Let’s kick off the week with some fresh listener questions we have lined up for you! And don't just stand on the sidelines- if you have a question you’d like us to answer, toss your voice memo our way. It only takes about 90 seconds to record and you can find a step by step guide over at HowToMoney.com/ask . Regardless of how random or bizarre you might think it is, we want to hear it!
1 - Should I participate in securities lending if that’s a service my brokerage is offering?
2 - Life insurance is on the horizon so should I get an indexed universal life plan like some friends of ours did?
3 - I’d like to purchase a home in the next few years… would it be beneficial to apply for a new Apple card?
4 - Does it make more sense to repair or replace an old Cadillac that’s due for some repairs?
5 - Should I keep the fancy portfolio that Bloom, now defunct, created for me or is there a better option?
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome to Out of Money.
Speaker 2 (00:01):
I'm Joel, I am mat and today we're gonna answer
some of your listener questions.
Speaker 1 (00:24):
Jill, it's always a great Monday when we can hear
directly from some of our listeners, some of our favorite listeners. Actually,
we'll get to how that's the how that's the case
during this episode. But we're gonna take a credit card
question from a team and this is a teenager who
doesn't want to ruin his chances to purchase a home.
Speaker 2 (00:41):
A teenager, it's more mature than most teenagers. I'd say
to one more mature than I was at his age.
We'll get to that one. We're gonna talk about term
life insurance. It's kind of like a like a life
insurance primer of sorts. We're gonna talk about when you
don't need it, when you do need it. We're gonna
talk about securities lending and whether or not that's something
that we're fans of. Yeah, that's and plenty more during our.
Speaker 1 (01:04):
Episode today, Buddy, a lot of fun ones quick, real quick.
Speaker 2 (01:06):
I wanted to mention something we've talked about, the buy once,
cry once movement and the fact that hey buying something.
Speaker 1 (01:12):
It's gonna last longer. Darn tough socks. Yeah, buy for life.
Speaker 2 (01:15):
That's kind of the staplehole thing that we reference this
Darn tough socks. But there are a lot of other
brands and companies that you might kind of put in
this vein as well, whether it's just a retailer with
a good return policy or a specific brand that says, hey,
we're gonna stand behind this with like a superior warranty.
We're gonna create stuff that last a whole lot longer.
There's this like European cell phonemaker.
Speaker 1 (01:35):
Do you remember what are they called? Do you remember that?
That would I don't know. It's easier to repair, to
replace the scroll. Oh, oh the gosh, what's that called?
I really yeah, we'll look it up. We'll put it
in this like a Lego phone. Yeah. Like that's less
about the quality and more about resisting planned opso lessons.
The fact that you can go in there tinker with it, remove. Oh,
I'm gonna upgrade the camera now, drink, drink. It's like that.
(01:56):
It's like the Big Monster truck racing game on It's
back back in the nineties and you could upgrade your
your tires. I'm gonna get a bigger engine, better suspension.
You know the game I'm talking about. What was they called?
I don't remember, and that's called cognitive declimb, my friend,
I can't remember anything anymore.
Speaker 2 (02:13):
But what I wanted to highlight was a brand in
particular that I hadn't really thought about much. And but
Speed Queen washers and dryers. Yeah, you've you've heard about
Speed Queen, right.
Speaker 1 (02:23):
I don't have personal experience with them. I've just seen
pictures of them. They're like, like they are these very boxy,
industrial looking, tough mofo washer and dryers.
Speaker 2 (02:30):
They do not look sexy in any way former fashion.
And the only reason that it came to my mind
was I was staying at my friend owns an Airbnb,
and I stated at his house a Speed Queen.
Speaker 1 (02:40):
He has speA.
Speaker 2 (02:41):
Queens, and he got Speed Queens the Great Wood experiment
as well, and that you out to see how they are.
So he got Speak Queens for two reasons. One, they
apparently do the laundry a lot faster, and so he
has to pay the cleaning crew less money because thus
Speed Queen they're finished quicker, right, since so it's faster.
Then secondarily, the warranty is insane on those things. I
(03:02):
think it's like seven years for a speakqueen to washer
and dryer, and then I and that includes the service
technician coming out to your house to hurt some labor. Yep,
the whole kid koboodle. So it's one of those things.
But I looked up the price. I was like, oh
my gosh, it's like twenty five hundred bucks for the pair.
Speaker 1 (03:17):
Oh my gosh. So it's expensive, Oh for the pair. Yeah,
that's better.
Speaker 2 (03:20):
But this is the kind of thing where and maybe
you could, I don't know, get some used on Facebook
marketplace and you're like, great, these things are going to
stand the test of time. My guess is if there's
a seven If these things come with a seven year warranty,
and from everything I've been able to read, they're gonna
last something like three times longer than the average washer
and dryer. So that's just one more place where you
can look, I think too, especially if you're in the
(03:42):
market for a washer and dryer right now, buying the
right thing, spending more upfront, and then saying this is
something I won't have to deal with for hopefully decades
to come.
Speaker 1 (03:52):
Yeah, I like that and are you also drawn to
the fact that it's made in the US. I was
actually surprised to see. I did a quick search because
I was wondering how many other brains are made in
the US, and I was surprised to see that. Ge
they've got a big factory up in Kentucky, so speak queen.
They're made up in Wisconsin. So it's kind of got
that American exceptionalism baked into it to sell to the
(04:12):
earth Midwesterners creating those speed queens. Uh, that's not what
we have at our house. I've gotten I've got LG
or something to me. I've got one of the ones
that play the music. That's that's what I have. It
plays music. Yeah, dude, that seems unnecessary. It's very your
speaking's Japanese and they don't play music like it's a
same it's either a same sung or LG. But you
turn it on and he does the don okay, And
anyone who has my washer driver knows exactly the song
(04:36):
that I'm singing right now. That's when you change the thing.
Speaker 2 (04:40):
I mean, mine's got like little but it doesn't play
like music or anything, but but it's got a little
ring tone.
Speaker 1 (04:45):
Tony sort of thing like at the end, Yeah, at
the end of the cycle as well, plays a little
ditty for you.
Speaker 2 (04:49):
Yeah, a little baby and annoying if it's going off
when you're trying to fall asleep. But the I think
that this is just a good remindered folks. Yes, check
out checkout speed Queen. Not it's not always about going
for the absolute cheapest.
Speaker 1 (05:01):
I don't know one, but if I if my go dead,
that might be the next thing. Totally consider it. Yeah,
the ones we have is just because we inherited it
when we purchase the house. It's what was already in there.
Same question. You've got a front loader, uh huh, right,
so one of the which typically they don't those don't
last as long as well, and when they don't do
a good job cleaning. Because it's funny. It's funny you
mentioned the speed Queen and how you got to try
(05:22):
this out, like than the Airbnb. Anytime I've used a
front load washer at an Airbnb, I swear they never Yeah,
it's like they don't rinse as well. It just smells
like detergent. Have you found that to be the case
or you're kind of like mine's mine's fine.
Speaker 2 (05:36):
Good it's fine, but like I will say, they break
down a whole lot more because of the I think
you know, the way the drum is and stuff. This
is coming from a guy who really doesn't know what
he's talking about right.
Speaker 1 (05:46):
Now, but from what it opens sideways, I mean, yeah, exactly,
the toploaders just do better, do a better job. Naturally.
Speaker 2 (05:55):
It's like we got these these these improved appliances that
use less water, and then what happens is they breakdown
five years sooner. So the trade off wasn't worth it.
Speaker 1 (06:02):
The design principle behind putting a door that's side facing
asn't put James and the Giant peach. They didn't go
out the side door. What door do they go out?
When they suspected that they were bobbing out on the
oceans right up the tip, they climbed up the top
virtually or almost. You guys just read that book Vertical. Yeah,
we're going through all that. We just as and I
just read that. Yeah.
Speaker 2 (06:19):
Yeah, it's so good, it's so classic. I'm like the
biggest rolled dolph In of all time. All Right, we
should probably take listen our questions. Well, first let's mention
the beer we were having today.
Speaker 1 (06:27):
This one's called Doom Volume.
Speaker 2 (06:29):
It's by the Veil Awesome Brewery out of Virginia, I believe,
and we'll give our thoughts on this one at the
end of the episode. If you have a money question,
we'd love to hear from you, just Got to Have
Money dot com, slash ask, or do the simple task
of recording that question and emailing it over to us.
We would love to take your question, hopefully next week
on the pod. But let's kick it off. Let's get
to a question now about maybe a prompt you've received
(06:52):
inside of your investing app and whether or not you
should follow through and make it happen.
Speaker 3 (06:58):
Hey, the Matt and Joel, this is our best friend
Wayne from Philadelphia contacting you with yet another question.
Speaker 4 (07:06):
So.
Speaker 5 (07:06):
I have a roth Ira account open with m one
and recently I noticed that I had a interest payment.
I did a little digging and found out that m
one Finance has a fully paid security lending program which
they automatically sign everyone up for and that you can
(07:28):
opt out of. I should also note that you are
not always lending out your assets, and it seems to
be some kind of lottery system that decides whose assets
are lent out and when so onto my question. How
do you guys feel about the lending of retirement securities?
Would you opt out or would you stay involved? Apparently
(07:49):
you get ten percent of any of the profits they
get from the lending, which seems really on the low side,
especially since it sounds like we as the customers, are
taking the majority of the risk.
Speaker 3 (08:00):
So while making this recording, I found out that Fidelity
has its own lending program. How does that compare to
M one? Are there other lending programs out there? Am
I leaving money on the table by not participating in
these types of programs? Thanks again for taking my question,
and I look forward to your answer. Best Wayne out,
(08:20):
Best Wayne out.
Speaker 1 (08:21):
You know, Joe, I'm gonna go out on a limb
and say, Wayne, this Wayne is my favorite Wayne friend
that I have that might have you met Wayne? I RL? Well, no, okay,
but I don't know any other Wayne. You do like
he automatically gets the number one spot. Sorry, Wayne, this
is the competition, whether it's super super stuff, But I
feel like I would also be friends with Wayne irl
(08:42):
and also means that this Wayne is easily going to
get bumped if you do meet someone IRL. No, no
this Wayne. This Wayne's way cooler your top not Twain,
So no joke. I actually I just looked on my
phone and I do have a Wayne in there, but
I don't know who that is. It says it says
like Wayne, like Wayne Lania or something like that. I'm like,
I don't who the heck is this. I don't know.
Maybe the time you met Wayne Gretzky, you guys are palser. No,
it was not him, but Wayne, thank you for this question.
(09:04):
It's It's one that we're going to hear more and
more as brokerage firms make their customers aware of securities.
Stockland is also known as stock lending. Folks are going
to be enticed by the language they use. Right, who
doesn't want to earn more money on their investments? Why
not earn a little bit, a little, big, little, some
side money on my side.
Speaker 2 (09:23):
Let me let my securities have a little side hustle
bringing me more money in right, it sounds like.
Speaker 1 (09:28):
Not only are they just earning me the regular sort
of dividends, maybe I can also do some of this
on the side. Yeah, what what's not to like? What's
not to like? There are some pitfalls that we do
need to cover before we send Wayning all in on
this direction and say, yeah, lend your stocks out, no worries. Well, ye,
stock lending is available to a whole bunch of people
now and there are so many fewer hurdles to lending
(09:51):
out your stocks. And you know, on like some of
the riskier types of investing you can do, you don't
need to be an a credit accredited investor. So usually
there's hurdle you have to overcome, which involves a network
that you have to have, or you have to have
a super high income. That's how you're able to make
more risky types of investments. But on when it comes
to stock lending, that's not the case. You just have
(10:12):
to make more than twenty five thousand bucks I think
with an accredited investor it's usually two hundred and fifty thousand,
or you have to check a box on the back
end of your account saying hey, I know the risks.
And so with most of these brokerage firms who are
offering this, like getting into stock lending is easypsy anybody
can do it. But that's not necessarily a good thing, right,
you know, stock lending, it's it's kind of in some ways,
(10:35):
like owning a rental property. Right, the property is yours,
but you lease that property to someone for a specified
period of time, most of the time over a year
basis right, So you make a little money while you
rent to that person, but you retain ownership of the property.
And so at the end of that year you can
say you're out of here, or I'm upping rent, or
(10:55):
please stick around. But there are reasons that stock lending
is unlike investing in real estate. And if we're going
to give the short answer, I'm going to say, I
just don't know that I would participate. I don't know
that it's the best idea for most folks. Agreed, I
don't think it's worth the squeeze. And the reason being
is because oftentimes folks want to borrow your stocks, typically
(11:16):
because they want to short the stock that you own.
They're basically betting that the price for that stock is
going to go down, and if it does, as they hope,
they make some money. So do you, so everyone wins.
But if the short seller is substantially wrong, there is
a chance that you could actually lose money. Even when
lending your stocks out again, you still retain the stock
in your account while you're lending it out, but you
(11:37):
know this is an actual legit way to make some money.
That being said, the safety is a bit questionable, and
I think we will see this becoming a bit more
normalized with the different brokerages out there, especially ones who
are counting on I don't know that. I feel like
you tend to see it more. He mentioned Fidelity specifically
they do this, but also with Robinhood folks who are
leaning into because the other side of this securities lending,
(12:00):
but then you also have margin investing. That's the other
that is what is made available because of stock lending
and the part I just don't like the aspect of
it that it's all it feels like it's built on
a house of cards. Yeah, that sort of approach. I
want you to be careful.
