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Speaker 1: Welcome to Hada Money. I'm Joel, I'm Matt, and today

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Speaker 1: we're answering your listener questions.

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Speaker 2: We hope everyone had a fantastic weekend. Specifically, you buddy,

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Speaker 2: a big old happy birthday. Today is Joel's.

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Speaker 1: Forty ninth birthday, though at this point, at this age,

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Speaker 1: we don't acknowledge birthdays.

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Speaker 2: Matt right, Well, it's one thing to say that, Oh

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Speaker 2: I'm forty one and a half as opposed he still

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Speaker 2: celebrate your actual birthday though, But this is Monday, and

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Speaker 2: I mentioned that because I want everyone to wish Joel

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Speaker 2: a happy birthday. Thanks Pat. Okay, we do have those

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Speaker 2: of their questions to get to.

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Speaker 1: Honestly, I'm not ashamed of my age, so you know,

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Speaker 1: I think some people are.

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Speaker 3: I don't.

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Speaker 1: It's just a number who cares. And I'm gonna be

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Speaker 1: like Brian Johnson to live forever, so.

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Speaker 2: You know exactly. It really is a number. Reference to

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Speaker 2: that recently, but a listener is asking about direct index

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Speaker 2: investing if it is worth the squeeze considering the benefits

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Speaker 2: he's receiving from it versus the cost. We'll talk about that.

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Speaker 2: Another listener is asking what he should do about this

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Speaker 2: awkward family money situation. Things I think are going to

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Speaker 2: get weird, but I love weighing in on awkwardness. Yeah,

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Speaker 2: and another listener is asking for the easiest way for

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Speaker 2: his kids to spend their money. We'll talk through some

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Speaker 2: methods of payment.

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Speaker 1: Sure, get to that more during today's episode, Buddy Quick PSA, Matt,

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Speaker 1: My parents just came back from Houston. I have mentioned

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Speaker 1: this on the show before. My mom is dealing with

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Speaker 1: a kind of skin cancer and she's she's doing well,

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Speaker 1: We're hopeful, but gosh, you just never know what this

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Speaker 1: kind of thing, right, And it's true. So but one

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Speaker 1: of the things that I was looking up because they

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Speaker 1: were they were going to get a second opinion in

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Speaker 1: Houston at MD Anderson, of course, and the hotel rooms

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Speaker 1: were quite expensive, and so I just had this hunch.

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Speaker 1: I was like, there has to be some sort of

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Speaker 1: free place for people who have cancer who are going

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Speaker 1: to some of these bigger cancer centers to stay, because

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Speaker 1: there are a lot of people who I would imagine

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Speaker 1: can't afford expensive hotel rooms near where they're getting treatment, right,

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Speaker 1: So I just like did a quick search and found that, yeah,

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Speaker 1: there is, in fact such a thing, and I'm sure

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Speaker 1: there are even more resources that I'm completely unaware of it.

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Speaker 1: If anybody is aware of them, please let us know.

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Speaker 1: We'll like maybe compile them, put them on our website

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Speaker 1: or something like that. But the American Cancer Society runs

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Speaker 1: something called the Hope Lodge, and it turns out it

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Speaker 1: was all booked up. My parents only had like a

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Speaker 1: week that they knew in advanced. They didn't have enough planning,

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Speaker 1: so they did Unfortunately, they had the funds to work

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Speaker 1: over for a hotel. But for the future when if

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Speaker 1: they have to make a return visit or at other

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Speaker 1: cancer centers around the country. This Hope Lodge exists, and

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Speaker 1: I mean it's kind of cool that there are resources

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Speaker 1: out there for people. And I guess just don't assume

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Speaker 1: that you got to go on a loan, you got.

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Speaker 2: To fork it out. Yeah. Well, I mean this is

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Speaker 2: like the Ronald McDonald house right in the essentially does

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Speaker 2: that still exist? I think he does, Okay, Yeah, I mean,

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Speaker 2: which is I'm pretty sure for setting up families to

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Speaker 2: have a place to stay if there are somewhere where

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Speaker 2: there's a where there's a child I guess getting receiving treatment.

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Speaker 2: So this would be the adult equivalent of that, right,

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Speaker 2: less orange and red. Perhaps, No, I'm pretty sure they

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Speaker 2: make those house you were chicken nuggets, sir, look look

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Speaker 2: pretty classy. But I appreciate your your outside of the

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Speaker 2: box thinking when it came to trying to find a

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Speaker 2: spot for them.

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Speaker 1: But yeah, I mean I was like, literally my first

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Speaker 1: initial knee jerk was go to hot wire, go to

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Speaker 1: price line, see if I can find him a good

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Speaker 1: deal in a hotel. And then second line of breastoning

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Speaker 1: was wait a second, what if there's something even cheaper

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Speaker 1: than that?

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Speaker 2: Yeah, this isn't a typical vacation or you know, something

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Speaker 2: like that.

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Speaker 1: And that is how my brain works, by the way, Yeah,

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Speaker 1: it's like orders of magnitude of money saving.

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Speaker 2: So run on. A nice little quick tip for folks

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Speaker 2: out there, Let's quickly introduce the beer that you and

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Speaker 2: I are going to enjoy during this episode, Buddy, A

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Speaker 2: Tiny S's, which is a sour ale with fruit candy flavor.

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Speaker 2: And this is a beer by Prairie artisan Ales. Brew

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Speaker 2: We've had on the show plenty of times, but not

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Speaker 2: this one. Even though I know if I actually had

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Speaker 2: this beer, oh really, we haven't had it on this

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Speaker 2: I'm pretty sure.

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Speaker 3: I don't.

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Speaker 2: You're like the number one person I drink craft beer with,

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Speaker 2: so I'm pretty sure it was with you, but maybe it. Yeah,

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Speaker 2: But looking forward to enjoying and sharing our thoughts at

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Speaker 2: the end of the episode.

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Speaker 1: Yeah, Prairie makes great beers. This one is very unique,

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Speaker 1: so we'll give our thoughts in.

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Speaker 4: A little bit.

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Speaker 2: But Mattle, Prairie gold Oki. Uh, those are just a

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Speaker 2: couple of the Prairie beers.

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Speaker 1: We've had a lot of, like big boozy stouts, but

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Speaker 1: like some really great sours to funky mosaic I ever

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Speaker 1: want to say? It was a good one?

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Speaker 2: Is it Christmas Bomb?

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Speaker 1: Oh?

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Speaker 3: Yeah?

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Speaker 2: That is that a Prairie total classic? Okay, yes, I

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Speaker 2: remember that one too.

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Speaker 1: All right, man, let's mention how people can ask a

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Speaker 1: question if they're so inclined. If you've got a money question,

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Speaker 1: we would love to tackle it on the show. Just

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Speaker 1: go to how to money dot com slash ask for

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Speaker 1: simple directions. Really just recording your question on the voice

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Speaker 1: memo app of your phone, emailing it over to us

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Speaker 1: at how to moneypod at gmail dot com. Hopefully we

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Speaker 1: can take it next week on the show. Matt, Let's

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Speaker 1: get to a question specifically about awkward family finances.

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Speaker 4: Hi, Joe, this is move best. A couple of years ago,

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Speaker 4: I signed a student loan for my great niece, which

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Speaker 4: is my sister's granddaughter, and she graduated from Spilman College,

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Speaker 4: and I think she's started to work and she's not

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Speaker 4: paying on her student loan which I co signed for. Now,

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Speaker 4: my backing institution was the Navy Federal Credit Union. They

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Speaker 4: are going into my account and taking out payments without

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Speaker 4: my permission. Is this legal? And what can I do

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Speaker 4: to get my niece to pay off this student loan?

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Speaker 2: Thank you, Joel. He addressed you specifically, so want you

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Speaker 2: kick things off?

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Speaker 1: Yeah, well, I don't know why. Maybe I maybe I'm

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Speaker 1: more memorable Matt.

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Speaker 2: Well, that's because he probably heard you talking with your

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Speaker 2: buddy Bill Handle out there weekly appearances indeed with Bill

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Speaker 2: Handle every Thursday on KFI. Well, Murph, let's get to

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Speaker 2: your question. So sorry to hear about this. The truth

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Speaker 2: has met.

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Speaker 1: These kinds of things are financially and relationally frustrating. It's

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Speaker 1: like a double way. I mean, it's like a gut

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Speaker 1: punch and a face punch at the same time, which

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Speaker 1: if you're like I'm thinking about Mike Tyson punch out

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Speaker 1: when I say that, And the double combo can be

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Speaker 1: really tough, tough to deal.

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Speaker 2: With the old one too, Yeah, and that's what they

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Speaker 2: call it. That's right.

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Speaker 1: And the truth is like when you mix money with family,

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Speaker 1: there are substantial pitfalls that can come about and often

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Speaker 1: do come about. I feel like that's why our advice

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Speaker 1: typically is like, don't mix family and close relationships. Most

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Speaker 1: of the time it doesn't work out.

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Speaker 3: Well.

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Speaker 1: I guess you and I run a business together. We're

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Speaker 1: best buds, so their pitfalls there too, right, and we

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Speaker 1: have had to come up with certain guidelines to make

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Speaker 1: sure that we are caring for each other well and

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Speaker 1: that we're splitting duties properly. And I think the typical

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Speaker 1: story we hear is that a family member lends another

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Speaker 1: family member money. They're hoping that they're going to get

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Speaker 1: paid back in a reasonable timeframe and that's probably what

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Speaker 1: the promise is, and when that doesn't happen, it sours

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Speaker 1: the relationship.

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Speaker 2: And this merv situation is.

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Speaker 1: A similar one, but co signing on a loan instead

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Speaker 1: of directly putting money into a relative's hands, and so

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Speaker 1: at the end of the day they can be similar

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Speaker 1: in the way that they work. And this is why

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Speaker 1: we typically advise, you know, financial transactions to be considered gifts.

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Speaker 1: If you do lend somebody money and then if you

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Speaker 1: can't afford to give them that money, don't give them

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Speaker 1: any sort of money at all, right, Like, if you

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Speaker 1: can't just kind of completely write it off, it could

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Speaker 1: come back to bite you. In a Mervh's case, this

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Speaker 1: co signing is going to come back to Biden sadly.

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Speaker 2: It's indeed, yeah, and it's worth saying as well. We're

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Speaker 2: not lawyers, but yes, MERVH. The stay on a holiday

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Speaker 2: and last night. The financial institution, it can legally take

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Speaker 2: money out of your account, out of your account there

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Speaker 2: with the credit union as a co signer of this loan,

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Speaker 2: if your great niece isn't making payments. This is known

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Speaker 2: as the right to offset. We are getting a little loyally,

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Speaker 2: you know, a little more technical in the weeds here. Basically,

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Speaker 2: the lender wouldn't have given that loan to your niece alone. Like,

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Speaker 2: the only way that they were willing to say yes

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Speaker 2: is because of the fact that you signed. There's a

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Speaker 2: reason for that, and it's becoming crystal clear to you. Now,

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Speaker 2: I'm assuming like they were worried about her ability to

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Speaker 2: pay and they wanted some additional recourse and you, in

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Speaker 2: this case, specifically your money if she were to fall

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Speaker 2: behind or if she were to stop making payments altogether,

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Speaker 2: which is you know what's led now to the sticky situation? Yeah,

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Speaker 2: that you find yourself and makes you think of my nephew, Matt.

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Speaker 2: He's fifteen.

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Speaker 1: If you wanted to go out there and buy a

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Speaker 1: brand new Mustang or something like that, because you know

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Speaker 1: he's about about to hit full driving age and he's like,

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Speaker 1: let's go, let me get this forty thousand dollars car.

