WEBVTT - Friday Flight - Refi Revival, Delay Pay Disaster, & Landline Love! #1047 0:00:00.080 --> 0:00:03.440 Welcome to Out of Money. I'm Joel, I am Matt. 0:00:03.520 --> 0:00:08.480 Today we're talking REFI Revival, Delay, Pay Disaster, and Landline. 0:00:07.960 --> 0:00:28.560 Love Landlines Baby. 0:00:28.640 --> 0:00:30.640 Yeah, you know we're gonna get nostalgic. I'm not talking 0:00:30.640 --> 0:00:33.800 about love Line. The Doctor Drue show that I never watched. 0:00:33.840 --> 0:00:35.040 That was him and Adam Krolla. 0:00:35.080 --> 0:00:35.920 Didn't they have that? It was? 0:00:35.920 --> 0:00:38.680 It was they were on n TV back in the day. Yeah, yeah, 0:00:38.760 --> 0:00:39.760 I don't remember that one take. 0:00:39.800 --> 0:00:43.120 It wasn't. Well, that was a cultural moment. I feel like, well, 0:00:43.360 --> 0:00:45.360 there are certain things. I was just talking to a friend. 0:00:45.479 --> 0:00:46.840 I don't really watch it, but I know it exacts 0:00:46.880 --> 0:00:47.600 about other. 0:00:47.479 --> 0:00:50.680 Shows on MTV, like MTV Unplugged, like there are certain concerts, 0:00:50.680 --> 0:00:54.000 certain sessions that stand out in my mind. I don't 0:00:54.040 --> 0:00:54.880 remember the love Line. 0:00:54.920 --> 0:00:55.200 Sorry. 0:00:55.800 --> 0:00:58.360 MTV was such a culture generator and it's not it was. 0:00:58.480 --> 0:01:02.600 You think the Celebrity Death Mat exhibit showed about my 0:01:02.720 --> 0:01:05.880 ride road Rules. Yeah, I think that's basically what is 0:01:06.080 --> 0:01:06.399 the first? 0:01:06.400 --> 0:01:08.960 Reality TV fueled my desire to want to go see 0:01:08.959 --> 0:01:11.560 the world to a certain extent. But no, we will 0:01:11.600 --> 0:01:14.679 talk about ways to get in touch with other people, 0:01:15.160 --> 0:01:18.400 but in an affordable way. This is our Friday flight. 0:01:18.400 --> 0:01:20.760 We're going to cover the top stories, the ones that 0:01:20.800 --> 0:01:22.440 impact your personal finance is the most. 0:01:22.520 --> 0:01:25.240 Speaking of getting in touch with other people, Matt, we 0:01:25.319 --> 0:01:27.600 got text messages this week, you and I did. 0:01:27.760 --> 0:01:30.959 From talk about the coin Base. Yeah. 0:01:31.240 --> 0:01:33.360 I'm wondering if other listeners got this text because you 0:01:33.360 --> 0:01:35.560 and I both got it, which is rare that you know, 0:01:35.600 --> 0:01:37.759 you and I both get the same scam text message. 0:01:37.920 --> 0:01:40.240 And it was like, hey, your coin boat based account, 0:01:40.240 --> 0:01:43.520 someone try to log in from this android phone in Sydney, 0:01:43.560 --> 0:01:46.720 Australia or something like that. If this wasn't you call 0:01:46.800 --> 0:01:50.800 this number? Of course, I don't have a coinbase account. 0:01:51.080 --> 0:01:53.760 Complete attempt to get me to call a number, so 0:01:53.840 --> 0:01:56.840 you weren't at all concerned, correct, Okay, but I'm sure somebody, 0:01:57.000 --> 0:01:58.680 well here's a coinbas account might be freaked out. 0:01:58.680 --> 0:02:00.400 Here's the deal. So, as you're saying and that, I 0:02:00.520 --> 0:02:02.680 put my hand up and I pointed to myself because 0:02:02.680 --> 0:02:05.400 I've got a coin Base account. I'm not that being said, 0:02:05.440 --> 0:02:07.600 I wasn't too concerned because I have a small a 0:02:07.600 --> 0:02:09.840 smaller amount of money over there, only a couple of 0:02:09.880 --> 0:02:15.400 mill in, just a few couple ten thousand. But okay, 0:02:15.400 --> 0:02:17.160 so here, okay, so here's the real question. Then what 0:02:17.280 --> 0:02:21.280 if you had gotten a text from a company or 0:02:21.400 --> 0:02:25.200 brokerage that you do do business with. Let's say it 0:02:25.240 --> 0:02:27.480 was Fidelity reaching out to you R Vanguard. These are 0:02:27.480 --> 0:02:28.079 two brokerages. 