Speaker 2 (12:15):
It's not all about the passive investing approach that that
you and I are typically fans of Matt and most
of the time you'd be fine lending out your securities
ultimately under in one or Robin Hood's program or Fidelities
really whoever's. But when you look at the disclosures, it
can also raise eyebrows and so you typically encounter a
clause about risk of default. I would read that clause carefully.
(12:35):
Most of the time, Matt, when we're agreeing to terms
of service, we're not looking at that stuff. We just
like scroll down to the bottom and we click okay.
But Robinhood and in one they've got, by the way,
their own cash collateral in the case of an event
where there's some sort of abnormal market behavior, but even
that may not be enough to cover your losses. They
Robinhood in particular, almost didn't have enough cash during some
(12:58):
of the massive memestock trading where there was just incredible
volatility in specific stocks. So if you were lending out
let's say your game Stop stock, well, there was a
chance that you were gonna get screwed, you know, and
and that Robinhood wasn't going to have the collateral to
cover your losses. And so in addition, you know your
stock portfolio. It's typically ensured by the SIPC, but securities
(13:21):
you've lean out they're not covered, which adds more risk
to this whole endeavor. So there are risks here that
are are meaningful. And when you look at some of
the terms, it frightens me. It makes me want to
not participate well in this process.
Speaker 1 (13:36):
Especially because we're not talking about making a ton of money.
If the reward was sky high, like you mentioned real estates,
you know, there is some decent money to be made
in real estate when you invest in rental properties or
just different types of real estate investing. If that was
the case here when it came to securities lending, it
might be worth the risk. But the rewards are actually
(13:57):
pretty paltry. We don't have personal experience, so Wayne, that
should tell you again, this reinforces our opinion that this
is not something that we recommend. But if you dig
around and you look at like, for instance, over on Reddit,
some folks have shared that with a two hundred and
fifty thousand dollars investment balance, they're making somewhere in the
neighborhood of one to two dollars a month. And so
(14:19):
that's the kind of conversation we're having here.
Speaker 2 (14:21):
They make it sound so much better when the pop
up happens and it's like, do you want to turn
on securities lending? Like you could make money on your
stocks that you own.
Speaker 1 (14:27):
Part of that is because it's not like your entire
portfolio is going to be lent out at the same
time because it's often the riskiest stocks that are likely
to be borrowed. Basically folks that want to borrow bland ole, boring, Voo,
the s and P five hundred, etf. You mentioned it
being a lottery as to who it is that gets chosen,
who gets the honor of being chosen to participate in
(14:49):
securities lending. Oftentimes it is those riskiest stocks because there
is not stock available when it comes to the clearing
of the stocks, So they're trying to facilitate in the
purchasing the selling of these different securities, which means most
hot of money listeners they're not going to receive much
benefit from participating. And the brokerage firms, as you alluded to,
they are the ones who stay in a profit the
(15:11):
most here, and of course you know they charge fees.
They take the bulk of the profit while you get
to you get a small, small, small, little.
Speaker 2 (15:18):
Slide, something like eighty five to ninety percent of the
profit I think from securities lending is taken by the
brokerage firms. From what I've been able to glean from
in one robinhood, it's like, hey, take do this and
earn some money. But really we want you to do
it because we make money. It helps us. And there
are some you know, idiosyncratic tax possibilities for lending stocks
right that have to do with what you rate your
(15:40):
dividends or taxed out, So be careful of that. There's actually,
you know, a possibility of losing money even if it
looks like you're making money lending stocks out because it
creates some sort of tax nightmare on the back end.
Speaker 1 (15:51):
All in all, it's not as favorable as receiving qualified
or arry dividends. Yeah.
Speaker 2 (15:56):
So I think when it comes down to it, lending
out your securities to make money, it sounds cool, but
there's so many downsides.
Speaker 1 (16:02):
You're not going to make much.
Speaker 2 (16:03):
Potential tax consequences along with increased risks. It just makes
it makes us hesitant to recommend it. I've turned the
feature off. I'm not playing on participating. Didn't Wayne say
that that.
Speaker 1 (16:13):
His broker is automatically Yeah, that's actually pretty crazy. I
don't know. That's a huge red flag in my books,
So I don't know if maybe that's something he autom
I mean that being said, I'm not over there playing
in the N one sandbox.
Speaker 2 (16:25):
So I would go back in there, and I would
make sure that that was turned completely off. I wouldn't
want to participate in this because of all the reasons
that we mentioned, but one of the primary ones again,
like the risk might be worth the reward, Matt, if
we were talking about making real money from lending your
securities out, but we're talking about making almost next to
nothing from everything. I've seen, even people with like massive
stock portfolios just saying yeah, it didn't really met me much.
(16:47):
So in that case, why would you even uh, why
would you even try?
Speaker 1 (16:51):
Exactly? All right, man, we've got more to get to.
It's been a minute since we've heard from a teenage listener,
so I'm looking forward to that one plus more right
after this.
Speaker 2 (17:06):
All right, just the second, we're going to take a
question about the Apple credit card?
Speaker 1 (17:10):
Is is it? Should we sign up for? That?
Speaker 4 (17:12):
Is that?
Speaker 1 (17:13):
Yeah? It's I gave it away. Keep listening too. Yeah,
there's actually I like it, but I don't have it.
Oh why not? Man, mystery. We'll get there, but first
let's get to a question. That's what they call a cliffhanger.
Speaker 2 (17:26):
I'm hanging off the edge. I'll las Sylvester salone. All right,
let's get to a question from listener Colin specifically about
life insurance, when to buy and how much.
Speaker 4 (17:36):
I'm at Joel, This is Colin from Leincaster, Pennsylvania. I
just wanted to get your guys input on life insurance.
My wife and I currently are renting and do not
have any children, so we don't have any life insurance
apart from a small group life plan that I have
through my employer, and the next year or two we're
probably going to start looking to buy a home and
(17:58):
start having children, so I wanted to make sure we
got everything squared away as far as life insurance goes.
So I just wanted to get your guys' input on
what you guys recommend. I've heard from most experts that
they recommend term life insurance. We also have friends that
are in an index universal life plan called Kaizen. Would
(18:22):
love to hear your input on that kind of idea
right now, my plan is to this to term life
insurance and keep it simple, but I just wanted to
hear what your guys thoughts were on that. I also
wanted to get your guys input on what kind of
level of coverage we should get. Currently, our household income
is ninety thousand dollars a year. I make about sixty
(18:45):
percent of that. So I wanted to just hear your
thoughts on, you know, what kind of strategy we should
have for the coverage and what kind of coverage we
should get on whom. So yeah, I would just appreciate
your guys's advice. As always, I appreciate everything you guys
do for us, and just yeah, the way you guys
(19:08):
make finances sound simple and enjoyable, we just I just
really appreciate that. So yeah, I would love to hear
from you guys, and thanks again.
Speaker 1 (19:19):
Bye Joe. Did you notice how Colin just slipped it
in casually there that he's got this group life insurance
plan that's provided by his employer for free. I'm not bitter. Yeah, no, okay,
that's that's.
Speaker 2 (19:30):
That's not abnormal. I will say when I worked for
the man, I had the man. Actually I did work
for the man for a small stand. It's a long
time because a smaller man that he was like a big,
big man, which means I didn't get some of these
sweet benefits. And so I like the fact that Colin's
got this available to him, but like he's realizing that's
not enough to you know, it's a good.
Speaker 1 (19:50):
Point, it's not enough mustard to cut it. What is
that the term mustard?
Speaker 2 (19:53):
Yeah, let's talk about workplace plans for just a second,
because some people think, oh, maybe that's the best place
to buy life insurance, And the truth is the time
it's not. Take the free amount that you're allotted, which
is often half or one x your current salary, which
is nice, that's a nice perk, But then if you
want to buy more, it's typically going to cost you more,
especially for somebody like Colin, who's so young, probably so healthy.
(20:14):
I can tell Colin, you listen to Andrew Kuberman's podcast
and that you're just an incredible shape, which means that
you're probably going to pay a whole lot less on
the open market than you would to get additional insurance
through your employer. So be glad that you have a
little bit. But the truth is, in the near future,
you're probably going to want to have more insurance because
as you take on more financial obligations, as your family
(20:34):
continues to grow, it's going to be important to increase
the amount of insurance that you have to protect that
growing family.
Speaker 1 (20:41):
In your growing assets but specifically, what kind of insurance
should he have? Jol Let's sing the praises of term
life don't make me sing, I really will. I'm glad
that that's what Colin's considering. It easily makes the most
sense for the overwhelming majority of folks out there, and
almost every other type of insurance you buy is overly complicated,
it costs way too much money. You might get a
(21:02):
pushy salesperson who tries to sell you on the benefits
of something like Index Universal Life like your friends have,
and make it sounds so good, just like the timeshare salesperson. Exactly.
It's very similar or even some I've heard of even
funkier life insurance products out there. They're gonna talk about
the tax advantages, how you can borrow from it, but
the monthly premium is often more than ten times what
(21:25):
your simple term life premium is going to be.
Speaker 2 (21:27):
But it's okay because you're gonna be able to borrow
from yourself down the road, and man, the tax benefits
are incredible, so don't do it.
Speaker 1 (21:33):
It's worth a much higher premium amount, right. I don't
think this is the right product for you, Colin. It
can possibly make sense for some folks who are incredibly wealthy,
who have very high incomes, like Matt, but not like
for ninety nine percent of folks. I think it comes
down to term life and instead what you do, instead
of paying ten times more, you save that money, and
those extra dollars would just then be better put to
(21:55):
use investing in tax advantaged accounts like roth iras, like
your hs, say, even workplace workplace sponsored retirement account like
a four one K and so in this case, the
bare minimum product term life insurance. It should provide you
all that you need and more, which is a simple
death benefit during your most vulnerable financial years.
Speaker 2 (22:14):
No more bells and whistles needed. I love, by the way,
when I make comments about how absolutely loaded you are, Matt,
you just ignore me.
Speaker 1 (22:21):
Now, You just you just chalk it up to Joe
being and I just I just try to keep on trucking.
We should, we should probably just answer the question. I know,
if you're watching the clock, all right, yeah, they probably
we can talk about how long can we talk about
life matures for people to turn us off? Well, you know,
the goal is to to like you said, cover yourself
and your family during those most vulnerable financial years and
(22:42):
The other problem, Matt, when people sign up for the
more expensive policies, one, they're typically unnecessary bells and whistles,
and they're paying more than they need to. And because
of that, many people end up ditching that policy before
they end up using it, and and because they realize, oh,
it's eating up touch on my budget, they're like, they
can't sustain it.
Speaker 2 (23:01):
This life insurance is too expensive. I've got if I
have to cut something, this is what I'm going to cut.
They forked over a lot of money over the years,
and then and then it turns out they don't have
coverage when they need it. We don't want you in
that position. That's just another check mark in the hey
go for term life insurance ins dead category. And it's
just important for us to mention also that you don't
have to get all the coverage you might ever need
(23:23):
in one fell swoop, partly because that can be hard
to predict ahead of time. You don't know what your
insurable need is going to be, you don't know where
your income is going to go, you don't know what
sort of assets you're going to have, and so you know,
life insurance laddering can be a great way to allow
you to have some coverage now, but not feel like
you have to go all the way and just like
(23:43):
get a multimillion dollar term life insurance policy, forking over
more than you want to, because you can always add
on more during years when you have a higher insurance need,
and then later on in your life you can essentially
kind of reduce coverage as let's say kids are leaving
the house and your insurance needs decline because your net
worth has increased and you have just you have a
(24:05):
higher net worth, you have more cash at your disposal,
and so becomes that becomes less necessary. So we have
a whole article about life insurance laddering that will link
to in the show notes. But I think that's such
an important thing for people to consider, and it's often
it's often not thought through enough because it can help
not only reduce premiums, but ensure that you have the
coverage you need during the times when you need it most.
Speaker 1 (24:26):
Totally, I prefer personally the term layering as opposed to laddering,
because I envision you stepping out into a rainstorm or
something and you're like, oh, let me get the umbrella,
but then you're out there with the umbrella walking around
and you're like, holy oh man, I'm getting soaked. I
actually need to put the rain jacket on. So you
put the rain jacket on, and you've got the umbrella.
Maybe you're like, I don't want my legs to get wet.
You know, my pants are getting wet, and then you
(24:47):
put on like the full on. Well. I don't even
know what you call it rain suit or something like that,
but you have one of those rainsuits. I've got a
rain jacket. I don't have any rain pants. I thought
about getting them though. Skip commuting to you know, riding
the bike to work. Want to be protected from the rain.
Speaker 2 (25:01):
If you're a bike commuter, you gotta have a pair.
But for most people who are just walking in the rain,
you probably don't. Yeah, or you just get wet.
Speaker 1 (25:06):
I mean that's what I do. I'm like, I bring
a change of short and just don't whine about it. Yeah.
I'm tough, buddy, I'm a tough guy. I'm a tough boy.
