1 00:00:05,640 --> 00:00:10,559 Speaker 1: Tonight, why smart people still makes some dumb money decisions. 2 00:00:10,640 --> 00:00:13,160 Speaker 1: You're listening to Simply Money, started by all Worth Financial 3 00:00:13,160 --> 00:00:17,759 Speaker 1: on Bob Sponsller along with Brian James. You've built a business, 4 00:00:17,920 --> 00:00:20,680 Speaker 1: or you've climbed the corporate ladder, you've got a few 5 00:00:20,760 --> 00:00:24,120 Speaker 1: million bucks tucked away. So why do even the smartest 6 00:00:24,120 --> 00:00:29,320 Speaker 1: people find some way to sabotage their own financial success? 7 00:00:29,640 --> 00:00:32,920 Speaker 1: The answer lies in your brain, and tonight the mistakes 8 00:00:32,960 --> 00:00:37,599 Speaker 1: we've seen smart successful investors make and how to avoid them. 9 00:00:37,680 --> 00:00:40,680 Speaker 1: Let's get into this topic, Brian, A lot to unpack here. 10 00:00:40,800 --> 00:00:43,479 Speaker 2: We're gonna start with the the I know better bias. 11 00:00:43,880 --> 00:00:46,120 Speaker 2: So let's say you're you're a retired executive and you've 12 00:00:46,120 --> 00:00:49,520 Speaker 2: always been on basically the alpha, and you've managed teams, 13 00:00:49,560 --> 00:00:51,640 Speaker 2: you've made the big decisions. You're a smart person, so 14 00:00:51,640 --> 00:00:53,680 Speaker 2: when it comes to investing, you're gonna trust your instincts 15 00:00:53,680 --> 00:00:55,120 Speaker 2: because they got you this far anyway. 16 00:00:55,480 --> 00:00:56,720 Speaker 3: That's where the mistake happens. 17 00:00:56,720 --> 00:00:56,840 Speaker 1: Though. 18 00:00:56,880 --> 00:00:59,319 Speaker 2: That overconfidence can lead people way too often to take 19 00:00:59,320 --> 00:01:03,640 Speaker 2: a concentrated position in stocks they think they understand, or worse, 20 00:01:03,680 --> 00:01:05,640 Speaker 2: hold on to a legacy stock too long because they 21 00:01:05,680 --> 00:01:08,640 Speaker 2: have some kind of emotional attachment and thinking you understand 22 00:01:08,640 --> 00:01:10,720 Speaker 2: a stock a lot of times can mean you're you're 23 00:01:10,760 --> 00:01:14,720 Speaker 2: following the herd who you're kind of coming up with 24 00:01:15,080 --> 00:01:18,440 Speaker 2: a biases based off of what the crowd thinks, and 25 00:01:18,720 --> 00:01:20,560 Speaker 2: hanging on to something that may or may not be 26 00:01:20,600 --> 00:01:21,920 Speaker 2: worth it because you're in a bit of an echo 27 00:01:22,040 --> 00:01:23,960 Speaker 2: chamber with a bunch of other people that love this stock. 28 00:01:24,240 --> 00:01:26,240 Speaker 2: So you know, here's a quick example. It take a 29 00:01:26,319 --> 00:01:29,479 Speaker 2: hypothetical Jane who is sixty two. She got three point 30 00:01:29,480 --> 00:01:32,920 Speaker 2: two million dollars and recently retired confident about that company 31 00:01:32,959 --> 00:01:35,440 Speaker 2: she worked for, and therefore left eight hundred thousand dollars 32 00:01:35,440 --> 00:01:38,240 Speaker 2: in the stock, about a quarter of her portfolio. She 33 00:01:38,319 --> 00:01:40,639 Speaker 2: had worked there over thirty years and it had built 34 00:01:40,800 --> 00:01:42,880 Speaker 2: her own wealth and believed in that brand and wanted 35 00:01:42,920 --> 00:01:44,640 Speaker 2: to stay loyal to the company that gave her so 36 00:01:44,760 --> 00:01:47,000 Speaker 2: much for her and her family. Over the next two years, 37 00:01:47,000 --> 00:01:49,560 Speaker 2: the market decided it didn't care about her her loyalty 38 00:01:49,560 --> 00:01:51,840 Speaker 2: to the company. That stock took a forty percent hit, 39 00:01:52,120 --> 00:01:54,640 Speaker 2: wiped out over three hundred thousand dollars in value. She 40 00:01:54,720 --> 00:01:57,200 Speaker 2: realized way too late that diversification was a lot more 41 00:01:57,240 --> 00:01:58,320 Speaker 2: important than sentiment. 42 00:01:58,480 --> 00:01:59,920 Speaker 4: I would this this locally. 43 00:02:00,000 --> 00:02:01,120 Speaker 3: Wow, this is General Electric. 44 00:02:01,200 --> 00:02:03,320 Speaker 2: General Electric is doing a fine place now, it's a 45 00:02:03,320 --> 00:02:06,280 Speaker 2: great company, great comeback story, But ten years ago, yeah 46 00:02:06,320 --> 00:02:08,799 Speaker 2: not so much. So this does happen to real people 47 00:02:08,800 --> 00:02:09,160 Speaker 2: out there. 48 00:02:10,080 --> 00:02:12,680 Speaker 1: Well, Brian, I've been doing this long enough to have 49 00:02:12,800 --> 00:02:15,760 Speaker 1: been in a place where I try to advise the 50 00:02:15,880 --> 00:02:20,720 Speaker 1: ge executives I worked with to exercise some stock options 51 00:02:20,760 --> 00:02:23,799 Speaker 1: prior to when the market tanked in two thousand and one, 52 00:02:23,919 --> 00:02:27,000 Speaker 1: two thousand and two. Some people listen, some people didn't. 53 00:02:27,440 --> 00:02:29,840 Speaker 1: And yeah, if you get a little overconfident and you 54 00:02:29,960 --> 00:02:33,520 Speaker 1: use Jane, you know, a female in your example, you're hypothetical. 55 00:02:33,560 --> 00:02:36,320 Speaker 1: And that's great. But what I find is it's us, Brian. 56 00:02:36,400 --> 00:02:39,799 Speaker 1: It's men that tie our egos way more often than 57 00:02:39,800 --> 00:02:42,800 Speaker 1: women to these kind of decisions. And just because we've 58 00:02:42,919 --> 00:02:47,240 Speaker 1: run or managed a large portion of a successful company 59 00:02:47,360 --> 00:02:49,840 Speaker 1: or even a private business, does not mean that we 60 00:02:49,880 --> 00:02:52,160 Speaker 1: can retire one day and feel like we have the 61 00:02:52,240 --> 00:02:56,000 Speaker 1: absolute command over the global economy. And people that try 62 00:02:56,040 --> 00:02:59,920 Speaker 1: to get into this kind of mindset can really lose 63 00:03:00,200 --> 00:03:02,640 Speaker 1: money quickly. And that's why, you know, it's not that 64 00:03:02,680 --> 00:03:07,080 Speaker 1: a good fiduciary financial advisor is any smarter than anyone else. 65 00:03:07,400 --> 00:03:10,480 Speaker 1: It's just you know, we're able to help people manage 66 00:03:10,520 --> 00:03:12,440 Speaker 1: their own behavioral risks. 67 00:03:12,960 --> 00:03:13,280 Speaker 3: Uh. 68 00:03:13,360 --> 00:03:16,080 Speaker 1: And oftentimes that's worth a lot of money and a 69 00:03:16,080 --> 00:03:18,560 Speaker 1: lot of peace of mind as people get into retirement. 70 00:03:18,880 --> 00:03:21,600 Speaker 1: Let's talk about another you know, pitfall that we run 71 00:03:21,639 --> 00:03:25,920 Speaker 1: into here, and that's loss aversion paralysis. Let's say markets 72 00:03:25,960 --> 00:03:29,000 Speaker 1: are down, you're looking at your portfolio that's in the 73 00:03:29,040 --> 00:03:32,560 Speaker 1: red for the short term, and you know you should rebalance, 74 00:03:32,639 --> 00:03:36,000 Speaker 1: you should buy low, sell high like everyone talks about, 75 00:03:36,440 --> 00:03:39,520 Speaker 1: and you know you should stay invested, but emotionally you 76 00:03:39,800 --> 00:03:42,680 Speaker 1: just can't pull the trigger. And that's something that we 77 00:03:42,720 --> 00:03:46,120 Speaker 1: call loss aversion our brain, Brian, This is just how 78 00:03:46,400 --> 00:03:51,120 Speaker 1: human beings work. Our brains hate losing money way more 79 00:03:51,240 --> 00:03:54,800 Speaker 1: than they like making money. And when the numbers get higher, 80 00:03:54,840 --> 00:03:58,520 Speaker 1: that net worth grows, the stakes feel even higher. Anytime 81 00:03:58,600 --> 00:04:02,720 Speaker 1: we have a market pullback and people say, well, I'm 82 00:04:02,760 --> 00:04:06,120 Speaker 1: gonna get out and get back in when things look better, 83 00:04:06,160 --> 00:04:08,880 Speaker 1: and that's usually a telltale sign that they're about to 84 00:04:08,960 --> 00:04:12,040 Speaker 1: leave hundreds of thousands of dollars on the table. Give 85 00:04:12,120 --> 00:04:17,080 Speaker 1: us a hypothetical example that from somebody will name Kevin 86 00:04:17,240 --> 00:04:19,280 Speaker 1: on what can happen here? Brian and what you and 87 00:04:19,320 --> 00:04:21,000 Speaker 1: I both have seen happen. 88 00:04:21,240 --> 00:04:23,680 Speaker 2: We're gonna name him Kevin, but I remember who it is, 89 00:04:24,680 --> 00:04:27,160 Speaker 2: so fifty eight years Sometimes. 90 00:04:26,839 --> 00:04:28,800 Speaker 4: These hypotheticals are not that hypothetical, right. 91 00:04:29,040 --> 00:04:30,279 Speaker 3: Everybody's got war stories. 