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Speaker 1: If he shows up alone to the dealership, they're going

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Speaker 1: to be like, sorry, buddy, you can afford maybe a

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Speaker 1: nineteen ninety eight Mustang, right like you have like fifteen

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Speaker 1: hundred bucks from working on odds and ends jobs. But

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Speaker 1: if I show up with him, not because I've got

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Speaker 1: the deepest pockets in the world, they'll be like, oh,

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Speaker 1: you just like put your name on this paper too,

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Speaker 1: and we can can get whatever Mustang he wants, and

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Speaker 1: you have an income right exactly, and we know that

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Speaker 1: you're going to be good for it, even if he's not.

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Speaker 1: But if I did that, then I'm putting myself at risk,

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Speaker 1: which is what happened here sadly with MERV. When you

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Speaker 1: co sign alone, you've created a legal obligation for that debt,

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Speaker 1: even if you never saw a dime of that money,

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Speaker 1: which is exactly what happened in this case and exactly

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Speaker 1: what happens in so many co signer cases, like you

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Speaker 1: are on the hook for the thing and you see

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Speaker 1: none of the benefits. And MERV, you said this was

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Speaker 1: a student loan, but you co signers don't have a

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Speaker 1: legal obligation if they signed for a physical item either.

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Speaker 1: So just because my nephew stop making payments, let's say

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Speaker 1: on that proverbial mustang, well I have to pay for them,

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Speaker 1: and I don't have the right to be able to

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Speaker 1: go get the mustang from him either. And this is

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Speaker 1: why co signing is something that we're just not fans of.

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Speaker 1: I get why people do it, right, being asked by

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Speaker 1: a loved one for help, it tugs at your harsh

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Speaker 1: strings and you're like, well, I want them to go

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Speaker 1: to college, I know this is going to be good

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Speaker 1: for the future, or I want to help them out

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Speaker 1: and be able to buy this car that they might

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Speaker 1: not otherwise be able to afford. And we should be

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Speaker 1: willing to help our family members out, but just not

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Speaker 1: by co signing for a loan. It's just too risky.

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Speaker 2: It's pretty much one of those don't ever do it things.

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Speaker 2: In our opinion, I don't want to have my name

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Speaker 2: on those loan documents. And so MERV, what should you

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Speaker 2: do legally financially as well?

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Speaker 3: Here?

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Speaker 2: Like you're on shaky ground. The only thing you can do,

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Speaker 2: honestly is just to have a heart to heart with

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Speaker 2: your with your great niece. It's worth coming in with

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Speaker 2: like without your guns blazing, and having a more kind

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Speaker 2: of honest conversation because she might not even be aware

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Speaker 2: of what's going on here. I mean, I think given

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Speaker 2: all the talk about student loan forgiveness over the past

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Speaker 2: couple of years, there's a chance she's like, oh, I

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Speaker 2: thought that got written off. I thought the gut that

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Speaker 2: the federal government was gonna forgive that. At a point,

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Speaker 2: there's a lot of people confused about the stack. It

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Speaker 2: was just a constantly it seemed like every week there

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Speaker 2: was something new.

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Speaker 1: So she might not even know that MERV is being

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Speaker 1: like getting their bills now and getting money taken essentially

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Speaker 1: actively exactly, So I would just reach out to her,

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Speaker 1: just first put that under radar. I can't imagine though,

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Speaker 1: that she's also not receiving requests for this money delinquency notices. Yeah,

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Speaker 1: but uh, you know, try to have this chat in person.

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Speaker 1: I think that can go a long way as well

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Speaker 1: as opposed to like shooting her text message or an email,

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Speaker 1: but try and find out if she'll be able to

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Speaker 1: resume making some payments, because the ability to show her

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Speaker 1: how this is impacting you, right, Like, have a running total,

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Speaker 1: show her how much you've paid, and let her know that, hey,

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Speaker 1: it'd be great to receive that money back over time,

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Speaker 1: maybe not expected all at once, but it's worth taking

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Speaker 1: a more relational tact here because like I don't think you'd, like,

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Speaker 1: you don't really have much legal recourse because your name

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Speaker 1: is on the loan and so she doesn't have to

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Speaker 1: pay you back, like you would have to go into

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Speaker 1: more legal territory, which I'm guessing you want to try

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Speaker 1: to avoid doing. Like you could sue her if you can,

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Speaker 1: if she has the ability to pay and she's not paying,

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Speaker 1: you could see her in small claims but I'm guessing

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Speaker 1: that's not something that you want to do, and that

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Speaker 1: this is going to be able to be more eloquently

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Speaker 1: solved by y'all talking this over. Yeah, it's one of

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Speaker 1: the and you can tell her personally, Hey, I co

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Speaker 1: signed for you in an effort to try to help

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Speaker 1: you out when you needed it, and now I feel

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Speaker 1: like the tables have turned and I need you to

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Speaker 1: help me out and pay what you owe, and we

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Speaker 1: need to come to a solution here. I think the

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Speaker 1: emotional peel that you're right, Matt, is really all that

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Speaker 1: MERVH has here. I think it's important to note that

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Speaker 1: late payments or a lack of payments being made will

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Speaker 1: impact your credit score as well as hers. So she's

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Speaker 1: not paying that this could negatively impact her credit score.

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Speaker 2: She needs to know that.

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Speaker 1: I would highlight that for her. And then if you

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Speaker 1: stop paying for some reason, you're harming both your credit

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Speaker 1: and her. So this is one of those things where

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Speaker 1: it's like lighting both of yourselves on fire at the

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Speaker 1: same time, which I wouldn't advise. And because the truth is,

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Speaker 1: if you do that and you say, let's say, try

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Speaker 1: to prevent the credit union from taking money out of

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Speaker 1: your account. That could prevent you from being able to

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Speaker 1: buy a home or a car, or even rent a

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Speaker 1: place in the near future. It will impact her for

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Speaker 1: a long time to come from a credit perspective too,

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Speaker 1: you would also likely be sued by the lender for

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Speaker 1: the outstanding debt. So it's not like you're going to

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Speaker 1: be able to get away with it either. Right at

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Speaker 1: some point they're going to come for you, come for

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Speaker 1: the money, and so we can't sugarcoat it.

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Speaker 2: MERVH.

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Speaker 1: You're between a rock and a hard place here. We

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Speaker 1: wish you good luck with that conversation with your great niece.

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Speaker 1: We hope you're able to convince her to start paying

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Speaker 1: in order to keep your finances, your credit, and your

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Speaker 1: relationship intact. There's just a lot at stake here with

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Speaker 1: this conversation. It's not easy, No, it definitely is not.

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Speaker 2: And hopefully this is a lesson learned without having to

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Speaker 2: experience this firsthand. And I will say, Joel, this is

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Speaker 2: one principle that we are in total agreement on with

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Speaker 2: Dave Ramsey because I remember listening to him, like I

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Speaker 2: don't know, fifteen twenty years ago, and he would always

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Speaker 2: harp on folks not co signing for somebody else. It's

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Speaker 2: a terrible decision, and this is exactly the exact kind

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Speaker 2: of situation that you want to find yourself avoiding.

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Speaker 1: The truth is, yeah, if you help co sign for somebody,

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Speaker 1: you're on the hook and there's a decent chance you

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Speaker 1: end up paying for it, and the relational damage that

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Speaker 1: often gets done in these situations can be severe. All right, Matt,

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Speaker 1: We've got more questions to get to, including well, is

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Speaker 1: there a way that you can actually help out a

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Speaker 1: much younger member of your family when it comes to

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Speaker 1: building credit. We'll talk about that. Get to a bunch

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Speaker 1: more of your money questions right after this.

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Speaker 2: A right, Joel, we are now back in the break.

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Speaker 2: Let's hear from another listener. This is a listener who

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Speaker 2: has some crummy benefits from her employer.

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Speaker 5: Hi, Matt, Joel. My name is Vicky and I'm from Ohio.

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Speaker 5: I work for an employer that offers a four oh

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Speaker 5: one K and an HSA. There is no matching for either.

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Speaker 5: I max out my AHSA every year. My FIOH one

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Speaker 5: K I do not use because it's through an insurance company.

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Speaker 5: They have high fees and the paperwork says that they

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Speaker 5: can change the pricing for services at any time without

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Speaker 5: a learning the investor. I have some money in a

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Speaker 5: brokerage account that I would like to put into a

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Speaker 5: four oh one K, but I'm uncomfortable using this four

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Speaker 5: oh one K, and I'm not sure what I should do.

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Speaker 5: Thank you for your help by Matt.

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Speaker 1: All Right, there's good news and bad news here for Vicky,

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Speaker 1: isn't there? And I'm glad that she has access to

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Speaker 1: multiple tax advantage retirement accounts.

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Speaker 2: That's the good news.

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Speaker 1: Yeah, sounds like she's using her HSA properly. She's maxing

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Speaker 1: that out letting it grow. Also good news, which is

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Speaker 1: something we talk about regularly on the show. And we'll

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Speaker 1: put a link to an article about HSA's and how

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Speaker 1: good they can be in the show notes. By the way,

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Speaker 1: just random note here, Vicky, you could always move funds

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Speaker 1: from that HSA to Fidelity over time if the fees

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Speaker 1: are high on that account too. You didn't mention kind

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Speaker 1: of what the HSA fees you're encountering are, but that

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Speaker 1: might be the best move to avoid some of the

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Speaker 1: fees that you might be encountering. But huge bummer about

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Speaker 1: your four to one K being with an insurance company.

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Speaker 1: That's the bad news. That is always a giant red flag.

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Speaker 1: Makes me frustrated for anybody out there dealing with that reality,

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Speaker 1: because that means that the fees are significantly higher than

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Speaker 1: what they would be if you are with one of

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Speaker 1: the low cost broken terms that we talk about here

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Speaker 1: all the time, specifically Vanguard, Fidelity, Schwab. Those ones are

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Speaker 1: the those broken terms make costs essentially non existent for

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Speaker 1: anybody who does business with them.

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Speaker 2: Yeah.

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Speaker 1: Yeah, there are small expensary shows, but they're infinteslaly small

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Speaker 1: and they barely impact the return that you see. But

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Speaker 1: if you're with an insurance company, they could be ten, fifteen,

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Speaker 1: twenty times as high and they can massively eat into

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Speaker 1: your returns over time. So this is yes, a big problem.

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Speaker 1: And if you had a match offer to you, well,

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Speaker 1: the advice would be to suck it up and get

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Speaker 1: the match, even though the investment options are massively inferior.

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Speaker 1: But with no match, I think that four one k man,

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Speaker 1: I think if that is like a it's dead to me, right, Like, yeah, totally,

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Speaker 1: I don't need that four one k honestly if it's

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Speaker 1: that bad and it doesn't come with any match either, well,

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Speaker 1: and good on her for having looked at the fine print,

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Speaker 1: the fact that it's with an insurance company, the fact

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Speaker 1: that they can change the terms, you know, the price,

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Speaker 1: the rate at any point. Too many folks make a

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Speaker 1: really important decision like this without having dug into the details,

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Speaker 1: without any due diligence. And I'll say so, regarding the

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Speaker 1: money that you have over there in your separate investing account,

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Speaker 1: your brokerage account, what I would do here is to

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Speaker 1: leave that money that you have in that account, like,

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Speaker 1: leave it in place.

