: that return in half.

590
00:29:24,320 --> 00:29:25,760
Speaker 3: So really, what should you do now?

591
00:29:25,800 --> 00:29:28,120
Speaker 2: I'd say stop paying attention to the market, you know,

592
00:29:28,440 --> 00:29:30,320
Speaker 2: maybe do maybe do a little quick math and figure

593
00:29:30,320 --> 00:29:32,120
Speaker 2: out exactly how much has been left on the table

594
00:29:32,160 --> 00:29:34,440
Speaker 2: over whatever this time period is you've been sitting in cash,

595
00:29:34,760 --> 00:29:36,959
Speaker 2: just so you can be reminded not not to you know,

596
00:29:37,000 --> 00:29:38,920
Speaker 2: not to try to pull the strategy too many times.

597
00:29:39,360 --> 00:29:41,280
Speaker 2: But if you're nervous about putting it all into once

598
00:29:41,280 --> 00:29:42,920
Speaker 2: because you feel like the train has left the station,

599
00:29:43,080 --> 00:29:45,520
Speaker 2: spread it out over time, you know, maybe divide it

600
00:29:45,520 --> 00:29:47,680
Speaker 2: by six a little bit over over the next six

601
00:29:47,720 --> 00:29:49,480
Speaker 2: months and then let it go. Let it do its job.

602
00:29:49,520 --> 00:29:51,400
Speaker 2: Don't be surprised when the market pulls back. That's a

603
00:29:51,440 --> 00:29:54,120
Speaker 2: guarantee I can give you it's gonna happen. But this

604
00:29:54,200 --> 00:29:56,600
Speaker 2: is you know, I hate to see people thinking they're

605
00:29:56,600 --> 00:29:59,640
Speaker 2: making responsible financial decisions. Then they wind up throwing the

606
00:29:59,640 --> 00:30:01,920
Speaker 2: money in, and the market does take a downturn, and

607
00:30:01,920 --> 00:30:04,040
Speaker 2: then those people tend to decide that the market has

608
00:30:04,080 --> 00:30:06,880
Speaker 2: targeted them for failure. The market could care less about you,

609
00:30:07,240 --> 00:30:09,120
Speaker 2: or your goals or your money. It's going to do

610
00:30:09,200 --> 00:30:10,920
Speaker 2: what it does. You have to learn to let it

611
00:30:11,000 --> 00:30:12,800
Speaker 2: do what it to, how to ride it and not

612
00:30:12,880 --> 00:30:14,560
Speaker 2: try to tap dance in and out of it.

613
00:30:15,040 --> 00:30:16,880
Speaker 3: So let's move on to Greg in Westchester.

614
00:30:16,960 --> 00:30:19,440
Speaker 2: So Greg's got a slug of company stock and his

615
00:30:19,720 --> 00:30:23,200
Speaker 2: retirement plan. He's concerned that it's become a pretty big

616
00:30:23,240 --> 00:30:26,280
Speaker 2: part of his portfolio, and he's asking Bob, are those

617
00:30:26,280 --> 00:30:28,600
Speaker 2: option strategies like Collers protective puts?

618
00:30:28,680 --> 00:30:30,320
Speaker 3: Is that realistic for an individual investor?

619
00:30:30,400 --> 00:30:30,440
Speaker 4: Or?

620
00:30:30,480 --> 00:30:31,920
Speaker 3: Is that better left of the institutions.

621
00:30:33,160 --> 00:30:36,480
Speaker 1: I think they're absolutely appropriate for individual investors, and I

622
00:30:36,560 --> 00:30:40,960
Speaker 1: wish more individual investors knew about them and actually use that.

623
00:30:40,960 --> 00:30:45,680
Speaker 1: That being said, they're awfully helpful if you're working with

624
00:30:45,760 --> 00:30:49,240
Speaker 1: a good fiduciary advisor that even knows what things these

625
00:30:49,280 --> 00:30:51,000
Speaker 1: things are and how to deploy them.

626
00:30:51,040 --> 00:30:54,240
Speaker 3: So let's get into that a little bit. A protective put.