0:02:28.160 --> 0:02:30.360 Never call that, even if you have a relationship with 0:02:30.400 --> 0:02:32.320 that business, Never call them over. Go to the website, 0:02:32.400 --> 0:02:33.120 login yourself. 0:02:33.120 --> 0:02:36.079 But do you think you would have felt emotionally charged 0:02:36.320 --> 0:02:38.760 a little bit more? Because coinbas You're like, Okay, that's 0:02:38.800 --> 0:02:42.240 like telling me that my payless credit card, you know, 0:02:42.240 --> 0:02:44.320 payless to the shoe store. That's like, that's where I 0:02:44.360 --> 0:02:46.720 get all my shoes. Basically, it was the equivalent of 0:02:46.720 --> 0:02:48.760 that for you because it's not not even on your radar. 0:02:48.800 --> 0:02:50.480 But for me, I felt it a little bit. I thought, 0:02:50.639 --> 0:02:53.400 But if it was like your Huckberry account's been compromised, 0:02:54.080 --> 0:02:56.600 not that you would have been like, oh my Bucks. 0:02:58.040 --> 0:02:59.840 By the way, if they don't call them Huckbucks, they 0:03:00.080 --> 0:03:01.839 or they're missing out. We should be on their marketing team. 0:03:01.880 --> 0:03:03.880 But yeah, I think those are the instances they are 0:03:03.880 --> 0:03:06.120 hoping to find folks who actually do have those accounts, 0:03:06.120 --> 0:03:07.600 And so yeah, like, do you think you would feel 0:03:07.639 --> 0:03:10.040 a little bit differently? If you had received a text 0:03:10.080 --> 0:03:12.799 message saying, hey your Fidelity, Hey, there is an outgoing 0:03:12.880 --> 0:03:15.880 wire from your Fidelity account. Yeah, if that wasn't you 0:03:15.919 --> 0:03:18.000 call us number now to let us know that that 0:03:18.240 --> 0:03:18.960 is not legit. 0:03:19.040 --> 0:03:20.880 I would have for a split second, But then I 0:03:20.880 --> 0:03:23.560 would have known, I know the rules because we do 0:03:23.639 --> 0:03:25.440 this for a living and we talk about it. I 0:03:25.440 --> 0:03:27.240 would have known to go to my account to log 0:03:27.280 --> 0:03:29.800 in into check and to not call a number that 0:03:29.880 --> 0:03:32.440 someone sends me on a text message, and also realize 0:03:32.600 --> 0:03:36.480 the Fidelity isn't sending These companies are not sending text Typically, 0:03:36.480 --> 0:03:38.800 they might send you a verification code via text when 0:03:38.840 --> 0:03:40.480 you're trying to log in, but they're not going to 0:03:40.480 --> 0:03:41.920 send you a text with the phone number to call. 0:03:42.080 --> 0:03:44.040 That's just not how it works, That's true. It's like 0:03:44.080 --> 0:03:47.280 the IRS scams, like very very very similar, where the 0:03:47.320 --> 0:03:51.040 IRS sends paper notices in the mail exactly right, So 0:03:51.200 --> 0:03:52.839 if everybody deals. 0:03:52.520 --> 0:03:55.360 With the IRS, so that's an instance where it might 0:03:55.400 --> 0:03:57.880 seem a little more plausible, right, Yeah. I was just 0:03:57.920 --> 0:04:00.520 trying to paint a situation because like if what if 0:04:00.560 --> 0:04:02.560 you were like out with your family eating dinner at 0:04:02.600 --> 0:04:04.119 a restaurant, you got the kids, you're having a great 0:04:04.160 --> 0:04:05.800 time and you happen to look down and you see 0:04:05.800 --> 0:04:08.160 a text and you don't have the ability to immediately 0:04:08.760 --> 0:04:10.960 hop on the computer or to log into your account. 