1 00:00:05,800 --> 00:00:09,879 Speaker 1: Tonight what smart investors should be doing after a strong 2 00:00:09,960 --> 00:00:12,760 Speaker 1: year for the markets. You're listening to Simply Money, presented 3 00:00:12,760 --> 00:00:16,760 Speaker 1: by all Worth Financial on Bob Sponsorller along with Brian James. Well, 4 00:00:16,800 --> 00:00:19,280 Speaker 1: here we are. It's mid to late November, and believe 5 00:00:19,320 --> 00:00:22,479 Speaker 1: it or not, Thanksgiving is coming up next week and 6 00:00:22,600 --> 00:00:26,400 Speaker 1: most investors probably pretty happy with their portfolios this year. 7 00:00:26,440 --> 00:00:28,600 Speaker 1: Other than that blip we had in April, it's been 8 00:00:28,640 --> 00:00:31,639 Speaker 1: another great year for the markets with one month ago. 9 00:00:31,720 --> 00:00:35,440 Speaker 1: But tonight we want to bring some awareness to that situation. 10 00:00:35,640 --> 00:00:39,440 Speaker 1: And Brian, this is an interesting topic because a lot 11 00:00:39,479 --> 00:00:43,199 Speaker 1: of people don't just make financial mistakes when the markets 12 00:00:43,200 --> 00:00:46,680 Speaker 1: are down. They can also make some mistakes or avoid 13 00:00:46,720 --> 00:00:49,519 Speaker 1: making some smart moves when the market's up, and that's 14 00:00:49,520 --> 00:00:50,920 Speaker 1: what we want to get into tonight. 15 00:00:52,200 --> 00:00:55,000 Speaker 2: Bad financial decisions don't only happen when things are great 16 00:00:55,000 --> 00:00:56,160 Speaker 2: and we're making tons of money. 17 00:00:57,040 --> 00:00:59,200 Speaker 3: They happen, of course, you know, they happen all the time. 18 00:00:59,280 --> 00:01:02,040 Speaker 2: Right when markets are down we do something silly, it 19 00:01:02,040 --> 00:01:04,360 Speaker 2: gets really really highlighted because of the overall market in 20 00:01:04,400 --> 00:01:06,600 Speaker 2: the economy. But let's talk about the other side of it. So, 21 00:01:06,800 --> 00:01:08,959 Speaker 2: when the market's up and your portfolio is growing. That's 22 00:01:09,000 --> 00:01:11,600 Speaker 2: a great thing, but that's also when you're most vulnerable 23 00:01:11,640 --> 00:01:12,600 Speaker 2: to kind of just letting it. 24 00:01:12,560 --> 00:01:14,120 Speaker 3: Go and floating and coasting a little bit. 25 00:01:14,400 --> 00:01:16,760 Speaker 2: People stop thinking critically about risk. I'll just throw the 26 00:01:16,800 --> 00:01:18,480 Speaker 2: We'll throw more money at it because it's on a roll. 27 00:01:18,480 --> 00:01:20,800 Speaker 2: They forget about taxes. They don't think about what happens 28 00:01:20,840 --> 00:01:23,240 Speaker 2: in December when mutual funds and things spit out. 29 00:01:23,280 --> 00:01:24,520 Speaker 3: Capital gains, and. 30 00:01:24,480 --> 00:01:27,000 Speaker 2: There's easy ways to avoid it by not touching them 31 00:01:27,040 --> 00:01:29,720 Speaker 2: like the hot stove during that time. But people just 32 00:01:29,760 --> 00:01:31,959 Speaker 2: assume the market's going to keep going up. And that's 33 00:01:32,000 --> 00:01:33,960 Speaker 2: exactly why we wanted to do this segment. If your 34 00:01:34,000 --> 00:01:36,319 Speaker 2: portfolio is up this year, great, good for you. 35 00:01:36,400 --> 00:01:36,920 Speaker 1: It should be. 36 00:01:37,319 --> 00:01:38,960 Speaker 2: But the question is and how much did I make? 37 00:01:39,000 --> 00:01:40,279 Speaker 2: It's what do I do next? 38 00:01:41,240 --> 00:01:43,680 Speaker 1: Well, Brian, to me, this manifests itself in a couple 39 00:01:43,760 --> 00:01:46,240 Speaker 1: different ways, and I want to see if you agree 40 00:01:46,280 --> 00:01:48,800 Speaker 1: with this. Number One is just avoidance. People have the 41 00:01:48,880 --> 00:01:51,600 Speaker 1: same risk profile, let's just call it. They want to 42 00:01:51,640 --> 00:01:55,120 Speaker 1: be sixty percent in stocks, and when the market goes up, 43 00:01:55,160 --> 00:01:57,760 Speaker 1: either for one or two years, we have something called 44 00:01:57,800 --> 00:02:02,160 Speaker 1: portfolio drift that's sixty forty allocation turns into seventy eight 45 00:02:02,240 --> 00:02:05,920 Speaker 1: to seventy five, seventy thirty. Let's say, and that happens. 46 00:02:06,040 --> 00:02:08,160 Speaker 1: You know that that just happens when the stock market 47 00:02:08,200 --> 00:02:11,080 Speaker 1: goes up, and if you don't have a strategy in place, 48 00:02:11,200 --> 00:02:14,799 Speaker 1: all of a sudden, your portfolio becomes more risky than 49 00:02:14,840 --> 00:02:17,400 Speaker 1: you wanted it to be, and you did nothing to 50 00:02:17,480 --> 00:02:20,919 Speaker 1: mitigate that through through rebalancing and then the other side 51 00:02:20,919 --> 00:02:22,840 Speaker 1: of the coin. And I see this from time to time, 52 00:02:23,280 --> 00:02:28,120 Speaker 1: people's people's tolerance for risk can can drift and change 53 00:02:28,200 --> 00:02:30,480 Speaker 1: based on one of the markets going up or down. 54 00:02:31,000 --> 00:02:33,959 Speaker 1: You know what their allocation could go to seventy percent 55 00:02:34,000 --> 00:02:36,120 Speaker 1: and like you just said, hey, let's let it ride. 56 00:02:36,160 --> 00:02:38,840 Speaker 1: Things are going good. But Brian, you and I have 57 00:02:38,919 --> 00:02:41,520 Speaker 1: lived through all of this many times by this point. 58 00:02:41,560 --> 00:02:43,799 Speaker 1: Most of the times we see a whip saw or 59 00:02:43,840 --> 00:02:46,760 Speaker 1: a big down draft in the market. Heck, let's go back, 60 00:02:46,840 --> 00:02:49,160 Speaker 1: you know, to April of this year. Most of those 61 00:02:49,200 --> 00:02:53,040 Speaker 1: things happen when no one sees it coming. And that's 62 00:02:53,080 --> 00:02:56,000 Speaker 1: when the phone calls start and say, wow, that thing 63 00:02:56,080 --> 00:02:59,720 Speaker 1: went down too much, too fast. I'm not comfortable. And Brian, 64 00:02:59,760 --> 00:03:03,000 Speaker 1: if they didn't have a strategy in place beforehand, it's 65 00:03:03,040 --> 00:03:05,160 Speaker 1: a little late to mitigate that risk. Right. 66 00:03:05,200 --> 00:03:07,600 Speaker 2: Now, here's how probably how somebody set themselves up for 67 00:03:07,600 --> 00:03:09,600 Speaker 2: that level of frustration. So let's use an example in 68 00:03:09,639 --> 00:03:12,000 Speaker 2: this past year. Let's say somebody started this year with 69 00:03:12,080 --> 00:03:14,760 Speaker 2: three million dollars sixty percent in stocks. That's one point 70 00:03:14,800 --> 00:03:17,280 Speaker 2: eight million, and then the rest about forty percent in bonds. 71 00:03:17,600 --> 00:03:20,360 Speaker 2: Marcus had a strong run driven by the technology industry 72 00:03:20,360 --> 00:03:23,280 Speaker 2: once again, and now that stock allocation is at two 73 00:03:23,360 --> 00:03:24,400 Speaker 2: point one million dollars. 74 00:03:24,480 --> 00:03:26,120 Speaker 3: Right, So the stocks grew, that's a good thing. We 75 00:03:26,240 --> 00:03:26,480 Speaker 3: like that. 76 00:03:26,720 --> 00:03:29,480 Speaker 2: But instead of being sixty percent, now it's seventy percent 77 00:03:29,680 --> 00:03:31,720 Speaker 2: without anybody making a single move. That's just what the 78 00:03:31,720 --> 00:03:34,200 Speaker 2: market gave us this year so far. Furiously knocking on 79 00:03:34,240 --> 00:03:35,960 Speaker 2: wood here and they're thinking, hey, this is great. Why 80 00:03:35,960 --> 00:03:37,400 Speaker 2: am I going to screw this up? It ain't broke, 81 00:03:37,440 --> 00:03:39,520 Speaker 2: why fix it? Well, then next year tech has a 82 00:03:39,520 --> 00:03:41,800 Speaker 2: big pullback, and this stuff does happen tech, the tech 83 00:03:41,880 --> 00:03:44,240 Speaker 2: industry has to lay off tens of thousands of people 84 00:03:44,240 --> 00:03:46,800 Speaker 2: at a time. Did happen to not that many years ago, 85 00:03:46,840 --> 00:03:49,320 Speaker 2: and that's what gave us this situation. But all of 86 00:03:49,360 --> 00:03:51,800 Speaker 2: a sudden, because of that overweight, now these folks have 87 00:03:51,880 --> 00:03:54,120 Speaker 2: lost over four hundred thousand dollars in just that one 88 00:03:54,160 --> 00:03:56,600 Speaker 2: portion of their portfolio. That's a pretty painful lesson to 89 00:03:56,680 --> 00:03:59,720 Speaker 2: learn because we simply didn't take gains and rebalance when 90 00:03:59,720 --> 00:04:01,000 Speaker 2: they were there for us. 91 00:04:01,440 --> 00:04:03,680 Speaker 1: Well, we talked about, you know, at the beginning of 92 00:04:03,720 --> 00:04:06,720 Speaker 1: this segment, the blip that we had in April. Yeah, 93 00:04:06,800 --> 00:04:08,720 Speaker 1: now we could talk about that like it was no 94 00:04:08,800 --> 00:04:10,880 Speaker 1: big deal back in April. But if we all go 95 00:04:11,040 --> 00:04:14,520 Speaker 1: back to quote unquote Liberation Day, when the President walked 96 00:04:14,560 --> 00:04:18,560 Speaker 1: out there with this huge list of companies that we 97 00:04:18,560 --> 00:04:20,520 Speaker 1: were going to put tariffs on, the market was not 98 00:04:20,640 --> 00:04:25,000 Speaker 1: ready for that. People were shocked by the magnitude and 99 00:04:25,040 --> 00:04:28,440 Speaker 1: the volume of those tariff announcements. And yeah, the market 100 00:04:28,480 --> 00:04:32,080 Speaker 1: recovered in pretty quick order. But boy back for those yeah, 101 00:04:32,200 --> 00:04:34,720 Speaker 1: that week or two weeks, you know, the market went 102 00:04:34,760 --> 00:04:37,480 Speaker 1: down by quite a bit pretty quickly. And those are 103 00:04:37,480 --> 00:04:41,159 Speaker 1: the kind of shocks that hit the system historically, you know, 104 00:04:41,279 --> 00:04:44,360 Speaker 1: even go back seventy eighty years, Stuff like that happens 105 00:04:44,360 --> 00:04:47,160 Speaker 1: from time to time. Usually, you know, between a ten 106 00:04:47,200 --> 00:04:50,720 Speaker 1: and fifteen percent short term pullback in the portfolio. And 107 00:04:50,880 --> 00:04:53,640 Speaker 1: that's why, you know, if risk is important to you, 108 00:04:53,720 --> 00:04:57,560 Speaker 1: if volatility is important to you, either from an income 109 00:04:57,680 --> 00:05:01,000 Speaker 1: you know, generation strategy, or just emotion. That's why you 110 00:05:01,080 --> 00:05:02,720 Speaker 1: got to get out in front of this and have 111 00:05:02,760 --> 00:05:05,839 Speaker 1: a strategy to keep your allocation where you want it 112 00:05:05,880 --> 00:05:06,880 Speaker 1: to be at all times. 