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Speaker 1: Bryan Thomas always enjoying this segment every Monday at eighty

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Speaker 1: a five with Brian James from Allworth Financial financial planner.

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Speaker 1: He is and I appreciate all Worth loaning him out

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Speaker 1: for a little time to give us some right information

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Speaker 1: about the well investing generally speaking in money matters. Welcome back,

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Speaker 1: Brian James. Happy Monday to you, my friend.

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Speaker 2: And thank you for having me. Mister Thomas, good morning

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Speaker 2: to you as well.

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Speaker 1: Oh he's enjoyed. And I mean I normally don't throw

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Speaker 1: your curve balls. I do have your topics and amer

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Speaker 1: it comes. Okay, here we go. No, this isn't a

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Speaker 1: difficult one, I don't think. But yeah, we've talked about

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Speaker 1: the price of gold, you know and sober before. But

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Speaker 1: what the hell I mean this there is to illustrate you.

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Speaker 1: Don't don't play catch up or be that guy who

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Speaker 1: tries to buy things after the giant surgeon price, because

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Speaker 1: you're gonna get burned. I guess a lot of people

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Speaker 1: got burned on gold Man it the range for fifty

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Speaker 1: two weeks. I'm looking at the journal five hundred and

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Speaker 1: sixty two dollars and twenty six an ounce, and at

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Speaker 1: one point within this calendar year, it was trading at

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Speaker 1: twenty eight hundred dollars. It lost like geez, six eight

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Speaker 1: hundred dollars over the past day or something. What the

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Speaker 1: hell happened? What's this all about? If you can feel it?

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Speaker 1: If you can't, then you know we can just move on, Brian.

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Speaker 2: Well, eventually, you know, this is what we always talk about, Brian,

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Speaker 2: because the gold is worth nothing more than what the

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Speaker 2: herd says it is. So you know, I want to

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Speaker 2: want to adjust the time old phrase of catching a

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Speaker 2: falling knife. Well, this is like trying to catch a

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Speaker 2: rising knife too. There's nothing to look at to say

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Speaker 2: that the gold should be worth this should be worth that.

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Speaker 2: It's simply the herd wants to rush into it. And

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Speaker 2: eventually the herd is going to turn. And I got

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Speaker 2: to think there's some smart money involved in this that

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Speaker 2: knows that the herd is going to move, and they

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Speaker 2: have ways of taking advantage of that and then pulling

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Speaker 2: the rug out from under everybody. Because again, gold has

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Speaker 2: no way to say, here's this new product we're inventing,

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Speaker 2: or here's a new market we're getting into, or we're

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Speaker 2: going to cut expenses this way, and that's going to

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Speaker 2: make profitability different. That's what the public stock market do.

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Speaker 2: That's what publicly traded stocks can do to inflate their value.

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Speaker 2: We're seeing it in the tech industry now, whether they're

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Speaker 2: laying off tens of thousands of people, which is that's

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Speaker 2: not a good thing if you're want of those people.

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Speaker 2: But that's a lever that a company can pull to

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Speaker 2: maintain its profit margin. Gold has no profit margin. It

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Speaker 2: is worth nothing more than what the herd says when

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Speaker 2: it stampedes in or out. And we've just seen the

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Speaker 2: stampede leave the car out.

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Speaker 1: So if I can draw a parallel, please call me

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Speaker 1: out as dead wrong. Is this kind of like a

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Speaker 1: meme stock kind of thing where you can get people

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Speaker 1: to just pile on a start buying like game Stop,

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Speaker 1: just because well it's a mean thing and it's going

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Speaker 1: up even though the company itself has zero value.

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Speaker 2: You know that has a great, great point And I

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Speaker 2: had not thought of it until this would be a

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Speaker 2: perfect meme stock. There's no insider trading. Gold doesn't have

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Speaker 2: board meetings that somebody may have caught wind of or

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Speaker 2: seen a secret email or whatever. It's just something that

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Speaker 2: you can attract people to buy, no different than crypto

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Speaker 2: when we have coins come out related to really nothing

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Speaker 2: important in history, but the herd will chase it. And

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Speaker 2: I would say, if you're somebody who is willing to

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Speaker 2: manipulate these markets to manipulate the buyers, this is a

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Speaker 2: probably good place to get away with it. Ernie, I

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Speaker 2: think you've uncovered a conspiracy brand.

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Speaker 1: I have, which is why you keep your money and

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Speaker 1: have it managed by a prudent financial planner who's sitting

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Speaker 1: on your side of the table. Is your produciary duty,

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Speaker 1: and you don't try to play the market because you're

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Speaker 1: never going to be able to catch up. Stick it

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Speaker 1: in there now. I guess the other parallel or correlaor

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Speaker 1: to this may be maybe not at Bitcoin tanked as well.

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Speaker 1: And I've never had any faith in bitcoins or any

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Speaker 1: other of the cryptocurrencies, just because it's like peace of

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Speaker 1: God for me. But you know that one also fell down.

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Speaker 1: It was supposed to go to one hundred thousand dollars

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Speaker 1: and it lost I don't know, ten twelve thousand dollars

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Speaker 1: the other day or something.

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Speaker 2: Yeah, So there was negative news that President Trump nominated Kevin.

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Speaker 3: Warsh as a federal Reserve Chair.

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Speaker 2: We're going to talk about him here in a little

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Speaker 2: bit anyway, and he's kind of a hawkish pick that

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Speaker 2: generally supports tighter monetary policy stronger dollar.