0:04:11.240 --> 0:04:13.120 That I think that's the kind of situation that folks 0:04:13.200 --> 0:04:15.600 might find themselves in where they are a little tempted, 0:04:15.600 --> 0:04:18.039 but like you said, don't do it, don't do it. 0:04:18.120 --> 0:04:21.160 That's where they get people too, with utility scams, like 0:04:21.160 --> 0:04:22.960 small business owners and they're like, hey, we're gonna shut 0:04:22.960 --> 0:04:25.839 your electricity off if you don't pay this fine and 0:04:25.880 --> 0:04:27.960 you have to do it with a one of those 0:04:28.040 --> 0:04:31.520 you know, gift cards, prepaid gift cards, and man, your 0:04:31.520 --> 0:04:33.680 business like people are people are going to come into 0:04:34.520 --> 0:04:36.520 lights out, like your restaurant is shut down for the 0:04:36.560 --> 0:04:39.400 evening if you don't pay up. And it feels like this, 0:04:39.640 --> 0:04:42.120 like because they put a time limit on it, and 0:04:42.240 --> 0:04:45.320 there's a necessity, a quick necessity. You don't have time 0:04:45.360 --> 0:04:48.080 to log in, check your account and actually verify the 0:04:48.200 --> 0:04:49.000 emotional state. 0:04:49.160 --> 0:04:52.440 Yeah, you're a heightened emotional state and you might do anything, 0:04:53.000 --> 0:04:56.360 but don't actually call the number that you're texting. But Joels, 0:04:56.400 --> 0:04:58.640 this is something that we haven't said in a long time. 0:04:59.480 --> 0:05:02.320 A lot of the home owners out there are refinancing. 0:05:02.640 --> 0:05:07.040 There's been a pretty significant increase in refis new mortgage 0:05:07.040 --> 0:05:11.359 applications over the past year. Interest rates have ticked down slightly, 0:05:11.520 --> 0:05:14.839 and folks who bought when rates were like peaking above 0:05:14.920 --> 0:05:18.159 seven percent, they are seeing rates now in the low sixes. 0:05:18.400 --> 0:05:19.280 They're ready to pounce. 0:05:19.440 --> 0:05:22.080 Even in this just last week or so, we've seen 0:05:22.080 --> 0:05:24.440 a bunch of bunch more refis than we've had in 0:05:24.600 --> 0:05:25.279 recent memory. 0:05:25.360 --> 0:05:29.240 And adjustable rate mortgages, so arms, they are becoming even 0:05:29.240 --> 0:05:32.279 more popular as well. So roughly ten percent of all 0:05:32.360 --> 0:05:36.320 refis right now are arms, and this is in part 0:05:36.320 --> 0:05:38.080 because they've I think they've sort of lost their Great 0:05:38.120 --> 0:05:41.880 Recession stigma, where back then it's just like, well, you'd 0:05:41.920 --> 0:05:43.320 be a fool to go with an ARM when you're 0:05:43.320 --> 0:05:48.400 at like historical lows. We haven't been at historical lows 0:05:48.400 --> 0:05:48.800 these days. 0:05:48.800 --> 0:05:51.840 Well, And like we've talked about arms, were there were 0:05:51.839 --> 0:05:54.960 a lot worse ARM product ARM products back then, and 0:05:55.240 --> 0:05:58.120 they've improved significantly. And there are some arms, like we 0:05:58.160 --> 0:06:01.880 talked about our credit union, a fifteen year arm where 0:06:01.920 --> 0:06:04.359 the interest rate only changes one time, and so for 0:06:04.480 --> 0:06:07.480 a lot of people giving that lower rate makes a 0:06:07.520 --> 0:06:08.000 lot of sense. 0:06:08.120 --> 0:06:10.360 Yeah, well, and with rates likely to drop an arm 0:06:10.400 --> 0:06:13.440 might you know, might mean less need to refinance in 0:06:13.480 --> 0:06:16.680 the future as well. That being said, you are subject 0:06:16.760 --> 0:06:19.400 to greater levels of risk if they don't if we 0:06:19.440 --> 0:06:22.640 don't see seat rates take down. But still I think 0:06:22.680 --> 0:06:25.560 a question worth asking, as folks are I don't know, 0:06:25.560 --> 0:06:26.920 there's a lot of it seems like there's a whole 0:06:26.920 --> 0:06:30.080 lot of refinancing chum in the water. So I think 0:06:30.160 --> 0:06:31.960 some folks might be saying, well, how often should I 0:06:32.000 --> 0:06:35.640 be refinancing? Because oftentimes it's not like a helock. A 0:06:35.680 --> 0:06:38.800 helock is free, that's an easy way. The race is 0:06:38.839 --> 0:06:40.240 going down. If the rates are going down. 0:06:40.160 --> 0:06:44.040 Yeah, but when it comes to refinancing, they cost some money. 0:06:44.040 --> 0:06:44.840 That's exactly right. 