113 00:05:07,120 --> 00:05:08,760 Speaker 3: Yeah, now let's move on to taxes. 114 00:05:08,839 --> 00:05:11,200 Speaker 2: Right, We've got a little more than a month left 115 00:05:11,200 --> 00:05:13,240 Speaker 2: here to do whatever we're gonna do to lock in 116 00:05:13,279 --> 00:05:15,080 Speaker 2: our taxes and do some tax planning by the end 117 00:05:15,120 --> 00:05:17,440 Speaker 2: of the year. So now's when you should be thinking 118 00:05:17,440 --> 00:05:19,400 Speaker 2: about what these steps are going to be. Definitely not 119 00:05:19,440 --> 00:05:21,320 Speaker 2: waiting till December twenty eighth, you're not gonna be able 120 00:05:21,320 --> 00:05:23,680 Speaker 2: to get your financial institutions to do the things you 121 00:05:23,720 --> 00:05:25,440 Speaker 2: need to do in paperwork and so forth, and your 122 00:05:25,480 --> 00:05:26,760 Speaker 2: CPA does not want to talk to you. 123 00:05:26,800 --> 00:05:28,880 Speaker 3: In New Year's eve, we're. 124 00:05:28,520 --> 00:05:31,000 Speaker 2: Definitely seeing people with solid gains and their taxable accounts, 125 00:05:31,000 --> 00:05:33,359 Speaker 2: and again, like we've been talking about, that's fantastic. But 126 00:05:33,400 --> 00:05:36,719 Speaker 2: if you're not pairing those gains back or maybe actually 127 00:05:36,760 --> 00:05:38,479 Speaker 2: maybe you are listening to us and maybe you're saying, 128 00:05:38,480 --> 00:05:40,320 Speaker 2: you know what, time to take some gains and move 129 00:05:40,360 --> 00:05:43,440 Speaker 2: off the table here. That's great, Thank you for doing 130 00:05:43,440 --> 00:05:45,279 Speaker 2: what you need to do for yourself, but now what 131 00:05:45,320 --> 00:05:47,640 Speaker 2: you're doing. Don't forget there's another step here. You've created 132 00:05:47,640 --> 00:05:49,960 Speaker 2: a capital gain if these are in taxable accounts, So 133 00:05:50,080 --> 00:05:52,880 Speaker 2: look for some smart tax loss harvesting moves elsewhere in 134 00:05:52,920 --> 00:05:55,760 Speaker 2: your portfolio. So oftentimes we're not just talking about selling 135 00:05:55,839 --> 00:05:58,359 Speaker 2: off rebalancing and selling off the winners. Look for some 136 00:05:58,480 --> 00:06:01,760 Speaker 2: losers to sell off too, and make sure that you're 137 00:06:01,800 --> 00:06:03,960 Speaker 2: going to minimize the taxes, the tax hits you're going 138 00:06:04,000 --> 00:06:05,599 Speaker 2: to take off of that. But this takes a little 139 00:06:05,600 --> 00:06:07,600 Speaker 2: bit of work, and it can take a professional eye 140 00:06:07,640 --> 00:06:09,360 Speaker 2: to figure out what's the right move, what's the right 141 00:06:09,600 --> 00:06:12,039 Speaker 2: position to pair back. And now we're just creating a 142 00:06:12,080 --> 00:06:14,120 Speaker 2: bunch of cash. Anyway, what do I do after I've 143 00:06:14,160 --> 00:06:16,080 Speaker 2: made all these sales of my winners and my losers 144 00:06:16,120 --> 00:06:17,200 Speaker 2: for tax planning purposes. 145 00:06:17,240 --> 00:06:18,200 Speaker 3: Now I've got a bunch of cash. 146 00:06:18,360 --> 00:06:20,800 Speaker 2: How do I keep it invested without giving myself what's 147 00:06:20,839 --> 00:06:22,839 Speaker 2: called a wash sale. And no, by the way, you 148 00:06:22,880 --> 00:06:26,200 Speaker 2: cannot simply buy again today what you sold tomorrow. The 149 00:06:26,279 --> 00:06:29,040 Speaker 2: irs really really doesn't like that. It won't work. You'll 150 00:06:29,040 --> 00:06:30,719 Speaker 2: get that lost discount. So you have to have a 151 00:06:30,760 --> 00:06:31,480 Speaker 2: plan to all of this. 152 00:06:32,320 --> 00:06:34,800 Speaker 1: Yeah, Brian, I want to throw out just a real simple, 153 00:06:34,960 --> 00:06:37,960 Speaker 1: practical example here on what we're talking about with tax 154 00:06:38,000 --> 00:06:41,400 Speaker 1: lost harvesting. Let's say you made an investment in a 155 00:06:41,440 --> 00:06:45,720 Speaker 1: broadly diversified ETF for all the right reasons and for 156 00:06:45,839 --> 00:06:49,039 Speaker 1: all the right time horizon. You plan on being in 157 00:06:49,080 --> 00:06:51,760 Speaker 1: this asset class, you know, for the next five, ten, 158 00:06:51,880 --> 00:06:54,320 Speaker 1: fifteen years, and it was a good long term position, 159 00:06:54,800 --> 00:06:57,360 Speaker 1: but for whatever reason, it's down in the short term 160 00:06:57,560 --> 00:07:00,640 Speaker 1: and you want to offset some gains. Here's here's what 161 00:07:00,680 --> 00:07:04,080 Speaker 1: we mean. You know, practically from tax loss harvesting, especially 162 00:07:04,120 --> 00:07:07,159 Speaker 1: in the area of ETFs, there are a lot of 163 00:07:07,200 --> 00:07:09,880 Speaker 1: ETFs that cover the same sector. So you could just 164 00:07:10,000 --> 00:07:14,160 Speaker 1: sell one ETF, harvest that loss, and literally within sixty 165 00:07:14,200 --> 00:07:19,480 Speaker 1: seconds by another ETF in the same asset class, same sector. 166 00:07:19,600 --> 00:07:23,160 Speaker 1: You're fully invested, but you've captured that short term loss 167 00:07:23,200 --> 00:07:26,440 Speaker 1: and you still stayed fully invested for the long term. 168 00:07:26,480 --> 00:07:30,320 Speaker 1: That's a practical, simple example by what we mean by 169 00:07:30,360 --> 00:07:34,120 Speaker 1: tax loss harvesting, and it's a great strategy to deploy. 170 00:07:34,560 --> 00:07:37,960 Speaker 1: Let's talk about the overall mindset here. When the market's 171 00:07:38,040 --> 00:07:41,760 Speaker 1: up in your statement looks good, it's really tempting to think, hey, 172 00:07:42,080 --> 00:07:45,120 Speaker 1: this is working great, I don't need to change a 173 00:07:45,200 --> 00:07:47,880 Speaker 1: thing that can create some traps. 174 00:07:47,920 --> 00:07:51,480 Speaker 2: Brian, Yeah, absolutely can, just like anything else. So you know, 175 00:07:51,880 --> 00:07:53,600 Speaker 2: if it doesn't if it ain't broke, I don't want 176 00:07:53,600 --> 00:07:55,440 Speaker 2: to fix it. That's fine, except a lot of times 177 00:07:55,440 --> 00:07:58,920 Speaker 2: things don't stay the same after the environment changes. So 178 00:07:59,040 --> 00:08:01,120 Speaker 2: success can kind of you can kind of mask the 179 00:08:01,200 --> 00:08:03,560 Speaker 2: drift of the portfolio. Everything is up, so everything must 180 00:08:03,600 --> 00:08:06,679 Speaker 2: be wonderful. It hides concentration risk. Maybe there's one portion 181 00:08:06,760 --> 00:08:09,080 Speaker 2: of your portfolio, one or two stocks that are driving 182 00:08:09,120 --> 00:08:10,760 Speaker 2: the whole thing. But if you're only looking at the 183 00:08:10,760 --> 00:08:12,320 Speaker 2: bottom line in your statement, you're not going to catch 184 00:08:12,360 --> 00:08:15,240 Speaker 2: that level of detail. So look again at the big picture. 185 00:08:15,240 --> 00:08:18,440 Speaker 2: Have you updated your retirement timeline right? Is it still 186 00:08:18,480 --> 00:08:20,040 Speaker 2: what you want? You're still shooting for what you want. 187 00:08:20,120 --> 00:08:22,720 Speaker 2: If you've decided to move it up, have you accounted 188 00:08:22,760 --> 00:08:24,560 Speaker 2: for what that impact will be and any moves you 189 00:08:24,560 --> 00:08:26,760 Speaker 2: should make now to affect that and make that actually happen. 190 00:08:26,960 --> 00:08:29,360 Speaker 2: Maybe you had a child graduate and they're starting to 191 00:08:29,360 --> 00:08:31,360 Speaker 2: start their lives. Do you anticipate needing to pay for 192 00:08:31,440 --> 00:08:33,920 Speaker 2: possibly a wedding, maybe helping out with a down payment 193 00:08:34,080 --> 00:08:36,320 Speaker 2: as that child's life is kind of getting more off 194 00:08:36,360 --> 00:08:36,680 Speaker 2: the ground. 195 00:08:37,320 --> 00:08:39,000 Speaker 3: Maybe you have a parent who is needing a little 196 00:08:39,000 --> 00:08:39,440 Speaker 3: more support. 197 00:08:39,480 --> 00:08:41,880 Speaker 2: You could be part of the Sandwich generation, where you're 198 00:08:41,920 --> 00:08:43,640 Speaker 2: taking care of the kids below you and the parents 199 00:08:43,679 --> 00:08:46,320 Speaker 2: above you. All this stuff happens even when the market's 200 00:08:46,320 --> 00:08:48,200 Speaker 2: calm and nobody's really paying attention. 