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Speaker 1: Welcome to Head of Money. I'm Joel and I am Matt.

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Speaker 2: Today we're going to answer some of your listener questions.

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Speaker 1: Happy Columbus Day, Joel or Indigenous People, depending on which

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Speaker 1: one you celebrate.

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Speaker 2: Ye, I teleb both, Matt.

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Speaker 1: Oh do you well? Then why are we releasing an

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Speaker 1: episode this this morning?

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Speaker 2: Because we recorded it not on a holiday?

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Speaker 1: That is true? What is the difference? I mean, I

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Speaker 1: know that we're releasing it on a holiday.

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Speaker 3: We are.

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Speaker 1: Yeah, let's I'm just not talk about the whole holiday thing.

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Speaker 1: We are. We are going to get.

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Speaker 2: To people get off on this day.

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Speaker 1: Yeah, a federal holiday.

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Speaker 2: Okay, I'm making are closed. Yeah, I'm gonna make you

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Speaker 2: come into work.

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Speaker 1: I'll see you then, boss.

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Speaker 3: Uh.

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Speaker 1: But we know we are going to get to listener questions. Uh,

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Speaker 1: We've got a fun topic. We're going to talk about

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Speaker 1: some of the underrated ways to scrimp and save. Looking

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Speaker 1: forward to that's Another listener is asking about some of

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Speaker 1: the best ways to invest sixty thousand dollars. And I'll

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Speaker 1: say our answer does not involve beanie babies. And we've

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Speaker 1: got a roth conversion tax bracket question. Maybe we'll even

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Speaker 1: get to what we think is in store for future

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Speaker 1: tax rates. Joel, we might make a little prediction.

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Speaker 2: Wait, you don't think we'll see You don't think beanie

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Speaker 2: baby values are gonna come back come bouncing back with inflation.

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Speaker 1: They are worth more than they used to being. How

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Speaker 1: they kept up with inflation? That's the real question I

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Speaker 1: want to I think my parents. By the way, the

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Speaker 1: question does not pertain to beanie babies.

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Speaker 2: I think I was gonna I think my parents still

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Speaker 2: have a giant like plastic bin of beanie babies in

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Speaker 2: their attic that my little sister accumulated over many many

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Speaker 2: years back in the day.

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Speaker 1: You got to bust that thing out and then burn them. No,

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Speaker 1: just package it as like a Christmas gift for each

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Speaker 1: one of like you and your two sisters, as like

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Speaker 1: a nostalgia blast from the past kind of thing. Wouldn't

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Speaker 1: that be fun? It goes straight to Goodwill. If they

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Speaker 1: did that whatever, your kids would love it.

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Speaker 2: Yeah, they probably would play with it, but I don't

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Speaker 2: want them. Real quick to mention a listener email that

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Speaker 2: came our way. This was from a listener Ryan, And

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Speaker 2: every once in a while, you and I is it Ryan?

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Speaker 1: Kay? Yeah?

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Speaker 4: Ryan?

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Speaker 1: Okay?

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Speaker 2: And he has written in before about donating plasma, and

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Speaker 2: I have occasionally talked smack about donating plasma. I used

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Speaker 2: to do it back in college, and so I guess, really,

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Speaker 2: so much of whether or not it's worth your time

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Speaker 2: is in the eye the beholder. At this point, my

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Speaker 2: life is like too busy, and I'm just not interested

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Speaker 2: in going to do that in order to make extra income.

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Speaker 2: But then I read listener Ryan Segel justifying I'm just

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Speaker 2: too busy. So Ryan, if only you're a little bit busier,

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Speaker 2: it had more. Okay, there are things I would rather do.

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Speaker 1: Yeah, I hate the You just don't want to do

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Speaker 1: that anymore. I don't want to do it. There are

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Speaker 1: other things that you are most willing to do in

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Speaker 1: order to save a buck. That's right. Some of those

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Speaker 1: we'll get to later on perhaps.

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Speaker 2: Yeah. Well, okay, So I was impressed reading he kind

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Speaker 2: of documented some of the numbers because we recently brought

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Speaker 2: it up on an episode and he was like, all right,

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Speaker 2: let me give you the update. He has donated plasma

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Speaker 2: more than thirteen hundred times in his life at this point.

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Speaker 1: Which is amazing, Like the fact that the human body

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Speaker 1: is able to do that's a lot of blood or

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Speaker 1: a lot of plasma. Well you get your blood back, right,

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Speaker 1: so you've been up the plasma. They take that part out.

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Speaker 2: Yeah, but it replenishes, right, that's why you're able to

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Speaker 2: do it like on repeat.

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Speaker 1: Well, same thing with blood, even if you are donating blood.

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Speaker 1: But still it's got to have some sort of impact, hopefully,

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Speaker 1: Ryan's it's got like a good nutrition program going, Well,

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Speaker 1: that's the thing you do. You have to so you

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Speaker 1: don't get dizzy and make sure you're eating enough steak, Brian,

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Speaker 1: is that what's necessary to make sure you're not iron efficient?

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Speaker 1: I don't know, or maybe is that again blood donation?

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Speaker 1: I don't know. Yeah, well, okay, very Halloween themed sort

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Speaker 1: of a little listener email here, that's right.

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Speaker 2: Well, so he documented how much money he's making. He

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Speaker 2: made five hundred and eighty five bucks in September alone.

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Speaker 2: And again what Ryan has said is money that he

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Speaker 2: makes from donating plasma goes straight into a travel fund.

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Speaker 2: And so he's tossing money into an account hoping to

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Speaker 2: take his family to Japan at some point. And granted

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Speaker 2: that's going to be.

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Speaker 1: Not just oping. I think it's going to happen. Yeah,

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Speaker 1: because before he said that it's how they funded their

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Speaker 1: trips to Disney World, but they're visiting the one in Japan,

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Speaker 1: which is evidently like the best Disney World in the

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Speaker 1: entire world is the one in Japan. And I'll be honest,

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Speaker 1: I be after having gone was it two years ago?

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Speaker 1: I occasionally get fed Disney stuff, and I have seen

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Speaker 1: some of the special effects. Specifically, I saw the special

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Speaker 1: effects with the Frozen like the what's her name Elsa

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Speaker 1: and you know, yeah Elsa nots it's been a minute

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Speaker 1: since uh, but the Frozen ride evidently is unreal just

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Speaker 1: how realistic, like she's frozen but then comes spoiler alert,

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Speaker 1: melts and all that, and like some of the comments

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Speaker 1: are like, yeah, here in the in the States, we

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Speaker 1: have like projection faces oh yeah, which I think are

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Speaker 1: still kind of pretty stink and cool. But the evidently

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Speaker 1: the animatronics and how they do stuff over there is

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Speaker 1: just like completely next level. I'll send you a link

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Speaker 1: so you can see how incredible this this ride is.

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Speaker 1: So I understand Ryan wanting to get his family over

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Speaker 1: there there, plus just.

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Speaker 2: Want to check it out country to visit in general.

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Speaker 2: But yeah, so just this is one of those ways

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Speaker 2: there's always there always wa to make money. Matt on

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Speaker 2: the side side hustles, and this one might be at

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Speaker 2: least if you're thinking about donating plasma or driving for Uber,

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Speaker 2: I think donating plasma on an hour for pay and

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Speaker 2: how much you have to work basis, this is going

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Speaker 2: to be a better way to go for a lot

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Speaker 2: of people. You might not be able to do it

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Speaker 2: as often. But the other thing too is I think

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Speaker 2: Ryan mentioned is that he can read books or watch

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Speaker 2: TV while he's doing it also, so you can kind

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Speaker 2: of multitask when you're donating plasma's.

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Speaker 1: That's when you watches The Last Man on Earth I

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Speaker 1: think was his favorite favorite TV show. And so what

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Speaker 1: I love about this though, is the fact that this

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Speaker 1: is sustainable for him. This is something like sometimes you

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Speaker 1: want to go total bonkers, you're gonna go hard for

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Speaker 1: three months and you're gonna make a ton, or you're

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Speaker 1: looking to really cut back. But the fact that he's

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Speaker 1: been able to do this for so long tells me

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Speaker 1: that he has just incorporated this into like the regular

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Speaker 1: rhythms of his life, and it's like in his mind

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Speaker 1: he sees that that's his entertainment time. That's when he

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Speaker 1: was able to pull out his phone watch the show,

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Speaker 1: and I love that. I really like the idea of

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Speaker 1: crafting and creating a life that is something that is

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Speaker 1: repeatable as a is something that you'll completely burn out on.

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Speaker 1: There's something that's just really appealing. I love the idea too.

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Speaker 2: It's way it feels way more acceptable to make that

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Speaker 2: your entertainment time and says I'm not gonna watch TV

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Speaker 2: to night, I'm just gonna watch my favorite show on

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Speaker 2: my phone while I'm doing any plasma.

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Speaker 1: I love it.

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Speaker 2: You're doing two things at the same time, and then

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Speaker 2: you move on with your day and you get to

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Speaker 2: go on trips you otherwise wouldn't be able to afford.

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Speaker 1: So yeah, okay, So another quick small aside, and he

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Speaker 1: acknowledged the fact that their travel budget. We're talking about

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Speaker 1: lifestyle creep, and he was saying, hey, you know, we

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Speaker 1: have seen our travel increase, but I have kept other

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Speaker 1: areas of spending in my life in check. So, for instance,

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Speaker 1: I haven't purchased this corvette. And we actually exchange a

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Speaker 1: few emails, and I figured this was worth mentioning because

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Speaker 1: a friend of mine recently purchased a C four corvette.

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Speaker 1: So that's like the generation of Corvette. This is a

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Speaker 1: one from like the early nineties. And the reason I

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Speaker 1: mentioned this is because he thinks that this corvette is

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Speaker 1: actually going to go up in value. It's not old

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Speaker 1: enough to be a classic yet, right, so the prices

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Speaker 1: aren't aren't like sky high, but it's also not precipice. Yeah,

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Speaker 1: but it's not so that people are paying top dollar

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Speaker 1: for it either. It's kind of like in this no

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Speaker 1: man's land in between. And he believes this because he

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Speaker 1: literally did this recently with an Toyota FJ from the seventies.

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Speaker 1: He bought it for like twenty something thousand and a

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Speaker 1: few years later sold it for thirty something thousand dollars. Literally,

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Speaker 1: the profit that he made from selling his FJ is

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Speaker 1: what he used to purchase this Corvette, which is his

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Speaker 1: new daily driver. And so the way we talk about

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Speaker 1: transportation here on the show, I think sometimes we can

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Speaker 1: be a bit extreme because we're like, oh, bik or

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Speaker 1: walk everywhere. Guys, Joel's got his rucksack on, you know,

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Speaker 1: trying to get some exercise and I'm zooming around on

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Speaker 1: my bike. But there are other ways of doing it

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Speaker 1: while being smart with your money. So not necessarily a

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Speaker 1: path that we've diggnim but hey, that's out there. Yeah, No,

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Speaker 1: I love that. I think that is.

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Speaker 2: It might not fit for everyone, especially if you're not

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Speaker 2: good repairing cars. But if you get something that's close

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Speaker 2: to being vintage, yeah, and then it becomes vintage while

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Speaker 2: you own it, yeah, you might actually see your car

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Speaker 2: value go up instead of go down, which is the

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Speaker 2: norm for most.

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Speaker 1: I think that's what Ryan was looking at. He was

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Speaker 1: even looking at even older He's like, I was looking

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Speaker 1: at like C three corvettes, which are I think those

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Speaker 1: are the ones from the eighties. Yeah, that look like

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Speaker 1: they're from the eighties a little more too. Yeah.

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Speaker 2: Well, all right, Matt, let's mention the beer we're having

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Speaker 2: on this episode. This one's called Conpi Crisp. It's a

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Speaker 2: rice lagger from Brewyard, a beer company. We will give

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Speaker 2: our thoughts on this one at the end of the episode.

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Speaker 1: We will.

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Speaker 2: And by the way, if you have a question for us,

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Speaker 2: we'd love to hear it in.

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Speaker 4: Matt.

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Speaker 2: Everyone who sends us a question and we feature it

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Speaker 2: on the podcast, we'll send them a pair of socks

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Speaker 2: the boo Yeah, highly coveted how to money socks that

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Speaker 2: are incredibly comfortable, incredibly beautiful. You can have a pair

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Speaker 2: for free if you send us a question. Just go

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Speaker 2: to hodamoney dot com, slash ask, or record a question

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Speaker 2: on the voicemament app of your phone and send it

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Speaker 2: our way. How to moneypod at gmail dot com. Matt,

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Speaker 2: let's get to a somewhat nerdy question about retirement accounts

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Speaker 2: and trying to avoid taxes.

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Speaker 4: Essentially, Hi, Matt, Joel the scott and Missoula, Montana. And

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Speaker 4: my question is in regard to taxes on roth ira conversions.

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Speaker 4: So I contributed to a traditional four oh one k

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Speaker 4: for several decades before rolling that money into an IRA

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Speaker 4: a few years ago, and like many people, I'm now

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Speaker 4: interested in converting the traditional ira to a roth ira.

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Speaker 4: But I'd like to do so in one fell swoop.

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Speaker 4: So for round numbers, let's say the IRA is worth

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Speaker 4: an even one million dollars and leaving state income tax

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Speaker 4: aside and only focusing on federal tax this would require

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Speaker 4: up to three hundred and seventy thousand dollars in taxes

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Speaker 4: federal taxes to do the conversion. And the problem I

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Speaker 4: have with this is that while contributing to the traditional

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Speaker 4: four to one k, over the decades, my pre tax

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Speaker 4: contribution savings was around twenty to twenty two percent. In

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Speaker 4: my opinion, this is the tax rate I should pay

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Speaker 4: Uncle Sam if I were to convert the full amount

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Speaker 4: and not up to thirty seven percent. Anyway, I'm just

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Speaker 4: wondering what your guys' take on this was, or if

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Speaker 4: you've heard of others bring that up. Thanks guys, I

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Speaker 4: appreciate your pos and keep up the good work.

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Speaker 1: All right, Scott. Great to hear from you, and I

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Speaker 1: will say I totally get your desire to want to

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Speaker 1: make this conversion just in a single year, the ability

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Speaker 1: to avoid the headache and the hassle. I get it.

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Speaker 1: It's probably going to be annoying for you to have

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Speaker 1: to spread it out. And the reason for this is

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Speaker 1: the our tax system. It's pretty complicated, and I think

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Speaker 1: that's one of the biggest pain points for the average American,

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Speaker 1: ourselves included. And by the way, if you haven't listened Scott,

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Speaker 1: speaking of Scott's we last Wednesday we talked with Scott

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Speaker 1: Hodge about how complicated are the US tax system is

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Speaker 1: and specifically how there can be these unintended consequences of

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Speaker 1: different drastic changes and how they tend to favor different

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Speaker 1: industries because of different incentives that are dangled. There's always

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Speaker 1: sort of a downstream effect, and so I don't know.

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Speaker 1: On one hand, I sympathize with you completely, But after

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Speaker 1: reading Scott's book and talking with him, I think we're

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Speaker 1: able to realize that. I guess there just isn't a

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Speaker 1: simple solution like we wish there was. Does that make sense?