0:06:44.920 --> 0:06:46.240 So you know, I think you and I, Matt, we 0:06:46.320 --> 0:06:48.120 used to kind of say, well, you probably need to 0:06:48.200 --> 0:06:50.440 drop your interest rate by about a point to make 0:06:50.480 --> 0:06:54.119 it worth it. But really that's a rule of thumb, 0:06:54.360 --> 0:06:56.880 and it's hard to say that. That's not like a 0:06:56.880 --> 0:06:58.960 hard and fast rule because it depends on a lot 0:06:59.000 --> 0:07:01.360 of things. Right, Either might will to refit into a 0:07:01.360 --> 0:07:04.719 lower rate, even if you can't quite save a full 0:07:04.760 --> 0:07:07.680 point or you might want to hold off even longer 0:07:07.720 --> 0:07:10.720 in hope, in hopes the rates go down even further 0:07:10.800 --> 0:07:13.000 so that you're not refinancing multiple times, because it costs 0:07:13.000 --> 0:07:16.200 money to refinance so much. Really depends even on how 0:07:16.240 --> 0:07:18.880 long you plan to stay in the home, because if 0:07:18.880 --> 0:07:20.480 you're like I'm probably only gonna be here for a 0:07:20.520 --> 0:07:24.320 few more years, refinancing probably doesn't make much sense. And 0:07:24.360 --> 0:07:25.880 the key I think is to figure out your break 0:07:25.880 --> 0:07:29.040 even point. So will the refinance save you enough in 0:07:29.080 --> 0:07:31.920 monthly payments to pay for those closing costs in less 0:07:31.960 --> 0:07:35.040 than two years. If so, it might make sense. Even still, 0:07:35.240 --> 0:07:37.640 you might want to chill for just a second and 0:07:37.680 --> 0:07:39.720 see if rates drop a little bit lower so that 0:07:39.720 --> 0:07:42.880 you're not kicking yourself wishing you'd waited four or five 0:07:42.880 --> 0:07:45.680 months to refinance. And then if a refinance is right 0:07:45.720 --> 0:07:48.840 for you, shop around. That is super key because you 0:07:48.880 --> 0:07:51.600 can save maybe an extra eighth of a point quarter point. 0:07:52.360 --> 0:07:54.720 Compare apples to apples and see what other lenders are 0:07:54.760 --> 0:07:57.560 offering so that you get the best rate around, not 0:07:57.800 --> 0:07:58.640 just a better rate. 0:07:58.760 --> 0:08:00.400 Yeah, yeah, I'm with you all back you on the 0:08:00.400 --> 0:08:02.960 two years two years time frame, because I think. 0:08:02.880 --> 0:08:05.080 Outside of that so much of your life. 0:08:04.960 --> 0:08:09.239 Can change, right, Like you're just guaranteeing yourself even less time, 0:08:10.200 --> 0:08:12.520 or you're guaranteeing yourself that you've got to stay in 0:08:12.520 --> 0:08:14.720 the house for a longer period of time, and like 0:08:14.800 --> 0:08:16.680 in two years, man, I don't know. I think a 0:08:16.680 --> 0:08:19.679 lot of individuals can find their life situation changing pretty 0:08:19.720 --> 0:08:23.320 drastically within that sort of time period. Let's talk about investing, because. 0:08:23.120 --> 0:08:24.920 Even better if you can make it payoff in a 0:08:24.960 --> 0:08:25.440 shorter time. 0:08:25.480 --> 0:08:27.840 Oh yeah, even sooner. Yeah, it makes it even more 0:08:27.880 --> 0:08:32.280 of a slam dunk decision. But the irs, man, they 0:08:32.280 --> 0:08:36.240 have released updated retirement account contribution limits for twenty twenty six. 0:08:36.880 --> 0:08:40.480 Que the air horns. I'm all about this, man. Next year, 0:08:40.520 --> 0:08:42.880 we're gonna be able to stick more money into our 0:08:42.920 --> 0:08:46.480 workplace retirement accounts in four one ks if we're so inclined. 0:08:46.760 --> 0:08:50.080 Four one K and four or three B contribution limits 0:08:50.080 --> 0:08:53.319 have been bumped up by one thousand bucks, so it's 0:08:53.360 --> 0:08:57.520 going from twenty three five hundred dollars to twenty four thousand, 0:08:57.679 --> 0:09:02.760 five hundred dollars. The additional and roth IRA max contributions 0:09:02.840 --> 0:09:05.679 have gone up from seven thousand dollars bumped up five 0:09:05.760 --> 0:09:09.680 hundred bucks to seventy five hundred dollars. HSA limits went 0:09:09.760 --> 0:09:11.720 up as well by a couple hundred bucks for couples, 0:09:12.600 --> 0:09:14.800 And this is great news. And so I think one 0:09:14.800 --> 0:09:16.960 of the reasons I'm so excited about this is because 0:09:17.520 --> 0:09:19.800 I think what this demonstrates to me is that there 0:09:19.880 --> 0:09:24.200 is a shift in our culture and the expectations surrounding 0:09:24.200 --> 0:09:24.800 a retirement. 