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Speaker 1: Tonight what some might see as a sharp pullback tied

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Speaker 1: to AI that has some investors asking the same question,

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Speaker 1: is this just a blip or a pullback or something

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Speaker 1: that really matters. You're listening to Simply Money, presented by

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Speaker 1: All Word Financial on Bob Spondseller along with Brian James.

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Speaker 2: Well, we obviously.

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Speaker 1: Talk a lot about AI stocks on this show, and

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Speaker 1: you know, we talk about the Magnificent seven and those

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Speaker 1: are really synonymous, you know, depending on which companies we're

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Speaker 1: talking about, usually in the context of potential volatility and valuation,

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Speaker 1: you know, Chips, cloud, infrastructure, all that. And we've seen

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Speaker 1: a bit of a pullback in these stocks, as Brian

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Speaker 1: and I have been talking about for what seems like

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Speaker 1: weeks now. We're right in the middle of earning season

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Speaker 1: and these stocks have been priced for what I'll say,

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Speaker 1: price for perfection for weeks and months.

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Speaker 2: Now.

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Speaker 1: We're getting a little pullback here as we're getting the

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Speaker 1: fourth quarter report cards. So Brian, give us a little

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Speaker 1: bit of an update on a couple of companies in particular.

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Speaker 3: Well, I's had some headlines here.

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Speaker 4: So what happened on Tuesday alone, some software and services

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Speaker 4: companies lost about three hundred billion in market value. If

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Speaker 4: you caught win that the market was down that day,

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Speaker 4: well guess what. This was a ground zero for IT.

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Speaker 4: The trigger behind this there's a company called Anthropic, which

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Speaker 4: if you're not close to the IT industry, you might

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Speaker 4: not have heard of it because chat GPT is the

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Speaker 4: what we all think is AI. It's like Kleenex now,

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Speaker 4: But Anthropic has something called Claude, which is for the

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Speaker 4: IT set who knows how this stuff works. This is

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Speaker 4: really the one that they feel is the most powerful,

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Speaker 4: and Claude released, or Anthropic rather released some new AI

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Speaker 4: driven automation tools and it goes beyond just answering questions,

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Speaker 4: so can actually help execute workflows, review documents, managed data,

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Speaker 4: so actual work that's actually getting done. So this could

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Speaker 4: be the one that actually is the big time and

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Speaker 4: money saver for a lot of companies with a high

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Speaker 4: degree of autonomy too. It can do a lot of

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Speaker 4: things on its own. So reason investors got spooked the

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Speaker 4: herd stampeded is because Anthropic isn't just selling this tool.

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Speaker 4: It's enabling companies to build their own workflows, which could

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Speaker 4: potentially replace a lot of these existing software offerings all

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Speaker 4: at the same time, So instead of buying five different platforms,

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Speaker 4: for example, companies could say, you know what, we could

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Speaker 4: just use one AI model and customize it ourselves. That's

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Speaker 4: the sweet spot that Nanthropic has discovered here.

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Speaker 1: Yeah, and even before these Anthropic numbers came out, shares

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Speaker 1: of companies like say Salesforce, HubSpot at Lascian we're already

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Speaker 1: down thirty percent or more over the past year because

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Speaker 1: some have seen this coming. And this is not unlike

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Speaker 1: what we saw when the Internet first came out. You're

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Speaker 1: gonna have winners and losers. There's gonna be companies that

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Speaker 1: are going to be able to adapt to this evolving

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Speaker 1: technologies and others that can't or won't or refuse to

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Speaker 1: even considered doing so, and they're going to take a hit.

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Speaker 1: You know, look at Microsoft that stocks pulled back too.

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Speaker 1: I would say that's another company, Brian, that you know,

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Speaker 1: is building you know, substantial AI models. They're involved in

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Speaker 1: data centers, and they also sell a lot of software. Uh,

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Speaker 1: That stocks pulled back a little bit as well. So

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Speaker 1: I think I think the continuing evolution here is going

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Speaker 1: to be, at the end of the day, how do

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Speaker 1: these companies actually use AI?

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Speaker 2: You're looking at.

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Speaker 1: Companies that are It comes down to how do you

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Speaker 1: manipulate data and information and who is going to be

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Speaker 1: able to build the best platform to manipulate and maneuver

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Speaker 1: that data and information. And we're going to have some

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Speaker 1: winners and losers. It's going to continue to happen. We're

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Speaker 1: going to continue to have volatility in this large cap

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Speaker 1: tech space, and again, it's a reason why you want

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Speaker 1: to diversify your portfolio. I feel like we've been talking

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Speaker 1: about that, you know again for weeks and months now,

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Speaker 1: and we're seeing it start to happen. Does this mean

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Speaker 1: that AI and these software companies are going away. No,

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Speaker 1: it's just a little bit of a reshuffling of the

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Speaker 1: deck here and people are still figuring out what the

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Speaker 1: proper valuation is for these companies based on expected future

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Speaker 1: revenue and earnings growth.

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Speaker 4: Yeah, and this is a tale as old as time too.

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Speaker 4: It's it's just the market evolving, right. So this country

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Speaker 4: has always been a very entrepreneurial, very business oriented place

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Speaker 4: to be and that's nothing more than what's happening here.

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Speaker 4: So if you've got a better product, then we're gonna

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Speaker 4: let the market dictate who the winners are.

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Speaker 3: You know, think back to the days.

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Speaker 4: When AT and T was the world's largest company, or

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Speaker 4: this is this goes back decades, you know, and think

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Speaker 4: of the car industries and all that, and with Xerox

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Speaker 4: was once the leader in the computer world too, right

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Speaker 4: up until Microsoft and Apple showed up. So this isn't new.

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Speaker 4: This is just things cycling here. So the question is

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Speaker 4: is the market overreacting to this? Are we saying this

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Speaker 4: is a problem. Well, in video, that's one of the

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Speaker 4: famous names out there, so their CEO pushback really hard

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Speaker 4: on the idea that AI replaces any software.

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Speaker 3: He's basically saying that.

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Speaker 4: The notion the tools are in decline are going to

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Speaker 4: be replaced is and I'm quoting him here, the most

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Speaker 4: illogical thing in the world. His argument, though, is that

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Speaker 4: AI companies aren't going to rebuild everything from scratch. They're

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Speaker 4: going to use existing software, not reinvent it. So he's

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Speaker 4: basically not overly concerned. And again in video, by the way,

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Speaker 4: this is the company that they don't produce AI themselves,

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Speaker 4: they produce a lot of the hardware that supports it.

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Speaker 4: So what he's saying is, if you are a human

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Speaker 4: or a robot, would you rebuild tools or use tools.

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Speaker 4: Obviously you use them. So the debate really is this

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Speaker 4: is AI going to be its own thing or does

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Speaker 4: it just does it complement the software That's what the

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Speaker 4: market's trying to figure out right now.

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Speaker 1: Or another option in the case of Navidia is buy

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Speaker 1: some software companies. I mean they build the chips and

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Speaker 1: all that, if they feel like they can integrate this

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Speaker 1: stuff together better than some of the existing players are doing. Shoot,

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Speaker 1: they've got the balance sheet right now, how in the

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Speaker 1: stock valuation to go out and buy some of this

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Speaker 1: software if they really like it. But I want to

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Speaker 1: bring this closer to home, and just a practical example,

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Speaker 1: let's look at how you and I actually operate day

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Speaker 1: to day here at all Worth. You know these days

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Speaker 1: we use Salesforce, you know, to manage our data and workflows,

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Speaker 1: and we also use chat GPT, and it's it's going

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Speaker 1: to be an interesting thing, you know, to watch the

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Speaker 1: evolution of this. You know, people smarter than me, higher

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Speaker 1: pay grade than I'm at that make these decisions on

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Speaker 1: how we're going to deploy technology. They're looking at what

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Speaker 1: we're spending on all these different tools, and they're probably

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Speaker 1: constantly looking at is there a more efficient way to

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Speaker 1: merge or blend how all this information is manipulated. I

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Speaker 1: think that's what's going on in every single company across America,

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Speaker 1: in every industry. It's how do you take all these

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Speaker 1: new tools and and you know, manipulate them and put

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Speaker 1: them together in a way that's really going to move

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Speaker 1: the ball all forward in terms of productivity and and

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Speaker 1: you know, eliminate duplication.

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Speaker 3: Yeah, and that and that's this is not a new thing.