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Speaker 1: I don't know.

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Speaker 2: A man Estonia sounds like they're simplifying things, and I

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Speaker 2: appreciated that example, this Scot Cave.

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Speaker 1: I also think we have a much more complicated economy

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Speaker 1: that yeah, that's true.

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Speaker 2: Yeah, that's what you're right, because I think about people

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Speaker 2: will laud Finland's education system and we should be more

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Speaker 2: like Finland. It's like Finland has four million people and

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Speaker 2: it's less of a melting about the United States.

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Speaker 1: It's we've got to all look the same as what

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Speaker 1: you're saying.

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Speaker 2: We have a lot more complexity to solve here in

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Speaker 2: this country. So you can't just like slap Finland system

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Speaker 2: on top of the United States and it's not going

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Speaker 2: to work the same.

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Speaker 1: Agree.

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Speaker 2: I think the other point of frustration math that a

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Speaker 2: lot of people feel is like, it feels like I

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Speaker 2: have to hire an expert to help me make the

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Speaker 2: right tax move. And then if you don't have somebody

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Speaker 2: on your side who costs hundreds and hundreds of dollars,

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Speaker 2: if not more, to basically points you in the right

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Speaker 2: direction when it comes to win and how you make

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Speaker 2: certain moves, you could end up overpaying in taxes by

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Speaker 2: thousands and thousands of dollars. That's pretty frustrating too, to

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Speaker 2: feel like you have to hire a pro to make

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Speaker 2: sure you don't step in it. I totally agree, yeah,

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Speaker 2: and I think Scott, you might not need the help

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Speaker 2: of a pro, but still I think even in this

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Speaker 2: case you might want to poney up for it because

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Speaker 2: this takes her so high.

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Speaker 1: Exactly even early on in the show, Jow, that's something

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Speaker 1: that we have always been an advocate for where we're saying, hey,

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Speaker 1: this is an area because of the fact that we're

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Speaker 1: talking about a larger amounts of money where it does

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Speaker 1: make sense to go with a professional. But especially the

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Speaker 1: further along your financial journey that you get, I think

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Speaker 1: it makes a bit more sense. The goal, of course,

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Speaker 1: is taking your traditional dollars, turning them into roth dollars.

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Speaker 1: And to minimize the overall tax burden while also maximizing

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Speaker 1: the flexibility of those funds. By the way, we don't

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Speaker 1: want you to trigger an insane tax bill for yourself.

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Speaker 1: And so I think the ideal strategy is to actually

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Speaker 1: do this over time via a Wroth conversion ladder, and

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Speaker 1: to not do this in a single year. And the

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Speaker 1: reason for that is because every single dollar that you

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Speaker 1: convert it is going to count as earned income. And

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Speaker 1: so what that means is if you're converting a massive

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Speaker 1: pile of money like you have there, Scott, you know,

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Speaker 1: if you're talking about a million bucks just to make

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Speaker 1: things nice and tidy and neat and even we could

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Speaker 1: be talking about a substantially higher tax bill that is

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Speaker 1: easily avoidable, all in the sake of maybe having fewer headaches.

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Speaker 1: But man, if it was up to me, like that

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Speaker 1: is a headache I am willing to endure if it

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Speaker 1: means I don't have to fork over like hundreds of

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Speaker 1: thousands of dollars.

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Speaker 2: Right, you know, it gives me more of a headache

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Speaker 2: paying more money than I need to yes to the government.

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Speaker 4: Right.

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Speaker 2: So, I've never known a single person Matt in my

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Speaker 2: whole all these forty years of life, who sends extra

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Speaker 2: money to the government out of the goodness of their heart.

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Speaker 2: And so we might have different beliefs about what the

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Speaker 2: tax structure should look like and what's the most optimized

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Speaker 2: way to go, and who should be taxed more or less,

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Speaker 2: But nobody still, even with those beliefs, tends to pay

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Speaker 2: more than they need to. And I think it's important

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Speaker 2: to mention that the ideal time to convert from traditional

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Speaker 2: to ROTH is in years where the market is either

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Speaker 2: down or your income is down or both. But here's

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Speaker 2: the other side of that coin. You can't control the market,

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Speaker 2: So you can't say I'm gonna wait till tony twenty five.

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Speaker 2: Pretty sure the market's going to be down. You don't

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Speaker 2: know that.

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Speaker 1: We don't have perfect Maybe yeah, and maybe.

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Speaker 2: Get lucky in your conversions and you convert extra in

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Speaker 2: a down year. But most of the time, the only

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Speaker 2: thing you control can control is how much and how

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Speaker 2: often you make those conversions. And so Scott, in your

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Speaker 2: scenario of having a million dollars that you'd like to convert,

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Speaker 2: how much you ought to do in a given year

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Speaker 2: is largely going to depend on your income. So let's

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Speaker 2: say you make, for example, eighty five thousand dollars a year, Right,

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Speaker 2: and you're married filing jointly, Well, you can convert almost

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Speaker 2: three hundred thousand dollars a year of traditional assets, turn

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Speaker 2: them into roth assets, and you can still not pay

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Speaker 2: tax on any income above the twenty four percent threshold

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Speaker 2: because of the way the tax brackets work. The next

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Speaker 2: bracket after the twenty four percent tax bracket, matt Is,

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Speaker 2: it jumps to thirty two percent.

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Speaker 1: It's a pretty big jump. That's a big jump. I don't

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Speaker 1: like it.

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Speaker 2: That's that's what we would want to avoid, I think,

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Speaker 2: is paying tax in the neighborhood of anywhere that starts with.

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Speaker 1: The three Sure. Yeah, So in this example, basically every

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Speaker 1: additional one hundred thousand dollars that you convert Scott is

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Speaker 1: roughly going to cost you an additional eight thousand dollars

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Speaker 1: in tax. That could have just been money that you

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Speaker 1: could have kept in your pocket had you opted to

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Speaker 1: take the more patient, long suffering route. And you can

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Speaker 1: avoid that ad a tax just by spreading those conversions out.

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Speaker 1: So that being said, though, in this example, you can

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Speaker 1: still convert all your dollars over, but it would just

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Speaker 1: maybe take a little bit longer, but you could do

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Speaker 1: that in just something like four years or so. Again,

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Speaker 1: this is this is all hypothetical. If you, let's say

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Speaker 1: you make twice that much, you're going to be able

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Speaker 1: to convert less each year, the process is going to

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Speaker 1: take longer. This might be a good point too, to

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Speaker 1: kind of point out the difference between your marginal tax

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Speaker 1: rate and your effective tax rate, because in something else

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Speaker 1: that Scott mentioned, he's because he's talking about a million

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Speaker 1: dollar nest egg essentially, and if he's talking, he's thinking

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Speaker 1: through thirty seven percent, which is why he said three

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Speaker 1: hundred and seventy thousand dollars. But that's the marginal tax rate,

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Speaker 1: Like that is the upper end of the taxes of

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Speaker 1: the rate that he's going to be paying. But his

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Speaker 1: effective tax rate is going to be much lower than that.

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Speaker 1: So it's the dollars above seven hundred and thirty thousand dollars,

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Speaker 1: that is, if he's married filing jointly, that's going to

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Speaker 1: be tax at that higher amount. Every dollar below that

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Speaker 1: seven point thirty is going to be it's going to

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Speaker 1: be taxed at a lesser and lesser amount. So when

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Speaker 1: you hear that, it kind of sounds like robbery, right,

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Speaker 1: Like you hear, oh my gosh, three hundred and seventy

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Speaker 1: thousand dollars that this guy is going to owe, Like

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Speaker 1: no wonder, people like they just thliw their hands up

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Speaker 1: in the air and just kind of give up, almost

381
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Speaker 1: taking the libertarian view towards taxes. It is theft, after all,

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Speaker 1: the government taking your taxes from you. I'm just pointing

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Speaker 1: this out to highlight the fact that it's not quite

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Speaker 1: as bad as Scott laid it out initially.

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Speaker 2: Yeah, And the other thing that it's really important for

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Speaker 2: Scott to consider is having the money on hand to

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Speaker 2: pay those taxes, right, So, do you have enough cash

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Speaker 2: set aside in the bank account to pay the bigger

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Speaker 2: tax bill once you've made that conversion. That's that's something

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Speaker 2: else you're going to want to make sure of, Scott,

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Speaker 2: so that you're not caught flat footed. And that's another

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Speaker 2: case I think against converting more than you need to

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Speaker 2: so that you're not necessarily coming out of pocket an

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Speaker 2: insane amount for this massive tax bill. In one fell swoop,

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Speaker 2: you want to minimize taxes, you also want to make

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Speaker 2: sure you consist and we have enough money to pay

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Speaker 2: the tax in the given year that you are making

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Speaker 2: those conversions. But I think ultimately at the end of

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Speaker 2: the day, especially given the potential sunset of the tax

400
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Speaker 2: cuts and Job Act it probably and potential higher tax

401
00:17:12,480 --> 00:17:14,879
Speaker 2: rates in the future, I think it does make sense to,

402
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Speaker 2: within reason, move this money from being traditional money to

403
00:17:18,440 --> 00:17:21,359
Speaker 2: roth money because it could have positive tax benefits, and

404
00:17:21,400 --> 00:17:23,879
Speaker 2: it could add that flexibility met that roth accounts are

405
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Speaker 2: so good at that you mentioned at the.

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Speaker 1: Beginning of this question too.

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Speaker 2: And the other thing Scott again, it's probably we hate

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Speaker 2: the idea that people have to pay money for tax help,

409
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Speaker 2: but in this case the stakes really are high. You

410
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Speaker 2: probably want to talk to a tax professional noodle this

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Speaker 2: out with someone who has experienced doing conversions, because paying

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Speaker 2: five hundred or one thousand bucks now could save you

413
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Speaker 2: thousands down the line. I mean, it's be frugal here,

414
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Speaker 2: not you maybe even hundreds of thousands of dollars potentially. Yeah,

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Speaker 2: we talked about in that one example, you pay an

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Speaker 2: additional eight thousand dollars in tax for every one hundred

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Speaker 2: thousand dollars you convert. That's the kind of stakes we're

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Speaker 2: talking about. So paying a little bit of money for

419
00:17:58,720 --> 00:18:01,720
Speaker 2: advice whether you whether it's on a site like Hello Nectarine,

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Speaker 2: and you set up an hourly a couple hours talking

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Speaker 2: with a financial advisor who's done many of these roth conversions.

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Speaker 2: Before whatever route you take, I think you're gonna want

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Speaker 2: to probably get some expert help and not just completely

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Speaker 2: go it alone.

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Speaker 1: Yeah, and I alluded to this earlier too, But when

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Speaker 1: it comes to choosing whether or not you're going to

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Speaker 1: go with a roth ira or a traditional ira, we

428
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Speaker 1: think it makes sense to go ahead and bite the

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Speaker 1: bullet now, to go ahead, rip the band aid off

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Speaker 1: as you're making the money, go ahead and paying the

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Speaker 1: taxes on the front end. Because of the fact that

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Speaker 1: tax rates only seem to be going up in the future.

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Speaker 1: We are at historic lows when it comes to the

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Speaker 1: different tax rates, and it feels good to get that

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Speaker 1: tax break now, but I think future you will appreciate

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Speaker 1: it even more.

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Speaker 2: Right, we don't have a crystal ball, we don't know

438
00:18:44,760 --> 00:18:47,800
Speaker 2: for sure, but if you're kind of taking bets, my

439
00:18:47,880 --> 00:18:50,600
Speaker 2: bets would be along those same lines of Matt totally

440
00:18:50,640 --> 00:18:53,280
Speaker 2: all right. We got more questions to get to, including

441
00:18:53,359 --> 00:18:55,919
Speaker 2: one about whether there's a bubble or not. In the

442
00:18:55,960 --> 00:18:59,720
Speaker 2: passive investing space, which is typically what you and I suggest.

443
00:19:00,080 --> 00:19:01,800
Speaker 2: Should people be worried about that? We'll get to that

444
00:19:01,880 --> 00:19:02,959
Speaker 2: and more right after this.

445
00:19:10,680 --> 00:19:12,680
Speaker 1: All right, Jill, we are back from the break taking

446
00:19:12,720 --> 00:19:15,600
Speaker 1: listener questions. Let's now hear from a listener who has

447
00:19:15,680 --> 00:19:19,240
Speaker 1: a chunk of money to invest, but he's asking how

448
00:19:19,280 --> 00:19:20,959
Speaker 1: he should go about investing those dollars.

449
00:19:21,119 --> 00:19:23,800
Speaker 3: Hi, Matt, and Joel, this is Nicholas from Richfield, Ohio.

450
00:19:24,119 --> 00:19:26,800
Speaker 3: I had a question about an investment option for sixty

451
00:19:26,880 --> 00:19:29,680
Speaker 3: thousand dollars that I currently have sitting in my Vanguard

452
00:19:29,720 --> 00:19:33,120
Speaker 3: Federal money market account. A little background and my wife

453
00:19:33,160 --> 00:19:35,359
Speaker 3: and I. I am thirty eight years old in a

454
00:19:35,359 --> 00:19:37,720
Speaker 3: school teacher. My wife is thirty three years old and

455
00:19:37,800 --> 00:19:41,760
Speaker 3: a nurse. We are in money year seven. We fully

456
00:19:41,840 --> 00:19:44,040
Speaker 3: fun We have a fully funded six month high yel

457
00:19:44,040 --> 00:19:47,240
Speaker 3: savings account for our emergencies. We fully fund both of

458
00:19:47,320 --> 00:19:50,760
Speaker 3: our roth I arrays. We put about seven thousand dollars

459
00:19:50,800 --> 00:19:53,440
Speaker 3: a year and a five twenty nine plan for my daughter.

460
00:19:53,240 --> 00:19:53,760
Speaker 1: She's two.

461
00:19:54,680 --> 00:19:57,680
Speaker 3: We max out my wife's four oh one K each year.

462
00:19:58,800 --> 00:20:01,399
Speaker 3: I put about seven points five thousand dollars in my

463
00:20:01,400 --> 00:20:02,760
Speaker 3: four h three B account.

464
00:20:02,960 --> 00:20:04,360
Speaker 1: I also contribute about.

465
00:20:04,200 --> 00:20:08,480
Speaker 3: Nine thousand, five hundred dollars into my state teacher retirement

466
00:20:08,560 --> 00:20:11,720
Speaker 3: for my pension. We have a taxable brokerage account with

467
00:20:11,720 --> 00:20:14,439
Speaker 3: about twenty four thousand dollars in it. Our house and

468
00:20:14,480 --> 00:20:17,280
Speaker 3: our cars are all paid off. My question to you

469
00:20:17,480 --> 00:20:20,639
Speaker 3: is should I dollar cost average all of this sixty

470
00:20:20,720 --> 00:20:25,159
Speaker 3: thousand dollars into VU And then if I should, what

471
00:20:25,320 --> 00:20:27,159
Speaker 3: kind of time frame should I be looking at to

472
00:20:27,160 --> 00:20:29,159
Speaker 3: do this. I was thinking maybe over the course of

473
00:20:29,200 --> 00:20:31,440
Speaker 3: a year. Should I look to spread this out longer?