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Speaker 2: I would not. It sounds like you might be considering

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Speaker 2: selling some positions, selling some funds, some stocks there where

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Speaker 2: you would trigger capital gains tax in order to fund

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Speaker 2: a very subpar for one k, again with no match,

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Speaker 2: And that would be just a terrible situation to find

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Speaker 2: yourself in. Like, if you have additional funds and you

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Speaker 2: want to invest outside of that brokerage account, then we've

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Speaker 2: got some ideas for you. But I would not be

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Speaker 2: looking to pull that money from that in order to

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Speaker 2: get it within a four to one k somewhere else. Yeah.

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Speaker 1: No, the four to one k, I think is just

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Speaker 1: I would ignore it, pretend like he doesn't exist. Essentially,

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Speaker 1: you're already funding your HSA quite nicely. You've also got

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Speaker 1: money in the brokerage account, and VICKI, I'm not sure

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Speaker 1: if you have any additional dollars in particular outside of

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Speaker 1: the brokerage account that you would like to use to invest,

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Speaker 1: but if you do, we'd love to see you contribute

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Speaker 1: to a roth IRA with one of those low cost

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Speaker 1: providers I mentioned just a second ago, because that's another

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Speaker 1: tax advantaged account that we love, and you could stick

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Speaker 1: up to seven thousand dollars a year, thousand dollars more

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Speaker 1: than that if you're over the age of fifty five,

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Speaker 1: eight thousand dollars a year in total, every single year.

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Speaker 1: If you wanted to write you're getting some tax diversification.

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Speaker 1: You'd be stocking more money away for your future. Plus

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Speaker 1: you're completely in control of the costs, potentially to the

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Speaker 1: point of zero percent. Matt, Like we talk about with

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Speaker 1: fidelities zero index funds like fz ro X, which is

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Speaker 1: their total stock market index fund. You could like, how

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Speaker 1: much more fun is it to say FC rocks. Yeah,

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Speaker 1: I mean, it's amazing the fact that the race to

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Speaker 1: the bottom went to the legit bottom. Actually it is

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Speaker 1: sometimes even better for some investors where we talk about

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Speaker 1: the match that some firms like robin Hood offer. It's

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Speaker 1: gotten incredibly competitive the individual retirement account landscape for individual investors,

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Speaker 1: and you stand to benefit. But it's all about opening

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Speaker 1: up the roth IRA and looking at those options.

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Speaker 2: Yeah, and ross are great from the standpoint of pull,

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Speaker 2: like ripping the tax band aid off right now and

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Speaker 2: never having to think about it ever again. But I

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Speaker 2: think it's worth mentioning if you know that you are

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Speaker 2: wanting to invest maybe a little more aggressively of let's

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Speaker 2: say the next five years, and if you know that

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Speaker 2: you're going to be in the highest income producing years

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Speaker 2: of your life, if you're basically at peak income, it

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Speaker 2: might be worth considering.

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Speaker 1: A traditional IRA to be able to reduce the taxes

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Speaker 1: owed because of your potentially higher income. But that's of course,

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Speaker 1: knowing that these are your peak earning years. Sometimes we

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Speaker 1: know we have more of an idea of what that's

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Speaker 1: going to because if you're thinking, well, yeah, I'm going

436
00:19:27,440 --> 00:19:29,040
Speaker 1: to go after pretty hard for five years, but then

437
00:19:29,080 --> 00:19:31,600
Speaker 1: after that I'm planning to switch to part time. I've

438
00:19:31,680 --> 00:19:34,480
Speaker 1: got other things i want to pursue. Well, now's the

439
00:19:34,520 --> 00:19:37,800
Speaker 1: time potentially to consider that traditional IRA obviously doesn't give

440
00:19:37,840 --> 00:19:40,280
Speaker 1: you as nearly as much flexibility. It's hard to project

441
00:19:40,280 --> 00:19:42,919
Speaker 1: those things perfectly, but yeah, most people have kind of

442
00:19:43,080 --> 00:19:46,000
Speaker 1: something to think through of them. Yeah, career trajectory they're

443
00:19:46,000 --> 00:19:46,399
Speaker 1: hoping for.

444
00:19:46,520 --> 00:19:50,000
Speaker 2: Totally, here's an outside of the box, maybe a less

445
00:19:50,080 --> 00:19:53,280
Speaker 2: orthodox way of thinking. Let's talk about your actual job.

446
00:19:53,320 --> 00:19:55,560
Speaker 2: Because so I just laid out a scenario where you're, like,

447
00:19:55,640 --> 00:19:58,560
Speaker 2: at the peak of your career, you're making a sweet income.

448
00:19:59,240 --> 00:20:02,600
Speaker 2: Maybe it's worth considering a different job at a different company.

449
00:20:03,040 --> 00:20:06,280
Speaker 2: I wouldn't necessarily go hunting for a new job just

450
00:20:06,320 --> 00:20:09,480
Speaker 2: because you're four to one k offerings are trash because

451
00:20:09,480 --> 00:20:11,600
Speaker 2: they don't offer a match. But if there are other

452
00:20:11,720 --> 00:20:14,440
Speaker 2: reasons that you're unhappy with your job, like maybe it's

453
00:20:14,480 --> 00:20:17,320
Speaker 2: just like the hours or the career potential. Maybe you've

454
00:20:17,320 --> 00:20:19,320
Speaker 2: got more in the tank and you're thinking, I don't

455
00:20:19,440 --> 00:20:21,359
Speaker 2: I don't see much of a future for me there,

456
00:20:21,560 --> 00:20:24,399
Speaker 2: then I would consider this as a good reason to

457
00:20:24,440 --> 00:20:27,800
Speaker 2: feel a job search. Great companies they should offer competitive

458
00:20:27,840 --> 00:20:31,480
Speaker 2: four to one k's. It's almost like a non starter. Honestly, now,

459
00:20:31,520 --> 00:20:33,760
Speaker 2: at this point for a company to not offer it's

460
00:20:33,760 --> 00:20:34,840
Speaker 2: some kind of match.

461
00:20:34,600 --> 00:20:38,080
Speaker 1: It's table stakes. Yes, for literally to hire great employees.

462
00:20:38,320 --> 00:20:40,840
Speaker 1: A match in a four oh one K is like, yeah,

463
00:20:41,000 --> 00:20:42,000
Speaker 1: you have to have it in order.

464
00:20:41,880 --> 00:20:43,399
Speaker 2: To get the right people, it seems like, and it

465
00:20:43,440 --> 00:20:45,399
Speaker 2: just doesn't speak well of the company if that's not

466
00:20:45,840 --> 00:20:48,359
Speaker 2: the base, the bare minimum that they're looking to offer.

467
00:20:48,480 --> 00:20:50,959
Speaker 2: And you know, you probably weren't expecting us to tell

468
00:20:51,000 --> 00:20:53,280
Speaker 2: you to get your resume ready, but I think it's

469
00:20:53,280 --> 00:20:56,159
Speaker 2: worth considering if there are other things that you're unsatisfied

470
00:20:56,160 --> 00:20:57,160
Speaker 2: with at your current employer.

471
00:20:57,240 --> 00:20:58,720
Speaker 1: Agreed, Yeah, you don't want it to be the whole

472
00:20:58,800 --> 00:21:02,440
Speaker 1: kitten Cammodle reason to leave. You might be unhappy if

473
00:21:02,440 --> 00:21:05,080
Speaker 1: you did, but it is certainly one of those factors

474
00:21:05,080 --> 00:21:07,480
Speaker 1: that you want to consider. And the other thing Matt

475
00:21:07,640 --> 00:21:10,679
Speaker 1: I would at least think through is maybe your employer

476
00:21:10,720 --> 00:21:12,600
Speaker 1: doesn't know any better, at least when it comes to

477
00:21:12,760 --> 00:21:16,760
Speaker 1: the fees that this foreign K plan is charging to employees.

478
00:21:16,960 --> 00:21:19,080
Speaker 1: You would think that they would know, but they might not.

479
00:21:19,160 --> 00:21:21,480
Speaker 1: I mean, think about the fact that employers often have

480
00:21:21,560 --> 00:21:24,840
Speaker 1: to find health care plans for their employees and guess

481
00:21:24,840 --> 00:21:27,440
Speaker 1: what the people in charge of that. They're not always

482
00:21:27,920 --> 00:21:31,119
Speaker 1: health care specialists. They might not have the expertise to

483
00:21:31,200 --> 00:21:34,040
Speaker 1: know exactly what's getting passed on to employees and what's not.

484
00:21:34,640 --> 00:21:36,719
Speaker 1: So maybe give them the benefit of the doubt, and

485
00:21:36,760 --> 00:21:40,840
Speaker 1: in that case, will petition them to help them understand

486
00:21:41,200 --> 00:21:44,600
Speaker 1: what sort of product they're giving to their employees. Right,

487
00:21:44,880 --> 00:21:47,600
Speaker 1: let them know about the four one KA options that

488
00:21:47,640 --> 00:21:50,520
Speaker 1: would save them and you money. Yeah, and that's right.

489
00:21:50,720 --> 00:21:52,800
Speaker 1: It's not just about you and your fellow employees. It's

490
00:21:52,800 --> 00:21:55,000
Speaker 1: about them too. There are lower cost plans for them

491
00:21:55,000 --> 00:21:58,360
Speaker 1: to implement. In all likelihood, tell them about companies like Guideline,

492
00:21:58,359 --> 00:22:00,760
Speaker 1: like Betterment that offer low cost four to one case

493
00:22:00,880 --> 00:22:05,360
Speaker 1: for small and medium sized employers, and they massively minimize

494
00:22:05,400 --> 00:22:08,760
Speaker 1: fees for employees too. Maybe they'll be so grateful and

495
00:22:08,800 --> 00:22:10,359
Speaker 1: they'll save enough that they can be more generous and

496
00:22:10,400 --> 00:22:12,280
Speaker 1: start offering a four to one K match too. You

497
00:22:12,359 --> 00:22:14,400
Speaker 1: never know, but it's one of those things where that's

498
00:22:14,440 --> 00:22:17,000
Speaker 1: two birds one stone. Yeah, there's a kind of gentle

499
00:22:17,040 --> 00:22:19,239
Speaker 1: way to let them know. Wait a second, Hey, look

500
00:22:19,280 --> 00:22:21,000
Speaker 1: what I found over here. This might be great for

501
00:22:21,040 --> 00:22:24,080
Speaker 1: the company and great for everyone in it too, in

502
00:22:24,160 --> 00:22:27,960
Speaker 1: order to minimize the crappy fees they're forking over so

503
00:22:28,080 --> 00:22:30,240
Speaker 1: people can't actually utilize the account I mean the employer.

504
00:22:30,240 --> 00:22:32,240
Speaker 1: I'm sure they offer a four one K they want

505
00:22:32,320 --> 00:22:35,080
Speaker 1: their employees to take advantage of it hopefully. Yeah, you know,

506
00:22:35,359 --> 00:22:37,639
Speaker 1: like I mean that's assuming the best. Like that's a

507
00:22:37,640 --> 00:22:38,880
Speaker 1: good faith sort of.

508
00:22:38,920 --> 00:22:41,560
Speaker 2: Argument, the fact that they don't know better, and once

509
00:22:41,600 --> 00:22:44,000
Speaker 2: you just provide them with the information, they're gonna change

510
00:22:44,000 --> 00:22:45,800
Speaker 2: their minds and they're gonna want to treat their employees better.

511
00:22:45,800 --> 00:22:48,280
Speaker 2: But like I guess a bad faith sort of scenario

512
00:22:48,480 --> 00:22:50,120
Speaker 2: would be like if they're getting a sweet trip out

513
00:22:50,119 --> 00:22:51,920
Speaker 2: of it every year from the insurance company or somebody

514
00:22:51,920 --> 00:22:53,919
Speaker 2: who always takes them to a certain golf course, and

515
00:22:54,000 --> 00:22:57,159
Speaker 2: those are deals that still happen today, unfortunately, And if

516
00:22:57,240 --> 00:22:58,879
Speaker 2: that were to be the case, then this could be

517
00:22:58,960 --> 00:23:03,640
Speaker 2: again going back to the suggestion of considering a different company.