627
00:30:54,320 --> 00:30:57,160
Speaker 1: I mean, sometimes our industry does a great job of

628
00:30:57,160 --> 00:31:00,520
Speaker 1: making this stuff. You know, seem way more common implicated

629
00:31:00,560 --> 00:31:03,160
Speaker 1: than it is. Think about if you've got a million

630
00:31:03,240 --> 00:31:07,240
Speaker 1: dollar home, Okay, you would not sit out there with

631
00:31:07,320 --> 00:31:10,040
Speaker 1: that home and have no insurance on the house. Right

632
00:31:10,120 --> 00:31:12,920
Speaker 1: if it burns down, you know, or a flood comes

633
00:31:12,920 --> 00:31:15,640
Speaker 1: through or whatever and wipes it out, you're you're eliminating

634
00:31:15,680 --> 00:31:17,840
Speaker 1: a big chunk of your net worth. Same thing with

635
00:31:17,880 --> 00:31:21,280
Speaker 1: the stock. All the protective put is is I am

636
00:31:21,320 --> 00:31:25,560
Speaker 1: buying an option to sell that stock at this price

637
00:31:25,960 --> 00:31:28,840
Speaker 1: by this set date, and you got to pay, you know,

638
00:31:28,880 --> 00:31:31,920
Speaker 1: a premium to do that. You know, just treat it

639
00:31:32,000 --> 00:31:35,320
Speaker 1: like an insurance premium. If the stock keeps going up

640
00:31:35,400 --> 00:31:38,600
Speaker 1: and you hold that put to expiration, it goes away

641
00:31:39,280 --> 00:31:43,080
Speaker 1: and that's a lost you know cost to ensure that stock,

642
00:31:43,320 --> 00:31:46,000
Speaker 1: just like you know, premiums you pay on your home.

643
00:31:46,600 --> 00:31:48,600
Speaker 1: If the stock starts to go down, you don't have

644
00:31:48,640 --> 00:31:50,160
Speaker 1: to hold the put to expiration.

645
00:31:50,360 --> 00:31:51,080
Speaker 3: You can sell it.

646
00:31:51,120 --> 00:31:55,280
Speaker 1: If you get that eight ten percent pullback, what have you.

647
00:31:55,280 --> 00:31:57,760
Speaker 1: You can always sell the put for a profit. But

648
00:31:57,840 --> 00:32:00,120
Speaker 1: you got the protection, and if you were right and

649
00:32:00,160 --> 00:32:02,760
Speaker 1: the stock went down, you were protected and made a

650
00:32:02,760 --> 00:32:04,520
Speaker 1: little money on the down on the you know, with

651
00:32:04,640 --> 00:32:08,640
Speaker 1: your downside protection. All a caller is is an attempt

652
00:32:08,640 --> 00:32:12,000
Speaker 1: to help get some of that insurance paid for. Meaning

653
00:32:12,480 --> 00:32:15,600
Speaker 1: you sell a call option, meaning you're you are willing

654
00:32:15,640 --> 00:32:19,040
Speaker 1: to sell your stock by a certain date at a

655
00:32:19,040 --> 00:32:23,120
Speaker 1: certain price, and you receive a premium in order, you know,

656
00:32:23,200 --> 00:32:26,360
Speaker 1: in return for selling that call option, and that helps

657
00:32:26,400 --> 00:32:29,320
Speaker 1: pay for the call op or the put protection. So

658
00:32:29,680 --> 00:32:31,840
Speaker 1: you know, in a caller strategy, you want to spread

659
00:32:31,840 --> 00:32:35,280
Speaker 1: these things apart a little bit and uh usually you

660
00:32:35,280 --> 00:32:38,400
Speaker 1: know that way, you have a little bit more upside left.

661
00:32:38,640 --> 00:32:41,360
Speaker 1: You know, things continue to go up, but you're helping

662
00:32:41,440 --> 00:32:46,400
Speaker 1: pay for some downside protection. It's a wonderful strategy. Unfortunately,

663
00:32:46,480 --> 00:32:49,080
Speaker 1: a lot of people have no idea what I'm talking about,

664
00:32:49,120 --> 00:32:52,560
Speaker 1: including advisors, and don't know how to put this into

665
00:32:52,600 --> 00:32:55,960
Speaker 1: a you know, responsible financial plan. Hope that helps Greg,

666
00:32:56,360 --> 00:32:59,040
Speaker 1: all right, Michael, and Hyde Park says, I'm being offered

667
00:32:59,040 --> 00:33:03,360
Speaker 1: a deferred compensation plan, but I'm worried about company solvency.