474
00:20:33,280 --> 00:20:35,520
Speaker 3: Should I look into short term CDs to put some

475
00:20:35,600 --> 00:20:37,399
Speaker 3: of it in there? Or are there other options I

476
00:20:37,440 --> 00:20:39,360
Speaker 3: haven't considered. Thank you for your time.

477
00:20:40,080 --> 00:20:44,760
Speaker 2: Wow, Matt Nicholas just absolutely crushing it, totally crushing it. Yeah,

478
00:20:44,760 --> 00:20:48,439
Speaker 2: I'm incredibly impressed, Nicholas, which you two are have been

479
00:20:48,440 --> 00:20:51,640
Speaker 2: able to accomplish so far in your careers and your

480
00:20:52,280 --> 00:20:55,040
Speaker 2: saving and wealth building journey is just top notch. I mean,

481
00:20:55,200 --> 00:20:57,439
Speaker 2: it really is super impressive, unparallel. Not many if you

482
00:20:57,440 --> 00:20:59,399
Speaker 2: know at your age, are doing what you guys have

483
00:20:59,440 --> 00:21:01,200
Speaker 2: been able to do. And it's not like I think

484
00:21:01,240 --> 00:21:02,960
Speaker 2: this is really important highlight Matt. It's not like they've

485
00:21:02,960 --> 00:21:05,439
Speaker 2: got super fancy jobs. He's not like yes, working on

486
00:21:05,480 --> 00:21:07,160
Speaker 2: Wall Street or and.

487
00:21:07,520 --> 00:21:09,919
Speaker 1: She's he's not a software engineer, right, And she's not

488
00:21:09,960 --> 00:21:11,040
Speaker 1: a rocket scientist, right.

489
00:21:11,080 --> 00:21:12,840
Speaker 2: She's not like a hand surgeon or something like that.

490
00:21:12,920 --> 00:21:15,320
Speaker 2: Like these are these are a teacher and a nurse

491
00:21:15,400 --> 00:21:16,720
Speaker 2: or assault of the earth professions?

492
00:21:16,800 --> 00:21:22,800
Speaker 1: Yeah, and like fantastic careers, but like median earning careers right, well, gosh, teachers,

493
00:21:22,800 --> 00:21:24,520
Speaker 1: I would say, even on the lower end, Yeah, I

494
00:21:24,560 --> 00:21:26,600
Speaker 1: mean yeah, you might be right. Yeah.

495
00:21:26,600 --> 00:21:28,760
Speaker 2: And then on top of that, Nicholas and his wife

496
00:21:28,800 --> 00:21:31,440
Speaker 2: they've amassed an additional sixty thousand dollars that they want

497
00:21:31,440 --> 00:21:32,840
Speaker 2: to be smart with. So it's like, hey, we paint

498
00:21:32,880 --> 00:21:34,680
Speaker 2: up all our dad, Hey, we're maxing everything out. We're

499
00:21:34,680 --> 00:21:38,400
Speaker 2: basically crushing every element of our savings and investing lives.

500
00:21:38,640 --> 00:21:40,720
Speaker 2: But we've got even more we want and are able

501
00:21:40,760 --> 00:21:43,240
Speaker 2: to do. And obviously this is this is not not

502
00:21:43,320 --> 00:21:45,159
Speaker 2: every hat a money listener is doing this or can

503
00:21:45,240 --> 00:21:48,000
Speaker 2: do this. But my guess is that this question alone

504
00:21:48,240 --> 00:21:49,639
Speaker 2: is probably going to inspire a lot of people out

505
00:21:49,640 --> 00:21:51,480
Speaker 2: there who are listing Matt. So I hope, so I

506
00:21:51,520 --> 00:21:53,960
Speaker 2: think it should, like you should, let's all take a

507
00:21:54,080 --> 00:21:57,480
Speaker 2: queue from this couple, realizing that hey, maybe we all

508
00:21:57,520 --> 00:21:59,440
Speaker 2: can do a little more than we previously.

509
00:21:59,080 --> 00:22:01,119
Speaker 1: Thought was possible. Yeah, but what is it that he

510
00:22:01,160 --> 00:22:04,320
Speaker 1: should do with that extra sixty thousand dollars when he

511
00:22:04,359 --> 00:22:06,240
Speaker 1: has already accomplished so much? Like I mean, it was

512
00:22:06,280 --> 00:22:08,160
Speaker 1: just so great hearing him talk through all the different

513
00:22:08,160 --> 00:22:10,560
Speaker 1: accounts and how his dollars are being funneled off into

514
00:22:10,840 --> 00:22:14,960
Speaker 1: these long term investing buckets essentially. But I guess on

515
00:22:15,040 --> 00:22:18,239
Speaker 1: that no, he mentioned some savings and investing goals, and

516
00:22:18,320 --> 00:22:20,879
Speaker 1: so which route I think he chooses to go is

517
00:22:20,880 --> 00:22:23,879
Speaker 1: going to depend on his specific goals that him and

518
00:22:23,880 --> 00:22:28,720
Speaker 1: his wife share. And so if you're looking into goals

519
00:22:28,920 --> 00:22:31,280
Speaker 1: and so like more on the savings side of things,

520
00:22:31,520 --> 00:22:33,280
Speaker 1: I would go with a CD or a high yield

521
00:22:33,320 --> 00:22:35,919
Speaker 1: savings account if this is money that you'd intend to

522
00:22:36,000 --> 00:22:39,159
Speaker 1: use in the next two or three years, Let's say,

523
00:22:39,200 --> 00:22:41,480
Speaker 1: if you're you know, maybe you're planning on renovating or

524
00:22:41,800 --> 00:22:44,440
Speaker 1: upgrading your home, which is likely well within reach since

525
00:22:44,440 --> 00:22:46,399
Speaker 1: you don't have any mortgage. I don't know if folks

526
00:22:46,400 --> 00:22:49,960
Speaker 1: caught that part the mortgage no car pay or car payments.

527
00:22:50,080 --> 00:22:51,640
Speaker 1: The car payments is what I heard the first time,

528
00:22:51,640 --> 00:22:53,200
Speaker 1: and when I listened to it, the second time is

529
00:22:53,240 --> 00:22:54,800
Speaker 1: when I realized that he said that he does not

530
00:22:55,040 --> 00:22:57,800
Speaker 1: even have a mortgage, which is mind blowing. But if

531
00:22:57,840 --> 00:23:00,000
Speaker 1: that's the case, and if he's got some of these

532
00:23:00,119 --> 00:23:02,920
Speaker 1: more short to medium term goals, different things that he

533
00:23:02,960 --> 00:23:05,160
Speaker 1: wants to do with that money, I would certainly want

534
00:23:05,200 --> 00:23:07,240
Speaker 1: to keep it liquid for that purpose.

535
00:23:07,320 --> 00:23:10,840
Speaker 2: And this is definitely money gear seven right that they're in, Yeah,

536
00:23:10,840 --> 00:23:12,760
Speaker 2: which means that the world is their oyster and they

537
00:23:12,760 --> 00:23:15,040
Speaker 2: have a lot of options open to them. And if

538
00:23:15,040 --> 00:23:18,120
Speaker 2: they want to accelerate their ability to reach financial independence

539
00:23:18,160 --> 00:23:20,520
Speaker 2: or something like that, that would mean, yeah, invest this

540
00:23:20,600 --> 00:23:22,760
Speaker 2: money and you're going to get there even more quickly.

541
00:23:23,160 --> 00:23:24,520
Speaker 2: Or if one of you wants to, let's say, quit

542
00:23:24,560 --> 00:23:27,320
Speaker 2: your job, start your own business. I think what you're saying,

543
00:23:27,359 --> 00:23:30,280
Speaker 2: mat is is maybe it's a renovation. Maybe it's another

544
00:23:30,359 --> 00:23:32,480
Speaker 2: goal of yours that's going to involve a cash infusion.

545
00:23:32,800 --> 00:23:36,359
Speaker 2: I think cash is a potential really helpful buffer totally

546
00:23:36,359 --> 00:23:38,280
Speaker 2: if you're going to begin a new endeavor like that

547
00:23:38,480 --> 00:23:41,000
Speaker 2: could be costly or could at least reduce income totally.

548
00:23:41,119 --> 00:23:42,879
Speaker 1: But then again, given the fact that he said that

549
00:23:42,920 --> 00:23:45,040
Speaker 1: this is money that is in his Vanguard account, like

550
00:23:45,320 --> 00:23:47,119
Speaker 1: in the fact that he's already crushing it with everything

551
00:23:47,119 --> 00:23:49,159
Speaker 1: he's in money year seven. He knows what's going on.

552
00:23:49,359 --> 00:23:51,320
Speaker 1: I don't think he would have stuck money into his

553
00:23:51,400 --> 00:23:54,280
Speaker 1: Vanguard account if he didn't know that this was money

554
00:23:54,280 --> 00:23:56,440
Speaker 1: that he was planning to not touch for a while,

555
00:23:56,440 --> 00:23:58,880
Speaker 1: which is why I think he's kind of thinking down

556
00:23:58,960 --> 00:24:00,679
Speaker 1: the path of like, Okay, this is more for long

557
00:24:00,760 --> 00:24:01,320
Speaker 1: term investing.

558
00:24:01,359 --> 00:24:03,639
Speaker 2: Now, I think you're probably right. So if that's the case,

559
00:24:03,920 --> 00:24:06,400
Speaker 2: and this is long term money, this is like five

560
00:24:06,440 --> 00:24:09,680
Speaker 2: plus year money, probably more ten plus year money. I

561
00:24:09,760 --> 00:24:12,119
Speaker 2: of course like the idea of putting that money to

562
00:24:12,200 --> 00:24:14,040
Speaker 2: work for you in the stock market.

563
00:24:14,280 --> 00:24:16,120
Speaker 1: I'm sure you agree that I do.

564
00:24:16,240 --> 00:24:18,479
Speaker 2: And part of that is because CD rates are falling,

565
00:24:18,560 --> 00:24:21,560
Speaker 2: you know, rates on saving these accounts are falling as well.

566
00:24:22,080 --> 00:24:23,920
Speaker 2: As long as you have that solid e fund, and

567
00:24:24,440 --> 00:24:26,399
Speaker 2: I would say this too, you actually might need a

568
00:24:26,440 --> 00:24:29,760
Speaker 2: smaller emergency fund than you think, giving how frugally you live,

569
00:24:30,000 --> 00:24:32,400
Speaker 2: given the fact that you have no debts. Emergency funds

570
00:24:32,400 --> 00:24:35,000
Speaker 2: are often met to pay for some of those obligations

571
00:24:35,000 --> 00:24:37,159
Speaker 2: to pile up if something were to happen, like a

572
00:24:37,240 --> 00:24:41,040
Speaker 2: job loss, and given kind of Nicholas's overall financial situation,

573
00:24:41,640 --> 00:24:44,800
Speaker 2: he might not need as much stored away because of

574
00:24:44,840 --> 00:24:46,520
Speaker 2: how good they've been with money and how few bills

575
00:24:46,520 --> 00:24:49,119
Speaker 2: that they actually have. But I think I would investor

576
00:24:49,200 --> 00:24:51,480
Speaker 2: rather than save. And the question comes down to should

577
00:24:51,520 --> 00:24:53,040
Speaker 2: you do it all at once or should you do

578
00:24:53,080 --> 00:24:56,239
Speaker 2: it over time? And I think if you look at

579
00:24:56,280 --> 00:24:58,840
Speaker 2: the data, it's always going to point to a lump

580
00:24:58,920 --> 00:25:02,840
Speaker 2: some investment being a better to right potential. Human emotions

581
00:25:03,280 --> 00:25:05,680
Speaker 2: might suggest that dollar cost averaging is a better way

582
00:25:05,680 --> 00:25:09,240
Speaker 2: to go, But if you just strictly look at the numbers,

583
00:25:09,440 --> 00:25:12,600
Speaker 2: the stock market goes up about seventy five percent of

584
00:25:12,640 --> 00:25:14,720
Speaker 2: the time, at least on an annual basis.

585
00:25:15,000 --> 00:25:15,600
Speaker 1: Most of the.

586
00:25:15,560 --> 00:25:18,800
Speaker 2: Time you're gonna come out ahead from a compounding perspective

587
00:25:19,119 --> 00:25:22,439
Speaker 2: by tossing that money in all in one fell swoop exactly.

588
00:25:22,480 --> 00:25:24,040
Speaker 2: It's the same as like, oh, should I dollar cost

589
00:25:24,040 --> 00:25:25,919
Speaker 2: average into a roth ira or should I put in

590
00:25:25,960 --> 00:25:29,199
Speaker 2: seven thousand dollars January first? Well, for most people the

591
00:25:29,240 --> 00:25:31,200
Speaker 2: answer is dollar cost average because they don't have seven

592
00:25:31,200 --> 00:25:33,000
Speaker 2: thousand dollars to stick in on January first.

593
00:25:33,040 --> 00:25:35,639
Speaker 1: But that's not the situation Nickas finds himself in. If

594
00:25:35,680 --> 00:25:37,840
Speaker 1: you've got the money, he's got the money. The answer

595
00:25:37,880 --> 00:25:40,400
Speaker 1: is probably sticking in on January first. Yeah, three out

596
00:25:40,400 --> 00:25:42,639
Speaker 1: of four years, the stock market goes up, and so

597
00:25:42,800 --> 00:25:45,159
Speaker 1: I would not want to dollar cost average into a

598
00:25:45,240 --> 00:25:48,879
Speaker 1: market that is only typically historically speaking, going to increase

599
00:25:48,880 --> 00:25:51,880
Speaker 1: in price. But Joel, you mentioned the human emotional side

600
00:25:51,880 --> 00:25:53,760
Speaker 1: of things. That is a real factor though as well,

601
00:25:53,760 --> 00:25:56,199
Speaker 1: because if you feel like you couldn't stomach a meaningful

602
00:25:56,280 --> 00:25:58,920
Speaker 1: drop in the market soon after putting that money in,

603
00:25:59,160 --> 00:26:01,480
Speaker 1: it's totally okay to do it, let's say, over a

604
00:26:01,560 --> 00:26:04,639
Speaker 1: six month or over a twelve month timeline, even if

605
00:26:04,680 --> 00:26:08,480
Speaker 1: it's not historically speaking the most optimized thing in the world,

606
00:26:08,760 --> 00:26:10,639
Speaker 1: because the risks of going that route is that you're

607
00:26:10,680 --> 00:26:13,040
Speaker 1: just going to settle those gains, but you also might

608
00:26:13,080 --> 00:26:16,160
Speaker 1: fail to invest at all, were you to essentially keep

609
00:26:16,200 --> 00:26:19,199
Speaker 1: punting down the road right as you're like, oh, you

610
00:26:19,240 --> 00:26:21,320
Speaker 1: wait a month or two, and you see the market

611
00:26:21,320 --> 00:26:22,680
Speaker 1: goes up a little bit, So maybe you wait a

612
00:26:22,720 --> 00:26:24,160
Speaker 1: little bit and then all of a sudden it looks

613
00:26:24,200 --> 00:26:26,000
Speaker 1: like you're trying to time the market and waiting on

614
00:26:26,000 --> 00:26:29,000
Speaker 1: a pullback. That's the risk that you run. Yeah, So

615
00:26:29,440 --> 00:26:31,399
Speaker 1: I guess if you were going to take more of

616
00:26:31,680 --> 00:26:33,840
Speaker 1: a dollar cost average approach. I would want to make

617
00:26:33,880 --> 00:26:36,639
Speaker 1: sure to automate some of those contributions or those purchases

618
00:26:37,040 --> 00:26:39,960
Speaker 1: on a recurring two week or on a recurring like

619
00:26:40,000 --> 00:26:43,120
Speaker 1: first of the month schedule, so that you don't forget

620
00:26:43,440 --> 00:26:48,159
Speaker 1: or that you're to avoid the temptation of let's just

621
00:26:48,200 --> 00:26:50,480
Speaker 1: wait a little little bit, let me just see what happens,

622
00:26:50,560 --> 00:26:53,159
Speaker 1: because again, historically speaking, the market is only going to

623
00:26:53,200 --> 00:26:53,520
Speaker 1: go up.