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Speaker 3: A stronger dollar.

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Speaker 2: Can suck liquidity out of things like crypto. So that's

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Speaker 2: part of the reaction to this that people think the

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Speaker 2: demand may fall because the government may pivot slightly away.

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Speaker 3: And I would say this is Trump is all about

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Speaker 3: interest rates.

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Speaker 2: He wants them to be at zero as soon as possible,

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Speaker 2: and that is more important than supporting the crypto markets.

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Speaker 2: Although President Trump has said he is a major supporter

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Speaker 2: of crypto but not last week.

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Speaker 1: Okay, fair enough, And since the first topic is or

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Speaker 1: was the FED chair? I keep reading articles about the

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Speaker 1: value of dollar or the dollar devaluation and dollar having

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Speaker 1: a dollar being a strong, fat currency for some reason, devaluation,

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Speaker 1: I guess is a good thing. Sometimes that doesn't sound

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Speaker 1: right to me. Brian James, Well, it.

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Speaker 2: Depends on what you're trying to buy. If you're it

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Speaker 2: depends on which side of transactions you are. When it

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Speaker 2: comes to this global economy that we pretty much still

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Speaker 2: live in, even though the world doesn't work that way.

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Speaker 3: So investors are worried about structural dollar.

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Speaker 2: Devaluation because of of course our US deficits rising federal

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Speaker 2: debt servicing costs with interest rates going up, and of

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Speaker 2: course political pressure on the FED to ease policy, and that,

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Speaker 2: of course is something that we've dabbled with that in

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Speaker 2: the past, right, We've had presidents lean on the FED chair.

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Speaker 3: Nixon did it right before the election.

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Speaker 2: That never happened because because he got thrown out of office,

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Speaker 2: but that led to stagflation, and so I think people

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Speaker 2: are a little spooked by that. And this is why

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Speaker 2: we saw golden crypto rally so hard into the end

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Speaker 2: of the month, right up until last week, until we

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Speaker 2: pulled the rug with the nomination of Kevin worsh We're

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Speaker 2: not the nomination, but the we really like super like Kevin, right,

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Speaker 2: I guess is what he's trying to say.

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Speaker 1: The gold star candidate currently exactly.

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Speaker 3: Yeah.

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Speaker 2: So, but last year, a dollar devaluation didn't save crypto

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Speaker 2: because the short term reality was better than the long

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Speaker 2: term theory. Last week, the dollar strengthened, not weakened, after

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Speaker 2: the news pointed to a more hawkish FED path because

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Speaker 2: when the dollar rises, liquidity tightens globally and that means

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Speaker 2: speculative assets tend to fall.

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Speaker 3: So we saw all those things come together.

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Speaker 1: Last week, all right, And in a Federal Reserve chairman

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Speaker 1: have always enjoyed pretty much rock solid independence. And I

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Speaker 1: always think of the Carter administration in that Porteria of

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Speaker 1: time because Jimmy Carter was just just pleading on with

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Speaker 1: knee pads to beg the Federal Reserve chairman to lower

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Speaker 1: the interest rates. And that didn't happen because the massive

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Speaker 1: inflation going on. But it didn't work for Carter. And

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Speaker 1: I'm just wondering, historically speaking, Donald Trump screaming and yellow

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Speaker 1: buck at the interest rates lower. Because Kevin wash happens

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Speaker 1: to be the current gold Star candidate likely nominee, is

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Speaker 1: Donald Trump going to be able to manipulate him? I mean,

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Speaker 1: if I can use that word, it's not a pejorative,

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Speaker 1: but is that that's kind of what it boils down to.

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Speaker 2: Yeah, I mean, I think that's what it boils down

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Speaker 2: to to Absolutely everybody he's put in place, is it's

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Speaker 2: somebody he can control to do his bidding.

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Speaker 3: Otherwise he wouldn't be attacking the current Fed chair that

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Speaker 3: he put in place. By the way, let's not forget

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Speaker 3: that true.

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Speaker 2: Jerome Powell was put in place by Trump, and Trump

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Speaker 2: now wants to apparently ruin him personally as well as

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Speaker 2: get him out of the seat.

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Speaker 3: But whatever. So I can't imagine he's going to put.

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Speaker 2: Somebody in who is not going to who is not

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Speaker 2: going to do his bidding per se, because that is

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Speaker 2: just not the history there, and he doesn't. He's not

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Speaker 2: somebody who likes to give up any control at all.

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Speaker 2: So it would shock me if they were the case.

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Speaker 1: All right, So let's say Donald Trump's you, Hey, you know,

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Speaker 1: Kevin I made you Federal Reserve chairman. You better damn

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Speaker 1: well lower the interest rates. Interest rates lower, and the

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Speaker 1: inevitable happens, which is predictably that inflation goes up.

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Speaker 3: Right Yep, Yes, absolutely what we're looking at.

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Speaker 1: So I guess, if you could guess, and I know

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Speaker 1: you won't know, how quickly do the markets react? How

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Speaker 1: quickly does inflation go up after interest rates are lowered?

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Speaker 1: In other words, when are we going to see this

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Speaker 1: disaster that many people are predicting if they do lower

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Speaker 1: the interest rates too much? And then at that point

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Speaker 1: I presume even Kevin Walsh would reverse course and raise

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Speaker 1: interest rates to deal with rising inflation. But that cycle

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Speaker 1: takes a while, doesn't it.