So I want to give an example. Imagine you want
to have the five hundred thousand dollars of coverage now,
and you're like, great, that's what I can afford. That
kind of aligns with our needs. Right now, we're one
of us to croak. And then maybe you're saying, I'm
(25:27):
gonna add another five hundred thousand dollars or maybe even
a million dollars of coverage five ten years from now
as your net worth grows, as maybe you take on
more responsibilities with let's say a house, right, you've got
a fat mortgage, maybe you've got a bunch of kids
on hand. Yeah, depending on your needs. And you are
specifically asking too, how much should you have on you
(25:48):
as opposed to your wife or your partner. Well, it's
not just about income. It's certainly a factor because he
mentioned did he say he brings in like sixty percent
of their overall income? You do want to take that
into account. But even non working spouses, they should also
be insured because of the valuable services that they provide
for the household, for the for the family, and the
(26:08):
increased costs that you're likely going to be faced with
if they were to pass away early. And it also
comes down to your life circumstances and your family situation.
I know for us early on, that's something we talked
through and we kind of came to the realization that like, Okay,
I think one of us would likely get the parents involved,
and then they're young enough and would want to be involved.
They were retired and I think would gladly step up
(26:31):
into that role to say help out with the kids.
But then subsequent conversations led us to say, you know what,
things are changing a little bit, let's make sure that
we are set in a more independent way when it
came when it came to the kids, like, you just
have different needs and even those needs change, right, Like
we're dynamic over time, and so it's something willing to adjust. Yeah,
it makes me something worth reevaluating of mothers. Mother's Day
(26:52):
was about a month ago.
Speaker 2 (26:52):
I remember seeing this cartoon and it was like, hey,
we gave you the day off today, mom, and we
hired everyone else to do all these tasks for you.
And think about all the people you would have to
hire to replace the task that to stay at home
spouse crew does. I mean it's incredible, Like there's chef,
there's taxi service, there's all of these things that would
not to mention just the time that you might want
to spend grieving or working less yourself because your spouse
(27:16):
has passed away, Like those are big things that also
have a financial angle to them totally.
Speaker 1 (27:21):
But the typical suggestion there is a good rule of
fum out there, and that's to get ten times your
income in life insurance, which is a helpful starting point.
But policy genius they actually have a solid calculator that
takes your savings into account, it takes into account how
much debt you have, and then again, ultimately, some of
this kind of comes down to you and what it
is that you and a half. Right, Like, let's say
you've got a non working spouse and you're just like, okay,
(27:44):
let's say two fifty, But then you're thinking, all right,
I don't want more than that, let's do five hundred thousand.
It kind of comes down to what it is that
you're comfortable taking on. Obviously, you would receive the bigger benefit,
which means you're gonna be paying more for that luxury,
but that's something else to take into account too. It's
not just math equation.
Speaker 2 (28:00):
Yeah, and part of it also comes down to finding
the sweet spot in length of term and the amount
of coverage, because you might say, well, two hundred and
fifty thousand bucks for twenty years is going to cost
me eleven dollars a month, but five hundred thousand dollars
a year for twenty months is gonna cost me sixteen
dollars a month, Like, well, it's probably worth an extra
five bucks a month to get the additional coverage. So
then you can like decide as you run the numbers, well,
(28:23):
is it worth that extra little bit of premium for
me to get the superior coverage. That's part of doing
the shopping too, And so I would I would plug
those in. Well, then maybe look at a thirty year policy,
then maybe look at a ten year policy. Typically I
would say a twenty year policy is probably going to
be best at least to start out with. Then you
can get another policy kind of like Matt was talking
about with layering, Like here you go five or ten
(28:45):
years hence and.
Speaker 1 (28:46):
I get the laddering analogy right, Like it's as if
you have ladders in your backpack or something and you're
kind of scaling a mountain, But who actually has ladders?
That's a backpacking which is why the layering always.
Speaker 2 (28:57):
Makes Yeah, and we talk about this just even in
the ads surrounding the shoil just be honest policy genius.
Speaker 1 (29:03):
They're a great place to shop because yeah, other shows
do like the disclosure. Yeah, and so genis just so
you know policy Genius is a paying.
Speaker 2 (29:12):
Advertiser for the show, and they are. They are, but
they're also we'd be talking about it regardless. They're a
great company place to shop. Another place you could consider
shopping is if you're a Costco customer. They partner with
the company that offers term life insurance. And I do
believe that you get a discount on the first five
years of Premium starby shopping both places. And see, Okay,
where am I getting the best rate for the coverage
(29:33):
we need?
Speaker 1 (29:34):
But and they give you a sixty four ho Ols
cup to fill up with coke? If only this isn't
a quick trip, Matt, this is Costco. We're talking right,
you know. It's funny. I'm picturing the food court there
at Costco and I still have not purchased an eaten
a hot dog at the food court. Okay, I'm making
it my mission to take you there on a how
to money hand. I hope that we are together when
you get to see the look on my face, when
(29:55):
I get to enjoy this, I'll be frank, which I
think that's what you try to convince me once another
a high quality dog there. I don't know if that's true, though,
I'm gonna make you go. I have to.
Speaker 2 (30:03):
We have to bring our boys too, because my son,
he's like a big fan of the costume West. He
does like a good hot dog. So heat tearing, all right,
Let's get to another question. This is about adding another
credit card to the mix. If you've already got three
d you need a fourth.
Speaker 1 (30:17):
Hi, Joel and Matt.
Speaker 6 (30:18):
My name is Caiden Hires and I am from Council Bluffs, Iowa.
My question was regarding credit cards. I currently have three
credit cards at the age of nineteen with a total
credit limit of thirty three hundred dollars. I was wondering
if you guys think it would be a good decision
(30:40):
to get an Apple card with three percent cash back
on everyday purchases with a limit of sixty five hundred dollars.
The only gist is my fiance and I plan on
trying to buy a house within the next around two years,
So I don't know if that would be a bad
thing or if it would be a good thing and
(31:01):
show that I'm more responsible with more money by keeping
my usage below ten percent and paying them off every
month in full. Thank you for listening to my question,
and I hope you guys have a great day and
enjoy the beer.
Speaker 1 (31:16):
So I just realized that Cayden said he's nineteen, which
means he's not partaking in the finer things in life
when it comes to the fancier craft beer.
Speaker 2 (31:23):
So two years from now, Cayden, you can start to
enjoy some of the beers that Matt and I have
enjoyed it.
Speaker 1 (31:29):
And if you head our way, we'll take you by
your first one. I would love to do that, Joe Caiden,
if you want to reach out, and we will totally
one percent honor this offer right here on the podcast
by you the best hazy ipa and also a nice
fruited tower. Ooh well, it also depends on the time
of year. There's a whole lot of thought that goes
into craft beer in our world, Cayden. But I love
(31:51):
that you were doing so many positive things with your
money already at the age of nineteen, he's already got
three cards. I feel like when I was his age,
I was pretty smart about the credit card because this
is back when you could get credit cards, when you're
like fourteen or fifteen. They were just like trying to
give him out like candy on college campuses. Yeah. Well,
and I wasn't in college at that age, and so
it wasn't that smart. But even still, I mean, I
(32:11):
guess the rules were much lax, and I remember my
dad saying, yeah, go ahead and get a card and
you can start learning how to handle this properly. But
before the Card Act, I believe the Card Act, which
sense that they would call it that.
Speaker 2 (32:22):
Yeah, which prevented credit card companies from offering like free
pizzas to grab a credit card on campus, which I
get that probably doomed a lot of people right from
the k.
Speaker 1 (32:32):
I also did that too, because I wanted the free pizzas.
Speaker 2 (32:34):
Yeah, but but if you were intelligent and you just
scored a free pizza and well, and I don't even
cast us spursions on people's intelligence. It was more like
it was a rigged system in a lot of ways,
pushing people towards credit card debt who didn't really know better.
But yep, yeah, let's talk about the Apple credit.
Speaker 1 (32:47):
Card like Cocade's thinking about it though, Yeah, like him
and his fiance like they are going to be.
Speaker 2 (32:52):
Like, they're on this awesome path and I'm really excited
for him. I agreed, I think he should get this
Apple credit card.
Speaker 1 (32:58):
And when did you become an out fanboys?
Speaker 2 (33:01):
I wouldn't say I'm a fanboy. I'm I'm fine with Apple,
but I have no really super emotional feelings towards that.
I don't love them or hate them. Yea, they just
exist and I utilize our products sometimes. But this card
in particular, I think does a couple of nice things
for Kayden.
Speaker 1 (33:15):
Here.
Speaker 2 (33:15):
One, it adds a credit card that doesn't have an
annual fee. I think that's a good thing, right. It
allows you to have another card in your arsenal. Not
that I'm against annual fees, right, if you're getting enough
bang for your buck with the annual fee, but it's
just kind of a we don't know that, we don't
know what you're spending is like, and Caden at the
age of nineteen, I don't know if you're if you're
spending enough or traveling enough right to get kind of
(33:36):
the bang for your buck from signing up for one
of those more expensive credit cards. But I think this
could help essentially with optimization of cash back on some
of the purchases you make by having this credit card
in your digital wallet. And I will explain why we
say digital wallet in the second right. That's the best part.
Speaker 1 (33:51):
Yeah about the Apple Apple Wallet, I know, double click
to pay baby.
Speaker 2 (33:54):
Yeah, it makes things simple. But the bigger reason this
could be helpful to you, though, I think is, is
the larger credit limit that you're going to have available.
The goal, as we've discussed many times before on the show,
is to have a large credit limit, but to not
use much of that available credit. That is what helps
make your credit score look awesome. It's what makes you
(34:15):
look like a super credit worthy person. And so this
new card alone would essentially double your credit limit, which
makes it easier to increase your credit score, because hey,
now that instead of having three thousand dollars worth available credit,
you've got something closer to seven thousand dollars of available credit.
If you're spending the same amount although you have an
extra card, you're still spending the same amount every month.
It just makes you look better to the credit barrows,
(34:38):
which is awesome, and that in particular is going to
be helpful for you as you work towards buying this house.
Speaker 1 (34:43):
A couple of years from this, right, your credit utilization
rate has gone down. Let's talk about timing here as well,
because we would tell you to not get this card
if you are planning on making offers and if you're
planning to apply for a mortgage over the next couple
of months. But you said you're looking to buy a
house in a couple of years, which means that small
credit ding that you're gonna receive applying for this card,
it's not going to negatively impact you at that point
(35:06):
in time. It's gonna Yeah, it's gonna be in the
rear view mirror for sure.
Speaker 2 (35:09):
It's a short it's a short lived ding that that
might hit for a couple three months maybe, Yeah, I
was gonna say.
Speaker 1 (35:14):
Sixty to ninety days if I if I had a guess.
But then the smart usage of that new card is
gonna help on multiple fronts because the base level goal
is to use less than thirty percent of your available credit.
And given the fact that he's at like thirty did
you say thirty three hundred is something like that? Overall,
like I don't, it wouldn't be that difficult to see
your spending start creeping above that, And so Yeah, like
(35:36):
you said, Kayen, for you to be able to keep
that to ten percent or less is even better. And
then you're aiming for that score, that credit score and
the seven to forty plus range that will help you
to qualify for the best rates possible when you are
ready to buy. And of course, like you said, make
sure that you are paying your card off on time
infull every single month. Otherwise just the crucial part that's
not Otherwise you're not allowed to have the credit card. Like, no,
(35:57):
no more credit cards for you. If you're not paying off,
it's not worth it. Yeah, agreed, But.
Speaker 2 (36:01):
It sounds like he's already got three Hopefully he's handling
those well, he's got this minimal line of credit. Hopefully
he's like developed the right habits over the past year
or whatever length of time he's had those credit cards available,
And now adding this next one into the mix, isn't
some sort of added temptation. Is just gaming the system
right to increase his credit score and to increase the
(36:21):
benefits that he gets from spending the way he's spending.
One of our favorite things too about the Apple card
is the user interface. I think it's worth mentioning that
Matt because anybody who has this from everything I've read
like love it. I don't have the Apple card personally,
although I'm not against it, I would totally consider it.
But people who are like Apple fanboys and fangirls, they
absolutely love this card, and for good reason, right, because
(36:43):
Apple's doing it differently than most of the other credit
card companies, and in fact, they seem to be helping
you visualize how much interest.
Speaker 1 (36:51):
That you would owe. There's like a lot of charts,
a lot of graphs, yes, interactive graphs as well, which
what's more fun than a graph and interactive that you
can put your finger on to move around?
Speaker 2 (37:00):
Right, I mean you love the stuff. I guess I'm
surprised you don't have this card, but all right, I'll
apply right now. But they're suggesting payment amounts right to
help you pay off your balance faster, which most credit
card companies they're not actually wanting you to do that.
Their favorite customers are the ones who don't pay off
their balance, and so any sort of added interactive graph
(37:21):
to help incentivize you or get you excited about paying
off your balance faster, well, they want to hide that
from you. So I love that Apple is doing the
exact opposite, and the card lives inside your Apple wallet,
which is also where you can sign up for Apple's
Cash account, which pays a competitive interest rate. So Apple
kind of created this semi banking system that I think
a lot of Apple customers are tending to like Apple.
(37:43):
They also don't charge bogus fees like some of the
credit card companies charged, so if you use it well,
it really is a good card for a lot of
folks to have, and I think for a lot of people, Matt,
it probably will be their first credit card or it
will be one of their go to credit cards, just
because of the nature of the way Apple people use
their devices and the way Apple caters to its customers
(38:05):
and gives them kind of what they're looking for.
Speaker 1 (38:07):
Yeah, Okay, one thing you mentioned though, was getting three
percent cash back. But I don't want folks to hear
too rosy of a picture that we're pinning here, because
the Apple card it really only offers two percent cash
back for every purchase that you make when you use
Apple Pay, which is accepted at most places, which is good.