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Speaker 4: It just comes with a fancy, sexy headline because it

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Speaker 4: happens to be the catalyst of the current stock market,

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Speaker 4: uh bullmarket with with all of the AI investment that's

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Speaker 4: going on. But this has always been happening, right, So

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Speaker 4: it wasn't that long ago that the big move was

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Speaker 4: away from paper for everybody onto digital things. So no

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Speaker 4: more are you really looking for, you know, signing stuff

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Speaker 4: that you get in the mail and then returning it

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Speaker 4: in an envelope. You're mostly doing it online electronically. Now,

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Speaker 4: think of the savings for that. You don't need staff

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Speaker 4: opening emails and scanning things and making copies and putting

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Speaker 4: them in files, and all those files taking up room

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Speaker 4: that you have to spend.

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Speaker 3: Office dollars, real estate dollars on.

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Speaker 4: So this is nothing more than an evolution that's happening

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Speaker 4: with a bullhorn because it happens to be making a

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Speaker 4: lot of people a lot of money right now, and

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Speaker 4: more specifically this week, it happens to be losing people

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Speaker 4: a lot of money right now because there's we have

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Speaker 4: this market pullback, which is no different than any other pullback.

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Speaker 1: Yeah, speaking of pullbacks, I mean we need to look

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Speaker 1: no further than Google. Google's parent company, Alphabet released its

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Speaker 1: earnings or a fourth quarter report card late, you know,

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Speaker 1: yesterday after the market closed, and it was a very

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Speaker 1: good quarter, Brian. I mean they beat on the revenue

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Speaker 1: and earnings projection side. All the numbers look great, they're

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Speaker 1: meeting all their numbers.

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Speaker 2: And yet the.

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Speaker 1: Stock pulled back, you know, three percent or so. And

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Speaker 1: I think that just speaks to, you know, the point

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Speaker 1: I was trying to make earlier. These these stocks are

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Speaker 1: priced to perfection right now, and in some cases, even

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Speaker 1: when you get what most would consider a very solid

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Speaker 1: earnings report, yeah you're gonna give back three four five percent.

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Speaker 1: That's just how these volatile growth oriented stocks behave. It

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Speaker 1: doesn't mean sell them. It doesn't mean the bull market

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Speaker 1: it's over is over. It's just you got to be

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Speaker 1: prepared for a little bit of volatility here anytime you

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Speaker 1: have high growth stocks in your portfolio. And it's just

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Speaker 1: a reminder to not put all your eggs in one basket,

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Speaker 1: meaning big cap, large cap growth stocks, because when you

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Speaker 1: do so, you're going to subject that portfolio to more

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Speaker 1: volatility than maybe you want to have. And we're continuing

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Speaker 1: to see a pivot more toward large cap value stocks,

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Speaker 1: consumer stick cyclical stocks, you know, more dividend payers. Those

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Speaker 1: are outperforming a little bit so far this year. Like

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Speaker 1: you said, Brian, it's just the normal EBB and flow

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Speaker 1: here that we all need to be prepared for if

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Speaker 1: we're responsibly managing our retirement plan and our investment portfolio.

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Speaker 3: That's right. So it makes sure you make sure you

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Speaker 3: understand what you own.

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Speaker 4: And like we've said a lot, if you have funds

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Speaker 4: and things investments that you have fallen in love with

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Speaker 4: because they've done so well over the last several years,

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Speaker 4: there is a really good chance they are heavily, heavily,

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Speaker 4: heavily overweighted.

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Speaker 3: Toward those mag seven stocks.

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Speaker 4: And again we've shared a number of examples of this

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Speaker 4: throughout time, especially in the first Internet way when there

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Speaker 4: were several fun families that made their names off of

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Speaker 4: their outperformance, and it was simply because a a lot

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Speaker 4: of their funds had the exact same holdings in them

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Speaker 4: all from the original Internet wave when I'm talking twenty

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Speaker 4: six years.

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Speaker 3: Ago now in the late nineties, early two thousand. So

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Speaker 3: to make sure you know what you own under the hood.

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Speaker 1: Brian, I mean, at least what I am finding when

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Speaker 1: dealing with my own clients and annual review meetings. I

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Speaker 1: think folks that have invested for a long time, they're

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Speaker 1: used to this, and they want they're not betting the

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Speaker 1: farm on anyone sector or anyone you know, company or

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Speaker 1: what have you. They want a diversified portfolio and they

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Speaker 1: understand how the game works. Anything you want to share about,

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Speaker 1: you know, client update meetings you've been having so far

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Speaker 1: in twenty twenty six, I mean to me, people are calm,

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Speaker 1: Their money's fine, it's diversified. Are you seeing any alarm

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Speaker 1: bells out there or things generally fine with clients? I

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Speaker 1: am seeing people remaining relatively calm and they understand this

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Speaker 1: is just how the markets work.

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Speaker 4: Yeah, and then I'm seeing pretty much the same thing.

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Speaker 4: People are fairly confident. Again, what I'm trying to do

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Speaker 4: is get people confident enough to go ahead and pull

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Speaker 4: the trigger on things that they wanted to do, because

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Speaker 4: you know, the money's here right now, we're at a peak.

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Speaker 4: You've probably if you've stayed invested this whole time, you've

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Speaker 4: got more money than you've ever had in your life.

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Speaker 4: And so therefore, if you're going to do things, if

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Speaker 4: you know you've got expenses coming up, now is the

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Speaker 4: time to start going ahead and maybe protecting those assets

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Speaker 4: for those big checks you're going to write later this

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Speaker 4: year for whatever reason, if we simply let it ride

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Speaker 4: because it's doing well, or we have the attitude I've

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Speaker 4: seen this a number of times, we have the attitude of, well,

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Speaker 4: my IRA is getting eleven percent right now, that's great.

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Speaker 4: You just told me what it did last year. So

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Speaker 4: if you're going to ride it until it doesn't get

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Speaker 4: that anymore, when you're guaranteeing yourself, you're going to sell

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Speaker 4: at not a peak. I would rather you sell at

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Speaker 4: a peak to do the things that you knew you

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Speaker 4: were going to do anyway, So let's just be thoughtful

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Speaker 4: and plan ahead, burn in a hand, to in a bush,

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Speaker 4: and all I can rattle off another bunch of cliches

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Speaker 4: that all kind of make sense in this environment.

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Speaker 1: Well, and you probably hear me say this way too

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Speaker 1: many times on the show, but I'll repeat it again,

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Speaker 1: you know, and it's making it's just you know, reiterating

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Speaker 1: your point. Do not treat your growth stock portfolio like

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Speaker 1: an ATM machine. There's a reason that we pull some

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Speaker 1: money out and have it in cash, have it out

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Speaker 1: of harm's way in preparation for some of that spending,

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Speaker 1: whether it be vacations, home repair, car purchases. There's a

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Speaker 1: reason we advise people to do that. All right, here's

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Speaker 1: the all Worth advice. Markets tend to overreact in moments

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Speaker 1: of uncertainty.

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Speaker 2: Our job, working together is to.

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Speaker 1: Stay grounded in fundamentals, not news headlines. Coming up next,

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Speaker 1: we tackle the hidden risk that could totally wreck or

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Speaker 1: substantially impact your financial freedom down the road. You're listening

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

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

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Speaker 1: present up by all Worth Financial on Bob Sponseller along

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Speaker 1: with Brian James Straight ahead of six forty three, we're

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Speaker 1: gonna be tackling three issues that seem to hit close

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Speaker 1: to home for many. What to do when a mutual

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Speaker 1: fund keeps throwing off those surprise capital gain distributions, How

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Speaker 1: often should you really be rebalancing your portfolio? And how

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Speaker 1: to think about liquidity when most of your net worth

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Speaker 1: is tied up and not easily accessible.

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Speaker 2: All right, When we talk.

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Speaker 1: About inflation, most people think about groceries, gas, maybe rent

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Speaker 1: or housing costs. And when those numbers start to come

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Speaker 1: down or relax as they have started to do, there

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Speaker 1: can be a sense of relief like, okay, maybe things

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Speaker 1: are getting back to normal. But headline inflation really only

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Speaker 1: tells part of the story. And if you're retired, you

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Speaker 1: know what we're about to talk about very well. What

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Speaker 1: we really want to call out here is folks that

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Speaker 1: are thinking about are maybe about to retire or even

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Speaker 1: within a decade of retirement. There's one category that deserves

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Speaker 1: special attention, and that's healthcare. Brian talk about this a

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Speaker 1: lot with our clients. It is a real thing. The

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Speaker 1: cost is going up. And before you get into some

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Speaker 1: of the updated headline, I mean, I'll again going back

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Speaker 1: to our company at all Worth. All Worth has basically

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Speaker 1: eaten the price increase of healthcare. I mean, we still

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Speaker 1: have to pay for some of it ourselves, but you know,

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Speaker 1: our company, at least for the last three, four or

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Speaker 1: five years, they have covered the increase in the premium cost.