201 00:08:49,280 --> 00:08:51,480 Speaker 1: Brian, I want to throw out an example here on 202 00:08:51,559 --> 00:08:54,960 Speaker 1: this whole mindset topic, you know, with an actual client 203 00:08:55,040 --> 00:08:57,880 Speaker 1: meeting I had this week, and this is a very 204 00:08:58,080 --> 00:09:01,720 Speaker 1: risk averse couple. I mean they've been looking for reasons 205 00:09:01,760 --> 00:09:04,440 Speaker 1: to go to cash for years now. You know, they're 206 00:09:04,520 --> 00:09:07,640 Speaker 1: just fearful about everything. And when we do a risk 207 00:09:07,760 --> 00:09:10,720 Speaker 1: tolerance you know, profile on them, and I ask them, 208 00:09:10,760 --> 00:09:13,280 Speaker 1: how much are you willing to have your portfolio decline 209 00:09:13,320 --> 00:09:16,040 Speaker 1: at any one time? You know, the answer is like 210 00:09:16,120 --> 00:09:19,280 Speaker 1: between two and three percent. And I'm like, it's really 211 00:09:19,360 --> 00:09:22,959 Speaker 1: hard to invest for any kind of growth or appreciation 212 00:09:23,640 --> 00:09:28,640 Speaker 1: with that kind of limited tolerance for downside. And lo 213 00:09:28,800 --> 00:09:31,120 Speaker 1: and behold. We had a review meeting this week and 214 00:09:31,679 --> 00:09:34,920 Speaker 1: the market's been up now for two years, and I 215 00:09:35,280 --> 00:09:39,160 Speaker 1: you know, the conversation starts with Bob, the market's doing. 216 00:09:39,400 --> 00:09:41,319 Speaker 1: Should we put more money into the market? 217 00:09:41,320 --> 00:09:43,480 Speaker 2: Should I mortgage my house? I want to borrow against 218 00:09:43,520 --> 00:09:44,320 Speaker 2: every asset I own. 219 00:09:44,720 --> 00:09:48,160 Speaker 1: And I'm literally rolodexing through all of these meeting notes 220 00:09:48,160 --> 00:09:51,160 Speaker 1: and conversations I've had with him over the last three years, 221 00:09:51,200 --> 00:09:53,480 Speaker 1: and I said, hey, here's what you've told me as 222 00:09:53,520 --> 00:09:57,480 Speaker 1: far as your downside tolerance for risk. Has that number changed? 223 00:09:58,120 --> 00:10:01,840 Speaker 1: And he literally started laughing. He's like no. I said, hey, 224 00:10:01,920 --> 00:10:04,240 Speaker 1: we just need to stick with the program. Here. We've 225 00:10:04,240 --> 00:10:08,640 Speaker 1: been using some structured notes where we've got some upside 226 00:10:08,720 --> 00:10:11,040 Speaker 1: brackets on how much we can earn, you know, is 227 00:10:11,080 --> 00:10:13,600 Speaker 1: a portion of the upside of the market. But over 228 00:10:13,800 --> 00:10:16,880 Speaker 1: the timeframe that we select for him, he's got to 229 00:10:16,920 --> 00:10:20,320 Speaker 1: guaranteed return a principle, one hundred percent guaranteed, you know, 230 00:10:20,400 --> 00:10:23,560 Speaker 1: return a principle. I said, hey, let's just stick with that. 231 00:10:23,760 --> 00:10:27,200 Speaker 1: It's working. You're happy, you've been calm this whole year. 232 00:10:27,240 --> 00:10:29,560 Speaker 1: You haven't called me once. And he's like, Yep, you're right, 233 00:10:29,640 --> 00:10:32,720 Speaker 1: let's stick with that. So my point here is in 234 00:10:32,800 --> 00:10:36,559 Speaker 1: periods where the markets have gone up, people can forget 235 00:10:37,160 --> 00:10:40,400 Speaker 1: about their lack of risk tolerance because they they don't 236 00:10:40,400 --> 00:10:42,400 Speaker 1: think the market's going to go down. It's just it's 237 00:10:42,440 --> 00:10:45,880 Speaker 1: something that you know, pretty common thing out there called 238 00:10:45,960 --> 00:10:49,440 Speaker 1: recency bias, and sometimes people need to be reminded of that. 239 00:10:49,720 --> 00:10:50,280 Speaker 3: Yeah, they do. 240 00:10:50,360 --> 00:10:52,800 Speaker 2: And and those those structured notes you were speaking of, there, 241 00:10:52,880 --> 00:10:54,040 Speaker 2: those can be great solutions. 242 00:10:54,120 --> 00:10:55,960 Speaker 3: They come to Everything has pros and cons. So if 243 00:10:55,960 --> 00:10:56,600 Speaker 3: you're going to have a. 244 00:10:56,520 --> 00:10:59,280 Speaker 2: Guarantee on the downside, then you're gonna have a limited upside. 245 00:10:59,280 --> 00:11:00,360 Speaker 3: There's absolutely nothing wrong with that. 246 00:11:00,400 --> 00:11:02,960 Speaker 2: But just go into them with eyes wide open, and 247 00:11:03,040 --> 00:11:04,959 Speaker 2: there's can be great tools for people who really really 248 00:11:05,000 --> 00:11:09,040 Speaker 2: would panic during a year like twenty two. But just 249 00:11:09,320 --> 00:11:11,599 Speaker 2: bear in mind, you know, there's pros and cons to 250 00:11:11,679 --> 00:11:13,760 Speaker 2: all these different things, all these moving parts. Hey, Bob, 251 00:11:13,760 --> 00:11:15,360 Speaker 2: I want to go back real quick. We were talking 252 00:11:15,360 --> 00:11:18,400 Speaker 2: about the need to pair back some gains and move 253 00:11:18,440 --> 00:11:20,880 Speaker 2: things around. Well, one thing we left out. We talked 254 00:11:20,880 --> 00:11:22,920 Speaker 2: a lot about we'll sell some stuff and generate some 255 00:11:23,000 --> 00:11:25,320 Speaker 2: gains and then offset that with some tax liability. 256 00:11:25,559 --> 00:11:27,800 Speaker 3: Another way to affect. 257 00:11:27,480 --> 00:11:29,720 Speaker 2: The same thing of taking some gains and rebalancing your 258 00:11:29,760 --> 00:11:31,560 Speaker 2: portfolio just get rid of chunks of it. 259 00:11:31,679 --> 00:11:31,839 Speaker 1: Right. 260 00:11:32,080 --> 00:11:34,079 Speaker 3: What I mean by that is if you're already. 261 00:11:33,760 --> 00:11:37,320 Speaker 2: Charitably declin charitably inclined, and you already give money to charity, 262 00:11:37,520 --> 00:11:39,640 Speaker 2: then you can look into something called a donor advised 263 00:11:39,679 --> 00:11:41,480 Speaker 2: fund and talked about it a couple of times this year. 264 00:11:41,480 --> 00:11:43,679 Speaker 3: I believe and simply. 265 00:11:43,320 --> 00:11:47,480 Speaker 2: Give a move actual shares of something into that donor 266 00:11:47,480 --> 00:11:50,120 Speaker 2: advice fund. Appreciated shares for which you would have a 267 00:11:50,160 --> 00:11:52,320 Speaker 2: capital gain that have grown a little too much, Well, 268 00:11:52,320 --> 00:11:54,240 Speaker 2: if you donate those to a donor advice fund or 269 00:11:54,240 --> 00:11:56,560 Speaker 2: straight to a charity, then you will have rebalanced your 270 00:11:56,600 --> 00:11:59,120 Speaker 2: portfolio and gotten a tax benefit out of it, and 271 00:11:59,160 --> 00:12:02,439 Speaker 2: you don't have to worry about that offsetting tax loss 272 00:12:02,559 --> 00:12:04,440 Speaker 2: searching for that asset. You can sell it to offset it. 273 00:12:04,520 --> 00:12:05,760 Speaker 2: Just another idea there. 274 00:12:06,160 --> 00:12:08,640 Speaker 1: Now, that's a great idea. Here's the all Worth advice. 275 00:12:08,720 --> 00:12:11,800 Speaker 1: When the market gives you a win, don't just enjoy it, 276 00:12:12,240 --> 00:12:15,600 Speaker 1: use it, check your risk, trim your taxes like Brian 277 00:12:15,760 --> 00:12:19,439 Speaker 1: just said, and make sure your strategy still serves your 278 00:12:19,480 --> 00:12:23,800 Speaker 1: life's goals. There is a new tax quote unquote breakout 279 00:12:23,840 --> 00:12:27,640 Speaker 1: there for retirees and a new tax hurdle for high 280 00:12:27,679 --> 00:12:30,440 Speaker 1: income earners. We're going to break all that down next. 281 00:12:30,480 --> 00:12:33,040 Speaker 1: You're listening to Simply Money, presented by all Worth Financial 282 00:12:33,040 --> 00:12:41,319 Speaker 1: on fifty five KRC, the talk station. You're listening to 283 00:12:41,360 --> 00:12:43,760 Speaker 1: Simply Money. You're presented by all Worth Financial on bop 284 00:12:43,800 --> 00:12:48,120 Speaker 1: spond seller along with Brian James. From rebalancing confusion to 285 00:12:48,240 --> 00:12:52,760 Speaker 1: questions about global diversification, we're going to tackle real listener 286 00:12:52,840 --> 00:12:56,840 Speaker 1: portfolios and questions, including one from a couple wondering if 287 00:12:56,880 --> 00:13:00,960 Speaker 1: their traditional sixty to forty allocation don't make sense in 288 00:13:01,000 --> 00:13:04,480 Speaker 1: twenty twenty five. All that's coming up at six forty three. 289 00:13:05,640 --> 00:13:08,520 Speaker 1: If you're age sixty five or older or approaching it. 290 00:13:08,559 --> 00:13:11,000 Speaker 1: We want to remind you of a tax break that 291 00:13:11,160 --> 00:13:14,720 Speaker 1: kicked in this year. It's a brand new deduction up 292 00:13:14,720 --> 00:13:17,559 Speaker 1: to six thousand dollars per person as a single tax 293 00:13:17,559 --> 00:13:20,640 Speaker 1: filer or twelve thousand dollars for a married couple that 294 00:13:20,840 --> 00:13:24,640 Speaker 1: seniors can claim whether they itemize or not, you know, 295 00:13:24,640 --> 00:13:28,240 Speaker 1: whether you itemize or just take the standard deduction. And 296 00:13:28,280 --> 00:13:30,560 Speaker 1: we're gonna walk through that tonight. Brian. I've seen this 297 00:13:30,679 --> 00:13:32,319 Speaker 1: come up, you know, in a couple of meetings here 298 00:13:32,320 --> 00:13:34,320 Speaker 1: in the last couple of weeks as we do income 299 00:13:34,440 --> 00:13:37,840 Speaker 1: planning strategies for twenty twenty five and we're off conversions. 