You know, it's still rivals one of our you know,
like our favorite cards out there, like the City Double
Cash and the Fidelity card. That three percent cash back rate,
(38:30):
it's limited to purchases that you make specifically at Apple,
with a few other selected retailers that they highlight, and
that list of selected retailers has actually been shrinking over
the past year or two. So I wouldn't go into
it thinking I don't want folks out there to hear
us talking about three percent cash back with the Apple
credit cards. That certainly beats the Double Cash well not really,
(38:51):
it's it's very very limited in scope. But two percent
cash back too for every purchase with Apple Pay. Two
is great.
Speaker 2 (38:56):
That's that's pretty good. And it's not hard to use
Apple Pay almost everywhere you go now online too.
Speaker 1 (39:01):
Oh sure, yeah, I mean, and you just load the
cards there onto your digital wallet double click to pay,
like I mentioned before, But Cadence sounds like he's starting
to get into the optimization game, and if so, I
would recommend not just looking at three percent, but something
like six percent cash back if you get the Amex
Blue Cash Preferred card at grocery stores. The combination of
getting six percent there looking at a specific category of spending,
(39:25):
So for us specifically, that's restaurants, that's where we use
our City Custom Cash card. Well, we are earning five percent.
And then what's another universal expense that everyone has gas,
So if you have a Costco warehouse anywhere near where
you are, the ability to get the Costco anywhere visa
and getting that five percent cash back man like six
(39:46):
five five on like a large, large percentage of your
monthly spending, it is hard to beat that cash back.
And then the Apple card two percent out of the water.
Then the Apple card with Apple Pay.
Speaker 2 (39:56):
Becomes kind of your go to for every other category,
which is same with like City Double cash or Fidelic.
Speaker 1 (40:01):
That's kind of how I think about it and can get
on board with that and how I use mine.
Speaker 2 (40:04):
And that's the most basic way to get the best
cash back returns on normal spending you're doing every day
without feeling like you got to get into the travel
hacking game.
Speaker 1 (40:13):
If you're not so inclined or keeping up with like
revolving categories of spending. Yeah, that's just not something I'm interested.
Speaker 2 (40:19):
That's annoying to me. Yeah, and it also feels like
it's like incentivizing more consumption. Then that's true, otherwise will
be pertaking in it's like, oh, five percent off at
home depot this quarter. Let me go there and load
up on stuff when you might not otherwise do it?
All right, We've got more to get to, including a
repair or replace your automobile question. What do you need
to think through before you make that decision? We'll talk
about that and more right after this.
Speaker 1 (40:47):
All right, buddy, we are back from the break and
it is now tign for the Facebook question of the Week,
which is from Sharisa. She wrote, repair versus replace. I
know usually it's better to repair your car rather than
get a different used car, but I'm second guessing myself.
Could you give me your opinion. I have a twenty
eleven Cadillac SRX that has a small timing belt leak
(41:09):
thirty seven hundred dollars to fix. Doesn't sound all that
small to me. Two of the catlet converters have failed
four thousand dollars to fix and required to pass emissions
and other standard wear tear stuff, torn ball joints, cracking
control arm bushings, engine transmission mounts. There's also a small
evaporation leak I don't even know what that is, Joel,
(41:30):
which might be as simple as changing the gas cap Okay,
she's chugging horribly due to the needed repairs and has
one hundred and sixty seven thousand miles without issues. The
car is worth around seven or eight thousand dollars. Would
you dump money into repairing all of this or get
something newer with fewer miles? What would you do in
her shoes? Okay?
Speaker 2 (41:49):
I feel like typically this is a tough question, right
because my bent is almost always to say keep your
car on the road, and I think most of the
time when this debate happens, there's a whole lot of
emotion involved. It's like you're just kind of tired of
the thing, and that makes it so much easier to
get rid of it and opt into something new, because
(42:10):
you're just assuming that this new thing isn't going to
have nearly as many headaches going along with it, and
you're tired of the headaches, which I get, But you know,
that makes it more likely that someone's going to take
the expedient route of trading in that automobile. That's like,
what she say is chugging along.
Speaker 1 (42:26):
And a horribly though.
Speaker 2 (42:27):
That is what she's said, Yeah, which is such, which
again I believe, but that makes it more likely you're
going to trade that puppy in for a new car,
even if the costs are steep, even if you're like
let's say, rolling negative equity into alone. It's just that
sort of emotional release that you're looking for, but that
comes at a massive financial cost. The cost of repairing
your car, though, Sharissa are getting intense, right, equaling the
(42:47):
current value of the automobile.
Speaker 1 (42:49):
That's the problem.
Speaker 2 (42:50):
So I think in this case, getting rid of this
car and opting for another used car that's in better
condition that makes the most sense to me.
Speaker 1 (42:57):
Yeah, multiple big repairs like this at the same time,
it can be seriously tough. But I would say one
thing before you go and do that before you make
the repairs, or before in this, like Joel mentioned, because
you are getting close to the total cost of that
vehicle before you go and replace it. Get a second
opinion from another mechanic. These are some I wish I
would have actually checked the Kelly Blue Book repair prices
(43:19):
or whatever, because some of these prices sound pretty dang high.
I would certainly want you to do your perform your
due diligence. I do not want you to be hasty.
Speaker 2 (43:27):
Well, yeah, I don't even know what a timing belt
leak is. Does a timing belt leak? I thought, I
know it needs to change. There's a water pump.
Speaker 1 (43:34):
There's a pump that's involved, so maybe it's but.
Speaker 2 (43:36):
That sounds like high for a timing belt water pump fix,
Like I would think maybe you could get that done
for half as much.
Speaker 1 (43:41):
And some of these other things aren't. I mean she
mentioned like engine mounts. It just depends, I guess on
the specific vehicle. Some engine mounts can be faincy, they're
like electronic and they automatically bounce. Some are just rubber,
So it just that varies as well. But I just
want you to make sure that you've talked to a
couple at least a couple other mechanics to see what
it's going to cost. If it is going to cost
(44:03):
that much, I would be reluctant toss that much money
into it. Sure, And instead, if it is still running,
even if it's running horribly or chugging horribly, the fact
that it's running at all is a good thing. Yeah,
And what stops running, then the value decreases. Yeah, we
get more. Somebody could come along and be like, Okay,
I know, I know what to do here. But if
it's not running, it's just like, well, how long has
it not been running? How long has it been sitting here?
You know, pulled off on the side of your driveway,
(44:25):
exactly flat looking tires and the weeds are grown up
around it. I'm not sure how much you know you've
saved up for this, but I would love to see
you pay cash, assuming you either get some better quotes
back or if you do, decide to get some different
But of course don't forget Consumer Reports. Head over there
for reliability ratings, because you know, I would also feel
(44:47):
a little bit differently if this was some type of
Toyota or Honda. But the fact that's the Catillac that
also steers me in the direction of like, I'm not
sure if I were in her shoes that I wouldn't
make all those ring. Consumer Reports lately has been and
pumping the old school hond of fits as like essentially
the best economical choice for people trying to buy it
and got the Cadillac kind of luxury. But I don't know,
(45:09):
I think surious I might be past that. Regardless of
what type of vehicle it is, though, make sure to
get it inspected because you know, the ability to snag
a car that is less likely to have major repair
issues moving forward. That's going to be a massive win,
no doubt.
Speaker 2 (45:23):
Let's get to a question from Trevor here. Matt He says,
a few years ago, I signed up for a robo advisor.
Speaker 1 (45:27):
It's called Bloom. It's not defunct.
Speaker 2 (45:29):
Not sure if it was worth the cost, but that's
not the question. I have maintained the asset allocation that
it had me in and my four oh one A.
Speaker 1 (45:35):
I'm wondering though.
Speaker 2 (45:36):
If I should just switch it to a lower fee
fund like VU. I'm with Fidelity. What do they have
that's equivalent to VOO? I like this question. I remember
Bloom is another one of those fintech startups basically analyzing
people's retirement accounts for them in an effort to make
sure that they weren't paying egregious fees and that they
were well diversified. I think the heart the mission behind
(45:56):
Bloom was great. They did this, of course for a fee.
It was much lower fee than what they were hoping
to save people. So it was an attempt to kind
of merge altruism and money savings for you and then
also met them a profit. It didn't work out though
ultimately for Bloom. But yeah, I didn't have a problem
with Bloom per se. But I also Matt, you and
(46:18):
I talk about DIY investing and how for most people
it's not overly complicated, and obviously there just weren't enough
paying customers to sustain Bloom. But this is just one
of those things too. About fintech companies in general, there's
some cool ones that stand the test of time. There's Acorns, Venmo,
they could why nab something we talk about regularly that
hastood the test of time. People still benefit from that.
(46:40):
Robinhood is another fintech that's been around a long time,
but a whole lot of them over time. You might
say that's cool. I love what they're doing, but they
just don't make a big enough DBT in the market
and they go bust or they sell to a mainstream company.
So Bloom sadly is in the fintech graveyard totally.
Speaker 1 (46:55):
I think the heart of what Trevor's asking is whether
or not he should just simplify things essentially, and the
way I like to like I was thinking about it,
I was just like, what is this like in our life? Right?
He's asking, like, do I need to maintain this super customized,
super bespoke investing portfolio to suit my personal needs? Because
I'm an individual? I am unique, Joels. That's what Trevor's saying.
Speaker 2 (47:16):
That's how I think every time I do a personality test,
I'm like, I'm not like all the other.
Speaker 1 (47:19):
People in these categories, Like these folks unique. But here's
the thing. If like, when we're talking about something like
a suit or a dress, do we need bespoke, do
we need our arms measured and our waist and all that? Absolutely,
because you need to take all those things into account.
But investment portfolios, in my opinion, are they are more
like tables than suits or t shirts. Do you need
(47:40):
to take your hair color into account or your eye color,
or the width of your the circumference of your waist,
or your shoe size or any like any of these
things when you're buying a table. No, Like, basically, it's
gonna be thirty inches off the ground. You want it
to be solid, and beyond that, you can like find
the type of table that that you're attracted to. You
don't need to think through all the different scenarios and
(48:01):
just all the different ways that you could customize this
and make it unique and different and have all these
different slices of your pie. I think in this way
that switching things up, taking the more simple path to wealth,
going with something like an index fund, an S ANDP
index fund, or a total stock market fund is absolutely
what Trevor should be doing as opposed to the customized
bespoke portfolio.
Speaker 2 (48:22):
So basically you're overthinking it if you're opting for that.
And yet maybe it'll have some positive benefits, but maybe
maybe not, but the negative realities over time of them
having to rebalance and pay attention to all the particulars
of your custom making portfolio might be unnecessary. And by
the way he mentioned VU, it could be too costly
(48:44):
as well to have that custom portfolio for yourself when
you're talking about higher expense ratios. But VU you can
buy that from Fidelity as a customer, and you're not
charge extra for buying Voo there. So you can buy
it from paying card, you can buy it on Robinhood,
you can buy Voo almost any right.
Speaker 1 (49:00):
He doesn't have to get something like VU. You can
buy VU, right. Yeah, this is one of the reasons
that Vanguard is so awesome. They're not like, no, this
is our walled private personal garden. You guys can't play
over here. No, they're there.
Speaker 2 (49:12):
It's like a public park mans right. They let everyone part,
which is beautiful. But the other thing is, yeah, Fidelity
does have similar funds. They have a mutual fund that's
almost an exact replica. It's fx AIX, which is also great,
which is also great.
Speaker 1 (49:25):
I also own a ton of that, yeah, in our
in our for one case, that's right, our solo Fomer case.
Speaker 2 (49:29):
That we have with Fidelity. And if you want more diversification, well,
I think a low cost target date fund is a
reasonable choice. Although we have talked about some of the
downsides of target date funds too. We think they solve
a meaningful problem, but they're also not necessarily the greatest
choice for everyone, especially for young investors. But you know,
while Bloom I think was of course making an effort
to make more complex diversification efforts simple. That's cool, It's
(49:53):
just it's just unnecessary for a whole lot of folks.
Speaker 1 (49:55):
Kind Of with your table example, Matt, it's like, yeah,
don't you run over complex. You want a solid table
that's affordable that maybe it's like, you know, you don't
want a table that's like rickety, like make sure it's
got solid legs. But then there's nothing else really that
you need to take into account. Agree, So Trevor hope
that helps man head over to Fidelity, get those low
cost index funds, and yeah, your investing life is going
(50:17):
to be simpler and more of your money is going
to be working for you in the future. Joel our
beer Doom volume. And we're gonna make this review short
because I got a call to catch. Yeah, I gotta
hop out of here. This is the beer by the Veil.
This is a hazy ip A.
Speaker 2 (50:31):
I'll give three words. You think thick, rich, velvety, the
veil Man. We don't get enough of their beers down
here where we live. This was awesome.
Speaker 1 (50:40):
I would drink the Veil any day of the week
that I was able to. So that's so funny because
I wrote down dry and crisp really like it's a
hazy but to me, it drink like a West Coast ipa.
It kind of had like this sharp crispness to it.
As hazy IPAs go. To me, this was more on
the crispier side. It almost drink like a logger, not
(51:00):
like like a burial beer tends to be. I don't know.
It tastes like dirt, kind of very vegetable in the
best way possible, whereas this very much have the hot
flavors going on. But yeah, it finished nice and clean
like in that way. It reminded me a lot of
West Coast ipa. Yeah, this is the most West Coast
hazy ipay that I feel like I've had in a minute.