624
00:26:53,640 --> 00:26:56,240
Speaker 2: Basically, what you're saying is if you're trying to if

625
00:26:56,359 --> 00:26:59,280
Speaker 2: dollar cost averaging allows you to avoid the emotional gut

626
00:26:59,320 --> 00:27:02,440
Speaker 2: punch that would be immediate drop, then go for it.

627
00:27:02,640 --> 00:27:04,840
Speaker 2: But as you've got to make sure you automate it

628
00:27:04,880 --> 00:27:06,760
Speaker 2: so that your emotions don't take over because it's so

629
00:27:06,840 --> 00:27:08,959
Speaker 2: easy to let that happen. I mean, you and I

630
00:27:09,000 --> 00:27:12,600
Speaker 2: were humans too, so we're susceptible to letting our emotions

631
00:27:12,600 --> 00:27:14,879
Speaker 2: take control. That's what we want you to avoid, because

632
00:27:14,960 --> 00:27:17,120
Speaker 2: that could just mean that sixty thousand dollars that you've

633
00:27:17,119 --> 00:27:20,080
Speaker 2: got waiting to invest, then maybe you don't get it

634
00:27:20,119 --> 00:27:21,399
Speaker 2: in like you thought you were going to, ur that

635
00:27:21,440 --> 00:27:24,159
Speaker 2: you plan to, and you miss out on potential gains

636
00:27:24,160 --> 00:27:28,080
Speaker 2: in the coming years just because fear or greed took over.

637
00:27:28,240 --> 00:27:29,800
Speaker 1: Yeah, and then you wait a whole year, and then

638
00:27:29,800 --> 00:27:31,520
Speaker 1: maybe there is a correction and you are able to

639
00:27:31,720 --> 00:27:35,120
Speaker 1: basically go back in time to maybe right now, maybe maybe,

640
00:27:35,560 --> 00:27:37,440
Speaker 1: But then the whole time you've also expended a whole

641
00:27:37,440 --> 00:27:39,560
Speaker 1: lot of stress and energy thinking about it, as opposed

642
00:27:39,600 --> 00:27:41,960
Speaker 1: to being able just to pull the trigger now and

643
00:27:42,000 --> 00:27:42,600
Speaker 1: not look back.

644
00:27:42,680 --> 00:27:44,960
Speaker 2: Yeah, it takes a brain space, and there is something

645
00:27:45,000 --> 00:27:48,040
Speaker 2: really valuable about doing the thing, being done with it,

646
00:27:48,240 --> 00:27:52,879
Speaker 2: because you know that if we're making data driven decisions,

647
00:27:53,119 --> 00:27:54,199
Speaker 2: that it's the right move to make.

648
00:27:54,280 --> 00:27:56,200
Speaker 1: Yeah, the numbers are on your side, right, So I

649
00:27:56,720 --> 00:27:57,080
Speaker 1: would do that.

650
00:27:57,040 --> 00:27:58,920
Speaker 2: That's why I would lean towards I think. The other

651
00:27:58,920 --> 00:28:01,399
Speaker 2: thing that's worth mentioning here to Matt is that this

652
00:28:01,480 --> 00:28:04,040
Speaker 2: couple's doing so much for their far off future. They've

653
00:28:04,320 --> 00:28:07,119
Speaker 2: eliminated basically all of their debts. They're socking away a

654
00:28:07,160 --> 00:28:09,560
Speaker 2: big chunk of every paycheck towards retirement goals.

655
00:28:09,880 --> 00:28:11,000
Speaker 1: And you and I are not.

656
00:28:11,000 --> 00:28:16,000
Speaker 2: The kind of dudes to disincentivize investing, to tell people, ah, investing,

657
00:28:16,119 --> 00:28:19,520
Speaker 2: don't do that, But we would suggest spending some time

658
00:28:19,920 --> 00:28:23,280
Speaker 2: pondering your medium term hopes and dreams, thinking about your

659
00:28:23,320 --> 00:28:26,560
Speaker 2: other goals aside from just having this massive nest egg

660
00:28:26,600 --> 00:28:29,639
Speaker 2: when you're sixty eight or something like that. Sometimes I

661
00:28:29,680 --> 00:28:33,200
Speaker 2: think Matt, we as humans, we might over invest, not

662
00:28:33,240 --> 00:28:36,000
Speaker 2: just because it's wise, but because we haven't taken enough

663
00:28:36,040 --> 00:28:38,640
Speaker 2: stock of what we want our lives to look like now.

664
00:28:38,760 --> 00:28:41,960
Speaker 2: We haven't necessarily brainstormed the simple ways in which we

665
00:28:41,960 --> 00:28:44,800
Speaker 2: can make those things happen, maybe in the near term

666
00:28:44,800 --> 00:28:48,200
Speaker 2: future instead of in some sort of utopian retirement future

667
00:28:48,400 --> 00:28:50,720
Speaker 2: that we're hoping to achieve. The truth is, you guys

668
00:28:50,800 --> 00:28:53,040
Speaker 2: might retire with with far more money than you need

669
00:28:53,080 --> 00:28:55,640
Speaker 2: given your lifestyle and your habits. I'm almost sure that

670
00:28:55,720 --> 00:28:58,760
Speaker 2: you will based on everything that you've described, and most

671
00:28:58,840 --> 00:29:01,440
Speaker 2: money shows don't push people to invest less truly, like

672
00:29:01,600 --> 00:29:04,040
Speaker 2: most financial advisors you would talk to would just tell

673
00:29:04,040 --> 00:29:05,960
Speaker 2: you the next smart thing to do with your money

674
00:29:06,160 --> 00:29:08,720
Speaker 2: if you're talking about maximizing your turns. But that's something

675
00:29:08,720 --> 00:29:11,080
Speaker 2: we would at least consider, because life isn't all about

676
00:29:11,280 --> 00:29:13,840
Speaker 2: maximizing returns with as much with as many dollars as

677
00:29:13,840 --> 00:29:17,080
Speaker 2: you can get into those accounts. Sometimes it's about maximizing

678
00:29:17,440 --> 00:29:20,400
Speaker 2: your joy and ability to be present and maybe ability

679
00:29:20,400 --> 00:29:22,800
Speaker 2: to dial back on work or take fridays off and

680
00:29:22,880 --> 00:29:25,120
Speaker 2: enjoy a hobby, whatever it is in the here and now,

681
00:29:25,160 --> 00:29:27,000
Speaker 2: So at least take that into consideration.

682
00:29:27,280 --> 00:29:30,640
Speaker 1: I completely agree, not just about maximizing returns, but maximizing

683
00:29:30,680 --> 00:29:33,920
Speaker 1: your life satisfaction. Nicholas, and I think given you mentioned

684
00:29:33,920 --> 00:29:36,360
Speaker 1: too that you've got a two year old, and man,

685
00:29:36,520 --> 00:29:38,640
Speaker 1: you are just getting out of the weeds of having

686
00:29:38,680 --> 00:29:41,280
Speaker 1: a baby right like you've been focused on getting enough sleep.

687
00:29:41,520 --> 00:29:44,240
Speaker 1: You probably don't even remember the past two years if

688
00:29:44,280 --> 00:29:46,480
Speaker 1: your two year old is anything like any of my kids,

689
00:29:46,840 --> 00:29:49,240
Speaker 1: where like it's just a blur and no, there's chunks

690
00:29:49,280 --> 00:29:51,200
Speaker 1: of time I don't even remember. And so the ability to.

691
00:29:51,120 --> 00:29:52,320
Speaker 2: To here that dude, memento.

692
00:29:52,480 --> 00:29:55,720
Speaker 1: Yeah, the ability to, like you said, you'll pause and

693
00:29:55,760 --> 00:29:58,440
Speaker 1: think through to make sure that your spending is aligning

694
00:29:58,520 --> 00:30:00,800
Speaker 1: with your values. I think could be time well spent

695
00:30:00,840 --> 00:30:02,680
Speaker 1: for y'all. But Nicholas, we hope I get you pointed

696
00:30:02,760 --> 00:30:05,720
Speaker 1: in the right direction. Joel, let's hear from a couple

697
00:30:05,760 --> 00:30:09,480
Speaker 1: who is looking to supercharge their investing after knocking out

698
00:30:09,520 --> 00:30:10,880
Speaker 1: some serious student loans.

699
00:30:11,360 --> 00:30:14,360
Speaker 5: Hi, Matt and Joel, this is Amy calling from Grand Rapids,

700
00:30:14,400 --> 00:30:18,480
Speaker 5: Michigan with a question about retirement accounts for those of

701
00:30:18,560 --> 00:30:22,480
Speaker 5: us who are self employed. My husband and I are

702
00:30:22,560 --> 00:30:26,560
Speaker 5: on money Gear seven and we feel pretty good about

703
00:30:26,560 --> 00:30:29,840
Speaker 5: our finances overall, but we feel a little bit behind

704
00:30:29,960 --> 00:30:34,240
Speaker 5: in saving for retirement. When we got married seven years ago,

705
00:30:34,960 --> 00:30:37,880
Speaker 5: we had one hundred and twenty five thousand dollars of

706
00:30:37,920 --> 00:30:42,280
Speaker 5: student loans and we hate being in debt, and so

707
00:30:42,400 --> 00:30:45,120
Speaker 5: we just did everything we could to pay that off

708
00:30:45,160 --> 00:30:48,520
Speaker 5: as quickly as possible and ended up paying it off

709
00:30:48,560 --> 00:30:51,160
Speaker 5: in less than three years, which we're really proud of.

710
00:30:52,920 --> 00:30:58,160
Speaker 5: But that choice stopped us from really aggressively saving for

711
00:30:58,240 --> 00:31:02,480
Speaker 5: retirement during those year years, so we're playing catch up now.

712
00:31:03,160 --> 00:31:06,040
Speaker 5: Both of us are self employed. My husband does not

713
00:31:06,120 --> 00:31:09,520
Speaker 5: have any employees in his business, which is separate from mine.

714
00:31:09,600 --> 00:31:13,560
Speaker 5: By the way, I have several full time employees in

715
00:31:13,600 --> 00:31:18,440
Speaker 5: my business, and we're wondering, in addition to our ROTH

716
00:31:18,520 --> 00:31:23,400
Speaker 5: I raise and our HSA, which we max out every

717
00:31:23,480 --> 00:31:27,680
Speaker 5: year we max out our roths, we also max out

718
00:31:27,720 --> 00:31:33,120
Speaker 5: our HSA in addition to those accounts, what retirement accounts

719
00:31:33,560 --> 00:31:38,240
Speaker 5: should we look into opening to continue saving more for retirement.

720
00:31:38,520 --> 00:31:39,720
Speaker 5: Thanks in advance for your.

721
00:31:39,600 --> 00:31:42,120
Speaker 2: Help, Matt, are all kind of money listeners in Money

722
00:31:42,160 --> 00:31:44,400
Speaker 2: Year seven? Or is it just these days they are, Yes,

723
00:31:44,520 --> 00:31:48,320
Speaker 2: so also impressive. They've all been listening to the show

724
00:31:48,360 --> 00:31:50,560
Speaker 2: for a few years. Agon I guess so well. I

725
00:31:50,560 --> 00:31:54,120
Speaker 2: get its seriously and how how good does it feel

726
00:31:54,160 --> 00:31:56,560
Speaker 2: to not have student loan debt in your life anymore?

727
00:31:56,920 --> 00:31:59,480
Speaker 2: That is, that's something you should be proud of to.

728
00:31:59,400 --> 00:32:02,080
Speaker 1: Not have yours jerked around by the latest headlines as

729
00:32:02,080 --> 00:32:04,000
Speaker 1: to whether or not student loan forgiveness is actually going

730
00:32:04,040 --> 00:32:06,400
Speaker 1: to go through, whether or not it's been paused.

731
00:32:06,440 --> 00:32:08,360
Speaker 2: We had a recent Friday flight where we mentioned, oh,

732
00:32:08,400 --> 00:32:10,239
Speaker 2: there was a court ruling, and then I think the

733
00:32:10,280 --> 00:32:12,800
Speaker 2: next day or later that day, another ruler came out

734
00:32:12,840 --> 00:32:14,640
Speaker 2: and batted it back out again. So it is this,

735
00:32:14,800 --> 00:32:16,800
Speaker 2: It is this football in the univer what's not happened? Yeah,

736
00:32:16,880 --> 00:32:18,920
Speaker 2: so pinning your hopes of that probably not a great idea.

737
00:32:19,320 --> 00:32:21,560
Speaker 2: But on top of that, Matt Amy kind of made

738
00:32:21,560 --> 00:32:23,400
Speaker 2: it sound like they weren't doing enough for retirement, but

739
00:32:23,400 --> 00:32:26,360
Speaker 2: they're maxing out their roth IRA's and their HSA HSA. Yeah,

740
00:32:26,480 --> 00:32:29,280
Speaker 2: it's like that's good. Yeah, don't don't beat yourself up

741
00:32:29,320 --> 00:32:31,040
Speaker 2: and assume that you have to be doing a ton

742
00:32:31,080 --> 00:32:34,280
Speaker 2: more than that. I wouldn't necessarily call this playing catch up,

743
00:32:34,280 --> 00:32:36,760
Speaker 2: even though Amy's calling it that. Of course, there's more

744
00:32:36,800 --> 00:32:37,960
Speaker 2: you can do, and as a.

745
00:32:37,960 --> 00:32:40,120
Speaker 1: Small business owner, let's talk about that.

746
00:32:40,200 --> 00:32:43,320
Speaker 2: I mean, it's it's easy. He's actually easier to invest

747
00:32:43,840 --> 00:32:46,200
Speaker 2: bigger chunks as someone who runs their own business, as

748
00:32:46,240 --> 00:32:49,280
Speaker 2: someone who works for the man, you can you can

749
00:32:49,280 --> 00:32:52,840
Speaker 2: make up for that lost time pretty easily. Thanks and

750
00:32:52,920 --> 00:32:56,480
Speaker 2: this largely thanks to you more generous contribution limits on

751
00:32:56,680 --> 00:33:00,000
Speaker 2: small business specific accounts. Matt, I remember when we first

752
00:33:00,040 --> 00:33:03,120
Speaker 2: started working for ourselves. I was kind of bummed to

753
00:33:03,120 --> 00:33:04,320
Speaker 2: miss out on an employer.

