Speaker 1: Welcome to Out of Money. I'm Joel, I'm Matt.
Speaker 2: Today we got a special ask kind of money episode
Speaker 2: for you. We're addressing tariff's volatility and their impact on you, you.
Speaker 1: Know, a buddy. This is the Tariff's special edition. How
Speaker 1: it's going to impact investing, How it's going to impact
Speaker 1: your job, your income, what you're spending, whether or not
Speaker 1: you should buy or sell a house. Perhaps these are
Speaker 1: all topics that we're going to be getting to during
Speaker 1: today's episode. Yeah, a lot to cover, and it's therefore
Speaker 1: we don't have any short quick stories to share with
Speaker 1: them this week. We've got a lot to get to
Speaker 1: during today's episode.
Speaker 2: As you and I have discussed multiple times to the
Speaker 2: constantly changing policy, that's got a factor to this discussion. Two,
Speaker 2: it's not like there's some set in stone let's plan
Speaker 2: on this. There are still like tariffs that are supposed
Speaker 2: to come into being in you know, less than three months.
Speaker 2: Will those are won't those happen? That's also part of
Speaker 2: the discussion here.
Speaker 1: Yeah, that's so true, because so we're literally recording this
Speaker 1: episode just like a few days before, you are hearing
Speaker 1: this out there and even and certainly between us recording
Speaker 1: and you hearing this episode, things could have changed. But literally,
Speaker 1: like while we're talking, like things are so dynamic, and
Speaker 1: I don't know if there's ever been a time where
Speaker 1: we've seen so much change in such a short amount
Speaker 1: of time. I heard specifically the terriffs I heard referred
Speaker 1: to recently as like the wax on wax off tariffs.
Speaker 1: It's the mister that Trump is the mister Miyagi of
Speaker 1: of international trade some truth for that which totally cracked
Speaker 1: me up. But the beer that you and I are
Speaker 1: going to enjoy during this episode is called a yellow Rose.
Speaker 1: This is a smash IPA. I did not know that
Speaker 1: was a category of Iba smash Burger's, but not smashed
Speaker 1: ipa smash I pa. I don't know Loane Pint Brewery.
Speaker 1: They are the of this particular drink, but never called
Speaker 1: it a drink before, but as a beer that we're
Speaker 1: gonna enjoy, and we'll share our thoughts at the end
Speaker 1: of the episode. True story.
Speaker 2: And by the way, if you have a money question,
Speaker 2: just go to how to money dot com slash ask
Speaker 2: for the simple directions on how to submit yours. If
Speaker 2: you've got one about the macroeconomy, how it impacts your
Speaker 2: personal finances. Please do send your questions our way, or
Speaker 2: you can just record your question on the voicemad Mo
Speaker 2: app of your phone email it over to us.
Speaker 1: Matt.
Speaker 2: Let's get to a question specifically about international investing in
Speaker 2: the age of tariffs.
Speaker 3: Hey, guys, this is Bryant and I'm calling in from Cutzer.
Speaker 3: My wife and I are both originally from the United States,
Speaker 3: but we are currently living and working in Cutzer as professors,
Speaker 3: and we are worried about the kind of state of
Speaker 3: the US economy, and we recently decided to keep living here,
Speaker 3: so we just turned down job offers extra c m
Speaker 3: M in order to kind of stay here and work here.
Speaker 3: Sellers are higher cost or lower. There's there's some perks involved,
Speaker 3: and we are kind of wondering where to go from
Speaker 3: here with our investments. We currently have most most of
Speaker 3: our investments are currently in the US stock market, mostly
Speaker 3: in the Vanguard et F v o O. But given
Speaker 3: kind of the decline of the dollar and the kind
Speaker 3: of fluctuation in the in the stock market currently and
Speaker 3: with everything else going on, we are considering investing internationally.
Speaker 3: So we've been looking at some European ETFs like the
Speaker 3: VGK and some other ones, And we were kind of
Speaker 3: just wondering if you have advice about that, what you
Speaker 3: think about if there's any picks that you would suggest. Yeah, thanks, Yes.
Speaker 1: Do you like how Bryant said, if we had any picks,
Speaker 1: We're here to dish out the stock tips.
Speaker 2: He's not, at least he's not asking about individual stocks.
Speaker 2: He's talking about, Hey, should I diversify internationally? Which is
Speaker 2: and it's honestly, that's a question as old as time,
Speaker 2: since the beginning of stock market investing.
Speaker 1: Yeah, Brian, he's a part of the VU family. He
Speaker 1: feels like a brother to me, Joel, because that's pretty
Speaker 1: much fully invested in VU.
Speaker 2: Yeah, I'd be curious to know, by the way, what
Speaker 2: it feels like to be living internationally right now, reading
Speaker 2: about all this American news from overseas. It's it's like, right,
Speaker 2: we feel inundated by it. I wonder if, because he's
Speaker 2: in the Middle East, if it feels more or less impactful.
Speaker 2: Maybe it feels even a little less unclear because the
Speaker 2: coverage is a little more sparse. I I don't no,
Speaker 2: but it is. It would be interesting to have that
Speaker 2: kind of Bird's eye view in What is it actually
Speaker 2: like living in what? How do you pronounce it Cutter?
Speaker 2: I've always had a tough time pronouncing that one.
Speaker 1: But that's I think that's how you pronounce it if
Speaker 1: you are a local, like if you live are That's
Speaker 1: how I always said. Yeah, I mean that's as I think.
Speaker 1: As English speakers, I've always heard it referred to as Qatar.
Speaker 1: But folks who say cutter, you have to be a
Speaker 1: professor living in Cutter to be able to say it
Speaker 1: that way. Joe, Yeah, so you're not allowed to say
Speaker 1: it like that, Okay, I won't just so you know. Good, good,
Speaker 1: Thanks for clarifying that ahead of the time. A whole
Speaker 1: lot of other words you're also not allowed to say either, right,
Speaker 1: because of who you are. But that's true, okay. But
Speaker 1: I also I get to worry that Bryant is experiencing here, right.
Speaker 1: I think.
Speaker 2: I think a lot of the norms that we've grown
Speaker 2: accustomed to, they're being shaken up right now. You and
Speaker 2: I were always talking about how politics shouldn't impact how
Speaker 2: you invest. That's particularly true right when we're getting to
Speaker 2: election season and people like, oh, if the Democrat or
Speaker 2: the Republican gets selected that maybe I should shake things
Speaker 2: up because I don't know if they're going to handle
Speaker 2: the economy as well. And that has always been based
Speaker 2: on the reality that both the R and the d's
Speaker 2: they kind of tend to hold a belief in the
Speaker 2: benefits of global free trade. And for the first time
Speaker 2: in a long time, Matt, the free trade bias that's
Speaker 2: essentially been held for generations, it's being upended. And so yeah,
Speaker 2: I do think the discussion of changing your investing strategy
Speaker 2: takes on a bit more weight in this environment. Like
Speaker 2: the question is different than what if an R or
Speaker 2: D gets elected. It's like, well, what if the way
Speaker 2: we think of the global economy is shifting dramatically?
Speaker 1: Yeah, and it does. I will say it appears like
Speaker 1: that sort of free trade approach to global trade is
Speaker 1: being upended. There's also a chance, of course, that it
Speaker 1: could just sort of be a blip on the radar
Speaker 1: in terms of stock market and investments. It could be
Speaker 1: just some of that short term volatility that has yet
Speaker 1: to be seen. And honestly, that kind of that's the
Speaker 1: filter I'm viewing all the questions we're going to kind
Speaker 1: of get to today. We're gonna address and try to
Speaker 1: answer the questions as best we can given what we
Speaker 1: know at the moment. So Bryant's question should he be
Speaker 1: investing internationally? There are gonna be valid arguments on both
Speaker 1: sides whether or not you should continue to invest solely
Speaker 1: in the in US companies or if you should expand
Speaker 1: that to international indexes as well, because many believe that
Speaker 1: US centric ETFs like VU offers enough overseas exposure that
Speaker 1: it just minimizes or it even completely eliminates the need
Speaker 1: to own funds that own foreign companies specifically, So basically
Speaker 1: you're getting enough diversification by owning a single index like
Speaker 1: VU because McDonald's, Apple, Amazon, these are all companies who
Speaker 1: are doing a lot of business in countries around the world,
Speaker 1: which achieves a just like a good enough kind of result.
Speaker 2: If you travel to Asia, man, you know how many
Speaker 2: kfs as you see a lot are there.
Speaker 1: I don't know. It's been a long time I've been
Speaker 1: in Asia. So we have always felt this way, and honestly,
Speaker 1: despite the tariff induced market volatility, we still feel that
Speaker 1: most folks will do just fine investing in low cost
Speaker 1: total stock market index funds or s and P five
Speaker 1: hundred ETFs over the years.
