1 00:00:00,080 --> 00:00:03,279 Speaker 1: Welcome to How the Money. I'm Joel and I am Matt, 2 00:00:03,320 --> 00:00:25,520 Speaker 1: and today we are answering your listener questions. And that 3 00:00:25,640 --> 00:00:28,120 Speaker 1: is right. We've got another Listener Questions episode lined up 4 00:00:28,160 --> 00:00:32,200 Speaker 1: for you today. We've got five fantastic questions, quite a range, 5 00:00:32,240 --> 00:00:33,839 Speaker 1: I feel like questions, even though a lot of these 6 00:00:33,840 --> 00:00:36,440 Speaker 1: were actually Today we're gonna focus on investing, but we're 7 00:00:36,440 --> 00:00:40,240 Speaker 1: gonna discuss everything, ranging from the differences between e t 8 00:00:40,400 --> 00:00:42,960 Speaker 1: f s and mutual funds. We've got a listener who's 9 00:00:43,040 --> 00:00:48,199 Speaker 1: asking about utilizing a no money down mortgage, whether we 10 00:00:48,240 --> 00:00:51,080 Speaker 1: think that's a good idea or not. And we've got 11 00:00:51,080 --> 00:00:54,880 Speaker 1: a question from a listener who is she's fired curious, 12 00:00:55,400 --> 00:00:57,480 Speaker 1: but she wants to know some more details of how 13 00:00:57,520 --> 00:01:00,080 Speaker 1: to actually make this happen. I'm excited to get of 14 00:01:00,160 --> 00:01:03,160 Speaker 1: those three questions, plus a few others. I'm looking forward 15 00:01:03,160 --> 00:01:04,200 Speaker 1: to it too. I think there's a lot of good 16 00:01:04,280 --> 00:01:05,880 Speaker 1: us today. But before you get to that, Mat, I 17 00:01:05,920 --> 00:01:08,280 Speaker 1: wanted to mention that I might be going out for 18 00:01:08,280 --> 00:01:10,400 Speaker 1: a free stake dinner in the next couple of weeks. 19 00:01:11,040 --> 00:01:13,480 Speaker 1: We both might we both might be free dinner. How 20 00:01:13,480 --> 00:01:15,399 Speaker 1: do you feel about free steake dinner? Sounds nice, right, 21 00:01:15,480 --> 00:01:17,480 Speaker 1: especially with the prices stake these days. So the question 22 00:01:17,600 --> 00:01:20,320 Speaker 1: is what's the catch and uh, and you've got some 23 00:01:20,360 --> 00:01:23,440 Speaker 1: more details. Well, so you and I we recently talked 24 00:01:23,440 --> 00:01:26,080 Speaker 1: about some of the crappiest financial products out there on 25 00:01:26,080 --> 00:01:28,680 Speaker 1: the scene, and we talked about how one of the 26 00:01:28,720 --> 00:01:30,320 Speaker 1: things they have in common is that many of these 27 00:01:30,319 --> 00:01:33,200 Speaker 1: products are sold, not bought. There are sales folks who 28 00:01:33,200 --> 00:01:36,920 Speaker 1: stand to benefit from our hard earned dollars by coercing 29 00:01:37,000 --> 00:01:39,400 Speaker 1: us into buying certain products, right And one of the 30 00:01:39,440 --> 00:01:42,000 Speaker 1: ways where they trick us with steak. Yeah, I was 31 00:01:42,040 --> 00:01:44,120 Speaker 1: gonna say, one of the ways that they get us 32 00:01:44,240 --> 00:01:47,840 Speaker 1: sometimes to buy their fancy product that makes them a 33 00:01:47,880 --> 00:01:50,440 Speaker 1: whole lot of money is through our bellies right there, 34 00:01:50,440 --> 00:01:53,400 Speaker 1: and they're offering us some sort of meal or incentive 35 00:01:53,760 --> 00:01:56,440 Speaker 1: to uh to then listen to their pitch at least 36 00:01:56,480 --> 00:01:58,920 Speaker 1: and and and I got this in the mail actually 37 00:01:59,400 --> 00:02:01,680 Speaker 1: some maybe as someone who used to live at my house, 38 00:02:01,680 --> 00:02:03,720 Speaker 1: which is interesting. I've lived in my house for eight years, 39 00:02:03,720 --> 00:02:06,720 Speaker 1: but I've never seen anything addressed to this individual. Guy 40 00:02:06,800 --> 00:02:08,840 Speaker 1: named Frank I'm not gonna say his last name, has 41 00:02:08,880 --> 00:02:12,680 Speaker 1: been invited to this complimentary steak dinner at morton Steakhouse, 42 00:02:13,120 --> 00:02:15,200 Speaker 1: or at least it's got a picture of a steak 43 00:02:15,240 --> 00:02:17,000 Speaker 1: and says Morton's on it. But I bet they're only 44 00:02:17,000 --> 00:02:20,560 Speaker 1: serving chicken. This is Morton's thus Steakhouse. Yeah, I think 45 00:02:20,560 --> 00:02:22,839 Speaker 1: this is a legit place. Okay, all right, obviously neither 46 00:02:22,880 --> 00:02:25,000 Speaker 1: one of us have ever been to this fancy white 47 00:02:25,000 --> 00:02:27,600 Speaker 1: cloth restaurant that serves at the steak that's right now. 48 00:02:27,600 --> 00:02:30,720 Speaker 1: We're not fancy dudes. But I guess the question is 49 00:02:30,760 --> 00:02:32,760 Speaker 1: this is coming up here in I don't know, just 50 00:02:32,800 --> 00:02:34,919 Speaker 1: a few days. Should you and I we should? We 51 00:02:34,919 --> 00:02:36,360 Speaker 1: should probably go check this out and see what this 52 00:02:36,360 --> 00:02:39,240 Speaker 1: guy's trying to sell, shouldn't we? Okay, So honestly, this 53 00:02:39,280 --> 00:02:41,440 Speaker 1: is kind of a frugal or cheap Is it frugal 54 00:02:41,880 --> 00:02:44,880 Speaker 1: to say, I'm going to expose myself to this information. 55 00:02:45,120 --> 00:02:48,120 Speaker 1: I will hear their pitch, their sales pitch, and we 56 00:02:48,200 --> 00:02:50,799 Speaker 1: will see what happens. Or it could be cheap because 57 00:02:50,800 --> 00:02:53,200 Speaker 1: we're just completely wasting our time and maybe it's not 58 00:02:53,360 --> 00:02:56,520 Speaker 1: worth the steak dinner. But it sort of raises an 59 00:02:56,520 --> 00:02:58,640 Speaker 1: ethical question, I think, because first of all, you just 60 00:02:58,840 --> 00:03:01,320 Speaker 1: admitted that it's not addressed to you, and so we 61 00:03:01,480 --> 00:03:03,919 Speaker 1: have to maybe go as Frank, I don't know. We 62 00:03:03,960 --> 00:03:06,040 Speaker 1: would have to see. I guess if we are allowed 63 00:03:06,080 --> 00:03:08,040 Speaker 1: to go because of maybe how old we are. It 64 00:03:08,160 --> 00:03:11,400 Speaker 1: seems like this might be geared towards some older investors 65 00:03:11,720 --> 00:03:15,200 Speaker 1: as they're trying to make the most of their retirement. Perhaps, um, 66 00:03:15,240 --> 00:03:17,440 Speaker 1: but as long as we're not lying saying they're probably 67 00:03:17,480 --> 00:03:19,480 Speaker 1: selling some annuities at the stake dinner, I kind of 68 00:03:19,480 --> 00:03:23,799 Speaker 1: think so it is first mortgages, perhaps some of these 69 00:03:23,800 --> 00:03:25,600 Speaker 1: different kinds of products. So as long as we can 70 00:03:25,680 --> 00:03:28,480 Speaker 1: R s v P and under our own names, under 71 00:03:28,480 --> 00:03:31,360 Speaker 1: our own names, without lying, then I think it's totally legit. 72 00:03:31,400 --> 00:03:35,600 Speaker 1: I think ethically we are in the green zone. Okay, okay, 73 00:03:35,840 --> 00:03:37,720 Speaker 1: but if there's anything obviously, if there's anything where you 74 00:03:37,760 --> 00:03:40,360 Speaker 1: have to falsify any information, that would squarely put us 75 00:03:40,360 --> 00:03:41,880 Speaker 1: in the red zone. I was really hoping to put 76 00:03:41,880 --> 00:03:44,760 Speaker 1: on a wig and some sort of like overcoat and 77 00:03:44,920 --> 00:03:47,120 Speaker 1: maybe like have a corn compipe or something and pretend 78 00:03:47,120 --> 00:03:48,720 Speaker 1: to be someone else for an evening. But you're saying 79 00:03:48,760 --> 00:03:51,640 Speaker 1: that's not okay. Probably not, But but I do think 80 00:03:51,680 --> 00:03:54,000 Speaker 1: it's fair for us to go because there is a 81 00:03:54,120 --> 00:03:56,240 Speaker 1: risk anybody that goes to this I think whoever is 82 00:03:56,240 --> 00:03:58,400 Speaker 1: putting this on, they're saying there's a chance that we 83 00:03:58,480 --> 00:04:00,400 Speaker 1: might be able to gain them as a customer. You 84 00:04:00,440 --> 00:04:02,640 Speaker 1: and I know that there's no way that's gonna happen. 85 00:04:02,720 --> 00:04:04,600 Speaker 1: They're messing with the wrong the wrong two dudes. They 86 00:04:04,600 --> 00:04:06,960 Speaker 1: can't think their harpoons into our skins not gonna happen. 87 00:04:07,440 --> 00:04:08,920 Speaker 1: But they as long as they think that there's a 88 00:04:09,000 --> 00:04:12,000 Speaker 1: chance that it might happen, I think it's a fair exchange. 89 00:04:12,440 --> 00:04:14,880 Speaker 1: So I am willing to say that we should look 90 00:04:14,920 --> 00:04:17,400 Speaker 1: into this, and if we do go, we we obviously 91 00:04:17,480 --> 00:04:19,440 Speaker 1: we're gonna talk more about it, that's right, and let 92 00:04:19,440 --> 00:04:22,440 Speaker 1: folks know what we've discovered. But most folks investigated in 93 00:04:23,000 --> 00:04:24,920 Speaker 1: what we're gonna write about. For for most folks, though 94 00:04:25,000 --> 00:04:27,440 Speaker 1: write this steak dinner is not worth it, because they 95 00:04:27,680 --> 00:04:30,280 Speaker 1: might be compelled to buy the thing this person is selling, 96 00:04:30,640 --> 00:04:33,800 Speaker 1: and it's gonna cost a whole lot more than that 97 00:04:33,839 --> 00:04:36,640 Speaker 1: delicious steak that you ate. And so yeah, you're basically 98 00:04:37,440 --> 00:04:39,480 Speaker 1: it sounds like you're getting something for free, but ultimately 99 00:04:39,480 --> 00:04:41,640 Speaker 1: you're getting taken. And so these are these are to 100 00:04:41,640 --> 00:04:44,120 Speaker 1: be avoided by most folks. Exactly. I do think that 101 00:04:44,160 --> 00:04:46,840 Speaker 1: you and I both would be quite resilient to any 102 00:04:47,000 --> 00:04:50,360 Speaker 1: of their any of their tactics into their pitches were 103 00:04:50,360 --> 00:04:52,520 Speaker 1: like teflon bud. All right, well, let's keep moving on that. 104 00:04:52,720 --> 00:04:55,120 Speaker 1: Let's talking about the beer we're having on today's episode. 105 00:04:55,440 --> 00:04:58,960 Speaker 1: This one is called O'Fallon Dad's Original Oatmeal Stout, and 106 00:04:59,040 --> 00:05:00,720 Speaker 1: this is from a brewery, and say Lewis will give 107 00:05:00,760 --> 00:05:03,440 Speaker 1: our thoughts on this one at the end of the episode. 108 00:05:03,480 --> 00:05:05,920 Speaker 1: It's got like a like a cookie tinkin. I kind 109 00:05:05,920 --> 00:05:08,000 Speaker 1: of looked to it for sure, describe it. This is 110 00:05:08,040 --> 00:05:11,080 Speaker 1: a brewery I've never heard of before, but yeah, looking 111 00:05:11,120 --> 00:05:13,360 Speaker 1: forward to enjoin this one and talking about it later on. 112 00:05:13,440 --> 00:05:15,440 Speaker 1: I just saw this one at our local bottle shop 113 00:05:15,480 --> 00:05:18,760 Speaker 1: and I was like, all right, well yeah, so all right, 114 00:05:18,839 --> 00:05:21,200 Speaker 1: but let's let's move on. Matt, let's answer some some 115 00:05:21,279 --> 00:05:24,160 Speaker 1: money questions today on the show. And for listeners out 116 00:05:24,200 --> 00:05:26,280 Speaker 1: there who have a question they want us to tackle 117 00:05:26,520 --> 00:05:29,200 Speaker 1: on an upcoming ask htm episode, just got how to 118 00:05:29,279 --> 00:05:33,039 Speaker 1: money dot com slash ask. There are simple instructions there 119 00:05:33,279 --> 00:05:35,120 Speaker 1: for you to submit your voice memos so we can 120 00:05:35,120 --> 00:05:38,479 Speaker 1: take it in an upcoming episode. But Matt, let's get 121 00:05:38,520 --> 00:05:40,960 Speaker 1: to our first one of the day. This one is 122 00:05:41,040 --> 00:05:45,520 Speaker 1: about defining terms when it comes to how we invest. Hi, 123 00:05:45,600 --> 00:05:48,320 Speaker 1: Matt and Joel, this is Brian from upstate New York. 124 00:05:48,839 --> 00:05:51,520 Speaker 1: I really appreciate the work you're doing and I've learned 125 00:05:51,520 --> 00:05:54,360 Speaker 1: a lot from your podcast. My wife and I are 126 00:05:54,360 --> 00:05:57,320 Speaker 1: currently a money Gear number seven and we're looking to 127 00:05:57,360 --> 00:06:01,640 Speaker 1: invest more in the total stock market. Specifically, I've been 128 00:06:01,640 --> 00:06:05,080 Speaker 1: looking into the Vanguard Total Stock Market Index fund that 129 00:06:05,120 --> 00:06:08,280 Speaker 1: you've recommended in the past, the vt S a X, 130 00:06:08,960 --> 00:06:11,240 Speaker 1: and I noticed that they have an e t F equivalent. 