92 00:04:30,800 --> 00:04:33,799 Speaker 2: Kevin had five million dollars in retirement savings in twenty 93 00:04:33,839 --> 00:04:34,360 Speaker 2: twenty two. 94 00:04:34,400 --> 00:04:35,279 Speaker 3: Only three years ago. 95 00:04:35,480 --> 00:04:37,960 Speaker 2: He watched his portfolio drop about eighteen percent because he 96 00:04:38,000 --> 00:04:41,400 Speaker 2: was pretty aggressively invested, which was which was fine because 97 00:04:42,279 --> 00:04:45,280 Speaker 2: he was not a risk averse prior and his plan 98 00:04:45,360 --> 00:04:48,520 Speaker 2: supported it and he had a growth mindset. But he 99 00:04:48,600 --> 00:04:50,880 Speaker 2: panicked this time because he is fifty eight years old 100 00:04:50,960 --> 00:04:53,039 Speaker 2: and you know, a little closer to retirement. And this 101 00:04:53,080 --> 00:04:55,279 Speaker 2: time it got him moved about forty percent of his 102 00:04:55,320 --> 00:04:57,320 Speaker 2: assets into a money market fund. This is before we 103 00:04:57,360 --> 00:04:59,120 Speaker 2: started working with him. This is mal Frankly, this is 104 00:04:59,160 --> 00:05:02,840 Speaker 2: how we started working with this hypothetical person. Anyway, he 105 00:05:02,880 --> 00:05:04,560 Speaker 2: told himself he was going to wait for things to 106 00:05:04,600 --> 00:05:06,960 Speaker 2: cal mm down and come back in, but never got 107 00:05:06,960 --> 00:05:09,440 Speaker 2: back in. Missed out on the twenty three rally, which 108 00:05:09,480 --> 00:05:12,400 Speaker 2: saw markets rebound by over twenty percent. And if you 109 00:05:12,440 --> 00:05:15,840 Speaker 2: look Bob at there are five years that are like this. 110 00:05:15,880 --> 00:05:18,560 Speaker 2: Twenty twenty two, two thousand and eight, two thousand and two, 111 00:05:18,640 --> 00:05:21,600 Speaker 2: nineteen thirty seven, nineteen seventy four, book it. Every one 112 00:05:21,640 --> 00:05:23,960 Speaker 2: of those are the only five that we've had that 113 00:05:24,000 --> 00:05:27,000 Speaker 2: have been a more than a fifteen to twenty percent loss. 114 00:05:27,040 --> 00:05:28,760 Speaker 2: Those are the whoppers we're all afraid of. But there's 115 00:05:28,800 --> 00:05:31,240 Speaker 2: only five of them over the last eighty some years. 116 00:05:31,800 --> 00:05:35,039 Speaker 2: But anyways, when we see these things, people tend to panic. 117 00:05:35,080 --> 00:05:38,279 Speaker 2: But the thing that the commonality between all those five years, 118 00:05:38,360 --> 00:05:41,280 Speaker 2: every last one of them, even two thousand and eight 119 00:05:41,440 --> 00:05:44,240 Speaker 2: was followed by a pretty quick upturn the immediate following 120 00:05:44,279 --> 00:05:46,480 Speaker 2: year because the herd panics and then it gets way 121 00:05:46,480 --> 00:05:48,960 Speaker 2: too excited on the positive side. So if you panic 122 00:05:49,000 --> 00:05:51,960 Speaker 2: at the bottom, you are proactively giving up that recovery. 123 00:05:52,160 --> 00:05:53,800 Speaker 2: So how do you avoid this? Well, first of all, 124 00:05:53,920 --> 00:05:56,599 Speaker 2: hire a discretionary manager who's going to remove your emotion 125 00:05:56,680 --> 00:05:59,320 Speaker 2: from your own decisions, because they're not using your decisions. 126 00:05:59,560 --> 00:06:03,359 Speaker 2: Automated rebalancing can help create yourself an investment policy statement 127 00:06:03,400 --> 00:06:05,960 Speaker 2: to outline how you respond to volatility before you're in 128 00:06:06,000 --> 00:06:07,960 Speaker 2: the moment. That's something you could pull out and say, Okay, 129 00:06:07,960 --> 00:06:10,000 Speaker 2: when I was in a calmer mindset, this is how 130 00:06:10,040 --> 00:06:11,560 Speaker 2: I thought about investments. 131 00:06:12,000 --> 00:06:14,200 Speaker 1: Yeah, and another thing to consider. And you and I 132 00:06:14,240 --> 00:06:16,520 Speaker 1: talk about this all the time. If you really feel 133 00:06:16,560 --> 00:06:18,720 Speaker 1: like you know, things are coming down the pike that 134 00:06:19,200 --> 00:06:21,800 Speaker 1: concern you, you don't have to blow out of your 135 00:06:21,800 --> 00:06:24,279 Speaker 1: portfolio and put a bunch of money in cat you know, 136 00:06:24,720 --> 00:06:27,919 Speaker 1: long term money, move to cash, just create a bucket strategy. 137 00:06:28,000 --> 00:06:31,839 Speaker 1: Because you know, in all those periods that you mentioned, Brian, 138 00:06:31,880 --> 00:06:35,599 Speaker 1: when we had severe market declines, in almost every case 139 00:06:35,640 --> 00:06:39,040 Speaker 1: they can the market completely recovered in about three years. 140 00:06:39,279 --> 00:06:41,920 Speaker 1: So you know, rather than blowing your whole plan up, 141 00:06:42,279 --> 00:06:45,200 Speaker 1: maybe you know, build up that emergency fund a little 142 00:06:45,240 --> 00:06:48,280 Speaker 1: bit with enough liquid, non risk cash to get you 143 00:06:48,360 --> 00:06:51,320 Speaker 1: through that you know, two to three year timeframe, and 144 00:06:51,320 --> 00:06:54,440 Speaker 1: and that that allows you to weather the storm the storms, 145 00:06:54,440 --> 00:06:58,840 Speaker 1: so to speak, without completely putting an upheaval your entire 146 00:06:58,920 --> 00:07:01,680 Speaker 1: financial plan and leaving a lot of money on the 147 00:07:01,720 --> 00:07:05,119 Speaker 1: table when the market comes back, just because you wanted 148 00:07:05,120 --> 00:07:08,800 Speaker 1: to prove emotionally you were right. Let's move on to 149 00:07:08,880 --> 00:07:12,320 Speaker 1: another one, flipping the whole scenario one hundred and eighty degrees. 150 00:07:12,360 --> 00:07:15,960 Speaker 1: The old fear of missing out. Someone hears about AI 151 00:07:16,120 --> 00:07:19,840 Speaker 1: stocks going up, or bitcoin going up, or private credit 152 00:07:19,960 --> 00:07:23,160 Speaker 1: or something that's really been off to the races. I mean, 153 00:07:23,240 --> 00:07:26,880 Speaker 1: let's say Gold in twenty twenty five, and they think, Man, 154 00:07:27,160 --> 00:07:29,800 Speaker 1: this thing's been flying. I need to get in now 155 00:07:30,000 --> 00:07:31,400 Speaker 1: or I'll miss out. 156 00:07:31,760 --> 00:07:31,960 Speaker 3: Yep. 157 00:07:31,960 --> 00:07:34,720 Speaker 2: Another hypothetical of a real person with a fake name. 158 00:07:34,760 --> 00:07:38,320 Speaker 2: So we're gonna call her Lisa this time. Were picking 159 00:07:38,360 --> 00:07:40,920 Speaker 2: on all the women tonight. They're usually the ones that 160 00:07:41,000 --> 00:07:43,560 Speaker 2: do better. We were just picking on Kevin. I think 161 00:07:43,560 --> 00:07:46,560 Speaker 2: we're equal opportunities. This is we're picking on human beings 162 00:07:46,560 --> 00:07:48,320 Speaker 2: for being human. Is what we're doing, all right, And 163 00:07:48,400 --> 00:07:51,160 Speaker 2: advisors are not exempt from this stuff. We sometimes we're 164 00:07:51,200 --> 00:07:52,960 Speaker 2: attempted to do these things too. But in any case, 165 00:07:53,160 --> 00:07:55,400 Speaker 2: so this is Lisa about two point eight million dollars 166 00:07:55,440 --> 00:07:58,360 Speaker 2: mostly in diversified index funds, so already a pretty well 167 00:07:58,440 --> 00:08:01,440 Speaker 2: organized portfolio to begin with. But late twenty twenty one, 168 00:08:01,560 --> 00:08:03,920 Speaker 2: she started to see that the technology stocks had been 169 00:08:03,960 --> 00:08:06,760 Speaker 2: gaining about forty percent in a year, and she decided 170 00:08:06,760 --> 00:08:09,000 Speaker 2: that that was too much to resist, and so she 171 00:08:09,080 --> 00:08:12,280 Speaker 2: moved about four hundred thousand dollars in aggressive growth tech funds. 172 00:08:12,480 --> 00:08:13,360 Speaker 3: And remember what I said. 173 00:08:13,360 --> 00:08:15,680 Speaker 2: This happened in late twenty one, thinking it was her 174 00:08:15,760 --> 00:08:17,640 Speaker 2: chance to catch up on returns, And of course we 175 00:08:17,680 --> 00:08:19,640 Speaker 2: all know what happened in came twenty two, and the 176 00:08:19,640 --> 00:08:22,840 Speaker 2: tech sector got absolutely hammered that four hundred thousand dollars 177 00:08:22,840 --> 00:08:25,200 Speaker 2: position was worth less than two hundred and eighty thousand 178 00:08:25,200 --> 00:08:28,800 Speaker 2: within a year. It's completely panicked, sold and fowled. I'll 179 00:08:28,800 --> 00:08:31,720 Speaker 2: never do that again. So unfortunately, what she did here, 180 00:08:31,920 --> 00:08:34,040 Speaker 2: the move wasn't necessarily bad. If she was still sitting 181 00:08:34,080 --> 00:08:35,880 Speaker 2: on those stocks to this day, she probably would have 182 00:08:35,920 --> 00:08:37,200 Speaker 2: made a good chunnge. I know, she would have made 183 00:08:37,240 --> 00:08:39,120 Speaker 2: a good chunk of money. But she came to us 184 00:08:39,160 --> 00:08:42,560 Speaker 2: after this whole panic of buy and sell had actually occurred, 185 00:08:42,920 --> 00:08:45,080 Speaker 2: and so unfortunately we just kind of had to sit 186 00:08:45,120 --> 00:08:48,640 Speaker 2: down and have a long the talk about history, market history, 187 00:08:48,640 --> 00:08:52,079 Speaker 2: how it works, and how those big, terrifying years always 188 00:08:52,160 --> 00:08:54,400 Speaker 2: end up with have always historically ended up with a 189 00:08:54,679 --> 00:08:57,920 Speaker 2: pretty big upswing. So the fix here performance chasing. That 190 00:08:58,000 --> 00:09:00,480 Speaker 2: always leads to buying high and selling low. But if 191 00:09:00,480 --> 00:09:02,800 Speaker 2: you're chasing performance, if you're looking at something for how 192 00:09:02,800 --> 00:09:05,079 Speaker 2: it did last year, you are behind it, you are 193 00:09:05,160 --> 00:09:07,600 Speaker 2: chasing it, and so that's going to lead you to 194 00:09:07,640 --> 00:09:10,160 Speaker 2: buying after it's already high. Instead of that, build a 195 00:09:10,160 --> 00:09:13,920 Speaker 2: core portfolio that's attached to your goals, your time horizon 196 00:09:13,960 --> 00:09:16,680 Speaker 2: for not only retirement, for just any various goals you 197 00:09:16,679 --> 00:09:18,800 Speaker 2: may have out there, paying off the house, starting a business, 198 00:09:18,880 --> 00:09:22,880 Speaker 2: or whatever. Satellite positions in these emerging themes cryptocurrency to 199 00:09:22,920 --> 00:09:25,280 Speaker 2: a little bigger position technology, that's okay, but that's not 200 00:09:25,360 --> 00:09:28,760 Speaker 2: a core position. Small and intentional. This is seasoning, not 201 00:09:28,840 --> 00:09:29,480 Speaker 2: the main course. 