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Speaker 3: It absolutely does. So it takes a while.

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Speaker 2: Inflation usually responds with a lag of about six to

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Speaker 2: eighteen months. It's not immediate, and it almost never shows

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Speaker 2: up in CPI the same quarter rates are cut. So

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Speaker 2: what happens is we get our big announcement that yes,

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Speaker 2: we have a person in there who made a decision

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Speaker 2: and rates made a move somehow, but it doesn't actually

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Speaker 2: trickle through for half a year, year and a half

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Speaker 2: from now, and so it takes a while for the

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Speaker 2: headlines to match up with what people are thinking in

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Speaker 2: the moment. So if you know fedchair Powell or future

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Speaker 2: FED share potential FED chair Warsh make a decision the

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Speaker 2: press and it doesn't agree with there'll be a lot

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Speaker 2: of headlines and a lot of vitriol about it now,

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Speaker 2: and that will drive short term chaos, of course, but

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Speaker 2: the long term won't show up for a half year

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Speaker 2: to even longer.

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Speaker 1: All right, Well, in the interest of not running over,

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Speaker 1: we'll just take a brief slice off of this segment

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Speaker 1: because we're gonna be talking about Trump child savings accounts,

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Speaker 1: and we'll give Brian James an opportunity to talk me

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Speaker 1: out of thinking it's a good idea. Maybe it is

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Speaker 1: a bad idea. I don't know. Trump Child savings accounts

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Speaker 1: coming up next. Then we're gonna learn about the idea

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Speaker 1: of using four to oh one k's for housing down payments,

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Speaker 1: which I think sounds like a really bad idea. It's

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Speaker 1: fourteen more with Brian James and Money Monday after these words.

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Speaker 3: Fifty five KRC and k City.

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Speaker 1: Talk Station is Money Monday with Brian James every Monday,

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Speaker 1: beginning at eight h five. All right, Brian pivoting over

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Speaker 1: the Trump savings accounts. I again thought it was a

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Speaker 1: good idea. It certainly since the kids can't access the

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Speaker 1: one thousand dollars. This is the this starting dollar map

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Speaker 1: that comes from the government, goes to an account, take

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Speaker 1: it out until eighteen it's going to compound the interest

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Speaker 1: compounding over eighteen years. It really is a great illustration

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Speaker 1: of the beauty of compounding, which I know you embrace,

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Speaker 1: Brian James, but also gets children maybe perhaps interested in

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Speaker 1: watching the growth of that money. There's also an opportunity

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Speaker 1: for employers and family members to add to that, and

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Speaker 1: there's also this philanthropic reality out there. I know Michael

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Speaker 1: and Susan Dell Foundation already promised six point two five

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Speaker 1: billion dollars to give about two hundred and fifty bucks

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Speaker 1: extra for these accounts, at least for twenty five million

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Speaker 1: American children in certain income qualified zips. They're allowed to

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Speaker 1: give to whoever they want. But this is a great

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Speaker 1: place to park it because it's going to add to

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Speaker 1: that ROI am I missing something in this Brian James

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Speaker 1: thinking it's a good idea.

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Speaker 3: No, I mean I don't hate it.

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Speaker 2: I wonder how it's going to be because this is

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Speaker 2: remember that these are only going to children born between

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Speaker 2: twenty twenty five and twenty twenty eight. Yeah's going to accidentally,

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Speaker 2: yeah the Trump term here, and so we're gonna have

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Speaker 2: this class of people who had this, and then some

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Speaker 2: poor kid will have born born January twenty first, twenty

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Speaker 2: twenty nine and will not have it. So what does

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Speaker 2: that mean sixty five years from now when all these

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Speaker 2: kids are retired. I mean the I like the idea

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Speaker 2: of setting up something that, first of all, you don't

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Speaker 2: have a choice about. Right, it's going to be invested

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Speaker 2: all in the stock market. They even put the math

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Speaker 2: in the announcement from the Treasury basically assumes ten percent

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Speaker 2: rate of return. There's just a little nugget in here

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Speaker 2: that says one thousand dollars could turn into a half

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Speaker 2: million dollars by retirement. So they're literally saying a new

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Speaker 2: born today, and I did the math, that's a ten

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Speaker 2: percent rate of return. They don't cite that, which is

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Speaker 2: interesting because if I'm going to say anything like that,

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Speaker 2: I have to show the math and all that other stuff.

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Speaker 1: Historically, historically it's more like eight, right, I mean, if

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Speaker 1: we're really going to be serious about this, I mean, truthfully, no.

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Speaker 2: The stock market has average ten percent. If you do

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Speaker 2: the math, that means that is over the longest of

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Speaker 2: long periods of time. But that includes two thousand and

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Speaker 2: eight and all that. But people who don't understand the

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Speaker 2: history will simply assume that I should get ten percent

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Speaker 2: every year. It's like some years you're going to lose

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Speaker 2: twenty five percent. Yeah, but the next year it's going

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Speaker 2: to return an extra thirty five and then get back

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Speaker 2: to normal.

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Speaker 3: And over the longest periods of time.

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Speaker 2: Yes, the stock market has average ten percent, And so

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Speaker 2: I guess it's not incorrect to say that the one

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Speaker 2: thousand dollars growing for sixty five years. I'm assuming that's

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Speaker 2: the age meeting that they mean by retirement. That's usually

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Speaker 2: what the government thinks of. But they don't mention that either. Well,

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Speaker 2: that will grow mathematically to a half million dollars.