131 00:06:11,880 --> 00:06:14,480 Speaker 1: I'm wondering what your general takes are on E T 132 00:06:14,800 --> 00:06:19,560 Speaker 1: S versus mutual funds, the general advantages and disadvantages, and 133 00:06:19,640 --> 00:06:24,599 Speaker 1: specifically which would make more sense for a long term investment. Thanks, 134 00:06:24,600 --> 00:06:27,400 Speaker 1: and I look forward to your response. All Right, Hey, Brian, 135 00:06:27,400 --> 00:06:29,960 Speaker 1: thank you for that question. And first of all, congrats 136 00:06:30,200 --> 00:06:33,000 Speaker 1: on being in money Gear number seven. That's the last 137 00:06:33,000 --> 00:06:35,279 Speaker 1: money gear we have, Matt, which means there's no more gears. 138 00:06:35,839 --> 00:06:39,480 Speaker 1: Brian's killing it. Yeah. Actually, if you're listening and you're 139 00:06:39,480 --> 00:06:41,600 Speaker 1: not totally sure what the money gears are, you can 140 00:06:41,640 --> 00:06:44,680 Speaker 1: listen back to episode three O two. That's where we 141 00:06:44,760 --> 00:06:48,120 Speaker 1: explained how you can figure out when to do what 142 00:06:48,520 --> 00:06:51,240 Speaker 1: with your money. But the fact that Brian is in 143 00:06:51,279 --> 00:06:54,560 Speaker 1: money gear seven means that he's eliminated virtually all debt 144 00:06:54,600 --> 00:06:56,760 Speaker 1: from his life except for maybe his mortgage. He might 145 00:06:56,800 --> 00:06:58,559 Speaker 1: even have that set up, you know, set up as 146 00:06:58,600 --> 00:07:01,360 Speaker 1: a goal of his And now he's just really going 147 00:07:01,400 --> 00:07:05,760 Speaker 1: after those big life and investment goals beyond the initial 148 00:07:05,839 --> 00:07:08,960 Speaker 1: amounts that he's already investing towards retirement. And this is 149 00:07:09,040 --> 00:07:12,480 Speaker 1: a fantastic position to be in. So congrats Brian, and 150 00:07:12,560 --> 00:07:15,240 Speaker 1: I want to point out that even though Brian is 151 00:07:15,360 --> 00:07:18,360 Speaker 1: at the top of his money game, he is still 152 00:07:18,520 --> 00:07:21,520 Speaker 1: looking to invest on a long time horizon. He's uh, 153 00:07:21,560 --> 00:07:24,240 Speaker 1: he's investing like warm buffet. He's not looking at how 154 00:07:24,240 --> 00:07:26,480 Speaker 1: he can make a quick buck in the near term. 155 00:07:26,720 --> 00:07:29,160 Speaker 1: Sekudos to you, Brian. And in fact, it was probably 156 00:07:29,200 --> 00:07:32,240 Speaker 1: following that strategy that allowed you to get to money 157 00:07:32,280 --> 00:07:35,360 Speaker 1: gear seven. You aren't chasing those quick profits, those get 158 00:07:35,440 --> 00:07:37,640 Speaker 1: rich quick schemes. That's right. We'll call We'll call Brian 159 00:07:37,640 --> 00:07:39,960 Speaker 1: the Oracle of New York Sunce. That's where he's suing 160 00:07:39,960 --> 00:07:42,680 Speaker 1: his question from. He is maybe maybe the warm buffet 161 00:07:42,720 --> 00:07:45,520 Speaker 1: of the Northeast. And Matt, let's talk about mutual funds 162 00:07:45,560 --> 00:07:48,080 Speaker 1: versus et s, because one one of the first things 163 00:07:48,120 --> 00:07:51,600 Speaker 1: we're tackling when with that question is that not all 164 00:07:51,720 --> 00:07:54,840 Speaker 1: mutual funds are created equally, because there are some mutual 165 00:07:54,840 --> 00:07:57,800 Speaker 1: funds out there that are pretty terrible, because not only 166 00:07:57,880 --> 00:08:00,679 Speaker 1: do they perform poorly, but they also to have extremely 167 00:08:00,760 --> 00:08:03,880 Speaker 1: high costs associated with them. And the term mutual fund 168 00:08:04,000 --> 00:08:06,440 Speaker 1: was it kind of refers to a broad category and 169 00:08:06,480 --> 00:08:09,200 Speaker 1: includes some funds that we wouldn't know anywhere near, we 170 00:08:09,200 --> 00:08:11,920 Speaker 1: wouldn't touch with a ten foot poll, but it also 171 00:08:11,960 --> 00:08:14,760 Speaker 1: includes some great mutual funds that we love, like one 172 00:08:15,160 --> 00:08:18,720 Speaker 1: specifically that Brian mentioned, VT s a x VT SACKS 173 00:08:18,760 --> 00:08:21,680 Speaker 1: that's right, which is Vanguard's classic total stock market mutual 174 00:08:21,720 --> 00:08:24,600 Speaker 1: fund that tracks the entire market. It's a great fund 175 00:08:24,720 --> 00:08:28,040 Speaker 1: for children of allogists to participate in. It's classic. Like 176 00:08:28,040 --> 00:08:29,880 Speaker 1: the look of this beer can, that's right. It's kind 177 00:08:29,880 --> 00:08:31,640 Speaker 1: of got this timeless look to it. That's that's how 178 00:08:31,640 --> 00:08:33,880 Speaker 1: I feel about. Almost nobody can go wrong going inside 179 00:08:33,880 --> 00:08:36,440 Speaker 1: of that fund unless you're like pulling out retirement dollars, 180 00:08:36,440 --> 00:08:39,120 Speaker 1: and if you're in that wealth preservation stage, it's not 181 00:08:39,160 --> 00:08:41,880 Speaker 1: as great of a choice. But mutual funds that tracks 182 00:08:41,920 --> 00:08:45,560 Speaker 1: specific indexes are commonly referred to as index funds, which 183 00:08:45,600 --> 00:08:47,360 Speaker 1: is something that you and I talk about a bunch 184 00:08:47,360 --> 00:08:50,280 Speaker 1: we're big fans of. So for your question, Brian, we're 185 00:08:50,280 --> 00:08:52,560 Speaker 1: going to assume that we're just comparing index funds to 186 00:08:52,559 --> 00:08:55,880 Speaker 1: e T s, which stands for exchange traded funds. By 187 00:08:55,920 --> 00:08:57,520 Speaker 1: the way, that's the route we're gonna take as we 188 00:08:57,600 --> 00:08:59,920 Speaker 1: kind of delve into this a little deeper. That's right. Yeah, 189 00:08:59,920 --> 00:09:03,040 Speaker 1: so all index funds are mutual funds, but not all 190 00:09:03,280 --> 00:09:06,839 Speaker 1: mutual funds are index funds. But yeah, you have heard 191 00:09:06,920 --> 00:09:09,920 Speaker 1: us recommend VT SACKS before, and one of the reasons 192 00:09:09,960 --> 00:09:13,560 Speaker 1: is because it is not actively managed, and because it 193 00:09:13,640 --> 00:09:16,720 Speaker 1: doesn't have a bunch of managers and analysts and other 194 00:09:16,720 --> 00:09:20,440 Speaker 1: Wall Street folks who are researching companies. They're making site visits, 195 00:09:20,840 --> 00:09:24,160 Speaker 1: visiting the headquarters of different companies and researching, and because 196 00:09:24,160 --> 00:09:26,960 Speaker 1: they're not actively deciding what stocks are going to go 197 00:09:27,000 --> 00:09:29,920 Speaker 1: into that fund, they are able to keep their costs low. 198 00:09:30,400 --> 00:09:34,600 Speaker 1: VT SACKS has an expense ratio of point zero four percent, 199 00:09:35,200 --> 00:09:39,600 Speaker 1: which is extremely affordable. It's very affordable, especially compared to 200 00:09:40,160 --> 00:09:42,280 Speaker 1: a lot of the other mutual funds out there. That 201 00:09:42,320 --> 00:09:46,720 Speaker 1: can run in the one to range kind of times 202 00:09:46,720 --> 00:09:50,000 Speaker 1: the expense of vt that that is not uncommon. Actually, 203 00:09:50,040 --> 00:09:51,880 Speaker 1: there are even some mutual funds out there that are 204 00:09:51,920 --> 00:09:54,439 Speaker 1: in the double digits if you can believe that run 205 00:09:54,440 --> 00:09:58,000 Speaker 1: away from those. Cannot imagine thinking like anyone thinking that 206 00:09:58,000 --> 00:10:00,440 Speaker 1: that's a good idea, that you're basically guarantee to lose 207 00:10:00,480 --> 00:10:02,840 Speaker 1: that much money over the course of a year. But 208 00:10:03,320 --> 00:10:05,480 Speaker 1: if you compare that to vanguards Total stock market e 209 00:10:05,600 --> 00:10:09,160 Speaker 1: t F, uh, you'll see that vt I it's even 210 00:10:09,640 --> 00:10:14,800 Speaker 1: more affordable at point zero uh. And so both of 211 00:10:14,840 --> 00:10:16,840 Speaker 1: these are great deals, but you know, the e t 212 00:10:16,960 --> 00:10:20,360 Speaker 1: F is slightly more affordable. And it should also be 213 00:10:20,400 --> 00:10:22,040 Speaker 1: no surprise to you that v t I is not 214 00:10:22,120 --> 00:10:25,960 Speaker 1: actively managed either. So that's a good explanation. Math. There's 215 00:10:25,960 --> 00:10:29,960 Speaker 1: these two funds. One's mutual fund, an index fund, and 216 00:10:30,000 --> 00:10:32,920 Speaker 1: the other is an e t F, But they're basically 217 00:10:33,040 --> 00:10:37,520 Speaker 1: mirroring the same index um and just slightly different fees 218 00:10:37,640 --> 00:10:40,600 Speaker 1: right ever so slightly. They're both really affordable though, because 219 00:10:40,840 --> 00:10:43,640 Speaker 1: they are inactively managed, yes are they're they're peg to 220 00:10:43,640 --> 00:10:46,000 Speaker 1: the total stock market, so they're both incredibly similar. But 221 00:10:46,120 --> 00:10:49,480 Speaker 1: one way that they differ significantly is the minimum investment 222 00:10:49,520 --> 00:10:53,520 Speaker 1: that's required. VT SACKS requires a three thousand dollar minimum investment, 223 00:10:53,520 --> 00:10:55,360 Speaker 1: which is a lot of money Brians and money gear seven. 224 00:10:55,360 --> 00:10:57,319 Speaker 1: He's got that money, though, so he gets go and 225 00:10:57,400 --> 00:10:59,839 Speaker 1: do it. But v t I allows you to invest 226 00:11:00,240 --> 00:11:02,640 Speaker 1: the share which is a couple hundred dollars at the moment, 227 00:11:02,640 --> 00:11:04,959 Speaker 1: so it's a little bit easier to less of a 228 00:11:05,000 --> 00:11:07,520 Speaker 1: hurdle right to actually invest in. But a part of 229 00:11:07,559 --> 00:11:10,800 Speaker 1: why that minimum investment exists is because you're essentially investing 230 00:11:11,160 --> 00:11:14,440 Speaker 1: in a fund that's a product of the brokers you're 231 00:11:14,520 --> 00:11:17,800 Speaker 1: investing with in in this case it's Vanguard, right, So 232 00:11:18,280 --> 00:11:21,960 Speaker 1: with the e t F you're actually buying and selling 233 00:11:22,000 --> 00:11:26,160 Speaker 1: shares with other investors. And you can even see this 234 00:11:26,200 --> 00:11:28,240 Speaker 1: when you log into Vanguard, by the way, because you 235 00:11:28,280 --> 00:11:31,120 Speaker 1: have the option to buy and sell funds, but you're 236 00:11:31,120 --> 00:11:34,160 Speaker 1: actually trading e t f s and so the this, 237 00:11:34,280 --> 00:11:36,680 Speaker 1: I know, this is probably maybe a little boring and 238 00:11:36,679 --> 00:11:39,839 Speaker 1: potentially overcompligated, but the action you can take it it's 239 00:11:39,840 --> 00:11:41,680 Speaker 1: even reflected in the language they use on the site, 240 00:11:41,679 --> 00:11:44,000 Speaker 1: which is which is pretty cool, yeah, exactly, And that 241 00:11:44,040 --> 00:11:46,240 Speaker 1: actually it gets to the core of another difference between 242 00:11:46,320 --> 00:11:49,840 Speaker 1: mutual funds and ETFs because you're trading with other investors 243 00:11:49,920 --> 00:11:52,400 Speaker 1: just like you. These trades they take place almost immediately, 244 00:11:53,040 --> 00:11:54,640 Speaker 1: just like if you were to trade the stock of 245 00:11:54,679 --> 00:11:57,079 Speaker 1: a single company. You know, there's an ask, there's a bid, 246 00:11:57,360 --> 00:12:00,000 Speaker 1: and then that transaction is complete. But since mutual fund 247 00:12:00,040 --> 00:12:02,160 Speaker 1: is don't work this way, and you're investing that money 248 00:12:02,240 --> 00:12:04,920 Speaker 1: with the brokerage itself, when you go to purchase mutual funds, 249 00:12:05,280 --> 00:12:09,000 Speaker 1: that transaction won't complete until the market closes at four pm, 250 00:12:09,760 --> 00:12:11,199 Speaker 1: or even until the next day if you make that 251 00:12:11,280 --> 00:12:14,720 Speaker 1: transaction after four pm, and so that's it's honestly, it's 252 00:12:14,760 --> 00:12:18,120 Speaker 1: really a minor thing, especially