202 00:09:30,240 --> 00:09:32,240 Speaker 1: Yeah, and as I listen to you tell that story 203 00:09:32,240 --> 00:09:35,080 Speaker 1: about Lisa in her situation, I can't help but think 204 00:09:35,080 --> 00:09:38,280 Speaker 1: about a lot of four to one K participants out there. 205 00:09:38,360 --> 00:09:42,080 Speaker 1: They get very little advice on an ongoing basis. And 206 00:09:42,160 --> 00:09:45,600 Speaker 1: I've seen this happen many times over the years. You know, 207 00:09:45,679 --> 00:09:47,680 Speaker 1: the four to one K advisor comes in for the 208 00:09:47,720 --> 00:09:50,679 Speaker 1: annual update, and what do people do. They look at 209 00:09:50,720 --> 00:09:53,960 Speaker 1: what has gone up the most last year or over 210 00:09:53,960 --> 00:09:56,240 Speaker 1: the last year, year and a half, and they pile 211 00:09:56,320 --> 00:09:59,599 Speaker 1: into that just assuming that those returns are going to continue. 212 00:10:00,040 --> 00:10:03,280 Speaker 1: And those people get disappointed, and sometimes they're the ones 213 00:10:03,600 --> 00:10:06,640 Speaker 1: that move to cash often for a long time, you know, 214 00:10:06,720 --> 00:10:10,240 Speaker 1: when the market, you know, moves the other way on them. So, uh, yeah, 215 00:10:10,280 --> 00:10:12,000 Speaker 1: it's good to have a plan, and it's good to 216 00:10:12,080 --> 00:10:15,480 Speaker 1: have a diversified portfolio. All right, let's talk about taxes, Brian. 217 00:10:15,559 --> 00:10:18,600 Speaker 1: A lot of high net worth investors they just focus 218 00:10:18,679 --> 00:10:22,960 Speaker 1: on gross returns, but they ignore the tax the drag 219 00:10:23,080 --> 00:10:26,120 Speaker 1: that taxes can have on their portfolio, depending on how 220 00:10:26,120 --> 00:10:29,160 Speaker 1: the portfolio is structured. Uh, you know, in the way 221 00:10:29,160 --> 00:10:32,480 Speaker 1: of bonds, you know, whether they're doing roth conversions. There's 222 00:10:32,520 --> 00:10:35,720 Speaker 1: a lot of things that go on here, capital gains, 223 00:10:35,760 --> 00:10:39,640 Speaker 1: you know, and ignoring just those capital gains distributions from 224 00:10:39,640 --> 00:10:42,920 Speaker 1: those mutual funds that they might have held for you know, decades. 225 00:10:43,280 --> 00:10:45,640 Speaker 1: Because as the saying goes, and we repeat this all 226 00:10:45,679 --> 00:10:48,760 Speaker 1: the time, it's not what you make that matters, it's 227 00:10:48,760 --> 00:10:50,440 Speaker 1: what you keep that's right. 228 00:10:50,480 --> 00:10:53,080 Speaker 3: So we're got one more example here. So this is 229 00:10:53,080 --> 00:10:53,880 Speaker 3: Stephen Rachel. 230 00:10:53,920 --> 00:10:55,719 Speaker 2: They had about a one point two million dollars in 231 00:10:55,760 --> 00:10:58,200 Speaker 2: their brokers account, and they decided it was time to 232 00:10:58,400 --> 00:11:01,600 Speaker 2: simplify their finances, and they were talking about, also, hey, 233 00:11:01,640 --> 00:11:04,600 Speaker 2: this tax loss harvesting direct indexing stuff sounds great. Let's 234 00:11:04,640 --> 00:11:06,120 Speaker 2: move a bunch of money into it all at once. 235 00:11:06,360 --> 00:11:08,560 Speaker 2: So they sold a huge position in a mutual fund 236 00:11:08,600 --> 00:11:10,959 Speaker 2: that they had had forever without really understanding how those 237 00:11:11,000 --> 00:11:12,880 Speaker 2: embedded capital gains were going to come in and again, 238 00:11:12,920 --> 00:11:14,160 Speaker 2: this is what drove them in the door to come 239 00:11:14,160 --> 00:11:14,640 Speaker 2: talk to us. 240 00:11:15,000 --> 00:11:15,959 Speaker 3: That sale, Bob Weill. 241 00:11:15,960 --> 00:11:18,240 Speaker 2: It triggered about one hundred and eighty thousand dollars in 242 00:11:18,280 --> 00:11:20,960 Speaker 2: capital gains, and that pushed them into a higher bracket, 243 00:11:21,080 --> 00:11:24,040 Speaker 2: which in turn increased their Medicare premiums due to how 244 00:11:24,120 --> 00:11:26,960 Speaker 2: ERMA works cost them thousands and taxes that they could 245 00:11:26,960 --> 00:11:30,320 Speaker 2: have avoided with just by just simply being thoughtful about 246 00:11:30,360 --> 00:11:32,960 Speaker 2: what they're doing. So what's the fix for this, Well, 247 00:11:32,960 --> 00:11:35,079 Speaker 2: build out your team. Make sure you've got a team 248 00:11:35,120 --> 00:11:37,800 Speaker 2: that has a CPA or at least a tax focused advisor, 249 00:11:37,920 --> 00:11:40,839 Speaker 2: not just an investment product seller. Pay attention to your 250 00:11:40,880 --> 00:11:44,000 Speaker 2: asset location. That means what you own in your IRA, 251 00:11:44,200 --> 00:11:47,760 Speaker 2: your tax sheltered investments versus your taxable things that are 252 00:11:47,800 --> 00:11:50,559 Speaker 2: exposed versus ROTH. There are different types of assets you 253 00:11:50,559 --> 00:11:52,120 Speaker 2: should own in each of those three things. 254 00:11:52,480 --> 00:11:53,920 Speaker 3: Manage those gains. 255 00:11:53,520 --> 00:11:56,959 Speaker 2: And losses proactively planning around those income thresholds that can 256 00:11:56,960 --> 00:11:59,840 Speaker 2: help reduce that tax drag and optimize those long term returns. 257 00:12:02,080 --> 00:12:05,840 Speaker 1: Yeah, and again we've talked about this often on the show, Brian. 258 00:12:06,160 --> 00:12:09,200 Speaker 1: This tax stuff is getting more and more complicated every 259 00:12:09,320 --> 00:12:12,760 Speaker 1: year in spite of tax rates going down, you know 260 00:12:12,840 --> 00:12:15,920 Speaker 1: in the big beautiful bill and all that. Along with 261 00:12:15,960 --> 00:12:19,400 Speaker 1: that tax bill comes some nuances and how all of 262 00:12:19,400 --> 00:12:23,080 Speaker 1: these tax rules and deductions work together. So it really 263 00:12:23,320 --> 00:12:25,640 Speaker 1: in this day and age, if you've got if you've 264 00:12:25,679 --> 00:12:28,800 Speaker 1: got any you know, amount of money whatsoever, you really 265 00:12:28,840 --> 00:12:32,320 Speaker 1: have to sit down and run through these numbers depending 266 00:12:32,400 --> 00:12:36,199 Speaker 1: on you know, different scenarios, especially when you're talking about 267 00:12:36,280 --> 00:12:40,000 Speaker 1: or considering moving large sums of money around. I mean, 268 00:12:40,160 --> 00:12:43,040 Speaker 1: I'll be honest, Brian, I've been shocked this year alone 269 00:12:43,040 --> 00:12:46,160 Speaker 1: when I've run some of these different scenarios and seeing 270 00:12:46,240 --> 00:12:49,800 Speaker 1: the impact depending on whether we pull lever ABC or D. 271 00:12:50,280 --> 00:12:53,640 Speaker 1: The impact the actual impact on an after tax basis 272 00:12:53,920 --> 00:12:57,640 Speaker 1: it has on somebody's financial plan. And boy, you gotta 273 00:12:57,679 --> 00:13:00,600 Speaker 1: be proactive and run the numbers instead of is going 274 00:13:00,640 --> 00:13:03,959 Speaker 1: with your gut so you own that you don't end 275 00:13:04,040 --> 00:13:06,880 Speaker 1: up having a lot of regret come next April when 276 00:13:06,880 --> 00:13:09,640 Speaker 1: it comes time to file your taxes. Here's the all 277 00:13:09,640 --> 00:13:15,400 Speaker 1: worth advice. Intelligence alone doesn't protect you from emotional money mistakes, 278 00:13:15,679 --> 00:13:21,080 Speaker 1: but a good plan and the right advisor can protect you. 279 00:13:21,120 --> 00:13:23,880 Speaker 1: Got gold or other valuable assets out there, There is 280 00:13:23,920 --> 00:13:27,320 Speaker 1: a smarter way to give and save big at tax time. 281 00:13:27,400 --> 00:13:31,439 Speaker 1: Plus what a former NFL quarterback wishes he knew about 282 00:13:31,520 --> 00:13:34,240 Speaker 1: money when he first got rich, and the lesson it 283 00:13:34,360 --> 00:13:38,520 Speaker 1: holds for anyone managing any amount of real wealth. You're 284 00:13:38,559 --> 00:13:41,440 Speaker 1: listening to Simply Money presented by Allworth Financial on fifty 285 00:13:41,480 --> 00:13:49,160 Speaker 1: five KRC the talk station. You're listening to Simply Money 286 00:13:49,240 --> 00:13:52,160 Speaker 1: presided by all Worth Financial on mob Sponsorller along with 287 00:13:52,200 --> 00:13:55,280 Speaker 1: Brian James straight Ahead at six forty three. We are 288 00:13:55,320 --> 00:13:59,600 Speaker 1: answering your questions about liquidity, premiums, active management and why 289 00:13:59,800 --> 00:14:05,400 Speaker 1: d X fund investors like you might be rethinking their strategy. Well, 290 00:14:05,400 --> 00:14:08,720 Speaker 1: if you own gold or other precious metals, and especially 291 00:14:08,800 --> 00:14:11,080 Speaker 1: if you've held them for a long time, you may 292 00:14:11,160 --> 00:14:14,440 Speaker 1: have a tax strategy available to you that also lets 293 00:14:14,480 --> 00:14:18,199 Speaker 1: you make a bigger impact with your charitable giving. This 294 00:14:18,240 --> 00:14:21,240 Speaker 1: is a timely topic, Brian, with gold prices up, you know, 295 00:14:21,520 --> 00:14:24,560 Speaker 1: strikingly here over the last few years. Let's get into 296 00:14:24,880 --> 00:14:26,800 Speaker 1: let's get into this strategy. It might apply to a 297 00:14:26,800 --> 00:14:27,720 Speaker 1: lot of folks out there. 