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Speaker 1: It sounds me like with this with regard to this

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Speaker 1: eligibility Paer, between January one of last year and December

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Speaker 1: thirty first of twenty eight, they've taken a play out

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Speaker 1: of the typical playbook. You create a government program, maybe

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Speaker 1: like temporary assistance with insurance payments because of COVID nineteen,

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Speaker 1: and once those are in play, they time when it

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Speaker 1: comes time to disappear, pursuit to the deadline at which

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Speaker 1: we all knew ahead of time they were going to

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Speaker 1: disappear people well and nash teeth, and it becomes an

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Speaker 1: election issue to keep that in place. So wait for

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Speaker 1: it coming into twenty twenty eight, that people see this disappearing,

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Speaker 1: aren't going to start screaming about where's my slice for

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Speaker 1: my child? And then they'll make it permanent. Brian James.

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Speaker 3: That's yes, that's something called the sunset.

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Speaker 2: And basically every I think every tax reform we've put

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Speaker 2: in place, nobody can commit to it for the rest

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Speaker 2: of our lives.

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Speaker 3: So everything has a sunset date.

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Speaker 2: And then what that does to my financial planning software

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Speaker 2: is I have a little flip button that says, do

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Speaker 2: we assume the sunsets?

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Speaker 3: Or we do do we assume this is not so it.

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Speaker 2: Does introduce questions, But to sum it up, I do

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Speaker 2: like the concept, and it does force people. Yeah, you're

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Speaker 2: gonna invest in the stock market, and darn it, you're

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Speaker 2: gonna like it because you have no other choice. That's

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Speaker 2: gonna force people to ride it out. It will force

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Speaker 2: people to see the ups and downs. It's very important

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Speaker 2: for every investor under the sun to ride out a

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Speaker 2: full market cycle way up, way down, and then way

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Speaker 2: back up again. That it takes probably five years for

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Speaker 2: somebody to truly truly see that. This will force people

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Speaker 2: into a situation where they have no choice but to

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Speaker 2: stare at it. I don't think that's a bad thing.

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Speaker 1: Okay, And you pointed out these these this money, these

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Speaker 1: funds individual owned by these individual children are gonna be

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Speaker 1: placed in what broad stock market index funds? Do we

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Speaker 1: get the does the public the the the Let's say

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Speaker 1: the parents are guardians, they have any choices to where

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Speaker 1: the specific allocations are made, like we do in our

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Speaker 1: respect to four to one case.

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Speaker 3: Brian, That's what I'm getting at. I don't believe there's

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Speaker 3: much option at all now.

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Speaker 2: Granted you can't set these up until this coming July,

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Speaker 2: so we don't know exactly how to push them.

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Speaker 1: Okay.

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Speaker 3: The only thing that's out.

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Speaker 2: There right now is when you do your taxes, you'll

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Speaker 2: notice you have the option to reserve a spot, and

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Speaker 2: I'm not exactly sure what that means. If you had

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Speaker 2: a baby, then then you have a spot, So I'm

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Speaker 2: not sure what the point of that is, but that's

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Speaker 2: where you'll see references to it, and there have been

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Speaker 2: about a half million reserved so far. But as people

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Speaker 2: are just starting to do their twenty five.

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Speaker 1: Taxes, great, well, there's an IRS form forty five forty

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Speaker 1: seven where parents right there now can initiate this process

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Speaker 1: if there's a portal for it, and I'll let folks

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Speaker 1: who well it might be eligible for it seat to

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Speaker 1: doing that. And I guess the other component of this

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Speaker 1: is traditional five twenty nine plans. Now you're not obligated

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Speaker 1: to open one of those, but don't those offer more

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Speaker 1: of that flexibility that you and I were just talking

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Speaker 1: about in terms of where the money is invested.

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Speaker 2: Yeah, I mean the big thing here about the Trump

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Speaker 2: accounts is the three thousand bucks from the federal government.

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Speaker 2: Everything else about it you can do on your own.

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Speaker 2: You can take a thousand dollars and throw it into

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Speaker 2: mutual fund and sit on it for sixty five years.

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Speaker 2: You'll get the same outcome. Remember, the Trump accounts will

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Speaker 2: be taxable on the way out, so you're not necessarily

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Speaker 2: getting the best possible treatment. As matter of fact, I

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Speaker 2: would say if you're looking to put money away, take

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Speaker 2: your Trump account if you've got a kid in this

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Speaker 2: date range.

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Speaker 3: But if you're looking to put money away, do a

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Speaker 3: five to twenty nine.

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Speaker 2: Plan and learn learn learn about how they are not

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Speaker 2: only for college anymore. Those can become wroth Ira contributions.

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Speaker 2: That's tax free dollars.

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Speaker 3: Brian.

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Speaker 2: You put the money in now, and you can invest

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Speaker 2: it in broad market indexes just like the Trump accounts.

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Speaker 3: Let it grow forever.

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Speaker 2: If it sits there for fifteen years, you can use

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Speaker 2: up to thirty five thousand dollars as future wroth Ira contributions,

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Speaker 2: which will Yeah, that's a new rule to win in

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Speaker 2: place in twenty twenty four in response to the fact

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Speaker 2: that people were saying, I don't want a fund a

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Speaker 2: five twenty nine because I have no idea if this

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Speaker 2: newborn is going to go to college at all. Okay, fine,

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Speaker 2: let's make it a retirement account so you can basically

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Speaker 2: effectively fund a wroth IRA from day one of a

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Speaker 2: newborn's life, actually technically before certainly.