since you're investing the right 253 00:12:18,200 --> 00:12:21,080 Speaker 1: way for the long haul. But that explains why there's 254 00:12:21,120 --> 00:12:24,160 Speaker 1: that delay with mutual funds. But E t F transactions 255 00:12:24,160 --> 00:12:26,520 Speaker 1: happen right away. They happen immediately. But this does mean 256 00:12:26,600 --> 00:12:29,439 Speaker 1: that e t s are a more accurate representation of 257 00:12:29,600 --> 00:12:33,199 Speaker 1: the current market market conditions. Again, when you're looking over 258 00:12:33,480 --> 00:12:37,040 Speaker 1: the time horizon that's like ten plus years. I mean, 259 00:12:37,080 --> 00:12:39,040 Speaker 1: come on, what's the big difference between a trade getting 260 00:12:39,080 --> 00:12:42,760 Speaker 1: executed at ten am as opposed to four pm. There's 261 00:12:43,000 --> 00:12:45,720 Speaker 1: there's not a huge difference there, but this is another 262 00:12:45,800 --> 00:12:48,760 Speaker 1: one small nuance, one small difference between mutual funds and 263 00:12:48,800 --> 00:12:50,599 Speaker 1: et s. Okay, so let's wrap this up, Matt, I 264 00:12:50,640 --> 00:12:53,040 Speaker 1: think we've given a good synopsis of the difference between 265 00:12:53,160 --> 00:12:55,040 Speaker 1: mutual funds or index funds at et f s, and 266 00:12:55,160 --> 00:12:58,400 Speaker 1: especially when we're talking about our low cost favorites, there 267 00:12:58,480 --> 00:13:01,280 Speaker 1: are just slight differences that shouldn't really have a major 268 00:13:01,280 --> 00:13:03,920 Speaker 1: impact on which one you choose. But when we're talking 269 00:13:03,920 --> 00:13:07,120 Speaker 1: about Brian and the specific situation he's in, he mentioned 270 00:13:07,120 --> 00:13:11,160 Speaker 1: that he's investing within a taxable brokerage account. For this reason, 271 00:13:11,200 --> 00:13:13,079 Speaker 1: we nudge you in the direction of e t f 272 00:13:13,160 --> 00:13:16,640 Speaker 1: s because of the way you're able to you're able 273 00:13:16,679 --> 00:13:20,160 Speaker 1: to rebalance, and and because of how they're structured. E 274 00:13:20,280 --> 00:13:22,720 Speaker 1: t f s are a more tax efficient vehicle, right 275 00:13:22,760 --> 00:13:25,400 Speaker 1: they have they have fewer taxable events than mutual funds do, 276 00:13:25,800 --> 00:13:28,000 Speaker 1: which means that you're going to be paying less when 277 00:13:28,040 --> 00:13:30,679 Speaker 1: it comes to capital gains taxes. And so for other 278 00:13:30,960 --> 00:13:34,199 Speaker 1: investing in tax advantage accounts, it doesn't really matter. Like 279 00:13:34,679 --> 00:13:36,520 Speaker 1: it's it's six, one, half dozen the other. You can 280 00:13:36,559 --> 00:13:39,640 Speaker 1: pick either fund and it doesn't it's not gonna have 281 00:13:39,720 --> 00:13:42,440 Speaker 1: any material impact on your ability to build wealth. They're 282 00:13:42,480 --> 00:13:45,080 Speaker 1: both great. But the takeaway we want to leave everyone 283 00:13:45,280 --> 00:13:48,320 Speaker 1: with is that both index funds and ETFs that track 284 00:13:48,400 --> 00:13:51,920 Speaker 1: the total stock market or SMP five are really great things. 285 00:13:52,320 --> 00:13:54,719 Speaker 1: And you know, e E. T f s inside of 286 00:13:54,880 --> 00:13:58,040 Speaker 1: a taxable brokerage account are a little bit superior from 287 00:13:58,080 --> 00:14:01,480 Speaker 1: a tax standpoint, But either one of those funds overall, 288 00:14:01,800 --> 00:14:04,760 Speaker 1: especially inside of your tax advantage accounts, is is a 289 00:14:04,840 --> 00:14:07,400 Speaker 1: great pick. And so yeah, just look at the expense ratios. 290 00:14:07,720 --> 00:14:10,520 Speaker 1: Make sure that you're paying little to nothing at all. 291 00:14:10,840 --> 00:14:13,360 Speaker 1: Fidelity we talked about that one FC Rocks, which is 292 00:14:13,400 --> 00:14:16,599 Speaker 1: basically the exact same thing. It's just Fidelities version is 293 00:14:16,880 --> 00:14:19,120 Speaker 1: zero expense ratio. So we like that fund a whole 294 00:14:19,120 --> 00:14:21,480 Speaker 1: lot too, even better. Yea, So those are all things 295 00:14:21,520 --> 00:14:24,840 Speaker 1: worth considering as you're kind of choosing between these different funds, 296 00:14:24,920 --> 00:14:26,840 Speaker 1: That's right. So we have several other questions we're gonna 297 00:14:26,880 --> 00:14:29,480 Speaker 1: get to during this episode, including that one about the 298 00:14:29,720 --> 00:14:32,280 Speaker 1: listener who's wanting to know some of those details. She's 299 00:14:32,280 --> 00:14:34,560 Speaker 1: wanting to know the nitty gritty when it comes to 300 00:14:34,680 --> 00:14:37,680 Speaker 1: actually executing fire in her life. We'll get to that 301 00:14:37,840 --> 00:14:49,640 Speaker 1: one and others right after this, all right, we're back. 302 00:14:49,720 --> 00:14:52,440 Speaker 1: We'll get to that early retirement question here in just 303 00:14:52,640 --> 00:14:55,280 Speaker 1: a second, but for now, Matt, let's take a question 304 00:14:55,440 --> 00:14:59,040 Speaker 1: from a listener who has a vacation home he and 305 00:14:59,160 --> 00:15:02,120 Speaker 1: his wife are looking to sell. Hi, guys, this is 306 00:15:02,240 --> 00:15:05,440 Speaker 1: Daniel from New Jersey. My wife and I purchased a 307 00:15:05,560 --> 00:15:09,880 Speaker 1: vacation home at the end of Since then, the value 308 00:15:09,920 --> 00:15:13,600 Speaker 1: of the home has increased substantially. If we sell the property, 309 00:15:13,840 --> 00:15:17,080 Speaker 1: we could then use the proceeds, which would be about 310 00:15:17,360 --> 00:15:21,280 Speaker 1: two hundred and fifty thousand after taxes, and completely pay 311 00:15:21,360 --> 00:15:25,480 Speaker 1: off our primary mortgage. Our primary mortgage balance is about 312 00:15:25,520 --> 00:15:29,680 Speaker 1: two d We have about thirteen years left at a 313 00:15:29,800 --> 00:15:33,880 Speaker 1: rate of two point six to five. We refinanced in 314 00:15:34,840 --> 00:15:37,400 Speaker 1: a fifteen year mortgage. P and I is about eighteen 315 00:15:37,480 --> 00:15:40,520 Speaker 1: hundred dollars per month and taxes and insurance are about 316 00:15:40,640 --> 00:15:43,200 Speaker 1: one thousand dollars per month. As this is not our 317 00:15:43,360 --> 00:15:47,920 Speaker 1: final retirement vacation home um she is fifty four, my 318 00:15:48,040 --> 00:15:50,640 Speaker 1: wife and I am fifty two. Down the line, we 319 00:15:50,640 --> 00:15:53,680 Speaker 1: would like to look at purchasing something different after the 320 00:15:53,760 --> 00:15:56,920 Speaker 1: market shifts if we sell. We're trying to determine if 321 00:15:56,960 --> 00:15:59,720 Speaker 1: paying off the mortgage is a better option. Than say, 322 00:16:00,040 --> 00:16:04,600 Speaker 1: investing two two hundred and fifty in say a Vanguard 323 00:16:04,680 --> 00:16:09,120 Speaker 1: Total Stock Market Index or potentially even a dividend stock 324 00:16:09,880 --> 00:16:13,280 Speaker 1: reinvest everything and allow all the money to grow. On 325 00:16:13,400 --> 00:16:15,480 Speaker 1: one hand, we would be dip free, but on the 326 00:16:15,600 --> 00:16:18,080 Speaker 1: other hand, we would no longer have that nest egg 327 00:16:18,200 --> 00:16:22,120 Speaker 1: to grow. Thanks guys, all right, let's get to it. Uh. 328 00:16:22,320 --> 00:16:25,080 Speaker 1: We think that taking some chips off the board could 329 00:16:25,160 --> 00:16:27,280 Speaker 1: be a good idea for you, Daniel. That being said, 330 00:16:27,320 --> 00:16:31,240 Speaker 1: you've gotten pretty dang lucky in just the past two 331 00:16:31,320 --> 00:16:33,960 Speaker 1: years of ownership. And I say lucky because everyone knows 332 00:16:34,280 --> 00:16:37,280 Speaker 1: home prices don't typically skyrocket like we have seen over 333 00:16:37,360 --> 00:16:40,640 Speaker 1: the past twelve months. They usually move more at a 334 00:16:40,680 --> 00:16:44,800 Speaker 1: snail's pace. And some classic second home markets have actually 335 00:16:44,840 --> 00:16:48,240 Speaker 1: seen even more of an increase in value recently as well. 336 00:16:48,360 --> 00:16:50,440 Speaker 1: But you know what it is that you do with 337 00:16:50,760 --> 00:16:53,400 Speaker 1: all of those newfounder riches, Well, that is a tough call. 338 00:16:53,480 --> 00:16:56,400 Speaker 1: But hopefully we'll give you some good thoughts, some good ideas. Yeah. 339 00:16:56,400 --> 00:16:58,560 Speaker 1: I like how you said taking some chips off the table, Matt, 340 00:16:58,600 --> 00:17:01,000 Speaker 1: because when you get lucky, sometimes you just gotta walk away. 341 00:17:01,040 --> 00:17:03,800 Speaker 1: Thank the poker gods for the luck that intervened because 342 00:17:04,200 --> 00:17:06,440 Speaker 1: that's you're not guaranteed right to walk away from the 343 00:17:06,480 --> 00:17:08,359 Speaker 1: table with money. And the same is true when you 344 00:17:08,440 --> 00:17:10,280 Speaker 1: own a house over what like an eighteen to twenty 345 00:17:10,359 --> 00:17:12,359 Speaker 1: four month time period typically because at the end of 346 00:17:13,200 --> 00:17:15,480 Speaker 1: so like normally we're not gonna say, oh, yeah, now's 347 00:17:15,480 --> 00:17:16,640 Speaker 1: a great time for you to go ahead and sell 348 00:17:16,640 --> 00:17:18,200 Speaker 1: that house a year and a half after you bought it. 349 00:17:18,320 --> 00:17:21,360 Speaker 1: That's definitely not something that we will likely ever say. 350 00:17:21,400 --> 00:17:23,800 Speaker 1: Again most of the time when that happens, if you 351 00:17:23,880 --> 00:17:25,960 Speaker 1: have to sell a home that quickly after you purchase it, 352 00:17:26,359 --> 00:17:28,600 Speaker 1: you will lose your shirt, you will lose a decent 353 00:17:28,680 --> 00:17:31,679 Speaker 1: chunk of money. But Daniel, fortunately is not in that position, 354 00:17:32,119 --> 00:17:34,520 Speaker 1: and so let's talk about what he does now that 355 00:17:34,640 --> 00:17:36,560 Speaker 1: he is kind of taking some of those chips off 356 00:17:36,600 --> 00:17:39,720 Speaker 1: the table. And I gotta say, Daniel, I really don't 357 00:17:39,760 --> 00:17:43,640 Speaker 1: like the idea of you guys paying off your primary mortgage, 358 00:17:43,960 --> 00:17:48,560 Speaker 1: mostly because it's below you said two point six. That 359 00:17:49,320 --> 00:17:53,360 Speaker 1: is crazy awesome. Most people would murder for that sort 360 00:17:53,400 --> 00:17:55,000 Speaker 1: of interest rate on their house. Right now. What's crazy 361 00:17:55,040 --> 00:17:56,760 Speaker 1: is that six months ago you would have been like, oh, yeah, 362 00:17:56,840 --> 00:18:00,560 Speaker 1: no big deal. As we've see mortgage rates basically st rockets. 363 00:18:00,720 --> 00:18:03,640 Speaker 1: That is definitely an enviable rate, that's right. Yeah, tell 364 00:18:03,640 --> 00:18:06,120 Speaker 1: your neighbors and they'll give you glances, like stink eye 365 00:18:06,119 --> 00:18:07,960 Speaker 1: glances because they're like, I wish I had that. But 366 00:18:08,520 --> 00:18:12,399 Speaker 1: in the current inflationary environment we're experiencing, this mortgage rate, 367 00:18:12,440 --> 00:18:15,359 Speaker 1: this hyper low mortgage rate that's locked in is a 368 00:18:15,480 --> 00:18:18,800 Speaker 1: great hedge that's actually protecting you from some of those 369 00:18:18,920 --> 00:18:21,880 Speaker 1: radical inflationary forces. So holding onto it makes a whole 370 00:18:21,880 --> 00:18:24,920 Speaker 1: lot of sense. Um that incredibly low fixed rate mortgage. 