May 9, 2025 • 36 mins
Time for a Friday Flight- our little sampling of the week’s financial news and what it means for your personal finances. There are a lot of headlines out there, but we boil them down to specific takeaways that will allow you to kick off the weekend informed and help you to get ahead with your money. In this episode we explain some relevant and helpful stories like: Best Buy and Walmart policy updates, homes are getting smaller, paper wealth effect, target date trends, gold beating out VOO, bye bye Buffett, beneficiary brushup, credit repair companies, medical debt dings, fintech vs real banks, and boosting your Social Security benefit!
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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. I'm Joel.
Speaker 2 (00:02):
I am Matt, and today we're talking paper, wealth, target,
date trends, and bye bye Buffett.
Speaker 1 (00:26):
You know what, buddy, this is our Friday flight where
we're going to tackle the most pressing personal finance headlines
out there, specifically how they pertain to your wallet. Joel,
you got to note here about Walmart. What's what's the
latest with Walmart?
Speaker 2 (00:40):
I want to give you a big fan I want
to give a quick I'm not not a fan of Walmart.
Speaker 1 (00:44):
Walmart. Yeah, so we've been doing more shopping there lately.
It's just not our you know, there's only one place
in my heart, and it's shaped like Aldi.
Speaker 2 (00:52):
You should actually get an Aldie tattoo over your heart.
I think that'd be great, maybe one of these days.
So okay to two different retailer police. Then I wanted
to highlight here one that's consumer friendly in one that's
not so Walmart. And I didn't realize this until I
went in the other day. I bought some shoes from
my little dude online and turns out they were too big,
(01:13):
so I had to go in the store.
Speaker 1 (01:14):
You're not gonna hang on to them, wait for them
to grow into them.
Speaker 2 (01:17):
You're right, I probably could, but I had to go
in anyway, okay, right to buy the right size, and
they the when I got there, the price at the
store for those shoes was higher than it was online,
and they wouldn't let me do an exchange. And they
wouldn't so I could return and then I could buy
and then if but then I was going to be
spending more than what I would have paid online. So
(01:38):
they that I was just unfamiliar with the fact that
Walmart does not match online prices in stores, which to
me does not seem And I guess I would get
it too, because there's more third party sellers on Walmart. Now,
if it wasn't actually sold by Walmart, it's like, all right,
I get that, don't price match that. But if it
is sold in Walmart item, Yeah, if it's sold in
(01:58):
ship by Walmart, why wouldn't they match it?
Speaker 1 (02:00):
You know, who would match that? Who's that Aldi? Would
I don't know how many pairs of shoes they're buying
an Aldi, But you know, like Kate and I we
joke about this. Anytime there's something kind of random that
we need, we just look at each other and I'm like, oh,
we've just voiced it into existence, because then you walk
down that seasonal aisle or like I swear it pops up,
(02:21):
it's there, Like you were recently talking about getting a
composter tapped into your home. I think it just means
that I'm just way more typical average American consumer than
maybe I would like to admit. That could be. That's
all I go.
Speaker 2 (02:35):
So I highlighted I highlighted a negative store policy. Let
me highlight a positive one from best Buy. So my
dad texted me and he's like, hey, I know you're
like where you live, they're better about picking up old
electronic items and stuff like that. Can can I drop
them off at your house? And can you ask your
trash provider to pick it up? And I was like, yeah,
but you know you could take this stuff to best
(02:55):
Buy instead. And when you go to best Buy, look
at their like electronics recycling page. They will take almost
anything for for free. So if you've got like my
dad had, like old modems and DVD players and stuff
lying around remotes, they'll take old TV's under a certain size.
So if you're like I've kind of accumulated a lot
of junk electronics that's past their prime and they're not
(03:17):
you can't sell them, and you're gonna actually have to
actually pay money to dispose of them.
Speaker 1 (03:20):
See take them to best Buy. I know you're supposed
to recycle, but I think there's a whole lot of folks, dude,
who are out there just tossing that stuff. You know.
I think that's probably like do you ever feel that
way about recycling?
Speaker 2 (03:29):
Kind of can't with a fifty five inch TV, but
you probably can with that old murder.
Speaker 1 (03:33):
But could he not sell that fifty five inch even
for like well it was maybe. I mean that's a
good point too, because like a no, no, here's a
flas screen, but like the screen just went out, you
can't sell that.
Speaker 2 (03:44):
Yeah, I was gonna say, I mean maybe there's some
tinkerer hobbyists who would be interested in that.
Speaker 1 (03:48):
You know. What I was gonna say was that sometimes
I feel like it is not a futile endeavor, but
like it, like recycling, like I do regular recycling. Like
this morning, even I was preparing some strawberries from my lunch,
Like what did I do with a plastic strawberry container?
Tossed it in the recycling bin, like we could know
we're even composting actually, like we are, like we're cutting
(04:09):
the little tops off and so hip we are reducing
our wasst and so we are doing our small little part.
But like sometimes when I think about it, I feel
like we are only moving the needle, like points zero
zero zero zero, Like I don't know, you can put
tons of zeros one percent, like just even in our country.