300 00:13:38,440 --> 00:13:41,200 Speaker 1: It's a good it's it's a nice deduction, but you've 301 00:13:41,200 --> 00:13:43,840 Speaker 1: got to understand the nuances of it as you do 302 00:13:43,920 --> 00:13:46,160 Speaker 1: your planning, you know, heading into the end of twenty 303 00:13:46,200 --> 00:13:47,720 Speaker 1: twenty five and twenty twenty six. 304 00:13:48,200 --> 00:13:50,240 Speaker 2: So some of the new tax law changes we've had 305 00:13:50,240 --> 00:13:52,959 Speaker 2: most recently are putting making some money drop out of 306 00:13:52,960 --> 00:13:53,240 Speaker 2: the sky. 307 00:13:53,280 --> 00:13:53,439 Speaker 1: Here. 308 00:13:53,440 --> 00:13:55,880 Speaker 2: If you are single and sixty five or older by 309 00:13:55,880 --> 00:13:57,880 Speaker 2: the end of twenty twenty five, you're gonna get a 310 00:13:57,960 --> 00:14:01,160 Speaker 2: six thousand dollars deduction. If you're married and both spouses 311 00:14:01,160 --> 00:14:04,200 Speaker 2: are sixty five or older, that's twelve thousand dollars off 312 00:14:04,240 --> 00:14:06,800 Speaker 2: your taxable income, so it doesn't matter whether you itemize 313 00:14:06,880 --> 00:14:09,200 Speaker 2: or not. This is on top of the standard deduction. However, 314 00:14:09,280 --> 00:14:11,440 Speaker 2: before we get too excited, there is an income limit. 315 00:14:11,679 --> 00:14:14,880 Speaker 2: If you're single, that deduction starts to phase out once 316 00:14:14,920 --> 00:14:18,160 Speaker 2: you're modified adjusted gross income hits seventy five thousand. It 317 00:14:18,240 --> 00:14:21,000 Speaker 2: is completely phased out by one hundred and seventy five thousand. 318 00:14:21,280 --> 00:14:23,600 Speaker 2: If you're married filing jointly, you're going to start to 319 00:14:23,600 --> 00:14:25,320 Speaker 2: lose it at one hundred and fifty all the way 320 00:14:25,360 --> 00:14:26,800 Speaker 2: up to two hundred and fifty thousand. 321 00:14:26,560 --> 00:14:28,320 Speaker 3: Dollars, where it disappears entirely. 322 00:14:28,320 --> 00:14:31,160 Speaker 2: So if your income is above those thresholds, then you'll 323 00:14:31,200 --> 00:14:33,640 Speaker 2: lose some or all that deduction. This is why planning 324 00:14:33,680 --> 00:14:35,960 Speaker 2: ahead matters though, Bob. So let's say you're drawing out 325 00:14:35,960 --> 00:14:37,800 Speaker 2: from a traditional IRA just to live your life or 326 00:14:37,880 --> 00:14:41,360 Speaker 2: taxable portfolio. Those withdrawals could push your income above that 327 00:14:41,400 --> 00:14:44,560 Speaker 2: phase out level, including Roth conversions, right, So you might 328 00:14:44,680 --> 00:14:48,080 Speaker 2: end up seeing you doing something for longer term tax 329 00:14:48,080 --> 00:14:50,240 Speaker 2: planning that's going to cost you this deduction. So, Tom, 330 00:14:50,320 --> 00:14:52,800 Speaker 2: sometimes we got to pick our poison, and. 331 00:14:52,720 --> 00:14:55,760 Speaker 1: Brian, I'm gonna give you an actual case example of this. 332 00:14:55,960 --> 00:14:57,800 Speaker 1: You know, again from a meeting I had in my 333 00:14:57,880 --> 00:15:02,120 Speaker 1: office earlier this week. People came in to talk specifically 334 00:15:02,200 --> 00:15:04,800 Speaker 1: or exactly as you say, about Wroth conversions. We had 335 00:15:04,840 --> 00:15:07,960 Speaker 1: already done some earlier in the year, and I told them, hey, 336 00:15:08,000 --> 00:15:10,280 Speaker 1: come back in the fourth quarter after you know exactly 337 00:15:10,320 --> 00:15:12,920 Speaker 1: what your income is gonna be, and we'll put the 338 00:15:12,920 --> 00:15:15,160 Speaker 1: finishing touches on this. And what I found to be 339 00:15:15,240 --> 00:15:19,080 Speaker 1: interesting as we ran this through the tax software, and 340 00:15:19,600 --> 00:15:22,600 Speaker 1: again we're talking about this six or twelve thousand dollars deduction. 341 00:15:23,800 --> 00:15:26,240 Speaker 1: We probably need to call this out. This is where 342 00:15:26,560 --> 00:15:30,080 Speaker 1: you know the president in the administration talked about Social 343 00:15:30,120 --> 00:15:33,760 Speaker 1: Security being quote unquote tax free. Well, this is where 344 00:15:33,760 --> 00:15:36,200 Speaker 1: we talk about kind of. And I'm gonna give you 345 00:15:36,240 --> 00:15:39,720 Speaker 1: an example. We started to run the numbers and we 346 00:15:40,120 --> 00:15:44,040 Speaker 1: added a little bit of Wroth conversions, and it was interesting, Brian. 347 00:15:44,120 --> 00:15:47,240 Speaker 1: At the end of the day, even with this deduction, 348 00:15:47,520 --> 00:15:51,200 Speaker 1: which in this client's case got phased out by about 349 00:15:51,200 --> 00:15:54,920 Speaker 1: two thirds, when I looked up their effective tax rate 350 00:15:55,040 --> 00:15:58,960 Speaker 1: in twenty twenty five versus twenty twenty four, their effective 351 00:15:59,080 --> 00:16:03,080 Speaker 1: tax rate went up by zero point two percent instead 352 00:16:03,080 --> 00:16:06,440 Speaker 1: of down. So even with this new you know, tax 353 00:16:06,480 --> 00:16:09,680 Speaker 1: free social Security, when you actually started to run the numbers, 354 00:16:10,160 --> 00:16:14,280 Speaker 1: it did not benefit their tax situation whatsoever. So the 355 00:16:14,360 --> 00:16:18,440 Speaker 1: devil's in the details. It's all where your income comes from. Obviously, 356 00:16:18,520 --> 00:16:22,120 Speaker 1: how much I think this tax legislation was targeted to, 357 00:16:22,560 --> 00:16:26,000 Speaker 1: you know, help out lower you know, income earners, which 358 00:16:26,040 --> 00:16:28,880 Speaker 1: is probably a good thing. But for everybody out there, 359 00:16:29,000 --> 00:16:30,880 Speaker 1: you know, assuming you're just going to get this twelve 360 00:16:30,920 --> 00:16:33,520 Speaker 1: thousand dollars deduction, it depends you're. 361 00:16:33,360 --> 00:16:35,600 Speaker 2: Probably gonna have to sacrifice something else in order to 362 00:16:35,600 --> 00:16:36,920 Speaker 2: get a couple thousand dollars. 363 00:16:36,720 --> 00:16:38,200 Speaker 3: Worth of back on your taxes. 364 00:16:38,240 --> 00:16:40,000 Speaker 2: So just a really just depends on what your your 365 00:16:40,080 --> 00:16:41,720 Speaker 2: priorities are in your tax planning. 366 00:16:42,240 --> 00:16:45,440 Speaker 1: Yeah, it might it might mean a slightly lower WROTH 367 00:16:45,520 --> 00:16:48,640 Speaker 1: conversion in order to get the full benefit. All right, 368 00:16:48,720 --> 00:16:53,360 Speaker 1: let's jump ahead here another important change. This one's affecting 369 00:16:53,560 --> 00:16:58,120 Speaker 1: high earning workers age fifty and up, especially if you're 370 00:16:58,160 --> 00:17:01,680 Speaker 1: managing a portfolio or nearing retirement and want to stack 371 00:17:01,800 --> 00:17:05,400 Speaker 1: the tax deck in your favor. Beginning in twenty twenty six, 372 00:17:05,520 --> 00:17:08,680 Speaker 1: if you're age fifty or older and you earn more 373 00:17:08,720 --> 00:17:11,120 Speaker 1: than one hundred and forty five thousand dollars in wages 374 00:17:11,160 --> 00:17:15,399 Speaker 1: from a single employer, well, that extra catchup contribution that 375 00:17:15,400 --> 00:17:18,280 Speaker 1: we're all used to maybe making in our employer sponsored 376 00:17:18,320 --> 00:17:21,040 Speaker 1: retirement plan, like a four to one K, it's no 377 00:17:21,160 --> 00:17:24,640 Speaker 1: longer going to qualify for the pre pre tax deduction. 378 00:17:25,160 --> 00:17:28,320 Speaker 1: It'll have to go into the WROTH account. And this 379 00:17:28,400 --> 00:17:31,480 Speaker 1: is a thing to check out with your HR department 380 00:17:31,560 --> 00:17:34,560 Speaker 1: or plan sponsor to make sure that your WROTH account 381 00:17:34,880 --> 00:17:38,320 Speaker 1: within your four toh one K will actually even handle 382 00:17:38,960 --> 00:17:40,960 Speaker 1: this extra ketchup you know, contribution. 383 00:17:40,960 --> 00:17:42,520 Speaker 2: Are there's still some four one ks out there that 384 00:17:42,560 --> 00:17:44,639 Speaker 2: don't offer WROTH at all. Now they're going to have 385 00:17:44,680 --> 00:17:46,160 Speaker 2: to or they're going to have to wipe out their 386 00:17:46,280 --> 00:17:49,000 Speaker 2: their extra ketchup contributions. So you know what this is, Bob, 387 00:17:49,000 --> 00:17:50,760 Speaker 2: that we're we're not going to talk about it this way. 388 00:17:50,800 --> 00:17:53,320 Speaker 2: This is a tax hike, right because we are taking 389 00:17:53,359 --> 00:17:56,760 Speaker 2: away a deduction, which is a different way of hiking 390 00:17:56,760 --> 00:17:58,520 Speaker 2: taxes a little bit. The IRS has figured out that 391 00:17:58,560 --> 00:18:01,000 Speaker 2: some of the promises we've made we can we can't 392 00:18:01,080 --> 00:18:04,320 Speaker 2: quite fix. So we're gonna we're gonna hide that by 393 00:18:04,400 --> 00:18:06,760 Speaker 2: taking away to catch up contribution because a lot of 394 00:18:06,760 --> 00:18:08,520 Speaker 2: people already doing this and they're not gonna pay attention. 395 00:18:08,520 --> 00:18:10,520 Speaker 2: They'll just notice that suddenly they have wroth on all of. 396 00:18:10,520 --> 00:18:11,600 Speaker 3: A sudden in their portfolio. 