Speaker 2: Yeah, And I think that's for multiple reasons, right, because
Speaker 2: despite this growing anti free trade sentiment, the US economy,
Speaker 2: it's still the most vibrant in existence, right, and our
Speaker 2: business environment is the envy of the world. Like when
Speaker 2: you think about the biggest companies in the world, it's
Speaker 2: not even close like the United States, especially when you're
Speaker 2: talking about the mag seven or whatever. Companies in other
Speaker 2: countries just can't hold a candle to the largest companies
Speaker 2: that we have in the United States here. True, and
Speaker 2: also when it comes to the breath and the diversity
Speaker 2: of companies and industries that the United States participates in.
Speaker 2: It's all our belief too that there's no real stomach
Speaker 2: for significant tariffs to remain over the long term. Right.
Speaker 2: We've already seen tariffs paused, reduced, rolled back, and then
Speaker 2: exceptions created for specific companies and sectors specifically like computers, smartphones.
Speaker 2: Right when you think of a company like Apple, they're
Speaker 2: lobbying hard to have tariffs reduced on smartphones in particular.
Speaker 2: And I think the administration is starting to understand how
Speaker 2: negative of an impact lasting tariffs could have. And it's
Speaker 2: obviously it's hard to predict when trade policy is kind
Speaker 2: of at the mercy of one man's whims right now.
Speaker 2: But the willingness to minimize tariffs and to shift when
Speaker 2: tide's turn, I think that's at least somewhat positive. So
Speaker 2: one we can see that the US economy is incredibly resilient,
Speaker 2: and two, it looks like tariff policy can and will
Speaker 2: change right as the American economy reacts negatively yes to
Speaker 2: the imposition of those tariffs. I think those are two
Speaker 2: at least positive signs that being a US centric investor
Speaker 2: still seems like.
Speaker 1: A reasonable idea, right But Bryant might feel differently. He
Speaker 1: might come down, you know, given the same information, he
Speaker 1: might make a totally different decision. And I think that's okay.
Speaker 1: There are a lot of really smart people out there
Speaker 1: who believe that international exposure is crucial for investors. And
Speaker 1: this is even before tariffs came on the scene. Even
Speaker 1: if international stocks have performed poorly versus US stocks over
Speaker 1: the past decade, that still doesn't mean that they will
Speaker 1: over the next decade. You know, like things could turn around,
Speaker 1: particularly if US policy continues to march down this road. Brian,
Speaker 1: if you do feel that you need to change things, up.
Speaker 1: I would say, don't change things up like immediately, Like
Speaker 1: you don't need to slam on the e break and
Speaker 1: pull ui. I would just consider buying other low few
Speaker 1: funds that offer non US talk exposures with new investment
Speaker 1: dollars over time. This isn't like a call to say
Speaker 1: just sell everything and you completely upend your financial or
Speaker 1: at least your investing life. Yeah.
Speaker 2: I think if you're going to change your investing strategy, like,
Speaker 2: make sure you write it down, be thoughtful about it,
Speaker 2: and say no no, because of this, It's changed my
Speaker 2: happening in the world. It's changed my belief in this way,
Speaker 2: and put pen to paper so that you have an
Speaker 2: informed view of why you're making those changes, so you're
Speaker 2: not just making them emotionally and half past exactly. That's
Speaker 2: a bad idea and it.
Speaker 1: Makes me think too. So at the beginning or in
Speaker 1: his question, he was talking about how they chose to
Speaker 1: stay there in Katar based on a couple of things,
Speaker 1: based on higher pay as well as lower lower cost
Speaker 1: of living. I think is what he said there that's
Speaker 1: great as opposed to thinking that, oh, it seems like
Speaker 1: the US economies and shambles. I'm not totally sure. I mean,
Speaker 1: he did mention like the weekend US dollar, but hopefully
Speaker 1: he primarily made the decision based on some of these hard,
Speaker 1: tangible number crunching that he was able to do, as
Speaker 1: opposed to projecting into the future what might be happening
Speaker 1: in a similar way. That's how I would want Bryant
Speaker 1: to approach his investing, like, yes, total, it's totally fine
Speaker 1: to say I want to maybe diversify a little bit
Speaker 1: more internationally, but make sure you're doing that with a
Speaker 1: plan while looking out the numbers as opposed to that
Speaker 1: sort of knee jerk emotional reaction.
Speaker 2: In a proactive, not reactive way. And the proactive, I
Speaker 2: think is exactly what you mentioned, Matt, just kind of
Speaker 2: buying into other index funds internationally over time to increase
Speaker 2: your exposure there, instead of making some sort of whiplash
Speaker 2: sell by sort of thing in one of your tax
Speaker 2: advantage retirement accounts. Right, and Bryant, he mentioned VGK that's
Speaker 2: a good one for your specific investing. It's a Vanguard fund,
Speaker 2: and then there's there are funds like VXUS it's a
Speaker 2: it's a broader international fund. They could do the trick
Speaker 2: as well.
Speaker 1: Also low cost. Also cost also starts with the V
Speaker 1: so I'm pretty sure Brian's going to be into it,
Speaker 1: and I think ultimately what it comes down to, Matt,
Speaker 1: part of what makes a good portfolio for anybody out
Speaker 1: there listening is if it allows you to sleep at night,
Speaker 1: If you are a nervous nelly, right, if you believe
Speaker 1: that ramping up to let's say, twenty percent international stock
Speaker 1: exposure over the coming years, if that would help you
Speaker 1: rest a little more.
Speaker 2: Easily, do it. If you have gone if you saw
Speaker 2: those those jaw dropping multiple five percent drops back to
Speaker 2: back and you were like, I can't handle this. I'm
Speaker 2: looking at my four one k and I'm freaking well,
Speaker 2: then it probably means you are too stock heavy and
Speaker 2: you need to have a more balanced investment approach, Like
Speaker 2: you don't do something, don't have so much exposure to
Speaker 2: stocks that if we do have a correction, like it's
Speaker 2: too emotionally difficult for you to stomach. I would also
Speaker 2: just note don't sleep on target date fund either. There's
Speaker 2: still US centric, but part of the appeal is the
Speaker 2: inclusion of some foreign stocks and bonds, So target date
Speaker 2: funds could be another reasonable choice for Briant and for
Speaker 2: other people out there, And it's something that we mentioned
Speaker 2: kind of frequently, especially because it is one of those
Speaker 2: set it and forget it things where you invest in
Speaker 2: the target date fund and it changes as you get
Speaker 2: closer to your retirement date.
Speaker 1: Yeah, but in a similar way, I feel like even
Speaker 1: VU is a set it and forget it kind of thing.
Speaker 1: You know, It's like, this isn't something that you really
Speaker 1: need to look at. It's it's a NIC and PFUF fund,
Speaker 1: an index fund. It automatically rebounces and take into account
Speaker 1: the different companies that are included in the troops.
Speaker 2: But it's getting closer to tapping those retirements. Certain percent
Speaker 2: stock oriented, certainly if you are approaching retirement. But I
Speaker 2: mean it seems like Brian is just looking at how
Speaker 2: am I going to be able to maximize my returns
Speaker 2: moving forward. So I do think that there's a way
Speaker 2: to sort of steal man the international exposure case, and
Speaker 2: like this is an aspect of not terrorists, but just
Speaker 2: our current form, current White.
Speaker 1: House's foreign policy. And hopefully this isn't venture too much
Speaker 1: in the politics. But like one of the things that
Speaker 1: we've heard recently is that the US isn't going to
Speaker 1: be like the world's police right like that, it's not
Speaker 1: going to be like the global cop on the beat,
Speaker 1: as evidenced by the Vice President's statement that got the
Speaker 1: signal gate whatever the thing this is a few weeks ago,
Speaker 1: it's just like, Oh, I hate that we're bailing out
Speaker 1: Europe again. And there seems to be this distancing from
Speaker 1: other countries. I mean not only in funding that we're
Speaker 1: cutting to other countries from a soft diplomacy standpoint, but
Speaker 1: also literally from a defense backing standpoint as well. So
Speaker 1: from a Steelman best case scenario for investing internationally, it
Speaker 1: almost seems like that there is an opportunity for all
Speaker 1: these countries who have previously been reliant specifically on US
Speaker 1: defense to have to get their books in order for
Speaker 1: companies to be like, oh, this is something that we're
Speaker 1: going to have to start doing, and I see potentially
Speaker 1: an opportunity for a lot of foreign countries to ramp
Speaker 1: I mean they're talking about ramping up like Germany, right,
Speaker 1: I mean they're like, oh, we've already seen defense stocks
Speaker 1: in Europe going and as companies get more efficient, that's
Speaker 1: going to lead to higher profits and potentially higher returns
Speaker 1: of well, so I could see that being sort of
Speaker 1: a not a best case scenario argument, but like a
Speaker 1: Steelman case for international investing, specifically because of the US's
Speaker 1: stance towards other countries. But who knows.
Speaker 2: All right, Matt, let's get some more questions we've got. Specifically,
Speaker 2: we're gonna get to a lot of questions that people
Speaker 2: pose in our Facebook group about tariffs and markets and
Speaker 2: how they should be reacting right now. This question comes
Speaker 2: from Justin. He says, in explaining tariffs, can you discuss
Speaker 2: if a tariff is a form of a regressive tax policy?