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Speaker 1: And that's not happening anymore in twenty twenty six because

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Speaker 1: these premiums have shot up sizeably. And I know all

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Speaker 1: of our clients and folks out there that listen are

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Speaker 1: dealing with the same thing. It's happening with Medicare premiums,

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Speaker 1: it's happening with healthcare premiums for folks that are still working.

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Speaker 1: It's a real issue, and we have to all make

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Speaker 1: sure that we're modeling this in our financial plans.

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Speaker 3: Yeah, and then that's exactly what we do.

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Speaker 4: What you just described is when we build a financial plan,

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Speaker 4: we're going to have a living expenses goal as well

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Speaker 4: as a healthcare goal. And nobody knows what their healthcare

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Speaker 4: expenses are going to be, but we are going to

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Speaker 4: track it separately so we have eyeballs on it. And

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Speaker 4: more importantly, because it will inflate more rapidly than the

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Speaker 4: cost of a loaf of bread at the store. So

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Speaker 4: federal data shows healthcare inflation currently is running about three

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Speaker 4: and a half percent annualize right now.

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Speaker 3: That's honestly, I think that's.

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Speaker 4: A little bit on the low side. That's still higher

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Speaker 4: than core inflation. Core CPI is around two point eight.

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Speaker 4: I remember that's the one that strips out in food

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Speaker 4: and energy because those can be really, really volatile. But

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Speaker 4: that three and a half percent percent number really understates

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Speaker 4: what retirees actually experienced when we do these plans, we're

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Speaker 4: using more like four and a half to five percent,

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Speaker 4: just to make sure we got eyeballs on it. So

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Speaker 4: this is coming from We've got some great information from

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Speaker 4: Health View Services they work for. That's a company that

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Speaker 4: works with financial advisors on how to model these things.

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Speaker 4: Their conclusion is pretty eye opening. The average annual increase

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Speaker 4: in healthcare costs throughout retirement that's almost six percent.

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Speaker 3: So you know that's not a typo. That is the way.

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Speaker 3: That's the number they're seeing, and that's not just inflation.

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Speaker 4: That includes the reality that as we age, we are

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Speaker 4: using more healthcare services, which drives the price up. Of course,

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Speaker 4: that's more doctor visits, more prescriptions, more procedures, all of

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Speaker 4: that is layered on top of rising prices. So that's why,

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Speaker 4: you know, we want to make sure that we know

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Speaker 4: get an idea of what the expenses are right now.

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Speaker 4: If you're your typical Medicare recipient, you might be spending

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Speaker 4: five six thousand dollars per year on yourself. Double that

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Speaker 4: if you're a married couple. That includes the Medicare premiums,

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Speaker 4: the assumption that you'd have probably a supplemental policy out there,

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Speaker 4: and a little bit of fudge factor for the of

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Speaker 4: the equipment and stuff on the side, doctor visits, copays,

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Speaker 4: those kinds of things.

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Speaker 1: Yeah, and a big number that jumped out to me.

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Speaker 1: Back to this Health View analysis of government data, they

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Speaker 1: are expecting just Medicare Part B premiums, they are projecting

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Speaker 1: those to rise by about seven percent per year through

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Speaker 1: twenty twenty through twenty thirty four. In Part D drug premiums,

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Speaker 1: those are expected to rise by a little under five

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Speaker 1: percent annually. Brian, I think you know, to state the obvious.

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Speaker 1: We know that Medicare and Social Security are under funded

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Speaker 1: in this country. The government is going to look for

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Speaker 1: any way possible to keep these program solvent. So in

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Speaker 1: the part of an easy way to do that is

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Speaker 1: just raise the premium costs that come out of people's

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Speaker 1: Social Security checks, and it's got to be modeled in

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Speaker 1: there and talked about. I don't know if we're going

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Speaker 1: to be at seven percent, but I find that analysis

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Speaker 1: interesting and I know it's something that we do every

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Speaker 1: year in review meetings. Exactly what you said, don't just

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Speaker 1: assume all your spending is going to grow at the

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Speaker 1: CPI rate. Actually break this down, like you've already talked

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Speaker 1: about healthcare separately, and build in some buffer there in

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Speaker 1: case the worst case scenario here happens in terms of

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Speaker 1: you know, medicare premium and drug prices, because it's a

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Speaker 1: real thing out there and we are starting to see it.

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Speaker 4: But don't stop there, right, Don't just carve out based

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Speaker 4: on those numbers that they shared. Those are good numbers

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Speaker 4: to start with, but you have to layer on what

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Speaker 4: your income is because of something called IERMA. Are MAA

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Speaker 4: can be a real problem for high earners. If your

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Speaker 4: income crosses certain thresholds, you're going to pay surch charges.

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Speaker 3: That's what's known as ERMA.

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Speaker 4: Income related Monthly adjustment amount is what that stands for.

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Speaker 4: That covers MEDICA parts BND So for example, if you're

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Speaker 4: twenty twenty six, if you're single and your income's over

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Speaker 4: one hundred and nine thousand or double that for a

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Speaker 4: married couple to eighteen, you're paying more than the standard Part.

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Speaker 3: B premium of two two ninety a month. They go

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Speaker 3: up fast too.

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Speaker 4: Monthly Part B premiums range from two hundred and eighty

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Speaker 4: four bucks all the way up to six hundred and

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Speaker 4: ninety dollars per person.

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Speaker 3: That top scariest tier.

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Speaker 4: Kicks in at about a half million dollars worth of

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Speaker 4: income for single filers, seven fifty for married couple. So yes,

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Speaker 4: we're talking about high earners. But we'll just remember the

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Speaker 4: way this works is they will the authorities are going

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Speaker 4: to look at what your income was from two years ago.

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Speaker 4: So decisions you make now if you're going to do

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Speaker 4: a ROTH conversion, or if you've got a big bonus

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Speaker 4: or something paid out from your company two years from now,

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Speaker 4: if you plan on being on Medicare, that's going to

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Speaker 4: be driven by whatever income that you have this year.

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Speaker 4: So I always tell people, don't don't get too hung

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Speaker 4: up on We absolutely have to avoid IRMA at all costs.

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Speaker 4: I can make a massive case for the fact that

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Speaker 4: it may be okay to take an IRMA hit for

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Speaker 4: a year or two while you're doing ROTH conversions, because

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Speaker 4: those roth conversions will compound for decades upon decades and

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Speaker 4: go to your heirs tax free.

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Speaker 3: That's going to beat the tar off of you know,

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Speaker 3: an IRMA surch charge.

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Speaker 4: It only lasts for a year, so remember it does

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Speaker 4: reset every year based on your two prior years.

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Speaker 1: No, that's a great point on the WROTH conversions and compounding.

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Speaker 1: Speaking of tax free compounding for decades, how about that

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Speaker 1: HSA opportunity. That's something that we could still control for

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Speaker 1: those of us are still working. As a reminder, for

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Speaker 1: twenty twenty six, the contribution limits are four four hundred

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Speaker 1: dollars per individual and eighty seven hundred and fifty dollars

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Speaker 1: for families.

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Speaker 2: If you can cash.

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Speaker 1: Flow current healthcare expenses, assuming you're healthy and still working,

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Speaker 1: maximize those HSA contributions and then don't spend the money now.

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Speaker 1: Let it compact, let it compound, put it in a

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Speaker 1: growth vehicle for fifteen twenty thirty years, let that money

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Speaker 1: build up and use that as your offset for future

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Speaker 1: healthcare inflation. Here's the all Worth advice. Don't let healthcare

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Speaker 1: be the silent killer of your retirement plan. Model it realistically,

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Speaker 1: do plan for higher inflation and start preparing earlier than

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Speaker 1: you think you might need to. Coming up next, when

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Speaker 1: AI actually helps in the financial planning process.

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Speaker 2: And when it doesn't.

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

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

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Speaker 1: Simply Money presented by all Worth Financial on Bob Sponseller

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Speaker 1: along with Brian James.