397 00:18:11,760 --> 00:18:14,960 Speaker 2: So anyway, make sure if you're gonna take advantage of this, 398 00:18:15,480 --> 00:18:17,080 Speaker 2: why there's not much take advantage of it. It's the 399 00:18:17,160 --> 00:18:20,200 Speaker 2: ketchup itself has not changed. The dollar amounts are the same. 400 00:18:20,680 --> 00:18:22,280 Speaker 2: But does your four to one k even offer that 401 00:18:22,359 --> 00:18:24,959 Speaker 2: roth ketchup option? Make sure that works, that you can 402 00:18:25,000 --> 00:18:27,560 Speaker 2: even do it. I'm sure they're all scrambling right now 403 00:18:27,600 --> 00:18:29,280 Speaker 2: to make sure that they that they can handle this. 404 00:18:29,359 --> 00:18:32,840 Speaker 2: On the custodial side, anticipate that tax impact. If you 405 00:18:32,880 --> 00:18:35,240 Speaker 2: are forced into this, you're gonna lose a deduction. But 406 00:18:35,280 --> 00:18:38,639 Speaker 2: if you continue to push through and make those contributions, 407 00:18:38,680 --> 00:18:40,639 Speaker 2: which isn't a bad thing. You're still saving for your future, 408 00:18:40,760 --> 00:18:43,240 Speaker 2: but that's gonna bump up your adjusted gross income and 409 00:18:43,359 --> 00:18:45,960 Speaker 2: it's also going to probably decrease your take home a 410 00:18:46,000 --> 00:18:47,000 Speaker 2: little bit because that's. 411 00:18:46,840 --> 00:18:47,800 Speaker 3: No longer deductible. 412 00:18:48,080 --> 00:18:51,800 Speaker 2: You're you're withholding is going to going to impact because 413 00:18:51,800 --> 00:18:54,439 Speaker 2: of these WROTH contributions that are going into this ketchup. 414 00:18:54,520 --> 00:18:56,680 Speaker 2: So don't be surprised if your paycheck changes a little 415 00:18:56,680 --> 00:18:59,200 Speaker 2: bit in a way you didn't anticipate if you are 416 00:18:59,240 --> 00:19:02,679 Speaker 2: doing those ketchup contributions. Again, if you're over over fifty 417 00:19:02,680 --> 00:19:04,800 Speaker 2: making more than one hundred and forty five thousand dollars 418 00:19:04,800 --> 00:19:08,280 Speaker 2: from one single employer, then ketchup contributions have to be roth. 419 00:19:08,480 --> 00:19:11,280 Speaker 2: That's after tax. That means withholding is going to increase 420 00:19:11,320 --> 00:19:12,720 Speaker 2: on a per paycheck basis. 421 00:19:13,600 --> 00:19:16,080 Speaker 1: Yeah, And just breaking down all these numbers, I guess 422 00:19:16,119 --> 00:19:19,080 Speaker 1: down to what i'll call plain english here. If you are, 423 00:19:19,640 --> 00:19:22,320 Speaker 1: you know, over fifty, and you really do plan on 424 00:19:22,400 --> 00:19:26,200 Speaker 1: making these catch up contributions, now's the time to check 425 00:19:26,240 --> 00:19:29,080 Speaker 1: with your HR office or your plan sponsor and make 426 00:19:29,119 --> 00:19:31,760 Speaker 1: sure that they are ramped up to handle this thing. 427 00:19:31,760 --> 00:19:33,920 Speaker 1: And if they aren't, put a bug in their ear 428 00:19:33,960 --> 00:19:35,919 Speaker 1: to ge get with it, because this is coming in 429 00:19:35,960 --> 00:19:39,080 Speaker 1: twenty twenty six, and we don't want people to be disappointed, 430 00:19:39,200 --> 00:19:41,640 Speaker 1: you know, by June of next year, because no one 431 00:19:41,680 --> 00:19:44,439 Speaker 1: got out in front of this and and made you know, 432 00:19:44,480 --> 00:19:47,400 Speaker 1: adjustments to your withholding and your contributions to your plan. 433 00:19:47,920 --> 00:19:51,640 Speaker 1: Coming up next, we've got the latest scams hitting Cincinnati 434 00:19:51,720 --> 00:19:55,359 Speaker 1: inboxes and doorsteps, and how to make sure your money 435 00:19:55,359 --> 00:19:59,120 Speaker 1: and identity stays safe. You're listening to Simple Money presented 436 00:19:59,119 --> 00:20:02,640 Speaker 1: by all Worth Financial on fifty five KRC the talk station. 437 00:20:07,359 --> 00:20:09,880 Speaker 1: You're listening to Simply Money presided by all Worth Financial 438 00:20:09,880 --> 00:20:13,160 Speaker 1: on Bob's font Seller along with Brian James. Joined tonight 439 00:20:13,240 --> 00:20:18,000 Speaker 1: by Josio Erlik, President of the Cincinnati Better Business Bureau. Julie, 440 00:20:18,040 --> 00:20:20,680 Speaker 1: thanks as always for joining us tonight, and we are 441 00:20:20,720 --> 00:20:25,160 Speaker 1: talking about scams, scams and more scams. Tell us how 442 00:20:25,160 --> 00:20:26,080 Speaker 1: to protect ourself. 443 00:20:27,680 --> 00:20:30,080 Speaker 4: Well, I've got a couple that are kind of seasonally related, 444 00:20:30,080 --> 00:20:33,000 Speaker 4: and i want to talk first about online marketplaces like 445 00:20:33,080 --> 00:20:37,880 Speaker 4: Walmart and Amazon. These are platforms where third party sellers 446 00:20:37,960 --> 00:20:40,720 Speaker 4: can list their products right along things sold by the 447 00:20:40,760 --> 00:20:41,800 Speaker 4: marketplace itself. 448 00:20:42,640 --> 00:20:43,920 Speaker 1: But not all of these. 449 00:20:43,720 --> 00:20:46,600 Speaker 4: Sellers have been vetted by the marketplace, and that's where 450 00:20:46,640 --> 00:20:51,040 Speaker 4: things start going south. Let's say you're shopping for a 451 00:20:51,080 --> 00:20:54,159 Speaker 4: popular cosmetic and you find it at a great discount. 452 00:20:54,760 --> 00:20:58,080 Speaker 4: Listing looks legitimate, but when you get the product, something 453 00:20:58,240 --> 00:21:01,199 Speaker 4: just doesn't seem right. Maybe the packaging is different, the 454 00:21:01,400 --> 00:21:05,240 Speaker 4: ingredients aren't listed correctly, maybe the quality just doesn't seem 455 00:21:05,280 --> 00:21:09,359 Speaker 4: to be there. These are often counterfeit cosmetics, and they're 456 00:21:09,400 --> 00:21:11,720 Speaker 4: of course designed to mimic the real thing, but the 457 00:21:11,800 --> 00:21:15,000 Speaker 4: fact is you don't know what's in it. 458 00:21:15,000 --> 00:21:15,560 Speaker 1: It could have. 459 00:21:15,680 --> 00:21:19,119 Speaker 4: Ingredients which leave you with irritation or maybe even an 460 00:21:19,160 --> 00:21:23,480 Speaker 4: allergic reaction. Now makeup is just an example. The same 461 00:21:23,600 --> 00:21:26,760 Speaker 4: caution should be applied if you are buying anything from 462 00:21:26,760 --> 00:21:30,840 Speaker 4: the marketplace. Scammers are counting on you to buy products 463 00:21:30,880 --> 00:21:34,439 Speaker 4: because you trust the marketplace platform and that you're not 464 00:21:34,520 --> 00:21:37,480 Speaker 4: going to check out who's really selling the product. You 465 00:21:37,600 --> 00:21:40,640 Speaker 4: need to protect yourself by knowing who's selling the product 466 00:21:40,960 --> 00:21:43,719 Speaker 4: is at the marketplace or an outside vendor. If it's 467 00:21:43,760 --> 00:21:47,520 Speaker 4: a vendor, check their reviews before you click to purchase, 468 00:21:48,119 --> 00:21:51,320 Speaker 4: and finally, look for a return policy that's backed by 469 00:21:51,320 --> 00:21:54,840 Speaker 4: the marketplace, not just the vendor. So as you buy 470 00:21:54,960 --> 00:21:58,000 Speaker 4: do your holiday shopping. Keep this in mind now as 471 00:21:58,040 --> 00:22:01,760 Speaker 4: you continue doing your holiday shopping. Pet scams. Let's talk 472 00:22:01,800 --> 00:22:05,760 Speaker 4: about pet scams because holidays are a prime time for 473 00:22:05,840 --> 00:22:09,280 Speaker 4: these types of scams. If you're thinking about surprising your 474 00:22:09,359 --> 00:22:12,600 Speaker 4: kids or your grandkids with a puppy for Christmas, best. 475 00:22:12,400 --> 00:22:14,480 Speaker 2: Idea ever, by the way, Mom and Dad are gonna 476 00:22:14,520 --> 00:22:14,920 Speaker 2: love that. 477 00:22:16,160 --> 00:22:18,280 Speaker 4: Oh yeah, well it's a surprise. 478 00:22:18,480 --> 00:22:18,800 Speaker 1: Yay. 479 00:22:18,920 --> 00:22:26,240 Speaker 4: Well you sound so happy. Okay. So you're scrolling through Facebook, 480 00:22:26,280 --> 00:22:28,800 Speaker 4: Marketplace Again, or Craig's List, or you'll click on an 481 00:22:28,840 --> 00:22:31,680 Speaker 4: ad that pops up on a random website. You see 482 00:22:31,680 --> 00:22:35,800 Speaker 4: this adorable little puppy for sale. It's a popular breed, 483 00:22:35,920 --> 00:22:38,800 Speaker 4: maybe it's even an exotic breed, and the price is 484 00:22:38,880 --> 00:22:42,159 Speaker 4: of course too good to be true. Here's the catch. 485 00:22:42,840 --> 00:22:47,200 Speaker 4: Fake pet ads can show up anywhere online and almost 486 00:22:47,480 --> 00:22:50,320 Speaker 4: eighty percent of those ads are fake. 487 00:22:50,960 --> 00:22:51,320 Speaker 1: Wow. 488 00:22:51,359 --> 00:22:56,040 Speaker 4: Scammers are great at copying pictures of pets that legitimate 489 00:22:56,080 --> 00:23:00,040 Speaker 4: beat breeders are posting on their own websites. And the 490 00:23:00,040 --> 00:23:03,000 Speaker 4: scammers can even fake video calls now too, so that 491 00:23:03,080 --> 00:23:06,040 Speaker 4: the puppy you see running around in the behind the 492 00:23:07,119 --> 00:23:11,560 Speaker 4: video is an AI generated puppy. Now, once you message 493 00:23:11,600 --> 00:23:13,679 Speaker 4: the seller, they're going to try to pressure you to 494 00:23:13,680 --> 00:23:19,280 Speaker 4: pay quickly. Typical scam tactic, usually through cryptocurrency or gift cards. 495 00:23:19,320 --> 00:23:22,560 Speaker 4: And the biggest red flag they won't let you come 496 00:23:22,720 --> 00:23:24,760 Speaker 4: to them to see the puppy. 497 00:23:24,359 --> 00:23:25,240 Speaker 1: And they're movers. 498 00:23:25,280 --> 00:23:26,959 Speaker 2: Their movers are going to bring it to me, right. 499 00:23:27,000 --> 00:23:28,080 Speaker 2: This is usually how this goes. 500 00:23:28,119 --> 00:23:29,400 Speaker 3: Movers will deliver the puppies. 