668
00:33:03,800 --> 00:33:07,240
Speaker 1: How do you evaluate that kind of risk before committing

669
00:33:07,280 --> 00:33:09,920
Speaker 1: to even get involved in the deferred comp plan?

670
00:33:10,480 --> 00:33:12,080
Speaker 3: So yeah, Michael, congratulations.

671
00:33:12,080 --> 00:33:14,600
Speaker 2: Obviously you're working for an employer that has put together

672
00:33:15,080 --> 00:33:17,280
Speaker 2: some great benefit plans for their for the employees. For

673
00:33:17,320 --> 00:33:19,880
Speaker 2: those who might not know, a deferred compensation plan. This

674
00:33:19,960 --> 00:33:21,200
Speaker 2: is not a four to oh one K. This is

675
00:33:21,240 --> 00:33:23,480
Speaker 2: something in addition to a four oh one K. Four

676
00:33:23,480 --> 00:33:25,400
Speaker 2: oh one K, of course, has its own limitations of

677
00:33:25,400 --> 00:33:28,400
Speaker 2: how much money can go into somewhere between twenty three

678
00:33:28,480 --> 00:33:30,760
Speaker 2: and thirty thousand dollars depending on your age. That is

679
00:33:30,800 --> 00:33:34,880
Speaker 2: available to everybody out there. A deferred comp plan is different.

680
00:33:34,880 --> 00:33:37,920
Speaker 2: It's not made available to everybody, to absolutely everybody. It's

681
00:33:38,000 --> 00:33:40,480
Speaker 2: usually an executive type of a plan, something for higher

682
00:33:40,680 --> 00:33:44,960
Speaker 2: income owners generally speaking, but also the big risk and

683
00:33:45,000 --> 00:33:49,160
Speaker 2: Michael's already included into this, these are assets of the company.

684
00:33:49,200 --> 00:33:51,880
Speaker 2: What that means is that a deferred comp plan is

685
00:33:51,960 --> 00:33:54,520
Speaker 2: it's a it could be a acclaimed by a creditor.

686
00:33:54,520 --> 00:33:57,520
Speaker 2: If that company ever gets sued by somebody, or or

687
00:33:57,600 --> 00:34:01,200
Speaker 2: goes bankrupt or whatever. That basically means that these assets

688
00:34:01,200 --> 00:34:03,240
Speaker 2: are exposed. Your four oh one K that is not

689
00:34:03,480 --> 00:34:05,760
Speaker 2: that is very clearly walled off. Nobody can touch it.

690
00:34:06,040 --> 00:34:07,360
Speaker 2: So what do you have to do? You have to

691
00:34:07,400 --> 00:34:09,680
Speaker 2: treat this like any other company. Forget the fact that

692
00:34:09,719 --> 00:34:12,480
Speaker 2: you work there. Make sure you understand your own company's

693
00:34:12,520 --> 00:34:14,879
Speaker 2: credit ratings. If it's publicly traded. What is their debt

694
00:34:14,880 --> 00:34:17,719
Speaker 2: load their what do their financial statements look like? Look

695
00:34:17,719 --> 00:34:20,480
Speaker 2: at trends and cash flow profit margins, have they made

696
00:34:20,560 --> 00:34:21,520
Speaker 2: layoffs recently?

697
00:34:21,800 --> 00:34:25,000
Speaker 3: And you can even ask HR for planned documents.

698
00:34:24,640 --> 00:34:27,160
Speaker 2: That they should be shoving them in your face anyway,

699
00:34:27,160 --> 00:34:29,040
Speaker 2: if you've got this as an option, but make sure

700
00:34:29,080 --> 00:34:30,839
Speaker 2: you understand exactly where that goes.

701
00:34:30,880 --> 00:34:32,600
Speaker 3: So, yes, you're right to identify some risks.