Speaker 2 (51:18):
Well, the veil didn't screw it up. They don't screw
up anything very tasty, not that I've experienced. All Right,
that's gonna do it, Matt, Go make that call. Until
next time, Best friends Out, Best Friends Out,
Welcome to Out of Money.
Speaker 2 (00:01):
I'm Joel, I am mat and today we're gonna answer
some of your listener questions.
Speaker 1 (00:24):
Jill, it's always a great Monday when we can hear
directly from some of our listeners, some of our favorite listeners. Actually,
we'll get to how that's the how that's the case
during this episode. But we're gonna take a credit card
question from a team and this is a teenager who
doesn't want to ruin his chances to purchase a home.
Speaker 2 (00:41):
A teenager, it's more mature than most teenagers. I'd say
to one more mature than I was at his age.
We'll get to that one. We're gonna talk about term
life insurance. It's kind of like a like a life
insurance primer of sorts. We're gonna talk about when you
don't need it, when you do need it. We're gonna
talk about securities lending and whether or not that's something
that we're fans of. Yeah, that's and plenty more during our.
Speaker 1 (01:04):
Episode today, Buddy, a lot of fun ones quick, real quick.
Speaker 2 (01:06):
I wanted to mention something we've talked about, the buy once,
cry once movement and the fact that hey buying something.
Speaker 1 (01:12):
It's gonna last longer. Darn tough socks. Yeah, buy for life.
Speaker 2 (01:15):
That's kind of the staplehole thing that we reference this
Darn tough socks. But there are a lot of other
brands and companies that you might kind of put in
this vein as well, whether it's just a retailer with
a good return policy or a specific brand that says, hey,
we're gonna stand behind this with like a superior warranty.
We're gonna create stuff that last a whole lot longer.
There's this like European cell phonemaker.
Speaker 1 (01:35):
Do you remember what are they called? Do you remember that?
That would I don't know. It's easier to repair, to
replace the scroll. Oh, oh the gosh, what's that called?
I really yeah, we'll look it up. We'll put it
in this like a Lego phone. Yeah. Like that's less
about the quality and more about resisting planned opso lessons.
The fact that you can go in there tinker with it, remove. Oh,
I'm gonna upgrade the camera now, drink, drink. It's like that.
(01:56):
It's like the Big Monster truck racing game on It's
back back in the nineties and you could upgrade your
your tires. I'm gonna get a bigger engine, better suspension.
You know the game I'm talking about. What was they called?
I don't remember, and that's called cognitive declimb, my friend,
I can't remember anything anymore.
Speaker 2 (02:13):
But what I wanted to highlight was a brand in
particular that I hadn't really thought about much. And but
Speed Queen washers and dryers. Yeah, you've you've heard about
Speed Queen, right.
Speaker 1 (02:23):
I don't have personal experience with them. I've just seen
pictures of them. They're like, like they are these very boxy,
industrial looking, tough mofo washer and dryers.
Speaker 2 (02:30):
They do not look sexy in any way former fashion.
And the only reason that it came to my mind
was I was staying at my friend owns an Airbnb,
and I stated at his house a Speed Queen.
Speaker 1 (02:40):
He has speA.
Speaker 2 (02:41):
Queens, and he got Speed Queens the Great Wood experiment
as well, and that you out to see how they are.
So he got Speak Queens for two reasons. One, they
apparently do the laundry a lot faster, and so he
has to pay the cleaning crew less money because thus
Speed Queen they're finished quicker, right, since so it's faster.
Then secondarily, the warranty is insane on those things. I
(03:02):
think it's like seven years for a speakqueen to washer
and dryer, and then I and that includes the service
technician coming out to your house to hurt some labor. Yep,
the whole kid koboodle. So it's one of those things.
But I looked up the price. I was like, oh
my gosh, it's like twenty five hundred bucks for the pair.
Speaker 1 (03:17):
Oh my gosh. So it's expensive, Oh for the pair. Yeah,
that's better.
Speaker 2 (03:20):
But this is the kind of thing where and maybe
you could, I don't know, get some used on Facebook
marketplace and you're like, great, these things are going to
stand the test of time. My guess is if there's
a seven If these things come with a seven year warranty,
and from everything I've been able to read, they're gonna
last something like three times longer than the average washer
and dryer. So that's just one more place where you
can look, I think too, especially if you're in the
(03:42):
market for a washer and dryer right now, buying the
right thing, spending more upfront, and then saying this is
something I won't have to deal with for hopefully decades
to come.
Speaker 1 (03:52):
Yeah, I like that and are you also drawn to
the fact that it's made in the US. I was
actually surprised to see. I did a quick search because
I was wondering how many other brains are made in
the US, and I was surprised to see that. Ge
they've got a big factory up in Kentucky, so speak queen.
They're made up in Wisconsin. So it's kind of got
that American exceptionalism baked into it to sell to the
(04:12):
earth Midwesterners creating those speed queens. Uh, that's not what
we have at our house. I've gotten I've got LG
or something to me. I've got one of the ones
that play the music. That's that's what I have. It
plays music. Yeah, dude, that seems unnecessary. It's very your
speaking's Japanese and they don't play music like it's a
same it's either a same sung or LG. But you
turn it on and he does the don okay, And
anyone who has my washer driver knows exactly the song
(04:36):
that I'm singing right now. That's when you change the thing.
Speaker 2 (04:40):
I mean, mine's got like little but it doesn't play
like music or anything, but but it's got a little
ring tone.
Speaker 1 (04:45):
Tony sort of thing like at the end, Yeah, at
the end of the cycle as well, plays a little
ditty for you.
Speaker 2 (04:49):
Yeah, a little baby and annoying if it's going off
when you're trying to fall asleep. But the I think
that this is just a good remindered folks. Yes, check
out checkout speed Queen. Not it's not always about going
for the absolute cheapest.
Speaker 1 (05:01):
I don't know one, but if I if my go dead,
that might be the next thing. Totally consider it. Yeah,
the ones we have is just because we inherited it
when we purchase the house. It's what was already in there.
Same question. You've got a front loader, uh huh, right,
so one of the which typically they don't those don't
last as long as well, and when they don't do
a good job cleaning. Because it's funny. It's funny you
mentioned the speed Queen and how you got to try
(05:22):
this out, like than the Airbnb. Anytime I've used a
front load washer at an Airbnb, I swear they never Yeah,
it's like they don't rinse as well. It just smells
like detergent. Have you found that to be the case
or you're kind of like mine's mine's fine.
Speaker 2 (05:36):
Good it's fine, but like I will say, they break
down a whole lot more because of the I think
you know, the way the drum is and stuff. This
is coming from a guy who really doesn't know what
he's talking about right.
Speaker 1 (05:46):
Now, but from what it opens sideways, I mean, yeah, exactly,
the toploaders just do better, do a better job. Naturally.
Speaker 2 (05:55):
It's like we got these these these improved appliances that
use less water, and then what happens is they breakdown
five years sooner. So the trade off wasn't worth it.
Speaker 1 (06:02):
The design principle behind putting a door that's side facing
asn't put James and the Giant peach. They didn't go
out the side door. What door do they go out?
When they suspected that they were bobbing out on the
oceans right up the tip, they climbed up the top
virtually or almost. You guys just read that book Vertical. Yeah,
we're going through all that. We just as and I
just read that. Yeah.
Speaker 2 (06:19):
Yeah, it's so good, it's so classic. I'm like the
biggest rolled dolph In of all time. All Right, we
should probably take listen our questions. Well, first let's mention
the beer we were having today.
Speaker 1 (06:27):
This one's called Doom Volume.
Speaker 2 (06:29):
It's by the Veil Awesome Brewery out of Virginia, I believe,
and we'll give our thoughts on this one at the
end of the episode. If you have a money question,
we'd love to hear from you, just Got to Have
Money dot com, slash ask, or do the simple task
of recording that question and emailing it over to us.
We would love to take your question, hopefully next week
on the pod. But let's kick it off. Let's get
to a question now about maybe a prompt you've received
(06:52):
inside of your investing app and whether or not you
should follow through and make it happen.
Speaker 3 (06:58):
Hey, the Matt and Joel, this is our best friend
Wayne from Philadelphia contacting you with yet another question.
Speaker 4 (07:06):
So.
Speaker 5 (07:06):
I have a roth Ira account open with m one
and recently I noticed that I had a interest payment.
I did a little digging and found out that m
one Finance has a fully paid security lending program which
they automatically sign everyone up for and that you can
(07:28):
opt out of. I should also note that you are
not always lending out your assets, and it seems to
be some kind of lottery system that decides whose assets
are lent out and when so onto my question. How
do you guys feel about the lending of retirement securities?
Would you opt out or would you stay involved? Apparently
(07:49):
you get ten percent of any of the profits they
get from the lending, which seems really on the low side,
especially since it sounds like we as the customers, are
taking the majority of the risk.
Speaker 3 (08:00):
So while making this recording, I found out that Fidelity
has its own lending program. How does that compare to
M one? Are there other lending programs out there? Am
I leaving money on the table by not participating in
these types of programs? Thanks again for taking my question,
and I look forward to your answer. Best Wayne out,
(08:20):
Best Wayne out.
Speaker 1 (08:21):
You know, Joe, I'm gonna go out on a limb
and say, Wayne, this Wayne is my favorite Wayne friend
that I have that might have you met Wayne? I RL? Well, no, okay,
but I don't know any other Wayne. You do like
he automatically gets the number one spot. Sorry, Wayne, this
is the competition, whether it's super super stuff, But I
feel like I would also be friends with Wayne irl
(08:42):
and also means that this Wayne is easily going to
get bumped if you do meet someone IRL. No, no
this Wayne. This Wayne's way cooler your top not Twain,
So no joke. I actually I just looked on my
phone and I do have a Wayne in there, but
I don't know who that is. It says it says
like Wayne, like Wayne Lania or something like that. I'm like,
I don't who the heck is this. I don't know.
Maybe the time you met Wayne Gretzky, you guys are palser. No,
it was not him, but Wayne, thank you for this question.
(09:04):
It's It's one that we're going to hear more and
more as brokerage firms make their customers aware of securities.
Stockland is also known as stock lending. Folks are going
to be enticed by the language they use. Right, who
doesn't want to earn more money on their investments? Why
not earn a little bit, a little, big, little, some
side money on my side.
Speaker 2 (09:23):
Let me let my securities have a little side hustle
bringing me more money in right, it sounds like.
Speaker 1 (09:28):
Not only are they just earning me the regular sort
of dividends, maybe I can also do some of this
on the side. Yeah, what what's not to like? What's
not to like? There are some pitfalls that we do
need to cover before we send Wayning all in on
this direction and say, yeah, lend your stocks out, no worries. Well, ye,
stock lending is available to a whole bunch of people
now and there are so many fewer hurdles to lending
(09:51):
out your stocks. And you know, on like some of
the riskier types of investing you can do, you don't
need to be an a credit accredited investor. So usually
there's hurdle you have to overcome, which involves a network
that you have to have, or you have to have
a super high income. That's how you're able to make
more risky types of investments. But on when it comes
to stock lending, that's not the case. You just have
(10:12):
to make more than twenty five thousand bucks I think
with an accredited investor it's usually two hundred and fifty thousand,
or you have to check a box on the back
end of your account saying hey, I know the risks.
And so with most of these brokerage firms who are
offering this, like getting into stock lending is easypsy anybody
can do it. But that's not necessarily a good thing, right,
you know, stock lending, it's it's kind of in some ways,
(10:35):
like owning a rental property. Right, the property is yours,
but you lease that property to someone for a specified
period of time, most of the time over a year
basis right, So you make a little money while you
rent to that person, but you retain ownership of the property.
And so at the end of that year you can
say you're out of here, or I'm upping rent, or
(10:55):
please stick around. But there are reasons that stock lending
is unlike investing in real estate. And if we're going
to give the short answer, I'm going to say, I
just don't know that I would participate. I don't know
that it's the best idea for most folks. Agreed, I
don't think it's worth the squeeze. And the reason being
is because oftentimes folks want to borrow your stocks, typically
(11:16):
because they want to short the stock that you own.
They're basically betting that the price for that stock is
going to go down, and if it does, as they hope,
they make some money. So do you, so everyone wins.
But if the short seller is substantially wrong, there is
a chance that you could actually lose money. Even when
lending your stocks out again, you still retain the stock
in your account while you're lending it out, but you
(11:37):
know this is an actual legit way to make some money.
That being said, the safety is a bit questionable, and
I think we will see this becoming a bit more
normalized with the different brokerages out there, especially ones who
are counting on I don't know that. I feel like
you tend to see it more. He mentioned Fidelity specifically
they do this, but also with Robinhood folks who are
leaning into because the other side of this securities lending,
(12:00):
but then you also have margin investing. That's the other
that is what is made available because of stock lending
and the part I just don't like the aspect of
it that it's all it feels like it's built on
a house of cards. Yeah, that sort of approach. I
want you to be careful.
Speaker 2 (12:15):
It's not all about the passive investing approach that that
you and I are typically fans of Matt and most
of the time you'd be fine lending out your securities
ultimately under in one or Robin Hood's program or Fidelities
really whoever's. But when you look at the disclosures, it
can also raise eyebrows and so you typically encounter a
clause about risk of default. I would read that clause carefully.