298 00:14:28,080 --> 00:14:29,800 Speaker 2: If you're a gold bug, then you're probably a happy 299 00:14:29,800 --> 00:14:32,880 Speaker 2: bug lately. So here here's how this works. Normally, If 300 00:14:32,960 --> 00:14:35,320 Speaker 2: if you sell gold that's gone up in value. Of course, 301 00:14:35,320 --> 00:14:37,400 Speaker 2: you're gonna have capital gains anytime you earn you make 302 00:14:37,440 --> 00:14:39,600 Speaker 2: money off of some type of investment that the IRS 303 00:14:39,680 --> 00:14:43,040 Speaker 2: is gonna come sniffing around. As for physical, physical gold 304 00:14:43,120 --> 00:14:45,920 Speaker 2: or bullion, the IRS treats that as a collectible. 305 00:14:45,960 --> 00:14:46,640 Speaker 3: That's not good. 306 00:14:46,840 --> 00:14:48,920 Speaker 2: The tax rate can be higher than the rate you 307 00:14:48,960 --> 00:14:51,720 Speaker 2: pay on stocks. Right, collectible's taxes can be a lot 308 00:14:51,760 --> 00:14:54,320 Speaker 2: higher than everything else. We're not necessarily only talking about 309 00:14:54,320 --> 00:14:57,080 Speaker 2: capital gain here. Now, that said, if you donate that 310 00:14:57,160 --> 00:15:00,440 Speaker 2: gold directly to a qualified charity instead of selling it first, 311 00:15:00,800 --> 00:15:03,120 Speaker 2: generally speaking, you can deduct the fair market value of 312 00:15:03,160 --> 00:15:05,840 Speaker 2: that gold at the time of the donation without triggering 313 00:15:05,840 --> 00:15:07,200 Speaker 2: capital gains on the appreciation. 314 00:15:07,320 --> 00:15:07,440 Speaker 1: Right. 315 00:15:07,440 --> 00:15:09,480 Speaker 3: That's not different than you can do the same thing 316 00:15:09,520 --> 00:15:10,600 Speaker 3: with stocks. That's the whole point. 317 00:15:10,640 --> 00:15:13,480 Speaker 2: You can donate appreciated stocks to charities as well, and 318 00:15:13,480 --> 00:15:15,600 Speaker 2: you're not going to tribute to trigger capital gains because. 319 00:15:15,400 --> 00:15:18,120 Speaker 3: You didn't actually sell anything. So that is a double win. 320 00:15:18,320 --> 00:15:20,840 Speaker 2: No matter what asset you're using, you're supporting a cause 321 00:15:20,880 --> 00:15:24,080 Speaker 2: that's important to you, and you're avoiding a major tax hit. 322 00:15:24,480 --> 00:15:27,600 Speaker 1: Yeah, Brian, get into this collectible tax. I mean because 323 00:15:27,600 --> 00:15:29,800 Speaker 1: if you correct me if I'm wrong here, But if 324 00:15:29,840 --> 00:15:32,240 Speaker 1: you don't give this stuff away and you hold it 325 00:15:32,280 --> 00:15:35,240 Speaker 1: and you leave it to your airs, you can avoid 326 00:15:35,280 --> 00:15:37,920 Speaker 1: the capital gains taxes, you know, one hundred percent. Is 327 00:15:37,960 --> 00:15:40,480 Speaker 1: that that's still the case even with collectibles. 328 00:15:40,040 --> 00:15:43,840 Speaker 2: Right, yeah, yeah, the rules don't change for just because 329 00:15:43,880 --> 00:15:47,040 Speaker 2: it's a collectible. It's simply the idea that it's the 330 00:15:47,040 --> 00:15:49,120 Speaker 2: taxation that changes. So what we're what we're kind of 331 00:15:49,120 --> 00:15:51,080 Speaker 2: tap dance around here. If you sell a collectible after 332 00:15:51,120 --> 00:15:52,720 Speaker 2: you've had it for more than twelve months, which is 333 00:15:52,760 --> 00:15:54,840 Speaker 2: just a long term gain, that's a maximum of a 334 00:15:54,960 --> 00:15:58,240 Speaker 2: twenty eight percent long term capital gains rate. You know, 335 00:15:58,520 --> 00:16:01,080 Speaker 2: even high earners who normally only only pay twenty percent 336 00:16:01,160 --> 00:16:03,520 Speaker 2: long term capital gains, they would face a twenty eight 337 00:16:03,560 --> 00:16:06,440 Speaker 2: percent on collectibles twelve months or less. That's short term, 338 00:16:06,480 --> 00:16:08,360 Speaker 2: just like anything else. So it's just taxes income. 339 00:16:09,200 --> 00:16:11,520 Speaker 1: Yeah, And depending on what the collectible is or the 340 00:16:11,560 --> 00:16:14,200 Speaker 1: form of this gold or silver and other nuance here 341 00:16:14,240 --> 00:16:16,440 Speaker 1: is you do have to get these things valued. You 342 00:16:16,480 --> 00:16:19,120 Speaker 1: can't just give coins away and not have some kind 343 00:16:19,120 --> 00:16:21,720 Speaker 1: of appraisal and just say, well, I'm going to count 344 00:16:21,800 --> 00:16:23,680 Speaker 1: this at the price of gold on the date I 345 00:16:23,720 --> 00:16:25,720 Speaker 1: gave it away, you know, And that's where some people 346 00:16:25,720 --> 00:16:27,880 Speaker 1: get tripped up. You actually do have to have an 347 00:16:27,920 --> 00:16:31,920 Speaker 1: appraisal relatively close to the date you give this stuff away, 348 00:16:32,720 --> 00:16:34,320 Speaker 1: so you don't run a file of the irs. 349 00:16:34,360 --> 00:16:35,680 Speaker 3: All right, let's get into a note. 350 00:16:35,720 --> 00:16:37,240 Speaker 2: Hey, Bob, I want I want to throw one more 351 00:16:37,240 --> 00:16:41,000 Speaker 2: point is this is how things get super super complicated 352 00:16:41,000 --> 00:16:42,480 Speaker 2: with for people. For those of you out there who 353 00:16:42,560 --> 00:16:45,280 Speaker 2: might be holding gold precious metals in safes, you're going 354 00:16:45,360 --> 00:16:47,600 Speaker 2: to run into some big challenges when it comes to 355 00:16:47,960 --> 00:16:50,240 Speaker 2: how are you going to settle this your estate settlement? 356 00:16:50,240 --> 00:16:53,120 Speaker 2: If you literally have hard assets in a safe, that 357 00:16:53,240 --> 00:16:55,280 Speaker 2: technically is going to have to go through probate because 358 00:16:55,280 --> 00:16:58,760 Speaker 2: there's really no way to say that to name a beneficiary, 359 00:16:58,800 --> 00:17:01,880 Speaker 2: no clean way anyway. So just make sure that that 360 00:17:02,040 --> 00:17:04,680 Speaker 2: is really what you want and that is the right 361 00:17:04,720 --> 00:17:07,000 Speaker 2: approach for you. It can feel like the right thing 362 00:17:07,000 --> 00:17:08,520 Speaker 2: to do at the time, but there's an awful lot 363 00:17:08,520 --> 00:17:11,280 Speaker 2: of extra little moving parts to holding hard assets like that. 364 00:17:12,080 --> 00:17:13,920 Speaker 1: Well, if a lot of these gold coins tend to 365 00:17:13,960 --> 00:17:16,720 Speaker 1: get passed down the unclean way, and I'll just leave 366 00:17:16,800 --> 00:17:17,640 Speaker 1: that there right. 367 00:17:17,600 --> 00:17:20,800 Speaker 3: Up until somebody's unhappy with what they got at all unravels. 368 00:17:21,359 --> 00:17:24,840 Speaker 1: All right, here's a story that should make anyone with money, 369 00:17:24,840 --> 00:17:29,240 Speaker 1: whether it's tens of millions or one hundred thousand dollars, 370 00:17:29,280 --> 00:17:32,680 Speaker 1: stop and think. This is a shocking story from New 371 00:17:32,760 --> 00:17:37,480 Speaker 1: York Giants quarterback Jameis Winston. He recently shared one of 372 00:17:37,560 --> 00:17:42,720 Speaker 1: the biggest financial lessons he's learned over his entire NFL career, 373 00:17:43,200 --> 00:17:45,760 Speaker 1: and it did not involve the stock market. Brian, this 374 00:17:45,800 --> 00:17:47,800 Speaker 1: one's shocking and actually pretty sad. 375 00:17:48,119 --> 00:17:50,360 Speaker 3: Actually, and I like Jamis Winston. I really like that guy. 376 00:17:50,400 --> 00:17:51,960 Speaker 3: He does seem to be a pretty down to earth 377 00:17:52,040 --> 00:17:54,040 Speaker 3: kind of guy. But this is a sad story. This 378 00:17:54,119 --> 00:17:54,720 Speaker 3: is not new. 379 00:17:54,800 --> 00:17:57,840 Speaker 2: He's doing okay now, but early in his career, when 380 00:17:57,880 --> 00:18:00,560 Speaker 2: he was earning big money off the field, he basically 381 00:18:00,680 --> 00:18:03,320 Speaker 2: gave his friends and family an allowance of about four 382 00:18:03,400 --> 00:18:06,160 Speaker 2: hundred thousand dollars a month. That's not his personal spending, 383 00:18:06,400 --> 00:18:08,840 Speaker 2: that's his posse, his entourage out there blowing four hundred 384 00:18:08,880 --> 00:18:11,120 Speaker 2: thousand dollars a month living it up. And he has 385 00:18:11,160 --> 00:18:13,800 Speaker 2: since admitted that he was very naive back then about money. 