371 00:18:25,040 --> 00:18:26,760 Speaker 1: It's kind of like a bird in the hand right 372 00:18:26,800 --> 00:18:29,440 Speaker 1: now that you don't want to get rid of because 373 00:18:29,760 --> 00:18:32,560 Speaker 1: it's so valuable, and so don't We would say, don't 374 00:18:32,560 --> 00:18:35,359 Speaker 1: give it up unless there's no other viable place for 375 00:18:35,480 --> 00:18:37,840 Speaker 1: you to stash funds. Paying off that mortgage in one 376 00:18:37,880 --> 00:18:39,760 Speaker 1: fell swoop is not what I would do with the 377 00:18:39,840 --> 00:18:42,360 Speaker 1: proceeds of this home sale, exactly. Yeah. So let's talk 378 00:18:42,440 --> 00:18:44,520 Speaker 1: through some of the other options that Daniel might have 379 00:18:44,640 --> 00:18:47,520 Speaker 1: when it comes to growing this money without taking on 380 00:18:47,600 --> 00:18:50,399 Speaker 1: too much risk. And we gotta say that so much 381 00:18:50,440 --> 00:18:52,840 Speaker 1: of that is going to depend on the time frame 382 00:18:53,200 --> 00:18:55,080 Speaker 1: for you, Daniel, for for when it is that you 383 00:18:55,160 --> 00:18:58,840 Speaker 1: plan on buying another vacation home. There is, of course 384 00:18:58,880 --> 00:19:01,840 Speaker 1: the known risk of inflation, but there's also real risk 385 00:19:02,160 --> 00:19:04,440 Speaker 1: by investing that money in the market if your timeline 386 00:19:04,520 --> 00:19:06,720 Speaker 1: is too short. If you were to say, stick this 387 00:19:06,800 --> 00:19:09,200 Speaker 1: money into a total stock market index fund, just like 388 00:19:09,240 --> 00:19:12,639 Speaker 1: we talked about, either way you want to go, or 389 00:19:12,680 --> 00:19:15,480 Speaker 1: so I used to saying index funds. Uh. Honestly, often 390 00:19:15,480 --> 00:19:17,240 Speaker 1: times when I say index fund, I think of ets 391 00:19:17,320 --> 00:19:20,399 Speaker 1: as well, because they're excherige exchange traded funds, and so 392 00:19:20,680 --> 00:19:23,000 Speaker 1: either way their funds, whether it's a mutual fund or 393 00:19:23,119 --> 00:19:27,240 Speaker 1: an exchange yeah, I mean both. But sticking it in 394 00:19:27,320 --> 00:19:29,159 Speaker 1: the market is a great idea if you've got a 395 00:19:29,280 --> 00:19:31,520 Speaker 1: longer timeline like eight or ten years down the road, 396 00:19:32,000 --> 00:19:34,920 Speaker 1: even just five years. But if you're talking like two years, 397 00:19:35,440 --> 00:19:38,399 Speaker 1: then you might find yourself with less money then you 398 00:19:38,480 --> 00:19:41,560 Speaker 1: started with. That would be awful, especially with more folks 399 00:19:41,600 --> 00:19:44,280 Speaker 1: these days speculating that we are entering into a recession 400 00:19:44,600 --> 00:19:47,399 Speaker 1: that might cause portfolio values to dip or even just 401 00:19:47,560 --> 00:19:49,840 Speaker 1: stagnate over the next twelve months. Yeah, who knows what 402 00:19:49,920 --> 00:19:53,200 Speaker 1: the future holds, right, Uh, we're certainly not making any predictions. 403 00:19:53,280 --> 00:19:56,400 Speaker 1: But the thing is, when you have a truncated timeline 404 00:19:56,640 --> 00:19:59,800 Speaker 1: like that historical returns of the stock market, it's you 405 00:20:00,000 --> 00:20:01,960 Speaker 1: and bank on them less. When you're talking about a 406 00:20:01,960 --> 00:20:04,800 Speaker 1: shorter timeline, If you've got ten years, it's pretty easy 407 00:20:05,240 --> 00:20:07,720 Speaker 1: to have at least some semblance of an idea of 408 00:20:07,840 --> 00:20:10,320 Speaker 1: what your return will be. But if you're talking about 409 00:20:10,320 --> 00:20:12,240 Speaker 1: a one or two your timeline, it's it. It becomes 410 00:20:12,359 --> 00:20:14,760 Speaker 1: much harder. And there's, like you said, that likelihood of 411 00:20:14,880 --> 00:20:17,600 Speaker 1: losing some of that capital that you'd like to deploy 412 00:20:17,840 --> 00:20:20,720 Speaker 1: in the purchase of that that next home. And so 413 00:20:21,800 --> 00:20:24,200 Speaker 1: it's it's hard to tell Daniel exactly what to do, Matt, 414 00:20:24,240 --> 00:20:26,800 Speaker 1: because we don't know his exact timeline. He might not either, 415 00:20:26,880 --> 00:20:30,240 Speaker 1: He might not know when he's going to be purchasing 416 00:20:30,280 --> 00:20:32,239 Speaker 1: that next time. It could be in his mind two 417 00:20:32,320 --> 00:20:34,879 Speaker 1: years from now, five years from now, or anywhere in between. 418 00:20:35,000 --> 00:20:37,040 Speaker 1: He did say when housing prices kind of get back 419 00:20:37,080 --> 00:20:38,480 Speaker 1: to normal, and who knows when that's going to be, 420 00:20:38,600 --> 00:20:41,120 Speaker 1: and who know what normal is? Like these are undefined 421 00:20:41,240 --> 00:20:43,919 Speaker 1: terms that no one truly knows exactly what's coming down 422 00:20:43,920 --> 00:20:46,960 Speaker 1: the pike. Yeah, nobody does. When will prices chill out 423 00:20:47,080 --> 00:20:50,359 Speaker 1: on homes? Um? I don't know lets anybody's guess, And 424 00:20:50,480 --> 00:20:53,320 Speaker 1: so I think Daniel could take maybe sort of a 425 00:20:53,480 --> 00:20:57,080 Speaker 1: d all of the above approach, because especially if it's 426 00:20:57,160 --> 00:21:00,320 Speaker 1: his timeline is is just more shorter, or it's it's 427 00:21:00,359 --> 00:21:03,000 Speaker 1: even more uncertain. Maybe he sticks some money into I 428 00:21:03,119 --> 00:21:06,720 Speaker 1: bonds like Bucks, then invest some of that money into 429 00:21:07,240 --> 00:21:09,960 Speaker 1: a total stock market et F, and then maybe pay 430 00:21:10,000 --> 00:21:12,959 Speaker 1: off just a little bit of his primary mortgage principal balance, 431 00:21:13,400 --> 00:21:15,520 Speaker 1: and and then keep a little bit in savings too. 432 00:21:15,880 --> 00:21:17,800 Speaker 1: It might might be best not to funnel all of 433 00:21:17,880 --> 00:21:21,480 Speaker 1: those dollars in just one single direction, you know, we 434 00:21:21,480 --> 00:21:24,359 Speaker 1: would say to Daniel, it's important to remember not to 435 00:21:24,480 --> 00:21:27,800 Speaker 1: forget that selling this home, it's gonna trigger a tax bill, 436 00:21:28,040 --> 00:21:30,200 Speaker 1: and so since you've owned it for more than a year, 437 00:21:30,480 --> 00:21:33,440 Speaker 1: you'll be paying long term capital gains on on the 438 00:21:33,560 --> 00:21:36,280 Speaker 1: increase in price that you've seen. But make sure to 439 00:21:36,359 --> 00:21:38,480 Speaker 1: set aside those funds to send to the I r 440 00:21:38,600 --> 00:21:40,480 Speaker 1: S come April next year. That's something you don't want 441 00:21:40,480 --> 00:21:42,680 Speaker 1: to forget. Stick it all in one place and then 442 00:21:43,040 --> 00:21:45,639 Speaker 1: wind up seeing some losses when you actually have to 443 00:21:45,680 --> 00:21:47,479 Speaker 1: have some of that cash on hand to pay your 444 00:21:47,480 --> 00:21:49,479 Speaker 1: tax bill next year. You don't want to mess that up. 445 00:21:49,680 --> 00:21:54,080 Speaker 1: So hopefully that's helpful. Um, congrats again on your good 446 00:21:54,160 --> 00:21:56,679 Speaker 1: fortune in the housing market. And are these are good 447 00:21:56,720 --> 00:21:58,600 Speaker 1: problems to have? That's right, trying to figure out what 448 00:21:58,720 --> 00:22:01,960 Speaker 1: it is that you're gonna do with all that cat Yeah, exactly. 449 00:22:02,040 --> 00:22:04,800 Speaker 1: So I know it can be like concerning when you're like, 450 00:22:04,880 --> 00:22:06,840 Speaker 1: I'm gonna get a ton of cash in one fell swoop. 451 00:22:07,080 --> 00:22:10,000 Speaker 1: But it's also a good thing, remember that. So all right, Matt, 452 00:22:10,040 --> 00:22:12,679 Speaker 1: let's get to the next question. This one is about 453 00:22:12,920 --> 00:22:15,879 Speaker 1: retiring early and what are the mechanisms that are going 454 00:22:15,920 --> 00:22:19,760 Speaker 1: to allow this couple to do it. Well, Hey, Matt 455 00:22:19,800 --> 00:22:21,480 Speaker 1: and Joel, this is current for me to go to 456 00:22:21,480 --> 00:22:23,600 Speaker 1: New York. I've got a question for you guys about 457 00:22:23,600 --> 00:22:26,680 Speaker 1: the nitty gritty of retiring early. My wife and I 458 00:22:26,800 --> 00:22:29,159 Speaker 1: are both thirty eight years old, and our finances are 459 00:22:29,200 --> 00:22:31,600 Speaker 1: in really great shape. We have no debts in our 460 00:22:31,640 --> 00:22:33,639 Speaker 1: home up right, and we have just shive a million 461 00:22:33,680 --> 00:22:36,280 Speaker 1: dollars in our retirement accounts in addition to about two 462 00:22:36,680 --> 00:22:39,720 Speaker 1: k in the taxable brokerage. We're not quite there yet, 463 00:22:39,840 --> 00:22:42,639 Speaker 1: but it's got me thinking about the logistics of early retirement. 464 00:22:43,240 --> 00:22:46,359 Speaker 1: Our retirement assets are spread across six different accounts, a 465 00:22:46,520 --> 00:22:49,760 Speaker 1: ross a traditional IRA and our employer sponsored accounts for 466 00:22:49,840 --> 00:22:52,240 Speaker 1: each me and my wife. When you edit all up, 467 00:22:52,280 --> 00:22:54,159 Speaker 1: it's a lot of money, but each account only has 468 00:22:54,160 --> 00:22:57,480 Speaker 1: about two K at most. When we eventually leave our jobs, 469 00:22:57,520 --> 00:23:00,200 Speaker 1: I guess that would consolidate to just four accounts, but 470 00:23:00,320 --> 00:23:03,760 Speaker 1: still it seems like a logistical nightmare to manage substantially 471 00:23:03,840 --> 00:23:07,400 Speaker 1: equal periodic payments for four different accounts. Is there something 472 00:23:07,480 --> 00:23:10,320 Speaker 1: I'm missing? Any information you could give on the nitty 473 00:23:10,359 --> 00:23:13,480 Speaker 1: gritty of how to actually retire early would be super appreciated. 474 00:23:13,760 --> 00:23:16,800 Speaker 1: Thanks so much. I love the show. Hey, Karin, thank 475 00:23:16,840 --> 00:23:19,280 Speaker 1: you for listening, and we are very glad to have 476 00:23:19,480 --> 00:23:23,680 Speaker 1: you as a listener of How the Money and Man. Joel, 477 00:23:23,840 --> 00:23:25,680 Speaker 1: I've got to say, I'm just happy that we're taking 478 00:23:25,680 --> 00:23:27,560 Speaker 1: so many questions of folks who are killing it with 479 00:23:27,640 --> 00:23:30,040 Speaker 1: their money today. And I say this because I think 480 00:23:30,160 --> 00:23:32,920 Speaker 1: sometimes it might be folks are thinking I want some 481 00:23:33,040 --> 00:23:35,800 Speaker 1: problems that I'm dealing with, like I want to want 482 00:23:35,840 --> 00:23:37,720 Speaker 1: something that might seem a little more applicable to my 483 00:23:37,760 --> 00:23:40,680 Speaker 1: situation right now. But I think these questions can also 484 00:23:40,760 --> 00:23:43,119 Speaker 1: be incredibly encouraging to see folks who may not be 485 00:23:43,520 --> 00:23:46,280 Speaker 1: all that far off from where you are currently uh 486 00:23:46,359 --> 00:23:48,359 Speaker 1: and to think that you could also potentially be in 487 00:23:48,400 --> 00:23:51,359 Speaker 1: this kind of situation. Yeah, I agree. Sometimes we have 488 00:23:51,440 --> 00:23:54,440 Speaker 1: listeners who have accrued lots of money over the years, 489 00:23:54,720 --> 00:23:57,760 Speaker 1: and while not everybody is in that position, hopefully all 490 00:23:57,800 --> 00:24:01,520 Speaker 1: how the money listeners aspire to be in a similar position. Absolutely. Yeah. 491 00:24:01,560 --> 00:24:04,160 Speaker 1: And so Karen, your your finances are in really great shape. 492 00:24:04,359 --> 00:24:06,320 Speaker 1: You've got that paid off home plus all of that 493 00:24:06,400 --> 00:24:09,600 Speaker 1: money in your investment accounts at your age, this is 494 00:24:09,680 --> 00:24:12,720 Speaker 1: nothing short of incredible. UM. I'm actually I'm curious to 495 00:24:12,800 --> 00:24:14,879 Speaker 1: know more about how y'all got to this point and 496 00:24:15,359 --> 00:24:17,879 Speaker 1: what it is that motivated you to stock away as 497 00:24:17,960 --> 00:24:20,840 Speaker 1: much money as you have. Um, but a big congrats 498 00:24:21,040 --> 00:24:22,760 Speaker 1: on all of the hard work that you've put in 499 00:24:22,840 --> 00:24:24,680 Speaker 1: to get to the point that y'all are currently in. 500 00:24:24,840 --> 00:24:26,800 Speaker 1: There's a lot of sacrifice that it takes to get 501 00:24:26,840 --> 00:24:28,280 Speaker 1: to that point. I think we can overlook that and 502 00:24:28,359 --> 00:24:30,480 Speaker 1: we can just be like jealous, But I would be 503 00:24:30,600 --> 00:24:33,480 Speaker 1: so interested to hear Karen and her wife tell us 504 00:24:33,560 --> 00:24:36,520 Speaker 1: the story of all of the sacrifices it took to 505 00:24:36,560 --> 00:24:38,800 Speaker 1: get there, because I guarantee you it didn't come easily. 