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Speaker 1: But like you always say, it's like investing in a

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Speaker 1: four oh one K if you got an employer match.

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Speaker 1: Never ever ever walk away from free money. So at

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Speaker 1: least do whatever minimum obligation you need to get an

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Speaker 1: employer match. And of course five twenty nine may be

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Speaker 1: a better way of investing for your child's education given

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Speaker 1: what you just pointed out, which I didn't know that

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Speaker 1: flexibility we now have with it. But go ahead take

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Speaker 1: the Trump money, but also separately open a five twenty.

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Speaker 2: Nine absolutely and fund your own retirement before you worry

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Speaker 2: too much about your kids. You're not going to do

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Speaker 2: them any good if you're on their couch when you're

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Speaker 2: ninety five.

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Speaker 1: You know what, Brian James, in my personal experience, that

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Speaker 1: is solid gold, solid gold, recommendation, because that's the way

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Speaker 1: my wife and I approached it. You know, we didn't

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Speaker 1: start socking away in a separate college education funn although

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Speaker 1: they did have five twenty nine, we didn't really contribute

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Speaker 1: that much to it, but we took care of our

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Speaker 1: own retirement needs, and by the time the kids got

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Speaker 1: the college age, we had enough that we can manage

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Speaker 1: the college expenses. And I never thought I would ever

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Speaker 1: see a day where that was possible, But it does

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Speaker 1: really work out that way.

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Speaker 3: Compounding us the magic of compounding. Brian Thomas.

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Speaker 1: Amen to that, Brian James. One more with Brian James.

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Speaker 1: How good is of an idea? Is it to use

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Speaker 1: your four oh one case? Speaking of which for a

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Speaker 1: housing down payment? We'll hear what Brian has to say

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Speaker 1: about that. I think I can guess eight twenty five

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Speaker 1: right now, if you have KCD Talk Station.

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Speaker 2: Fifty five KRC the simply.

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Speaker 3: Money Man, it is station.

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Speaker 1: Eight twenty seven. Here if you have KCD Talk station

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Speaker 1: Brian Thomas with Money Monday's Brian James doing what we

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Speaker 1: call Money Monday, a few segments of money related topics.

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Speaker 1: And it wasn't I guess it was just like last

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Speaker 1: week or so, the National Economic Council Director Kevin Hassett

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Speaker 1: suggested that, well, we're going to allow people to take

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Speaker 1: money out of their four oh one case and use

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Speaker 1: that for a down payment on a home. Now, I

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Speaker 1: understand home prices going through the roof, and of course,

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Speaker 1: if you've got to come up with is it still

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Speaker 1: twenty percent down, Brian, to buy a house. It's the

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Speaker 1: biggest tough road to hoe to deal with when you

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Speaker 1: want to buy a house, because I remember when we

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Speaker 1: bought our first house and we scraped up every little

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Speaker 1: dollar we could find and meet that twenty percent down.

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Speaker 2: Yeah, it is still that the that's not a hard

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Speaker 2: bar you got to get over. But if you want

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Speaker 2: to avoid mortgage insurance, which basically means paying your bank

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Speaker 2: because your bank thinks you're a little riskier if you

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Speaker 2: cannot put the twenty percent down, you got to buy

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Speaker 2: mortgage insurance, and then you have to refinance usually to

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Speaker 2: get out of it. Sometimes you can get out of

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Speaker 2: it without that once you hit that point of equity.

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Speaker 3: But yeah, that's still the case.

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Speaker 2: And so what we're talking about today is the ability

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Speaker 2: to borrow or to pull money out of your four

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Speaker 2: oh one case, still be taxable. You're not avoiding taxes,

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Speaker 2: We'll never do that, but you'd be avoiding the ten

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Speaker 2: percent penalty, and you'd be allowed to do it in

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Speaker 2: the first place to gather money to make that down payment.

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Speaker 2: This is something, as you mentioned, this was thrown out

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Speaker 2: there as a hey, let's think about this. But it

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Speaker 2: does seem to have been pretty well shelved here. I

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Speaker 2: don't think I think this is going to go quietly

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Speaker 2: into that good night because the President just said he

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Speaker 2: doesn't like it. Yeah, and part of what he's saying,

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Speaker 2: you know, President Trump may simply be reacting to what

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Speaker 2: the market is currently doing. Obviously, we're at an all

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Speaker 2: time high, and we've been running really for three years

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Speaker 2: now with good markets, and he's simply saying, well, why

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Speaker 2: would I want to suck a bunch of money out

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Speaker 2: of the market, And then that could have an impact

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Speaker 2: over time when people pulling money out of the capital

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Speaker 2: markets and sticking them into ill liquid assets like houses.

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Speaker 2: Good idea maybe to get the job done, but at

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Speaker 2: the same time, all that's gonna do is pump up demand.

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Speaker 2: It's not unlike what we did with student loans over

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Speaker 2: the past thirty years that resulted in higher tuition.

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Speaker 1: Yeah, you know in pump up demand is is kind

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Speaker 1: of the elephant the room that I wasn't thinking about.