754
00:33:04,040 --> 00:33:05,840
Speaker 1: Match, and I was like, having worked for the man

755
00:33:05,960 --> 00:33:09,400
Speaker 1: and having received a match, see, I never experienced I've

756
00:33:09,400 --> 00:33:11,240
Speaker 1: never never had a four one K match in my

757
00:33:11,360 --> 00:33:14,880
Speaker 1: entire life, so for me, it's always felt overrated.

758
00:33:14,920 --> 00:33:16,400
Speaker 2: I was like, oh, this is one of those things

759
00:33:16,440 --> 00:33:19,280
Speaker 2: I'm giving up in addition to like subsidized health care

760
00:33:19,280 --> 00:33:21,560
Speaker 2: for my employer, right, that's also a big chunk of change.

761
00:33:21,640 --> 00:33:23,120
Speaker 2: This is one of those things I'm giving up to

762
00:33:23,160 --> 00:33:26,200
Speaker 2: go start my own business and hopefully my income is

763
00:33:26,240 --> 00:33:29,480
Speaker 2: able to increase enough to kind of overcome some of

764
00:33:29,520 --> 00:33:31,480
Speaker 2: those perks I'm missing out on. That was something I

765
00:33:31,480 --> 00:33:33,320
Speaker 2: had to get accustomed to, but I didn't realize. I

766
00:33:33,320 --> 00:33:36,120
Speaker 2: guess that I was actually overvaluing that perk. Maybe I

767
00:33:36,120 --> 00:33:37,680
Speaker 2: gave it too much credence. And I think a three

768
00:33:37,760 --> 00:33:40,600
Speaker 2: to six percent match is nice if you're able to

769
00:33:40,600 --> 00:33:43,400
Speaker 2: get it from your employer. But small business owners also

770
00:33:43,480 --> 00:33:47,640
Speaker 2: have serious perks, especially if you're inclined to invest a

771
00:33:47,680 --> 00:33:49,120
Speaker 2: lot in tax advantage ways.

772
00:33:49,120 --> 00:33:51,240
Speaker 1: And besides, like we're focusing on the money side of things,

773
00:33:51,240 --> 00:33:53,600
Speaker 1: but aside from all that, there's just like the lifestyle.

774
00:33:53,720 --> 00:33:56,719
Speaker 1: Oh yeah, and just the autonomy and calling your own shots.

775
00:33:56,840 --> 00:33:58,920
Speaker 2: So even if you have a great boss, it doesn't

776
00:33:58,960 --> 00:34:00,600
Speaker 2: like there's something nice about being your own.

777
00:34:00,440 --> 00:34:03,480
Speaker 1: Boss and incredible about being your own boss. But so

778
00:34:03,640 --> 00:34:06,800
Speaker 1: question for you, given what you have experienced, what you know. Now,

779
00:34:07,000 --> 00:34:09,680
Speaker 1: let's assume, because you're saying that, like, okay, hopefully my

780
00:34:09,760 --> 00:34:11,560
Speaker 1: income would go up to be able to make up

781
00:34:11,600 --> 00:34:14,040
Speaker 1: for the fact that healthcare is more expensive, to make

782
00:34:14,120 --> 00:34:15,840
Speaker 1: up for the fact that I no longer have a match.

783
00:34:16,200 --> 00:34:18,680
Speaker 1: Let's say you were making the exact same dollar amount

784
00:34:18,800 --> 00:34:21,080
Speaker 1: that you were making while working for the man as

785
00:34:21,120 --> 00:34:23,600
Speaker 1: you are now working for yourself. Would you have made

786
00:34:23,600 --> 00:34:26,440
Speaker 1: the trade off? For sure? Yeah, for sure, because of

787
00:34:26,800 --> 00:34:29,239
Speaker 1: like we said, the autonomy of flexibility. It's hard to

788
00:34:29,280 --> 00:34:32,879
Speaker 1: go back to imagining being an employee for somebody else

789
00:34:32,880 --> 00:34:34,640
Speaker 1: when you've worked for yourself. I know, we call her.

790
00:34:34,719 --> 00:34:37,120
Speaker 2: We refer to ourselves now as unemployeed on employees.

791
00:34:37,280 --> 00:34:37,560
Speaker 1: Yeah.

792
00:34:37,600 --> 00:34:39,399
Speaker 2: Like when I talked to Emily, She's like, what would

793
00:34:39,440 --> 00:34:41,839
Speaker 2: be after the podcasting someday? And I'm like, I don't know,

794
00:34:41,960 --> 00:34:45,280
Speaker 2: but it wouldn't be working for I don't think company.

795
00:34:45,320 --> 00:34:47,320
Speaker 1: You have to be something that I was like crazy

796
00:34:47,360 --> 00:34:50,840
Speaker 1: passionate about where I felt like, because you're kind of

797
00:34:50,880 --> 00:34:53,279
Speaker 1: like signing over man, we're going to get a whole

798
00:34:53,280 --> 00:34:55,239
Speaker 1: lot of pushback for folks who have like a traditional

799
00:34:55,760 --> 00:34:56,319
Speaker 1: debut two.

800
00:34:56,280 --> 00:34:58,160
Speaker 2: John, I loved my traditional job for so many.

801
00:34:58,320 --> 00:35:00,279
Speaker 1: Great they're great, and I think the vast Jordan.

802
00:35:00,560 --> 00:35:03,279
Speaker 2: Let's be honest too, The average self employed individual works

803
00:35:03,280 --> 00:35:06,319
Speaker 2: more because it's their own business, and sometimes they find

804
00:35:06,360 --> 00:35:08,520
Speaker 2: themselves working sixty seventy hours and you care about it

805
00:35:08,840 --> 00:35:12,200
Speaker 2: forty or forty five because of that deeper level of attachment.

806
00:35:12,200 --> 00:35:14,040
Speaker 1: So I get that too. Yeah, Okay, let's not keep

807
00:35:14,200 --> 00:35:16,400
Speaker 1: going down the path of how great entrepreneurship. This is

808
00:35:16,440 --> 00:35:17,759
Speaker 1: why I was throwing in a m way that it's

809
00:35:17,800 --> 00:35:20,200
Speaker 1: not actually, I appreciate that. Amy. Based on the way

810
00:35:20,320 --> 00:35:22,640
Speaker 1: your separate businesses are structured, you're gonna want to take

811
00:35:22,640 --> 00:35:24,319
Speaker 1: two different paths here when it comes to being able

812
00:35:24,360 --> 00:35:27,759
Speaker 1: to invest more for your retirement. And as a self

813
00:35:27,800 --> 00:35:31,280
Speaker 1: employed fella with no employees, your husband is the perfect

814
00:35:31,320 --> 00:35:34,359
Speaker 1: candidate for a solo four one K also known as

815
00:35:34,400 --> 00:35:37,640
Speaker 1: an S four one K self employed four one K.

816
00:35:38,280 --> 00:35:41,399
Speaker 1: This account comes with two contribution limits. So first, you've

817
00:35:41,440 --> 00:35:44,080
Speaker 1: got the typical four one K contribution limit that all

818
00:35:44,120 --> 00:35:47,320
Speaker 1: employees are kept at, which is twenty three thousand dollars

819
00:35:47,360 --> 00:35:49,560
Speaker 1: for this year. But then in addition to that, he

820
00:35:49,600 --> 00:35:52,799
Speaker 1: can contribute to his solo as the employer. Right, so

821
00:35:52,840 --> 00:35:54,920
Speaker 1: he's switching hats. He just took off his employee hat.

822
00:35:54,960 --> 00:35:57,880
Speaker 1: Now he's putting on the boss employ your hat. And

823
00:35:57,920 --> 00:36:00,720
Speaker 1: that is limited to twenty five percent of his gross

824
00:36:00,800 --> 00:36:04,440
Speaker 1: wages or his W two income. But together, what that

825
00:36:04,560 --> 00:36:07,080
Speaker 1: means is that it's possible for him to hurl sixty

826
00:36:07,200 --> 00:36:10,920
Speaker 1: nine thousand dollars into that account if he decides to

827
00:36:10,960 --> 00:36:14,359
Speaker 1: max out both. They're not all that hard to set up.

828
00:36:14,520 --> 00:36:16,600
Speaker 1: And you know, when you're talking about wanting to make

829
00:36:16,680 --> 00:36:18,480
Speaker 1: up for lost ground, you're talking about wanting to catch

830
00:36:18,560 --> 00:36:22,439
Speaker 1: up quickly. I see this as the easy slam dunk

831
00:36:22,480 --> 00:36:24,799
Speaker 1: way for y'all to get a whole lot more money

832
00:36:24,840 --> 00:36:27,200
Speaker 1: into retirement if you've got the ability to pull this

833
00:36:27,280 --> 00:36:27,600
Speaker 1: off well.

834
00:36:27,600 --> 00:36:29,520
Speaker 2: The SO four one kmap that is the account that

835
00:36:29,560 --> 00:36:31,440
Speaker 2: you and I that we have used because we're the

836
00:36:31,440 --> 00:36:33,560
Speaker 2: only full time employees have had of money, and if

837
00:36:33,560 --> 00:36:35,560
Speaker 2: we were to hire one person as an employee, though,

838
00:36:35,840 --> 00:36:38,239
Speaker 2: we would no longer have this account at our disposal.

839
00:36:38,440 --> 00:36:40,920
Speaker 2: We opened ours up with Fidelity, But Fidelity, Vanguard, and

840
00:36:40,960 --> 00:36:43,920
Speaker 2: twub have pretty great low cost solo for one K accounts,

841
00:36:43,920 --> 00:36:45,960
Speaker 2: so I would look into those for your husband and

842
00:36:46,000 --> 00:36:49,319
Speaker 2: amy for you, since you do have employees, you're a

843
00:36:49,360 --> 00:36:52,759
Speaker 2: baller hiring other people on a full time basis, you

844
00:36:52,800 --> 00:36:55,520
Speaker 2: have to decide whether or not, essentially you want to

845
00:36:55,560 --> 00:36:57,680
Speaker 2: offer them a retirement account or not as well. Is

846
00:36:57,719 --> 00:36:59,759
Speaker 2: this something you want to establish just for yourself or

847
00:36:59,800 --> 00:37:02,920
Speaker 2: is this something that you want to make available to others.

848
00:37:03,520 --> 00:37:05,400
Speaker 2: It could be something that used to retain talent, So

849
00:37:05,400 --> 00:37:06,839
Speaker 2: I want you to think about that as a small

850
00:37:06,880 --> 00:37:09,400
Speaker 2: business owner. If you want to keep these people around

851
00:37:09,440 --> 00:37:11,120
Speaker 2: and you can afford to do it, this is a

852
00:37:11,160 --> 00:37:15,520
Speaker 2: perk that might help keep people your employees loyal to

853
00:37:16,160 --> 00:37:18,839
Speaker 2: the job that they've got, And so if that's the case,

854
00:37:18,880 --> 00:37:20,880
Speaker 2: the set IRA could be a great vehicle for that.

855
00:37:20,920 --> 00:37:23,000
Speaker 2: But read the fine print on the set IRA, because

856
00:37:23,000 --> 00:37:26,120
Speaker 2: you have to contribute the same percentage for each employee.

857
00:37:26,440 --> 00:37:28,759
Speaker 2: That could get expensive really quickly, kind of depending on

858
00:37:28,800 --> 00:37:30,799
Speaker 2: how you set that up. So you can't do the

859
00:37:30,800 --> 00:37:33,759
Speaker 2: solo four one K because you have full time employees.

860
00:37:34,000 --> 00:37:36,560
Speaker 2: The set IRA is at least something one of the

861
00:37:36,640 --> 00:37:39,359
Speaker 2: vehicles worth considering. It's it's pretty much the one that

862
00:37:39,640 --> 00:37:42,640
Speaker 2: people who do hire others often tend to gravitate towards.

863
00:37:42,719 --> 00:37:44,480
Speaker 1: Yeah, and the set by the way, stands for Simplified

864
00:37:44,480 --> 00:37:47,920
Speaker 1: employee pension. But if you're looking down that path, you

865
00:37:47,920 --> 00:37:50,240
Speaker 1: could also just offer a traditional four one K plan

866
00:37:50,320 --> 00:37:52,839
Speaker 1: if you wanted to. Which so the thing is, those

867
00:37:52,920 --> 00:37:54,200
Speaker 1: used to be really hard to set up, which is

868
00:37:54,200 --> 00:37:56,319
Speaker 1: why I think over the past several decades the set

869
00:37:56,400 --> 00:37:58,719
Speaker 1: got to be a lot more popular. But now it's

870
00:37:58,800 --> 00:38:02,120
Speaker 1: relatively easy. Things to newer companies out there, like Guideline

871
00:38:02,239 --> 00:38:05,279
Speaker 1: Betterment as well as Human Interest, and you might be

872
00:38:05,320 --> 00:38:07,120
Speaker 1: able to set the plan up for your company there

873
00:38:07,719 --> 00:38:11,160
Speaker 1: in the like two thousand dollars a year neighborhood, which

874
00:38:11,320 --> 00:38:14,120
Speaker 1: isn't actually all that awful depending on Again, it kind

875
00:38:14,120 --> 00:38:16,160
Speaker 1: of depends on the scale and the size of your business.

876
00:38:16,200 --> 00:38:18,120
Speaker 2: This is one of those things where like fintech companies

877
00:38:18,200 --> 00:38:20,640
Speaker 2: came to the rescue in it was really hard to

878
00:38:20,640 --> 00:38:23,200
Speaker 2: work with some of the bigger players, and they said, listen,

879
00:38:23,280 --> 00:38:26,080
Speaker 2: we're gonna use some of these cheap, low cost funds

880
00:38:26,480 --> 00:38:29,400
Speaker 2: with companies like Vanguarden Finelity, but we're going to reduce

881
00:38:30,120 --> 00:38:33,000
Speaker 2: the price per person that it costs to run these plans.

882
00:38:33,120 --> 00:38:35,800
Speaker 2: So small businesses are now more competitive in the marketplace

883
00:38:35,840 --> 00:38:38,600
Speaker 2: when it comes to finding great employees because they can

884
00:38:38,640 --> 00:38:41,680
Speaker 2: offer these perks they used to be just prohibitively expensive

885
00:38:41,719 --> 00:38:42,439
Speaker 2: to offer.

886
00:38:42,600 --> 00:38:45,160
Speaker 1: Yeah, it only used to be larger companies, like just

887
00:38:45,360 --> 00:38:49,120
Speaker 1: typical corporate giant like Microsoft, so that we're offering for

888
00:38:49,280 --> 00:38:51,120
Speaker 1: one k's but it's like, oh no, you can actually

889
00:38:51,480 --> 00:38:53,640
Speaker 1: offer that now if we wanted to hire people, Matt like,

890
00:38:53,800 --> 00:38:56,040
Speaker 1: this is totally there, how we would do it exactly,

891
00:38:56,080 --> 00:38:57,719
Speaker 1: And then you can offer a match if you want to.