(12:35):
Most of the time, Matt, when we're agreeing to terms
of service, we're not looking at that stuff. We just
like scroll down to the bottom and we click okay.
But Robinhood and in one they've got, by the way,
their own cash collateral in the case of an event
where there's some sort of abnormal market behavior, but even
that may not be enough to cover your losses. They
Robinhood in particular, almost didn't have enough cash during some
(12:58):
of the massive memestock trading where there was just incredible
volatility in specific stocks. So if you were lending out
let's say your game Stop stock, well, there was a
chance that you were gonna get screwed, you know, and
and that Robinhood wasn't going to have the collateral to
cover your losses. And so in addition, you know your
stock portfolio. It's typically ensured by the SIPC, but securities
(13:21):
you've lean out they're not covered, which adds more risk
to this whole endeavor. So there are risks here that
are are meaningful. And when you look at some of
the terms, it frightens me. It makes me want to
not participate well in this process.
Speaker 1 (13:36):
Especially because we're not talking about making a ton of money.
If the reward was sky high, like you mentioned real estates,
you know, there is some decent money to be made
in real estate when you invest in rental properties or
just different types of real estate investing. If that was
the case here when it came to securities lending, it
might be worth the risk. But the rewards are actually
(13:57):
pretty paltry. We don't have personal experience, so Wayne, that
should tell you again, this reinforces our opinion that this
is not something that we recommend. But if you dig
around and you look at like, for instance, over on Reddit,
some folks have shared that with a two hundred and
fifty thousand dollars investment balance, they're making somewhere in the
neighborhood of one to two dollars a month. And so
(14:19):
that's the kind of conversation we're having here.
Speaker 2 (14:21):
They make it sound so much better when the pop
up happens and it's like, do you want to turn
on securities lending? Like you could make money on your
stocks that you own.
Speaker 1 (14:27):
Part of that is because it's not like your entire
portfolio is going to be lent out at the same
time because it's often the riskiest stocks that are likely
to be borrowed. Basically folks that want to borrow bland ole, boring, Voo,
the s and P five hundred, etf. You mentioned it
being a lottery as to who it is that gets chosen,
who gets the honor of being chosen to participate in
(14:49):
securities lending. Oftentimes it is those riskiest stocks because there
is not stock available when it comes to the clearing
of the stocks, So they're trying to facilitate in the
purchasing the selling of these different securities, which means most
hot of money listeners they're not going to receive much
benefit from participating. And the brokerage firms, as you alluded to,
they are the ones who stay in a profit the
(15:11):
most here, and of course you know they charge fees.
They take the bulk of the profit while you get
to you get a small, small, small, little.
Speaker 2 (15:18):
Slide, something like eighty five to ninety percent of the
profit I think from securities lending is taken by the
brokerage firms. From what I've been able to glean from
in one robinhood, it's like, hey, take do this and
earn some money. But really we want you to do
it because we make money. It helps us. And there
are some you know, idiosyncratic tax possibilities for lending stocks
right that have to do with what you rate your
(15:40):
dividends or taxed out, So be careful of that. There's actually,
you know, a possibility of losing money even if it
looks like you're making money lending stocks out because it
creates some sort of tax nightmare on the back end.
Speaker 1 (15:51):
All in all, it's not as favorable as receiving qualified
or arry dividends. Yeah.
Speaker 2 (15:56):
So I think when it comes down to it, lending
out your securities to make money, it sounds cool, but
there's so many downsides.
Speaker 1 (16:02):
You're not going to make much.
Speaker 2 (16:03):
Potential tax consequences along with increased risks. It just makes
it makes us hesitant to recommend it. I've turned the
feature off. I'm not playing on participating. Didn't Wayne say
that that.
Speaker 1 (16:13):
His broker is automatically Yeah, that's actually pretty crazy. I
don't know. That's a huge red flag in my books,
So I don't know if maybe that's something he autom
I mean that being said, I'm not over there playing
in the N one sandbox.
Speaker 2 (16:25):
So I would go back in there, and I would
make sure that that was turned completely off. I wouldn't
want to participate in this because of all the reasons
that we mentioned, but one of the primary ones again,
like the risk might be worth the reward, Matt, if
we were talking about making real money from lending your
securities out, but we're talking about making almost next to
nothing from everything. I've seen, even people with like massive
stock portfolios just saying yeah, it didn't really met me much.
(16:47):
So in that case, why would you even uh, why
would you even try?
Speaker 1 (16:51):
Exactly? All right, man, we've got more to get to.
It's been a minute since we've heard from a teenage listener,
so I'm looking forward to that one plus more right
after this.
Speaker 2 (17:06):
All right, just the second, we're going to take a
question about the Apple credit card?
Speaker 1 (17:10):
Is is it? Should we sign up for? That?
Speaker 4 (17:12):
Is that?
Speaker 1 (17:13):
Yeah? It's I gave it away. Keep listening too. Yeah,
there's actually I like it, but I don't have it.
Oh why not? Man, mystery. We'll get there, but first
let's get to a question. That's what they call a cliffhanger.
Speaker 2 (17:26):
I'm hanging off the edge. I'll las Sylvester salone. All right,
let's get to a question from listener Colin specifically about
life insurance, when to buy and how much.
Speaker 4 (17:36):
I'm at Joel, This is Colin from Leincaster, Pennsylvania. I
just wanted to get your guys input on life insurance.
My wife and I currently are renting and do not
have any children, so we don't have any life insurance
apart from a small group life plan that I have
through my employer, and the next year or two we're
probably going to start looking to buy a home and
(17:58):
start having children, so I wanted to make sure we
got everything squared away as far as life insurance goes.
So I just wanted to get your guys' input on
what you guys recommend. I've heard from most experts that
they recommend term life insurance. We also have friends that
are in an index universal life plan called Kaizen. Would
(18:22):
love to hear your input on that kind of idea
right now, my plan is to this to term life
insurance and keep it simple, but I just wanted to
hear what your guys thoughts were on that. I also
wanted to get your guys input on what kind of
level of coverage we should get. Currently, our household income
is ninety thousand dollars a year. I make about sixty
(18:45):
percent of that. So I wanted to just hear your
thoughts on, you know, what kind of strategy we should
have for the coverage and what kind of coverage we
should get on whom. So yeah, I would just appreciate
your guys's advice. As always, I appreciate everything you guys
do for us, and just yeah, the way you guys
(19:08):
make finances sound simple and enjoyable, we just I just
really appreciate that. So yeah, I would love to hear
from you guys, and thanks again.
Speaker 1 (19:19):
Bye Joe. Did you notice how Colin just slipped it
in casually there that he's got this group life insurance
plan that's provided by his employer for free. I'm not bitter. Yeah, no, okay,
that's that's.
Speaker 2 (19:30):
That's not abnormal. I will say when I worked for
the man, I had the man. Actually I did work
for the man for a small stand. It's a long
time because a smaller man that he was like a big,
big man, which means I didn't get some of these
sweet benefits. And so I like the fact that Colin's
got this available to him, but like he's realizing that's
not enough to you know, it's a good.
Speaker 1 (19:50):
Point, it's not enough mustard to cut it. What is
that the term mustard?
Speaker 2 (19:53):
Yeah, let's talk about workplace plans for just a second,
because some people think, oh, maybe that's the best place
to buy life insurance, And the truth is the time
it's not. Take the free amount that you're allotted, which
is often half or one x your current salary, which
is nice, that's a nice perk, But then if you
want to buy more, it's typically going to cost you more,
especially for somebody like Colin, who's so young, probably so healthy.
(20:14):
I can tell Colin, you listen to Andrew Kuberman's podcast
and that you're just an incredible shape, which means that
you're probably going to pay a whole lot less on
the open market than you would to get additional insurance
through your employer. So be glad that you have a
little bit. But the truth is, in the near future,
you're probably going to want to have more insurance because
as you take on more financial obligations, as your family
(20:34):
continues to grow, it's going to be important to increase
the amount of insurance that you have to protect that
growing family.
Speaker 1 (20:41):
In your growing assets but specifically, what kind of insurance
should he have? Jol Let's sing the praises of term
life don't make me sing, I really will. I'm glad
that that's what Colin's considering. It easily makes the most
sense for the overwhelming majority of folks out there, and
almost every other type of insurance you buy is overly complicated,
it costs way too much money. You might get a
(21:02):
pushy salesperson who tries to sell you on the benefits
of something like Index Universal Life like your friends have,
and make it sounds so good, just like the timeshare salesperson. Exactly.
It's very similar or even some I've heard of even
funkier life insurance products out there. They're gonna talk about
the tax advantages, how you can borrow from it, but
the monthly premium is often more than ten times what
(21:25):
your simple term life premium is going to be.
Speaker 2 (21:27):
But it's okay because you're gonna be able to borrow
from yourself down the road, and man, the tax benefits
are incredible, so don't do it.
Speaker 1 (21:33):
It's worth a much higher premium amount, right. I don't
think this is the right product for you, Colin. It
can possibly make sense for some folks who are incredibly wealthy,
who have very high incomes, like Matt, but not like
for ninety nine percent of folks. I think it comes
down to term life and instead what you do, instead
of paying ten times more, you save that money, and
those extra dollars would just then be better put to
(21:55):
use investing in tax advantaged accounts like roth iras, like
your hs, say, even workplace workplace sponsored retirement account like
a four one K and so in this case, the
bare minimum product term life insurance. It should provide you
all that you need and more, which is a simple
death benefit during your most vulnerable financial years.
Speaker 2 (22:14):
No more bells and whistles needed. I love, by the way,
when I make comments about how absolutely loaded you are, Matt,
you just ignore me.
Speaker 1 (22:21):
Now, You just you just chalk it up to Joe
being and I just I just try to keep on trucking.
We should, we should probably just answer the question. I know,
if you're watching the clock, all right, yeah, they probably
we can talk about how long can we talk about
life matures for people to turn us off? Well, you know,
the goal is to to like you said, cover yourself
and your family during those most vulnerable financial years and
(22:42):
The other problem, Matt, when people sign up for the
more expensive policies, one, they're typically unnecessary bells and whistles,
and they're paying more than they need to. And because
of that, many people end up ditching that policy before
they end up using it, and and because they realize, oh,
it's eating up touch on my budget, they're like, they
can't sustain it.
Speaker 2 (23:01):
This life insurance is too expensive. I've got if I
have to cut something, this is what I'm going to cut.
They forked over a lot of money over the years,
and then and then it turns out they don't have
coverage when they need it. We don't want you in
that position. That's just another check mark in the hey
go for term life insurance ins dead category. And it's
just important for us to mention also that you don't
have to get all the coverage you might ever need
(23:23):
in one fell swoop, partly because that can be hard
to predict ahead of time. You don't know what your
insurable need is going to be, you don't know where
your income is going to go, you don't know what
sort of assets you're going to have, and so you know,
life insurance laddering can be a great way to allow
you to have some coverage now, but not feel like
you have to go all the way and just like
(23:43):
get a multimillion dollar term life insurance policy, forking over
more than you want to, because you can always add
on more during years when you have a higher insurance need,
and then later on in your life you can essentially
kind of reduce coverage as let's say kids are leaving
the house and your insurance needs decline because your net
worth has increased and you have just you have a
(24:05):
higher net worth, you have more cash at your disposal,
and so becomes that becomes less necessary. So we have
a whole article about life insurance laddering that will link
to in the show notes. But I think that's such
an important thing for people to consider, and it's often
it's often not thought through enough because it can help
not only reduce premiums, but ensure that you have the
coverage you need during the times when you need it most.
Speaker 1 (24:26):
Totally, I prefer personally the term layering as opposed to laddering,
because I envision you stepping out into a rainstorm or
something and you're like, oh, let me get the umbrella,
but then you're out there with the umbrella walking around
and you're like, holy oh man, I'm getting soaked. I
actually need to put the rain jacket on. So you
put the rain jacket on, and you've got the umbrella.
Maybe you're like, I don't want my legs to get wet.
You know, my pants are getting wet, and then you
(24:47):
put on like the full on. Well. I don't even
know what you call it rain suit or something like that,
but you have one of those rainsuits. I've got a
rain jacket. I don't have any rain pants. I thought
about getting them though. Skip commuting to you know, riding
the bike to work. Want to be protected from the rain.
Speaker 2 (25:01):
If you're a bike commuter, you gotta have a pair.
But for most people who are just walking in the rain,
you probably don't. Yeah, or you just get wet.
Speaker 1 (25:06):
I mean that's what I do. I'm like, I bring
a change of short and just don't whine about it. Yeah.
I'm tough, buddy, I'm a tough guy. I'm a tough boy.
So I want to give an example. Imagine you want
to have the five hundred thousand dollars of coverage now,
and you're like, great, that's what I can afford. That
kind of aligns with our needs. Right now, we're one
of us to croak. And then maybe you're saying, I'm
(25:27):
gonna add another five hundred thousand dollars or maybe even
a million dollars of coverage five ten years from now
as your net worth grows, as maybe you take on
more responsibilities with let's say a house, right, you've got
a fat mortgage, maybe you've got a bunch of kids
on hand. Yeah, depending on your needs. And you are
specifically asking too, how much should you have on you
(25:48):
as opposed to your wife or your partner. Well, it's
not just about income. It's certainly a factor because he
mentioned did he say he brings in like sixty percent
of their overall income? You do want to take that
into account. But even non working spouses, they should also
be insured because of the valuable services that they provide
for the household, for the for the family, and the
(26:08):
increased costs that you're likely going to be faced with
if they were to pass away early. And it also
comes down to your life circumstances and your family situation.