501 00:23:29,440 --> 00:23:31,680 Speaker 4: Oh, you got it, you don't need me here. They're 502 00:23:31,720 --> 00:23:34,280 Speaker 4: going to send you the if that's another version of 503 00:23:34,320 --> 00:23:37,360 Speaker 4: the scam, but now you got ahead of me. Here 504 00:23:37,720 --> 00:23:40,399 Speaker 4: they're going to claim that they are in a hurry 505 00:23:40,440 --> 00:23:43,199 Speaker 4: to rehome the dog, or there's a long list of 506 00:23:43,240 --> 00:23:45,560 Speaker 4: interested buyers, you've got to buy now, or they're going 507 00:23:45,600 --> 00:23:48,800 Speaker 4: to move on to the next customer. Some victims have 508 00:23:48,960 --> 00:23:51,399 Speaker 4: driven hours to pick up their puppy, and of course 509 00:23:51,680 --> 00:23:54,800 Speaker 4: when they get to this bogus address, there's nothing there. 510 00:23:55,440 --> 00:23:57,560 Speaker 4: In the version of the scam that you just talked about, 511 00:23:58,040 --> 00:23:59,639 Speaker 4: they're going to offer to send you the pet, and 512 00:23:59,680 --> 00:24:02,400 Speaker 4: of course they're going to charge extra for that, then 513 00:24:02,480 --> 00:24:05,480 Speaker 4: come back at you for more money for things like 514 00:24:05,600 --> 00:24:10,199 Speaker 4: vaccinations or storage bees or an extra box of doggie 515 00:24:10,200 --> 00:24:11,320 Speaker 4: bones in the crate. 516 00:24:11,080 --> 00:24:11,920 Speaker 1: With a pup. 517 00:24:13,320 --> 00:24:15,840 Speaker 4: Even if you've paid all that money, you're still not 518 00:24:15,880 --> 00:24:18,840 Speaker 4: going to get your pet. Bottom line, don't buy a 519 00:24:18,880 --> 00:24:23,880 Speaker 4: pet online unless you can actually see it in person. First, 520 00:24:24,200 --> 00:24:26,360 Speaker 4: you want to make sure the animal is real and 521 00:24:26,520 --> 00:24:29,240 Speaker 4: it's a good fit for your family. And if you're 522 00:24:29,280 --> 00:24:32,640 Speaker 4: thinking of gifting a pet this season, first of all, 523 00:24:32,680 --> 00:24:36,320 Speaker 4: you might want to rethink that whole concept. But go local. 524 00:24:36,760 --> 00:24:41,200 Speaker 4: Visit local shelters or local breeders in person, and check 525 00:24:41,240 --> 00:24:43,120 Speaker 4: them out on BBB dot org. 526 00:24:44,040 --> 00:24:46,440 Speaker 1: Hey, Josile, I want to make sure we save enough 527 00:24:46,480 --> 00:24:48,919 Speaker 1: time here, because, let's face it, we are right in 528 00:24:48,960 --> 00:24:51,720 Speaker 1: the middle of Medicare open enrollment season and people are 529 00:24:51,760 --> 00:24:54,960 Speaker 1: literally out there shopping for medical plans right now. You've 530 00:24:54,960 --> 00:24:58,880 Speaker 1: got some great watch outs as far as Medicare open 531 00:24:58,960 --> 00:25:00,840 Speaker 1: enrollment scans. Make sure we cover that. 532 00:25:02,000 --> 00:25:05,720 Speaker 4: Okay, it's easy to fall for these scams because they're 533 00:25:05,720 --> 00:25:08,600 Speaker 4: going to call you. They're going to spoof your caller 534 00:25:08,640 --> 00:25:11,479 Speaker 4: ID so that it looks like Medicare is really calling you. 535 00:25:12,000 --> 00:25:14,800 Speaker 4: They'll tell you you need a new Medicare card because 536 00:25:14,840 --> 00:25:17,560 Speaker 4: it's open enrollment season and you just can't move from 537 00:25:17,600 --> 00:25:20,479 Speaker 4: one plan to the other without a new card. You 538 00:25:20,600 --> 00:25:24,280 Speaker 4: do not need a new card to participate in open enrollment. 539 00:25:24,880 --> 00:25:26,960 Speaker 4: They use that as a ploy, so you're going to 540 00:25:27,000 --> 00:25:29,760 Speaker 4: give them your personal information like your bank account, your 541 00:25:29,800 --> 00:25:34,720 Speaker 4: credit card, or your Medicare ID. Scammers count on this 542 00:25:34,880 --> 00:25:38,560 Speaker 4: sense of urgency during these six weeks or so of 543 00:25:38,600 --> 00:25:42,200 Speaker 4: open enrollment and the confusion about open enrollment and all 544 00:25:42,200 --> 00:25:46,040 Speaker 4: of the plans to trick you into giving up your 545 00:25:46,080 --> 00:25:50,840 Speaker 4: sensitive information. Now, to protect yourself, you need to ignore 546 00:25:50,960 --> 00:25:55,480 Speaker 4: these unexpected calls asking for Medicare details. I guarantee you 547 00:25:55,680 --> 00:25:58,439 Speaker 4: everyone you get is going to be an attempt to 548 00:25:58,480 --> 00:26:03,440 Speaker 4: scam you out of money or personal information. Other Medicare 549 00:26:03,480 --> 00:26:06,240 Speaker 4: related scams. They might call you and offer you a 550 00:26:06,280 --> 00:26:09,359 Speaker 4: free gift to get you enrolled in a similar program. 551 00:26:09,440 --> 00:26:12,359 Speaker 4: Those are air quotes around that. Again, they're trying to 552 00:26:12,359 --> 00:26:15,359 Speaker 4: get your personal information. Or they'll convince you to buy 553 00:26:15,440 --> 00:26:19,800 Speaker 4: some medical equipment that Medicare will pay for. Not only 554 00:26:19,840 --> 00:26:22,560 Speaker 4: will you not get this product, but now they have 555 00:26:22,640 --> 00:26:25,919 Speaker 4: your Medicare ID and they will use that to defraud 556 00:26:26,040 --> 00:26:29,359 Speaker 4: Medicare down the road. So a lot of things to 557 00:26:29,400 --> 00:26:33,080 Speaker 4: watch out for there, but nothing is free, all. 558 00:26:33,119 --> 00:26:35,360 Speaker 1: Right, Joe Seal. In the minute or so we've got left, 559 00:26:35,400 --> 00:26:37,679 Speaker 1: I want to go back to that marketplace scam that 560 00:26:37,720 --> 00:26:40,720 Speaker 1: you talked about at the outset of the segment. You 561 00:26:40,800 --> 00:26:43,640 Speaker 1: talked about, you know, scams for I think you were 562 00:26:43,640 --> 00:26:47,520 Speaker 1: talking about makeup for women. I want to make sure 563 00:26:47,600 --> 00:26:50,320 Speaker 1: we get something out of this segment. Personally, Brian likes 564 00:26:50,359 --> 00:26:54,760 Speaker 1: to take a lot of bubble baths, especially during the holidays. Okay, 565 00:26:54,800 --> 00:26:58,000 Speaker 1: are there any scams out there relating to let's say, 566 00:26:58,080 --> 00:27:02,720 Speaker 1: shower gel or bubble baths, so things that Brian should 567 00:27:02,760 --> 00:27:04,600 Speaker 1: be looking out for to make sure he does not 568 00:27:04,760 --> 00:27:09,280 Speaker 1: purchase the wrong product that might cause allergies or infect 569 00:27:09,359 --> 00:27:09,800 Speaker 1: his skin. 570 00:27:10,119 --> 00:27:13,560 Speaker 2: I'm a jasmine bath bomb kind of guy, if that helps. 571 00:27:14,240 --> 00:27:16,639 Speaker 4: If you're looking for the upper end stuff and you 572 00:27:16,800 --> 00:27:21,560 Speaker 4: find it for five dollars, it's probably not the good 573 00:27:21,560 --> 00:27:23,800 Speaker 4: stuff that you're looking for and you might end up 574 00:27:23,840 --> 00:27:27,360 Speaker 4: with a little rash. So yes, steer clear of that. 575 00:27:27,520 --> 00:27:28,000 Speaker 1: Be right back. 576 00:27:28,040 --> 00:27:30,280 Speaker 3: I got to go empty my bathroom closet or something. 577 00:27:32,920 --> 00:27:35,800 Speaker 1: All right, Hey, Joe Seal. As always, you've covered a 578 00:27:35,800 --> 00:27:38,560 Speaker 1: lot of great round with great stuff with us tonight, 579 00:27:38,640 --> 00:27:40,959 Speaker 1: and we were also able to have a little funnel 580 00:27:41,040 --> 00:27:44,000 Speaker 1: with you along the way. Really appreciate your time tonight. 581 00:27:44,320 --> 00:27:47,439 Speaker 1: Hope you have a wonderful Thanksgiving. Thanks again for joining 582 00:27:47,480 --> 00:27:50,119 Speaker 1: us tonight. You're listening to Simply Money, presented by all 583 00:27:50,160 --> 00:27:59,240 Speaker 1: Worth Financial on fifty five KRC, the talk station. You're 584 00:27:59,359 --> 00:28:03,359 Speaker 1: listening to some by all Worth Financials. I'm seller along 585 00:28:03,400 --> 00:28:06,320 Speaker 1: with Brian James. Do you have a financial question you'd 586 00:28:06,359 --> 00:28:08,440 Speaker 1: like for us to answer? There is a red button 587 00:28:08,480 --> 00:28:10,680 Speaker 1: you can click while you're listening to the show. If 588 00:28:11,240 --> 00:28:14,600 Speaker 1: you're listening on the iHeart app, simply record your question 589 00:28:14,760 --> 00:28:17,879 Speaker 1: and it will come straight to us. All right, Brian, 590 00:28:17,920 --> 00:28:21,200 Speaker 1: Here comes Elliott in Madeira and he says, We've got 591 00:28:21,200 --> 00:28:25,200 Speaker 1: a big taxable account and I'm realizing capital gains interact 592 00:28:25,240 --> 00:28:28,480 Speaker 1: with Medicare premium said tax credits. How do you invest 593 00:28:28,520 --> 00:28:32,040 Speaker 1: without triggering hidden tax landmines? Great question. 594 00:28:32,160 --> 00:28:34,560 Speaker 2: Well, this goes all the way back to you know, 595 00:28:34,600 --> 00:28:37,080 Speaker 2: the different flavors of income you might have, and then 596 00:28:37,119 --> 00:28:39,560 Speaker 2: the real enemy here is this one is called modified 597 00:28:39,560 --> 00:28:42,840 Speaker 2: adjusted gross income. Remember when it was just adjusted gross income? 