Speaker 2: For simplicity's sake, if tariff's raise the cost of groceries
Speaker 2: by one hundred bucks equally for all consumers, that one
Speaker 2: hundred dollars is a much larger percentage for a person
Speaker 2: making two grand a month than for the person making
Speaker 2: ten grand a month.
Speaker 1: Yep, yep. I mean, that's basically true. Terrafs are regressive
Speaker 1: in this way. And it's super fascinating because at least
Speaker 1: one of the major reasons offered for implementing teriffs was
Speaker 1: to help lower income Americans, so bringing back the manufacturing
Speaker 1: jobs that were lost to other countries, is one of
Speaker 1: the main goals, and I of course understand the thought
Speaker 1: process here. I just don't think that recreating a world
Speaker 1: where the US is a manufacturing powerhouse is likely or
Speaker 1: even makes the most sense for our economy. It makes
Speaker 1: A few days ago or last week, we were talking
Speaker 1: about we were looking at the digital rendering or the
Speaker 1: flyover of the BID factory in China, which it's like
Speaker 1: larger than Manhattan, It's like almost as big as San
Speaker 1: Francisco or something like that. Mind blowing dorms for their workers,
Speaker 1: and I'm wanting it. It's crazy impressive and you're just like,
Speaker 1: this is amazing that the singular private company. But then
Speaker 1: to think, wait, are we going to compete with that?
Speaker 1: Not from a do we have the ability to? But
Speaker 1: do we have the do we want to do that? Right? Like?
Speaker 1: Is that the kind of manufacturing powerhouse that we're looking
Speaker 1: for the US to become? Is that the kind of job?
Speaker 1: Do you want to be confined to whatever corporate dorm
Speaker 1: you know, because that's closest to the factory that you're
Speaker 1: now working in and you don't have a life outside
Speaker 1: of that. Do you want that for your kids? You know? Like,
Speaker 1: and that's where I have a really tough time grappling
Speaker 1: with the fact that this is something that's an actual
Speaker 1: goal or aim of the current administration. It's one of
Speaker 1: those things to work at a Silicon Valley company where
Speaker 1: they have like professional chefs and massuses and stuff like that,
Speaker 1: and so you're kind of coerced into staying, but you're
Speaker 1: not forced to be there. And I see that as yeah,
Speaker 1: person of the job, as opposed to be like, oh no, no,
Speaker 1: you have to live in It's like a modern day Hooverville, Right,
Speaker 1: That's what it looks like. It could turn into agreed,
Speaker 1: agreed where we did in that path.
Speaker 2: Yeah, when it comes down to back to Justin's question,
Speaker 2: tariff policies are going to hurt the bottom half of
Speaker 2: income earners much harder than folks who have a lot
Speaker 2: more financial resources at their disposal. So, for example, avocados
Speaker 2: have been much talked about. Matt loves most of our
Speaker 2: avocados come from Mexico. And if avocado goes from a
Speaker 2: buck twenty five apiece to two bucks apiece, well, the
Speaker 2: person with the higher salary and the greater savings they
Speaker 2: can more easily afford their avocado toast or their QUACAMOLEI
Speaker 2: habit because better than the person who's living paycheck to paycheck. Sure,
Speaker 2: that extra seventy five cents per avocado, it really does add.
Speaker 2: And that's just like literally one example of potentially hundreds
Speaker 2: of items that we buy regularly that could go up
Speaker 2: in price, and people who have less money coming in
Speaker 2: are just going to feel the upticking prices more. The
Speaker 2: same thing happened with inflation over the past few years, right,
Speaker 2: it was lower income households who felt more pain because
Speaker 2: of inflation. So yeah, on average, richer households will pay
Speaker 2: more overall thanks to tariffs, but less as a percentage
Speaker 2: of their income. And we haven't really seen massive price
Speaker 2: bumps yet, but as those come rolling in, I think
Speaker 2: the rock solid belief that tariffs are going to benefit
Speaker 2: economically disadvantaged folks in our society could dissipate quickly as
Speaker 2: public perception turns even more sour. And I think that's
Speaker 2: part of what's going to lead to the inability for
Speaker 2: substantial tariffs to remain in place over the long term.
Speaker 1: Yeah, going back to manufacturing, guess what, It's hard to
Speaker 1: manufacture avocados or coffee.
Speaker 2: For instance, Like you can't do that in the US.
Speaker 2: I guess you could try. There's like three countries that
Speaker 2: produce the vast majority of the world's coffee. Buteah, if
Speaker 2: we made a coffee in the US, it probably like
Speaker 2: the worst coffee in the world.
Speaker 1: And that's not because like that is out the stuff.
Speaker 2: I want an American stuck at making coffee, but I
Speaker 2: want to drink it because we don't have the climate
Speaker 2: to grow the bets, so we need to grow.
Speaker 3: Right.
Speaker 1: If we did have the climate, it'd be the best
Speaker 1: coffee in the world, right exactly, That's what Joel's saying.
Speaker 2: All Right, we've got more of your questions to get
Speaker 2: to about tariffs and the markets. We'll get to a
Speaker 2: bunch of those right after this.
Speaker 1: All right, man, we are back from the break. We're
Speaker 1: gonna take some more questions that listeners posted over there
Speaker 1: in the Facebook group. If you are not a member
Speaker 1: of the how to Money Facebook group, be sure to
Speaker 1: look it up. But let's see Becca, she asked about retaliation.
Speaker 1: She was talking asking about gold and crypto as well. Joel,
Speaker 1: one of your thoughts there, do you get any thoughts
Speaker 1: specifically about the trade war? That's that's the part that
Speaker 1: seems the most ominous.
Speaker 2: Yeah, I feel like that's kind of freaking people off
Speaker 2: the host I agree, And I think I'm glad she
Speaker 2: asked about this, because retaliation is is real, right, you
Speaker 2: can you can punch somebody in the nose, but then
Speaker 2: I don't know if they punch you in the ear back,
Speaker 2: like you're both hurting, So you have to take that
Speaker 2: into account. You might say, great, we got the upper
Speaker 2: hand here in the beginning, but do you ultimately get
Speaker 2: kicked in the pants, right? Do you ultimately have the
Speaker 2: upper hand, That's the question. And I think tariffs are
Speaker 2: a kind of a too complay at this game scenario.
Speaker 2: And we're already seeing other countries, a lot of our
Speaker 2: Canadian neighbors to the north canceling trips to the US,
Speaker 2: other countries too, just saying I'm not vacationing there because
Speaker 2: I'm so mad about the US trade policy. And that
Speaker 2: impacts the airlines, that impacts hotels, that impacts other travel
Speaker 2: leisure industries. And so if the US continues to have
Speaker 2: an antagonistic approach to trading partners, particularly friendly ones are
Speaker 2: ones we've been friendly with over many, many decades, it
Speaker 2: could hurt the bottom line of US companies who sell
Speaker 2: some of their goods and services abroad. I'm just thinking
Speaker 2: of a company like McDonald's. I could see consumers in
Speaker 2: other countries saying, like boycotting, Yeah, yeah, I'm not evening,
Speaker 2: I'm switching to my local fair instead. So not only
Speaker 2: will their cost rize US companies cost rizes, but demand
Speaker 2: could go down to internationally. And so I do think
Speaker 2: that erosion of faith in the US as a mutually
Speaker 2: beneficial training partner, it could potentially create some of the
Speaker 2: most harm.
Speaker 1: Totally, And that's the part that doesn't make the like
Speaker 1: any sense at all. Like China, Okay, I totally understand that,
Speaker 1: Like if you start doing some research or reading reading
Speaker 1: about the amount of intellectual property theft that has taken
Speaker 1: place from China and like the billions of dollars annually
Speaker 1: that you could assign a dollar amount to. Okay, I
Speaker 1: kind of understand the argument there, But the argument is
Speaker 1: more of an adversarial relationship there. Yes, absolutely as the
Speaker 1: other predominant world power. But when it comes to like
Speaker 1: Canada and even Mexico, I understood at the very beginning
Speaker 1: when border crossings were still a thing, and that's something
Speaker 1: that the Trump camp that they campaigned on like shutting
Speaker 1: the border, but that's like all but completely gone away,
Speaker 1: and so the and what gives with Canada. There's like
Speaker 1: no hardly any illegal crossings. Oh my gosh. Like the
Speaker 1: fentanyl stats about the number of pounds that were crossing
Speaker 1: the Mexican border as opposed to the Canadian border was
Speaker 1: like laughable, Like, I don't these aren't real numbers. But
Speaker 1: it was something like every thirty days, like three thousand
Speaker 1: pounds of fentanyl from Mexico and it was something like
Speaker 1: seven from Canada, I believe. And so the adversarial relationship
Speaker 1: in particular to Canada makes very little sense to me.
Speaker 1: But becos also asking about gold and crypto, how that
Speaker 1: would be impacted, And so we'll start with gold because
Speaker 1: it's done quite well for investors as they've turned there
Speaker 1: during uncertain times. It's actually outperformed the SMP by a
Speaker 1: lot over this past year, given the volatility that we've seen.