518
00:23:03,880 --> 00:23:07,000
Speaker 2: If this is just one of many reasons that you

519
00:23:07,040 --> 00:23:08,480
Speaker 2: are finding yourself unsatisfied, and.

520
00:23:08,440 --> 00:23:11,560
Speaker 1: You think those insurance companies are taking the HR people

521
00:23:11,640 --> 00:23:12,200
Speaker 1: out to the.

522
00:23:12,160 --> 00:23:14,440
Speaker 2: Disc golf course or the real golf course, I'm guessing

523
00:23:14,480 --> 00:23:18,240
Speaker 2: this thea's the latter. Yeah, But let's hear from another listener, Joel.

524
00:23:18,280 --> 00:23:21,960
Speaker 2: This is a listener who has a question about direct indexing,

525
00:23:22,280 --> 00:23:24,199
Speaker 2: which is not something I think we've talked about here

526
00:23:24,200 --> 00:23:24,600
Speaker 2: on the show.

527
00:23:24,720 --> 00:23:27,960
Speaker 3: Hey, Matt, Joel Greg here calling from Lynnwood, Washington, and

528
00:23:28,040 --> 00:23:30,840
Speaker 3: I have a question about direct indexing through an SMA.

529
00:23:31,560 --> 00:23:34,040
Speaker 3: I'm thirty two married. We have about three hundred and

530
00:23:34,080 --> 00:23:38,040
Speaker 3: fifty thousand income and our portfolios five hundred thousand, with

531
00:23:38,560 --> 00:23:41,159
Speaker 3: half in retirement and half in a brokerage account. So

532
00:23:41,240 --> 00:23:43,919
Speaker 3: with the brokerage account, I have an advisor. I'm not

533
00:23:43,960 --> 00:23:46,359
Speaker 3: paying a fee. It's through Fidelity, and they make that

534
00:23:46,880 --> 00:23:49,280
Speaker 3: available if you have more than two hundred and fifty

535
00:23:49,320 --> 00:23:53,720
Speaker 3: thousand invested with Fidelity. But he's suggesting a direct indexing

536
00:23:53,760 --> 00:23:57,560
Speaker 3: approach opening an SMA. It has to be one hundred

537
00:23:57,600 --> 00:24:01,360
Speaker 3: thousand plus and there's a point four percent fee, And

538
00:24:01,920 --> 00:24:05,439
Speaker 3: just using easy math here, his suggestion is, you know

539
00:24:05,480 --> 00:24:08,720
Speaker 3: we can we can donate the winners the top gains

540
00:24:09,000 --> 00:24:12,000
Speaker 3: and tax loss harvest the losers. So out of one

541
00:24:12,040 --> 00:24:15,119
Speaker 3: hundred thousand portfolio, say we grew to one hundred and

542
00:24:15,119 --> 00:24:19,120
Speaker 3: ten in an ETF fund, you just have your holdings

543
00:24:19,119 --> 00:24:23,600
Speaker 3: grew to one hundred and ten. In a direct indexing approach,

544
00:24:23,640 --> 00:24:27,399
Speaker 3: you might have stocks that grew by fifty percent and

545
00:24:27,480 --> 00:24:30,520
Speaker 3: you have other stocks that lost fifty percent so instead

546
00:24:30,520 --> 00:24:33,760
Speaker 3: of having, you know, just a plus ten thousand, you

547
00:24:33,840 --> 00:24:37,520
Speaker 3: might have plus fifty and minus forty. And in that

548
00:24:37,600 --> 00:24:41,800
Speaker 3: instance you could donate the ones that gained a lot

549
00:24:42,160 --> 00:24:46,199
Speaker 3: and rebuy at a higher cost basis plus. Then you

550
00:24:46,240 --> 00:24:50,880
Speaker 3: can tax loss, harvest the losers, and reduce your taxable

551
00:24:50,880 --> 00:24:54,240
Speaker 3: income this year. So I think the math works here.

552
00:24:54,320 --> 00:24:58,680
Speaker 3: The point four percent fee is going to be more

553
00:24:58,840 --> 00:25:03,000
Speaker 3: than turned with that tax efficiency. But I wanted to

554
00:25:03,080 --> 00:25:04,840
Speaker 3: run it by you in case I'm missing anything.

555
00:25:05,119 --> 00:25:08,639
Speaker 2: Thanks so much, ooh man, I like this question and

556
00:25:08,840 --> 00:25:09,840
Speaker 2: a lot of mass.

557
00:25:09,920 --> 00:25:12,160
Speaker 1: It does show that that actually some of the changes

558
00:25:12,520 --> 00:25:15,800
Speaker 1: that have happened on the investing front are not insignificant

559
00:25:15,800 --> 00:25:18,880
Speaker 1: when it comes to individual investors being able to save

560
00:25:19,040 --> 00:25:21,639
Speaker 1: on taxes. And I'm glad that Greg is with Fidelity,

561
00:25:21,720 --> 00:25:23,840
Speaker 1: by the way. I mean, although I have read that

562
00:25:24,000 --> 00:25:26,199
Speaker 1: they regularly try to pitch folks on signing up for

563
00:25:26,280 --> 00:25:29,240
Speaker 1: the more expensive account management services.

564
00:25:30,040 --> 00:25:32,280
Speaker 2: But yeah, I am not happy with the scenario that

565
00:25:32,280 --> 00:25:34,480
Speaker 2: it sounds like Greg is finding himself in because when

566
00:25:34,480 --> 00:25:37,480
Speaker 2: it comes to f Z Rocks and the other zero funds, yeah,

567
00:25:37,480 --> 00:25:39,600
Speaker 2: that's great, But when it comes to some of these

568
00:25:39,600 --> 00:25:42,439
Speaker 2: other services that they're offering, I think there might be

569
00:25:42,440 --> 00:25:44,359
Speaker 2: some better options out there that we'll get to.

570
00:25:44,480 --> 00:25:46,679
Speaker 1: Although just the fact that he had this conversation and

571
00:25:46,720 --> 00:25:50,560
Speaker 1: he's asking this question, I think it sounds like Greg

572
00:25:50,640 --> 00:25:53,320
Speaker 1: has the ability to save money on taxes in ways

573
00:25:53,560 --> 00:25:54,960
Speaker 1: that he hadn't really thought of before.

574
00:25:55,040 --> 00:25:57,240
Speaker 2: That's true. Yeah, So we're talking about tax lost harvesting

575
00:25:57,320 --> 00:26:00,200
Speaker 2: right now, which is one of the things that direct

576
00:25:59,800 --> 00:26:02,600
Speaker 2: and takes advantage of. And you know, this is kind

577
00:26:02,640 --> 00:26:04,119
Speaker 2: of like how we talk about the need for folks

578
00:26:04,160 --> 00:26:08,080
Speaker 2: who have more complex tax situations the pay a pro

579
00:26:08,520 --> 00:26:11,520
Speaker 2: If the tax savings outweigh the fee that you're going

580
00:26:11,600 --> 00:26:14,639
Speaker 2: to pay, well, you'd be shortsighted to not pay. And

581
00:26:14,680 --> 00:26:17,320
Speaker 2: when it comes to tax lost harvesting, it's similar. So

582
00:26:17,400 --> 00:26:20,760
Speaker 2: it's define it real quick. Tax loss harvesting is when

583
00:26:20,800 --> 00:26:23,119
Speaker 2: you sell an investment at a loss in order to

584
00:26:23,160 --> 00:26:26,560
Speaker 2: offset other gains that you might have received, and if

585
00:26:26,560 --> 00:26:29,680
Speaker 2: your losses exceed your gains, well, you can then deduct

586
00:26:29,760 --> 00:26:32,840
Speaker 2: those losses. In a given year, it's up to three

587
00:26:32,840 --> 00:26:35,600
Speaker 2: thousand dollars if you are married filing jointly for that

588
00:26:35,680 --> 00:26:39,439
Speaker 2: given year, in order to reduce your ordinary income. If

589
00:26:39,480 --> 00:26:42,040
Speaker 2: your losses are larger than that well, you can then

590
00:26:42,119 --> 00:26:45,520
Speaker 2: carry those losses forward, claim those losses to offset ordinary

591
00:26:45,560 --> 00:26:49,159
Speaker 2: income in future years. And it's not an insignificant amount

592
00:26:49,160 --> 00:26:51,240
Speaker 2: of money here, and a good advisor who is paying

593
00:26:51,280 --> 00:26:54,000
Speaker 2: attention can help you to save on taxes buy selling

594
00:26:54,040 --> 00:26:57,640
Speaker 2: and buying in a timely manner without changing your portfolio

595
00:26:58,119 --> 00:26:59,280
Speaker 2: allocation all that much.

596
00:26:59,359 --> 00:27:02,560
Speaker 1: Yeah, I mean, think about this if you can even

597
00:27:03,080 --> 00:27:05,520
Speaker 1: let's say, if your total stock market index fund has

598
00:27:05,560 --> 00:27:08,280
Speaker 1: experienced some losses, you could sell in order to show

599
00:27:08,320 --> 00:27:11,000
Speaker 1: a paper loss, rebuy an S and P five hundred

600
00:27:11,000 --> 00:27:14,760
Speaker 1: index fund, and those are would not be subject to

601
00:27:14,800 --> 00:27:18,160
Speaker 1: the wash sale rule because because they're dissimilar enough, and

602
00:27:18,359 --> 00:27:21,439
Speaker 1: you can just reap tax savings because of it. And

603
00:27:21,520 --> 00:27:23,760
Speaker 1: it's important to mention that the tax loss harvesting only

604
00:27:23,760 --> 00:27:26,520
Speaker 1: works inside of a brokerage account. You're not creating, that's true,

605
00:27:26,560 --> 00:27:28,840
Speaker 1: a taxable event when you sell a fund inside of

606
00:27:28,880 --> 00:27:31,720
Speaker 1: your four oh and k or your IRA. Also, tax

607
00:27:31,760 --> 00:27:35,000
Speaker 1: loss harvesting is more effective for higher income earners. So

608
00:27:35,320 --> 00:27:37,800
Speaker 1: you know, Greg, he was pretty honest about what he makes.

609
00:27:37,800 --> 00:27:40,080
Speaker 1: He makes a lot of money, close to three hundred

610
00:27:40,080 --> 00:27:43,600
Speaker 1: and fifty kyah, which means that his highest marginal tax

611
00:27:43,600 --> 00:27:46,320
Speaker 1: bracket is getting up there. He's not far from at

612
00:27:46,400 --> 00:27:48,320
Speaker 1: least some of those dollars being taxed in the thirty

613
00:27:48,320 --> 00:27:51,439
Speaker 1: two percent range if he continues to crush, which means

614
00:27:51,560 --> 00:27:54,840
Speaker 1: the stakes are higher and that a tax loss harvesting

615
00:27:54,920 --> 00:27:58,760
Speaker 1: strategy could have I would say, a not insignificant impact

616
00:27:58,960 --> 00:28:02,800
Speaker 1: on his tax situation. Still the point four percent fee,

617
00:28:03,160 --> 00:28:06,280
Speaker 1: it's not cheap, and tax lost harvesting is something you

618
00:28:06,359 --> 00:28:09,520
Speaker 1: can do yourself without an insane amount of effort. But

619
00:28:09,640 --> 00:28:13,520
Speaker 1: this direct indexing approach, I would say that the fidelity

620
00:28:13,520 --> 00:28:15,800
Speaker 1: rep is talking about does make it easier, kind of

621
00:28:15,840 --> 00:28:18,520
Speaker 1: in the way that Greg outlined, making it easier essentially

622
00:28:18,560 --> 00:28:22,160
Speaker 1: to call the losers and to grab those tax savings

623
00:28:22,280 --> 00:28:24,560
Speaker 1: than if you're talking about owning just a couple of

624
00:28:24,560 --> 00:28:27,560
Speaker 1: funds inside of your brokerage account.