386 00:18:14,040 --> 00:18:16,199 Speaker 2: He basically saw those eight figures in his bank account 387 00:18:16,200 --> 00:18:18,280 Speaker 2: and just thought it was a bottomless pit, you know, 388 00:18:18,359 --> 00:18:20,360 Speaker 2: and so that that meant he could really just kind 389 00:18:20,359 --> 00:18:22,719 Speaker 2: of give everybody what they wanted and not worry about it. 390 00:18:22,800 --> 00:18:26,280 Speaker 2: Obviously a dangerous mindset. You know, a four hundred thousand 391 00:18:26,280 --> 00:18:29,080 Speaker 2: dollars burn rate would have com he kept up to that, 392 00:18:29,119 --> 00:18:31,320 Speaker 2: it would have blown up his original twenty five million 393 00:18:31,359 --> 00:18:33,439 Speaker 2: dollar contract in about five years. 394 00:18:34,320 --> 00:18:36,119 Speaker 1: And I think the lesson to be learned here. I mean, 395 00:18:36,160 --> 00:18:39,159 Speaker 1: we all like to talk about rich people, quarterbacks, entertainers, 396 00:18:39,160 --> 00:18:42,040 Speaker 1: what have you. This this kind of behavior can apply 397 00:18:42,080 --> 00:18:43,800 Speaker 1: to a lot of folks out there. And what we 398 00:18:43,840 --> 00:18:48,639 Speaker 1: mean is anytime somebody becomes dependent on your income or 399 00:18:48,680 --> 00:18:52,720 Speaker 1: your money and you start enabling that spending, it can 400 00:18:52,760 --> 00:18:55,119 Speaker 1: get off the rails in a hurry. And that the 401 00:18:55,160 --> 00:18:57,159 Speaker 1: point we're trying to make here is make sure you 402 00:18:57,600 --> 00:19:01,240 Speaker 1: put good sound boundaries around any quote unquote help you're 403 00:19:01,280 --> 00:19:05,000 Speaker 1: giving others, because it's awfully hard to turn that spickett 404 00:19:05,000 --> 00:19:09,480 Speaker 1: off sometimes once that spicket has been turned on, all right, 405 00:19:09,520 --> 00:19:12,000 Speaker 1: every Sunday you'll find our all Worth advice in the 406 00:19:12,040 --> 00:19:15,720 Speaker 1: Cincinnati Inquirer. Here's a preview. Brian hit this one real quick. 407 00:19:15,800 --> 00:19:19,000 Speaker 1: Thomas from Amelia says, I'm sixty years old, I'll work 408 00:19:19,040 --> 00:19:21,920 Speaker 1: another fifteen years, which will get me into my seventies 409 00:19:21,960 --> 00:19:25,440 Speaker 1: before I retire. Can I get by with less savings 410 00:19:25,520 --> 00:19:27,679 Speaker 1: since I'll be retiring later than most people? 411 00:19:27,800 --> 00:19:29,440 Speaker 2: Yeah, well the time was Obviously we can't answer that 412 00:19:29,520 --> 00:19:32,080 Speaker 2: question here without a lot more information. But there's no 413 00:19:32,200 --> 00:19:34,600 Speaker 2: magic number out there. What matters is that it's not 414 00:19:34,680 --> 00:19:36,480 Speaker 2: how much money you have, it's how much you need 415 00:19:36,520 --> 00:19:39,520 Speaker 2: to spend. It's the outflows, not the pile. So starting 416 00:19:39,520 --> 00:19:40,879 Speaker 2: to figure out what that budget looks like and you 417 00:19:40,960 --> 00:19:41,720 Speaker 2: get a clear picture. 418 00:19:42,840 --> 00:19:44,720 Speaker 1: All right, What if you're a person who's got a 419 00:19:44,760 --> 00:19:48,640 Speaker 1: great financial plan and you're soon to achieve financial freedom, 420 00:19:48,800 --> 00:19:52,120 Speaker 1: is now the time to downsize your home? We'll explore 421 00:19:52,119 --> 00:19:54,600 Speaker 1: that question next. You're listening to Simply Money, puts outed 422 00:19:54,600 --> 00:19:58,119 Speaker 1: by all Worth Financial on fifty five KRC, the talk station. 423 00:20:04,320 --> 00:20:06,920 Speaker 1: You're listening to Simply Money, presented by all Worth Financial. 424 00:20:06,960 --> 00:20:10,600 Speaker 1: I'm Bob Sponseller along with Brian James, joined tonight by 425 00:20:10,640 --> 00:20:14,840 Speaker 1: our real estate expert, Michelle Sloan, owner of Remax Time 426 00:20:15,320 --> 00:20:16,840 Speaker 1: and Michelle, I know tonight you. 427 00:20:16,840 --> 00:20:19,119 Speaker 4: Want to talk about the whole topic. 428 00:20:18,840 --> 00:20:22,600 Speaker 1: Of downsizing and I'm I'm really interested and fascinated to 429 00:20:22,640 --> 00:20:25,439 Speaker 1: hear your thoughts on this because it's a topic that 430 00:20:25,520 --> 00:20:28,320 Speaker 1: comes up all the time in our office with clients, 431 00:20:28,480 --> 00:20:32,280 Speaker 1: you know, heading into retirement. Should we downsize our home? 432 00:20:32,880 --> 00:20:36,000 Speaker 1: And the important question is where do we go if 433 00:20:36,000 --> 00:20:36,960 Speaker 1: we downsize? 434 00:20:37,000 --> 00:20:37,760 Speaker 3: And what is that. 435 00:20:38,080 --> 00:20:41,840 Speaker 1: Quote unquote downsizing really cost. At the end of the day, 436 00:20:42,160 --> 00:20:44,680 Speaker 1: I've seen a few interesting things come across my desk, 437 00:20:44,720 --> 00:20:46,520 Speaker 1: but I want to hear your thoughts on this topic. 438 00:20:47,480 --> 00:20:51,360 Speaker 5: Okay, So downsizing, or as I like to call it, 439 00:20:51,720 --> 00:20:52,720 Speaker 5: right sizing. 440 00:20:53,800 --> 00:20:55,840 Speaker 4: So I personally, so. 441 00:20:57,000 --> 00:21:00,280 Speaker 5: I'm hitting a big birthday this year and just couple 442 00:21:00,359 --> 00:21:04,080 Speaker 5: of weeks actually, and so it was time for me. 443 00:21:04,320 --> 00:21:07,040 Speaker 1: It's okay to be thirty years old, Michelle. You don't 444 00:21:07,240 --> 00:21:08,639 Speaker 1: have to be embarrassed by that. 445 00:21:08,880 --> 00:21:13,800 Speaker 5: Oh sweet, I'm only forty two. But anyway, I'm kidding, 446 00:21:15,240 --> 00:21:19,040 Speaker 5: really kidding, business, that's not fair. I've been in business 447 00:21:19,080 --> 00:21:23,800 Speaker 5: for twenty years, in real estate twenty years, and before that, 448 00:21:23,880 --> 00:21:28,040 Speaker 5: I was in radio and television for twenty years. So 449 00:21:29,359 --> 00:21:33,680 Speaker 5: the big six was in kindergarten real estate. Yeah, right, 450 00:21:34,160 --> 00:21:36,800 Speaker 5: So it's kind of crazy. But anyway, so Scott and 451 00:21:36,800 --> 00:21:42,040 Speaker 5: I actually we just recently this summer, right size from 452 00:21:42,160 --> 00:21:44,919 Speaker 5: a two story home where we where our kids grew up, 453 00:21:45,000 --> 00:21:49,840 Speaker 5: where we lived for twenty years, and into a ranch 454 00:21:49,840 --> 00:21:50,720 Speaker 5: style property. 455 00:21:51,320 --> 00:21:52,680 Speaker 4: There are a lot of. 456 00:21:52,600 --> 00:21:56,000 Speaker 5: People in the sixty to sixty five, sixty to sixty 457 00:21:56,320 --> 00:21:59,000 Speaker 5: seventy price range or price range. 458 00:22:00,880 --> 00:22:05,040 Speaker 4: I was gonna say, now sixty to Steff. 459 00:22:05,040 --> 00:22:07,000 Speaker 5: See, that's what happens to your brain when you get old. 460 00:22:08,880 --> 00:22:09,720 Speaker 3: We lose it for you. 461 00:22:10,600 --> 00:22:14,480 Speaker 5: H Well, so anyway, so you know, we did we 462 00:22:14,600 --> 00:22:16,840 Speaker 5: made a move. After twenty years, our kids grew up 463 00:22:16,840 --> 00:22:19,879 Speaker 5: in the two story home. It's time to move to 464 00:22:19,960 --> 00:22:22,639 Speaker 5: something that's a little bit smaller. But of course it 465 00:22:22,680 --> 00:22:25,879 Speaker 5: didn't end up being a little bit smaller. We wanted 466 00:22:25,920 --> 00:22:27,800 Speaker 5: it to be a little bit less expensive. It was 467 00:22:27,840 --> 00:22:30,640 Speaker 5: a little more expensive. I think this is what you're 468 00:22:30,680 --> 00:22:33,840 Speaker 5: talking about, because when we want to downsize, it doesn't 469 00:22:33,880 --> 00:22:36,280 Speaker 5: mean that you're going to be spending less. 470 00:22:36,800 --> 00:22:38,480 Speaker 4: Yeah, no such thing as a financial day. 471 00:22:38,640 --> 00:22:41,280 Speaker 1: And you took the words out of my mouth, Michelle. 472 00:22:41,320 --> 00:22:43,879 Speaker 1: I run into this all the time. But go ahead, 473 00:22:44,000 --> 00:22:47,400 Speaker 1: you know, talk about the factors that you and your husband, 474 00:22:47,600 --> 00:22:49,560 Speaker 1: you know, looked at because I know you're both you know, 475 00:22:49,760 --> 00:22:53,040 Speaker 1: intelligent people and you're obviously a professional in this field. 476 00:22:53,600 --> 00:22:54,080 Speaker 3: One of the. 477 00:22:54,040 --> 00:22:57,720 Speaker 1: Things that you really started to evaluate before pulling the 478 00:22:57,760 --> 00:23:02,119 Speaker 1: trigger on this quote unquote DOWNSIDEI. 479 00:23:01,560 --> 00:23:04,160 Speaker 5: Well, we wanted to talk about the cash and equity 480 00:23:04,200 --> 00:23:06,400 Speaker 5: that we did have. The house that we lived in 481 00:23:06,720 --> 00:23:10,119 Speaker 5: was paid off, so we knew that by selling that 482 00:23:10,200 --> 00:23:13,280 Speaker 5: home we would have a large chunk of money. Did 483 00:23:13,320 --> 00:23:16,879 Speaker 5: we want to pay cash for that next property? Absolutely? 