439
00:18:25,160 --> 00:18:27,879
Speaker 1: I would just think about your regular and broader point,

440
00:18:27,880 --> 00:18:30,479
Speaker 1: which is, well, you know what you have lost. Not

441
00:18:30,520 --> 00:18:32,280
Speaker 1: only do you have to pay the taxes as you're

442
00:18:32,280 --> 00:18:37,080
Speaker 1: pulling that out, you've lost that long term return on

443
00:18:37,200 --> 00:18:39,720
Speaker 1: investment that the compounding interest does. I mean you're taking

444
00:18:39,760 --> 00:18:42,040
Speaker 1: away the point of the four to one k by

445
00:18:42,080 --> 00:18:42,480
Speaker 1: doing that.

446
00:18:43,040 --> 00:18:46,840
Speaker 2: Yeah, that's really a massive sacrifice, and it's Owning a

447
00:18:46,880 --> 00:18:49,520
Speaker 2: home is not a bad thing. But houses don't believe

448
00:18:49,520 --> 00:18:51,120
Speaker 2: your you know, the advice you might be getting from

449
00:18:51,119 --> 00:18:53,879
Speaker 2: your older relatives that comes out of the fifties and

450
00:18:53,880 --> 00:18:55,720
Speaker 2: sixties that says a house is the greatest.

451
00:18:55,400 --> 00:18:58,040
Speaker 3: Investment you can buy. A house is a terrible investment.

452
00:18:58,200 --> 00:18:59,679
Speaker 2: If you do the math of what you have to

453
00:18:59,680 --> 00:19:03,320
Speaker 2: pay for home via the price itself interest, replacing the

454
00:19:03,320 --> 00:19:06,000
Speaker 2: hot water, heater, property taxes, all that stuff over time,

455
00:19:06,160 --> 00:19:08,880
Speaker 2: Houses are an absolutely awful investment that we all kind

456
00:19:08,880 --> 00:19:10,840
Speaker 2: of have to have a solution for because otherwise you're

457
00:19:10,840 --> 00:19:14,120
Speaker 2: paying rent and there for inflation every year. But that's

458
00:19:14,200 --> 00:19:16,040
Speaker 2: not the way to think about it. The way to

459
00:19:16,040 --> 00:19:17,639
Speaker 2: think about it is, I need to make sure it

460
00:19:17,640 --> 00:19:20,040
Speaker 2: fits my budget. All of those things I just described

461
00:19:20,080 --> 00:19:24,480
Speaker 2: have to fit the cash flow, including wherever my down

462
00:19:24,480 --> 00:19:26,679
Speaker 2: payment is coming from. That has to not disturb my

463
00:19:26,760 --> 00:19:29,520
Speaker 2: retirement that maybe thirty years off. But that's why again,

464
00:19:29,520 --> 00:19:31,480
Speaker 2: this is why I have a job. Let's figure out

465
00:19:31,480 --> 00:19:33,399
Speaker 2: what can I get away with now so that it

466
00:19:33,440 --> 00:19:35,600
Speaker 2: don't disrupt things thirty years from now. I know what

467
00:19:35,640 --> 00:19:37,159
Speaker 2: I can afford right now that I can write a

468
00:19:37,200 --> 00:19:39,639
Speaker 2: check for. But can I afford it not now but

469
00:19:39,720 --> 00:19:40,560
Speaker 2: thirty years from now.

470
00:19:40,600 --> 00:19:43,760
Speaker 1: That's the harder question to answer as a financial planner.

471
00:19:43,800 --> 00:19:48,040
Speaker 1: And I understand your process. You run through computer modeling

472
00:19:48,200 --> 00:19:51,320
Speaker 1: all the gazillions of different scenarios for people as they

473
00:19:51,359 --> 00:19:53,119
Speaker 1: are putting away money in their four oh one cas.

474
00:19:53,119 --> 00:19:55,240
Speaker 1: If the market goes sideways, if it goes up, it

475
00:19:55,359 --> 00:19:59,439
Speaker 1: performs this way, that way, nine gajillion ways of slicing it.

476
00:19:59,480 --> 00:20:01,800
Speaker 1: So he give some people. You give people some comfort

477
00:20:01,880 --> 00:20:04,160
Speaker 1: level as to where they are going, where they want

478
00:20:04,160 --> 00:20:05,760
Speaker 1: to be, and are they on the right track. I

479
00:20:05,840 --> 00:20:08,399
Speaker 1: understand all that. One of the things that's always bothered me,

480
00:20:08,480 --> 00:20:10,520
Speaker 1: and when I see when we start talking about a

481
00:20:10,760 --> 00:20:14,960
Speaker 1: well a devalued currency, the fiat currency problems generally speaking.