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Speaker 2: Well, let's face it, AI.

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Speaker 1: Has come a long way, especially in the last couple

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Speaker 1: of years.

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Speaker 2: Brian.

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Speaker 1: I mean, it's ubiquitous, it's everywhere. It's predicted to replace

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Speaker 1: everything in everyone. And along with that, you know you

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Speaker 1: occasionally see the stories come around using AI as your

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Speaker 1: financial advisor or helping you build a financial plan. Let's

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Speaker 1: let's spend a few minutes talking about where we are

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Speaker 1: today in twenty twenty six with AI and where it

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Speaker 1: can be very useful and maybe where you should not

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Speaker 1: rely on it or still have a human involved when

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Speaker 1: it comes to managing your finances and putting together a

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Speaker 1: sound financial plan and making sound financial decisions.

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Speaker 4: Yeah, so AI has definitely come a long way. It

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Speaker 4: can do a lot more than it used to.

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Speaker 2: Right.

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Speaker 4: It's but it's mostly task based, simple tasks, simple workflow

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Speaker 4: types of things. So, for example, it can summary, summarize

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Speaker 4: your inbox, give you a meal plan, and it can

438
00:21:39,600 --> 00:21:42,199
Speaker 4: give you facts in the financial planning space. Let's say

439
00:21:42,200 --> 00:21:44,280
Speaker 4: you know the difference between a roth IRA traditional IRA

440
00:21:44,680 --> 00:21:47,119
Speaker 4: really really quickly. It's I think of it as Google

441
00:21:47,160 --> 00:21:50,160
Speaker 4: on steroids right now, you know, because I can get

442
00:21:50,359 --> 00:21:52,520
Speaker 4: I can ask a question in normal English and get

443
00:21:52,560 --> 00:21:55,000
Speaker 4: what I think is a pretty good answer. Now, what

444
00:21:55,040 --> 00:21:57,399
Speaker 4: I have learned, Bob, what I have learned is to

445
00:21:57,440 --> 00:22:00,720
Speaker 4: also ask it to please show me your work, provide resources,

446
00:22:00,720 --> 00:22:02,959
Speaker 4: so that why I went across that thing. You know,

447
00:22:03,720 --> 00:22:05,159
Speaker 4: I know where you got it, so I could go

448
00:22:05,160 --> 00:22:07,080
Speaker 4: read it for myself and figure it out. So let

449
00:22:07,080 --> 00:22:09,000
Speaker 4: me give you an example. This just happened last night.

450
00:22:09,320 --> 00:22:11,840
Speaker 4: I am I'm helping a friend of mine who has

451
00:22:11,880 --> 00:22:15,159
Speaker 4: gone through a divorce, and the two spouses are not

452
00:22:15,359 --> 00:22:18,240
Speaker 4: particularly tech savvy, don't use a lot of financial technology,

453
00:22:18,520 --> 00:22:21,199
Speaker 4: and they've been arguing about the timing of the various

454
00:22:21,200 --> 00:22:23,280
Speaker 4: payments that have to go to support stuff that has

455
00:22:23,320 --> 00:22:25,640
Speaker 4: to go back and forth, and one of them has

456
00:22:25,640 --> 00:22:27,960
Speaker 4: completely given up and stands in line at the bank

457
00:22:28,000 --> 00:22:30,679
Speaker 4: to go depositive check in the other's account, which to

458
00:22:30,680 --> 00:22:31,280
Speaker 4: me is ridiculous.

459
00:22:31,280 --> 00:22:32,479
Speaker 3: Shouldn't have do that? Twenty twenty six.

460
00:22:32,640 --> 00:22:34,320
Speaker 4: So I was trying to do some research on this,

461
00:22:34,320 --> 00:22:36,280
Speaker 4: this particular big bank which I don't use, so I

462
00:22:36,280 --> 00:22:38,440
Speaker 4: can't look at I can't look directly at my own

463
00:22:38,440 --> 00:22:41,280
Speaker 4: app and see how it works. And I asked, shat GPT,

464
00:22:41,880 --> 00:22:43,840
Speaker 4: how does this work in this bank app? How can

465
00:22:43,880 --> 00:22:46,440
Speaker 4: I do this kind of a transaction? And it gave

466
00:22:46,480 --> 00:22:48,400
Speaker 4: me a bunch of information and I was like, okay,

467
00:22:48,400 --> 00:22:50,240
Speaker 4: that sounds great, but I know this, and I literally

468
00:22:50,320 --> 00:22:52,359
Speaker 4: asked it, are you certain this is how the app

469
00:22:52,359 --> 00:22:55,800
Speaker 4: actually works? Because sometimes you confidently make stuff up and

470
00:22:55,840 --> 00:22:58,200
Speaker 4: it kind of acknowledged, yeah, I'm wrong. Sometimes it really

471
00:22:58,240 --> 00:22:59,240
Speaker 4: is like talking to a person.

472
00:23:00,480 --> 00:23:01,119
Speaker 2: I told you that.

473
00:23:01,280 --> 00:23:04,480
Speaker 3: Yes, that's literally how chat GPD responds. Yeah, yeah, he said, yeah,

474
00:23:04,520 --> 00:23:05,280
Speaker 3: it's it.

475
00:23:05,359 --> 00:23:09,080
Speaker 4: Basically chat GPT responds like somebody who really really really

476
00:23:09,080 --> 00:23:11,240
Speaker 4: wants to help but doesn't always know exactly what they're

477
00:23:11,240 --> 00:23:14,520
Speaker 4: talking about. It's well meaning, but anyway, so but but

478
00:23:14,560 --> 00:23:16,760
Speaker 4: I solve that by the by just looking. I asked

479
00:23:16,760 --> 00:23:18,520
Speaker 4: it to provide its resources, and I figured out what

480
00:23:18,560 --> 00:23:21,040
Speaker 4: was happening in this particular case was it was combining

481
00:23:21,440 --> 00:23:24,840
Speaker 4: articles and online forum questions from like the past six

482
00:23:24,920 --> 00:23:27,359
Speaker 4: or seven years, so it combined all of that stuff,

483
00:23:27,400 --> 00:23:29,520
Speaker 4: and the app and software and all that stuff changes

484
00:23:29,560 --> 00:23:32,680
Speaker 4: over time, so it was it was mushing conversations together

485
00:23:32,720 --> 00:23:34,120
Speaker 4: and it kind of made up its own reality.

486
00:23:34,280 --> 00:23:35,359
Speaker 3: In the end, we got there.

487
00:23:35,600 --> 00:23:38,280
Speaker 4: My point in all this is, it is not ready

488
00:23:38,440 --> 00:23:40,920
Speaker 4: to put together a full financial plan for somebody because

489
00:23:40,920 --> 00:23:43,000
Speaker 4: it's going to rely it might it might pull the

490
00:23:43,119 --> 00:23:46,080
Speaker 4: IRA rules from fifteen years ago and smush them together

491
00:23:46,119 --> 00:23:49,320
Speaker 4: with social security calculations from now, and that doesn't make sense.

492
00:23:49,359 --> 00:23:52,360
Speaker 4: I think we'll probably get there, but it's nowhere near

493
00:23:52,400 --> 00:23:54,359
Speaker 4: that right now. So again, Google on steroids is what

494
00:23:54,400 --> 00:23:54,960
Speaker 4: it's good for.

495
00:23:54,920 --> 00:23:58,520
Speaker 1: I think, Yeah, I agree, and I want to move

496
00:23:58,560 --> 00:24:01,439
Speaker 1: beyond just getting the right answer to a question, a

497
00:24:01,520 --> 00:24:04,479
Speaker 1: technical question in ten seconds or left. I mean, we

498
00:24:04,640 --> 00:24:07,640
Speaker 1: all love the idea of that, and that makes life

499
00:24:07,720 --> 00:24:10,960
Speaker 1: much more efficient. And I think the point you're making

500
00:24:11,000 --> 00:24:13,520
Speaker 1: here is let's not overly use that as a crutch

501
00:24:13,560 --> 00:24:16,240
Speaker 1: and just assume that that answer that gets spit out

502
00:24:16,280 --> 00:24:20,160
Speaker 1: in seven seconds is absolutely right about everything. Because you've

503
00:24:20,160 --> 00:24:22,600
Speaker 1: already gave it, given a great example. It's not I

504
00:24:22,600 --> 00:24:25,800
Speaker 1: want to move beyond that to some of the decisions

505
00:24:25,840 --> 00:24:29,560
Speaker 1: that our actual clients come into our office and need

506
00:24:29,560 --> 00:24:30,440
Speaker 1: to talk about.