484 00:23:17,240 --> 00:23:20,320 Speaker 5: Could we do that? No, I still had to get 485 00:23:20,359 --> 00:23:23,119 Speaker 5: a small loan. I don't love the idea of getting 486 00:23:23,119 --> 00:23:25,600 Speaker 5: a loan at seven percent, But you know what, it 487 00:23:25,680 --> 00:23:29,679 Speaker 5: was time and we you know, sometimes you just know 488 00:23:30,200 --> 00:23:34,800 Speaker 5: when it's time. Emotionally, it has it has to hit 489 00:23:34,920 --> 00:23:37,960 Speaker 5: all of those buttons. It has to hit the emotional button, 490 00:23:37,960 --> 00:23:42,119 Speaker 5: the financial button. You have to be flexible in your location, 491 00:23:43,080 --> 00:23:46,600 Speaker 5: and you do want to talk about costs because as 492 00:23:46,680 --> 00:23:51,320 Speaker 5: we are going into our the years where we're considering retiring, 493 00:23:53,160 --> 00:23:55,119 Speaker 5: then we have to think about, Okay, am I going 494 00:23:55,200 --> 00:23:58,840 Speaker 5: to be able to afford this home moving forward? So 495 00:23:59,080 --> 00:24:01,800 Speaker 5: there's a lot of questions that you have to ask yourself. 496 00:24:02,240 --> 00:24:04,880 Speaker 5: And it just so happened that a property came along, 497 00:24:05,400 --> 00:24:07,880 Speaker 5: thankfully someone I knew. 498 00:24:07,680 --> 00:24:08,679 Speaker 4: So off market. 499 00:24:08,760 --> 00:24:11,320 Speaker 5: I was really I was able to sort of pull 500 00:24:11,400 --> 00:24:14,639 Speaker 5: some strings within my networks find a home that I 501 00:24:14,760 --> 00:24:18,920 Speaker 5: found off market. We purchased that home and was able 502 00:24:18,920 --> 00:24:22,320 Speaker 5: to sell our home simultaneously and it all worked out great. 503 00:24:22,720 --> 00:24:25,280 Speaker 4: But it takes a lot, a lot of planning. 504 00:24:25,400 --> 00:24:29,280 Speaker 5: So if if you're someone or you know someone who 505 00:24:29,440 --> 00:24:36,760 Speaker 5: is in the market right now to downsize or write size, planning, planning, 506 00:24:36,760 --> 00:24:40,119 Speaker 5: planning with your real estate agent, with your financial advisor, 507 00:24:40,560 --> 00:24:43,040 Speaker 5: to find out where you want to go. Do you 508 00:24:43,040 --> 00:24:44,679 Speaker 5: want to be closer to your kids or do you 509 00:24:44,680 --> 00:24:47,399 Speaker 5: want to move far far away from your kids? Do 510 00:24:47,520 --> 00:24:50,720 Speaker 5: you want to spend more money? Can you spend more 511 00:24:50,760 --> 00:24:54,440 Speaker 5: money or spend less money? And that location of where 512 00:24:54,480 --> 00:24:57,119 Speaker 5: you're going to be moving to is that other aspect 513 00:24:57,160 --> 00:24:59,679 Speaker 5: of how much money are you going to spend? Do 514 00:24:59,680 --> 00:25:01,399 Speaker 5: you want want to live on a golf course? Do 515 00:25:01,440 --> 00:25:03,280 Speaker 5: you want to live do you want to have a 516 00:25:03,320 --> 00:25:06,560 Speaker 5: swimming pool? You know, what is your lifestyle look like 517 00:25:07,440 --> 00:25:08,960 Speaker 5: as you move into the future. 518 00:25:09,600 --> 00:25:11,560 Speaker 2: Yeah, Michelle, I really like the way you put that, 519 00:25:11,640 --> 00:25:14,800 Speaker 2: the way you went through that process for your own family, because, yes, 520 00:25:14,840 --> 00:25:16,080 Speaker 2: the spreadsheet is important. 521 00:25:16,119 --> 00:25:16,920 Speaker 4: It is important that. 522 00:25:16,840 --> 00:25:18,879 Speaker 2: We can afford our lifestyles and that of course includes 523 00:25:18,920 --> 00:25:20,120 Speaker 2: wherever that we live. 524 00:25:20,680 --> 00:25:22,399 Speaker 4: But at the same time that should not. 525 00:25:22,640 --> 00:25:25,040 Speaker 2: I don't ever want the spreadsheet to drive a decision 526 00:25:25,080 --> 00:25:27,280 Speaker 2: unless it's truly a dire financial plan. What I mean 527 00:25:27,320 --> 00:25:29,399 Speaker 2: by that is, I don't want people going, well, interest 528 00:25:29,480 --> 00:25:31,800 Speaker 2: rates are high right now, so therefore we're going to 529 00:25:31,880 --> 00:25:33,960 Speaker 2: hold off on moving into our dream home, even though 530 00:25:33,960 --> 00:25:36,800 Speaker 2: we've always wanted to do that. If the math works, 531 00:25:36,880 --> 00:25:38,920 Speaker 2: do it, because you can always figure, you can always 532 00:25:38,960 --> 00:25:41,080 Speaker 2: refinance and that kind of thing later. So you know, 533 00:25:41,160 --> 00:25:43,439 Speaker 2: I wouldn't want anybody saying, well, now interest rates are 534 00:25:43,440 --> 00:25:45,000 Speaker 2: finally where I want them to be, so now I'm 535 00:25:45,040 --> 00:25:46,520 Speaker 2: going to move into my beach home with the tender 536 00:25:46,560 --> 00:25:47,359 Speaker 2: age of eighty five. 537 00:25:47,600 --> 00:25:49,800 Speaker 4: But we don't want to put it out well, and if. 538 00:25:49,640 --> 00:25:52,440 Speaker 5: You could be waiting a long time, you know, we 539 00:25:52,960 --> 00:25:55,399 Speaker 5: look into the crystal ball of what mortgage rates are 540 00:25:55,400 --> 00:25:57,720 Speaker 5: going to look like a month from now, three months 541 00:25:57,800 --> 00:25:59,399 Speaker 5: from now, they may. 542 00:25:59,280 --> 00:26:00,400 Speaker 4: Fluctuate a litle little bit. 543 00:26:01,000 --> 00:26:03,640 Speaker 5: I personally don't ever think we're going to see three 544 00:26:03,680 --> 00:26:05,040 Speaker 5: percent as a mortgage rate. 545 00:26:05,080 --> 00:26:05,320 Speaker 3: Ever. 546 00:26:05,400 --> 00:26:08,640 Speaker 4: Again, it put. 547 00:26:08,520 --> 00:26:13,560 Speaker 5: Us into a situation where it was great. It made 548 00:26:13,800 --> 00:26:17,800 Speaker 5: the whole market flourish for a while, but now so 549 00:26:17,880 --> 00:26:20,240 Speaker 5: many people that are holding on to those really low 550 00:26:20,359 --> 00:26:23,919 Speaker 5: rates don't want to make a move because they feel 551 00:26:23,920 --> 00:26:28,439 Speaker 5: like they're stuck. And that's a conversation, you're right, that 552 00:26:28,520 --> 00:26:31,280 Speaker 5: I always have with my clients is okay, if you 553 00:26:31,400 --> 00:26:34,239 Speaker 5: feel stuck because you have one hundred thousand dollars at 554 00:26:34,280 --> 00:26:38,200 Speaker 5: three percent and you would need to borrow maybe three 555 00:26:38,320 --> 00:26:43,359 Speaker 5: hundred thousand dollars at seven percent, Okay, it's part of 556 00:26:43,400 --> 00:26:46,360 Speaker 5: the equation. And so if you're ready and you can 557 00:26:46,400 --> 00:26:49,280 Speaker 5: afford it, I always say, don't wait to live your life. 558 00:26:50,080 --> 00:26:52,960 Speaker 5: And that's the same with real estate. It's the same 559 00:26:52,960 --> 00:26:55,840 Speaker 5: with retirement planning too, right, it's. 560 00:26:55,640 --> 00:26:57,879 Speaker 1: The same with you need to run down to Athens, 561 00:26:57,960 --> 00:27:01,600 Speaker 1: Ohio this weekend and get that little bungalow, your little 562 00:27:01,640 --> 00:27:02,439 Speaker 1: party center. 563 00:27:03,400 --> 00:27:04,000 Speaker 3: You'll help you. 564 00:27:04,040 --> 00:27:04,960 Speaker 4: I can help you by that. 565 00:27:05,400 --> 00:27:09,440 Speaker 1: See, Michelle will have you under contract by Saturday night. 566 00:27:09,600 --> 00:27:12,160 Speaker 3: This is all working out well for everybody. 567 00:27:12,480 --> 00:27:14,480 Speaker 4: My Michelle goes there more often than I do. 568 00:27:14,560 --> 00:27:17,120 Speaker 2: We've got one more week of an empty apartment until 569 00:27:17,160 --> 00:27:19,119 Speaker 2: our daughter moves back in, and we're both sad. 570 00:27:20,160 --> 00:27:22,240 Speaker 1: All right, Hey, Michelle, in the minute we got left, 571 00:27:22,440 --> 00:27:24,600 Speaker 1: walk us through if you could think of, you know, 572 00:27:24,680 --> 00:27:27,520 Speaker 1: maybe a horror story if somebody didn't do the planning, 573 00:27:27,600 --> 00:27:31,160 Speaker 1: didn't think ahead, made a rash decision and regretted it later. 574 00:27:31,240 --> 00:27:33,440 Speaker 1: You got any stories like that that you can share 575 00:27:33,480 --> 00:27:36,119 Speaker 1: where you know the thing kind of the watch out. 576 00:27:36,320 --> 00:27:39,119 Speaker 5: Well, the one thing was I did have a client 577 00:27:39,240 --> 00:27:43,080 Speaker 5: who moved out of state, moved to Florida and hated 578 00:27:43,119 --> 00:27:46,760 Speaker 5: it and miss their family here. Now they had to 579 00:27:46,840 --> 00:27:50,440 Speaker 5: live that, live through that, but after six months they 580 00:27:50,440 --> 00:27:55,320 Speaker 5: wanted to move back. Well, financially, if you try to 581 00:27:55,400 --> 00:28:00,520 Speaker 5: sell a property within the first year or two, most 582 00:28:00,680 --> 00:28:03,879 Speaker 5: likely you're not going to make money on your investment. 583 00:28:03,960 --> 00:28:05,840 Speaker 5: You have to be able to be in a home 584 00:28:05,880 --> 00:28:08,760 Speaker 5: for a while. They just got to Florida and they're like, gosh, 585 00:28:08,760 --> 00:28:12,560 Speaker 5: it's really hot down here. This is unbearable. 586 00:28:13,440 --> 00:28:15,520 Speaker 4: Tell me that, and there's a lot of traffic. 587 00:28:15,640 --> 00:28:18,000 Speaker 5: So if you're going to make a big move somewhere 588 00:28:18,040 --> 00:28:22,199 Speaker 5: you've never been before, I recommend going and spending a 589 00:28:22,280 --> 00:28:25,800 Speaker 5: month somewhere and see if you really like it before 590 00:28:25,840 --> 00:28:29,119 Speaker 5: you invest big dollars into buying a property. 