892
00:38:57,760 --> 00:39:00,600
Speaker 1: You can allow each individual employee to decide what it

893
00:39:00,680 --> 00:39:02,520
Speaker 1: is that they would like to contribute, but based on

894
00:39:02,560 --> 00:39:04,120
Speaker 1: the way you're asking your question, it sounds like this

895
00:39:04,160 --> 00:39:06,399
Speaker 1: is more of a personal question, not a business question,

896
00:39:06,480 --> 00:39:08,879
Speaker 1: and it's something that you and your husband are trying

897
00:39:08,880 --> 00:39:11,560
Speaker 1: to find ways to salk more away for your retirement.

898
00:39:11,640 --> 00:39:13,480
Speaker 1: And if that's the case, I would say focus on

899
00:39:13,520 --> 00:39:16,480
Speaker 1: your husband's self employed or solo for one K first,

900
00:39:16,800 --> 00:39:19,480
Speaker 1: in large part because of the fact that there are

901
00:39:19,520 --> 00:39:23,960
Speaker 1: no additional expenses associated with that where you're extending benefits

902
00:39:24,040 --> 00:39:26,680
Speaker 1: to other employees. They're at the company in your case.

903
00:39:26,920 --> 00:39:28,439
Speaker 1: And one other thing I would mention too is don't

904
00:39:28,440 --> 00:39:32,400
Speaker 1: forget about brokerage accounts because as a small business owner,

905
00:39:32,440 --> 00:39:35,440
Speaker 1: a lot of times your revenue or your personal income

906
00:39:35,600 --> 00:39:38,600
Speaker 1: might it's highly variable oftentimes, and so you might there

907
00:39:38,680 --> 00:39:41,399
Speaker 1: might be years where you're not able to maybe put

908
00:39:41,480 --> 00:39:43,279
Speaker 1: much away towards retirement at all. But then there might

909
00:39:43,320 --> 00:39:45,000
Speaker 1: be a couple of years where at the end of

910
00:39:45,040 --> 00:39:46,719
Speaker 1: the year you're looking at one hundred thousand dollars and

911
00:39:46,719 --> 00:39:49,160
Speaker 1: you're thinking, what in the world am I supposed to

912
00:39:49,160 --> 00:39:49,320
Speaker 1: do with?

913
00:39:49,520 --> 00:39:49,560
Speaker 4: Is?

914
00:39:49,800 --> 00:39:51,880
Speaker 1: Yeah, And in that case, like the answer is a

915
00:39:51,880 --> 00:39:54,120
Speaker 1: brokerage account. And a lot of people we know who

916
00:39:54,160 --> 00:39:57,280
Speaker 1: own small businesses, whether it's because they sold a company

917
00:39:57,400 --> 00:39:59,600
Speaker 1: or because they had a few great years that is

918
00:39:59,600 --> 00:40:01,839
Speaker 1: what they're without money. It's a lot of it is

919
00:40:02,200 --> 00:40:04,320
Speaker 1: in a brokerage account, and granted you don't have the

920
00:40:04,719 --> 00:40:07,960
Speaker 1: tax benefit there, but the positive side of the equation

921
00:40:08,040 --> 00:40:10,479
Speaker 1: is you don't have to wait until full retirement age

922
00:40:10,520 --> 00:40:12,680
Speaker 1: to be able to access those funds as well. So

923
00:40:12,880 --> 00:40:15,000
Speaker 1: I think even though they're not called qute unquote retirement accounts,

924
00:40:15,000 --> 00:40:17,399
Speaker 1: there's a lot of quote unquote retirement money that are

925
00:40:17,400 --> 00:40:20,919
Speaker 1: in brokerage accounts. Yes, that we're invested by small business owners. Yeah, Matt.

926
00:40:21,040 --> 00:40:25,719
Speaker 2: Every small business owner knows that it's your income can

927
00:40:25,760 --> 00:40:28,520
Speaker 2: be it's less linear and up into the right slowly

928
00:40:28,560 --> 00:40:31,000
Speaker 2: but surely, like that's often what it looks like in

929
00:40:31,040 --> 00:40:34,640
Speaker 2: the traditional employment world, but for small business owners it

930
00:40:34,680 --> 00:40:37,239
Speaker 2: might be two great years and then one semi rough

931
00:40:37,320 --> 00:40:40,759
Speaker 2: year and then or five bad years. Right, Yeah, so

932
00:40:40,800 --> 00:40:42,120
Speaker 2: you can be all over the place. You might have

933
00:40:42,160 --> 00:40:43,480
Speaker 2: to take a little more of a Joseph in the

934
00:40:43,520 --> 00:40:46,320
Speaker 2: Book of Genesis sort of route, like stocking up for

935
00:40:46,360 --> 00:40:48,680
Speaker 2: the fami in the years and investing more in the

936
00:40:48,760 --> 00:40:51,600
Speaker 2: years that are awesome, and then investing little to nothing

937
00:40:51,600 --> 00:40:54,520
Speaker 2: potentially even in some of the years that aren't as good.

938
00:40:54,800 --> 00:40:57,279
Speaker 2: But Amy, we hope that that helps and that maybe

939
00:40:57,280 --> 00:40:59,759
Speaker 2: even you're able to make your business more competitive with

940
00:41:00,000 --> 00:41:02,960
Speaker 2: the retirement account you choose. Now, we've got more questions

941
00:41:02,960 --> 00:41:05,880
Speaker 2: we've got to take, including one about underrated ways to

942
00:41:05,920 --> 00:41:08,319
Speaker 2: save Fellow how to money listeners, of course, had some

943
00:41:08,360 --> 00:41:10,239
Speaker 2: really good thoughts on that one. We'll get to that

944
00:41:10,280 --> 00:41:11,520
Speaker 2: question and more right after this.

945
00:41:19,800 --> 00:41:22,120
Speaker 1: Go back from the break, and of course it's time

946
00:41:22,239 --> 00:41:24,440
Speaker 1: now for our Facebook question of the week, which is

947
00:41:24,480 --> 00:41:28,000
Speaker 1: from Christian and he writes, Hey, guys, what has been

948
00:41:28,040 --> 00:41:31,360
Speaker 1: some of your favorite quote unquote underrated ways to save money?

949
00:41:31,440 --> 00:41:33,840
Speaker 1: My wife and I have a fairly dialed in budget,

950
00:41:33,880 --> 00:41:36,359
Speaker 1: but are looking for some unique ways that we might

951
00:41:36,440 --> 00:41:38,560
Speaker 1: not have considered to save some extra money as we

952
00:41:38,680 --> 00:41:42,080
Speaker 1: prepare to save for a home. Oh that's exciting. Save

953
00:41:42,200 --> 00:41:43,080
Speaker 1: enough for that down payment.

954
00:41:43,200 --> 00:41:44,200
Speaker 2: Yeah, I want to hear from you first.

955
00:41:44,239 --> 00:41:44,479
Speaker 4: Dude.

956
00:41:44,480 --> 00:41:46,440
Speaker 2: Oh, you've talked a lot about cutting your own hair.

957
00:41:46,520 --> 00:41:47,439
Speaker 2: That's gotta be one of them.

958
00:41:47,640 --> 00:41:50,600
Speaker 1: That's a classic. Yeah, it's a classic mat way of saving. Well,

959
00:41:50,600 --> 00:41:52,480
Speaker 1: we've recently talked about this, but I would say one

960
00:41:52,520 --> 00:41:56,360
Speaker 1: of the most effective ways on an ongoing basis that

961
00:41:56,400 --> 00:41:57,880
Speaker 1: we've been able to save money. Is the fact that

962
00:41:57,880 --> 00:42:00,600
Speaker 1: we still only have one car. I think about just

963
00:42:00,640 --> 00:42:02,719
Speaker 1: all the things, Like I guess when I read this question,

964
00:42:02,800 --> 00:42:05,480
Speaker 1: I think through, what are how are people going to

965
00:42:05,560 --> 00:42:07,799
Speaker 1: judge you because you're trying to save money? Like what

966
00:42:07,840 --> 00:42:09,160
Speaker 1: are the things that you do that are kind of

967
00:42:09,200 --> 00:42:12,359
Speaker 1: weird where you're able to save a buck you don't

968
00:42:12,400 --> 00:42:14,680
Speaker 1: really care what other people are thinking. Like when we

969
00:42:14,840 --> 00:42:16,680
Speaker 1: moved up here into the burbs, like we could have

970
00:42:16,719 --> 00:42:20,000
Speaker 1: moved like out to the real suburbs, but that also

971
00:42:20,040 --> 00:42:21,759
Speaker 1: would have meant that we would have been living a

972
00:42:21,800 --> 00:42:25,880
Speaker 1: more isolated existence, car centric lifestyle, which exactly would have

973
00:42:25,960 --> 00:42:28,400
Speaker 1: meant that we would need to have gotten that second vehicle.

974
00:42:28,400 --> 00:42:30,720
Speaker 1: And the fact is we chose a house that's smaller,

975
00:42:30,800 --> 00:42:33,400
Speaker 1: that's not nearly as fancy, in order to be closer

976
00:42:33,440 --> 00:42:36,200
Speaker 1: to like a city center, like a city square, because

977
00:42:36,239 --> 00:42:37,840
Speaker 1: I knew that that meant that I was still going

978
00:42:37,920 --> 00:42:40,480
Speaker 1: to be able to maintain the similar lifestyle, or at

979
00:42:40,560 --> 00:42:42,359
Speaker 1: least the lifestyle that I was looking for, which meant

980
00:42:42,440 --> 00:42:45,640
Speaker 1: me sweating and right pedaling around on my stupid little bike.

981
00:42:45,840 --> 00:42:48,520
Speaker 1: But I love it. The ability to stay active. You're

982
00:42:48,560 --> 00:42:50,600
Speaker 1: moving around like fresh air, sunlight.

983
00:42:50,800 --> 00:42:52,640
Speaker 2: I thought your your suggestion was going to be don't

984
00:42:52,680 --> 00:42:53,240
Speaker 2: go to the doctor.

985
00:42:55,680 --> 00:42:59,359
Speaker 1: Seems this is a two birds of one stone sort

986
00:42:59,360 --> 00:43:01,080
Speaker 1: of deal. I don't to go to the doctor because

987
00:43:01,360 --> 00:43:04,120
Speaker 1: more eventually that I'm biking around. That's true, So I

988
00:43:04,120 --> 00:43:06,440
Speaker 1: think mine is a Lots of times when people talk

989
00:43:06,440 --> 00:43:08,840
Speaker 1: about buying a used car to save money, they're often saying.

990
00:43:08,680 --> 00:43:11,160
Speaker 2: Buy a three or four year old used car. It'll

991
00:43:11,200 --> 00:43:14,319
Speaker 2: be depreciated and you'll you know, you're gonna you're gonna

992
00:43:14,320 --> 00:43:16,520
Speaker 2: save a lot of money, versus buying new. My my

993
00:43:16,600 --> 00:43:18,760
Speaker 2: thing is, and I know a lot of people disagree

994
00:43:18,760 --> 00:43:20,359
Speaker 2: with me because they'll be like, no, but it needs

995
00:43:20,400 --> 00:43:23,439
Speaker 2: to be reliable, is to buy a really, really old car,

996
00:43:24,040 --> 00:43:27,960
Speaker 2: because if you buy something that's mostly fully depreciated out

997
00:43:28,160 --> 00:43:30,719
Speaker 2: I'm talking about a four to six thousand dollars car,

998
00:43:30,880 --> 00:43:33,040
Speaker 2: which are harder to come by decent ones these days.

999
00:43:33,040 --> 00:43:35,840
Speaker 2: I'm not not gonna lie, but I think that I

1000
00:43:35,920 --> 00:43:37,680
Speaker 2: have found that to be a sweet spot for me.

1001
00:43:38,160 --> 00:43:40,680
Speaker 2: And you know, we have two cars, not one these days,

1002
00:43:40,920 --> 00:43:43,200
Speaker 2: but having one that's like super duper old and the

1003
00:43:43,200 --> 00:43:45,279
Speaker 2: other one's like pretty like I'm not gonna lose much

1004
00:43:45,320 --> 00:43:48,399
Speaker 2: money and appreciation on those rides. They're also cheaper to ensure.

1005
00:43:48,480 --> 00:43:51,000
Speaker 2: So I like having older cars. I like knowing that

1006
00:43:51,040 --> 00:43:54,840
Speaker 2: my car budget is like minimal, incredibly small. Feel like

1007
00:43:54,880 --> 00:43:56,320
Speaker 2: it just gives me a lot of wiggle room to

1008
00:43:56,760 --> 00:43:59,160
Speaker 2: spend more on things that matter more to me. In

1009
00:43:59,239 --> 00:44:00,920
Speaker 2: cars just don't fit that bill, should we.

1010
00:44:01,080 --> 00:44:02,920
Speaker 1: One of us said something else that they're both kind

1011
00:44:02,920 --> 00:44:04,920
Speaker 1: of car centric. Yeah, something, that's why I refer to

1012
00:44:04,920 --> 00:44:07,000
Speaker 1: your hair. You cut your own hair, right, Okay. A

1013
00:44:07,040 --> 00:44:09,120
Speaker 1: smaller one that I thought of here is the fact

1014
00:44:09,160 --> 00:44:11,439
Speaker 1: that so this is not a way to save money.

1015
00:44:11,480 --> 00:44:14,160
Speaker 1: But Kate and I took Heavy to the Atlanta Symphony Orchestra,

1016
00:44:14,440 --> 00:44:17,560
Speaker 1: which is like a fancy outing, and so you snuck in, Yeah,

1017
00:44:17,560 --> 00:44:18,120
Speaker 1: we went in.

1018
00:44:18,080 --> 00:44:20,120
Speaker 2: Through the exit in the fire door.

1019
00:44:20,440 --> 00:44:22,200
Speaker 1: Now you get dressed up for an occasion like that,

1020
00:44:22,640 --> 00:44:24,400
Speaker 1: and we took a few pictures because it was kind

1021
00:44:24,400 --> 00:44:26,279
Speaker 1: of like a special date. And I realized that the

1022
00:44:26,320 --> 00:44:27,840
Speaker 1: clothes I was wearing, like the shirt I was putting

1023
00:44:27,840 --> 00:44:29,759
Speaker 1: on is at least ten years old. It's a dress

1024
00:44:29,800 --> 00:44:32,120
Speaker 1: shirt that I used to wear, so like fancy dinners

1025
00:44:32,280 --> 00:44:35,120
Speaker 1: or weddings back in the day. And what I realized

1026
00:44:35,160 --> 00:44:37,480
Speaker 1: is that I don't care. And it made me think

1027
00:44:37,520 --> 00:44:40,600
Speaker 1: through how much money I have not spent on clothing.