598 00:28:42,840 --> 00:28:45,480 Speaker 2: When O there's modified adjusted gross income. Actually been around 599 00:28:45,480 --> 00:28:46,040 Speaker 2: for a long time. 600 00:28:46,360 --> 00:28:49,080 Speaker 1: Brian, not to interrupt, but this this is just another 601 00:28:49,280 --> 00:28:51,840 Speaker 1: exhibit A and and this is what we talked about 602 00:28:51,840 --> 00:28:54,400 Speaker 1: with with my clients that came in this year. Every 603 00:28:54,480 --> 00:28:57,480 Speaker 1: year we talk about simplifying the tax code, and should 604 00:28:57,520 --> 00:29:00,400 Speaker 1: you know we're gonna do our tax on sceniars? They 605 00:29:00,480 --> 00:29:03,440 Speaker 1: just make it more and more complicated every year. But 606 00:29:03,840 --> 00:29:06,840 Speaker 1: that's a little rant. Please answer Elliott's. 607 00:29:06,440 --> 00:29:11,760 Speaker 2: Question, Bob is bothered today. Modified adjuster grows. Income consists 608 00:29:11,800 --> 00:29:15,200 Speaker 2: of realized capital gains, stuff you sold to a game, dividends, 609 00:29:15,240 --> 00:29:19,240 Speaker 2: interest roth conversions, required minimum distributions, sale of a property, 610 00:29:19,440 --> 00:29:21,760 Speaker 2: and even mutual fund distributions that hit this time of 611 00:29:21,840 --> 00:29:24,240 Speaker 2: year that you maybe didn't ask for. All that stuff 612 00:29:24,280 --> 00:29:27,040 Speaker 2: couples together and it affects your Medicare premiums. 613 00:29:27,080 --> 00:29:28,000 Speaker 3: That's called IRMA. 614 00:29:28,160 --> 00:29:31,080 Speaker 2: IRMA uses income from two years ago, So whatever you're 615 00:29:31,080 --> 00:29:32,920 Speaker 2: paying in twenty twenty five is triggered off what you 616 00:29:32,960 --> 00:29:35,760 Speaker 2: did in twenty three, and then crossing a threshold by 617 00:29:35,840 --> 00:29:37,840 Speaker 2: just a dollar can add up to eight hundred or 618 00:29:37,880 --> 00:29:40,880 Speaker 2: three thousand dollars per year per person. That calculation is 619 00:29:40,960 --> 00:29:43,600 Speaker 2: not marginable. You're either over it, or you're above it, 620 00:29:43,760 --> 00:29:45,800 Speaker 2: or you're below it. So here's what you can do. 621 00:29:45,800 --> 00:29:47,800 Speaker 2: I try to avoid these accidental gains. If you've got 622 00:29:47,840 --> 00:29:49,600 Speaker 2: mutual funds, try to find a way to replace them 623 00:29:49,600 --> 00:29:52,320 Speaker 2: with ETFs that itself can be a taxable transaction, but 624 00:29:52,360 --> 00:29:54,480 Speaker 2: it can be a long term benefit because ETFs do 625 00:29:54,560 --> 00:29:56,960 Speaker 2: not generate the capital gains that mutual funds do, even 626 00:29:57,000 --> 00:30:00,240 Speaker 2: though they follow the intexes. Harvest your gains intentional. Know 627 00:30:00,280 --> 00:30:01,840 Speaker 2: what you're going to sell and look for things to 628 00:30:01,880 --> 00:30:05,160 Speaker 2: offset future gains, and be careful. You're gonna have to 629 00:30:05,200 --> 00:30:07,280 Speaker 2: prioritize too. You're gonna have to decide is it more 630 00:30:07,280 --> 00:30:09,760 Speaker 2: important to keep my IRMA low or is it more 631 00:30:09,760 --> 00:30:12,240 Speaker 2: important to go ahead and convert my IRA to reduce 632 00:30:12,320 --> 00:30:16,640 Speaker 2: future require minimum distributions. Personally, IRMA resets every couple of years. Anyway, 633 00:30:16,880 --> 00:30:18,600 Speaker 2: I am open. I'm very open to the idea that, 634 00:30:18,640 --> 00:30:20,480 Speaker 2: you know what, we might make our medicare premiums a 635 00:30:20,480 --> 00:30:22,520 Speaker 2: little higher and that won't be fun for a year, 636 00:30:22,520 --> 00:30:24,200 Speaker 2: but two years after that it's going to be back 637 00:30:24,200 --> 00:30:26,560 Speaker 2: to normal, after we're done with all of our wrath conversions. 638 00:30:26,800 --> 00:30:30,240 Speaker 2: So there isn't a bright shining clear everybody should do 639 00:30:30,280 --> 00:30:33,520 Speaker 2: exactly this and then never think about it again. It's 640 00:30:33,560 --> 00:30:36,440 Speaker 2: based on your philosophy. What's most important to you? Where 641 00:30:36,440 --> 00:30:38,240 Speaker 2: do you want your tax savings? Do you want cheaper 642 00:30:38,240 --> 00:30:40,760 Speaker 2: medicare premiums, for example, or do you want to do 643 00:30:40,760 --> 00:30:44,320 Speaker 2: your wroth conversions to benefit your family? Lots to think about, Elliott, 644 00:30:44,320 --> 00:30:45,880 Speaker 2: and it's good that you're on the track of kind 645 00:30:45,880 --> 00:30:49,080 Speaker 2: of building that list of all those different things that interact. 646 00:30:48,880 --> 00:30:50,160 Speaker 3: Michael and mount lookout. 647 00:30:50,400 --> 00:30:53,160 Speaker 2: He says, we've got it a traditional sixty forty portfolio. 648 00:30:53,160 --> 00:30:55,360 Speaker 2: But he's really starting to question, you know, that's been 649 00:30:55,360 --> 00:30:56,560 Speaker 2: that way for a very long time. 650 00:30:57,080 --> 00:30:58,400 Speaker 3: Does that even make sense anymore? 651 00:30:58,400 --> 00:30:59,680 Speaker 2: And how do you know when it's time to just 652 00:30:59,720 --> 00:31:01,760 Speaker 2: kind of start over and rebuild that whole framework. 653 00:31:03,200 --> 00:31:06,280 Speaker 1: Well, uh, before we blow the whole thing up, Michael, 654 00:31:06,360 --> 00:31:09,400 Speaker 1: I mean I I you know, I I will say, 655 00:31:09,600 --> 00:31:12,800 Speaker 1: you know, when people say the traditional sixty forty portfolio, 656 00:31:13,280 --> 00:31:16,400 Speaker 1: I know a lot of financial magazines and media folks say, hey, 657 00:31:16,400 --> 00:31:20,440 Speaker 1: here's how most people invest, therefore that's how everybody should 658 00:31:20,480 --> 00:31:23,280 Speaker 1: invest in allocy. So I would say, first of all, 659 00:31:23,640 --> 00:31:26,880 Speaker 1: you know, sit down, update your financial plan or build 660 00:31:26,880 --> 00:31:29,680 Speaker 1: a financial plan if you don't already have one, and 661 00:31:29,880 --> 00:31:33,560 Speaker 1: just be realistic. Talk to a good fiduciary financial advisor 662 00:31:33,640 --> 00:31:36,240 Speaker 1: that knows kind of where interest rates are and what 663 00:31:36,440 --> 00:31:40,600 Speaker 1: to maybe expect realistically here over the next ten to 664 00:31:40,680 --> 00:31:43,920 Speaker 1: twenty years, uh not the last twenty to thirty years. 665 00:31:43,960 --> 00:31:45,480 Speaker 1: And here's what I mean by that. You know, we 666 00:31:45,680 --> 00:31:49,880 Speaker 1: enjoyed pretty good total returns from bonds between let's say 667 00:31:49,920 --> 00:31:53,640 Speaker 1: the nineteen eighties to the early two thousands, because overall 668 00:31:54,040 --> 00:31:58,000 Speaker 1: interest rates were trending down and that tends to work 669 00:31:58,120 --> 00:32:01,280 Speaker 1: well for bonds. You know, bond prices go up when 670 00:32:01,400 --> 00:32:05,200 Speaker 1: interest rates go down. That game's kind of over now. 671 00:32:05,280 --> 00:32:07,840 Speaker 1: I mean, interest rates are pretty darn low. You know, 672 00:32:07,920 --> 00:32:10,120 Speaker 1: they ticked up, they came back down. And what I'm 673 00:32:10,160 --> 00:32:13,360 Speaker 1: saying here is that forty percent in bonds might not 674 00:32:13,560 --> 00:32:17,040 Speaker 1: deliver the same total return over the next twenty years 675 00:32:17,320 --> 00:32:20,080 Speaker 1: that it's then it's done over the last thirty. So 676 00:32:20,120 --> 00:32:23,760 Speaker 1: build a financial plan, be risk realistic about what these 677 00:32:23,840 --> 00:32:28,000 Speaker 1: asset classes are likely deliver going forward, and then that'll 678 00:32:28,000 --> 00:32:31,640 Speaker 1: answer your question. Don't just take a one size fits 679 00:32:31,640 --> 00:32:34,360 Speaker 1: all approach and you know, throw the whole thing out. 680 00:32:34,760 --> 00:32:38,000 Speaker 1: Sit down and be intentional about it on a risk 681 00:32:38,120 --> 00:32:41,640 Speaker 1: and reward basis, and see which asset allocation works best 682 00:32:41,680 --> 00:32:44,640 Speaker 1: for you. And also it might be time to add 683 00:32:44,680 --> 00:32:48,400 Speaker 1: maybe some alternative investments to your portfolio. That's where you 684 00:32:48,480 --> 00:32:51,080 Speaker 1: can maybe get a little bit more return and still 685 00:32:51,080 --> 00:32:54,400 Speaker 1: have that risk control that you'll want. Hope that helps. 686 00:32:54,880 --> 00:32:58,680 Speaker 1: Eric and Edgewood says, we own both growth and value funds, 687 00:32:59,200 --> 00:33:01,640 Speaker 1: but I don't understand and what actually makes a company 688 00:33:01,640 --> 00:33:05,360 Speaker 1: a quote unquote value fund anymore? Is that still a 689 00:33:05,520 --> 00:33:08,280 Speaker 1: meaningful distinction for long term investors? 690 00:33:08,320 --> 00:33:10,680 Speaker 2: Brian, Yeah, that's a common question, and it just comes 691 00:33:10,680 --> 00:33:13,680 Speaker 2: from what we what we have evolved to. So so, traditionally, 692 00:33:13,800 --> 00:33:16,800 Speaker 2: value stocks were those companies that looked really cheap on paper, right. 693 00:33:16,840 --> 00:33:18,880 Speaker 2: You looked at their assets, you looked at what the 694 00:33:18,920 --> 00:33:21,520 Speaker 2: what the forecast of sales and revenues was going to 695 00:33:21,560 --> 00:33:25,160 Speaker 2: be in a relatively low price to earnings ratio, steady. 696 00:33:24,840 --> 00:33:26,000 Speaker 3: Cash flow, all that kind of stuff. 