Speaker 1: If you zoom out a little bit more, you see
Speaker 1: that it's essentially matched the SMP over the past five years.
Speaker 1: But then beyond that it doesn't do so well, and
Speaker 1: especially if you look at the last even the last
Speaker 1: five to ten years, and you eliminate the past most
Speaker 1: recent four months, things start looking the whole lot more normal.
Speaker 1: It's the volatility that we've most recently experienced that's really
Speaker 1: throwing the average returns off.
Speaker 2: Which is on average when people turn to goal, it's
Speaker 2: like a flight to safety exact. And so I think
Speaker 2: that's why beck is asked about this, well, should I
Speaker 2: be flying to safety? And part of that depends, I guess,
Speaker 2: on your view of where the world is headed.
Speaker 1: Yees. But so still, if you have time on your
Speaker 1: side as an investor, look into the stock market, that's
Speaker 1: going to be a better choice from a long term
Speaker 1: historical perspective. As far as crypto goes, we still dislike
Speaker 1: crypto generally speaking, and we've got to carve out though
Speaker 1: for bitcoin. Bitcoin is not unlike the other cryptocurrencies, but inflation, tariffs,
Speaker 1: currency fluctuations as well currency inflation. This could lead to
Speaker 1: more investors moving into the bitcoin direction. Still highly volatile
Speaker 1: and basically it's still acting like a security. It's acting
Speaker 1: like socks. You got to be aware of that, and
Speaker 1: we want you Becca as well as all how too
Speaker 1: many listeners out there to stay invested in the market,
Speaker 1: but I certainly think having some bitcoin might be wise,
Speaker 1: certainly dabbling a little bit, no more than five percent.
Speaker 1: I get that A thumbs up.
Speaker 2: Yeah again, going back to kind of something we mentioned earlier, though,
Speaker 2: making huge shifts in how you're invested makes very little sense.
Speaker 2: But if you're making smart, calculated moves in different directions
Speaker 2: because you are being thoughtful about the future of Bitcoin,
Speaker 2: of money, of companies, of US based companies specifically, I
Speaker 2: get that. But you still you don't want to make
Speaker 2: knee jerk responses.
Speaker 1: Yeah, in large part because I think we are optimistic
Speaker 1: and we're hopeful that things are going to go back
Speaker 1: to normal, like not too far future. Yeah, yeah, I
Speaker 1: did say that. Well, but you know what I mean.
Speaker 2: Let's get to a question from listener Sarah. She says,
Speaker 2: I have a current college student. We used five twenty
Speaker 2: nine funds for freshman year, but it's now depleted. Student's
Speaker 2: father wants to keep adding to five two nine. I
Speaker 2: want to save in a HIGL savings account. What are
Speaker 2: your thoughts with the current volatility in investments right now.
Speaker 1: I think Sarah and the student's father are both right
Speaker 1: to a certain extent. I'm not sure where Sarah lives,
Speaker 1: but much of the answer comes down to the state
Speaker 1: that she lives in, because if she gets a tax
Speaker 1: break for funneling those dollars through a five twenty nine, well,
Speaker 1: of course do that. If not, well, then the high
Speaker 1: yield savings account is the right answer we're gonna get.
Speaker 1: So why I said that, I think you're both right here.
Speaker 1: Let's say you do live in a state that gives
Speaker 1: you a tax break. That still doesn't mean we want
Speaker 1: you to invest those dollars once you put those dollars
Speaker 1: into the five twenty nine. Notice I said to funnel
Speaker 1: those dollars through the five twenty nine as opposed to
Speaker 1: like parking it there in like a long term like
Speaker 1: airport parking. No, no, no, Like we're talking about like
Speaker 1: you doing the drop off, like at the at the
Speaker 1: gate or at the you know what, they got the
Speaker 1: numbers there at the airport. We're not talking about like
Speaker 1: the long term parking where you're having a height.
Speaker 2: It's almost like a legal form of money laundering, right
Speaker 2: where you're literally funneling it through this account passenger just
Speaker 2: to get a tax break, but you don't have to
Speaker 2: take much action with those that money beyond that it's
Speaker 2: totally and then you can, yeah, spend it at your
Speaker 2: discretion for college needs. Yeah, In most five twenty nine plans,
Speaker 2: they offer fixed income choices that do resemble the returns
Speaker 2: that you're going to see with a high heeled savings account,
Speaker 2: albeit with slightly lower returns.
Speaker 1: But put the money in the account. You get the
Speaker 1: tax break, but then keep the money in the most
Speaker 1: conservative choice, which is probably going to be like a
Speaker 1: money market equivalent kind of fun. So you're not actually
Speaker 1: investing those dollars it is. You are treating it a
Speaker 1: bit more like cash.
Speaker 2: And that's essentially the advice we would give you tariffs
Speaker 2: or not, right, a market volatility or not. It is
Speaker 2: one of those things where if the money needs to
Speaker 2: be spent immediately or in the very near term, you
Speaker 2: don't want to invest those dollars, even if it's twenty
Speaker 2: twenty three, right and you're like, the market's roaring, this
Speaker 2: is great. Should I be investing? No, you shouldn't if
Speaker 2: you need the money soon. Would We've always said, you know,
Speaker 2: for people with young kids, we're all about investing inside
Speaker 2: of those five twenty nine funds. If you're doing the
Speaker 2: other investments you need to make as an individual in
Speaker 2: your tax advantage retirement accounts first. But yes, we do
Speaker 2: want you putting money then in the five twenty nine
Speaker 2: fund and investing those dollars for their future. You want
Speaker 2: that tax advantage money to grow. But when you're getting
Speaker 2: closer to needing to spend that money down, you got
Speaker 2: a d risk, right. You want to make sure your
Speaker 2: five twenty nine planned money is not invested in something
Speaker 2: that could cause you to see significant drops in the
Speaker 2: balance in a short period of time. And so at
Speaker 2: this point you're investing in like a heavy stock based
Speaker 2: portfolio inside of the five twenty nine plan would be
Speaker 2: the furthest thing from smart Like it would be a
Speaker 2: terrible idea that the risks of losing a chunk of
Speaker 2: this money so close to needing it, it's just not
Speaker 2: worth the potential rewards. So exactly, you might say, oh, man,
Speaker 2: the fixed income fund is paying like two and a
Speaker 2: half three percent, and that seems like average return to DSP.
Speaker 2: The guys cite that all the time on the show Man.
Speaker 2: That's like an average aal return of something like ten percent.
Speaker 2: This I should be invested in the stock market. Well, no,
Speaker 2: you don't want to take that risk when you need
Speaker 2: the money soon.
Speaker 1: Yeah. Yeah. If it was me, if I if I
Speaker 1: had a freshman in high school, I would be willing
Speaker 1: to still be one hundred percent invested in security or
Speaker 1: in stocks. If I had a sophomore, I'm going to
Speaker 1: start taking some chips off the table. Is that a
Speaker 1: sophomore I think I would reduce that down by a
Speaker 1: third to like sixty six percent in stocks maybe the
Speaker 1: other third, you know, and more of a cash equivalent
Speaker 1: junior year. I'm like, I'm pulling even more off. But
Speaker 1: by senior year, I would want to be you want
Speaker 1: to have a money liquid pretty much ready to go
Speaker 1: in cash where you are not going to experience the
Speaker 1: ups and downs of the market.
Speaker 2: It'd be different too, right. I think if she had
Speaker 2: a freshman and she had plenty of money, some of
Speaker 2: it was actually even going to be for senior year
Speaker 2: or even beyond for college cost. But we're talking about
Speaker 2: the money going essentially directly to funding.
Speaker 1: The college exactly. She said she's got a current college student. Yeah,
Speaker 1: let's keep moving though. Jessica asks, if I'm worried about
Speaker 1: a layoff, my husband works for the VA. Is there
Speaker 1: a way to look into what unemployment benefits we would
Speaker 1: qualify for. I'm a planner, and yes, I like to
Speaker 1: plan for the what ifs before they happen? Is unemployment
Speaker 1: state by state? We have emergency savings? Does that fact
Speaker 1: into how much unemployment you qualify for? Also, I'd love
Speaker 1: an example copy of a bare bones budget for a
Speaker 1: family of four, for instance, how can you realistically go
Speaker 1: I'm sorry, how low can you realistically go on food? Oh? Yeah,
Speaker 1: that's good.
Speaker 2: I want you specifically to address the food question in
Speaker 2: a second map because I feel like that's something you
Speaker 2: d have been attentive to.
Speaker 1: That's the TLDR.
Speaker 2: But even the challenge that you guys instituted for yourself
Speaker 2: a few years back, which you've talked about on the show.
Speaker 2: We'll give that in just a second, but.
Speaker 1: You might have to remind me.
Speaker 2: But move on, okay or keep moving So let's specifically
Speaker 2: talk about the layoff fears first. That was Jessica's first question.