625
00:28:27,680 --> 00:28:31,600
Speaker 2: Yeah, direct indexing it's a relatively new product. It's gaining steam,

626
00:28:31,720 --> 00:28:34,359
Speaker 2: but it's an attempt to mirror the index strategy that

627
00:28:34,400 --> 00:28:38,680
Speaker 2: you find with something like let's say an SMPF ETF

628
00:28:38,720 --> 00:28:41,719
Speaker 2: for something similar, but you've got fractional shares, you've got

629
00:28:41,800 --> 00:28:45,480
Speaker 2: zero commission trades, and both of these advancements in investing

630
00:28:45,640 --> 00:28:48,920
Speaker 2: has made this method more widely available to investors in

631
00:28:48,960 --> 00:28:52,520
Speaker 2: recent years. So instead of just buying a simple index fund, instead,

632
00:28:52,520 --> 00:28:55,720
Speaker 2: what's happening is you buy small amounts of individual stocks

633
00:28:55,720 --> 00:28:58,800
Speaker 2: that make up that index, and then this offers the

634
00:28:58,800 --> 00:29:02,440
Speaker 2: potential for smater tax moves are when there is volatility

635
00:29:02,480 --> 00:29:03,160
Speaker 2: there in the market.

636
00:29:03,960 --> 00:29:05,640
Speaker 1: I am thinking of Matt. You know, you have a

637
00:29:05,680 --> 00:29:08,440
Speaker 1: folder on your desktop and you have five hundred files

638
00:29:08,440 --> 00:29:10,560
Speaker 1: in there, or you scatter shot them instead across the

639
00:29:10,680 --> 00:29:13,840
Speaker 1: entirety of your desktop. That's what direct into indexing, at

640
00:29:13,920 --> 00:29:16,320
Speaker 1: least in my mind, looks like instead of putting it

641
00:29:16,320 --> 00:29:18,880
Speaker 1: in a folder inside an index fund, they're literally just

642
00:29:18,920 --> 00:29:21,840
Speaker 1: all scattered all over. But Okay, what should Greg do here?

643
00:29:22,040 --> 00:29:25,880
Speaker 1: And should he succumb to the Fidelity pitch go with

644
00:29:25,920 --> 00:29:29,400
Speaker 1: their their separately managed account in order to have access

645
00:29:29,440 --> 00:29:32,680
Speaker 1: to these tax lost harvesting benefits. I don't think so,

646
00:29:32,880 --> 00:29:35,600
Speaker 1: And I also don't necessarily think it means that Greg

647
00:29:35,800 --> 00:29:40,120
Speaker 1: needs to Diyatt himself, although he could, but there are

648
00:29:40,360 --> 00:29:44,080
Speaker 1: ways to actually, I think maybe split the baby and

649
00:29:44,120 --> 00:29:46,920
Speaker 1: get the best of both worlds. Betterment is a robo

650
00:29:46,960 --> 00:29:49,560
Speaker 1: advisor that we're fans of, and tax loss harvesting is

651
00:29:49,640 --> 00:29:52,480
Speaker 1: included in the feed that Betterment charges, which is only

652
00:29:52,720 --> 00:29:55,080
Speaker 1: a quarter of a percent instead of four tenths of

653
00:29:55,080 --> 00:29:57,920
Speaker 1: a percent. And the bigger that portfolio gets, the more

654
00:29:57,960 --> 00:30:00,680
Speaker 1: that fee matters. So that's actually a s acial difference

655
00:30:00,960 --> 00:30:03,760
Speaker 1: in price. And I think that's a big deal. Reducing

656
00:30:03,880 --> 00:30:06,440
Speaker 1: taxes matters, yes, and I think it's important to highlight that.

657
00:30:06,640 --> 00:30:11,040
Speaker 1: But Betterment has an automated algorithm that harvests losses without

658
00:30:11,080 --> 00:30:15,160
Speaker 1: creating additional trading costs, while also helping you avoid running

659
00:30:15,160 --> 00:30:16,920
Speaker 1: a foul of the irs, which is I guess from

660
00:30:16,920 --> 00:30:20,080
Speaker 1: they perspective, that's the biggest potential pitfall is that you

661
00:30:20,520 --> 00:30:23,080
Speaker 1: don't do it properly, either from a planning perspective or

662
00:30:23,120 --> 00:30:26,479
Speaker 1: from a tax perspective. And hey, it turns out you

663
00:30:26,520 --> 00:30:30,560
Speaker 1: didn't tax lost harvest to its maximum ability. And while

664
00:30:30,560 --> 00:30:33,360
Speaker 1: we love Fidelity, moving over to Betterment might be best

665
00:30:33,480 --> 00:30:37,600
Speaker 1: for Greg in this situation. Betterment also highlights on their

666
00:30:37,640 --> 00:30:40,440
Speaker 1: website that seven out of ten Betterment customers have their

667
00:30:40,520 --> 00:30:45,040
Speaker 1: taxable advisory fee their Betterment fee covered by the likely

668
00:30:45,080 --> 00:30:47,960
Speaker 1: tax savings of tax lost harvesting, and Greg would almost

669
00:30:47,960 --> 00:30:49,960
Speaker 1: certainly be one of them, especially when he ran the

670
00:30:50,040 --> 00:30:51,880
Speaker 1: numbers and he's like, hey, I'm going to come out

671
00:30:51,880 --> 00:30:54,200
Speaker 1: ahead with the higher fee from Fidelity, Well, then you're

672
00:30:54,200 --> 00:30:55,600
Speaker 1: definitely going to come out more than a head with

673
00:30:55,640 --> 00:30:58,240
Speaker 1: the lower fee from Betterment. So I think you can

674
00:30:58,280 --> 00:31:00,800
Speaker 1: maybe have your cake and eat it too, just by

675
00:31:00,880 --> 00:31:02,680
Speaker 1: doing business at the right place.

676
00:31:02,800 --> 00:31:06,080
Speaker 2: Yeah, And I think more than anything, the red flag

677
00:31:06,160 --> 00:31:08,400
Speaker 2: that gets raised in this scenario is the fact that

678
00:31:08,400 --> 00:31:10,000
Speaker 2: it feels like a pitch. It feels like a pitch

679
00:31:10,000 --> 00:31:12,840
Speaker 2: from Fidelity. And while there are many things that we

680
00:31:12,920 --> 00:31:17,440
Speaker 2: love about Fidelity, specifically there's zero cost funds, it feels

681
00:31:17,480 --> 00:31:19,320
Speaker 2: like they're trying to sell you on this and perhaps

682
00:31:19,320 --> 00:31:21,040
Speaker 2: in order to gain more of your business and have

683
00:31:21,080 --> 00:31:24,720
Speaker 2: you pay for slightly more expensive services that they're making

684
00:31:24,760 --> 00:31:26,760
Speaker 2: slightly more profit on. And it's not that's the thing.

685
00:31:26,800 --> 00:31:29,560
Speaker 2: It's not a ridiculous amount. Point four really isn't that bad.

686
00:31:29,760 --> 00:31:31,360
Speaker 2: It's not gonna a lot better than a lot of

687
00:31:31,480 --> 00:31:34,000
Speaker 2: about other advisors other than one percent, for sure, one

688
00:31:34,000 --> 00:31:36,920
Speaker 2: percent of assets under management. It's not predatory. And that's the.

689
00:31:36,920 --> 00:31:40,160
Speaker 1: Part that feels a little weird about this is that,

690
00:31:40,200 --> 00:31:42,440
Speaker 1: like it's good enough for that to be folks who

691
00:31:42,440 --> 00:31:44,560
Speaker 1: are satisfied with the services that they're receiving for that

692
00:31:44,680 --> 00:31:46,600
Speaker 1: dollar amount. But what we're just saying is that hey,

693
00:31:47,160 --> 00:31:49,000
Speaker 1: go with Betterment and you'll be able to get the

694
00:31:49,000 --> 00:31:51,120
Speaker 1: same thing. Basically, you don't have somebody that you're talking to,

695
00:31:51,400 --> 00:31:53,560
Speaker 1: but you're gonna get the same kind of service, the

696
00:31:53,600 --> 00:31:57,240
Speaker 1: same tax loss harvesting there within your brokerage. And he

697
00:31:57,320 --> 00:32:00,120
Speaker 1: said that that Fidelity advisor was saying that, hey, by

698
00:32:00,200 --> 00:32:02,960
Speaker 1: the way, for the ones that gain that have seen

699
00:32:02,960 --> 00:32:05,000
Speaker 1: a lot of gains, you can donate those and so

700
00:32:05,120 --> 00:32:07,640
Speaker 1: you're not realizing your capital gains there. Well, that's not

701
00:32:08,120 --> 00:32:10,480
Speaker 1: a unique selling proposition of Fidelity. You can do that

702
00:32:10,520 --> 00:32:13,600
Speaker 1: with any brokerage, any brokerage account that's like yeah worth

703
00:32:13,600 --> 00:32:17,440
Speaker 1: their salt. You can donate stocks or funds out of

704
00:32:17,480 --> 00:32:20,000
Speaker 1: those brokerages and so that's not You can do that

705
00:32:20,000 --> 00:32:22,640
Speaker 1: with Betterment as well. So in a similar way, it's like, well,

706
00:32:22,720 --> 00:32:25,600
Speaker 1: you're getting all the benefit literally that you've mentioned with

707
00:32:25,720 --> 00:32:28,640
Speaker 1: Betterment at a lower cost as opposed to going with

708
00:32:29,040 --> 00:32:32,800
Speaker 1: you the same services that are being offered there at Fidelity. Okay,

709
00:32:32,920 --> 00:32:35,800
Speaker 1: one minor downside actually to the zero funds from Fidelity. Matt,

710
00:32:35,800 --> 00:32:39,560
Speaker 1: speaking of donation, I tried to donate some FC rocks

711
00:32:39,760 --> 00:32:43,640
Speaker 1: last year and you can't actually donate that fund because

712
00:32:43,680 --> 00:32:44,720
Speaker 1: it's a proprietary fund.

713
00:32:44,840 --> 00:32:44,959
Speaker 4: There.

714
00:32:45,000 --> 00:32:47,440
Speaker 1: You didn't realize that until I try to donate it.

715
00:32:47,760 --> 00:32:52,200
Speaker 1: But so again, there are all sorts of tiny details

716
00:32:52,240 --> 00:32:53,760
Speaker 1: you got to keep in mind. But in this case,

717
00:32:53,800 --> 00:32:56,400
Speaker 1: I think the big thing is much lower price. You

718
00:32:56,440 --> 00:32:59,080
Speaker 1: still get the tax loss harvesting. That's one of the

719
00:32:59,120 --> 00:33:02,240
Speaker 1: things at Betterment. It does really well with their algorithm.

720
00:33:02,560 --> 00:33:05,560
Speaker 1: So I feel very confident. If that's something you really

721
00:33:05,560 --> 00:33:07,360
Speaker 1: want and you feel like it's going to help you

722
00:33:07,360 --> 00:33:09,880
Speaker 1: come out ahead from a tax perspective, I'd go there instead.