I know for us early on, that's something we talked
through and we kind of came to the realization that like, Okay,
I think one of us would likely get the parents involved,
and then they're young enough and would want to be involved.
They were retired and I think would gladly step up
(26:31):
into that role to say help out with the kids.
But then subsequent conversations led us to say, you know what,
things are changing a little bit, let's make sure that
we are set in a more independent way when it
came when it came to the kids, like, you just
have different needs and even those needs change, right, Like
we're dynamic over time, and so it's something willing to adjust. Yeah,
it makes me something worth reevaluating of mothers. Mother's Day
(26:52):
was about a month ago.
Speaker 2 (26:52):
I remember seeing this cartoon and it was like, hey,
we gave you the day off today, mom, and we
hired everyone else to do all these tasks for you.
And think about all the people you would have to
hire to replace the task that to stay at home
spouse crew does. I mean it's incredible, Like there's chef,
there's taxi service, there's all of these things that would
not to mention just the time that you might want
to spend grieving or working less yourself because your spouse
(27:16):
has passed away, Like those are big things that also
have a financial angle to them totally.
Speaker 1 (27:21):
But the typical suggestion there is a good rule of
fum out there, and that's to get ten times your
income in life insurance, which is a helpful starting point.
But policy genius they actually have a solid calculator that
takes your savings into account, it takes into account how
much debt you have, and then again, ultimately, some of
this kind of comes down to you and what it
is that you and a half. Right, Like, let's say
you've got a non working spouse and you're just like, okay,
(27:44):
let's say two fifty, But then you're thinking, all right,
I don't want more than that, let's do five hundred thousand.
It kind of comes down to what it is that
you're comfortable taking on. Obviously, you would receive the bigger benefit,
which means you're gonna be paying more for that luxury,
but that's something else to take into account too. It's
not just math equation.
Speaker 2 (28:00):
Yeah, and part of it also comes down to finding
the sweet spot in length of term and the amount
of coverage, because you might say, well, two hundred and
fifty thousand bucks for twenty years is going to cost
me eleven dollars a month, but five hundred thousand dollars
a year for twenty months is gonna cost me sixteen
dollars a month, Like, well, it's probably worth an extra
five bucks a month to get the additional coverage. So
then you can like decide as you run the numbers, well,
(28:23):
is it worth that extra little bit of premium for
me to get the superior coverage. That's part of doing
the shopping too, And so I would I would plug
those in. Well, then maybe look at a thirty year policy,
then maybe look at a ten year policy. Typically I
would say a twenty year policy is probably going to
be best at least to start out with. Then you
can get another policy kind of like Matt was talking
about with layering, Like here you go five or ten
(28:45):
years hence and.
Speaker 1 (28:46):
I get the laddering analogy right, Like it's as if
you have ladders in your backpack or something and you're
kind of scaling a mountain, But who actually has ladders?
That's a backpacking which is why the layering always.
Speaker 2 (28:57):
Makes Yeah, and we talk about this just even in
the ads surrounding the shoil just be honest policy genius.
Speaker 1 (29:03):
They're a great place to shop because yeah, other shows
do like the disclosure. Yeah, and so genis just so
you know policy Genius is a paying.
Speaker 2 (29:12):
Advertiser for the show, and they are. They are, but
they're also we'd be talking about it regardless. They're a
great company place to shop. Another place you could consider
shopping is if you're a Costco customer. They partner with
the company that offers term life insurance. And I do
believe that you get a discount on the first five
years of Premium starby shopping both places. And see, Okay,
where am I getting the best rate for the coverage
(29:33):
we need?
Speaker 1 (29:34):
But and they give you a sixty four ho Ols
cup to fill up with coke? If only this isn't
a quick trip, Matt, this is Costco. We're talking right,
you know. It's funny. I'm picturing the food court there
at Costco and I still have not purchased an eaten
a hot dog at the food court. Okay, I'm making
it my mission to take you there on a how
to money hand. I hope that we are together when
you get to see the look on my face, when
(29:55):
I get to enjoy this, I'll be frank, which I
think that's what you try to convince me once another
a high quality dog there. I don't know if that's true, though,
I'm gonna make you go. I have to.
Speaker 2 (30:03):
We have to bring our boys too, because my son,
he's like a big fan of the costume West. He
does like a good hot dog. So heat tearing, all right,
Let's get to another question. This is about adding another
credit card to the mix. If you've already got three
d you need a fourth.
Speaker 1 (30:17):
Hi, Joel and Matt.
Speaker 6 (30:18):
My name is Caiden Hires and I am from Council Bluffs, Iowa.
My question was regarding credit cards. I currently have three
credit cards at the age of nineteen with a total
credit limit of thirty three hundred dollars. I was wondering
if you guys think it would be a good decision
(30:40):
to get an Apple card with three percent cash back
on everyday purchases with a limit of sixty five hundred dollars.
The only gist is my fiance and I plan on
trying to buy a house within the next around two years,
So I don't know if that would be a bad
thing or if it would be a good thing and
(31:01):
show that I'm more responsible with more money by keeping
my usage below ten percent and paying them off every
month in full. Thank you for listening to my question,
and I hope you guys have a great day and
enjoy the beer.
Speaker 1 (31:16):
So I just realized that Cayden said he's nineteen, which
means he's not partaking in the finer things in life
when it comes to the fancier craft beer.
Speaker 2 (31:23):
So two years from now, Cayden, you can start to
enjoy some of the beers that Matt and I have
enjoyed it.
Speaker 1 (31:29):
And if you head our way, we'll take you by
your first one. I would love to do that, Joe Caiden,
if you want to reach out, and we will totally
one percent honor this offer right here on the podcast
by you the best hazy ipa and also a nice
fruited tower. Ooh well, it also depends on the time
of year. There's a whole lot of thought that goes
into craft beer in our world, Cayden. But I love
(31:51):
that you were doing so many positive things with your
money already at the age of nineteen, he's already got
three cards. I feel like when I was his age,
I was pretty smart about the credit card because this
is back when you could get credit cards, when you're
like fourteen or fifteen. They were just like trying to
give him out like candy on college campuses. Yeah. Well,
and I wasn't in college at that age, and so
it wasn't that smart. But even still, I mean, I
(32:11):
guess the rules were much lax, and I remember my
dad saying, yeah, go ahead and get a card and
you can start learning how to handle this properly. But
before the Card Act, I believe the Card Act, which
sense that they would call it that.
Speaker 2 (32:22):
Yeah, which prevented credit card companies from offering like free
pizzas to grab a credit card on campus, which I
get that probably doomed a lot of people right from
the k.
Speaker 1 (32:32):
I also did that too, because I wanted the free pizzas.
Speaker 2 (32:34):
Yeah, but but if you were intelligent and you just
scored a free pizza and well, and I don't even
cast us spursions on people's intelligence. It was more like
it was a rigged system in a lot of ways,
pushing people towards credit card debt who didn't really know better.
But yep, yeah, let's talk about the Apple credit.
Speaker 1 (32:47):
Card like Cocade's thinking about it though, Yeah, like him
and his fiance like they are going to be.
Speaker 2 (32:52):
Like, they're on this awesome path and I'm really excited
for him. I agreed, I think he should get this
Apple credit card.
Speaker 1 (32:58):
And when did you become an out fanboys?
Speaker 2 (33:01):
I wouldn't say I'm a fanboy. I'm I'm fine with Apple,
but I have no really super emotional feelings towards that.
I don't love them or hate them. Yea, they just
exist and I utilize our products sometimes. But this card
in particular, I think does a couple of nice things
for Kayden.
Speaker 1 (33:15):
Here.
Speaker 2 (33:15):
One, it adds a credit card that doesn't have an
annual fee. I think that's a good thing, right. It
allows you to have another card in your arsenal. Not
that I'm against annual fees, right, if you're getting enough
bang for your buck with the annual fee, but it's
just kind of a we don't know that, we don't
know what you're spending is like, and Caden at the
age of nineteen, I don't know if you're if you're
spending enough or traveling enough right to get kind of
(33:36):
the bang for your buck from signing up for one
of those more expensive credit cards. But I think this
could help essentially with optimization of cash back on some
of the purchases you make by having this credit card
in your digital wallet. And I will explain why we
say digital wallet in the second right. That's the best part.
Speaker 1 (33:51):
Yeah about the Apple Apple Wallet, I know, double click
to pay baby.
Speaker 2 (33:54):
Yeah, it makes things simple. But the bigger reason this
could be helpful to you, though, I think is, is
the larger credit limit that you're going to have available.
The goal, as we've discussed many times before on the show,
is to have a large credit limit, but to not
use much of that available credit. That is what helps
make your credit score look awesome. It's what makes you
(34:15):
look like a super credit worthy person. And so this
new card alone would essentially double your credit limit, which
makes it easier to increase your credit score, because hey,
now that instead of having three thousand dollars worth available credit,
you've got something closer to seven thousand dollars of available credit.
If you're spending the same amount although you have an
extra card, you're still spending the same amount every month.
It just makes you look better to the credit barrows,
(34:38):
which is awesome, and that in particular is going to
be helpful for you as you work towards buying this house.
Speaker 1 (34:43):
A couple of years from this, right, your credit utilization
rate has gone down. Let's talk about timing here as well,
because we would tell you to not get this card
if you are planning on making offers and if you're
planning to apply for a mortgage over the next couple
of months. But you said you're looking to buy a
house in a couple of years, which means that small
credit ding that you're gonna receive applying for this card,
it's not going to negatively impact you at that point
(35:06):
in time. It's gonna Yeah, it's gonna be in the
rear view mirror for sure.
Speaker 2 (35:09):
It's a short it's a short lived ding that that
might hit for a couple three months maybe, Yeah, I
was gonna say.
Speaker 1 (35:14):
Sixty to ninety days if I if I had a guess.
But then the smart usage of that new card is
gonna help on multiple fronts because the base level goal
is to use less than thirty percent of your available credit.
And given the fact that he's at like thirty did
you say thirty three hundred is something like that? Overall,
like I don't, it wouldn't be that difficult to see
your spending start creeping above that, And so Yeah, like
(35:36):
you said, Kayen, for you to be able to keep
that to ten percent or less is even better. And
then you're aiming for that score, that credit score and
the seven to forty plus range that will help you
to qualify for the best rates possible when you are
ready to buy. And of course, like you said, make
sure that you are paying your card off on time
infull every single month. Otherwise just the crucial part that's
not Otherwise you're not allowed to have the credit card. Like, no,
(35:57):
no more credit cards for you. If you're not paying off,
it's not worth it. Yeah, agreed, But.
Speaker 2 (36:01):
It sounds like he's already got three Hopefully he's handling
those well, he's got this minimal line of credit. Hopefully
he's like developed the right habits over the past year
or whatever length of time he's had those credit cards available,
And now adding this next one into the mix, isn't
some sort of added temptation. Is just gaming the system
right to increase his credit score and to increase the
(36:21):
benefits that he gets from spending the way he's spending.
One of our favorite things too about the Apple card
is the user interface. I think it's worth mentioning that
Matt because anybody who has this from everything I've read
like love it. I don't have the Apple card personally,
although I'm not against it, I would totally consider it.
But people who are like Apple fanboys and fangirls, they
absolutely love this card, and for good reason, right, because
(36:43):
Apple's doing it differently than most of the other credit
card companies, and in fact, they seem to be helping
you visualize how much interest.
Speaker 1 (36:51):
That you would owe. There's like a lot of charts,
a lot of graphs, yes, interactive graphs as well, which
what's more fun than a graph and interactive that you
can put your finger on to move around?
Speaker 2 (37:00):
Right, I mean you love the stuff. I guess I'm
surprised you don't have this card, but all right, I'll
apply right now. But they're suggesting payment amounts right to
help you pay off your balance faster, which most credit
card companies they're not actually wanting you to do that.
Their favorite customers are the ones who don't pay off
their balance, and so any sort of added interactive graph
(37:21):
to help incentivize you or get you excited about paying
off your balance faster, well, they want to hide that
from you. So I love that Apple is doing the
exact opposite, and the card lives inside your Apple wallet,
which is also where you can sign up for Apple's
Cash account, which pays a competitive interest rate. So Apple
kind of created this semi banking system that I think
a lot of Apple customers are tending to like Apple.
(37:43):
They also don't charge bogus fees like some of the
credit card companies charged, so if you use it well,
it really is a good card for a lot of
folks to have, and I think for a lot of people, Matt,
it probably will be their first credit card or it
will be one of their go to credit cards, just
because of the nature of the way Apple people use
their devices and the way Apple caters to its customers
(38:05):
and gives them kind of what they're looking for.
Speaker 1 (38:07):
Yeah, Okay, one thing you mentioned though, was getting three
percent cash back. But I don't want folks to hear
too rosy of a picture that we're pinning here, because
the Apple card it really only offers two percent cash
back for every purchase that you make when you use
Apple Pay, which is accepted at most places, which is good.
You know, it's still rivals one of our you know,
like our favorite cards out there, like the City Double
Cash and the Fidelity card. That three percent cash back rate,
(38:30):
it's limited to purchases that you make specifically at Apple,
with a few other selected retailers that they highlight, and
that list of selected retailers has actually been shrinking over
the past year or two. So I wouldn't go into
it thinking I don't want folks out there to hear
us talking about three percent cash back with the Apple
credit cards. That certainly beats the Double Cash well not really,
(38:51):
it's it's very very limited in scope. But two percent
cash back too for every purchase with Apple Pay. Two
is great.