0:09:24.880 --> 0:09:25.040 Right. 0:09:25.040 --> 0:09:28.240 And so back in the day, there were many more workplace, 0:09:29.000 --> 0:09:34.959 workplace sponsored retirement plans, government sponsored pensions. Right, So like you, 0:09:35.160 --> 0:09:37.960 you're talking about more defined benefit plans as opposed to 0:09:37.960 --> 0:09:44.000 defined contribution plans. And by seeing this uptick, it shifts 0:09:44.040 --> 0:09:47.760 the responsibility slightly to individuals and companies as well, right, 0:09:47.760 --> 0:09:50.480 because we are seeing the uptick when it comes to 0:09:50.800 --> 0:09:54.839 four to one k's as well. But you might say, well, 0:09:54.880 --> 0:09:56.840 it also has to do with inflation. And I got 0:09:57.000 --> 0:09:59.160 curious and dug into the numbers a little bit, and 0:09:59.240 --> 0:10:03.400 I was super shock to see that the limits back 0:10:03.400 --> 0:10:07.040 in nineteen seventy five, let's say, on an IRA, was 0:10:07.040 --> 0:10:09.920 fifteen hundred bucks. It took twenty five years to get 0:10:09.920 --> 0:10:13.280 from nineteen seventy five the fifteen hundred dollar limit there 0:10:13.520 --> 0:10:16.760 to the year two thousand, where the limit increased only 0:10:16.800 --> 0:10:20.680 by guess one thousand dollars five hundred bucks. Wow, it 0:10:20.720 --> 0:10:23.920 was only two thousand dollars in the year two thousand, 0:10:24.000 --> 0:10:27.200 and then between two thousand and twenty twenty five it 0:10:27.240 --> 0:10:31.120 increased from two thousand to seven thousand dollars, a massive uptick, right, 0:10:31.559 --> 0:10:34.600 And if you're only looking at inflation, you might say, well, 0:10:34.600 --> 0:10:36.559 wait a minute, guess what we had a lot of 0:10:36.800 --> 0:10:39.120 between nineteen seventy five and the year two thousand. We 0:10:39.160 --> 0:10:42.240 had a ton of inflation and very little inflation between 0:10:42.240 --> 0:10:45.200 the year twenty twenty I'm sorry, between twenty and twenty 0:10:45.200 --> 0:10:45.680 twenty five. 0:10:46.280 --> 0:10:49.880 And so my hypothesis is that what COVID blip in there. 0:10:49.800 --> 0:10:52.600 Well, yeah, but what took place more within that period 0:10:52.640 --> 0:10:56.040 of time was just an expectation as to who was 0:10:56.120 --> 0:11:00.160 a little bit more responsible for their retirement dollars. It's 0:11:00.160 --> 0:11:03.160 just something I can totally get excited and be appreciative of. 0:11:03.360 --> 0:11:05.240 So, if you're looking to figure out how much should 0:11:05.240 --> 0:11:09.160 you should contribute to your IRA every single month in 0:11:09.240 --> 0:11:11.520 order to max that puppy out, Matt the math says 0:11:11.559 --> 0:11:13.000 six hundred and twenty five dollars a month. 0:11:13.120 --> 0:11:14.080 Ooh, I like it. 0:11:14.200 --> 0:11:15.800 Yeah, so nice. Nice. 0:11:15.920 --> 0:11:19.119 Need even start setting that John calen adopilot come January 0:11:19.240 --> 0:11:20.760 and then you'll you'll max it out by the end 0:11:20.800 --> 0:11:23.959 of the year. So we would love ideally everyone listening 0:11:23.960 --> 0:11:25.760 to the sound of our voices to max out there 0:11:25.800 --> 0:11:27.880 Rath every single year. The other thing they got update 0:11:27.920 --> 0:11:30.160 because everything's getting updated by the IRS this time of year, 0:11:30.520 --> 0:11:34.600 was the capital gains taxes and at what levels you 0:11:34.679 --> 0:11:36.960 pay zero, fifteen and twenty percent? 