507
00:24:30,600 --> 00:24:32,119
Speaker 2: You know, things like how.

508
00:24:32,000 --> 00:24:36,160
Speaker 1: Do I manage caring for my adult family members, how

509
00:24:36,160 --> 00:24:39,439
Speaker 1: do I manage beneficiaries for my kids? You know, my

510
00:24:39,560 --> 00:24:42,040
Speaker 1: kids have grown up, and some of them are doing well,

511
00:24:42,160 --> 00:24:45,600
Speaker 1: some of them aren't. Sometimes an advisor and needs to

512
00:24:45,600 --> 00:24:47,199
Speaker 1: look a client in the eye and say, hey, you

513
00:24:47,240 --> 00:24:50,479
Speaker 1: haven't had your legal documents looked at in seventeen years.

514
00:24:51,400 --> 00:24:53,920
Speaker 1: You're worth five million dollars, and you won't spend three

515
00:24:54,040 --> 00:24:56,119
Speaker 1: hundred dollars to sit down with an attorney.

516
00:24:56,440 --> 00:25:00,800
Speaker 4: In the examples of suspiciously specific Bob was a recent meeting.

517
00:25:01,520 --> 00:25:04,119
Speaker 1: It's a meeting you and I had together yesterday, Am

518
00:25:04,160 --> 00:25:05,640
Speaker 1: I Am I stating that correctly?

519
00:25:05,880 --> 00:25:08,879
Speaker 3: No, I was just sharing some inside base Yeah, well yeah,

520
00:25:08,920 --> 00:25:10,680
Speaker 3: real stories, folks, real stories.

521
00:25:10,840 --> 00:25:13,480
Speaker 1: Well, and then running scenarios. You know, I think a

522
00:25:13,520 --> 00:25:17,080
Speaker 1: lot of people know have a pretty good idea whether

523
00:25:17,119 --> 00:25:19,760
Speaker 1: they have enough money or not to be able to

524
00:25:19,800 --> 00:25:23,160
Speaker 1: survive in retirement. But especially when folks have a little

525
00:25:23,200 --> 00:25:26,240
Speaker 1: more to work with, they're balancing Hey, do I take

526
00:25:26,280 --> 00:25:30,960
Speaker 1: an extra cruise or trip, or remodel the bathroom, or

527
00:25:30,960 --> 00:25:33,160
Speaker 1: do I give my twenty year old kids a little

528
00:25:33,160 --> 00:25:35,159
Speaker 1: bit of money to help them, you know, get a

529
00:25:35,160 --> 00:25:37,280
Speaker 1: head start in life and maybe buy a first home.

530
00:25:37,359 --> 00:25:40,679
Speaker 1: That's where you need some human interaction to run different

531
00:25:40,720 --> 00:25:43,399
Speaker 1: scenarios and just talk about life.

532
00:25:43,040 --> 00:25:43,640
Speaker 2: A little bit.

533
00:25:44,200 --> 00:25:47,000
Speaker 1: And in my opinion, Brian, correct me if I'm wrong,

534
00:25:47,840 --> 00:25:52,440
Speaker 1: AI is years away from being able to duplicate those

535
00:25:52,600 --> 00:25:54,320
Speaker 1: kinds of meaningful interactions.

536
00:25:54,440 --> 00:25:56,719
Speaker 3: Yeah, let me. Let me share another example I've been

537
00:25:56,720 --> 00:25:57,360
Speaker 3: through lately too.

538
00:25:57,400 --> 00:25:59,719
Speaker 4: So of course we have clients who get in situations

539
00:25:59,720 --> 00:26:02,520
Speaker 4: and some times where we also have tax preparers and

540
00:26:02,600 --> 00:26:05,320
Speaker 4: sometimes we're providing tax advice, sometimes they're doing tax planning.

541
00:26:05,560 --> 00:26:08,080
Speaker 4: So I've been on calls with clients with directly with

542
00:26:08,280 --> 00:26:11,200
Speaker 4: the IRS, with very specific questions from people who want

543
00:26:11,240 --> 00:26:13,000
Speaker 4: to do their taxes correctly, aren't trying to get away

544
00:26:13,000 --> 00:26:14,320
Speaker 4: with things, so they're just not sure how to fill

545
00:26:14,359 --> 00:26:17,320
Speaker 4: this out and turbo tax isn't clear enough. So we've

546
00:26:17,320 --> 00:26:19,360
Speaker 4: called the IRS and we've said, here's the situation, here's

547
00:26:19,359 --> 00:26:22,080
Speaker 4: all the facts and figures that I've never once heard

548
00:26:22,160 --> 00:26:25,240
Speaker 4: an IRS person say, here is the playbook here is

549
00:26:25,280 --> 00:26:28,520
Speaker 4: exactly how you handle that situation. They will share stories

550
00:26:28,520 --> 00:26:30,680
Speaker 4: and they will say things like that is most likely

551
00:26:30,720 --> 00:26:33,240
Speaker 4: the way it should be done. Nobody commits because there

552
00:26:33,280 --> 00:26:36,040
Speaker 4: is no playbook for lots of unique situations. There is

553
00:26:36,119 --> 00:26:37,880
Speaker 4: no way that AI is ever going to be able

554
00:26:37,920 --> 00:26:40,480
Speaker 4: to figure that stuff out. Because what you're really asking is,

555
00:26:40,720 --> 00:26:43,240
Speaker 4: when you have filed taxes before for other people in

556
00:26:43,280 --> 00:26:45,080
Speaker 4: this situation, how have you handled it?

557
00:26:45,200 --> 00:26:47,639
Speaker 3: Not what does the IRS want to see? IRS doesn't know.

558
00:26:47,760 --> 00:26:49,639
Speaker 4: They just want you to present in the most honest

559
00:26:49,640 --> 00:26:52,000
Speaker 4: manner possible, and then they're going to evaluate whether they

560
00:26:52,000 --> 00:26:53,280
Speaker 4: need to investigate a little more.

561
00:26:53,280 --> 00:26:55,360
Speaker 3: But there is no black and white. Here's the process

562
00:26:55,359 --> 00:26:55,879
Speaker 3: for everything.

563
00:26:56,520 --> 00:26:57,359
Speaker 2: Don't say never.

564
00:26:57,480 --> 00:27:00,720
Speaker 1: Brian elon Musk as we speak, is trying to create

565
00:27:00,880 --> 00:27:04,879
Speaker 1: robots to replace you and I all right, it's coming.

566
00:27:05,359 --> 00:27:07,800
Speaker 2: They're at least trying. All right, here's the all Worth advice.

567
00:27:08,160 --> 00:27:11,359
Speaker 1: If you're relying entirely on AI for your financial plan,

568
00:27:11,640 --> 00:27:14,600
Speaker 1: you might end up with something that spits out quickly

569
00:27:14,640 --> 00:27:18,360
Speaker 1: and looks very impressive, but it might miss what actually

570
00:27:18,400 --> 00:27:22,000
Speaker 1: makes your entire financial plan work in the first place.

571
00:27:23,119 --> 00:27:25,680
Speaker 1: And now that we've addressed that, we're gonna address your

572
00:27:25,800 --> 00:27:29,000
Speaker 1: financial questions coming up next. You're listening to Simply Money

573
00:27:29,080 --> 00:27:32,000
Speaker 1: presented by all Worth Financial on fifty five KRC, the

574
00:27:32,280 --> 00:27:39,840
Speaker 1: talk station. You're listening to Simply Money presented by all

575
00:27:39,880 --> 00:27:43,199
Speaker 1: Worth Financial on Bob'spond Seller along with Brian James. You

576
00:27:43,240 --> 00:27:45,480
Speaker 1: have a financial question you'd like for us to answer.

577
00:27:45,640 --> 00:27:47,840
Speaker 1: There's a red button you can click while you're listening

578
00:27:47,880 --> 00:27:50,560
Speaker 1: to the show. If you're listening on the iHeart app,

579
00:27:51,000 --> 00:27:54,199
Speaker 1: simply record your question and it will come straight to us.

580
00:27:55,000 --> 00:27:57,520
Speaker 1: All right, Brian Mark and Fort Mitchell. I know you

581
00:27:57,640 --> 00:27:59,520
Speaker 1: love those forts down in northern Kentucky.