723
00:33:10,240 --> 00:33:11,760
Speaker 2: Totally. We got more to get to you, buddy. We're

724
00:33:11,760 --> 00:33:15,360
Speaker 2: gonna talk about Apple Watches, HSA's and more right after this.

725
00:33:23,040 --> 00:33:23,880
Speaker 2: All right, Matt, we're back.

726
00:33:24,040 --> 00:33:26,080
Speaker 1: Let's get to the Facebook question of the week. This

727
00:33:26,120 --> 00:33:28,280
Speaker 1: one comes from Chad. He posted this in the how

728
00:33:28,280 --> 00:33:31,840
Speaker 1: to Money Facebook group. He said, authorized user or checking account.

729
00:33:32,080 --> 00:33:34,320
Speaker 1: We got my eleven year old fifth grader and Apple

730
00:33:34,360 --> 00:33:37,360
Speaker 1: Watch with cellular capabilities. Man, I'm pretty sure you didn't

731
00:33:37,400 --> 00:33:39,480
Speaker 1: have any fancy technology like that in fifth grade.

732
00:33:39,640 --> 00:33:42,320
Speaker 2: Of course I didn't, Chad said, my current fifth grade. Well,

733
00:33:42,320 --> 00:33:44,360
Speaker 2: I don't have a current fifth grader, but my kids,

734
00:33:44,440 --> 00:33:47,240
Speaker 2: right now don't even have a fancy tech like that.

735
00:33:47,320 --> 00:33:49,840
Speaker 1: I get that. Sorry to interrupt, Chad says, I want

736
00:33:49,840 --> 00:33:51,840
Speaker 1: to be able to give him the ability to use

737
00:33:51,880 --> 00:33:54,240
Speaker 1: his watch to make purchases at the various events he

738
00:33:54,280 --> 00:33:58,040
Speaker 1: attends bowling club sporting events, etc. Instead of having him

739
00:33:58,120 --> 00:34:01,600
Speaker 1: use actually more like lose cash. Which do you think

740
00:34:01,680 --> 00:34:04,080
Speaker 1: is better? I know that Chase has a checking account

741
00:34:04,080 --> 00:34:06,560
Speaker 1: for kids, maybe it's for teens. I could fund that

742
00:34:06,680 --> 00:34:09,080
Speaker 1: and put his debit card onto his watch. I could

743
00:34:09,080 --> 00:34:10,959
Speaker 1: make him an authorized user on one of my Chase

744
00:34:11,000 --> 00:34:13,200
Speaker 1: cards and set a really low limit on there so

745
00:34:13,239 --> 00:34:14,040
Speaker 1: he can just use the.

746
00:34:14,040 --> 00:34:16,480
Speaker 2: Watch to pay for stuff. Thoughts, Well, maybe I give

747
00:34:16,480 --> 00:34:18,240
Speaker 2: it away a little bit. I'm not opposed to cash,

748
00:34:18,280 --> 00:34:20,920
Speaker 2: and I will say I also, Chad, I've got an

749
00:34:20,960 --> 00:34:23,440
Speaker 2: eleven year old who's a sixth grader, not a fifth grader,

750
00:34:24,040 --> 00:34:26,120
Speaker 2: And over the past couple of years there have been

751
00:34:26,280 --> 00:34:29,600
Speaker 2: numerous like basketball games, hangs with friends where they're out

752
00:34:29,600 --> 00:34:31,560
Speaker 2: in public where they can like make their own purchases,

753
00:34:31,640 --> 00:34:34,200
Speaker 2: And in all of those scenarios, she's taken her own

754
00:34:34,239 --> 00:34:36,440
Speaker 2: cash with her. Yeah, And I guess the way I

755
00:34:36,440 --> 00:34:39,040
Speaker 2: think about it, I'm like, would I rather her lose

756
00:34:39,040 --> 00:34:43,759
Speaker 2: an Apple watch or have like direct access to all

757
00:34:43,800 --> 00:34:46,920
Speaker 2: of her funds there, or just the ability to at

758
00:34:46,960 --> 00:34:49,040
Speaker 2: most lose the amount of money that she's taken with her.

759
00:34:49,080 --> 00:34:52,279
Speaker 2: So personally, man for us, at least, the going with

760
00:34:52,320 --> 00:34:56,600
Speaker 2: the old school physical cash method for us has worked

761
00:34:56,600 --> 00:34:56,960
Speaker 2: out fine.

762
00:34:57,040 --> 00:34:59,520
Speaker 1: I can't imagine he's gonna lose the watch, right, but

763
00:34:59,560 --> 00:35:01,359
Speaker 1: I don't. I think you can lose some loose money.

764
00:35:01,440 --> 00:35:04,040
Speaker 1: So I get where Chad's coming from. And maybe his

765
00:35:04,120 --> 00:35:05,840
Speaker 1: son has lost twenty bucks here or there before and

766
00:35:05,840 --> 00:35:08,200
Speaker 1: he's like cash to day. Yeah, man, if you could

767
00:35:08,200 --> 00:35:09,960
Speaker 1: just tap with his wrist, it's gonna make this a

768
00:35:09,960 --> 00:35:12,359
Speaker 1: whole lot easier. And I totally understand what you're saying.

769
00:35:12,360 --> 00:35:14,320
Speaker 1: And I think, especially for younger kids, cash makes the

770
00:35:14,360 --> 00:35:14,920
Speaker 1: most sense.

771
00:35:14,920 --> 00:35:16,960
Speaker 2: Sometimes MO money more problems, you know, like you want

772
00:35:16,960 --> 00:35:19,160
Speaker 2: to go digital, and okay, so now you've got something

773
00:35:19,200 --> 00:35:22,000
Speaker 2: that you've got to provide service for. That's true because

774
00:35:22,120 --> 00:35:23,799
Speaker 2: like not only is the cost of the device or

775
00:35:23,800 --> 00:35:26,239
Speaker 2: the phone or the watch or whatever, but then I mean,

776
00:35:26,280 --> 00:35:28,759
Speaker 2: it's not cheap to pay for the cell plans now

777
00:35:28,880 --> 00:35:30,479
Speaker 2: for these individual device, although it's.

778
00:35:30,360 --> 00:35:32,759
Speaker 1: Gotten a lot cheaper. Actually we've talked about that is

779
00:35:32,760 --> 00:35:35,080
Speaker 1: true US Mobile on the show and how you and

780
00:35:35,160 --> 00:35:38,680
Speaker 1: I are US Mobile customers now for our cell plans,

781
00:35:38,800 --> 00:35:41,960
Speaker 1: they're incredibly cheap. But they also have now service for

782
00:35:42,000 --> 00:35:44,239
Speaker 1: smart watches. I think six dollars and fifty cents a month,

783
00:35:44,280 --> 00:35:46,840
Speaker 1: which if that's what you want as it goes, it

784
00:35:46,880 --> 00:35:48,560
Speaker 1: is a fortable Yeah. If he's already got the Apple

785
00:35:48,600 --> 00:35:50,120
Speaker 1: Watch and you're like, man, we just need to save

786
00:35:50,160 --> 00:35:51,680
Speaker 1: money on that because it's costing us a lot more

787
00:35:51,719 --> 00:35:53,520
Speaker 1: with one of the big guys, We'll look at US Mobile.

788
00:35:53,640 --> 00:35:56,200
Speaker 1: That's the best price I've seen, and I think getting

789
00:35:56,280 --> 00:35:59,040
Speaker 1: used to digital money, this is probably right about the

790
00:35:59,120 --> 00:36:00,919
Speaker 1: right time. I'm getting my sixth grade or fourth grader

791
00:36:01,040 --> 00:36:04,280
Speaker 1: kind of used to it right now. I did cash

792
00:36:04,400 --> 00:36:06,239
Speaker 1: kind of thrown in the towel on that. Honestly, it

793
00:36:06,280 --> 00:36:08,439
Speaker 1: was mostly my fault. It's a pain in the butt. Yeah,

794
00:36:08,480 --> 00:36:10,160
Speaker 1: I will say that that was not as good and

795
00:36:10,200 --> 00:36:12,200
Speaker 1: dedicated to it as I should have been. So that's

796
00:36:12,280 --> 00:36:14,800
Speaker 1: not my kids on my kids, that's on me. Although

797
00:36:14,800 --> 00:36:16,560
Speaker 1: when we try to go digital too early that didn't

798
00:36:16,600 --> 00:36:18,719
Speaker 1: work either, so it's a little bit of trial and

799
00:36:18,840 --> 00:36:21,960
Speaker 1: error in our household. But yeah, we opted actually for

800
00:36:22,000 --> 00:36:24,279
Speaker 1: free teen accounts from Capital One. They come with a

801
00:36:24,280 --> 00:36:26,880
Speaker 1: debit card, and so now it's really easy for me

802
00:36:27,200 --> 00:36:30,000
Speaker 1: to transfer money to them for my Capital One account

803
00:36:30,000 --> 00:36:31,680
Speaker 1: to theirs. They've got a debit card, they could take

804
00:36:31,680 --> 00:36:33,759
Speaker 1: it with them, and that's actually been kind of the

805
00:36:33,760 --> 00:36:36,440
Speaker 1: best solution for our family. They don't have fancy watches

806
00:36:36,480 --> 00:36:38,640
Speaker 1: to attach that card to, but you could.

807
00:36:38,920 --> 00:36:40,600
Speaker 2: Yeah, I mean, if you do have that account, of

808
00:36:40,600 --> 00:36:43,080
Speaker 2: course you can take that debit card, stick it in

809
00:36:43,120 --> 00:36:45,240
Speaker 2: the wallet app and he could pay from his watch.

810
00:36:45,320 --> 00:36:47,160
Speaker 2: You could actually you could even attach it to Apple's

811
00:36:47,160 --> 00:36:52,040
Speaker 2: new Apple Cash feature, which exists within like the iOS framework,

812
00:36:52,560 --> 00:36:54,640
Speaker 2: where you can even you know, you send your son

813
00:36:54,800 --> 00:36:57,520
Speaker 2: money to his Apple Cash account via like text message.

814
00:36:58,000 --> 00:37:00,239
Speaker 2: Not that this is something you should be doing on

815
00:37:00,280 --> 00:37:02,520
Speaker 2: the RAG, but it's worth highlighting that it's even simpler

816
00:37:02,840 --> 00:37:06,680
Speaker 2: than like Venmo or cash app. If you're so inclined

817
00:37:06,680 --> 00:37:08,080
Speaker 2: and if this is something that you do want.

818
00:37:07,920 --> 00:37:10,600
Speaker 1: To do, yeah, And I think the other thing Chad

819
00:37:10,600 --> 00:37:12,759
Speaker 1: mentioned was, oh, sure I make him an authorized user

820
00:37:12,840 --> 00:37:16,080
Speaker 1: on one of my credit cards so that he can

821
00:37:16,880 --> 00:37:20,520
Speaker 1: use the watch to pay for stuff with that card. Well,

822
00:37:20,520 --> 00:37:22,360
Speaker 1: I think you can and probably should make him an

823
00:37:22,360 --> 00:37:25,279
Speaker 1: authorized user on your credit card that'll help with him

824
00:37:25,320 --> 00:37:28,799
Speaker 1: building credit. Assuming you handle your credit well, he'll become

825
00:37:28,800 --> 00:37:31,120
Speaker 1: a teenager and he'll have a score that many adults

826
00:37:31,160 --> 00:37:32,920
Speaker 1: can only hope for. And if that's the case, if

827
00:37:32,920 --> 00:37:35,560
Speaker 1: you have a long, great credit history, But he wouldn't

828
00:37:35,560 --> 00:37:37,719
Speaker 1: want you to give him access to pay with that

829
00:37:37,760 --> 00:37:40,080
Speaker 1: credit card that's in your name if you make him

830
00:37:40,080 --> 00:37:42,919
Speaker 1: authorized user, don't actually get him the physical credit card,

831
00:37:43,120 --> 00:37:45,640
Speaker 1: but being an authorized user on yours and then having

832
00:37:45,640 --> 00:37:48,000
Speaker 1: his own account like the Capitol One account that I

833
00:37:48,080 --> 00:37:50,719
Speaker 1: mentioned that allows him to use his money that you

834
00:37:50,760 --> 00:37:53,400
Speaker 1: have at least some oversight of seems like the right

835
00:37:53,440 --> 00:37:56,319
Speaker 1: balance to me. I just don't want Matt to have

836
00:37:56,440 --> 00:37:59,560
Speaker 1: a credit card that's mine and my kids using that card.