1028
00:44:41,040 --> 00:44:43,160
Speaker 1: And I think for a lot of people it's hard

1029
00:44:43,160 --> 00:44:44,880
Speaker 1: to wrap their minds around that because it's just a

1030
00:44:44,880 --> 00:44:46,759
Speaker 1: regular part of their budget where they're just kind of

1031
00:44:47,080 --> 00:44:50,600
Speaker 1: constantly getting new threads. And I've got like a handful

1032
00:44:50,680 --> 00:44:52,800
Speaker 1: of long sleeve shirts, a handful of short sleeve shirts,

1033
00:44:52,880 --> 00:44:55,080
Speaker 1: and they're just on rotation, and once they get holes

1034
00:44:55,080 --> 00:44:57,359
Speaker 1: in them, I'll replace them. But typically I replaced them

1035
00:44:57,360 --> 00:44:59,120
Speaker 1: with like the exact same shirt because I just I

1036
00:44:59,160 --> 00:45:00,480
Speaker 1: have a certain kind of shirt that I like.

1037
00:45:00,600 --> 00:45:03,719
Speaker 2: That's funny, we're too similar because I was wearing I

1038
00:45:03,760 --> 00:45:06,279
Speaker 2: wore the other day the shirt that I wore, and

1039
00:45:06,360 --> 00:45:11,120
Speaker 2: my daughter noticed this in Emily and I's engagement pictures. Yes,

1040
00:45:11,760 --> 00:45:13,839
Speaker 2: it's like one of those pearl snapshirts I was talking about.

1041
00:45:13,880 --> 00:45:16,040
Speaker 2: She was like, wait a second, is this the shirt

1042
00:45:16,040 --> 00:45:18,359
Speaker 2: you're wearing in those pictures of mommy from fifteen years ago.

1043
00:45:18,400 --> 00:45:20,879
Speaker 2: I was like, yeah, I still wear it. I still

1044
00:45:20,920 --> 00:45:21,399
Speaker 2: love that shirt.

1045
00:45:21,440 --> 00:45:23,640
Speaker 1: And the thing is, Kate, I think she feels the

1046
00:45:23,640 --> 00:45:26,240
Speaker 1: same way too, because the vast majority of her clothes,

1047
00:45:26,239 --> 00:45:28,120
Speaker 1: of clothes that she gets for the kids, even shoes.

1048
00:45:28,480 --> 00:45:30,960
Speaker 1: She gets them all at goodwill, and that's one of

1049
00:45:31,000 --> 00:45:32,960
Speaker 1: the benefits of living in such a wealthy country is

1050
00:45:33,000 --> 00:45:37,680
Speaker 1: that folks are cycling through their clothing and their desire

1051
00:45:37,880 --> 00:45:40,120
Speaker 1: for I don't know, something new or the latest and

1052
00:45:40,120 --> 00:45:42,640
Speaker 1: greatest man. That means that's we're financially winning because of

1053
00:45:42,640 --> 00:45:46,200
Speaker 1: this exactly no shame at all and going to a

1054
00:45:46,280 --> 00:45:46,920
Speaker 1: threst store.

1055
00:45:47,000 --> 00:45:49,000
Speaker 2: Living that hand me down life. Let's quickly get to

1056
00:45:49,040 --> 00:45:51,480
Speaker 2: a couple of other great answers and suggestions that people

1057
00:45:51,480 --> 00:45:54,520
Speaker 2: in the how to Money Facebook group gave. Angie mentioned

1058
00:45:54,520 --> 00:45:56,799
Speaker 2: window shopping, which I thought was brilliant, like, if you

1059
00:45:56,840 --> 00:45:58,520
Speaker 2: like shopping but you don't want to spend any money,

1060
00:45:58,880 --> 00:46:01,399
Speaker 2: leave your wallet at home, just go browsing and said,

1061
00:46:01,640 --> 00:46:04,080
Speaker 2: but actually leave your wallet so that you don't get smart,

1062
00:46:04,080 --> 00:46:07,440
Speaker 2: you're not attempted to spend. Carrie mentioned that that she

1063
00:46:07,560 --> 00:46:10,320
Speaker 2: cancels subscriptions as soon as she gets them, which is

1064
00:46:10,360 --> 00:46:12,880
Speaker 2: also incredibly intelligent. Right, so you get the service, you

1065
00:46:12,920 --> 00:46:15,520
Speaker 2: sign up, but you don't have to fret about forgetting

1066
00:46:15,520 --> 00:46:17,680
Speaker 2: to cancel down the line. You can always sign up again.

1067
00:46:17,719 --> 00:46:20,600
Speaker 2: So if you start on let's say November first, cancel

1068
00:46:20,640 --> 00:46:22,319
Speaker 2: it on November first, you still have it through the

1069
00:46:22,320 --> 00:46:23,439
Speaker 2: rest of the month and you don't have to worry

1070
00:46:23,440 --> 00:46:24,440
Speaker 2: about the auto renew.

1071
00:46:24,239 --> 00:46:26,160
Speaker 1: You got to make sure that they say you will

1072
00:46:26,200 --> 00:46:28,799
Speaker 1: still be able to enjoy the services. Otherwise you're like,

1073
00:46:30,960 --> 00:46:33,279
Speaker 1: then you really shut yourself in the foot. I saw

1074
00:46:33,320 --> 00:46:35,879
Speaker 1: that tongue says to shot for car insurance every time

1075
00:46:35,920 --> 00:46:38,960
Speaker 1: your policy is up for renewal, which takes some dedication.

1076
00:46:39,440 --> 00:46:41,719
Speaker 1: I feel like we're more like, hey, check your car

1077
00:46:41,760 --> 00:46:44,920
Speaker 1: insurance every two to three years type of folks. But honestly,

1078
00:46:45,080 --> 00:46:47,440
Speaker 1: especially in today's like insurance and environment, this is a

1079
00:46:47,440 --> 00:46:49,239
Speaker 1: really smart move. And what I really like about this

1080
00:46:49,320 --> 00:46:51,200
Speaker 1: as well is the fact that this is like a

1081
00:46:51,239 --> 00:46:54,359
Speaker 1: bigger line item because one of the downsides of save

1082
00:46:54,400 --> 00:46:56,720
Speaker 1: four figures, yes, yeah, one of the downsides of finding

1083
00:46:56,760 --> 00:46:59,680
Speaker 1: some of these unique sort of fun ways to save though,

1084
00:47:00,080 --> 00:47:03,120
Speaker 1: is that oftentimes you're trading your time for the ability

1085
00:47:03,160 --> 00:47:05,920
Speaker 1: to save in the here now a little bit. So

1086
00:47:06,160 --> 00:47:08,239
Speaker 1: that's just I don't know, it's a slippery slope when

1087
00:47:08,280 --> 00:47:10,520
Speaker 1: it comes to finding ways to save a few bucks

1088
00:47:10,560 --> 00:47:12,480
Speaker 1: in the here now, But how much time are you

1089
00:47:12,480 --> 00:47:15,400
Speaker 1: giving up for that? Another one here from Tory and

1090
00:47:15,400 --> 00:47:17,720
Speaker 1: this is the show that the getting coffee out problem

1091
00:47:17,800 --> 00:47:20,680
Speaker 1: that it's not just this personal finance myth. But she

1092
00:47:20,719 --> 00:47:23,480
Speaker 1: said that she started to make coffee at home. She's

1093
00:47:23,520 --> 00:47:26,440
Speaker 1: saving forty dollars a week. It's a lot. Well, it's

1094
00:47:26,440 --> 00:47:28,560
Speaker 1: not just because of the coffee. It's because she often

1095
00:47:28,800 --> 00:47:33,200
Speaker 1: ends up getting a pastry with her coffee, which, hey,

1096
00:47:33,320 --> 00:47:36,520
Speaker 1: I can relate. Like our local coffee shop. We live

1097
00:47:36,680 --> 00:47:38,759
Speaker 1: a luxurious life show. There's actually two coffee shops that

1098
00:47:38,800 --> 00:47:40,920
Speaker 1: we like to alternate between. One of them has amazing

1099
00:47:40,920 --> 00:47:44,439
Speaker 1: coffee and the pastries are fine. The other one has

1100
00:47:44,680 --> 00:47:47,320
Speaker 1: fine coffee, but the pastries are completely off the chain,

1101
00:47:47,440 --> 00:47:48,840
Speaker 1: like literally some of the best I've had in my

1102
00:47:48,960 --> 00:47:51,200
Speaker 1: entire life. And it is hard for me to not

1103
00:47:51,239 --> 00:47:53,520
Speaker 1: want to walk in there occasionally and get myself an

1104
00:47:53,560 --> 00:47:55,759
Speaker 1: almond bear claw because they're so good. They're so good.

1105
00:47:55,920 --> 00:47:58,000
Speaker 2: But I think that's true. And I you and I

1106
00:47:58,000 --> 00:48:00,320
Speaker 2: both kind of hate how the coffee has bet or

1107
00:48:00,360 --> 00:48:03,160
Speaker 2: the avocado toast thing became such a stupid meme.

1108
00:48:03,440 --> 00:48:05,719
Speaker 1: But it's it's also true. There's some truth to it

1109
00:48:05,760 --> 00:48:06,440
Speaker 1: that you could.

1110
00:48:06,200 --> 00:48:08,160
Speaker 2: Spend too much money at the coffee shop and that

1111
00:48:08,000 --> 00:48:11,439
Speaker 2: that money does add up. Richard said, a clothes drying

1112
00:48:11,520 --> 00:48:13,800
Speaker 2: rack is saving him from running his dryer and he's

1113
00:48:14,000 --> 00:48:16,880
Speaker 2: energy constantly. I think that's wise. It's also better for

1114
00:48:16,920 --> 00:48:18,160
Speaker 2: if you want to make your clothes lost long.

1115
00:48:18,360 --> 00:48:20,480
Speaker 1: Yeah, and especially in the winter too, when the air

1116
00:48:20,520 --> 00:48:22,960
Speaker 1: is dry. It's a nice way of introducing moisture into

1117
00:48:23,000 --> 00:48:25,080
Speaker 1: the air, which is easier on your sinuses. There you go,

1118
00:48:25,200 --> 00:48:28,719
Speaker 1: it's a little health money crossover. The Matt's spinoff Hack

1119
00:48:28,800 --> 00:48:30,800
Speaker 1: podcast is going to be so good. And then Amy

1120
00:48:30,960 --> 00:48:34,120
Speaker 1: mentioned keeping non perishable snacks on hand in the car

1121
00:48:34,280 --> 00:48:36,480
Speaker 1: to avoid getting fast food in a pinch, which I

1122
00:48:36,520 --> 00:48:39,239
Speaker 1: love because Matt, isn't that like a thing Your kids

1123
00:48:39,239 --> 00:48:41,440
Speaker 1: are hungry or you're hungry and you're out there on

1124
00:48:41,440 --> 00:48:43,400
Speaker 1: the road literally did it last weekend due, Yeah, and

1125
00:48:43,600 --> 00:48:46,279
Speaker 1: having those snacks in the car can save you from

1126
00:48:46,480 --> 00:48:48,880
Speaker 1: forking over forty fifty bucks that you weren't expecting. Me.

1127
00:48:49,000 --> 00:48:50,759
Speaker 1: We should do that and not just like I think

1128
00:48:50,800 --> 00:48:52,760
Speaker 1: a lot of tons folks will hear non perishable snacks

1129
00:48:52,800 --> 00:48:54,520
Speaker 1: and they think like certain bars or whatever, but like

1130
00:48:54,600 --> 00:48:57,480
Speaker 1: I'm thinking of like almonds, just something that is healthy,

1131
00:48:58,040 --> 00:49:00,600
Speaker 1: not processed, that's going to give you an bang for

1132
00:49:00,600 --> 00:49:02,680
Speaker 1: your buck to get you to that next meal. Perhaps

1133
00:49:02,880 --> 00:49:04,839
Speaker 1: all right, we got signed for another quick question here

1134
00:49:04,880 --> 00:49:08,480
Speaker 1: from Dan. He writes, if there's a bubble in passive investing,

1135
00:49:08,520 --> 00:49:12,919
Speaker 1: in that bubble pops, how does a wise investor hedge jil,

1136
00:49:12,960 --> 00:49:16,040
Speaker 1: have you given much thought to the passive investing landscape

1137
00:49:16,040 --> 00:49:16,680
Speaker 1: that they find ourselves?

1138
00:49:16,800 --> 00:49:18,719
Speaker 2: There's been more written about it in recent years, and

1139
00:49:18,719 --> 00:49:22,280
Speaker 2: it is something that passive index fund investors have expressed

1140
00:49:22,320 --> 00:49:25,840
Speaker 2: a little more concern about. And so I think Dan's

1141
00:49:25,880 --> 00:49:29,520
Speaker 2: question is worth talking about. But you know, he basically says, Okay,

1142
00:49:29,520 --> 00:49:31,360
Speaker 2: how does somebody hedge? And I think the first question

1143
00:49:31,480 --> 00:49:33,440
Speaker 2: is is therey bubble and passive investing?

1144
00:49:33,520 --> 00:49:33,680
Speaker 4: Right?

1145
00:49:35,239 --> 00:49:37,799
Speaker 2: That's the real question, right. Index funds rise in popularity

1146
00:49:37,880 --> 00:49:40,520
Speaker 2: is money is flowing in every two weeks with every

1147
00:49:40,520 --> 00:49:43,440
Speaker 2: paycheck for so many people, like tens of millions of

1148
00:49:43,480 --> 00:49:46,960
Speaker 2: Americans around the country, into the total stock market index

1149
00:49:46,960 --> 00:49:49,600
Speaker 2: fund into target date funds. Some people are concerned that

1150
00:49:49,640 --> 00:49:52,440
Speaker 2: this rise in popularity that basically too many people are

1151
00:49:52,440 --> 00:49:55,040
Speaker 2: buying the overall market with each paycheck and it's leading

1152
00:49:55,040 --> 00:49:57,759
Speaker 2: to a less dynamic stock market. And one of the

1153
00:49:57,800 --> 00:50:00,640
Speaker 2: most you know, prominent folks who's taking this that index

1154
00:50:00,640 --> 00:50:03,000
Speaker 2: funds are in a bubble is Michael Burry Matt. He

1155
00:50:03,120 --> 00:50:06,120
Speaker 2: was the movie The Big Short, like he was profiled

1156
00:50:06,160 --> 00:50:08,440
Speaker 2: in there about five years ago. And part of why

1157
00:50:08,440 --> 00:50:11,400
Speaker 2: he's famous is because he correctly predicted what was going

1158
00:50:11,440 --> 00:50:13,640
Speaker 2: to happen in the housing market recession up to the

1159
00:50:13,640 --> 00:50:18,239
Speaker 2: Great Recession. Yes, and yet index funds don't seem to

1160
00:50:18,280 --> 00:50:20,879
Speaker 2: have upended the stock market in any visible way since

1161
00:50:20,880 --> 00:50:23,400
Speaker 2: his prediction five years ago. I do think, yeah, as

1162
00:50:23,440 --> 00:50:27,359
Speaker 2: we're seeing more content being written about this potential phenomenon,

1163
00:50:27,680 --> 00:50:30,600
Speaker 2: it seems like there's more bark than bite.