702
00:34:32,600 --> 00:34:34,680
Speaker 2: There could be a good opportunity here, but it could

703
00:34:34,680 --> 00:34:36,520
Speaker 2: also be risky as well, so just make sure you

704
00:34:36,640 --> 00:34:38,400
Speaker 2: understand what you're getting into. But otherwise those can be

705
00:34:38,480 --> 00:34:42,759
Speaker 2: really beneficial programs. So one more quick one. Alison and

706
00:34:42,800 --> 00:34:45,520
Speaker 2: Lovelin's got some rental properties. They've gone up, but the

707
00:34:45,600 --> 00:34:46,919
Speaker 2: maintenance is wearing them out.

708
00:34:46,960 --> 00:34:48,959
Speaker 3: So what would she asks Bob? What are their best

709
00:34:48,960 --> 00:34:49,760
Speaker 3: exit strategies?

710
00:34:49,800 --> 00:34:52,040
Speaker 2: How can they get out without triggering these massive capital

711
00:34:52,080 --> 00:34:52,960
Speaker 2: gains of real estate?

712
00:34:53,480 --> 00:34:55,600
Speaker 1: Well, I got to move quick here, Alison. The most

713
00:34:55,640 --> 00:34:58,600
Speaker 1: popular option is to use if you don't want to,

714
00:34:58,760 --> 00:35:01,680
Speaker 1: you know, have maintenance headed and be a landlord anymore

715
00:35:01,719 --> 00:35:05,560
Speaker 1: at Delaware statutory trust better known as a passive ten

716
00:35:05,680 --> 00:35:10,080
Speaker 1: thirty one alternatives, So you basically put your property in

717
00:35:10,120 --> 00:35:13,040
Speaker 1: there it gets sold and you get diversified into a

718
00:35:13,400 --> 00:35:18,000
Speaker 1: professionally managed portfolio of real estate. You defer the capital

719
00:35:18,040 --> 00:35:20,880
Speaker 1: gains and you convert this to an income stream. The

720
00:35:20,880 --> 00:35:23,560
Speaker 1: only thing is they're typically a little bit illiquid. You

721
00:35:23,640 --> 00:35:25,480
Speaker 1: got to be willing to hold them for five or

722
00:35:25,480 --> 00:35:28,840
Speaker 1: ten years. But it can be a good strategy to

723
00:35:28,880 --> 00:35:32,760
Speaker 1: defer and spread out that capital gains headache, and also

724
00:35:33,000 --> 00:35:37,840
Speaker 1: get yourself out of the landlord and you know maintenance business,

725
00:35:37,920 --> 00:35:39,919
Speaker 1: which a lot of people want to do is they

726
00:35:40,360 --> 00:35:43,720
Speaker 1: head toward retirement. All right, coming up next, some advice

727
00:35:43,760 --> 00:35:47,560
Speaker 1: on keeping money from wrecking your relationships. You're listening to

728
00:35:47,600 --> 00:35:50,359
Speaker 1: Simply Money, presented by all Worth Financial on fifty five

729
00:35:50,440 --> 00:35:57,960
Speaker 1: KRC the talk station. You're listening to Simply Money presented

730
00:35:58,080 --> 00:36:01,480
Speaker 1: by Allworth Financial on Bob's Hansel along with Brian James.

731
00:36:02,120 --> 00:36:05,040
Speaker 1: Did you know that more than one in three Americans

732
00:36:05,080 --> 00:36:09,440
Speaker 1: say they have lost a friendship because of money, according

733
00:36:09,480 --> 00:36:13,240
Speaker 1: to a new survey from lending Tree. They say financial stress,

734
00:36:13,280 --> 00:36:18,640
Speaker 1: disputes or mismatch spending expectations have driven a wedge between

735
00:36:18,680 --> 00:36:22,400
Speaker 1: people they once called friends. Brian, this is a shame.

736
00:36:22,520 --> 00:36:23,319
Speaker 3: Walk us through it.

737
00:36:23,480 --> 00:36:25,640
Speaker 2: Well, Bob, we've got a survey here showing four out

738
00:36:25,640 --> 00:36:28,760
Speaker 2: of ten admit having had disagreements with friends over money,

739
00:36:28,760 --> 00:36:30,640
Speaker 2: and about a third of them feel pressure to match

740
00:36:30,680 --> 00:36:33,319
Speaker 2: their friends spending, and about one in three bob have

741
00:36:33,480 --> 00:36:36,000
Speaker 2: lied about how well they're doing financially. Well, this shows

742
00:36:36,040 --> 00:36:37,680
Speaker 2: us that money can be a bit of a minefield.