591 00:28:29,320 --> 00:28:33,360 Speaker 1: I think date before you get married, right, Michelle, all right? 592 00:28:33,440 --> 00:28:36,880 Speaker 1: Great stuff is always from Michelle Sloan, owner of Remax Time. 593 00:28:36,960 --> 00:28:39,360 Speaker 1: Thank you so much Michelle for joining us tonight. You're 594 00:28:39,400 --> 00:28:42,040 Speaker 1: listeningly Money presented by all Worth Financial on. 595 00:28:42,000 --> 00:28:44,440 Speaker 4: Fifty five KRC, the talk station. 596 00:28:49,960 --> 00:28:52,640 Speaker 1: You're listening to Simply Money presented by all Worth Financial 597 00:28:52,640 --> 00:28:55,760 Speaker 1: and Bob Sponseller along with Brian James. Do you have 598 00:28:55,760 --> 00:28:58,280 Speaker 1: a financial question you'd like for us to answer. There 599 00:28:58,360 --> 00:29:00,680 Speaker 1: is a red button you can click if you're listening 600 00:29:01,200 --> 00:29:04,520 Speaker 1: listening to the show on the iHeart app. Simply record 601 00:29:04,560 --> 00:29:08,080 Speaker 1: your question and it will come straight to us. All right, 602 00:29:08,120 --> 00:29:12,720 Speaker 1: Brian ron in Mainfield said Mainville pardon me, says, I 603 00:29:12,840 --> 00:29:17,320 Speaker 1: keep hearing about tax smart withdraw sequencing, but what happens 604 00:29:17,360 --> 00:29:21,240 Speaker 1: to that plan when markets fall early during retirement? 605 00:29:21,480 --> 00:29:23,040 Speaker 4: Great question, great question. 606 00:29:23,320 --> 00:29:25,880 Speaker 2: So actually that the market's falling can play a role 607 00:29:25,920 --> 00:29:26,840 Speaker 2: in tax smart investing. 608 00:29:26,880 --> 00:29:28,760 Speaker 4: So it's unfortunate. We never want them to fall. We 609 00:29:28,800 --> 00:29:29,720 Speaker 4: never really want. 610 00:29:29,520 --> 00:29:31,920 Speaker 2: To be able to tax loss harvest but or tax 611 00:29:32,040 --> 00:29:33,720 Speaker 2: you know, take advantage of the stuff. 612 00:29:33,760 --> 00:29:35,360 Speaker 4: We want things to go up, but it does happen. 613 00:29:35,720 --> 00:29:38,240 Speaker 2: So tax smart withdrawal sequency this is the this is 614 00:29:38,320 --> 00:29:40,719 Speaker 2: the strategy of deciding which accounts are going to pull from. 615 00:29:40,760 --> 00:29:41,800 Speaker 3: You have three flavors. 616 00:29:42,000 --> 00:29:43,920 Speaker 2: Taxable, that's the one you get a ten ninety nine 617 00:29:43,920 --> 00:29:47,800 Speaker 2: beyond tax deferred as your ten ninety nine are or nothing. 618 00:29:47,560 --> 00:29:48,800 Speaker 3: Tax free, which is your ROTH. 619 00:29:49,080 --> 00:29:51,360 Speaker 2: So the goal being to minimize these taxes and extend 620 00:29:51,400 --> 00:29:54,120 Speaker 2: the portfolio life. So the the way that I would, 621 00:29:54,840 --> 00:29:57,400 Speaker 2: you know, ensure that this doesn't have too much of 622 00:29:57,440 --> 00:30:00,080 Speaker 2: an impact is to have done that kind of a 623 00:30:00,280 --> 00:30:01,680 Speaker 2: I know, this doesn't really help a whole lot for 624 00:30:01,720 --> 00:30:04,080 Speaker 2: somebody who may have just gone through it, but you know, 625 00:30:04,120 --> 00:30:06,400 Speaker 2: make sure you've got a few years worth of cash 626 00:30:06,480 --> 00:30:09,600 Speaker 2: or bond buffers, conservative type investments that you can tap into. 627 00:30:09,840 --> 00:30:11,960 Speaker 2: And as we've said all year long, this is the 628 00:30:12,000 --> 00:30:14,800 Speaker 2: time you got bills. Come do now or coming do soon? 629 00:30:14,960 --> 00:30:16,560 Speaker 2: Take that money off the table. You know you're going 630 00:30:16,640 --> 00:30:18,320 Speaker 2: to write a check in the next three six months 631 00:30:18,400 --> 00:30:20,480 Speaker 2: or whatever. The market's at a peak. Be happy that 632 00:30:20,520 --> 00:30:22,440 Speaker 2: you've got more money than you've ever had, assuming you 633 00:30:22,520 --> 00:30:25,440 Speaker 2: stayed invested. Pull that money off the table, and then 634 00:30:25,480 --> 00:30:28,680 Speaker 2: when the market turns down, be looking to do roth conversions. 635 00:30:28,680 --> 00:30:30,280 Speaker 2: You're going to own the same stuff in the wrath. 636 00:30:30,320 --> 00:30:32,120 Speaker 2: Don't worry about what the market's doing. Do it at 637 00:30:32,120 --> 00:30:34,200 Speaker 2: a time where the market is down, and then when 638 00:30:34,240 --> 00:30:37,080 Speaker 2: it inevitably swings back up, as it always does. That's 639 00:30:37,120 --> 00:30:38,840 Speaker 2: good that growth is going to happen from that point 640 00:30:38,840 --> 00:30:40,720 Speaker 2: on a in a tax free manner. 641 00:30:41,000 --> 00:30:41,840 Speaker 4: So I hope that helps. Ryan. 642 00:30:41,920 --> 00:30:44,680 Speaker 2: Let's move on to Mark in Kenwood, Marcus seeing more 643 00:30:44,720 --> 00:30:48,920 Speaker 2: and more references to something called behavioral and investing in 644 00:30:49,080 --> 00:30:51,640 Speaker 2: understanding our own biases and just kind of the psychological 645 00:30:51,680 --> 00:30:54,200 Speaker 2: side of things. Bob, what are the common blind spots 646 00:30:54,240 --> 00:30:56,800 Speaker 2: that you see even in our most disciplined investors. 647 00:30:58,240 --> 00:31:00,960 Speaker 1: Well, Mark, actually he will to know what the most 648 00:31:01,000 --> 00:31:04,120 Speaker 1: common blind spot that we see is. And i'd be 649 00:31:04,160 --> 00:31:07,160 Speaker 1: interested on your in your take on this mine. And 650 00:31:07,240 --> 00:31:11,920 Speaker 1: this is really kind of gone up. We really didn't 651 00:31:11,960 --> 00:31:15,120 Speaker 1: used to see this over the last twenty five thirty years, 652 00:31:15,160 --> 00:31:17,520 Speaker 1: but I'll say over the next five to seven years. 653 00:31:18,640 --> 00:31:19,640 Speaker 3: Political bias. 654 00:31:19,920 --> 00:31:22,280 Speaker 1: You know, I think we all have we all have 655 00:31:22,400 --> 00:31:25,760 Speaker 1: these assumptions baked in, and I think it has to 656 00:31:25,760 --> 00:31:29,880 Speaker 1: do with which media resources we tend to engage in. 657 00:31:30,480 --> 00:31:32,720 Speaker 1: You know, I find more and more and more people 658 00:31:32,800 --> 00:31:36,440 Speaker 1: walk in just sure that depending on who's in the 659 00:31:36,480 --> 00:31:39,760 Speaker 1: White House or who's running the government, either great things 660 00:31:39,760 --> 00:31:43,040 Speaker 1: are gonna happen or the whole country's gonna, you know, 661 00:31:43,280 --> 00:31:46,000 Speaker 1: go down in flames. And the truth is, and we 662 00:31:46,040 --> 00:31:48,320 Speaker 1: talk about this all the time, Brian. If you go 663 00:31:48,440 --> 00:31:52,080 Speaker 1: back over seventy five eighty years and look at actual 664 00:31:52,160 --> 00:31:55,600 Speaker 1: returns of the market, you really got to let this 665 00:31:55,640 --> 00:32:01,880 Speaker 1: stuff go because the markets have performed almost identically in 666 00:32:01,920 --> 00:32:05,840 Speaker 1: spite of whether Democrats or Republicans are in office. I 667 00:32:05,840 --> 00:32:09,880 Speaker 1: think that's the most common blind spot that we're trying 668 00:32:09,920 --> 00:32:12,080 Speaker 1: to help people get over. What do you think about 669 00:32:12,120 --> 00:32:16,040 Speaker 1: this one? Because behavioral investing's, let's face it, it's behavior 670 00:32:17,000 --> 00:32:20,720 Speaker 1: that could truly, you know, move people off of success 671 00:32:20,800 --> 00:32:22,480 Speaker 1: of a long term financial plan. 672 00:32:22,600 --> 00:32:24,440 Speaker 2: I don't think this is a new field, Bob, or 673 00:32:24,760 --> 00:32:26,719 Speaker 2: a new series of discoveries. I think you and I 674 00:32:26,720 --> 00:32:28,600 Speaker 2: have dealt with it for thirty years. It's just a 675 00:32:28,680 --> 00:32:32,120 Speaker 2: new It's just identifying, you know what people the reasons 676 00:32:32,160 --> 00:32:34,720 Speaker 2: that people make decisions. They've been making decisions this way 677 00:32:35,040 --> 00:32:37,840 Speaker 2: all along. We react to what we see and we 678 00:32:38,200 --> 00:32:41,080 Speaker 2: actually change, you know, if we Sometimes people investors will 679 00:32:41,120 --> 00:32:43,320 Speaker 2: take surveys and describe how they feel about things, and 680 00:32:43,360 --> 00:32:45,959 Speaker 2: then they behave in an entirely different manner. When it 681 00:32:45,960 --> 00:32:48,640 Speaker 2: comes down to it, money makes people passionate. That makes 682 00:32:48,680 --> 00:32:51,520 Speaker 2: people make crazy decisions. So it's good to understand the 683 00:32:51,640 --> 00:32:54,360 Speaker 2: range of things you might feel when you're trying to 684 00:32:54,360 --> 00:32:55,960 Speaker 2: make a big decision, and that way you can kind 685 00:32:55,960 --> 00:32:58,200 Speaker 2: of more clearly step back and see the forest for 686 00:32:58,240 --> 00:32:59,240 Speaker 2: the trees rather than. 687 00:32:59,160 --> 00:33:00,880 Speaker 4: Just zeroing in on the emotional. 688 00:33:00,480 --> 00:33:01,040 Speaker 3: Side of things. 