482
00:20:15,200 --> 00:20:17,119
Speaker 1: And then there's that pesky thing you just brought up,

483
00:20:17,119 --> 00:20:18,960
Speaker 1: which raised this to my attention, made me want to

484
00:20:19,000 --> 00:20:21,639
Speaker 1: ask you taxes. You're going to pay taxes on your

485
00:20:21,640 --> 00:20:23,200
Speaker 1: four oh one K when the money comes out. That's

486
00:20:23,200 --> 00:20:26,000
Speaker 1: why I think ROTH is probably a better way. But

487
00:20:27,119 --> 00:20:29,920
Speaker 1: my worry, and it remains a worry because I'm not

488
00:20:29,960 --> 00:20:32,040
Speaker 1: withdrawing any money from a four to one K yet,

489
00:20:32,280 --> 00:20:35,119
Speaker 1: is that we're gonna have some calamity befall us, you know,

490
00:20:35,200 --> 00:20:37,159
Speaker 1: not maybe not a great depression, but it's gonna be

491
00:20:37,160 --> 00:20:41,800
Speaker 1: something pretty bad, global war whatever, and somebody's gonna start

492
00:20:41,840 --> 00:20:44,680
Speaker 1: salivating over the rate at which they tax the withdrawals

493
00:20:44,680 --> 00:20:46,640
Speaker 1: from four oh one k's, and it may turn into

494
00:20:46,640 --> 00:20:51,080
Speaker 1: some rapacious nineteen fifties level of course waited for how

495
00:20:51,119 --> 00:20:53,040
Speaker 1: much money you have, But they're going to go after

496
00:20:53,080 --> 00:20:55,119
Speaker 1: all this money that we've been diligently saving under the

497
00:20:55,160 --> 00:20:57,160
Speaker 1: promise we can take it out. But since the tax

498
00:20:57,240 --> 00:21:00,840
Speaker 1: rate doesn't isn't known fifteen years from nowur whatever, it

499
00:21:00,880 --> 00:21:02,000
Speaker 1: could be literally anything.

500
00:21:02,040 --> 00:21:05,200
Speaker 2: Brian, Well, I think the fundamentally, I think I think

501
00:21:05,200 --> 00:21:07,600
Speaker 2: you're exactly right. The fundamentally, the thing that this country

502
00:21:07,640 --> 00:21:09,879
Speaker 2: has done better than any other country on the face

503
00:21:09,920 --> 00:21:11,960
Speaker 2: of the earth and the history of all time is

504
00:21:12,119 --> 00:21:16,600
Speaker 2: crowdsource economic development. We have done absolutely everything we possibly

505
00:21:16,640 --> 00:21:20,000
Speaker 2: can to entice people to go find every unnailed down

506
00:21:20,040 --> 00:21:22,040
Speaker 2: dollar they can and invest it in some kind of

507
00:21:22,080 --> 00:21:24,639
Speaker 2: capital venture. We did it with what you're referring to

508
00:21:24,760 --> 00:21:27,400
Speaker 2: is the way we did it by enticing people to say, hey,

509
00:21:27,440 --> 00:21:29,240
Speaker 2: you know, I don't need this pension because the stock

510
00:21:29,320 --> 00:21:32,000
Speaker 2: market will grow faster. So pensions all went away over

511
00:21:32,040 --> 00:21:34,399
Speaker 2: the decades, and now we take little chunks of our

512
00:21:34,400 --> 00:21:37,120
Speaker 2: paychecks and we invest them in other people's businesses. That's

513
00:21:37,119 --> 00:21:39,879
Speaker 2: what the stock market is. And historically that has worked,

514
00:21:40,320 --> 00:21:42,840
Speaker 2: even inclusive of some of those calamities that you mentioned,

515
00:21:42,840 --> 00:21:45,480
Speaker 2: like twenty and eight in twenty twenty two, don't forget

516
00:21:45,480 --> 00:21:47,800
Speaker 2: that not that long ago. So all of that does

517
00:21:47,840 --> 00:21:50,680
Speaker 2: still work. That's why we're where we are. But as

518
00:21:50,680 --> 00:21:53,320
Speaker 2: you just mentioned, you're also a sitting duck. For you know,

519
00:21:53,359 --> 00:21:55,200
Speaker 2: your four O one K has never been taxed. All

520
00:21:55,240 --> 00:21:58,040
Speaker 2: they have to do they're not going to confiscate your money.

521
00:21:58,080 --> 00:22:00,159
Speaker 2: Nobody's going to swoop in and take large chunks of

522
00:22:00,200 --> 00:22:02,080
Speaker 2: your four oh one k. They're just going to bump

523
00:22:02,200 --> 00:22:04,760
Speaker 2: ordinary income tax rates up a little bit at a time.

524
00:22:05,040 --> 00:22:06,919
Speaker 2: And that's what's gonna happen, you know, over over the

525
00:22:06,960 --> 00:22:10,280
Speaker 2: decades as we have to deal with our fiscal irresponsibility.

526
00:22:10,400 --> 00:22:12,080
Speaker 2: At some point, you're kind of a sitting duck if

527
00:22:12,119 --> 00:22:14,840
Speaker 2: you only have that pre tax pile of money. My

528
00:22:15,000 --> 00:22:17,080
Speaker 2: personally speaking, the way I'm dealing with this, my wife

529
00:22:17,119 --> 00:22:19,080
Speaker 2: and I are only doing ROTH contributions in our four

530
00:22:19,119 --> 00:22:21,240
Speaker 2: oh one ks. Now, that didn't exist when we first

531
00:22:21,280 --> 00:22:23,840
Speaker 2: started thirty years ago. It does now. I got to

532
00:22:23,880 --> 00:22:25,720
Speaker 2: bite the bullet. But I know I'm talking thirty forty

533
00:22:25,760 --> 00:22:27,840
Speaker 2: years of compounding, so I don't care. The math still

534
00:22:27,840 --> 00:22:28,320
Speaker 2: favors it.

535
00:22:28,520 --> 00:22:30,600
Speaker 1: Yeah, and you know that the ship has sailed for me.