0:11:37.320 --> 0:11:38.360 And I didn't see that. 0:11:38.400 --> 0:11:41.600 You can make almost one hundred thousand dollars a year 0:11:41.640 --> 0:11:44.040 now and pays zero in capital gains taxes. 0:11:44.200 --> 0:11:45.880 Used to be like was it ninety two thousand? 0:11:46.280 --> 0:11:48.400 And I think it's like ninety eight nine hundred? Al right, 0:11:48.520 --> 0:11:51.439 I should have written still never down. Still glad to 0:11:51.480 --> 0:11:52.080 see that increases. 0:11:52.080 --> 0:11:56.360 So all the frugal, frugal early retirees out there, they're 0:11:56.400 --> 0:11:57.240 fist pumping your. 0:11:57.160 --> 0:12:01.439 Taxbile broker's account can be away to you might be 0:12:01.480 --> 0:12:04.120 able to avoid the fifteen percent capital gains tax if 0:12:04.160 --> 0:12:06.880 you're smart, If you're savvy, So should you stick more 0:12:07.320 --> 0:12:10.160 in a low cost s and P five hundred ETF 0:12:10.440 --> 0:12:12.559 because you have the ability to stock more into those 0:12:12.600 --> 0:12:15.760 workplace retirement accounts. Historically it's been a pretty fantastic choice. 0:12:16.040 --> 0:12:19.120 Even recent history has proven it to be a super 0:12:19.120 --> 0:12:22.880 smart bet. Returns this year actually set to crush every 0:12:22.960 --> 0:12:25.840 projection from Wall Street firms for the third year in 0:12:25.840 --> 0:12:29.840 a row. Met Those projections continue to fail consistently, often 0:12:29.920 --> 0:12:33.320 on the underside, sometimes on the over. But the experts 0:12:33.440 --> 0:12:35.760 in this CNBC article experts, I should probably put that 0:12:35.760 --> 0:12:38.679 in quotation marks. They're saying that this strategy, it's not 0:12:38.720 --> 0:12:42.880 looking as smart moving forward, is not diversified enough, they say. 0:12:43.440 --> 0:12:45.559 And to be honest, I think these these experts make 0:12:45.640 --> 0:12:48.640 some reasonable points, Like one is that while you own 0:12:48.760 --> 0:12:50.800 five hundred companies in an S and P five hundred fund, 0:12:51.080 --> 0:12:53.559 your eggs are in fewer baskets to a certain extent 0:12:53.559 --> 0:12:55.720 because or at least maybe like a couple of your 0:12:55.720 --> 0:12:57.719 eggs are gargantuan and a lot of the other ones 0:12:57.720 --> 0:13:00.680 are super duper tiny because of the massive market cap 0:13:00.880 --> 0:13:03.680 that AI companies like Microsoft and then Video hold, So 0:13:04.240 --> 0:13:06.880 just a few stocks really make up something like twenty 0:13:06.880 --> 0:13:09.359 percent of your SP five hundred fund, which. 0:13:09.320 --> 0:13:11.880 Those max seven eggs are quite large. The rest of 0:13:11.920 --> 0:13:13.599 them are like little jelly bean eggs. It feels a 0:13:13.640 --> 0:13:14.199 little risky. 0:13:14.440 --> 0:13:16.000 It does feel a little risky, So I get that, 0:13:16.280 --> 0:13:19.000 And then you know, when returns have been significantly higher 0:13:19.040 --> 0:13:22.000 than average for many years now, a reversion to the 0:13:22.040 --> 0:13:24.920 mean is likely. Like when you've seen outsize gains and 0:13:24.960 --> 0:13:28.120 that historical average is something closer to ten percent. Well, 0:13:28.120 --> 0:13:31.640 what should you expect in coming years? Well, you should 0:13:31.679 --> 0:13:35.360 probably expect the average to level out at some point. 0:13:35.600 --> 0:13:38.160 So should you change your strategy? This is something we 0:13:38.240 --> 0:13:40.040 talk about regularly here on the show. We talked about 0:13:40.040 --> 0:13:42.080 it with a Nick Majulia article that was written not 0:13:42.080 --> 0:13:42.680 too long ago. 0:13:42.800 --> 0:13:43.600 I think so much. 0:13:43.480 --> 0:13:46.120 Depends on your goals, and it depends on your risk tolerance. 0:13:46.160 --> 0:13:47.840 Those are the things you have to assess. So for 0:13:47.880 --> 0:13:50.280 some people out there, they might say, I am too nervous. 