689 00:33:02,000 --> 00:33:04,600 Speaker 1: All right, and in Cincinnati, this one's for you, Brian, 690 00:33:04,720 --> 00:33:09,200 Speaker 1: She says, I've noticed even professional money managers underperform the 691 00:33:09,240 --> 00:33:14,680 Speaker 1: major indices. What metrics beyond performance should investors really use 692 00:33:14,840 --> 00:33:16,600 Speaker 1: to judge a portfolio manager. 693 00:33:16,960 --> 00:33:18,800 Speaker 2: Well, it depends on what you're what you're what you're 694 00:33:18,840 --> 00:33:22,040 Speaker 2: looking for in this relationship with your portfolio manager. If 695 00:33:22,080 --> 00:33:23,920 Speaker 2: if it's if it is nothing more than I have 696 00:33:24,000 --> 00:33:25,440 Speaker 2: a pile of money and I want to grow it 697 00:33:25,480 --> 00:33:28,560 Speaker 2: as much as I possibly can, well then uh, you 698 00:33:28,600 --> 00:33:30,440 Speaker 2: know that that might be the only goal you have. 699 00:33:30,520 --> 00:33:30,920 Speaker 4: But when? 700 00:33:31,000 --> 00:33:33,840 Speaker 2: But but I think realistically the answer is are they 701 00:33:34,040 --> 00:33:38,400 Speaker 2: paying attention to my tax situation? Portfolio growth is irrelevant 702 00:33:38,480 --> 00:33:41,719 Speaker 2: if or is not as impactful if it's happening without 703 00:33:41,760 --> 00:33:45,120 Speaker 2: regard to what somebody's ultimate tax situation is. Because all 704 00:33:45,120 --> 00:33:46,840 Speaker 2: of a sudden, we're giving money away to a to 705 00:33:46,840 --> 00:33:48,840 Speaker 2: an outside entity in the I R S and all 706 00:33:48,880 --> 00:33:51,760 Speaker 2: of a sudden, you know, not very tax efficient and 707 00:33:51,800 --> 00:33:54,040 Speaker 2: as well as financial planning, right, I think there's a 708 00:33:54,080 --> 00:33:56,479 Speaker 2: lot more to this. If you simply want a uh, 709 00:33:57,320 --> 00:34:00,240 Speaker 2: if you simply want a pile of index funds and 710 00:34:00,520 --> 00:34:02,920 Speaker 2: you know, just do that, don't pay anybody. But if 711 00:34:02,960 --> 00:34:05,480 Speaker 2: you you know, if you're good to go with you know, 712 00:34:05,480 --> 00:34:08,400 Speaker 2: if you're looking for more financial plan more educated decisions, 713 00:34:08,560 --> 00:34:10,719 Speaker 2: that's going to take a lot more of the of 714 00:34:10,760 --> 00:34:11,479 Speaker 2: the impact there. 715 00:34:12,360 --> 00:34:14,160 Speaker 1: Coming up next, we want to make you aware of 716 00:34:14,200 --> 00:34:18,000 Speaker 1: a lesser known social security benefit that could impact some 717 00:34:18,120 --> 00:34:20,880 Speaker 1: of you out there. You're listening to Simply Money presented 718 00:34:20,880 --> 00:34:24,680 Speaker 1: by all Worth Financial on fifty five KRC the talk station. 719 00:34:28,520 --> 00:34:31,160 Speaker 1: You're listening to Simply Money presented by all Worth Financial. 720 00:34:31,160 --> 00:34:35,000 Speaker 1: I'm Bob Spondseller along with Brian James. If you're over 721 00:34:35,080 --> 00:34:38,440 Speaker 1: sixty two years of age, and you're still raising children 722 00:34:38,520 --> 00:34:41,719 Speaker 1: at home who are eighteen years or younger and their 723 00:34:41,800 --> 00:34:44,920 Speaker 1: dependents they're at home and you're thinking about how to 724 00:34:45,080 --> 00:34:50,160 Speaker 1: claim or time your social Security benefit claiming strategy, there 725 00:34:50,320 --> 00:34:53,400 Speaker 1: is a little known twist in the social security rules 726 00:34:53,560 --> 00:34:58,480 Speaker 1: that can meaningfully impact cash flow for families where older 727 00:34:58,560 --> 00:35:03,200 Speaker 1: parents are still per voting for minors. Brian, this doesn't 728 00:35:03,239 --> 00:35:06,279 Speaker 1: impact a ton of people, but it certainly impacts some 729 00:35:06,560 --> 00:35:08,640 Speaker 1: so I think it's important to take a few minutes 730 00:35:08,680 --> 00:35:09,359 Speaker 1: and touch on it. 731 00:35:09,920 --> 00:35:13,239 Speaker 2: Yeah, so this is important because there are there. This 732 00:35:13,360 --> 00:35:15,600 Speaker 2: is not a loophole that we want people to rush 733 00:35:15,600 --> 00:35:17,439 Speaker 2: out and try to take advantage of. Right you're you're 734 00:35:17,640 --> 00:35:20,239 Speaker 2: the best case scenario. You're in the situation, weren't aware 735 00:35:20,239 --> 00:35:21,840 Speaker 2: of it. There might be somebody that you might be 736 00:35:21,920 --> 00:35:24,040 Speaker 2: able to benefit, But don't rush out and have a 737 00:35:24,120 --> 00:35:27,759 Speaker 2: child later in life just to tep into social security panicles. 738 00:35:28,080 --> 00:35:29,799 Speaker 2: I know that's what you were thinking, Bob. I'm sure 739 00:35:30,840 --> 00:35:32,839 Speaker 2: you have decided, you know what we could squeeze out 740 00:35:32,840 --> 00:35:35,080 Speaker 2: a little more. They're you know, they're all what could 741 00:35:35,080 --> 00:35:37,680 Speaker 2: go wrong? Anyway, Here's how this works. If you're again, 742 00:35:37,680 --> 00:35:40,760 Speaker 2: if you're if you're over sixty two, which means you. 743 00:35:40,680 --> 00:35:42,360 Speaker 4: Could file for Social Security. 744 00:35:42,360 --> 00:35:44,680 Speaker 2: That's true anyway, regardless of this, that's just the earliest 745 00:35:44,719 --> 00:35:47,000 Speaker 2: age you can. But also if you file at that age, 746 00:35:47,040 --> 00:35:50,160 Speaker 2: you're taking the lowest amount. This is still uh, you 747 00:35:50,200 --> 00:35:53,080 Speaker 2: still have a social Security timing decision. But if you're 748 00:35:53,080 --> 00:35:55,759 Speaker 2: in that situation and it makes sense to uh, you know, 749 00:35:55,800 --> 00:35:57,319 Speaker 2: to go ahead and turn that on, then you're gonna 750 00:35:57,320 --> 00:35:59,680 Speaker 2: get a benefit for if you're still raising children who 751 00:35:59,680 --> 00:36:02,160 Speaker 2: are eight or younger. Now, obviously this is not a 752 00:36:02,239 --> 00:36:05,400 Speaker 2: very common situation for somebody of a later age just 753 00:36:05,440 --> 00:36:07,280 Speaker 2: to have children their own children. 754 00:36:07,400 --> 00:36:09,319 Speaker 4: But what happens more and more, and I think this is. 755 00:36:09,320 --> 00:36:11,719 Speaker 2: Who this is really targeted at, is people who may 756 00:36:11,719 --> 00:36:15,319 Speaker 2: have adopted perhaps their own grandchildren because just because of 757 00:36:15,320 --> 00:36:18,759 Speaker 2: tough circumstances, or maybe adopted later in life, that kind 758 00:36:18,800 --> 00:36:22,120 Speaker 2: of thing. So let's not overly simplify things. Obviously a 759 00:36:22,160 --> 00:36:28,520 Speaker 2: lot of moving parts, but yeah. 760 00:36:26,560 --> 00:36:29,319 Speaker 1: Well the benefit amount, just to put it out there, 761 00:36:29,360 --> 00:36:31,440 Speaker 1: it can be up to about half of the parent's 762 00:36:31,480 --> 00:36:34,520 Speaker 1: primary insurance amount, you know, in other words, what they 763 00:36:34,520 --> 00:36:37,160 Speaker 1: would get at full retirement age. And in the case, 764 00:36:37,360 --> 00:36:40,960 Speaker 1: you know, because we're talking about older folks or relatively 765 00:36:41,040 --> 00:36:44,680 Speaker 1: older folks that are raising potentially young kids, if the 766 00:36:44,760 --> 00:36:49,040 Speaker 1: parent happens to pass away, that child survivor benefit can 767 00:36:49,080 --> 00:36:52,640 Speaker 1: be up to about seventy five percent of the parent's benefit. 768 00:36:52,800 --> 00:36:55,719 Speaker 1: So again, for those that are in that situation, it's 769 00:36:55,760 --> 00:36:58,799 Speaker 1: at least something to think about, because if you're you know, 770 00:36:58,920 --> 00:37:02,360 Speaker 1: vacillating between ten taking benefits between at sixty two or 771 00:37:02,400 --> 00:37:05,920 Speaker 1: sixty four, sixty five and you're in this situation. This 772 00:37:06,000 --> 00:37:09,520 Speaker 1: really can potentially tip the scales on when you take 773 00:37:09,520 --> 00:37:11,719 Speaker 1: your Social Security benefits, so we just want to make 774 00:37:11,760 --> 00:37:12,560 Speaker 1: people aware of it. 775 00:37:12,800 --> 00:37:14,680 Speaker 2: Yeah, average check on this is eight hundred to one 776 00:37:14,680 --> 00:37:16,960 Speaker 2: thousand bucks a month, so it is significant money. But 777 00:37:17,000 --> 00:37:20,319 Speaker 2: that does not mean you should file for Social Security early. 778 00:37:20,360 --> 00:37:23,279 Speaker 2: There's still a puzzle to put together here, your own 779 00:37:23,320 --> 00:37:26,680 Speaker 2: social Security retirement benefits, the dependent benefits side of things, 780 00:37:26,719 --> 00:37:29,279 Speaker 2: as well as the survivorship should something happen to you 781 00:37:29,320 --> 00:37:31,759 Speaker 2: for your spouse, that all of it fits together, you've 782 00:37:31,760 --> 00:37:33,719 Speaker 2: got to make this decision in concert with all the 783 00:37:33,760 --> 00:37:34,240 Speaker 2: other things. 784 00:37:35,080 --> 00:37:37,800 Speaker 1: Thanks for listening tonight. You're listening to Simply Money, presented 785 00:37:37,840 --> 00:37:41,640 Speaker 1: by all Worth Financial on fifty five KRC, the talk 786 00:37:41,680 --> 00:37:41,960 Speaker 1: station