Speaker 2: I get that insecurity, you know, government workers, they used
Speaker 2: to have some of the most secure positions around. That's
Speaker 2: no longer the case. If I were in your shoes, Jessica,
Speaker 2: I'd be hoping for the best. But I'd at least
Speaker 2: be planning for the worst, planning for a potential job loss. Yeah,
Speaker 2: that means some things for your finances, but it also
Speaker 2: means networking right and looking for other work just in case,
Speaker 2: because you want to be prepared and you want to
Speaker 2: have kind of irons in the fire going because you're
Speaker 2: not sure kind of where things are headed.
Speaker 1: Yeah.
Speaker 2: And then when it comes to unemployment benefits, yes, it
Speaker 2: is a state by state thing. And no, your emergency
Speaker 2: fund has no impact on how much money you receive
Speaker 2: from those unemployment benefits.
Speaker 1: Yes, not like family assets and FASTA and applying for color.
Speaker 1: Not like wait a second, she's you've got plenty of
Speaker 1: moneys is loaded. We're not going to give you any
Speaker 1: of those unemployment benefits. That's not how it works exactly.
Speaker 1: That's something that you are paying into. You will receive
Speaker 1: those benefits, and each state has its own for the
Speaker 1: employer pays into it. Yeah, yeah, exactly. The formula is
Speaker 1: based usually on a percentage of your recent wages, with
Speaker 1: a fairly low cap. In our state, I believe the
Speaker 1: weekly max is something like three hundred and sixty five dollars,
Speaker 1: and it goes a lot lower than that. If you
Speaker 1: make less too. Yeah, my guess is that your husband
Speaker 1: actually makes more than that at the VA. So, but
Speaker 1: also know how long those benefits might last. And so
Speaker 1: we're typically talking anywhere between three and six months. So
Speaker 1: your liquid savings, your emergency fund is going to be crucial,
Speaker 1: even though unemployment benefits are certainly going to be helpful.
Speaker 1: And then when we're talking about the bare bones budget, Joey,
Speaker 1: you're saying, what challenge are you talking about?
Speaker 2: As far as you were trying to do two dollars
Speaker 2: per person per meal for many years. Oh and you
Speaker 2: were able to achieve that. Well back in the day,
Speaker 2: we're doing one dollar per meal per person. Yeah that's one.
Speaker 1: Dollar, dude.
Speaker 2: You're making me think of the commercials to support families
Speaker 2: in countries that are economically challenged.
Speaker 1: Man. Granted, this is when the kids were really little,
Speaker 1: so it's not like they're eating a ton. Things are
Speaker 1: different now as they've gotten bigger. I mean literally, man,
Speaker 1: it's crazy how I don't want to get all sentimental,
Speaker 1: but because they grow fast, they eat a lot of food.
Speaker 1: And when it comes to your grocery budget specifically, it
Speaker 1: comes down to how dialed in your current grocery spending
Speaker 1: is because let's say you're a baller like Joel, and
Speaker 1: you get your groceries delivered from Whole food and then
Speaker 1: everything else lies. Well, you don't do Whole Foods, but
Speaker 1: you've done that.
Speaker 2: I've been getting the liver room. I've talked about why
Speaker 2: the discount is to card gift cards.
Speaker 1: But and then let's say all the rest of your
Speaker 1: groceries you buy at the local farmers market on Saturday mornings,
Speaker 1: and it's super fresh and organic, and you can't get
Speaker 1: any groceries that are any more extensive than that because
Speaker 1: that's kind of like as expensive as they get there. Well,
Speaker 1: you're gonna be able to I mean, oh my gosh,
Speaker 1: you just by going to limit. Yes, I mean, you
Speaker 1: could cut back in such a significant way if that's
Speaker 1: what you're used to. However, if you already got your
Speaker 1: groceries dialed in, let's say you are you've been an
Speaker 1: Aldi shopper, you are very intentional about your spending there, man,
Speaker 1: it's really difficult to cut back on your spending, specifically
Speaker 1: on groceries. So that's what I mean. I think that's
Speaker 1: one that can vary pretty wildly. But I will say
Speaker 1: the way our family is implemented. A bear bones budget
Speaker 1: is all other discretionary spending I've essentially slashed by two thirds,
Speaker 1: and so it's literally hit with a multiplier jowl of
Speaker 1: zero point three to three. Because what I know is
Speaker 1: that even if things aren't doing, like aren't so great
Speaker 1: for our family, we're still gonna want to celebrate Christmas, Like,
Speaker 1: We're still gonna go on vacation, Kate and I are
Speaker 1: still going to want to go on date nights. They're
Speaker 1: just not going to be as nice. Yeah, the presents
Speaker 1: are going to be quite as big, the case is
Speaker 1: not going to be quite as long or exotic, perhaps,
Speaker 1: but there are still certain aspects the kids' activities. They
Speaker 1: may not be doing quite as many of them, but
Speaker 1: there are still certain things that like, the reason they're
Speaker 1: on our budget currently is because we've prioritized them. But
Speaker 1: we're just gonna have to find a way to prioritize
Speaker 1: them to a lesser extent, not necessarily eliminate them completely,
Speaker 1: though I know if a push comes to shove that
Speaker 1: that's something that we can do. So that's how we
Speaker 1: approach the bare bones budget. It's tougher when it comes
Speaker 1: to groceries because there's sort of a floor as to
Speaker 1: what it is that you can get by on. But true,
Speaker 1: all other dis same thing with your housing, like housing, transportation,
Speaker 1: and food. Man, those are really tough to make adjustments on,
Speaker 1: hard to turn on a time. Yeah, like you can
Speaker 1: plan to change those, but it's really hard to be
Speaker 1: like I'm gonna sell a car tomorrow because of a
Speaker 1: lot of life job life upheopal.
Speaker 2: Yeah, you might be able to do, but you might not. Also,
Speaker 2: I would say one of the biggest food line items
Speaker 2: in people's budget is and sometimes they don't think about
Speaker 2: it like this, but it's.
Speaker 1: Eating out craft Okay, yeah, you keep the craft beer
Speaker 1: budget and then you cut eating it. You can't elimit.
Speaker 2: Take that that's your craft beer equivalent, of course, But
Speaker 2: it's eating out, and people under assume how much they
Speaker 2: spend eating out at restaurants and when you lately, man,
Speaker 2: when you look at the data over the past five
Speaker 2: plus years, we the amount of money we spend eating
Speaker 2: out versust grocery stores, it's increased significantly as a culture.
Speaker 2: And so that's the biggest thing I think to combat
Speaker 2: is some of the eating out. Yeah, you might be
Speaker 2: able to save a little bit more by switching. If
Speaker 2: you don't shop at all, to yet going there, you
Speaker 2: could probably you know, cut some of the more expensive
Speaker 2: items from your grocery list. The same things are going
Speaker 2: to be smaller there than they're going to be.
Speaker 1: Once you underestimate all, even going from Kroger, which is
Speaker 1: like an affordable grocery store, even going from Cross I
Speaker 1: mean this, I've got the records, I got the receipts
Speaker 1: man literally going back, you know, decade and decades, but
Speaker 1: years and years and years. Switch it from Kroger to
Speaker 1: all these straight up getting item for item, we cut
Speaker 1: our grocery budget by thirty percent. I totally three percent overnight.
Speaker 1: I totally believe.
Speaker 2: I couldn't believe it. So I do think that's an
Speaker 2: important tip. But I also just want to highlight that
Speaker 2: there are other ways that people are not really thinking
Speaker 2: that they're spending money, or they're spending thoughtlessly, especially eating out.
Speaker 2: It's just something that and the average meal eating out
Speaker 2: costs four times with the meal at home costs.
Speaker 1: So remember that.
Speaker 2: And if you want to get I think inspired to
Speaker 2: make cheaper meals that are still tasty at home, check
Speaker 2: out our friend Frankie Celenza. He used to struggle meals.
Speaker 1: He came on.
Speaker 2: Episode eight forty six to talk about that, and he's like,
Speaker 2: all about making good food that's good for you for
Speaker 2: not much money at all, which I love. So yeah,
Speaker 2: definitely check out that episode and hopefully that'll be inspirational.
Speaker 1: If you really do want to cut that grocery budget totally.
Speaker 1: And he was into mountain biking, which is something of
Speaker 1: that I remember staying that's right, I feel like I
Speaker 1: like it even more. All right, let's geme. Even Pascal asks,
Speaker 1: is this the ridiculous time to put my house up
Speaker 1: for sale and move? Oh? What do you think, y'all?