582
00:27:59,600 --> 00:28:02,560
Speaker 4: Come to protecting us and being on that wall from

583
00:28:02,640 --> 00:28:03,760
Speaker 4: the Heathens of Florence.

584
00:28:06,119 --> 00:28:10,560
Speaker 1: Mark Mark says, I have multiple inherited iras with different

585
00:28:10,640 --> 00:28:14,080
Speaker 1: start dates. How do I coordinate with draws so I

586
00:28:14,119 --> 00:28:18,840
Speaker 1: don't accidentally accelerate taxes under the ten year rule that

587
00:28:18,880 --> 00:28:22,560
Speaker 1: we all got introduced to here with the Secure Act.

588
00:28:22,960 --> 00:28:26,200
Speaker 4: Yeah, So what I'm gonna guess is okay, so this situation,

589
00:28:26,440 --> 00:28:28,679
Speaker 4: we never get enough information in these questions, so truly

590
00:28:28,760 --> 00:28:31,440
Speaker 4: truly answer, but I can infer some things. So obviously

591
00:28:31,440 --> 00:28:35,640
Speaker 4: Mark has lost some loved ones, relatives, benefactors who had

592
00:28:35,760 --> 00:28:38,320
Speaker 4: iras of their own Mark has now inherited those And

593
00:28:38,360 --> 00:28:40,719
Speaker 4: of course these people all died at different times, so

594
00:28:40,760 --> 00:28:42,680
Speaker 4: the cutoff date some of this is pretty simple. It's

595
00:28:42,720 --> 00:28:45,920
Speaker 4: either before twenty twenty or it's after anyone who passed

596
00:28:45,920 --> 00:28:48,640
Speaker 4: away before twenty twenty who was not your spouse. Right,

597
00:28:48,720 --> 00:28:53,280
Speaker 4: a spouse can take that deceased spouse's IRA into their

598
00:28:53,320 --> 00:28:55,840
Speaker 4: own IRA as if it was theirs all along, so

599
00:28:55,880 --> 00:28:57,959
Speaker 4: there's really no harm, no foul. You just get more

600
00:28:58,000 --> 00:28:59,960
Speaker 4: money in your own IRA and then it's basically your

601
00:29:00,120 --> 00:29:02,320
Speaker 4: from then on out. So we're talking about non spousal

602
00:29:02,360 --> 00:29:03,240
Speaker 4: beneficiaries here.

603
00:29:03,920 --> 00:29:04,480
Speaker 2: There are.

604
00:29:04,880 --> 00:29:07,480
Speaker 4: If I inherited something from an IRA from someone who

605
00:29:07,480 --> 00:29:10,600
Speaker 4: died before twenty twenty, then what I hopefully have been

606
00:29:10,600 --> 00:29:14,840
Speaker 4: doing all along is taking a required minimum distribution. Also

607
00:29:14,880 --> 00:29:17,200
Speaker 4: depends on what the age of that person was when

608
00:29:17,240 --> 00:29:19,840
Speaker 4: they passed away, but that can be spread out over

609
00:29:19,840 --> 00:29:22,160
Speaker 4: the remainder of my life. I do have to take distributions,

610
00:29:22,200 --> 00:29:24,880
Speaker 4: which is all about taxation. The IRS doesn't want the money,

611
00:29:24,880 --> 00:29:26,480
Speaker 4: they want a little piece of the money. You get

612
00:29:26,480 --> 00:29:28,640
Speaker 4: to do whatever else you want with that distribution, which

613
00:29:28,640 --> 00:29:31,000
Speaker 4: you got pay income taxes on it. On top of

614
00:29:31,080 --> 00:29:33,520
Speaker 4: whatever your existing income tax situation is.

615
00:29:33,520 --> 00:29:35,640
Speaker 3: Via salaries and other things you might have going on.

616
00:29:36,000 --> 00:29:39,640
Speaker 4: That's prior to twenty twenty for folks who died after

617
00:29:39,760 --> 00:29:40,600
Speaker 4: twenty twenty.

618
00:29:41,000 --> 00:29:41,760
Speaker 3: Now there's a.

619
00:29:41,720 --> 00:29:43,920
Speaker 4: Ten year clock, so I have to on a pre

620
00:29:44,000 --> 00:29:47,360
Speaker 4: tax IRA, I have to liquidate that whole thing by

621
00:29:47,440 --> 00:29:50,600
Speaker 4: ten years, right, So that might mean that I can

622
00:29:50,640 --> 00:29:53,160
Speaker 4: wait all the way until day three hundred, three thousand,

623
00:29:53,200 --> 00:29:54,080
Speaker 4: six hundred and fifty.

624
00:29:54,120 --> 00:29:55,800
Speaker 3: And as somebody in the receiving endo this, please don't

625
00:29:55,840 --> 00:29:57,040
Speaker 3: do that. Give us a couple weeks to.

626
00:29:57,000 --> 00:29:59,880
Speaker 4: Sort this out, but you can wait all the way

627
00:30:00,080 --> 00:30:03,200
Speaker 4: till the end. If this person was not of a

628
00:30:03,280 --> 00:30:07,040
Speaker 4: required minimum distribution age already themselves, meaning seventy three seventy

629
00:30:07,040 --> 00:30:10,560
Speaker 4: five in their own situation before they died, If they

630
00:30:10,640 --> 00:30:14,800
Speaker 4: were receiving their REQUIREMENTUM distribution before they passed, then you

631
00:30:14,920 --> 00:30:17,040
Speaker 4: as the heir, need to take out a little bit

632
00:30:17,160 --> 00:30:19,800
Speaker 4: every single year, but the whole thing still must be

633
00:30:19,840 --> 00:30:22,800
Speaker 4: liquidated within ten years. So what I would be thinking about,

634
00:30:22,880 --> 00:30:25,200
Speaker 4: because we tend to inherit these things at our own

635
00:30:25,400 --> 00:30:28,680
Speaker 4: highest tax brackets, use usually our parents, and we're usually

636
00:30:28,720 --> 00:30:31,200
Speaker 4: older ourselves at our highest earning years you're probably already

637
00:30:31,240 --> 00:30:33,080
Speaker 4: in a high tax bracket. You might be able to

638
00:30:33,080 --> 00:30:35,920
Speaker 4: find that window between retirement and before you turn on

639
00:30:36,000 --> 00:30:39,520
Speaker 4: social Security and before your own requirementium distributions kick in.

640
00:30:39,800 --> 00:30:41,720
Speaker 4: That's probably the window where you want to be taking

641
00:30:41,720 --> 00:30:44,320
Speaker 4: these dollars out, and you might even use these resulting

642
00:30:44,360 --> 00:30:47,320
Speaker 4: dollars to do some WROTH conversions on your own. Now

643
00:30:47,320 --> 00:30:49,440
Speaker 4: I'm getting really way beyond where Mark asks, but there's

644
00:30:49,480 --> 00:30:50,400
Speaker 4: a lot of moving parts here.

645
00:30:51,000 --> 00:30:52,360
Speaker 3: Twenty twenty is the cutoff date.

646
00:30:52,760 --> 00:30:55,040
Speaker 1: I think you could tape that answer and put that

647
00:30:55,160 --> 00:30:57,200
Speaker 1: on YouTube and make a lot of money. That was

648
00:30:57,240 --> 00:31:00,320
Speaker 1: basically a mini seminar on IRA distributetions.

649
00:31:00,360 --> 00:31:02,440
Speaker 3: Well done, Well, thank you, Bob so well.

650
00:31:02,520 --> 00:31:03,320
Speaker 2: I appreciate that.

651
00:31:03,520 --> 00:31:06,640
Speaker 4: We will move on to Chad in Amberley Village. Chad's

652
00:31:06,640 --> 00:31:08,720
Speaker 4: got the capital gain questions. You must be looking ato

653
00:31:08,760 --> 00:31:11,120
Speaker 4: ten ninety nines and he says, one of my funds

654
00:31:11,160 --> 00:31:14,120
Speaker 4: distributes capital gains every December, even in down years.

655
00:31:14,200 --> 00:31:15,680
Speaker 3: Well, that's blowing. He didn't say that.

656
00:31:15,720 --> 00:31:16,239
Speaker 2: I added it.

657
00:31:16,360 --> 00:31:18,840
Speaker 3: How do I evaluate whether that fund still belongs in

658
00:31:18,880 --> 00:31:19,880
Speaker 3: a taxable account?