0:13:50.360 --> 0:13:53.560 I can't stomach the potential volatility coming down the pike. 0:13:54.000 --> 0:13:57.160 I should make some changes. You should know yourself emotionally. 0:13:57.840 --> 0:14:01.240 There are other solid approaches, but I think to investing. 0:14:01.440 --> 0:14:04.120 But a knee jerk response to articles like this, that's 0:14:04.120 --> 0:14:05.679 the thing we want people to avoid. That would be 0:14:05.720 --> 0:14:06.120 on wise. 0:14:06.240 --> 0:14:08.280 Yeah, And in addition to that, it's been a glorious 0:14:08.280 --> 0:14:11.240 time to be a diversified investor, but it could get 0:14:11.280 --> 0:14:14.600 a little harder in the coming years. And also, so 0:14:14.720 --> 0:14:18.719 like you're saying, just don't expect these incredible returns in perpetuity. 0:14:19.000 --> 0:14:21.240 But I wanted to talk about target date funds because 0:14:21.240 --> 0:14:23.840 they can be a really good choice for many folks 0:14:23.920 --> 0:14:26.400 out there if you are looking for more bond exposure, 0:14:26.440 --> 0:14:29.720 if you're looking for more international exposure. The abilit want 0:14:29.720 --> 0:14:32.160 to be so us heavy, and yeah, I get that 0:14:32.200 --> 0:14:34.920 desire that there's a decent argument to be made there, 0:14:35.320 --> 0:14:37.720 but one of the things we might be seeing is 0:14:37.840 --> 0:14:41.640 private equity it might be forcing its way into target 0:14:41.760 --> 0:14:45.600 date funds soon, which is no bueno. And so instead 0:14:45.600 --> 0:14:49.680 of just having the option to invest in alternative assets, 0:14:50.040 --> 0:14:52.160 you would now be forced to own them in various 0:14:52.280 --> 0:14:55.360 target date funds that you might own if companies like 0:14:55.440 --> 0:14:59.440 Blackstone and Apollo have their way. There's conversations evidently that 0:14:59.480 --> 0:15:01.720 are happening on Wall Street about including those in some 0:15:01.800 --> 0:15:03.200 of these target day funds. 0:15:02.840 --> 0:15:04.680 And you and I we've kind of talked about how 0:15:04.760 --> 0:15:07.680 we don't like the idea of even alternative assets being 0:15:07.680 --> 0:15:11.240 widely available in retirement accounts gives people maybe too much choice, 0:15:11.280 --> 0:15:14.640 and choice it's not even really helpful for the average investor. 0:15:15.320 --> 0:15:17.240 I think it feels even more nefarious to have them 0:15:17.240 --> 0:15:20.320 inside of a target date fund because target date funds 0:15:20.480 --> 0:15:22.360 feel like this set and forget its strategy for a 0:15:22.400 --> 0:15:26.120 lot of people. Yeah, and to have you who don't 0:15:26.280 --> 0:15:29.360 those the average investor doesn't need exposure to alternatives. If 0:15:29.360 --> 0:15:31.480 they end up in target date funds, I think they 0:15:31.520 --> 0:15:33.920 actually could ruin something that serves a lot of people. 0:15:33.960 --> 0:15:36.320 Pretty well. Sure, Yeah, I don't know if I would 0:15:36.320 --> 0:15:38.080 agree with you and say there's too much freedom. I 0:15:38.080 --> 0:15:40.280 think you can. You should be allowed to invest. 0:15:40.120 --> 0:15:42.000 The paradox of choice whatever anti Aldy. 0:15:42.160 --> 0:15:44.560 Sure, But that being said, if you want the choice, 0:15:44.600 --> 0:15:46.120 there is still another store that you can go to. 0:15:46.720 --> 0:15:48.920 It's not forcing everybody. I don't want to force everyone 0:15:48.920 --> 0:15:51.040 to go to ALDI because I think that they should 0:15:51.120 --> 0:15:53.120 limit their choices, but you should have the option to. 0:15:53.560 --> 0:15:55.920 But I do agree with you one hundred percent. The 0:15:55.960 --> 0:15:58.760 fact that if there's private equity getting sort of like 0:15:58.800 --> 0:16:02.080 shoved into this porkage, but they're still maintaining the target 0:16:02.160 --> 0:16:05.240 date fund, That's where it feels it just backwards, you know, 0:16:05.360 --> 0:16:06.840 like you know, like this feels like an instance to 0:16:06.840 --> 0:16:08.480 where like like oil and water doesn't mix, and it 0:16:08.520 --> 0:16:09.960 feels like they're trying to mix the two. Things like 0:16:09.960 --> 0:16:13.160 target date funds are known for being affordable, relatively affordable 0:16:13.720 --> 0:16:14.680 private equity, isn't. 0:16:15.360 --> 0:16:17.320 You can see the expense ratios taking up on some 0:16:17.360 --> 0:16:17.920 of those funds. 