Speaker 1: I'm reading into the question, and what I'm going to
Speaker 1: say is that if if you're looking to move to
Speaker 1: like a different country again, going to like m I'm
Speaker 1: kind of going back to the whole emotional response, the
Speaker 1: guitar answer that we gave earlier. If you feel like
Speaker 1: that the worst, like that the future of the US
Speaker 1: isn't bright, I don't know that Like that feels more
Speaker 1: like a like a knee jerk sort of reactionary response
Speaker 1: as opposed to maybe you're moving for another job, opportunity
Speaker 1: to get be closer to family. Maybe you're moving because
Speaker 1: you need you're downsizing, or you're upsizing. Maybe your family's
Speaker 1: growing and you need a bigger house. See, that was
Speaker 1: my These are all good reasons yes to move. That
Speaker 1: was my assumption in the question, was that Pascal was
Speaker 1: asking based on, Hey, is it just a terrible time
Speaker 1: to list my house because of what's going on with
Speaker 1: the market. And my answer to that is actually, no,
Speaker 1: not really. I think if you're right, though, Matt, if
Speaker 1: you're like, I'm thinking about moving to a completely different
Speaker 1: country because I'm worried about the future of the United States,
Speaker 1: I would say that's that's probably overblown. Like yet, there's
Speaker 1: a lot of folks out there who who feel though
Speaker 1: I don't harbor the same fears. But I will say,
Speaker 1: it's not that the housing market is immune from trade
Speaker 1: policy changes. It's just that other factors influence your decision
Speaker 1: whether or not to move a whole lot more like,
Speaker 1: I'd love to know how long you've owned the home,
Speaker 1: why you're moving, Are you moving to a lower cost
Speaker 1: of living location. Are you hoping to rent for a
Speaker 1: while after you sell this house? That would be helpful
Speaker 1: information to have. Ultimately, No, it's not a ridiculous time
Speaker 1: to sell your home. Home prices are high, even though
Speaker 1: mortgage rates remain steep, and so you got to make
Speaker 1: sure you price the home right and you market it
Speaker 1: well because homes are staying on the market longer these days.
Speaker 1: But you can still do quite well as a seller
Speaker 1: in this market, especially when you think about where home
Speaker 1: prices were a few years ago. Matt, think about Pascal,
Speaker 1: if even if he's only on the home for four
Speaker 1: or five years, just the appreciation on the home in
Speaker 1: that amount of time could be significant. Yep. But the
Speaker 1: question is what are you going to do after you
Speaker 1: sell them? Yeah, exactly. You got to take factors into account,
Speaker 1: like financing, because if you've got three percent mortgage and
Speaker 1: you're looking at something, you know rates are closer to
Speaker 1: seven percent now, So financing is a huge factor as well,
Speaker 1: if it so much of it I think comes down
Speaker 1: to flexibility and how much flexibility you have to move
Speaker 1: or to not move right now, because if you got
Speaker 1: to move, you gotta move right. Like, if it's for
Speaker 1: a job, can maybe consider be becoming a first time
Speaker 1: landlord if that's something that you've never thought of it
Speaker 1: you're like wait a minute, Oh, that sounds totally awesome.
Speaker 1: This this is a three too, This would make a
Speaker 1: killer rental. Plus I got that.
Speaker 2: You know, my mortgage is a thousand and this will
Speaker 2: run for two grand. Sure, it's a great time to
Speaker 2: start being landlord. That's a consideration. But for a lot
Speaker 2: of folks who are thinking, uh, okay, I just I
Speaker 2: got to sell this house. We need the equity from
Speaker 2: the zune to buy the new family home because we're
Speaker 2: moving for jobs. It's not a dumb move. That being said,
Speaker 2: if you have flexibility though as to when you might
Speaker 2: list this house. If it was me personally. Because of
Speaker 2: the uncertainty in the market, I think a lot I
Speaker 2: mean countries. There are entire countries that are hitting the
Speaker 2: pause button on certain things. There are certain industries that
Speaker 2: are like, yep, we're we're just gonna we're gonna ride
Speaker 2: this thing out and see where things land. Because of that,
Speaker 2: we're seeing employers and it's all trickling down to consumers.
Speaker 1: There. The level of uncertainty is leading folks to not
Speaker 1: want to take risks, which means that you I think
Speaker 1: that you may not be able to get the most
Speaker 1: for your house where you to sell it like right now,
Speaker 1: as opposed to letting things shake out and see where
Speaker 1: things land in thirty to ninety days. Perhaps if it
Speaker 1: was me that that's that's what I would do.
Speaker 2: Yeah, but you just still have to remember, like where
Speaker 2: what was the home valued at a few years ago?
Speaker 2: And are you going to do pretty good? And if
Speaker 2: it's time to go, is it time to go? If
Speaker 2: you have flexibility though, Matt, Yeah, Pascal might be able
Speaker 2: to do better by waiting to sell, but also it's
Speaker 2: brings selling time and as well, you could do a
Speaker 2: whole lot worse than selling right now. Yeah, what if
Speaker 2: tears lead to sky high prices, inflation starts going up,
Speaker 2: and the Feds like, oh, guess what we're not gonna
Speaker 2: do at all this year?
Speaker 1: Yeah, you know we talked about those two rate cuts. Yeah,
Speaker 1: not happening. That's not going to be great for the
Speaker 1: market and mortgage and finance costs. Yeah, But then again,
Speaker 1: if the costs of building those homes goes up. Yeah,
Speaker 1: there's like so many nothing on effects that are any
Speaker 1: different effects that it's truly hard to take them all
Speaker 1: into account. So you got to do it for personal reasons.
Speaker 1: Then people buying some homes all the time because they
Speaker 1: were at the stage of life where they needed to
Speaker 1: do that, no doubt. All right, man, we've got more
Speaker 1: listener questions. We'll get to some more good ones, including
Speaker 1: how you can benefit from a market downturn. We'll do
Speaker 1: that right after this. I know y'all watch the Super
Speaker 1: Mario Brothers. Moody. I always decided to bring this back
Speaker 1: with terrorists, terrorists, terrors, Terris har Riffs. See I haven't
Speaker 1: seen it. You haven't. Now my son's watched Spitches Peach.
Speaker 1: It's a it's a good jack vaccine. Now I'll have
Speaker 1: to you'll have to. Let's keep moving. We've got listener
Speaker 1: questions to answer. This one is from Alex who wrote
Speaker 1: how to Determine whether it's worthwhile to take any early
Speaker 1: retirement offer. I know folks who are working for the
Speaker 1: federal government and are like five to nine years away
Speaker 1: from retirement, but some of them have been receiving offers
Speaker 1: to retire early and still get their pension benefits. Still,
Speaker 1: it kind of sounds like a scenario where folks are
Speaker 1: getting to have their cake and eat it too.
Speaker 2: Potentially, right, Potentially depends on the individual, for sure. I
Speaker 2: mean I like this, especially for people who are financially
Speaker 2: independence minded, like they've been working towards that. It's kind
Speaker 2: of like arranging your own layoff. It's one of those
Speaker 2: things that doesn't it doesn't come around for everybody, some
Speaker 2: sort of.
Speaker 1: Early retirement offer.
Speaker 2: And we talked about something akin to that, like with
Speaker 2: Sam Dogan back in the day, the dude who runs
Speaker 2: the website Financial Samurai, And it can be a brilliant
Speaker 2: move if calculated correctly. And he was just talking about
Speaker 2: when layoffs are happening at the workplace, if you kind
Speaker 2: of volunteer and you get a sweet severance package to
Speaker 2: walk away. I think he got like two years worth
Speaker 2: of pay or something like that.
Speaker 1: Something insane.
Speaker 2: Most people don't give that much. Nope, it's like six
Speaker 2: months at the max. But that can be if you
Speaker 2: are in a good financial position, like something that only
Speaker 2: increases and benefits your financial standing while allowing you more flexibility.
Speaker 2: But so much depends right on your likely job stability,
Speaker 2: your overall financial situation. Because if you've got a big
Speaker 2: chunk of savings you've been investing for years, well, you
Speaker 2: can totally use an early retirement offer to allow you
Speaker 2: to vacate your position earlier than you thought you might
Speaker 2: be able to. But if not, like, if you're in
Speaker 2: more tenuous financial circumstances, you have to be really careful
Speaker 2: before taking an early retirement offer because you might find
Speaker 2: that you don't have gainful employment lined up sure, and
Speaker 2: you're in a much worse financial position.
Speaker 1: Yeah, but taking alex as he or she wrote this
Speaker 1: early retirement, So like, if we're taking a retirement in
Speaker 1: the traditional sense of the word, and you are going
Speaker 1: to be totally set, this totally changes this conversation from
Speaker 1: a financial conversation to a life fulfillment conversation, right, Like
Speaker 1: this is on Maslow's hierarchy of needs, where you've just
Speaker 1: graduated to the next level talking about you know, these
Speaker 1: are more like self actualization needs as opposed to do
Speaker 1: I have enough money to pay the bills? Do I
Speaker 1: have enough money to be able to afford some of
Speaker 1: the more you know, some of the luxuries in life,
Speaker 1: some of the things that I want to do, And
Speaker 1: so much of that comes down to how it is
Speaker 1: that you want to spend your time. And so I
Speaker 1: think that's if you are closer, closer to retirement, I
Speaker 1: think you might be more in that camp, which leads
Speaker 1: to less number crunching and more uh self searching, Yeah,
Speaker 1: soul searching and writing and you know, like journaling and
Speaker 1: trying to figure out, like what do I want my
Speaker 1: days to look like? And if that's the case, Alex,
Speaker 1: I would highly recommend for you to literally do something
Speaker 1: like that, like go on a silent retreat, spend some
Speaker 1: time just completely away from what it is that you
Speaker 1: are doing in the day to day to shake things up,
Speaker 1: to help you to maybe almost stumble upon whatever it
Speaker 1: is that you might want to spend the next.