506 00:24:39,240 --> 00:24:41,760 Speaker 1: And and let's talk about maybe some of the question 507 00:24:41,840 --> 00:24:44,680 Speaker 1: that that Karen had Matt and the nitty gritty of 508 00:24:44,760 --> 00:24:47,640 Speaker 1: retiring earliers. She put it, we talk a lot about 509 00:24:47,680 --> 00:24:51,040 Speaker 1: investing in tax advantaged accounts. They rock. They're one of 510 00:24:51,080 --> 00:24:53,960 Speaker 1: our our favorite methods for people to invest because why 511 00:24:54,040 --> 00:24:56,119 Speaker 1: not get a tax break as you're saving for your future. 512 00:24:56,880 --> 00:24:59,840 Speaker 1: But there is a slight problem if you're one of 513 00:24:59,880 --> 00:25:03,760 Speaker 1: the go getters like Karin who wants to retire mega early, 514 00:25:04,160 --> 00:25:07,760 Speaker 1: because those accounts are more difficult to tap, specifically because 515 00:25:07,760 --> 00:25:10,880 Speaker 1: there's a ten percent penalty when that you pay when 516 00:25:10,920 --> 00:25:13,480 Speaker 1: you start pulling money out if you haven't reached the 517 00:25:13,520 --> 00:25:15,040 Speaker 1: age of fifty nine and a half. That's right, So 518 00:25:15,080 --> 00:25:18,440 Speaker 1: it's hard to retire early before half, right exactly. So 519 00:25:18,560 --> 00:25:21,000 Speaker 1: that's early enough, is what the what the government says. 520 00:25:21,160 --> 00:25:22,680 Speaker 1: And if you want to retire earlier than that, we'll 521 00:25:22,680 --> 00:25:25,159 Speaker 1: guess what it's gonna cause you that extra ten percent. Well, 522 00:25:25,280 --> 00:25:27,200 Speaker 1: since Karen and her wife they're not even in their 523 00:25:27,240 --> 00:25:30,000 Speaker 1: forties yet, they're what thirty eight, she said, there's there's 524 00:25:30,040 --> 00:25:33,240 Speaker 1: this big gap between when they're putting this money in 525 00:25:33,600 --> 00:25:35,840 Speaker 1: and then when they're able to pull the money out. 526 00:25:36,640 --> 00:25:38,800 Speaker 1: But there are some lovers here that we need to 527 00:25:38,800 --> 00:25:41,000 Speaker 1: talk about. And and Karin actually she mentioned one in 528 00:25:41,040 --> 00:25:44,679 Speaker 1: her question to have access to those accounts earlier than 529 00:25:44,760 --> 00:25:46,920 Speaker 1: retirement age. But here's the thing. They can get a 530 00:25:47,080 --> 00:25:50,280 Speaker 1: little tricky. And first things first, before we get to 531 00:25:50,320 --> 00:25:51,720 Speaker 1: some of those Matt I wanted to say, I like 532 00:25:51,840 --> 00:25:54,399 Speaker 1: the idea actually of Karin over the next couple of 533 00:25:54,480 --> 00:25:57,840 Speaker 1: years before they actually pull the fire trigger contributing more 534 00:25:58,160 --> 00:26:01,560 Speaker 1: to a taxable broker's account now so that they can 535 00:26:01,600 --> 00:26:04,560 Speaker 1: have easy access to those funds whenever they like. For 536 00:26:04,760 --> 00:26:06,560 Speaker 1: a big chunk of those early retirement years. I think 537 00:26:06,600 --> 00:26:09,400 Speaker 1: she said they have two thousand dollars in that taxable 538 00:26:09,400 --> 00:26:12,679 Speaker 1: brokerage account. Now, it's a wise idea to put more 539 00:26:12,760 --> 00:26:15,119 Speaker 1: and more money into that account, specifically because that's going 540 00:26:15,200 --> 00:26:18,080 Speaker 1: to be the easiest account to tap once they do 541 00:26:18,200 --> 00:26:20,919 Speaker 1: quit their jobs. That's right. They can take a page 542 00:26:21,119 --> 00:26:23,720 Speaker 1: out of Brian's book one of year seven investing in 543 00:26:23,800 --> 00:26:27,280 Speaker 1: those brokerage taxable accounts. But Karin was was touching on 544 00:26:27,400 --> 00:26:30,879 Speaker 1: sort of the complexity of having to deal with, you know, 545 00:26:30,920 --> 00:26:33,359 Speaker 1: all of these multiple accounts, and I will say it 546 00:26:33,480 --> 00:26:35,080 Speaker 1: is going to take a little bit more work as 547 00:26:35,240 --> 00:26:37,960 Speaker 1: you are entering retirement and you're trying to manage these funds. 548 00:26:38,280 --> 00:26:40,080 Speaker 1: But the good news is is that you're gonna have enough. 549 00:26:40,240 --> 00:26:42,800 Speaker 1: You should have enough time on hand to manage all 550 00:26:42,840 --> 00:26:45,920 Speaker 1: of this wealth early on. It's something that requires virtually 551 00:26:46,000 --> 00:26:47,919 Speaker 1: no time. Right You're you're working in your job, you're 552 00:26:47,920 --> 00:26:49,879 Speaker 1: living your life, you're trying to keep expenses low, and 553 00:26:49,960 --> 00:26:52,399 Speaker 1: you're just socking money away into these accounts. You're not 554 00:26:52,480 --> 00:26:56,600 Speaker 1: necessarily wrapping your head and thinking hard and long about 555 00:26:56,640 --> 00:26:59,000 Speaker 1: how it is that you're going to tap these funds. 556 00:26:59,080 --> 00:27:01,159 Speaker 1: But obviously, Karine, this is the stage that you all 557 00:27:01,160 --> 00:27:02,920 Speaker 1: are at now. Yeah. Really, you're just trying to fill 558 00:27:02,960 --> 00:27:04,600 Speaker 1: the buckets and now you're like, how do I empty 559 00:27:04,640 --> 00:27:08,040 Speaker 1: them wisely? Exactly? Exactly? Yeah. Uh. And first of all, 560 00:27:08,040 --> 00:27:09,760 Speaker 1: you actually you want to have some of these different 561 00:27:09,800 --> 00:27:14,239 Speaker 1: buckets to pull from for maximum flexibility. Avoiding pulling from 562 00:27:14,240 --> 00:27:16,520 Speaker 1: those retirement accounts for as long as possible is a 563 00:27:16,560 --> 00:27:18,679 Speaker 1: good goal. But let's talk about some of the main 564 00:27:18,800 --> 00:27:22,080 Speaker 1: methods for pulling out those retirement funds a little bit early. 565 00:27:22,480 --> 00:27:25,440 Speaker 1: And one of the major ones is using the Rath 566 00:27:25,600 --> 00:27:29,560 Speaker 1: conversion ladder strategy. And this is when you are basically 567 00:27:29,640 --> 00:27:32,840 Speaker 1: converting four O w K dollars or traditional IRA dollars 568 00:27:33,080 --> 00:27:36,159 Speaker 1: to a ROTH IRA and then after five years, you 569 00:27:36,200 --> 00:27:39,760 Speaker 1: can withdraw those funds penalty and tax free. It is 570 00:27:39,800 --> 00:27:42,240 Speaker 1: important to note that you you will have to pay 571 00:27:42,359 --> 00:27:45,240 Speaker 1: ordinary income tax on those converted funds the year that 572 00:27:45,400 --> 00:27:48,399 Speaker 1: you perform that conversion. That's why it's a good idea 573 00:27:48,520 --> 00:27:51,639 Speaker 1: to spread these conversions out in order to keep your 574 00:27:51,720 --> 00:27:54,280 Speaker 1: tax liability to a minimum, and preferbly to do it 575 00:27:54,359 --> 00:27:57,120 Speaker 1: in non working years, right once Karin has actually left 576 00:27:57,160 --> 00:28:00,280 Speaker 1: her job, because that that way her incomes lower. Exactly. Yeah, 577 00:28:00,359 --> 00:28:03,840 Speaker 1: this is also why this is called a Roth conversion ladder, 578 00:28:04,160 --> 00:28:06,960 Speaker 1: because you're you're staggering the amounts of money that you're converting. 579 00:28:07,520 --> 00:28:09,960 Speaker 1: But that can be a smart use of your extra 580 00:28:10,080 --> 00:28:12,919 Speaker 1: dollars so that you can access your funds early before 581 00:28:13,040 --> 00:28:15,680 Speaker 1: that fifty nine and a half arbitrary age that the 582 00:28:15,720 --> 00:28:18,520 Speaker 1: I R S is set. And the other strategy map. 583 00:28:18,520 --> 00:28:21,480 Speaker 1: There's one other major strategy that that firefolks used to 584 00:28:21,520 --> 00:28:24,600 Speaker 1: access some of those you know, retirement accounts earlier than 585 00:28:24,640 --> 00:28:27,520 Speaker 1: the otherwise would be able to. And Karin actually referred 586 00:28:27,520 --> 00:28:30,399 Speaker 1: to it in her question. She called it substantial equal 587 00:28:30,520 --> 00:28:34,520 Speaker 1: periodic payments. It's also known as seventy two T because 588 00:28:34,720 --> 00:28:37,000 Speaker 1: she was named after the I R S line item 589 00:28:37,160 --> 00:28:40,640 Speaker 1: and the law exactly allows for this move. They're they're 590 00:28:40,640 --> 00:28:43,760 Speaker 1: not catching names, but I mean, I guess they make sense. 591 00:28:44,120 --> 00:28:47,280 Speaker 1: And you said the whole thing. But the abbreviation is SEP, 592 00:28:47,560 --> 00:28:49,960 Speaker 1: not to be confused with a step iris, right, because 593 00:28:49,960 --> 00:28:53,760 Speaker 1: it's actually two ps on this one, right. And so Karin, 594 00:28:53,800 --> 00:28:55,600 Speaker 1: you'll you'll likely you want to seek the advice of 595 00:28:55,640 --> 00:28:58,560 Speaker 1: a tax professional no matter which route you're taking. We 596 00:28:58,720 --> 00:29:01,080 Speaker 1: just definitely want to encourage you in that direction. But 597 00:29:01,240 --> 00:29:04,600 Speaker 1: this strategy where is where you withdraw a specific amount 598 00:29:04,640 --> 00:29:08,080 Speaker 1: of money from your IRA every single year until you 599 00:29:08,160 --> 00:29:10,360 Speaker 1: turn fifty nine and a half. But it has to 600 00:29:10,440 --> 00:29:13,080 Speaker 1: be the same exact amount every single year, and you 601 00:29:13,160 --> 00:29:15,400 Speaker 1: basically have to telegraph that to the I R S 602 00:29:15,400 --> 00:29:17,479 Speaker 1: ahead of time. This is a way that you can 603 00:29:17,520 --> 00:29:20,560 Speaker 1: avoid that temper cent penalty. But like I said, it 604 00:29:20,640 --> 00:29:23,400 Speaker 1: requires you to predetermine how much money you're gonna be withdrawing. 605 00:29:23,880 --> 00:29:25,040 Speaker 1: And here's the thing. You have to do it in 606 00:29:25,080 --> 00:29:27,000 Speaker 1: good years and bad, whether the stock market is at 607 00:29:27,000 --> 00:29:30,160 Speaker 1: all time highs or is just having a rough go 608 00:29:30,280 --> 00:29:32,240 Speaker 1: of it, you have to pull that money out no 609 00:29:32,360 --> 00:29:36,920 Speaker 1: matter what. It disallows flexibility and you can't deviate from 610 00:29:36,960 --> 00:29:39,040 Speaker 1: the method even if all hell is breaking loose and 611 00:29:39,160 --> 00:29:43,360 Speaker 1: so um that it is not ideal, especially given how 612 00:29:43,640 --> 00:29:48,200 Speaker 1: many years you're going to have between retiring and getting 613 00:29:48,240 --> 00:29:49,960 Speaker 1: to that fifty nine and a half a drains, that 614 00:29:50,200 --> 00:29:52,120 Speaker 1: is probably not the route you're going to want to go. 615 00:29:52,680 --> 00:29:54,600 Speaker 1: You're probably gonna want to lean more towards the Roth 616 00:29:54,640 --> 00:29:58,000 Speaker 1: conversion ladder, but it's at least worth considering. And our 617 00:29:58,080 --> 00:30:00,880 Speaker 1: friend Brandon actually the Matt fi Into, he's kind of 618 00:30:00,960 --> 00:30:04,240 Speaker 1: the guru on all things early retirement and will it 619 00:30:04,280 --> 00:30:06,680 Speaker 1: will include links to some of his articles that go 620 00:30:06,840 --> 00:30:09,000 Speaker 1: in depth about these strategies so you can get a 621 00:30:09,080 --> 00:30:11,320 Speaker 1: better idea of how to pull them off. But I 622 00:30:11,400 --> 00:30:14,640 Speaker 1: just want to say again, a tax professional could help 623 00:30:14,720 --> 00:30:17,920 Speaker 1: you save thousands or tens of thousands of dollars by 624 00:30:18,400 --> 00:30:21,040 Speaker 1: pulling these levers correctly and giving you the proper advice 625 00:30:21,320 --> 00:30:23,320 Speaker 1: to make sure that you are pulling from these buckets 626 00:30:23,560 --> 00:30:25,760 Speaker 1: in the proper order at the proper times. So yeah, 627 00:30:25,800 --> 00:30:28,760 Speaker 1: don't shy away from hiring that professional, paying them some 628 00:30:28,840 --> 00:30:30,760 Speaker 1: money in order to save you a ton of money 629 00:30:30,800 --> 00:30:32,560 Speaker 1: down the line. That's right, Yeah, I don't skip that 630 00:30:32,640 --> 00:30:36,200 Speaker 1: step of consulting at tax professional current because making a 631 00:30:36,280 --> 00:30:39,000 Speaker 1: mistake with any of these options could honestly cost you 632 00:30:39,160 --> 00:30:42,800 Speaker 1: tens of thousands of dollars. The the stakes are incredibly 633 00:30:42,840 --> 00:30:45,760 Speaker 1: high when it comes to early retirement, and so for 634 00:30:45,920 --> 00:30:48,240 Speaker 1: us sitting here, it's impossible to sort of delve into 635 00:30:48,280 --> 00:30:51,880 Speaker 1: all the nuance of your specific situation. That expert help 636 00:30:52,080 --> 00:30:54,240 Speaker 1: is a necessity. But you can definitely start by looking 637 00:30:54,320 --> 00:30:57,239 Speaker 1: into the seventy two t look into creating a Roth 638 00:30:57,320 --> 00:31:00,160 Speaker 1: conversion ladder that should definitely give you a G eight 639 00:31:00,200 --> 00:31:02,480 Speaker 1: starting points, a nice path for you to launch from. 640 00:31:02,680 --> 00:31:04,960 Speaker 1: I feel like maybe the other option for Karin is 641 00:31:04,960 --> 00:31:06,120 Speaker 1: to go to one of these state dinners. I think 642 00:31:06,120 --> 00:31:08,960 Speaker 1: we're gonna be able to help her out. Maybe maybe 643 00:31:09,000 --> 00:31:12,960 Speaker 1: some some annuities aren't perfect for for Karnt exactly unlikely. 