837
00:38:00,120 --> 00:38:03,520
Speaker 1: Way too young in my opinion for that, and I

838
00:38:03,560 --> 00:38:07,319
Speaker 1: stand to lose more in that case too. So I

839
00:38:07,360 --> 00:38:09,560
Speaker 1: just kind of like that, that separation of powers, Like

840
00:38:09,600 --> 00:38:12,440
Speaker 1: I like them having their own card, their own accounts.

841
00:38:12,440 --> 00:38:13,480
Speaker 1: You don't have them messing up your.

842
00:38:13,440 --> 00:38:17,600
Speaker 2: Stuff, not that they would, but I just, uh, there's.

843
00:38:17,400 --> 00:38:20,160
Speaker 1: Always the risk, right, yeah, there's the risk of them

844
00:38:20,440 --> 00:38:24,080
Speaker 1: going and buying something that they couldn't actually afford and

845
00:38:24,120 --> 00:38:27,800
Speaker 1: then on my credit card, whereas hey they've got a

846
00:38:27,840 --> 00:38:30,480
Speaker 1: finite amount that's in there. It's in their you know

847
00:38:30,520 --> 00:38:32,759
Speaker 1: account on the team account through Capital One, and.

848
00:38:32,719 --> 00:38:35,239
Speaker 2: So downside being if there is any fraud or something

849
00:38:35,280 --> 00:38:37,399
Speaker 2: that happens, they're out their own money. I guess while

850
00:38:37,400 --> 00:38:39,200
Speaker 2: you're trying to claw that back, because that's obviously one

851
00:38:39,200 --> 00:38:42,040
Speaker 2: of the benefits of using credit cards that we like,

852
00:38:42,640 --> 00:38:45,799
Speaker 2: there are those extra protections built in. If I ever

853
00:38:45,840 --> 00:38:48,359
Speaker 2: considered using a credit card, it would be for those protections,

854
00:38:48,440 --> 00:38:51,560
Speaker 2: not because I was looking to try to like completely

855
00:38:51,600 --> 00:38:54,359
Speaker 2: optimize and to teach my kids about how to use

856
00:38:54,360 --> 00:38:57,080
Speaker 2: credit card cash back and rewards and points. Like if

857
00:38:57,080 --> 00:38:59,120
Speaker 2: you're if that's what you're thinking, I think it's a

858
00:38:59,160 --> 00:39:01,919
Speaker 2: little too premature, at least at this point in the game.

859
00:39:02,000 --> 00:39:03,960
Speaker 2: I think, if you've got teenagers that are older like

860
00:39:03,960 --> 00:39:06,920
Speaker 2: seventeen eighteen, hey, trying to start talking about points and

861
00:39:06,920 --> 00:39:09,960
Speaker 2: cash back and how paying on time in fact ahead

862
00:39:10,000 --> 00:39:11,680
Speaker 2: of time before the statement even hits at the end

863
00:39:11,719 --> 00:39:14,640
Speaker 2: of the month, why not run that through the credit

864
00:39:14,719 --> 00:39:16,760
Speaker 2: card company. But at this point, at least at eleven

865
00:39:16,840 --> 00:39:19,239
Speaker 2: years old, that would not at all be on my

866
00:39:19,280 --> 00:39:20,920
Speaker 2: mind at all trying to teach my kid how to

867
00:39:21,160 --> 00:39:22,359
Speaker 2: use your credit card like a pro.

868
00:39:22,560 --> 00:39:22,759
Speaker 3: Right.

869
00:39:22,840 --> 00:39:25,840
Speaker 1: Yeah, you're not ready to gain that system at eleven, Yeah, exactly.

870
00:39:26,840 --> 00:39:30,360
Speaker 1: But I think this is like a perfect fora getting

871
00:39:30,400 --> 00:39:32,719
Speaker 1: him the right account, attaching it to the watch, and

872
00:39:32,760 --> 00:39:35,680
Speaker 1: making sure he has money at his disposal. He knows

873
00:39:35,680 --> 00:39:37,720
Speaker 1: how to spend, he knows where the money comes from.

874
00:39:37,960 --> 00:39:41,640
Speaker 1: It sounds like Chad is, you know, handling his money

875
00:39:41,680 --> 00:39:44,239
Speaker 1: lessons with his son like a pro Matt. Let's get

876
00:39:44,239 --> 00:39:46,799
Speaker 1: to another Facebook question from how to Money Facebook group.

877
00:39:46,800 --> 00:39:49,400
Speaker 1: This one comes from Megan. She says, given the benefits

878
00:39:49,440 --> 00:39:53,279
Speaker 1: of HSA's health savings accounts, would you prioritize investing in

879
00:39:53,320 --> 00:39:56,719
Speaker 1: an HSA over an IRA? Assuming funds are limited and

880
00:39:56,760 --> 00:39:59,520
Speaker 1: it's not possible to fully fund both if you were

881
00:39:59,560 --> 00:40:01,719
Speaker 1: forced to choose, that's what you're asking. If you have

882
00:40:01,760 --> 00:40:03,560
Speaker 1: to choose a favorite child, Joel, which one.

883
00:40:03,440 --> 00:40:03,880
Speaker 2: Would it be?

884
00:40:05,600 --> 00:40:08,440
Speaker 1: Well, we all know that one. That's like playing Russian roulette. Man,

885
00:40:08,480 --> 00:40:12,600
Speaker 1: that's a tough one. Yeah, it's difficult. Which one is superior?

886
00:40:12,719 --> 00:40:15,360
Speaker 2: And I'll say hopefully Megan's talking and talking about the

887
00:40:15,440 --> 00:40:19,120
Speaker 2: roth IRA as opposed to an HSA. Imagining you've got

888
00:40:19,160 --> 00:40:21,200
Speaker 2: a high deductible health care plan here, which gives you

889
00:40:21,239 --> 00:40:24,200
Speaker 2: access to an HSA. I'm assuming here that your income

890
00:40:24,320 --> 00:40:27,000
Speaker 2: is such that you are able to contribute to a

891
00:40:27,080 --> 00:40:29,439
Speaker 2: roth ray. So which one first? And I would say,

892
00:40:29,440 --> 00:40:32,920
Speaker 2: despite the roth ira being far more popular, if you

893
00:40:32,960 --> 00:40:37,040
Speaker 2: were looking at the technical details, well, then you can't

894
00:40:37,160 --> 00:40:40,560
Speaker 2: beat an HSA. And that's because, yes, you can avoid

895
00:40:40,560 --> 00:40:42,719
Speaker 2: a lot of tax when it comes to going with

896
00:40:42,719 --> 00:40:44,840
Speaker 2: a roth ira, but you can avoid all the tax

897
00:40:45,320 --> 00:40:48,400
Speaker 2: with an HSA. So I I guess I want to

898
00:40:48,400 --> 00:40:51,840
Speaker 2: couch that answer in if you are optimizing for the

899
00:40:51,880 --> 00:40:54,120
Speaker 2: absolute best rate, or not the best rate, but for

900
00:40:54,160 --> 00:40:58,160
Speaker 2: the best accounts, Yeah, for the least amount of taxes

901
00:40:58,200 --> 00:41:01,440
Speaker 2: paid as possible on your investments, then the HSA you

902
00:41:01,520 --> 00:41:02,440
Speaker 2: literally can't beat that.

903
00:41:02,600 --> 00:41:06,000
Speaker 1: Yeah, And that's why we sing its praises often on

904
00:41:06,000 --> 00:41:08,279
Speaker 1: the show. The triple tax advantage is huge, and if

905
00:41:08,320 --> 00:41:11,200
Speaker 1: your contributions are coming out of your paycheck, you get

906
00:41:11,200 --> 00:41:13,120
Speaker 1: to skip additional payroll tax on top of That's it's

907
00:41:13,120 --> 00:41:15,360
Speaker 1: almost like a quadruple tax advantage, and technically it is.

908
00:41:15,400 --> 00:41:17,960
Speaker 1: And that puts the HSA on top of our opinion.

909
00:41:18,360 --> 00:41:19,600
Speaker 1: And it's not like you give up on a lot

910
00:41:19,600 --> 00:41:21,000
Speaker 1: of flexibility by doing that either.

911
00:41:21,040 --> 00:41:21,439
Speaker 2: I think Matt.

912
00:41:21,520 --> 00:41:23,600
Speaker 1: Sometimes that's the trade off you have to weigh with

913
00:41:23,760 --> 00:41:27,560
Speaker 1: certain retirement accounts is, well, how long is this money

914
00:41:27,600 --> 00:41:29,680
Speaker 1: going to be locked away? And especially if I feel

915
00:41:29,680 --> 00:41:32,319
Speaker 1: like I need access to those funds before I reach

916
00:41:32,400 --> 00:41:35,400
Speaker 1: like full retirement age, gosh, I'm not going to be

917
00:41:35,400 --> 00:41:39,000
Speaker 1: able to touch it. Well, the WROTH offers some flexibility

918
00:41:39,000 --> 00:41:40,480
Speaker 1: in that regard to being able to claw back some

919
00:41:40,480 --> 00:41:44,279
Speaker 1: of those contributions, but the HSA allows similar flexibility for

920
00:41:44,360 --> 00:41:47,080
Speaker 1: taking those funds out before retirement. So both of those

921
00:41:47,080 --> 00:41:50,880
Speaker 1: funds have certain flexible withdrawal rules that are worth digging into,

922
00:41:51,239 --> 00:41:54,120
Speaker 1: but flexibility on both first they can be helpful, right,

923
00:41:54,360 --> 00:41:56,759
Speaker 1: I think the biggest trade off is, like, I think

924
00:41:56,760 --> 00:41:59,319
Speaker 1: the question that someone needs to ask themselves is how

925
00:41:59,320 --> 00:42:02,320
Speaker 1: committed are they to sticking with a spreadsheet? How organized

926
00:42:02,320 --> 00:42:04,759
Speaker 1: can you be not over the course of months or years,

927
00:42:04,760 --> 00:42:09,239
Speaker 1: but like even decades. Yeah, because yes, one is much

928
00:42:09,320 --> 00:42:10,879
Speaker 1: much better than the other, but it takes a bit

929
00:42:10,880 --> 00:42:11,880
Speaker 1: more work, you know.