536
00:22:30,880 --> 00:22:33,600
Speaker 1: First off, the employer doesn't offer the Roth version. And second,

537
00:22:33,680 --> 00:22:36,399
Speaker 1: I'm sixty and the idea of me contributing for the

538
00:22:36,400 --> 00:22:38,240
Speaker 1: next twenty thirty years, yeah.

539
00:22:38,040 --> 00:22:40,399
Speaker 2: Sneaking up on conversion time to do that math for

540
00:22:40,480 --> 00:22:42,040
Speaker 2: that that low income window you'll have.

541
00:22:42,240 --> 00:22:44,040
Speaker 1: I am gonna have to talk to somebody about that

542
00:22:44,080 --> 00:22:46,240
Speaker 1: convert real quick, since you only have a minute left.

543
00:22:46,240 --> 00:22:48,320
Speaker 1: What's the conversion thing? How does that work?

544
00:22:48,359 --> 00:22:48,600
Speaker 3: Sure?

545
00:22:48,640 --> 00:22:50,639
Speaker 2: So what we're talking about there is roth conversion. So

546
00:22:50,720 --> 00:22:52,960
Speaker 2: if you have that bucket of pre tax dollars, which

547
00:22:52,960 --> 00:22:54,920
Speaker 2: if you started a four oh one K thirty years ago,

548
00:22:54,960 --> 00:22:57,280
Speaker 2: I guarant darantee you do because I do the only choice. Yeah,

549
00:22:57,320 --> 00:22:59,680
Speaker 2: most people do. Uh. So what you can do is

550
00:22:59,720 --> 00:23:01,919
Speaker 2: you can and convert. You can say yes, IRS, I

551
00:23:01,920 --> 00:23:04,080
Speaker 2: would like to pay you taxes on this. You know,

552
00:23:04,119 --> 00:23:06,000
Speaker 2: maybe maybe it's one hundred thousand dollars and then you're

553
00:23:06,040 --> 00:23:08,359
Speaker 2: in a twenty percent bracket. Remember this would be on

554
00:23:08,400 --> 00:23:10,760
Speaker 2: top of whatever your bracket already is via salary, So

555
00:23:10,800 --> 00:23:13,760
Speaker 2: maybe you're let's call it twenty five percent bracket. Then

556
00:23:14,000 --> 00:23:16,639
Speaker 2: you would be writing a check purposely voluntarily to the

557
00:23:16,640 --> 00:23:19,720
Speaker 2: IRS to free up one hundred thousand dollars and keep

558
00:23:19,760 --> 00:23:21,520
Speaker 2: it invested in the market. Then it would grow tax

559
00:23:21,520 --> 00:23:23,800
Speaker 2: free forever. The longer you can let it go, the better.

560
00:23:23,960 --> 00:23:25,760
Speaker 2: But the reason I'm hinting this to you, Brian, is

561
00:23:25,800 --> 00:23:29,000
Speaker 2: because someday you'll retire and it will be you will

562
00:23:29,000 --> 00:23:31,240
Speaker 2: have some years where you don't have salary, neither of

563
00:23:31,240 --> 00:23:33,880
Speaker 2: you is working, So your lowest bracket you've had in decades,

564
00:23:34,040 --> 00:23:36,600
Speaker 2: and it will be well before age seventy five, which

565
00:23:36,600 --> 00:23:39,600
Speaker 2: is when you will start being forced to pay taxes

566
00:23:39,880 --> 00:23:42,879
Speaker 2: via requirementum distributions. That's the window that I was referring to.

567
00:23:43,040 --> 00:23:44,719
Speaker 2: That's when you want to look to do conversions. So

568
00:23:44,760 --> 00:23:46,960
Speaker 2: what you might be doing is piling up cash on

569
00:23:47,080 --> 00:23:50,120
Speaker 2: the side somewhere with the intent of paying taxes when

570
00:23:50,160 --> 00:23:52,399
Speaker 2: your income is lower than it's been in decades.

571
00:23:52,800 --> 00:23:55,080
Speaker 1: All right, that make actually makes sense to me, And

572
00:23:55,119 --> 00:23:58,040
Speaker 1: I'm an idiot. Brian James, good job, appreciate you will well,

573
00:23:58,080 --> 00:23:59,440
Speaker 1: I have a job, say, I know, and that's why

574
00:23:59,440 --> 00:24:01,280
Speaker 1: I love having the show. Brian James. Trying to keep

575
00:24:01,320 --> 00:24:02,720
Speaker 1: us on the right path. Brian James will do this

576
00:24:02,760 --> 00:24:05,480
Speaker 1: again next Monday. Thank you for showing up every money

577
00:24:05,480 --> 00:24:07,679
Speaker 1: and offering the stage wisdom and looking forward to doing

578
00:24:07,680 --> 00:24:09,240
Speaker 1: it again next week. Have a great week, my friend.

579
00:24:09,320 --> 00:24:10,920
Speaker 3: We will talk to you when it is seventy five

580
00:24:10,960 --> 00:24:11,760
Speaker 3: and Sunday next week.

581
00:24:12,720 --> 00:24:15,160
Speaker 1: Maybe a little optimistic, Brian, but at least for going

582
00:24:15,160 --> 00:24:16,040
Speaker 1: in the right direction.

583
00:24:16,600 --> 00:24:17,200
Speaker 3: Thanks brother.

584
00:24:17,280 --> 00:24:18,760
Speaker 1: Eight thirty five efty five Curiousity