644 00:31:14,160 --> 00:31:16,360 Speaker 1: Uh So, Karin, hopefully that's helpful. Hopefully it points you 645 00:31:16,440 --> 00:31:19,600 Speaker 1: in the right direction. There are different paths that you 646 00:31:19,680 --> 00:31:23,600 Speaker 1: can take right but having this information in your brain 647 00:31:23,880 --> 00:31:26,640 Speaker 1: and then talking to a professional can help you figure 648 00:31:26,640 --> 00:31:29,640 Speaker 1: out the exact path that's best for for y'all. So 649 00:31:29,840 --> 00:31:32,560 Speaker 1: best of luck as you get closer and closer to 650 00:31:32,680 --> 00:31:35,000 Speaker 1: that retirement date. We hope you have fun things planned 651 00:31:35,280 --> 00:31:37,680 Speaker 1: for early retirements. All Matt, We got a couple more 652 00:31:37,840 --> 00:31:40,520 Speaker 1: questions to get to and coming up right after the break, 653 00:31:40,560 --> 00:31:43,280 Speaker 1: we're gonna take a question from a listener who is 654 00:31:43,440 --> 00:31:45,480 Speaker 1: trying to put no money down on a home. Is 655 00:31:45,520 --> 00:31:47,440 Speaker 1: that a good idea? Well, we'll talk about that in 656 00:31:47,560 --> 00:31:59,040 Speaker 1: just a sec. All right, we're back from the break, 657 00:31:59,320 --> 00:32:03,720 Speaker 1: and let's hear that question now from that first time HomeBuyer. Hey, 658 00:32:03,800 --> 00:32:06,200 Speaker 1: Matt and Joel, this is John coming to you from 659 00:32:06,240 --> 00:32:10,800 Speaker 1: the beautiful Pacific Northwest near Olympia, Washington. My question today 660 00:32:10,880 --> 00:32:14,000 Speaker 1: regards savings strategy. I am in the Air Force and 661 00:32:14,040 --> 00:32:15,880 Speaker 1: I'm looking to buy a home. When I do my 662 00:32:16,000 --> 00:32:19,360 Speaker 1: next move, which should be in roughly two years, I 663 00:32:19,440 --> 00:32:21,560 Speaker 1: plan on using a v A loan, So having a 664 00:32:21,640 --> 00:32:24,400 Speaker 1: down payment isn't a necessity, but it is something I 665 00:32:24,480 --> 00:32:27,520 Speaker 1: do want to have on hand. I put ten thousandto 666 00:32:27,560 --> 00:32:29,560 Speaker 1: I bons last year and I was just gonna throw 667 00:32:29,640 --> 00:32:32,400 Speaker 1: another ten thousand in this year as my medium to 668 00:32:32,520 --> 00:32:35,920 Speaker 1: short range savings planned. But is there another strategy or 669 00:32:35,960 --> 00:32:39,360 Speaker 1: another way I can save? Because the down payment isn't 670 00:32:39,400 --> 00:32:41,200 Speaker 1: required for my loan, I feel like I can be 671 00:32:41,280 --> 00:32:44,200 Speaker 1: a little more risk tolerant. Thanks for taking my question. 672 00:32:44,320 --> 00:32:48,160 Speaker 1: Guys and cheers, John, thanks for your question, Matt. Honestly 673 00:32:48,280 --> 00:32:50,560 Speaker 1: this makes me pine for my old stomping grounds to 674 00:32:50,560 --> 00:32:53,680 Speaker 1: the Pacific Northwest. Can we please the beautiful Pacific north 675 00:32:53,760 --> 00:32:55,440 Speaker 1: can please take a how of money trip out to 676 00:32:55,920 --> 00:32:59,120 Speaker 1: the Washington, Oregon area in the near future. Very near 677 00:32:59,240 --> 00:33:01,720 Speaker 1: was one of of my favorite hikes. It's lovely, it's 678 00:33:01,720 --> 00:33:03,680 Speaker 1: lovely there, beautiful. I saw him in a crater lake. 679 00:33:03,720 --> 00:33:06,960 Speaker 1: I know you have. That's also incredibly beautiful. I fund 680 00:33:06,960 --> 00:33:09,800 Speaker 1: like my top three domestic places to visit list, so 681 00:33:10,040 --> 00:33:12,400 Speaker 1: I will say when so when getting I visited, we 682 00:33:12,520 --> 00:33:14,520 Speaker 1: were there like at the beginning of July, and there's 683 00:33:14,520 --> 00:33:17,760 Speaker 1: still like feet and feet of snow banks like snow, 684 00:33:17,920 --> 00:33:19,800 Speaker 1: like snow really whenever on the side of the road. 685 00:33:19,800 --> 00:33:22,080 Speaker 1: It was unreal that it was in the middle of 686 00:33:22,080 --> 00:33:23,680 Speaker 1: the summer. I was going to go, I think at 687 00:33:23,680 --> 00:33:25,760 Speaker 1: the end of October one year, and it was like, Nope, 688 00:33:25,800 --> 00:33:29,200 Speaker 1: too much snow. You can't. Oh yeah, like it was 689 00:33:29,320 --> 00:33:30,840 Speaker 1: you couldn't even go. So it would be like a 690 00:33:30,920 --> 00:33:33,600 Speaker 1: six week window when it's no snow. I guess, yeah, 691 00:33:33,840 --> 00:33:36,000 Speaker 1: I saw I was devastated and hopefully I'll get get 692 00:33:36,040 --> 00:33:38,640 Speaker 1: there one of these days. But I digressed, John, Let's 693 00:33:38,640 --> 00:33:40,640 Speaker 1: get to you, let's get to your question. Let's talk 694 00:33:40,680 --> 00:33:42,640 Speaker 1: about a house. Let's talk let's talk about v A 695 00:33:42,720 --> 00:33:45,480 Speaker 1: loans because it's it's such a help to so many 696 00:33:45,520 --> 00:33:49,120 Speaker 1: people in the Armed services who who serve our country. 697 00:33:49,240 --> 00:33:51,960 Speaker 1: Right It allows for them to put zero percent down 698 00:33:52,360 --> 00:33:54,480 Speaker 1: when they're buying a home, and it allows a whole 699 00:33:54,520 --> 00:33:56,920 Speaker 1: lot of folks to be able to buy a home 700 00:33:57,320 --> 00:34:00,280 Speaker 1: where it might otherwise become a lot more difficult. And 701 00:34:00,520 --> 00:34:02,480 Speaker 1: in some ways it's great that you can buy a 702 00:34:02,520 --> 00:34:04,760 Speaker 1: home without having saved up anything for a down payment. 703 00:34:05,480 --> 00:34:09,520 Speaker 1: But it is double edged because most folks aren't as 704 00:34:09,600 --> 00:34:12,799 Speaker 1: intentional as John. And so you know, some who opt 705 00:34:12,840 --> 00:34:15,920 Speaker 1: to a finance or home they haven't saved up much, 706 00:34:16,040 --> 00:34:19,000 Speaker 1: if anything, not only for a down payment, but for upheat, 707 00:34:19,040 --> 00:34:22,400 Speaker 1: for repairs, for rainy days, and that is a risky 708 00:34:22,440 --> 00:34:25,600 Speaker 1: path to go down. So John, we're glad to see 709 00:34:25,880 --> 00:34:29,759 Speaker 1: you using this loan access to your advantage, but you're 710 00:34:29,760 --> 00:34:32,759 Speaker 1: still preparing by saving and investing. Now you're turning something 711 00:34:33,239 --> 00:34:36,719 Speaker 1: that could potentially be be a negative into something that's 712 00:34:36,719 --> 00:34:39,680 Speaker 1: actually an extreme positive. That's right. Yeah, John sounds like 713 00:34:39,719 --> 00:34:43,520 Speaker 1: he's a really smart guy and he's approaching this very wisely. 714 00:34:44,200 --> 00:34:45,800 Speaker 1: I think of this in the same vein honestly, is 715 00:34:45,800 --> 00:34:48,839 Speaker 1: getting a zero percent financing loan on a car. If 716 00:34:48,880 --> 00:34:51,080 Speaker 1: you've got the cash to buy it out right, but 717 00:34:51,160 --> 00:34:53,640 Speaker 1: then you still finance it as an arbitrage move, then 718 00:34:53,800 --> 00:34:56,440 Speaker 1: that can be a really really smart move. But if 719 00:34:56,440 --> 00:34:58,560 Speaker 1: you're financing a new car because you haven't saved a 720 00:34:58,680 --> 00:35:01,279 Speaker 1: nickel then and and it's the only way that you 721 00:35:01,320 --> 00:35:03,120 Speaker 1: can get the car that you want, well that's not 722 00:35:03,239 --> 00:35:05,839 Speaker 1: a great move. And I think stocking more money into 723 00:35:06,040 --> 00:35:09,560 Speaker 1: I bonds is a great move for the time being. John. 724 00:35:09,760 --> 00:35:11,359 Speaker 1: You know, you are capped, like you said, at ten 725 00:35:11,360 --> 00:35:13,560 Speaker 1: thousand dollars a year. But the cool thing is that 726 00:35:13,880 --> 00:35:16,160 Speaker 1: you can decide to leave that money where it is, 727 00:35:16,800 --> 00:35:18,960 Speaker 1: or you can pull it if need be as you 728 00:35:19,040 --> 00:35:22,680 Speaker 1: get closer to purchase time. It's a perfect medium term vehicle. 729 00:35:23,200 --> 00:35:25,680 Speaker 1: And you know, given the fact that you won't need 730 00:35:25,880 --> 00:35:28,800 Speaker 1: a down payment at all, since none is required, we 731 00:35:28,920 --> 00:35:30,800 Speaker 1: do think that it's okay to get a little riskier 732 00:35:30,840 --> 00:35:33,719 Speaker 1: with your investments and begin to make some moves with 733 00:35:33,920 --> 00:35:36,600 Speaker 1: those extra funds that are going to be more long 734 00:35:36,760 --> 00:35:38,799 Speaker 1: term in nature as well. It's kind of the best 735 00:35:38,840 --> 00:35:41,400 Speaker 1: of both worlds because if your investments end up painting 736 00:35:41,640 --> 00:35:43,960 Speaker 1: out great over the next two years, maybe you will 737 00:35:44,040 --> 00:35:46,480 Speaker 1: draw those funds. But if you wanted to continue to 738 00:35:46,600 --> 00:35:49,120 Speaker 1: let those dollars sit there and continue to grow, you 739 00:35:49,200 --> 00:35:51,960 Speaker 1: have the option of not putting any money down. Yeah. 740 00:35:52,000 --> 00:35:54,240 Speaker 1: I agree, man, I think he is in the cappard 741 00:35:54,280 --> 00:35:56,640 Speaker 1: seat because it's not like he has to amass any 742 00:35:56,680 --> 00:35:59,160 Speaker 1: sort of money in the next two years in order 743 00:35:59,200 --> 00:36:02,000 Speaker 1: to buy this home him. Um, it's still helpful right 744 00:36:02,040 --> 00:36:04,279 Speaker 1: to have some cash on hand, of course for those 745 00:36:04,320 --> 00:36:06,960 Speaker 1: other costs associated with homeownership, but it's also great that 746 00:36:07,040 --> 00:36:10,160 Speaker 1: he can start increasing his ability to build wealth. I 747 00:36:10,200 --> 00:36:12,600 Speaker 1: think it's okay for him to focus more on growing 748 00:36:12,719 --> 00:36:14,840 Speaker 1: his wealth and building up a bigger nest egg for 749 00:36:15,200 --> 00:36:17,760 Speaker 1: the future, because it's not necessary for him to access 750 00:36:17,800 --> 00:36:20,040 Speaker 1: those funds, that's right. Yeah, he can lock some of 751 00:36:20,040 --> 00:36:22,600 Speaker 1: them away, right, So take advantage of the TSP as 752 00:36:22,680 --> 00:36:25,560 Speaker 1: much as possible. John, That's that's one thing. You should 753 00:36:25,600 --> 00:36:27,640 Speaker 1: do the same with your RATH. I r A take 754 00:36:27,640 --> 00:36:30,719 Speaker 1: advantage of that as well. The cool thing is you 755 00:36:30,800 --> 00:36:34,680 Speaker 1: can actually use the wrath for home ownership needs if 756 00:36:35,000 --> 00:36:37,680 Speaker 1: you so choose, also in the future. So those are 757 00:36:37,760 --> 00:36:40,520 Speaker 1: two of the retirement accounts we would suggest focusing on 758 00:36:41,120 --> 00:36:45,240 Speaker 1: as you're trying to build money for retirement for your future. 