930
00:42:11,960 --> 00:42:14,960
Speaker 2: So in this case, the HSA requires more work. And

931
00:42:15,000 --> 00:42:17,560
Speaker 2: it makes me think of something droll that we like

932
00:42:17,600 --> 00:42:19,920
Speaker 2: to do, which is smoking meat. And you talk to

933
00:42:19,960 --> 00:42:22,960
Speaker 2: anybody who's into barbecue, and you're gonna get a superior barbecue,

934
00:42:23,239 --> 00:42:27,359
Speaker 2: a superior brisket or pork butt. If you go with

935
00:42:27,520 --> 00:42:30,640
Speaker 2: an offset smoker where you've got lump charcoal, where you've

936
00:42:30,640 --> 00:42:33,680
Speaker 2: got like white oak. Right, but guess what it takes

937
00:42:33,920 --> 00:42:37,520
Speaker 2: my mouthwater. It takes more handholding, It takes a little

938
00:42:37,520 --> 00:42:39,680
Speaker 2: bit more paying attention to that smoker to make sure

939
00:42:39,719 --> 00:42:42,160
Speaker 2: that you're doing it right. The vast majority of folks

940
00:42:42,200 --> 00:42:44,320
Speaker 2: out there, I think, are probably like, man, I just

941
00:42:44,360 --> 00:42:46,319
Speaker 2: want some nice barbecue at home to where I'm not

942
00:42:46,360 --> 00:42:49,360
Speaker 2: paying out the nose by ordering takeout every time I

943
00:42:49,440 --> 00:42:52,279
Speaker 2: go out. And for those folks in those instances, guess

944
00:42:52,280 --> 00:42:55,200
Speaker 2: what a pellet smoker a trigger because it's not quite

945
00:42:55,320 --> 00:42:57,600
Speaker 2: as good of a product in the end, but dang it,

946
00:42:57,640 --> 00:42:59,880
Speaker 2: you know what, it does a whole lot with a

947
00:43:00,000 --> 00:43:03,000
Speaker 2: minimal amount of efforts, And for the vast majority of folks,

948
00:43:03,080 --> 00:43:04,600
Speaker 2: I think that's going to be enough for them.

949
00:43:04,600 --> 00:43:06,040
Speaker 1: And so I think you just set it and forget it,

950
00:43:06,080 --> 00:43:07,640
Speaker 1: and it's idiot proof. And that's kind of what the

951
00:43:07,719 --> 00:43:10,239
Speaker 1: roth IRA is like. You got to be committed to

952
00:43:10,280 --> 00:43:13,840
Speaker 1: the system if you're gonna take full advantage of the HSA.

953
00:43:14,120 --> 00:43:16,840
Speaker 1: I think the other thing worth highlighting about the HSA

954
00:43:16,960 --> 00:43:19,080
Speaker 1: is that it can become like in traditional IRA after

955
00:43:19,120 --> 00:43:21,520
Speaker 1: the age of sixty five. So if you're incredibly healthy,

956
00:43:21,560 --> 00:43:23,520
Speaker 1: you don't rack up a ton of medical bills, which

957
00:43:23,560 --> 00:43:25,960
Speaker 1: what we hope for you. Hey, it's not like that

958
00:43:26,000 --> 00:43:30,360
Speaker 1: money is locked away because you didn't incur enough medical expenses.

959
00:43:30,800 --> 00:43:32,520
Speaker 2: You could also split the difference, right.

960
00:43:32,360 --> 00:43:34,760
Speaker 1: If if funds are limited, go fifty to fifty funding

961
00:43:34,800 --> 00:43:37,960
Speaker 1: each account halfway. You know, hopefully further down the line

962
00:43:37,960 --> 00:43:39,960
Speaker 1: you can contribute to both of those accounts in more

963
00:43:40,000 --> 00:43:42,759
Speaker 1: meaningful ways. But why not go have these too? If

964
00:43:42,800 --> 00:43:45,960
Speaker 1: you're kind of seriously split on which one is best.

965
00:43:46,080 --> 00:43:48,520
Speaker 1: It's true, I think the HSA is a little bit better.

966
00:43:49,320 --> 00:43:53,040
Speaker 2: I like it's ten but from a financial standpoint, from

967
00:43:53,040 --> 00:43:55,880
Speaker 2: an optimization standpoint, but it's a lot worse from how

968
00:43:55,920 --> 00:43:58,160
Speaker 2: much attention do I need to give to this thing yep,

969
00:43:58,200 --> 00:44:01,759
Speaker 2: over the coming years. So great question, Megan. We hope

970
00:44:01,800 --> 00:44:04,759
Speaker 2: that helps Matt. Let's get back to the beer that

971
00:44:04,800 --> 00:44:07,120
Speaker 2: we had on this episode. This one was called tiny S's.

972
00:44:07,360 --> 00:44:09,640
Speaker 1: It's like a fruited sour, I want to say, or

973
00:44:09,920 --> 00:44:13,960
Speaker 1: I don't know, candied sour from the good folks of Prairie.

974
00:44:13,680 --> 00:44:16,120
Speaker 2: And I think they've like just annoyingly embraced that, because

975
00:44:16,320 --> 00:44:19,920
Speaker 2: like it's got an illustrated chemistry and motif going on,

976
00:44:20,000 --> 00:44:22,440
Speaker 2: and even like some of the things that are so

977
00:44:22,560 --> 00:44:25,520
Speaker 2: called atoms, they just look like nerds. And I literally,

978
00:44:25,560 --> 00:44:27,120
Speaker 2: like when I smelled it before we started drinking it

979
00:44:27,320 --> 00:44:28,560
Speaker 2: at the beginning of the episode, I was like, man,

980
00:44:28,560 --> 00:44:31,120
Speaker 2: this smells like nerd ropes and that is told. It

981
00:44:31,120 --> 00:44:33,400
Speaker 2: spells like your kid's candy basket post Halloween. This is

982
00:44:33,560 --> 00:44:34,960
Speaker 2: exactly what it tastes like. I don't know if I've

983
00:44:35,000 --> 00:44:38,080
Speaker 2: ever had a beer that was so sweet, Like I

984
00:44:38,080 --> 00:44:40,840
Speaker 2: guess we've had some like big, boozy sweet beers, but

985
00:44:40,880 --> 00:44:42,120
Speaker 2: I don't know. I don't know if I've ever had

986
00:44:42,160 --> 00:44:43,680
Speaker 2: a sour that was this sweet before.

987
00:44:43,800 --> 00:44:45,959
Speaker 1: Right, Oh, you're right, like, because usually they're they're they're

988
00:44:46,080 --> 00:44:48,480
Speaker 1: sweet with fruit, but this is sweet with candy, and

989
00:44:48,520 --> 00:44:49,200
Speaker 1: so it feels.

990
00:44:49,040 --> 00:44:51,879
Speaker 2: Like sugary sweet. It's like Skittles sweet one hundred percent.

991
00:44:51,960 --> 00:44:53,360
Speaker 2: It's like, as I drink it, I can kind of

992
00:44:53,560 --> 00:44:55,680
Speaker 2: crunch my teeth together and I can almost feel the sugar.

993
00:44:56,360 --> 00:44:58,759
Speaker 2: I can taste the rainbow, Matt, I can taste the rainbow. Yeah,

994
00:44:58,760 --> 00:45:00,560
Speaker 2: like Sweethearts a little bit. It' art a little bit

995
00:45:00,560 --> 00:45:03,799
Speaker 2: of sweet. This is just more sweet, less tart, for sure,

996
00:45:04,120 --> 00:45:06,160
Speaker 2: And it reminds me of like country time lemonade as

997
00:45:06,160 --> 00:45:08,239
Speaker 2: a kid, where you can like mix your own, because

998
00:45:08,280 --> 00:45:10,879
Speaker 2: it does taste like that. It's less lemony, it's more

999
00:45:10,920 --> 00:45:13,920
Speaker 2: pink tasting, and you know in the big canister where

1000
00:45:13,920 --> 00:45:16,640
Speaker 2: you can like add your own, oh yeah, extra, and

1001
00:45:16,640 --> 00:45:18,160
Speaker 2: you can make it as sweet or as not sweet

1002
00:45:18,160 --> 00:45:20,319
Speaker 2: as you want. This tastes like the pink lemonade I

1003
00:45:20,360 --> 00:45:24,000
Speaker 2: was making in seventh grade, Like yeah, high coned to me.

1004
00:45:24,080 --> 00:45:27,360
Speaker 1: This is a novelty beer and it's not really my style,

1005
00:45:27,840 --> 00:45:29,440
Speaker 1: but every once in a while it's fun to have

1006
00:45:29,440 --> 00:45:31,800
Speaker 1: a novelty beer and just see what people can create

1007
00:45:31,880 --> 00:45:34,960
Speaker 1: in the beer category. This one is very far afield,

1008
00:45:35,280 --> 00:45:38,880
Speaker 1: kind of goofy and very sweet, which is not my jam.

1009
00:45:39,000 --> 00:45:41,160
Speaker 2: Very sweet, and it's almos. It's almost like it's marketed.

1010
00:45:41,239 --> 00:45:42,839
Speaker 2: Like what do you think of that pencil there with

1011
00:45:42,880 --> 00:45:45,279
Speaker 2: like the pencil grip yeah on there, Like there's certain

1012
00:45:45,360 --> 00:45:48,600
Speaker 2: it's like a throwback to like middle school kind of days.

1013
00:45:48,960 --> 00:45:52,560
Speaker 2: It makes me think about Founders Breakfast Out, remember when

1014
00:45:52,600 --> 00:45:54,600
Speaker 2: it had the baby on there and who was it

1015
00:45:54,880 --> 00:45:58,759
Speaker 2: the Federal drug No, somebody like shut them down and said, hey,

1016
00:45:58,800 --> 00:46:00,440
Speaker 2: you have you can't have the baby be on your

1017
00:46:00,440 --> 00:46:03,400
Speaker 2: beer anymore because of it's like you're marketing to kids.

1018
00:46:03,560 --> 00:46:06,319
Speaker 2: What it's like an old school Norman Rockwell looking kind

1019
00:46:06,320 --> 00:46:10,080
Speaker 2: of picture as opposed to this talk about the different

1020
00:46:10,160 --> 00:46:13,360
Speaker 2: vapes getting marketing to kids. This is like totally something

1021
00:46:13,440 --> 00:46:15,000
Speaker 2: of nighth grade would see and be like, oh, but

1022
00:46:15,080 --> 00:46:18,360
Speaker 2: it tastes a good anyway, they might actually like this.

1023
00:46:18,400 --> 00:46:21,719
Speaker 2: I'm not trying to accuse Prairie of anything underhanded here.

1024
00:46:22,480 --> 00:46:25,040
Speaker 1: This tasty beer, just a bit sweet, good stuff, unique,

1025
00:46:25,719 --> 00:46:28,359
Speaker 1: not one I'll probably ever pick up again. All Right,

1026
00:46:28,360 --> 00:46:30,200
Speaker 1: that's gonna do it, though, Matt for this episode. And

1027
00:46:30,280 --> 00:46:32,160
Speaker 1: by the way, if you have a money question, please

1028
00:46:32,280 --> 00:46:34,160
Speaker 1: do send it our way. We'd love to hear from you.

1029
00:46:34,680 --> 00:46:36,799
Speaker 1: Just record it on the voicemail map of your phone,

1030
00:46:37,000 --> 00:46:38,560
Speaker 1: send it over to us. Hopefully we can take it

1031
00:46:38,560 --> 00:46:41,040
Speaker 1: next week and we'll put links to some of the

1032
00:46:41,040 --> 00:46:43,120
Speaker 1: resources we mentioned up in the show notes on our

1033
00:46:43,120 --> 00:46:44,760
Speaker 1: website at howtomoney dot com.

1034
00:46:44,840 --> 00:46:47,200
Speaker 2: You know it. So, until next time, best Friends Out,

1035
00:46:47,239 --> 00:47:02,240
Speaker 2: Best Friends Out,