659
00:31:19,880 --> 00:31:20,160
Speaker 2: Bob?

660
00:31:21,320 --> 00:31:23,680
Speaker 1: All right, Well, Chad, I'm gonna lead off with the

661
00:31:24,280 --> 00:31:29,440
Speaker 1: standard answer. It depends, but I'll give you a couple

662
00:31:29,440 --> 00:31:33,000
Speaker 1: of examples. I've got a couple clients in their mid

663
00:31:33,080 --> 00:31:36,240
Speaker 1: eighties that have owned the same growth mutual funds for

664
00:31:36,360 --> 00:31:39,520
Speaker 1: sixty years and it's done well. They never intended to

665
00:31:39,560 --> 00:31:42,520
Speaker 1: spend any of that money. They live off their pension

666
00:31:42,560 --> 00:31:44,840
Speaker 1: and social Security. They don't need to spend any of

667
00:31:44,840 --> 00:31:48,720
Speaker 1: that money. And their cost basis in that fund is very,

668
00:31:48,880 --> 00:31:53,840
Speaker 1: very very low, and we're just gonna hold on to

669
00:31:53,960 --> 00:31:56,440
Speaker 1: the fund to get the stepped up basis when they

670
00:31:56,480 --> 00:31:58,920
Speaker 1: die and leave it to their kids tax free. You know,

671
00:31:58,960 --> 00:32:01,760
Speaker 1: that's one end of the sum. And these clients don't

672
00:32:01,800 --> 00:32:04,520
Speaker 1: care if they get a surprise capital gain distribution. They

673
00:32:04,600 --> 00:32:06,560
Speaker 1: pay a little bit of tax and they end up

674
00:32:06,600 --> 00:32:09,320
Speaker 1: giving that money to their grandkids anyway. That's one end

675
00:32:09,320 --> 00:32:12,920
Speaker 1: of the spectrum. If you're somebody that has a mutual

676
00:32:12,960 --> 00:32:15,600
Speaker 1: fund in a taxable account and you're going to be

677
00:32:15,600 --> 00:32:18,400
Speaker 1: around for another ten, twenty thirty years, I think you

678
00:32:18,480 --> 00:32:22,320
Speaker 1: want to sit down with an advisor, CPA, financial advisor,

679
00:32:22,480 --> 00:32:25,640
Speaker 1: any kind of fiduciary that can run these numbers and say, hey,

680
00:32:25,720 --> 00:32:29,160
Speaker 1: is there a better way to gradually move out of

681
00:32:29,160 --> 00:32:35,320
Speaker 1: this taxable mutual fund world? Into more tax efficient ETFs

682
00:32:35,800 --> 00:32:39,720
Speaker 1: because you know that'll eliminate these surprise capital gains. And

683
00:32:40,080 --> 00:32:42,760
Speaker 1: we talk about all the time the investment world has

684
00:32:42,840 --> 00:32:46,240
Speaker 1: evolved here over the last fifteen to twenty years to

685
00:32:46,360 --> 00:32:50,240
Speaker 1: make things much more tax efficient, especially if you're using

686
00:32:50,280 --> 00:32:53,360
Speaker 1: some tax loss harvesting in the background that can help

687
00:32:53,440 --> 00:32:56,880
Speaker 1: offset some of these capital gains from this mutual fund

688
00:32:57,160 --> 00:33:00,880
Speaker 1: that we want to gradually unwind and to meld that

689
00:33:01,040 --> 00:33:04,440
Speaker 1: into a more tax efficient portfolio. So again, it depends

690
00:33:04,480 --> 00:33:07,600
Speaker 1: on your situation. Sit down with somebody that's gonna work

691
00:33:07,640 --> 00:33:10,680
Speaker 1: in your best interest, run the numbers, and figure out

692
00:33:10,680 --> 00:33:13,520
Speaker 1: a plan on how to evolve out of this capital

693
00:33:13,560 --> 00:33:17,080
Speaker 1: gain mutual fund world, because it tends to work in

694
00:33:17,120 --> 00:33:19,440
Speaker 1: your favor if you find a good strategy to do that.

695
00:33:19,920 --> 00:33:22,160
Speaker 1: All right, we got time for one more. Charles in

696
00:33:22,280 --> 00:33:26,440
Speaker 1: Mount Lookout says, our plan assumes rebalancing once a year.

697
00:33:26,960 --> 00:33:29,960
Speaker 1: But what happens mathematically if markets move sharply in the

698
00:33:30,000 --> 00:33:32,560
Speaker 1: middle of the year and we don't touch anything. I

699
00:33:32,600 --> 00:33:33,800
Speaker 1: love this question, Brian.

700
00:33:33,880 --> 00:33:35,800
Speaker 4: It's a great question because what he described is pretty

701
00:33:35,880 --> 00:33:39,240
Speaker 4: much what always happens. The markets really never don't move sharply.

702
00:33:39,280 --> 00:33:41,719
Speaker 4: They either do nothing, or they spike and move quickly.

703
00:33:41,840 --> 00:33:43,600
Speaker 4: So this is kind of just how it works. I'm

704
00:33:43,640 --> 00:33:44,840
Speaker 4: going to share an example here.

705
00:33:44,880 --> 00:33:45,400
Speaker 3: So I am.

706
00:33:45,840 --> 00:33:47,400
Speaker 4: I live in a house that was built in two

707
00:33:47,440 --> 00:33:49,840
Speaker 4: thousand and three, lovely neighborhood up on the northern side

708
00:33:49,880 --> 00:33:54,320
Speaker 4: of Cincinnati, and I pay zero attention to my HVAC equipment.

709
00:33:54,640 --> 00:33:57,000
Speaker 4: I know it's gonna die. I know I should probably

710
00:33:57,040 --> 00:34:00,280
Speaker 4: haven't inspected more often than they do, except you not

711
00:34:00,320 --> 00:34:02,040
Speaker 4: to because I'm good at some things in mine too.

712
00:34:02,160 --> 00:34:03,840
Speaker 2: You're too cheap to pay for the inspection.

713
00:34:04,080 --> 00:34:05,240
Speaker 3: And that's a.

714
00:34:05,160 --> 00:34:07,000
Speaker 4: Simple way to put to speak the check there, Bob,

715
00:34:07,040 --> 00:34:10,920
Speaker 4: you speak true. But anyway, I know it's a problem.

716
00:34:11,080 --> 00:34:12,759
Speaker 4: It's just gonna get It's not a problem right now

717
00:34:12,760 --> 00:34:15,120
Speaker 4: because it works fine, but it's gonna get slightly worse

718
00:34:15,160 --> 00:34:17,600
Speaker 4: every year. So when you when your portfolio is out

719
00:34:17,600 --> 00:34:20,160
Speaker 4: of balance, even just a little bit, probably not gonna

720
00:34:20,160 --> 00:34:22,759
Speaker 4: rebalance itself. It's gonna get out of balance again because

721
00:34:22,760 --> 00:34:24,680
Speaker 4: we're gonna have a second sharp move and a third

722
00:34:24,719 --> 00:34:25,919
Speaker 4: sharp move, and stuff's.

723
00:34:25,560 --> 00:34:26,240
Speaker 3: Gonna move around.

724
00:34:26,400 --> 00:34:28,880
Speaker 4: It's slowly gonna become more and more of a problem.

725
00:34:29,080 --> 00:34:31,440
Speaker 4: I am not heartbroken if people say they haven't rebalanced

726
00:34:31,440 --> 00:34:32,640
Speaker 4: their portfolio in a couple of years.

727
00:34:32,680 --> 00:34:33,280
Speaker 3: That's fine.

728
00:34:33,440 --> 00:34:35,360
Speaker 4: I hope you've done it at least once within twenty

729
00:34:35,360 --> 00:34:38,799
Speaker 4: five years for example. So just this isn't gonna hurt

730
00:34:38,840 --> 00:34:42,520
Speaker 4: you overnight. It's not something to lose sleepover. But eventually,

731
00:34:42,680 --> 00:34:45,680
Speaker 4: just like my furnace and my air conditioner, it's gonna die,

732
00:34:45,760 --> 00:34:47,680
Speaker 4: and it's gonna happen at the worst possible time, either

733
00:34:47,719 --> 00:34:49,759
Speaker 4: in February or August, and I'm gonna pay the price.