Speaker 2: Decade or two do it. Yeah, I mean I love
Speaker 2: the idea for lots of people. If this means, hey,
Speaker 2: I wasn't. I was still planning on working to get
Speaker 2: that pension because that was a huge part of kind
Speaker 2: of my retirement income plan. But because that comes along
Speaker 2: with this early retirement offer, why don't I just ride
Speaker 2: off into the sunset now I.
Speaker 1: Am fully financially prepared.
Speaker 2: If that's the case and you have other things you'd
Speaker 2: rather be doing with your life, kind of like you're
Speaker 2: talking about, Matt, I think it's great. I think this
Speaker 2: can be the perfect accelerator to get going in retirement
Speaker 2: earlier than you had planned, maybe enjoy some more of
Speaker 2: those early retirement years that you were going to be
Speaker 2: working instead. So yeah, I think that's I think that's
Speaker 2: great advice. All right, let's get to a question from Pam.
Speaker 2: She says, I'm a middle aged investor in forty six.
Speaker 2: I'm looking for advice on how to help protect what
Speaker 2: I've already saved while still remaining.
Speaker 1: Agile and aggressive.
Speaker 2: I recently increased my income after years of struggling to
Speaker 2: save money, so I will be actively trying to catch
Speaker 2: up on my retirement over the next ten plus years.
Speaker 2: I'd love to hear how this market will help or
Speaker 2: hinder my ability to catch up on saving.
Speaker 1: Yeah. Wait to go, Pam on increasing your income, it totally.
Speaker 1: I'm sure it feels good. She said that she was
Speaker 1: struggling when it came to being able to save and invest,
Speaker 1: which means she's actually able to do it now because
Speaker 1: she's got more money flowing in. It's going to allow
Speaker 1: her to ramp up these contributions. And in her words,
Speaker 1: she's looking to protect what she's saved while being aggressive
Speaker 1: as well. And I think there's only one way to
Speaker 1: do that, and that is to invest like an optimist
Speaker 1: and then save like a pessimist. So keeping your savings
Speaker 1: such Morgan House Yeah, yeah, yeah, I did not coin
Speaker 1: that phrase. Those savings, those dollars, the money that you've
Speaker 1: got there in the emergency fund needs to be secure
Speaker 1: and liquid in a highield savings where you have enough
Speaker 1: on hand to give you that peace of mind, you know,
Speaker 1: given to meaningful financial downturn. And then just keep investing
Speaker 1: in low cost index funds as well, like clockwork. And
Speaker 1: the goal is to have enough cash so that you
Speaker 1: don't have to ever touch those investments at an inopportune time,
Speaker 1: like right now. That's something you want to avoid at
Speaker 1: all costs. And right now specifically, given the fact that
Speaker 1: you're talking about having not made a whole lot of
Speaker 1: progress perhaps up until now, just realize that some of
Speaker 1: the volatility that you're seeing it doesn't really impact you
Speaker 1: nearly as much. This is something that when you've been
Speaker 1: saving and investing for decades and decades and you've built
Speaker 1: up a fat, you know, nice sized nest egg, that's
Speaker 1: when this volatility can really take a bite out of
Speaker 1: your overall network. The number can change quite a bit. Yeah,
Speaker 1: and obviously, let's say you've been investing for a few years,
Speaker 1: it still sucks to see your investments go down by
Speaker 1: a three grand. It's different though, when it's thirty grand
Speaker 1: or one hundred grand or one fifty And that's the
Speaker 1: kind of swing that some folks out there who have
Speaker 1: been investing for twenty thirty years, that's what they're experiencing
Speaker 1: right now. I will say, I do think, no matter
Speaker 1: to the size of the drop, the people who have
Speaker 1: more cash on hand, who feel comfortable that they can
Speaker 1: cover bills if something unexpected does happen to their job
Speaker 1: or to whatever like, if they feel more financially prepared
Speaker 1: from a liquid cash standpoint, my guess is they don't
Speaker 1: feel the loop de loop in their stomach when they
Speaker 1: look at their retirement account balance nearly as much your
Speaker 1: weather the storm. Exactly, it's much easier to weather the storm.
Speaker 1: That's why that.
Speaker 2: Hey, if I've got the cash on hand in savings
Speaker 2: to back me up, and I'm still doing the investing
Speaker 2: thing like clockwork, well then you don't have to. That
Speaker 2: should reduce worries significantly. And as we said before, right
Speaker 2: dollar costs averaging into those tax advantage accounts, that's where
Speaker 2: it's at. Do that through thick and through thin, and
Speaker 2: then you know, once you reach the age of fifty, PAM,
Speaker 2: you're a few years away you'll have the ability to
Speaker 2: contribute even more to those accounts as those contributions limits rise.
Speaker 2: You say you're making trying to catch up on retirement
Speaker 2: account contributions. Well, guess what at fifty you get to
Speaker 2: contribute more, which is pretty cool.
Speaker 1: Another one thousand bucks. Yeah, so into the iras and
Speaker 1: then even more into like four to one case four
Speaker 1: h three b's. And so if you're getting to the
Speaker 1: point where you're maxing any of these accounts, just note
Speaker 1: that in a few short years you're gonna be able
Speaker 1: to funnel even more into those accounts, which is which
Speaker 1: is awesome, super sweet and yeah, and that kind of
Speaker 1: goes to the volatility sort of point I was making
Speaker 1: thus her save your savings rate PAM. The amount that
Speaker 1: you're able to set aside right now into those accounts
Speaker 1: actively as opposed to seeing the returns on that money,
Speaker 1: that is going to have the biggest, uh impact on
Speaker 1: your retirement.
Speaker 2: That's that's so underrated. Is there a super savings rate?
Speaker 2: People don't talk about it enough. The more the higher
Speaker 2: your savings rate. The more, the less you have to worry,
Speaker 2: essentially about the machinations of the market.
Speaker 1: An he asks, during times of market volatility, is having
Speaker 1: your money in something like betterment that does automatic tax
Speaker 1: loss harvesting better than having all your investments in VU,
Speaker 1: which I love that so many folks are going back
Speaker 1: to the voo joel. But uh, yeah, I think some
Speaker 1: of this, some of the answer here depends on what
Speaker 1: your definition of better yes is, And.
Speaker 2: They're not mutually exclusive, like you can do tax loss
Speaker 2: harvesting into WU. Right, So but I get what Annie
Speaker 2: is getting at, and the short answer is yes, Like,
Speaker 2: you know, we're always hoping that our investments go up,
Speaker 2: but tax loss harvesting is a tool that you're able
Speaker 2: to utilize. You're able to sell investments when they're down.
Speaker 2: The thing is, you don't want to sell them permanently,
Speaker 2: like we don't want you locking in those losses moving
Speaker 2: into cash because you're fearful. But you can sell those
Speaker 2: investments and then rebuy a very similar fund, let's say,
Speaker 2: going from VU, let's say into VTI, like Vanguard's S
Speaker 2: and P five hundred fund into the Vanguard Total Stock
Speaker 2: Market Index fund. Right, And when you do when you
Speaker 2: sell and then rebuy an incredibly similar fund immediately. This
Speaker 2: allows you to show a paper loss. We'll changing your
Speaker 2: holdings minimally. And this is an awesome move for people
Speaker 2: to make for tax purposes. When it comes down to it,
Speaker 2: brass tax you can only claim three grand a year
Speaker 2: and investing losses. And if you experienced more losses than that,
Speaker 2: Let's say you have a ten thousand dollars crop, right,
Speaker 2: and you sell and then you buy another very similar
Speaker 2: fund that's not the exact same, Well, you can roll
Speaker 2: those losses into future tax years. That's kind of cool.
Speaker 2: So tax loss harvesting, Yes, in market volatility, it's a
Speaker 2: way too. It's a silver lining I guess of sorts
Speaker 2: to the downturn in your portfolio that you're seeing.
Speaker 1: Yeah, so Joe said, yes that it is better, But
Speaker 1: it just depends on what you're willing to pay for.
Speaker 1: That's like. So that's that's why I feel like it
Speaker 1: kind of depends on what your definition is because someone
Speaker 1: would say, well, is whole food's better than all d
Speaker 1: and it's like, well, depends on what you like to
Speaker 1: pay for, because if you don't want to pay for
Speaker 1: tax loss harvesting. You want the organic chicken or just whatever.
Speaker 1: If you don't want to pay for it, then if
Speaker 1: you don't want to pay it, it's like, so it's
Speaker 1: point two five percent, Like that's the fee that you're
Speaker 1: going to pay. If you're fine paying that fee, then yeah,
Speaker 1: it is better because they do it automatically. But if
Speaker 1: you don't want to pay that fee, that's something that
Speaker 1: one would say is not better. Uh, because you can
Speaker 1: dihy that tax loss harvesting yourself, do your research, know
Speaker 1: how it works. But it's certainly possible to manually do
Speaker 1: this on your own. If you're not wanting to do that,
Speaker 1: then betterment is totally the way to go, especially there
Speaker 1: within your brokerage account. Jennifer asks, I have a first
Speaker 1: time college student heading off to school in the fall.