697 00:33:26,040 --> 00:33:29,640 Speaker 2: These are banks, utilities, old school manufacturers. Growth stocks, on 698 00:33:29,640 --> 00:33:31,760 Speaker 2: the other hand, these were the innovators. These are the 699 00:33:31,800 --> 00:33:34,440 Speaker 2: ones inventing new things and finding new markets to sell 700 00:33:34,480 --> 00:33:37,720 Speaker 2: them in. They reinvested every spare dollar to go do 701 00:33:37,840 --> 00:33:41,160 Speaker 2: more of that. It's not as clear anymore so that 702 00:33:40,560 --> 00:33:43,800 Speaker 2: that distinction has gotten a little blurry. Tech companies now 703 00:33:43,840 --> 00:33:46,520 Speaker 2: throw off massive cash or they just plane sit on it. 704 00:33:46,760 --> 00:33:48,480 Speaker 2: You know, there's a lot of big technology companies that 705 00:33:48,560 --> 00:33:51,400 Speaker 2: have more cash than some companies or some countries have 706 00:33:51,520 --> 00:33:55,080 Speaker 2: in their entire economies. These value companies often traded higher 707 00:33:55,160 --> 00:33:58,760 Speaker 2: multiples than their so called growth names, and index providers 708 00:33:58,760 --> 00:34:01,040 Speaker 2: also keep changing the depth finitions of what is growth 709 00:34:01,040 --> 00:34:03,560 Speaker 2: and what is valued. So does this distinction still kind 710 00:34:03,560 --> 00:34:05,960 Speaker 2: of matter if your long term investor. Yeah, but you 711 00:34:06,000 --> 00:34:07,560 Speaker 2: have to look a little harder to find it. And 712 00:34:07,560 --> 00:34:10,200 Speaker 2: it's not because the labels are perfect. It's owning both 713 00:34:10,200 --> 00:34:12,840 Speaker 2: of them. Is not about predicting which style wins next. 714 00:34:13,040 --> 00:34:15,879 Speaker 2: It's about not having to make sure you've got both 715 00:34:15,920 --> 00:34:18,000 Speaker 2: of them, because now they're intermingling with each other a 716 00:34:18,000 --> 00:34:20,239 Speaker 2: lot more than they used to. The definitions are kind 717 00:34:20,239 --> 00:34:22,520 Speaker 2: of messy, but the behaviors are still different enough that 718 00:34:22,560 --> 00:34:25,239 Speaker 2: you can see the difference. And we've seen a microcosm 719 00:34:25,280 --> 00:34:27,200 Speaker 2: in the last five years of when it's a good 720 00:34:27,239 --> 00:34:29,200 Speaker 2: time to own growth stocks and when it's a good 721 00:34:29,200 --> 00:34:31,840 Speaker 2: time to own value stocks. The challenge is that we 722 00:34:31,880 --> 00:34:34,200 Speaker 2: cannot predict when those times are going to shift. So 723 00:34:34,280 --> 00:34:35,400 Speaker 2: make sure you've got. 724 00:34:35,360 --> 00:34:38,000 Speaker 1: Both of them. Yeah. And another thing to throw in 725 00:34:38,080 --> 00:34:41,160 Speaker 1: on that, just be watchful on the composition of these funds. 726 00:34:41,200 --> 00:34:44,480 Speaker 1: What I mean is style drifts. Sometimes these value or 727 00:34:44,520 --> 00:34:48,520 Speaker 1: growth funds will venture into the other kind of stock 728 00:34:48,600 --> 00:34:51,480 Speaker 1: to juice the return, and that's what we call style drifts. 729 00:34:51,520 --> 00:34:54,319 Speaker 1: So it's another thing to watch. Coming up next, what 730 00:34:54,520 --> 00:34:58,680 Speaker 1: could be the most underrated investment strategy of them all. 731 00:34:58,960 --> 00:35:01,600 Speaker 1: You're listening to Simply Money presented by all Worth Financial 732 00:35:01,600 --> 00:35:09,560 Speaker 1: on fifty five KRC the talk station. You're listening to 733 00:35:09,600 --> 00:35:12,600 Speaker 1: Simply Money presented by all Worth Financial on Bob Sponsller 734 00:35:12,640 --> 00:35:17,200 Speaker 1: along with Brian James. Well, Youngsters like you, Brian live 735 00:35:17,239 --> 00:35:20,239 Speaker 1: in a world where if our Amazon package takes more 736 00:35:20,280 --> 00:35:24,440 Speaker 1: than two days to get delivered, we're sitting there on 737 00:35:24,480 --> 00:35:28,080 Speaker 1: a tracking app refreshing it every hour. Where's my package? 738 00:35:28,080 --> 00:35:30,839 Speaker 1: Where's my package? We can't even wait for the microwave 739 00:35:30,920 --> 00:35:34,279 Speaker 1: to finish. But when it comes to investing, that kind 740 00:35:34,320 --> 00:35:39,520 Speaker 1: of impatience can cost people real money. But patience is 741 00:35:39,560 --> 00:35:42,399 Speaker 1: one of the hardest things to practice when it comes 742 00:35:42,400 --> 00:35:44,200 Speaker 1: to investing, right, Brian. 743 00:35:44,160 --> 00:35:45,600 Speaker 2: Well, first off, Bob, I want to I want my 744 00:35:45,680 --> 00:35:47,960 Speaker 2: knees to acknowledge that you called me a youngster and 745 00:35:48,000 --> 00:35:50,320 Speaker 2: they need to quit feeling this way in the mornings anyway. 746 00:35:50,719 --> 00:35:53,360 Speaker 2: Uh yeah, So the most should I should have said hipster? 747 00:35:54,719 --> 00:35:57,919 Speaker 2: The hips aren't doing so well either. Well, the most 748 00:35:57,920 --> 00:36:01,720 Speaker 2: successful investors out there practice. Let's be clear, though, patience 749 00:36:01,760 --> 00:36:05,600 Speaker 2: does not mean just passive ignoring and just taking whatever 750 00:36:05,640 --> 00:36:07,759 Speaker 2: comes to you. It's actually an active mindset because you 751 00:36:07,800 --> 00:36:10,640 Speaker 2: have to force yourself to be patient. This means you 752 00:36:10,719 --> 00:36:12,480 Speaker 2: made a plan and you've committed to it. You're not 753 00:36:12,560 --> 00:36:15,160 Speaker 2: reacting to every headline out there. That's the bane of 754 00:36:15,160 --> 00:36:17,600 Speaker 2: every financial plan is if I want to change it 755 00:36:17,600 --> 00:36:19,520 Speaker 2: every time there's a scary headline, well then I'm going 756 00:36:19,600 --> 00:36:21,359 Speaker 2: to be changing you know, once a month, once a week, 757 00:36:21,440 --> 00:36:23,120 Speaker 2: sometimes twice before lunch. 758 00:36:23,400 --> 00:36:24,000 Speaker 3: That's the key. 759 00:36:24,040 --> 00:36:24,200 Speaker 1: Though. 760 00:36:24,239 --> 00:36:27,640 Speaker 2: Patience doesn't mean ignoring your money. It means trust your strategy. 761 00:36:27,680 --> 00:36:29,759 Speaker 2: You built a plan years ago and it should have 762 00:36:29,760 --> 00:36:32,240 Speaker 2: been stress tested at the time, which means whatever stress 763 00:36:32,280 --> 00:36:34,880 Speaker 2: is occurring now, you've probably already accounted for. If you 764 00:36:34,960 --> 00:36:37,839 Speaker 2: haven't done this, then you need to. It's confidence that 765 00:36:37,840 --> 00:36:40,600 Speaker 2: the long term plan matters more than what's going on 766 00:36:40,719 --> 00:36:41,680 Speaker 2: here in the short term. 767 00:36:42,080 --> 00:36:44,640 Speaker 1: Brian, that's great advice. Do I need to deploy the 768 00:36:44,680 --> 00:36:48,160 Speaker 1: same level of patience as a Cincinnati Bengals fan? 769 00:36:49,080 --> 00:36:53,520 Speaker 2: Now that requires insanity and a complete ignoring of reality. 770 00:36:53,560 --> 00:36:55,040 Speaker 3: That's a very very different situation. 771 00:36:56,280 --> 00:36:58,920 Speaker 1: All right, Let's think of patience then as getting back 772 00:36:58,960 --> 00:37:01,000 Speaker 1: to money, which is what this shows about. Think of 773 00:37:01,080 --> 00:37:05,520 Speaker 1: patience as emotional discipline. Every time the market dips and 774 00:37:05,640 --> 00:37:08,760 Speaker 1: you feel that urge to do something, you know, cash 775 00:37:08,760 --> 00:37:13,080 Speaker 1: out your portfolio or buy too much of tech stocks, 776 00:37:13,120 --> 00:37:15,160 Speaker 1: you know, on a dip, that is a test, and 777 00:37:15,280 --> 00:37:19,080 Speaker 1: passing that test, staying put is what can tend to 778 00:37:19,120 --> 00:37:22,160 Speaker 1: pay off, you know, over time. And that's one of 779 00:37:22,160 --> 00:37:26,320 Speaker 1: the key benefits of having a good fiduciary advisory team 780 00:37:26,480 --> 00:37:29,480 Speaker 1: making the decisions. You know, I I'll speak for our 781 00:37:29,520 --> 00:37:32,320 Speaker 1: own Andy Stout here at all Worth Financial. One of 782 00:37:32,360 --> 00:37:35,120 Speaker 1: the one of the key things that I admire the 783 00:37:35,120 --> 00:37:39,480 Speaker 1: most about Andy is his ability to remain non emotional 784 00:37:39,560 --> 00:37:43,080 Speaker 1: at all times. And I know there's other folks like 785 00:37:43,120 --> 00:37:46,520 Speaker 1: that that manage money, you know, the same way. And 786 00:37:47,000 --> 00:37:49,560 Speaker 1: that's the kind of person you want with your hands 787 00:37:49,560 --> 00:37:52,040 Speaker 1: at the wheels. Someone who's not just going to react 788 00:37:52,080 --> 00:37:55,960 Speaker 1: emotionally to these short term blips or news headlines and 789 00:37:56,040 --> 00:38:01,719 Speaker 1: keep you on track with a good discipline, data driven strategy. Yeah. 790 00:38:01,719 --> 00:38:03,560 Speaker 2: Absolutely, And this is a this is a great time 791 00:38:03,600 --> 00:38:05,200 Speaker 2: to be thinking about these things. Make sure you're on 792 00:38:05,200 --> 00:38:07,040 Speaker 2: top of what your plan is right. Think about like 793 00:38:07,120 --> 00:38:10,040 Speaker 2: tending a garden and don't dig up the don't pull 794 00:38:10,080 --> 00:38:12,040 Speaker 2: everything up and look at the roots may give it 795 00:38:12,080 --> 00:38:12,600 Speaker 2: time to grow. 796 00:38:13,080 --> 00:38:16,880 Speaker 1: Here's the all Worth advice. Patience is impassive. It's a mindset. 797 00:38:16,960 --> 00:38:19,960 Speaker 1: Commit to the plan, ignore the noise and let time 798 00:38:20,400 --> 00:38:23,200 Speaker 1: do the heavy lifting. Thanks for listening tonight. Tune in 799 00:38:23,200 --> 00:38:26,400 Speaker 1: tomorrow and we'll talk about the biggest money mistakes that 800 00:38:26,440 --> 00:38:29,760 Speaker 1: are still happening in twenty twenty five. You've been listening 801 00:38:29,760 --> 00:38:32,120 Speaker 1: to Simply Money, presented by all Worth Financial on fifty 802 00:38:32,160 --> 00:38:34,080 Speaker 1: five KRC, the talk station