Speaker 2 (38:56):
That's that's pretty good. And it's not hard to use
Apple Pay almost everywhere you go now online too.
Speaker 1 (39:01):
Oh sure, yeah, I mean, and you just load the
cards there onto your digital wallet double click to pay,
like I mentioned before, But Cadence sounds like he's starting
to get into the optimization game, and if so, I
would recommend not just looking at three percent, but something
like six percent cash back if you get the Amex
Blue Cash Preferred card at grocery stores. The combination of
getting six percent there looking at a specific category of spending,
(39:25):
So for us specifically, that's restaurants, that's where we use
our City Custom Cash card. Well, we are earning five percent.
And then what's another universal expense that everyone has gas,
So if you have a Costco warehouse anywhere near where
you are, the ability to get the Costco anywhere visa
and getting that five percent cash back man like six
(39:46):
five five on like a large, large percentage of your
monthly spending, it is hard to beat that cash back.
And then the Apple card two percent out of the water.
Then the Apple card with Apple Pay.
Speaker 2 (39:56):
Becomes kind of your go to for every other category,
which is same with like City Double cash or Fidelic.
Speaker 1 (40:01):
That's kind of how I think about it and can get
on board with that and how I use mine.
Speaker 2 (40:04):
And that's the most basic way to get the best
cash back returns on normal spending you're doing every day
without feeling like you got to get into the travel
hacking game.
Speaker 1 (40:13):
If you're not so inclined or keeping up with like
revolving categories of spending. Yeah, that's just not something I'm interested.
Speaker 2 (40:19):
That's annoying to me. Yeah, and it also feels like
it's like incentivizing more consumption. Then that's true, otherwise will
be pertaking in it's like, oh, five percent off at
home depot this quarter. Let me go there and load
up on stuff when you might not otherwise do it?
All right, We've got more to get to, including a
repair or replace your automobile question. What do you need
to think through before you make that decision? We'll talk
about that and more right after this.
Speaker 1 (40:47):
All right, buddy, we are back from the break and
it is now tign for the Facebook question of the Week,
which is from Sharisa. She wrote, repair versus replace. I
know usually it's better to repair your car rather than
get a different used car, but I'm second guessing myself.
Could you give me your opinion. I have a twenty
eleven Cadillac SRX that has a small timing belt leak
(41:09):
thirty seven hundred dollars to fix. Doesn't sound all that
small to me. Two of the catlet converters have failed
four thousand dollars to fix and required to pass emissions
and other standard wear tear stuff, torn ball joints, cracking
control arm bushings, engine transmission mounts. There's also a small
evaporation leak I don't even know what that is, Joel,
(41:30):
which might be as simple as changing the gas cap Okay,
she's chugging horribly due to the needed repairs and has
one hundred and sixty seven thousand miles without issues. The
car is worth around seven or eight thousand dollars. Would
you dump money into repairing all of this or get
something newer with fewer miles? What would you do in
her shoes? Okay?
Speaker 2 (41:49):
I feel like typically this is a tough question, right
because my bent is almost always to say keep your
car on the road, and I think most of the
time when this debate happens, there's a whole lot of
emotion involved. It's like you're just kind of tired of
the thing, and that makes it so much easier to
get rid of it and opt into something new, because
(42:10):
you're just assuming that this new thing isn't going to
have nearly as many headaches going along with it, and
you're tired of the headaches, which I get, But you know,
that makes it more likely that someone's going to take
the expedient route of trading in that automobile. That's like,
what she say is chugging along.
Speaker 1 (42:26):
And a horribly though.
Speaker 2 (42:27):
That is what she's said, Yeah, which is such, which
again I believe, but that makes it more likely you're
going to trade that puppy in for a new car,
even if the costs are steep, even if you're like
let's say, rolling negative equity into alone. It's just that
sort of emotional release that you're looking for, but that
comes at a massive financial cost. The cost of repairing
your car, though, Sharissa are getting intense, right, equaling the
(42:47):
current value of the automobile.
Speaker 1 (42:49):
That's the problem.
Speaker 2 (42:50):
So I think in this case, getting rid of this
car and opting for another used car that's in better
condition that makes the most sense to me.
Speaker 1 (42:57):
Yeah, multiple big repairs like this at the same time,
it can be seriously tough. But I would say one
thing before you go and do that before you make
the repairs, or before in this, like Joel mentioned, because
you are getting close to the total cost of that
vehicle before you go and replace it. Get a second
opinion from another mechanic. These are some I wish I
would have actually checked the Kelly Blue Book repair prices
(43:19):
or whatever, because some of these prices sound pretty dang high.
I would certainly want you to do your perform your
due diligence. I do not want you to be hasty.
Speaker 2 (43:27):
Well, yeah, I don't even know what a timing belt
leak is. Does a timing belt leak? I thought, I
know it needs to change. There's a water pump.
Speaker 1 (43:34):
There's a pump that's involved, so maybe it's but.
Speaker 2 (43:36):
That sounds like high for a timing belt water pump fix,
Like I would think maybe you could get that done
for half as much.
Speaker 1 (43:41):
And some of these other things aren't. I mean she
mentioned like engine mounts. It just depends, I guess on
the specific vehicle. Some engine mounts can be faincy, they're
like electronic and they automatically bounce. Some are just rubber,
So it just that varies as well. But I just
want you to make sure that you've talked to a
couple at least a couple other mechanics to see what
it's going to cost. If it is going to cost
(44:03):
that much, I would be reluctant toss that much money
into it. Sure, And instead, if it is still running,
even if it's running horribly or chugging horribly, the fact
that it's running at all is a good thing. Yeah,
And what stops running, then the value decreases. Yeah, we
get more. Somebody could come along and be like, Okay,
I know, I know what to do here. But if
it's not running, it's just like, well, how long has
it not been running? How long has it been sitting here?
You know, pulled off on the side of your driveway,
(44:25):
exactly flat looking tires and the weeds are grown up
around it. I'm not sure how much you know you've
saved up for this, but I would love to see
you pay cash, assuming you either get some better quotes
back or if you do, decide to get some different
But of course don't forget Consumer Reports. Head over there
for reliability ratings, because you know, I would also feel
(44:47):
a little bit differently if this was some type of
Toyota or Honda. But the fact that's the Catillac that
also steers me in the direction of like, I'm not
sure if I were in her shoes that I wouldn't
make all those ring. Consumer Reports lately has been and
pumping the old school hond of fits as like essentially
the best economical choice for people trying to buy it
and got the Cadillac kind of luxury. But I don't know,
(45:09):
I think surious I might be past that. Regardless of
what type of vehicle it is, though, make sure to
get it inspected because you know, the ability to snag
a car that is less likely to have major repair
issues moving forward. That's going to be a massive win,
no doubt.
Speaker 2 (45:23):
Let's get to a question from Trevor here. Matt He says,
a few years ago, I signed up for a robo advisor.
Speaker 1 (45:27):
It's called Bloom. It's not defunct.
Speaker 2 (45:29):
Not sure if it was worth the cost, but that's
not the question. I have maintained the asset allocation that
it had me in and my four oh one A.
Speaker 1 (45:35):
I'm wondering though.
Speaker 2 (45:36):
If I should just switch it to a lower fee
fund like VU. I'm with Fidelity. What do they have
that's equivalent to VOO? I like this question. I remember
Bloom is another one of those fintech startups basically analyzing
people's retirement accounts for them in an effort to make
sure that they weren't paying egregious fees and that they
were well diversified. I think the heart the mission behind
(45:56):
Bloom was great. They did this, of course for a fee.
It was much lower fee than what they were hoping
to save people. So it was an attempt to kind
of merge altruism and money savings for you and then
also met them a profit. It didn't work out though
ultimately for Bloom. But yeah, I didn't have a problem
with Bloom per se. But I also Matt, you and
(46:18):
I talk about DIY investing and how for most people
it's not overly complicated, and obviously there just weren't enough
paying customers to sustain Bloom. But this is just one
of those things too. About fintech companies in general, there's
some cool ones that stand the test of time. There's Acorns, Venmo,
they could why nab something we talk about regularly that
hastood the test of time. People still benefit from that.
(46:40):
Robinhood is another fintech that's been around a long time,
but a whole lot of them over time. You might
say that's cool. I love what they're doing, but they
just don't make a big enough DBT in the market
and they go bust or they sell to a mainstream company.
So Bloom sadly is in the fintech graveyard totally.
Speaker 1 (46:55):
I think the heart of what Trevor's asking is whether
or not he should just simplify things essentially, and the
way I like to like I was thinking about it,
I was just like, what is this like in our life? Right?
He's asking, like, do I need to maintain this super customized,
super bespoke investing portfolio to suit my personal needs? Because
I'm an individual? I am unique, Joels. That's what Trevor's saying.
Speaker 2 (47:16):
That's how I think every time I do a personality test,
I'm like, I'm not like all the other.
Speaker 1 (47:19):
People in these categories, Like these folks unique. But here's
the thing. If like, when we're talking about something like
a suit or a dress, do we need bespoke, do
we need our arms measured and our waist and all that? Absolutely,
because you need to take all those things into account.
But investment portfolios, in my opinion, are they are more
like tables than suits or t shirts. Do you need
(47:40):
to take your hair color into account or your eye color,
or the width of your the circumference of your waist,
or your shoe size or any like any of these
things when you're buying a table. No, Like, basically, it's
gonna be thirty inches off the ground. You want it
to be solid, and beyond that, you can like find
the type of table that that you're attracted to. You
don't need to think through all the different scenarios and
(48:01):
just all the different ways that you could customize this
and make it unique and different and have all these
different slices of your pie. I think in this way
that switching things up, taking the more simple path to wealth,
going with something like an index fund, an S ANDP
index fund, or a total stock market fund is absolutely
what Trevor should be doing as opposed to the customized
bespoke portfolio.
Speaker 2 (48:22):
So basically you're overthinking it if you're opting for that.
And yet maybe it'll have some positive benefits, but maybe
maybe not, but the negative realities over time of them
having to rebalance and pay attention to all the particulars
of your custom making portfolio might be unnecessary. And by
the way he mentioned VU, it could be too costly
(48:44):
as well to have that custom portfolio for yourself when
you're talking about higher expense ratios. But VU you can
buy that from Fidelity as a customer, and you're not
charge extra for buying Voo there. So you can buy
it from paying card, you can buy it on Robinhood,
you can buy Voo almost any right.
Speaker 1 (49:00):
He doesn't have to get something like VU. You can
buy VU, right. Yeah, this is one of the reasons
that Vanguard is so awesome. They're not like, no, this
is our walled private personal garden. You guys can't play
over here. No, they're there.
Speaker 2 (49:12):
It's like a public park mans right. They let everyone part,
which is beautiful. But the other thing is, yeah, Fidelity
does have similar funds. They have a mutual fund that's
almost an exact replica. It's fx AIX, which is also great,
which is also great.
Speaker 1 (49:25):
I also own a ton of that, yeah, in our
in our for one case, that's right, our solo Fomer case.
Speaker 2 (49:29):
That we have with Fidelity. And if you want more diversification, well,
I think a low cost target date fund is a
reasonable choice. Although we have talked about some of the
downsides of target date funds too. We think they solve
a meaningful problem, but they're also not necessarily the greatest
choice for everyone, especially for young investors. But you know,
while Bloom I think was of course making an effort
to make more complex diversification efforts simple. That's cool, It's
(49:53):
just it's just unnecessary for a whole lot of folks.
Speaker 1 (49:55):
Kind Of with your table example, Matt, it's like, yeah,
don't you run over complex. You want a solid table
that's affordable that maybe it's like, you know, you don't
want a table that's like rickety, like make sure it's
got solid legs. But then there's nothing else really that
you need to take into account. Agree, So Trevor hope
that helps man head over to Fidelity, get those low
cost index funds, and yeah, your investing life is going
(50:17):
to be simpler and more of your money is going
to be working for you in the future. Joel our
beer Doom volume. And we're gonna make this review short
because I got a call to catch. Yeah, I gotta
hop out of here. This is the beer by the Veil.
This is a hazy ip A.
Speaker 2 (50:31):
I'll give three words. You think thick, rich, velvety, the
veil Man. We don't get enough of their beers down
here where we live. This was awesome.
Speaker 1 (50:40):
I would drink the Veil any day of the week
that I was able to. So that's so funny because
I wrote down dry and crisp really like it's a
hazy but to me, it drink like a West Coast ipa.
It kind of had like this sharp crispness to it.
As hazy IPAs go. To me, this was more on
the crispier side. It almost drink like a logger, not
(51:00):
like like a burial beer tends to be. I don't know.
It tastes like dirt, kind of very vegetable in the
best way possible, whereas this very much have the hot
flavors going on. But yeah, it finished nice and clean
like in that way. It reminded me a lot of
West Coast ipa. Yeah, this is the most West Coast
hazy ipay that I feel like I've had in a minute.
Speaker 2 (51:18):
Well, the veil didn't screw it up. They don't screw
up anything very tasty, not that I've experienced. All Right,
that's gonna do it, Matt, Go make that call. Until
next time, Best friends Out, Best Friends Out,
Hosts And Creators
Joel Larsgaard
Matthew Altmix
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