743
00:36:37,960 --> 00:36:40,080
Speaker 2: This is one of the last domains where we actually

744
00:36:40,120 --> 00:36:42,640
Speaker 2: reveal our vulnerabilities because people can see what we spend

745
00:36:42,640 --> 00:36:46,200
Speaker 2: money on, income, debt, our fears, aspirations. When all of

746
00:36:46,200 --> 00:36:48,400
Speaker 2: our friends are at different stages or just have different

747
00:36:48,440 --> 00:36:51,280
Speaker 2: attitudes for how this is working for him, these differences

748
00:36:51,320 --> 00:36:53,920
Speaker 2: can really magnify between people, and it can drive a

749
00:36:53,960 --> 00:36:56,760
Speaker 2: wedge between between people who otherwise we're good family members

750
00:36:56,760 --> 00:36:57,200
Speaker 2: and friends.

751
00:36:58,560 --> 00:37:01,520
Speaker 1: Well, Brian, what this comes down to me is just uh,

752
00:37:02,000 --> 00:37:05,000
Speaker 1: I'll just say it insecurity. You know, you've got people

753
00:37:05,040 --> 00:37:07,680
Speaker 1: that have a lot of money, where their whole identity

754
00:37:07,800 --> 00:37:10,320
Speaker 1: is tied up in their wealth or you know, their income,

755
00:37:10,480 --> 00:37:13,040
Speaker 1: and they like to, you know, lord it over people.

756
00:37:13,080 --> 00:37:17,400
Speaker 1: They talk about their country club membership or their expensive vacation.

757
00:37:17,560 --> 00:37:20,400
Speaker 1: You know, they they want to make everybody know that

758
00:37:20,520 --> 00:37:24,680
Speaker 1: they've made it and they're doing great. If you're around

759
00:37:24,719 --> 00:37:27,120
Speaker 1: people like that, you got to question whether they are

760
00:37:27,239 --> 00:37:30,040
Speaker 1: truly your friend, because if they're gonna if they're got

761
00:37:30,040 --> 00:37:32,160
Speaker 1: to hang that over your head and make you feel

762
00:37:32,200 --> 00:37:34,759
Speaker 1: like less of a person, I would say that's not

763
00:37:34,920 --> 00:37:37,960
Speaker 1: really a friend. On the flip side, if you've got

764
00:37:37,960 --> 00:37:40,480
Speaker 1: people that hang out with folks that have some money

765
00:37:40,520 --> 00:37:43,640
Speaker 1: and you've got less money, and you're expecting that person

766
00:37:44,120 --> 00:37:47,000
Speaker 1: to pay for your stuff, pay for your dinner, you know,

767
00:37:47,080 --> 00:37:49,479
Speaker 1: all that kind of stuff. You know, that's not good either.

768
00:37:49,600 --> 00:37:52,399
Speaker 1: So I think it comes down to not tying your

769
00:37:52,480 --> 00:37:57,279
Speaker 1: identity to money. True friendships, UH can put all that

770
00:37:57,360 --> 00:37:59,399
Speaker 1: kind of stuff aside, have a little bit of a

771
00:37:59,440 --> 00:38:04,160
Speaker 1: feel or where your friend really is financially, and treat

772
00:38:04,200 --> 00:38:08,280
Speaker 1: one another with you know, mutual respect and dignity and

773
00:38:08,480 --> 00:38:11,120
Speaker 1: keep from getting into, you know, all these kind of messes.

774
00:38:11,160 --> 00:38:14,239
Speaker 1: I hate to see relationships end because of money. Here's

775
00:38:14,280 --> 00:38:18,520
Speaker 1: the all Worth advice. Prevent money from becoming that silent wedge.

776
00:38:18,560 --> 00:38:22,600
Speaker 1: Define your terms, talk early, protect both your financial peace

777
00:38:23,000 --> 00:38:26,320
Speaker 1: and your friendships. Thanks for listening tonight. You've been listening

778
00:38:26,320 --> 00:38:28,880
Speaker 1: to Simply Money, presented by all Worth Financial on fifty

779
00:38:28,880 --> 00:38:31,120
Speaker 1: five KRC, the talk station