Speaker 1: I'm wondering what if any federal student aid or loans
Speaker 1: will still be available. Also wondering with all the federal
Speaker 1: cuts to universities, impunitive cuts for diversity, will you universities
Speaker 1: have to raise tuition?
Speaker 2: All right, that's a good question. So federal student loan availability, Matt,
Speaker 2: from what I've seen, it has not changed at this point,
Speaker 2: and so Jennifer, your student should still have access to
Speaker 2: federal student loans per normal. What's been in flux is
Speaker 2: student loan repayment plans and so like the Safe Plan
Speaker 2: that was launched by the Biden administration, that has been
Speaker 2: axed by the courts. So like those more generous repayment plans,
Speaker 2: they're not as generous and there's still a lot of flux.
Speaker 2: We're going to actually tackle that on the show with
Speaker 2: an expert soon, so stay tuned for that episode. But
Speaker 2: make sure, Jennifer that you fell out the FASA by
Speaker 2: the end of June, and ideally sooner rather than later,
Speaker 2: because that can help your student qualify for need based aid.
Speaker 2: On top of that, don't forget to apply for scholarships
Speaker 2: and to look for other ways to minimize debt, like
Speaker 2: getting a campus job. That was something I did when
Speaker 2: I was at school mat I became a resident assistant
Speaker 2: and that reduced my room and board fees dramatically, and
Speaker 2: so I was able to go to a private school
Speaker 2: out of state and take on very little student loans
Speaker 2: because of those moves. Those are the kind of things, Jennifer,
Speaker 2: I would just tell you to at least consider and
Speaker 2: if you're looking for more tips about scholarship hunting and
Speaker 2: the like, go back and listen to episode eight sixty
Speaker 2: that we did with Joscelyn Pearson, who that's all she does.
Speaker 2: She eats, breathes, and sleeps scholarships. So there are a
Speaker 2: lot of ways to get free money to pay for
Speaker 2: that education in hopes to avoid those student loans, or
Speaker 2: at least just minimize them.
Speaker 1: Yeah, and your other question about federal cuts and the
Speaker 1: potential raising of tuition, that only applies to a couple
Speaker 1: of elite universities, and then those tend to have pretty
Speaker 1: large endowments. Harvard, for instance, if I think they got
Speaker 1: like over fifty billion dollars in their endowment, is that right? Yeah,
Speaker 1: that's pretty crazy billion with a B. So while it's
Speaker 1: not benign, I wouldn't worry about it actually increasing the
Speaker 1: cost of tuition across the board. And interestingly enough, while
Speaker 1: the sticker price of college continues to go up, the
Speaker 1: MSRP the advertised price, the actual net price that students
Speaker 1: pay has been going down. Particularly in recent years. There
Speaker 1: are fewer high school grads who are opting to go
Speaker 1: to college post COVID, which has also led to price
Speaker 1: reductions so that I wouldn't worry too much about that.
Speaker 2: There's a supply and demand element here, and when fewer
Speaker 2: kids are choosing to go get a higher education, it
Speaker 2: makes shopping around even more important because colleges they can't.
Speaker 2: I think people just assumed they can just raise the
Speaker 2: price to whatever they want and people are gonna have
Speaker 2: to pay, and that is not the case. Students have choice,
Speaker 2: and that's where kind of the dream school thing comes in.
Speaker 2: We talk about how don't settle on one school and
Speaker 2: assume that's where I have to go, no matter the cost.
Speaker 1: No, no, no. Cast your net wide and find schools
Speaker 1: that will offer more significant financial aid to you and
Speaker 1: your family so that you can reduce the cost because
Speaker 1: ultimately the institution that's on the diploma isn't as important,
Speaker 1: I don't think, as the education that you receive. So
Speaker 1: keep those student loans to a minimum, please, all right, Matt,
Speaker 1: Let's leave everyone in this episode with some advice that
Speaker 1: a listener left on the how to Money Facebook post.
Speaker 1: That's the opposite of a question, is it is?
Speaker 2: And listener Pamela said, I think the best way to
Speaker 2: deal with with all this is to stop buying stuff
Speaker 2: frivolously time for the minimalist life.
Speaker 3: Oh for it.
Speaker 1: Yeah, this is something that we've been preaching for a
Speaker 1: long time, and it's true, like terrists are like essentially
Speaker 1: terrists are like a sales tax, and uh, it depends
Speaker 1: on where you want to go with this, because like
Speaker 1: our is sales tax badtel. It depends on what the
Speaker 1: alternatives are, you know, like because it makes me, you
Speaker 1: know what, it makes me think of our states that
Speaker 1: don't have income tax and they only have sales tax,
Speaker 1: and those are states that we have seen a whole
Speaker 1: lot of people flocking to, Like I'm thinking of specifically
Speaker 1: Texas and Florida, though I see Tennessee as well, uh
Speaker 1: and and even some of the other states that have that.
Speaker 1: They do actually have uh an income tax, but it's
Speaker 1: actually a lot lower those like they take the other
Speaker 1: top slots.
Speaker 2: And some of those states have been reducing their income
Speaker 2: tax because they have to compete with states they don't have.
Speaker 1: They're competing and so some of it, so much of
Speaker 1: it comes down to what the alternatives are. And so
Speaker 1: this isn't like some sort of universal defense of international terrorists,
Speaker 1: but it is interesting to see that when given the
Speaker 1: choice between states with income tax versus taxes that are
Speaker 1: more associated with spending. That Hey, here's something that I
Speaker 1: am willing to give a little on when it comes
Speaker 1: to what I'm willing you know, the number of dollars
Speaker 1: I'm spending, so I don't know.
Speaker 3: I like that.
Speaker 1: It puts a lot more control. It gives you the
Speaker 1: power to almost dictate the amount that this is going
Speaker 1: to impact you, and for a lot of folks out
Speaker 1: there to decide, hey, I'm going to really pair back
Speaker 1: my spending. This is something I've been wanting to do anyway.
Speaker 1: It's almost like a kick in the pants push up,
Speaker 1: you know. Not I say kick on the pants because
Speaker 1: I said getting kicked in the pants earlier when we're
Speaker 1: talking about fighting, and that's not the kind of kick
Speaker 1: in the pants I'm talking about here, A little a nice,
Speaker 1: pleasant breeze at your back as you are encouraged perhaps
Speaker 1: to spend less, I'm not. Yeah, well, okay makes I
Speaker 1: don't want to make the argument though, that like, you
Speaker 1: don't need to have a new iPhone, right, Hey, if
Speaker 1: you want a new iPhone, get you a new iPhone.
Speaker 1: That's right. But there's just that those arguments, especially from
Speaker 1: officials in power, so stupid, those are degrading exactly, want
Speaker 1: to hear that exactly. It's not okay.
Speaker 2: But from us, it's different because we're trying to incentivize
Speaker 2: you to have more financial flexibility and power in your life.
Speaker 2: We're not trying to tell you you don't need that thing.
Speaker 2: We're just trying to say, hey, there's better opportunities than
Speaker 2: the best things that money can give you is freedom
Speaker 2: and flexibility, not more new stuff. And I will say,
Speaker 2: when prices go up, buying less and buying secondhand is
Speaker 2: going to save you more money. It always has, but
Speaker 2: the stakes could be going up if tariffs remain, so
Speaker 2: you know, we're all likely going to face increased prices
Speaker 2: in more form or another. But I think more minimalism
Speaker 2: is almost always good advice.
Speaker 1: So totally all right, we've gone long. This is the
Speaker 1: Yellow Rose smash IPA. What did you think? I dug
Speaker 1: it taste super tasting, dude.
Speaker 2: Texas beer seems to be somewhere Texas ipa seem to
Speaker 2: be somewhere in between West coast and East coast. It's
Speaker 2: like they found this middle ground and I'm here for it.
Speaker 1: I like this one totally, like when you pour it,
Speaker 1: it's got the haziness going on, but it Yeah, I
Speaker 1: kind of had some of those West Coasts greape fruit bitterness,
Speaker 1: like bitter edge bitter notes to it. Yeah, that's what
Speaker 1: I'm trying to say. With kind of old school looking
Speaker 1: label to boot, Doesn't it kind of just like look
Speaker 1: like it's been sitting on the shelf fading like a decade.
Speaker 1: It does. There's some canes that you see and it
Speaker 1: looks like it came straight out of some AI generated
Speaker 1: computer with vivid colors and whatnot. And this looks like,
Speaker 1: I don't know, it looks like it's been sitting on
Speaker 1: the shelf since the eighties. But it did not taste
Speaker 1: that way. No, it's just it's the vibe that they're
Speaker 1: going for. But that's gonna be it for this episode.
Speaker 1: Leave us a review if you haven't, and of course
Speaker 1: you can head over to the website for more personal
Speaker 1: finance goodies. That's howimoney dot com buddy. That's going to
Speaker 1: be it for this one until next time. Best Friends Out,
Speaker 1: Best Friends Out, Yah,