759 00:36:45,520 --> 00:36:47,680 Speaker 1: And you should also keep some money, like I said, liquid, 760 00:36:47,960 --> 00:36:50,400 Speaker 1: because as a homeowner, you're gonna want to be financially 761 00:36:50,480 --> 00:36:53,440 Speaker 1: prepared to tackle upgrades and repairs as needed. And let's 762 00:36:53,480 --> 00:36:55,360 Speaker 1: talk about that just for a second, mat because a 763 00:36:55,440 --> 00:36:57,560 Speaker 1: lot of people they don't think about this when buying him. 764 00:36:57,560 --> 00:37:00,200 Speaker 1: They're just thinking about closing costs or down payment, and 765 00:37:00,360 --> 00:37:03,120 Speaker 1: so it's important to not forget to add some money 766 00:37:03,200 --> 00:37:06,760 Speaker 1: to your savings right now to John. And that's because 767 00:37:07,239 --> 00:37:08,520 Speaker 1: a good rule of thumb, we would say, is that 768 00:37:08,560 --> 00:37:11,399 Speaker 1: you'll typically spend about one percent of the purchase price 769 00:37:11,640 --> 00:37:14,879 Speaker 1: of the home each year for repairs to that home. 770 00:37:15,080 --> 00:37:17,239 Speaker 1: And so if you buy three thousand dollar home, I 771 00:37:17,280 --> 00:37:19,080 Speaker 1: mean three thousand dollars a year is what you can 772 00:37:19,200 --> 00:37:22,359 Speaker 1: expect to spend. Should have that money in the bank 773 00:37:22,600 --> 00:37:26,359 Speaker 1: ready and waiting. It's also important to note that your 774 00:37:26,400 --> 00:37:30,000 Speaker 1: ownership timeline needs to be even longer. If you're putting 775 00:37:30,239 --> 00:37:32,920 Speaker 1: no money down on this loan. Who knows where the 776 00:37:32,960 --> 00:37:34,839 Speaker 1: market's going to be in a couple of years when 777 00:37:34,840 --> 00:37:37,160 Speaker 1: you're ready to buy um, things could have mellowed out 778 00:37:37,200 --> 00:37:38,920 Speaker 1: a little bit, or things might still be as hot 779 00:37:39,000 --> 00:37:41,680 Speaker 1: as ever. Who knows. But we would suggest only making 780 00:37:41,719 --> 00:37:43,920 Speaker 1: the purchase if you plan to own the home for 781 00:37:44,200 --> 00:37:48,480 Speaker 1: at least a decade, and that is a long time horizon, right, 782 00:37:48,520 --> 00:37:50,919 Speaker 1: That's that's asking a lot of you, but I think 783 00:37:51,320 --> 00:37:54,560 Speaker 1: it is important, especially with when you're putting less money down, 784 00:37:54,880 --> 00:37:58,400 Speaker 1: A longer ownership time horizon is necessary because not everyone's 785 00:37:58,400 --> 00:38:01,279 Speaker 1: gonna get as lucky Matt as listener Daniel did and 786 00:38:01,400 --> 00:38:04,479 Speaker 1: see just an incredible amount of growth in eighteen twenty 787 00:38:04,520 --> 00:38:06,720 Speaker 1: four months. Yeah, and you know, if that means owning 788 00:38:06,960 --> 00:38:09,239 Speaker 1: this house as a rental property in the future, that's 789 00:38:09,239 --> 00:38:10,719 Speaker 1: okay as well. We just don't want you to lose 790 00:38:10,800 --> 00:38:15,040 Speaker 1: money by selling on a truncated two to three year timeline, because, yeah, 791 00:38:15,080 --> 00:38:18,759 Speaker 1: buying and selling houses is expensive. And I just thought 792 00:38:18,880 --> 00:38:20,719 Speaker 1: something else to Joel. You're talking about sending that that 793 00:38:20,800 --> 00:38:24,000 Speaker 1: one percent of the home purchase price aside, uh for 794 00:38:24,520 --> 00:38:26,879 Speaker 1: repairs on that home. Keep in mind that that's also 795 00:38:27,000 --> 00:38:29,200 Speaker 1: on top of your emergency fund. This is money that 796 00:38:29,280 --> 00:38:32,800 Speaker 1: you want to earmark for repairs to your home because 797 00:38:32,840 --> 00:38:35,239 Speaker 1: let's say it all hits the fan at the same time, 798 00:38:35,440 --> 00:38:37,440 Speaker 1: and you know, I don't know, maybe maybe you you 799 00:38:37,520 --> 00:38:39,439 Speaker 1: lose your job and a tree fell in your house. 800 00:38:39,800 --> 00:38:42,560 Speaker 1: You know, well, I guess you'd use insurance. But there 801 00:38:42,600 --> 00:38:44,719 Speaker 1: are some of these smaller repairs that can really add 802 00:38:44,800 --> 00:38:47,400 Speaker 1: up when it comes to maintaining a home. Well, but 803 00:38:47,440 --> 00:38:50,160 Speaker 1: then you're talking about your deductible at least right on 804 00:38:50,239 --> 00:38:52,440 Speaker 1: hand exactly. But yeah, just keep that in mind. This 805 00:38:52,719 --> 00:38:55,040 Speaker 1: this isn't something that you should include within that three 806 00:38:55,080 --> 00:38:57,000 Speaker 1: to six months, but it should be something in addition. 807 00:38:57,680 --> 00:38:59,600 Speaker 1: And John, if if you haven't listened back to the 808 00:38:59,640 --> 00:39:03,319 Speaker 1: episode we did with Doug Nordman, we highly recommend going 809 00:39:03,360 --> 00:39:05,520 Speaker 1: back to check that one out. That was episode one 810 00:39:05,719 --> 00:39:09,399 Speaker 1: sixty six. It's a while ago, but we discussed how 811 00:39:09,600 --> 00:39:13,000 Speaker 1: folks in the military consuwer charge their path to retirement 812 00:39:13,080 --> 00:39:16,439 Speaker 1: by using the benefits that are available to them. Well, 813 00:39:16,880 --> 00:39:19,279 Speaker 1: we definitely talked about the TSP within that episode. But 814 00:39:19,400 --> 00:39:20,919 Speaker 1: this might be a great episode for you to share 815 00:39:21,000 --> 00:39:23,960 Speaker 1: with some friends, uh, since we approached it from that 816 00:39:24,120 --> 00:39:26,839 Speaker 1: military angle. But we appreciate your question. Best of luck 817 00:39:26,880 --> 00:39:29,480 Speaker 1: to you and thank you for your service as well. Alright, 818 00:39:29,520 --> 00:39:31,480 Speaker 1: let's go ahead and get to the last question of 819 00:39:31,600 --> 00:39:34,120 Speaker 1: the episode, and this one comes from a listener who 820 00:39:34,200 --> 00:39:38,960 Speaker 1: is looking to modify and switch up his investing strategy. Hey, 821 00:39:39,040 --> 00:39:41,759 Speaker 1: Matt and Joel, this is Kalb from Cincinnati, Ohio. I've 822 00:39:41,760 --> 00:39:44,759 Speaker 1: been listening since and appreciate everything you guys do for 823 00:39:44,840 --> 00:39:47,160 Speaker 1: the show. My wife and I had a question on 824 00:39:47,280 --> 00:39:50,279 Speaker 1: changing up our investment strategy. The only debt we have 825 00:39:50,440 --> 00:39:52,360 Speaker 1: is our mortgage, and we do have a well established 826 00:39:52,400 --> 00:39:55,920 Speaker 1: emergency fund as well. We're both contributing above the amount 827 00:39:55,960 --> 00:39:57,920 Speaker 1: and needed to get the full match from our employer's 828 00:39:57,960 --> 00:40:01,600 Speaker 1: sponsored retirement accounts. I contribute to my RATH option in 829 00:40:01,719 --> 00:40:05,040 Speaker 1: my investment as a target date retirement fund. My wife's 830 00:40:05,040 --> 00:40:07,440 Speaker 1: investments are similar, but she doesn't have the RATH option. 831 00:40:08,200 --> 00:40:10,640 Speaker 1: We're thinking of lowering our investment in our four oh 832 00:40:10,719 --> 00:40:13,239 Speaker 1: one case to only receive the full match, and then 833 00:40:13,280 --> 00:40:16,759 Speaker 1: put our remaining investments into RATH I r A, preferably 834 00:40:16,840 --> 00:40:19,480 Speaker 1: with Fidelity on the S and P five hundred or 835 00:40:19,600 --> 00:40:23,040 Speaker 1: the FC Rocks Total Market Fund. We're thinking I could 836 00:40:23,080 --> 00:40:25,120 Speaker 1: invest in one and my wife could invest in the 837 00:40:25,160 --> 00:40:28,520 Speaker 1: other for better diversity as well. These funds have lower 838 00:40:28,600 --> 00:40:31,120 Speaker 1: expense ratios and greater returns in our four oh one 839 00:40:31,200 --> 00:40:34,359 Speaker 1: k options. We wanted your opinion if there's anything else 840 00:40:34,440 --> 00:40:37,000 Speaker 1: we should consider with us plans, such as compound interest 841 00:40:37,080 --> 00:40:40,600 Speaker 1: benefits or other benefits to keeping our contributions and our 842 00:40:40,960 --> 00:40:43,800 Speaker 1: current accounts, or other pros and constant we should consider. 843 00:40:44,560 --> 00:40:47,279 Speaker 1: Our current accounts also have total market in SMP five 844 00:40:47,360 --> 00:40:50,279 Speaker 1: hundred options, so we could just split our investments into 845 00:40:50,360 --> 00:40:53,319 Speaker 1: those accounts, but the expenses would still be greater than 846 00:40:53,360 --> 00:40:57,160 Speaker 1: the index funds provided through Fidelity. We're in our early thirties, 847 00:40:57,200 --> 00:40:58,560 Speaker 1: so we do have a lot of time to build 848 00:40:58,640 --> 00:41:02,160 Speaker 1: up our retirement. Any general advice or considerations you think 849 00:41:02,239 --> 00:41:05,239 Speaker 1: we should look into would be super helpful. Appreciate the help, 850 00:41:05,320 --> 00:41:07,840 Speaker 1: and I hope you have a great day. All right, Caleb, 851 00:41:07,920 --> 00:41:11,279 Speaker 1: thank you so much for listening to the show. And yeah, 852 00:41:11,400 --> 00:41:14,920 Speaker 1: long time listener, appreciate that. I love seeing his desire 853 00:41:14,960 --> 00:41:19,960 Speaker 1: to optimize. And I think sometimes optimization is overrated, and 854 00:41:20,239 --> 00:41:22,400 Speaker 1: some people are looking to optimize all the time and 855 00:41:22,480 --> 00:41:24,960 Speaker 1: they can't even enjoy themselves because all they're looking at 856 00:41:25,000 --> 00:41:27,759 Speaker 1: his ways to make everything more efficient. But I think, 857 00:41:27,800 --> 00:41:30,520 Speaker 1: what what Caleb is doing. Is is some helpful optimization 858 00:41:31,120 --> 00:41:33,239 Speaker 1: of the way he invests, and and and and just 859 00:41:33,320 --> 00:41:35,480 Speaker 1: kind of changing up some of what he's doing is 860 00:41:35,480 --> 00:41:39,320 Speaker 1: actually gonna have major long term implications because the idea 861 00:41:39,600 --> 00:41:41,040 Speaker 1: right that you and your wife are both getting the 862 00:41:41,080 --> 00:41:44,640 Speaker 1: full company match and then putting additional investment dollars into 863 00:41:44,760 --> 00:41:48,319 Speaker 1: your roth IRA instead of funneling more money into your 864 00:41:48,320 --> 00:41:50,760 Speaker 1: four one K is a great one. We think that's awesome. 865 00:41:51,320 --> 00:41:53,319 Speaker 1: We I feel like Caleb's thought there's through well, he's 866 00:41:53,320 --> 00:41:55,959 Speaker 1: doing the right right thing. And because you know, we're 867 00:41:56,440 --> 00:41:58,839 Speaker 1: we're fans of the Wrath for for so many reasons. 868 00:41:58,880 --> 00:42:01,319 Speaker 1: It's something we've talked about a lot over the years. 869 00:42:01,600 --> 00:42:04,520 Speaker 1: There's added flexibility for you when it comes to accessing 870 00:42:04,800 --> 00:42:08,480 Speaker 1: those contributions in the future. Uh. It makes me think, Matt, 871 00:42:08,520 --> 00:42:12,399 Speaker 1: back to the financial independence question and retiring early, Well, 872 00:42:12,400 --> 00:42:15,320 Speaker 1: you can pull those ROTH contributions out over the year's 873 00:42:15,440 --> 00:42:18,680 Speaker 1: tax and penalty free. That is another source of early 874 00:42:18,760 --> 00:42:21,920 Speaker 1: retirement income if you want it. And uh, and so 875 00:42:22,080 --> 00:42:25,360 Speaker 1: while we don't know the future with certainty, there's also 876 00:42:25,560 --> 00:42:28,759 Speaker 1: a really solid chance that tax rates end up going 877 00:42:28,880 --> 00:42:30,880 Speaker 1: up in the future. There's actually a tax law on 878 00:42:30,920 --> 00:42:33,919 Speaker 1: the books that is set to sunset in meaning tax 879 00:42:34,040 --> 00:42:36,640 Speaker 1: rates are going to go up unless something is done 880 00:42:36,680 --> 00:42:39,880 Speaker 1: about it, and so paying tax on income now and 881 00:42:40,040 --> 00:42:43,000 Speaker 1: never paying tax on it or the gains again is 882 00:42:43,080 --> 00:42:46,960 Speaker 1: just a solid investment approach. It's an optimization step that's 883 00:42:47,000 --> 00:42:49,440 Speaker 1: worth taking. In Caleb's case, Yeah, like you said, the 884 00:42:49,480 --> 00:42:52,200 Speaker 1: other great thing is that he'll have lower fees by 885 00:42:52,280 --> 00:42:56,200 Speaker 1: choosing his own IRA provider. Fidelity is a great choice. 