734
00:34:49,800 --> 00:34:52,359
Speaker 4: I'm gonna have to pay somebody extra because they will

735
00:34:52,360 --> 00:34:54,600
Speaker 4: be swamped to deal with it. So the longer you

736
00:34:54,680 --> 00:34:56,640
Speaker 4: let it go, the more it will hurt. And this

737
00:34:56,719 --> 00:35:01,359
Speaker 4: is definitely a physician heal thyself opinion when I'm talking

738
00:35:01,360 --> 00:35:02,600
Speaker 4: about my own equipment here.

739
00:35:03,480 --> 00:35:06,240
Speaker 1: All right, coming up next, what some couples are hiding

740
00:35:06,280 --> 00:35:09,960
Speaker 1: from one another about money and why honestly might honestly

741
00:35:10,200 --> 00:35:13,520
Speaker 1: no pun intended be one of the most underrated financial

742
00:35:13,560 --> 00:35:17,000
Speaker 1: strategies out there. You're listening to Simply Money presented by

743
00:35:17,000 --> 00:35:20,120
Speaker 1: all Worth Financial on fifty five KRC the talk station.

744
00:35:26,200 --> 00:35:28,880
Speaker 1: You're listening to Simply Money presented by all Worth Financial,

745
00:35:28,880 --> 00:35:32,960
Speaker 1: a Bob sponseller along with Brian James Well Let's face it,

746
00:35:33,080 --> 00:35:37,319
Speaker 1: money is an uncomfortable topic to discuss for many, yet

747
00:35:37,400 --> 00:35:41,480
Speaker 1: it's a critically important ongoing conversation if you're involved in

748
00:35:41,520 --> 00:35:46,640
Speaker 1: any kind of meaningful relationship. Financial secrets undermine trust, let's

749
00:35:46,680 --> 00:35:50,640
Speaker 1: face it, and for many it can seem even like betrayal.

750
00:35:51,280 --> 00:35:51,640
Speaker 2: Brian.

751
00:35:51,760 --> 00:35:55,560
Speaker 1: A new survey from bank Rate kind of points this out,

752
00:35:55,640 --> 00:35:59,040
Speaker 1: walk us through what how Americans tend to be behaving

753
00:35:59,120 --> 00:35:59,600
Speaker 1: right now.

754
00:36:01,040 --> 00:36:03,160
Speaker 4: It's just funny to me that somebody at Bankrate sat

755
00:36:03,160 --> 00:36:05,080
Speaker 4: around a conference room table and said, hey, here's a

756
00:36:05,120 --> 00:36:07,879
Speaker 4: fun survey to du let's mush some really sensitive things together.

757
00:36:07,920 --> 00:36:10,640
Speaker 4: People say, We see what people say, so here's our result.

758
00:36:11,040 --> 00:36:14,080
Speaker 4: More than two and five US adults believe that keeping

759
00:36:14,160 --> 00:36:17,880
Speaker 4: financial secrets is at least as bad as physical infidelities.

760
00:36:17,920 --> 00:36:21,080
Speaker 4: That's forty percent. At the same time, more questions about

761
00:36:21,080 --> 00:36:24,800
Speaker 4: almost half of people who are in committed relationships, you know, married,

762
00:36:24,800 --> 00:36:27,320
Speaker 4: living together, civil partnership, those kinds of things, they admit

763
00:36:27,360 --> 00:36:29,960
Speaker 4: they don't know everything about their spouses or partners finances.

764
00:36:30,239 --> 00:36:32,080
Speaker 3: And I'm that one and two that's not right.

765
00:36:32,080 --> 00:36:34,520
Speaker 4: There's there's a bigger percentage than that who aren't paying

766
00:36:34,520 --> 00:36:36,160
Speaker 4: attention to what the others do and most time works

767
00:36:36,200 --> 00:36:38,680
Speaker 4: out fine. But almost always one spouse knows more than

768
00:36:38,719 --> 00:36:39,640
Speaker 4: the other anyway.

769
00:36:40,040 --> 00:36:40,839
Speaker 3: And one last one.

770
00:36:40,920 --> 00:36:43,640
Speaker 4: Almost one in ten of Americans in these committed relationships

771
00:36:43,640 --> 00:36:47,240
Speaker 4: are keeping major sources of debt, expenses or income secret

772
00:36:47,280 --> 00:36:49,960
Speaker 4: from their partner, according to the survey. Now that's the

773
00:36:49,960 --> 00:36:52,160
Speaker 4: one that that's a little more concerning to me, right,

774
00:36:52,160 --> 00:36:52,520
Speaker 4: that's the.

775
00:36:52,480 --> 00:36:55,840
Speaker 1: Bi I totally agree. It's that one in ten, that

776
00:36:56,040 --> 00:36:59,960
Speaker 1: nine percent. If you're keeping major sources of debt, expense

777
00:37:00,440 --> 00:37:04,839
Speaker 1: or income secret from your spouse or significant other, you're

778
00:37:05,560 --> 00:37:08,680
Speaker 1: you're probably headed for divorce at some point, and it's

779
00:37:08,719 --> 00:37:11,200
Speaker 1: going to be a messy one. So you know, Brian,

780
00:37:11,280 --> 00:37:14,680
Speaker 1: when we do financial plans for people, you know, I

781
00:37:14,680 --> 00:37:17,840
Speaker 1: I encourage people to have a little mad money for

782
00:37:17,920 --> 00:37:21,160
Speaker 1: each other. You know, in a healthy relationship, people should

783
00:37:21,200 --> 00:37:23,319
Speaker 1: have a little bit of freedom. You know, I'm talking

784
00:37:23,320 --> 00:37:26,680
Speaker 1: about money, not physically. I'm talking about money where you

785
00:37:26,719 --> 00:37:30,839
Speaker 1: know how you know, you should be able to not

786
00:37:30,880 --> 00:37:33,160
Speaker 1: worry about going to get a haircut or having a

787
00:37:33,280 --> 00:37:35,520
Speaker 1: going having a burger with your buddies and watching the

788
00:37:35,520 --> 00:37:38,719
Speaker 1: football game. Everybody should have a little mad money that

789
00:37:38,800 --> 00:37:42,000
Speaker 1: doesn't have to get fully disclosed. Or tracked or discussed

790
00:37:42,080 --> 00:37:44,799
Speaker 1: or spreadsheeted. I think that's healthy. So I think we're

791
00:37:44,800 --> 00:37:48,960
Speaker 1: agreeing here. Again, back to these major sources of debt,

792
00:37:49,320 --> 00:37:52,360
Speaker 1: credit cards, all this hidden stuff that will at some

793
00:37:52,480 --> 00:37:53,880
Speaker 1: point resurface.

794
00:37:54,360 --> 00:37:55,879
Speaker 2: That's the stuff that's a no no.

795
00:37:55,960 --> 00:37:59,280
Speaker 4: Yeah, And this is different than than spouse's purposely living

796
00:37:59,400 --> 00:38:01,440
Speaker 4: separate finance. People do that all the time. We have

797
00:38:01,480 --> 00:38:04,360
Speaker 4: our own separate checking accounts. My check goes into my account,

798
00:38:04,360 --> 00:38:05,480
Speaker 4: your check goes into your account.

799
00:38:05,520 --> 00:38:06,680
Speaker 3: That's kind of the end of it. That's fine.

800
00:38:06,719 --> 00:38:08,960
Speaker 4: We can work with that because those spouses are willing

801
00:38:08,960 --> 00:38:10,879
Speaker 4: to share with each other. Here's what everything is, here's

802
00:38:10,920 --> 00:38:13,160
Speaker 4: where everything is, and we can build a plan around that.

803
00:38:13,440 --> 00:38:16,000
Speaker 4: It's when we get a call from one spouse who says,

804
00:38:16,239 --> 00:38:17,920
Speaker 4: my spouse isn't coming with me, but I want to

805
00:38:17,920 --> 00:38:20,520
Speaker 4: build a plan based just off of my financial assets.

806
00:38:20,600 --> 00:38:22,759
Speaker 4: We almost can't do that because you're both supporting a

807
00:38:22,760 --> 00:38:25,640
Speaker 4: household somehow, and this is doomed anyway.

808
00:38:26,560 --> 00:38:29,200
Speaker 1: Yeah, thanks for listening tonight. You've been listening to Simply Money,

809
00:38:29,280 --> 00:38:32,160
Speaker 1: presented by all Worth Financial on fifty five KRC, the

810
00:38:32,520 --> 00:38:33,040
Speaker 1: talk station