1164
00:50:30,600 --> 00:50:33,719
Speaker 1: I guess yeah. So to explain it, the argument is

1165
00:50:33,760 --> 00:50:36,520
Speaker 1: often that there won't be enough active traders who are

1166
00:50:36,520 --> 00:50:40,279
Speaker 1: pretty sensitive left to restore efficiency within the markets. But

1167
00:50:40,360 --> 00:50:42,840
Speaker 1: that being said, active trading is still the vast majority

1168
00:50:42,920 --> 00:50:46,480
Speaker 1: in index fund's own roughly like roughly twenty percent of

1169
00:50:46,520 --> 00:50:48,680
Speaker 1: the market, like some say as low as fifteen percent,

1170
00:50:48,680 --> 00:50:51,400
Speaker 1: but others say as much as thirty five percent. But

1171
00:50:51,400 --> 00:50:54,280
Speaker 1: that's of the overall global share amounts, and that doesn't

1172
00:50:54,320 --> 00:50:56,640
Speaker 1: sound absurd to me. And the truth is, if index

1173
00:50:56,680 --> 00:51:00,000
Speaker 1: fund popularity rises so much that it does actually lead

1174
00:51:00,120 --> 00:51:03,480
Speaker 1: to market inefficiencies, well human nature is going to take over.

1175
00:51:03,560 --> 00:51:07,000
Speaker 1: This is where like like greed is good, Gordon Gecko. Right.

1176
00:51:07,480 --> 00:51:10,160
Speaker 1: This is where this comes into play because individual.

1177
00:51:09,840 --> 00:51:12,080
Speaker 2: People will say, oh, too much money flowing into passive

1178
00:51:12,080 --> 00:51:14,719
Speaker 2: index funds looks like there's opportunity elsewhere.

1179
00:51:14,360 --> 00:51:17,239
Speaker 1: For yes, individuals and institutional investors, they're going to write

1180
00:51:17,239 --> 00:51:20,440
Speaker 1: that wrong by spotting them investing accordingly and then seeking

1181
00:51:20,440 --> 00:51:22,120
Speaker 1: to reap those outsized gains. Right.

1182
00:51:22,239 --> 00:51:24,160
Speaker 2: I think there are examples of this too, Matt. Like

1183
00:51:24,880 --> 00:51:27,520
Speaker 2: makes me think about Kathy Wood's ARC fund. I mean,

1184
00:51:27,560 --> 00:51:31,480
Speaker 2: she was became incredibly famous because of her post COVID

1185
00:51:31,560 --> 00:51:35,439
Speaker 2: run up. How well that fund performed. That's literally one

1186
00:51:35,560 --> 00:51:38,480
Speaker 2: example of thousands of these sorts of funds that are

1187
00:51:38,480 --> 00:51:40,920
Speaker 2: in existence where they say, hey, we're we actually have

1188
00:51:40,960 --> 00:51:42,759
Speaker 2: a stance on what we think is going to happen

1189
00:51:42,760 --> 00:51:45,719
Speaker 2: in certain sectors of the market. We are picking stocks accordingly,

1190
00:51:45,960 --> 00:51:49,239
Speaker 2: and we're offering this fund to outside investors because we

1191
00:51:49,280 --> 00:51:52,680
Speaker 2: think other people are going to agree and benefit monetarily

1192
00:51:52,760 --> 00:51:55,920
Speaker 2: from our strategy. But there are also, you know, millions

1193
00:51:55,920 --> 00:51:58,360
Speaker 2: of normal folks, Matt, just beyond these institutional investors and

1194
00:51:58,360 --> 00:52:00,759
Speaker 2: these bigger firms that are making these plays, tons of

1195
00:52:00,760 --> 00:52:03,960
Speaker 2: people on the sidelines in their home, you know, in

1196
00:52:04,000 --> 00:52:06,439
Speaker 2: their Lazy Boy or whatever with the robin Hood app

1197
00:52:06,440 --> 00:52:08,080
Speaker 2: on their phone, or the in One app or something

1198
00:52:08,120 --> 00:52:11,160
Speaker 2: like that. They're investing via these apps on their phones,

1199
00:52:11,360 --> 00:52:15,000
Speaker 2: and they're influencing the markets too, granted with fewer dollars,

1200
00:52:15,160 --> 00:52:18,080
Speaker 2: but still their combined influence makes a difference. It makes

1201
00:52:18,120 --> 00:52:19,520
Speaker 2: you think of Wall Street bets.

1202
00:52:19,680 --> 00:52:19,839
Speaker 4: Right.

1203
00:52:20,840 --> 00:52:23,840
Speaker 2: A small group of people on Reddit can have massive

1204
00:52:23,960 --> 00:52:27,720
Speaker 2: impacts of a bunch of indo individual investors. Their choices

1205
00:52:27,800 --> 00:52:30,440
Speaker 2: impact the market too, So, you know, I guess to

1206
00:52:30,480 --> 00:52:33,000
Speaker 2: the heart of Dan's question, should you avoid index funds

1207
00:52:33,280 --> 00:52:36,400
Speaker 2: because there's a potential index bubble? I don't think so,

1208
00:52:36,560 --> 00:52:39,960
Speaker 2: because I don't think an index fund bubble exists. I

1209
00:52:40,000 --> 00:52:43,399
Speaker 2: guess if you wanted hedging advice, we would say paying

1210
00:52:43,400 --> 00:52:46,319
Speaker 2: off debt. You know, that's maybe instead of investing more,

1211
00:52:46,400 --> 00:52:49,040
Speaker 2: you use some of those investing dollars to pay off debt.

1212
00:52:49,200 --> 00:52:51,239
Speaker 2: That's a guaranteed return on your money. You could also

1213
00:52:51,280 --> 00:52:55,400
Speaker 2: consider investing in real estate. That's another way to invest

1214
00:52:55,440 --> 00:52:59,240
Speaker 2: money without having as much risk of you know, stock

1215
00:52:59,280 --> 00:53:02,759
Speaker 2: market exposure, where I guess index funds could potentially reap

1216
00:53:02,840 --> 00:53:06,719
Speaker 2: some negative side effects of index fund concentration, but I

1217
00:53:06,760 --> 00:53:09,040
Speaker 2: think ultimately Matt, Like, our opinion hasn't changed on this,

1218
00:53:09,120 --> 00:53:11,640
Speaker 2: and nothing that's been written about this has made me

1219
00:53:11,719 --> 00:53:15,040
Speaker 2: think that index funds aren't still low cost index funds

1220
00:53:15,040 --> 00:53:17,560
Speaker 2: with some of our favorite low cost brokerage firms aren't

1221
00:53:17,560 --> 00:53:20,040
Speaker 2: still the best way to invest in the stock market.

1222
00:53:20,120 --> 00:53:22,520
Speaker 1: Yeah, and we kind of switched from saying passive investing

1223
00:53:22,520 --> 00:53:25,520
Speaker 1: in the question to indexed investing, which is like, oftentimes

1224
00:53:25,520 --> 00:53:27,480
Speaker 1: that's what folks mean when they say passive investing, they're

1225
00:53:27,480 --> 00:53:29,799
Speaker 1: talking about index investing, And what is index investing? It's

1226
00:53:29,920 --> 00:53:32,959
Speaker 1: just a it's investing in a predetermined kind of way.

1227
00:53:33,480 --> 00:53:36,160
Speaker 1: And it's hard to imagine a world where they're where

1228
00:53:36,160 --> 00:53:39,640
Speaker 1: we see index funds decrease without the overall market going down,

1229
00:53:39,680 --> 00:53:42,239
Speaker 1: because index funds are the market, especially if you're looking

1230
00:53:42,239 --> 00:53:45,080
Speaker 1: at something like a total stock market index fund or

1231
00:53:45,120 --> 00:53:47,120
Speaker 1: even like the S ANDP index fund. Right, Like you

1232
00:53:47,160 --> 00:53:50,960
Speaker 1: have that tank because of quote unquote a passive investing bubble,

1233
00:53:51,320 --> 00:53:53,799
Speaker 1: but like that's the five hundred biggest companies in the

1234
00:53:53,840 --> 00:53:56,520
Speaker 1: overall market. And so what you're essentially asking, the way

1235
00:53:56,520 --> 00:53:59,080
Speaker 1: I'm reading this is that, hey, I am expecting the

1236
00:53:59,080 --> 00:54:01,520
Speaker 1: overall stock market to be in a bubble and maybe

1237
00:54:01,520 --> 00:54:03,920
Speaker 1: that's the case, maybe we will see a correction, But

1238
00:54:04,040 --> 00:54:07,880
Speaker 1: if you can accurately predict when that's gonna happen and

1239
00:54:07,880 --> 00:54:09,719
Speaker 1: by how much, well, I've got a whole lot of

1240
00:54:09,719 --> 00:54:11,520
Speaker 1: money that I'm willing to invest with you. In fact,

1241
00:54:11,680 --> 00:54:13,800
Speaker 1: is nobody is able to do that? And so that's

1242
00:54:14,000 --> 00:54:15,800
Speaker 1: I guess all that to say, we're not worried about

1243
00:54:16,200 --> 00:54:19,920
Speaker 1: there being a passive or an index fund investing bubble,

1244
00:54:20,320 --> 00:54:22,360
Speaker 1: so something to chew on. That's how we see it,

1245
00:54:22,360 --> 00:54:25,640
Speaker 1: at least, Joel. Let's quickly get back to the beer

1246
00:54:25,680 --> 00:54:29,000
Speaker 1: that you and I enjoyed during this episode. How'd you

1247
00:54:29,040 --> 00:54:33,880
Speaker 1: say it? Can pie can pie can pie with it

1248
00:54:34,120 --> 00:54:37,160
Speaker 1: spelled with a K K A n p A I

1249
00:54:37,239 --> 00:54:41,720
Speaker 1: can pie crisp, which is a mochi mokey Rice Lagger?

1250
00:54:42,239 --> 00:54:44,359
Speaker 2: I just said Rice Lagger. I didn't want to miss

1251
00:54:44,360 --> 00:54:45,000
Speaker 2: with that one.

1252
00:54:45,600 --> 00:54:45,759
Speaker 4: Joe.

1253
00:54:46,000 --> 00:54:47,880
Speaker 1: I know you're thinking that I should probably know how

1254
00:54:47,880 --> 00:54:49,800
Speaker 1: to pronounce all this if anybody, if either one of

1255
00:54:49,880 --> 00:54:53,360
Speaker 1: us does, how was it gonna go there? But what

1256
00:54:53,400 --> 00:54:54,359
Speaker 1: did you think about this beer?

1257
00:54:54,520 --> 00:54:56,160
Speaker 2: It made me think, why don't we drink more?

1258
00:54:56,200 --> 00:54:58,880
Speaker 1: Rice Laggers? I don't know. I kind of enjoyed it.

1259
00:54:59,120 --> 00:54:59,759
Speaker 1: I really liked it.

1260
00:55:00,000 --> 00:55:04,719
Speaker 2: So clean, so light, so refreshing. It just feels so

1261
00:55:04,880 --> 00:55:09,680
Speaker 2: pure compared to most of the loggers we drink, and I.

1262
00:55:09,040 --> 00:55:11,680
Speaker 1: Like it tastes triple distilled or something like that. It's just, yeah,

1263
00:55:11,719 --> 00:55:12,239
Speaker 1: super clear.

1264
00:55:12,360 --> 00:55:15,440
Speaker 2: There's a big contrast between other laggers and this and

1265
00:55:15,480 --> 00:55:18,200
Speaker 2: a rice lagger, And especially when you're talking about like

1266
00:55:18,239 --> 00:55:20,160
Speaker 2: the spectrum of beers, this feels like it's on an

1267
00:55:20,239 --> 00:55:23,440
Speaker 2: extreme far end of the beer spectrum. It's like the

1268
00:55:23,480 --> 00:55:25,960
Speaker 2: opposite direction of a barrel aged out. And I'm kind

1269
00:55:25,960 --> 00:55:27,719
Speaker 2: of ye, it's kind of fun to try something that's

1270
00:55:27,760 --> 00:55:30,360
Speaker 2: on the complete opposite spectrum of what I typically gravitate

1271
00:55:30,400 --> 00:55:31,120
Speaker 2: towards variety.

1272
00:55:31,160 --> 00:55:33,080
Speaker 1: Man, I like it, Yeah, I'm all for it as well. Yeah.

1273
00:55:33,120 --> 00:55:34,759
Speaker 1: The reason it's called a rice lagger is like the

1274
00:55:35,000 --> 00:55:38,759
Speaker 1: so the sugars from brewing with rice get fermented, and

1275
00:55:38,840 --> 00:55:41,719
Speaker 1: so that allows for some of that really clean Honestly,

1276
00:55:41,880 --> 00:55:44,840
Speaker 1: I perceive as rice like flavors, which you shouldn't be

1277
00:55:44,840 --> 00:55:46,200
Speaker 1: surprised to hear that I love.

1278
00:55:47,600 --> 00:55:47,680
Speaker 2: Like.

1279
00:55:47,719 --> 00:55:49,799
Speaker 1: I love that. I love rice. If you didn't know

1280
00:55:49,840 --> 00:55:53,000
Speaker 1: Matt's half Korean, it's like literally a part of my heritage. Man,

1281
00:55:53,040 --> 00:55:55,560
Speaker 1: I truly love rice, like the good rice, not like

1282
00:55:55,760 --> 00:55:57,400
Speaker 1: you know, cheap rice that you might buy at al

1283
00:55:57,440 --> 00:55:59,960
Speaker 1: d like we get the high quality bag at Costco,

1284
00:56:00,480 --> 00:56:02,279
Speaker 1: which I think you'all have been getting that lately too,

1285
00:56:02,320 --> 00:56:03,160
Speaker 1: because K.

1286
00:56:03,320 --> 00:56:05,600
Speaker 2: Factor our price preserving it's a it's a very small

1287
00:56:05,600 --> 00:56:06,839
Speaker 2: increase in cost and.

1288
00:56:06,800 --> 00:56:08,879
Speaker 1: The quality is so much better, so much better. Yeah,

1289
00:56:09,080 --> 00:56:10,600
Speaker 1: glad you'll come over to the dark side when it

1290
00:56:10,600 --> 00:56:13,600
Speaker 1: comes to the fancy race. But oh, thanks to our

1291
00:56:13,640 --> 00:56:16,239
Speaker 1: buddy Joel for donating this one to the to the show.

1292
00:56:16,320 --> 00:56:19,320
Speaker 1: This is another beer by Brewyard Beer Company. Glad you

1293
00:56:19,320 --> 00:56:20,240
Speaker 1: and I got to share it. Buddy.

1294
00:56:20,280 --> 00:56:21,800
Speaker 2: Well, Steph, all right, that's going to be it for

1295
00:56:21,840 --> 00:56:23,399
Speaker 2: this one. We'll put links to some of the things

1296
00:56:23,400 --> 00:56:26,520
Speaker 2: we mentioned up in the show notes on our website

1297
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Speaker 2: at how to money dot com. And if you have

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Speaker 2: a listener question, we'd love to hear from you again.

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Speaker 2: We're giving you free socks if you submit one, send

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Speaker 2: us one via email and we take it on an

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Speaker 2: upcoming episode. We hope to hear from you soon.

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Speaker 1: Matt.

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Speaker 2: That's going to do it for this will know until

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Speaker 2: next time. Best Friends Out, Best Friends Out.