0:16:18.080 --> 0:16:20.680 Yeah, yeah, it does not seem like it's a good match. 0:16:20.720 --> 0:16:23.080 And so that's an instance. It's just something that we're 0:16:23.080 --> 0:16:25.520 going to keep an eye on because hopefully this is 0:16:25.560 --> 0:16:28.280 an instance where we see some of the better brokerages 0:16:28.280 --> 0:16:31.080 out there, like Vanguard and Fidelity holding the line. But 0:16:31.120 --> 0:16:32.840 if they don't, we're going to call them out on it. Well, 0:16:32.840 --> 0:16:34.920 but we will talk about it. And it just feels 0:16:34.920 --> 0:16:37.920 like another way for private equity to get their hands 0:16:37.960 --> 0:16:40.760 on your dollars. Like it used to be the rock 0:16:40.800 --> 0:16:43.960 star fund managers it's like, Oh, that's how we can 0:16:44.240 --> 0:16:46.600 that's how we can garner more in expenses. Now it 0:16:46.600 --> 0:16:48.360 feels like private equity. It's like, oh, you need to 0:16:48.400 --> 0:16:53.480 pay more for access to this opportunity to potentially experience 0:16:53.520 --> 0:16:55.480 outside returns, just a higher. 0:16:55.360 --> 0:16:56.920 Level of risk, or at least they had to go 0:16:56.960 --> 0:17:01.600 court accredited investors, people who had enough income or enough 0:17:02.280 --> 0:17:06.240 net worth and say and sell them on investing in 0:17:06.280 --> 0:17:10.240 their scheme. And now if they're inside of target date funds, 0:17:10.560 --> 0:17:13.200 they're getting every day people to invest in their schemes 0:17:13.240 --> 0:17:15.640 instead of having to sell the people who really do 0:17:15.760 --> 0:17:19.639 have the investing knowledge and ability. Because I don't feel 0:17:19.640 --> 0:17:21.680 bad for a credit I mean I feel bad sometimes, 0:17:21.720 --> 0:17:24.040 but I don't feel too bad for credit investors who 0:17:24.080 --> 0:17:27.720 lose money because they invested in alternative investments. That's something 0:17:27.760 --> 0:17:29.399 that I got into with eyes wide open, play at 0:17:29.400 --> 0:17:32.440 your own risk. Every day investors who kind of unwinningly 0:17:32.480 --> 0:17:34.760 are investing in alternative assets. That feels a little different 0:17:34.800 --> 0:17:37.760 to me. Let's talk about the comeback of student loan payments. 0:17:37.800 --> 0:17:41.240 Matt that the of those have been widely documented and 0:17:41.280 --> 0:17:43.639 they have put many Americans between what I would call 0:17:43.680 --> 0:17:46.720 maybe a rock and a hard place, choosing between paying 0:17:46.800 --> 0:17:50.359 your student loans and your credit cards. It's not easy, 0:17:50.440 --> 0:17:52.320 right if you have limited funds. And so there was 0:17:52.359 --> 0:17:55.480 this new TransUnion survey which found that borrowers are ranking 0:17:55.560 --> 0:17:58.920 their student loan payment ahead of their credit card payment, 0:17:58.960 --> 0:18:01.639 which makes sense because the stakes are higher with that 0:18:01.680 --> 0:18:05.400 student loan, especially given the wage garnishment threats that are 0:18:05.480 --> 0:18:08.600 likely to come about the administration is set. We're even 0:18:08.640 --> 0:18:10.480 going to hay take money out of your tax refund 0:18:10.760 --> 0:18:13.520 if you're not paying your student loans, So the money's 0:18:13.560 --> 0:18:16.439 gonna come out and find its way to pay off 0:18:16.480 --> 0:18:19.679