886 00:42:56,320 --> 00:42:59,520 Speaker 1: And Caleb, you named FZ Rocks, which literally has that 887 00:42:59,600 --> 00:43:03,399 Speaker 1: expense ratio of zero, my favorite expense ratio ever free 888 00:43:03,480 --> 00:43:06,479 Speaker 1: n That means that more of your money is working 889 00:43:06,560 --> 00:43:09,879 Speaker 1: for you, not going to pay uh some different fund 890 00:43:09,960 --> 00:43:13,839 Speaker 1: manager salaries. I wouldn't necessarily look to recent returns as 891 00:43:13,840 --> 00:43:15,719 Speaker 1: an indicator of what you can expect to see in 892 00:43:15,760 --> 00:43:18,320 Speaker 1: the future. But since you are in the wealth building 893 00:43:18,360 --> 00:43:20,400 Speaker 1: stage of your life and you've got decades to go 894 00:43:20,520 --> 00:43:24,360 Speaker 1: and you're investing journey, the funds you mentioned are excellent choices. 895 00:43:24,480 --> 00:43:25,960 Speaker 1: But so much of this does come down to the 896 00:43:26,000 --> 00:43:28,319 Speaker 1: expense ratio. Just like we talked about with Brian at 897 00:43:28,320 --> 00:43:31,239 Speaker 1: the beginning of the episode, the performance. Oftentimes, when you're 898 00:43:31,239 --> 00:43:32,680 Speaker 1: looking at these index funds, it's going to be the 899 00:43:32,719 --> 00:43:36,160 Speaker 1: exact same as you're looking at equivalent funds um and 900 00:43:36,239 --> 00:43:39,200 Speaker 1: so the biggest differentiator is the cost of those funds. 901 00:43:39,239 --> 00:43:42,400 Speaker 1: What is the guaranteed burn rate of what these funds? 902 00:43:42,480 --> 00:43:44,360 Speaker 1: What investing what these funds is going to cost you. 903 00:43:45,120 --> 00:43:48,040 Speaker 1: And Caleb had a question about compounding interest and whether 904 00:43:48,080 --> 00:43:50,719 Speaker 1: he's going to be losing out on that front. Well, 905 00:43:50,800 --> 00:43:53,359 Speaker 1: the answer to that is no, it doesn't matter if 906 00:43:53,480 --> 00:43:56,279 Speaker 1: your money is in three different accounts or or just one. 907 00:43:56,719 --> 00:44:01,400 Speaker 1: What matters. It doesn't matter how how wide you spread 908 00:44:01,440 --> 00:44:03,680 Speaker 1: those dollars, how many different accounts you stick them into. 909 00:44:03,920 --> 00:44:06,239 Speaker 1: I mean, for simplicity sake, as few as possible, right, 910 00:44:06,360 --> 00:44:08,040 Speaker 1: but it's not going to make a difference on your 911 00:44:08,239 --> 00:44:11,800 Speaker 1: overall returns. What matters is how much money you're stacking 912 00:44:11,960 --> 00:44:15,200 Speaker 1: into those accounts and the impact that the fees Matt 913 00:44:15,239 --> 00:44:17,160 Speaker 1: that you mentioned are having on those returns. That's why 914 00:44:17,400 --> 00:44:20,239 Speaker 1: we prioritize low fees because the impact of just one 915 00:44:20,480 --> 00:44:22,920 Speaker 1: percentage point of fees, it's amazing. It can have the 916 00:44:22,960 --> 00:44:26,200 Speaker 1: impact of something close to on your returns by the 917 00:44:26,280 --> 00:44:29,120 Speaker 1: time you reach retirement age. So we would suggest that 918 00:44:29,239 --> 00:44:32,120 Speaker 1: you go ahead and proceed with this shake up. Proceed 919 00:44:32,200 --> 00:44:34,840 Speaker 1: with this optimization, Caleb, It's it's not going to be 920 00:44:35,120 --> 00:44:37,560 Speaker 1: life changing, but it's a smart move from a tax 921 00:44:37,600 --> 00:44:40,680 Speaker 1: planning and future flexibility perspective. This is this is one 922 00:44:40,680 --> 00:44:42,160 Speaker 1: of those changes that you're gonna want to make, and 923 00:44:42,400 --> 00:44:43,839 Speaker 1: it's something that we talk about two in the Money 924 00:44:43,880 --> 00:44:46,720 Speaker 1: Gears Matt that getting the company match is really really important, 925 00:44:46,719 --> 00:44:49,520 Speaker 1: and after that we we prefer the RATH for most folks, 926 00:44:49,800 --> 00:44:52,560 Speaker 1: not everyone, but for most folks as the next step 927 00:44:52,680 --> 00:44:55,680 Speaker 1: before you kind of continue adding more money to that 928 00:44:55,760 --> 00:44:58,680 Speaker 1: workplace retirement account. Yeah, especially to since the workplace one 929 00:44:58,920 --> 00:45:00,880 Speaker 1: was just more expensive. Right, we want you out of 930 00:45:01,000 --> 00:45:03,920 Speaker 1: something that may not be the best option for you, 931 00:45:04,080 --> 00:45:06,160 Speaker 1: and instead you're kind of going out on your own. 932 00:45:06,320 --> 00:45:08,000 Speaker 1: You're going with a low cost provider, You're going with 933 00:45:08,080 --> 00:45:10,400 Speaker 1: the low cost funds. And especially since you have so 934 00:45:10,560 --> 00:45:12,920 Speaker 1: many years of compounding growth, it would be one thing 935 00:45:13,040 --> 00:45:15,680 Speaker 1: if say you're closer to retirement and you've only got 936 00:45:15,719 --> 00:45:17,920 Speaker 1: a couple of years well switching. Honestly, it doesn't make 937 00:45:17,960 --> 00:45:20,560 Speaker 1: that much difference because you're you're talking about expense ratios 938 00:45:20,600 --> 00:45:22,680 Speaker 1: that aren't going to compound. But these are expense ratios 939 00:45:22,680 --> 00:45:25,279 Speaker 1: that are going to compound for decades to come. And 940 00:45:25,360 --> 00:45:27,000 Speaker 1: so this really does, like Joel said, this is going 941 00:45:27,040 --> 00:45:29,480 Speaker 1: to have a massive impact on your portfolio at the 942 00:45:29,560 --> 00:45:31,160 Speaker 1: end of the day when the time comes for you 943 00:45:31,280 --> 00:45:33,960 Speaker 1: to retire. So you are definitely you've got your mind, 944 00:45:34,000 --> 00:45:35,719 Speaker 1: You've got your head in the right place. Ye make 945 00:45:35,760 --> 00:45:37,840 Speaker 1: the change. As Michael Jackson would say in Man in 946 00:45:37,880 --> 00:45:40,080 Speaker 1: the Mirror, one of my all time favorite in Jay songs. 947 00:45:40,160 --> 00:45:43,520 Speaker 1: It is a good one. Joel, Let's get to the beer. Uh, 948 00:45:43,680 --> 00:45:46,000 Speaker 1: And I'm gonna put what I realized about halfway through 949 00:45:46,040 --> 00:45:48,880 Speaker 1: this episode. This is not, in fact a beer, was 950 00:45:48,880 --> 00:45:52,120 Speaker 1: it not? Is this another malt beverage? Yes? Now I 951 00:45:52,200 --> 00:45:54,200 Speaker 1: screwed up just like you did that one time. I 952 00:45:54,280 --> 00:45:56,800 Speaker 1: will say this one tasted better. What was that? Tasted 953 00:45:56,840 --> 00:45:58,279 Speaker 1: more like a beer? I got the P. B and 954 00:45:58,400 --> 00:46:01,960 Speaker 1: j R. That malt beverage by Edmond's host, But you 955 00:46:02,080 --> 00:46:05,520 Speaker 1: got the malt beverage from O'Fallon. This was a Dad's 956 00:46:05,600 --> 00:46:08,200 Speaker 1: original oatmeal stout and it says stout on there. So 957 00:46:08,280 --> 00:46:10,080 Speaker 1: it makes you think that this is, uh, I don't 958 00:46:10,080 --> 00:46:12,239 Speaker 1: know this false advertising. It kind of is. I'm gonna 959 00:46:12,280 --> 00:46:16,040 Speaker 1: sue blow that it says malt beverage with natural flavor. 960 00:46:16,600 --> 00:46:19,279 Speaker 1: But yeah, what were your thoughts on this particular drink. 961 00:46:19,440 --> 00:46:21,320 Speaker 1: I mean, I thought I had some oatmeal cookie vibes 962 00:46:21,440 --> 00:46:23,840 Speaker 1: it was about it was. It was definitely lighter, like 963 00:46:24,040 --> 00:46:25,360 Speaker 1: it said, it was a stout, and so I was 964 00:46:25,400 --> 00:46:27,600 Speaker 1: expecting something a little thicker, a little more robust. But 965 00:46:27,680 --> 00:46:29,600 Speaker 1: I guess because it's a malt beverage. Now you know 966 00:46:29,760 --> 00:46:32,600 Speaker 1: why I got falsely sold a bill of goods. That's 967 00:46:32,640 --> 00:46:35,080 Speaker 1: why it was. I don't know. It had like almost 968 00:46:35,080 --> 00:46:38,600 Speaker 1: like some soda like effervescence going on to it. So funny. 969 00:46:38,680 --> 00:46:41,160 Speaker 1: Did it make you think of like cream soda? Maybe? Yeah, 970 00:46:41,440 --> 00:46:44,480 Speaker 1: It's kind of got like those richer pastry like flavors 971 00:46:44,719 --> 00:46:47,320 Speaker 1: in a lighter body drink, which you don't normally expect 972 00:46:47,680 --> 00:46:49,960 Speaker 1: light cream soda. I totally pick up on that as well. 973 00:46:50,000 --> 00:46:51,880 Speaker 1: I said, this one was Okay, it's not one of 974 00:46:51,920 --> 00:46:54,279 Speaker 1: the best we've had. We're probably not gonna buy it again, 975 00:46:55,200 --> 00:46:57,399 Speaker 1: but I would be willing to try an actual beer 976 00:46:57,480 --> 00:47:00,279 Speaker 1: by them. But I did appreciate the fact, don't. I 977 00:47:00,320 --> 00:47:01,800 Speaker 1: can't think of the last time I had to stout 978 00:47:01,840 --> 00:47:05,360 Speaker 1: that was like an oatmeal cookie inspired beer. And I 979 00:47:05,440 --> 00:47:07,800 Speaker 1: point that out as a fan of oatmeal cookies like 980 00:47:07,920 --> 00:47:10,680 Speaker 1: oatmeal oatmeal and raisin cookies. I am a huge fan 981 00:47:10,719 --> 00:47:13,200 Speaker 1: of chocolate chips. I like a little bit of that 982 00:47:13,360 --> 00:47:16,040 Speaker 1: chew when I'm enjoying my cookie. You put raisings in 983 00:47:16,080 --> 00:47:18,600 Speaker 1: my cookies, you get slapped. That's what happens. I do 984 00:47:18,719 --> 00:47:22,440 Speaker 1: it for my health. Anyway, I'm sure O'Fallon is a 985 00:47:22,520 --> 00:47:25,279 Speaker 1: great brewery. If you live there in Missouri near them, 986 00:47:25,360 --> 00:47:28,279 Speaker 1: don't send us the hate mail. He will give them 987 00:47:28,320 --> 00:47:31,080 Speaker 1: another shot, but Jill not's gonna be it. For this episode. 988 00:47:31,120 --> 00:47:32,480 Speaker 1: We will be sure to link to any of the 989 00:47:32,560 --> 00:47:36,200 Speaker 1: resources that we mentioned during this ask How the Money episode, 990 00:47:36,320 --> 00:47:38,839 Speaker 1: And we've had multiple weeks now of our newsletter. If 991 00:47:38,920 --> 00:47:40,759 Speaker 1: you have not yet signed up for the How the 992 00:47:40,800 --> 00:47:43,160 Speaker 1: Money newsletter, head to how the Money dot com forward 993 00:47:43,160 --> 00:47:45,960 Speaker 1: slash newsletter where you can easily sign up to get 994 00:47:46,040 --> 00:47:50,000 Speaker 1: little nuggets of personal finance goodness in your inbox every 995 00:47:50,040 --> 00:47:53,000 Speaker 1: Tuesday morning. And just like that steak dinner Matt and 996 00:47:53,000 --> 00:47:56,560 Speaker 1: I were talking about, which is free you, our email 997 00:47:56,719 --> 00:47:58,560 Speaker 1: is also free. But unlike that steake dinner, We're not 998 00:47:58,560 --> 00:48:00,640 Speaker 1: going to try to sell you pieces of crap. We're 999 00:48:00,680 --> 00:48:02,680 Speaker 1: gonna We're not trying to mislead. You know, we're gonna 1000 00:48:02,719 --> 00:48:05,600 Speaker 1: try to actually give you helpful personal finance information. That's 1001 00:48:05,600 --> 00:48:07,680 Speaker 1: the goal of the newsletter. It's been well received so far, 1002 00:48:07,800 --> 00:48:09,920 Speaker 1: and we would love for you to join our our 1003 00:48:10,000 --> 00:48:12,560 Speaker 1: email list, so don't miss out. That's right, all right, Matt. 1004 00:48:12,640 --> 00:48:15,000 Speaker 1: That's gonna do it for this episode. Until next time, 1005 00:48:15,440 --> 00:48:17,319 Speaker 1: best Friends Out, Best Friends Out,