Like and when I start thinking about the world large,
like at large, like you think about China, if you
(04:30):
think about countries that are burning massive amounts of coal
fossil fuels, and how does that they handle waste, I'm
just like, man, maybe like for our little neighborhood over here,
we're doing a good thing. But I don't know, sometimes
I get discouraged when I think about just the world
at large, man, and all that's going on. Oh man,
we went broad. You should still do the right thing.
(04:52):
I like, we are still recycling, but sometimes I have
a hard time, I guess, get getting super excited about that.
But that being said, I'm glad you brought the policy up.
Talk about the deforestation of the Amazon rainforest. Now, Matt,
it's and it's certainly great that there are companies out
there who are processing these electronics, making sure that there's
not what is it lad and mercury getting into the
water supply and different things like that. Agree, glad that
(05:14):
they're taking care of that, because I don't want to
be living somewhere man where those forever chemicals and whatever.
Is that that what they're called forever chemicals? Yeah, forever
thinks forever plastics. Yeah, that's the new thing now, plastics, microplastics.
We're all eating the microplastics inside of us. It's true.
Speaker 2 (05:29):
So trying to highlight something good and bad, I feel
like we have down more of the bad path.
Speaker 1 (05:33):
Not bad.
Speaker 2 (05:34):
Maybe, Okay, let's highlight something else that's good though here
because we talked what last week about the slate truck
that's twenty grand, which is awesome thing. Love that that's
good news. Well, now, not just our cars shrinking and
getting less expensive, but we're seeing signs that new homes
in the United States they're continuing to shrink in size.
(05:56):
So I think part of that is because of negative news,
the higher cost the building, and the fact that prices
are remaining elevated. Builders are like, well, I can produce
the square footage of the house that I'm building, and
I could do just fine and make a profit, and
I'm gonnapeld more buyers. So and we are seeing some
price cuts too in the housing market. We're actually going
(06:16):
to dedicate a whole lot of money newsletter to housing soon,
so please sign up for that. But yeah, some of
the new apartment sizes are actually shrinking in size two.
So when new apartments are being built, especially gen zs,
they're like, yeah, give me all the amenities, but give
me a tiny box in which to stick my bed
and I'll be fine. So I think this is a
(06:37):
good thing. I think bigger isn't always better, And in fact,
when you think about it, bigger means more maintenance costs.
It means higher utility bills. The five thousand square foot
house versus the twenty five hundred square foot house, Yeah,
it's going to cost you a lot more money to maintain.
We talked about secondary cost last week, Well you got
a factor in the secondary cost of home ownership two.
(06:57):
And like, I think just bigger is better mentality, maybe
it's falling by the wayside a little bit. Finally, I
just think being content to live in smaller quarters, it
just it means less money going towards housing, and more
money that you have to save and invest to grow
your net worth, to have more options when it comes
to work and free time. The more we tossed into
our homes, the less flexibility we have.
Speaker 1 (07:19):
Totally agree. Yeah, I also wonder if the pendulum is
swinging back as well as fewer folks are working from home.
Now I'm having to go in so I'm just looking
for a place to crash at night. For the most part,
I think that's probably true.
Speaker 2 (07:29):
Yeah, for a minute, there was that push towards especially
I remember my little sister living in a studio apartment.
Speaker 1 (07:36):
That's when they upgraded, right, Yeah, and they were like,
we can't both work from home here exactly. It makes sense.
So while we're speaking of homes, the average American homeowner
is also rich in home equity. Collectively speaking, we've got
more than thirty five trillion dollars in our homes thanks
to the appreciation that they've experienced over time. And so
if you, let's say, bought a house in the last
(07:57):
ten to fifteen years, you have inevitably increase your net
worth because of that home, just because of the trend. Yeah,
it's it is up something like eighty percent since twenty twenty,
so even the more recent years it has been even
more significant. But it is really only wealth on paper,
and it can add to this thing called the wealth effect.
(08:18):
And let me explain that basically, you feel richer, it
can lead to increased spending. Because of that, you spend
a little bit more freely. But you know, the tough
thing is home equity. It isn't all that liquid. And
because we are typically beneficiaries of home appreciation right like,
we are not necessarily working for it. I think it
could mean for some folks out there that it's easier
(08:40):
to borrow and spend, kind of like an easy come,
easy go sort of thing. I think. So I want
to put this on folks radar because I want them
to be careful of this. You want to be careful
of this temptation. I think more than ever, it's important
to I think the rule of thumb here is to
know thyself, because I do think that there are some
folks like I don't think about the homes that we
own like investment properties at all when I calculate my
my net worth, when I calculate some far off payout
(09:03):
amount once the homes are paid for that kind of thing.
But I think there might be some folks where, you know,
if they still got the Zillow app on their phone
and they're like, oh, it's increasing again, that's elevating over
every price of use. Yeah. It kind of makes me
think of like credit lines. Like if you are the
kind of person who can handle a thirty thousand dollars
available credit on your credit card and you hardly spend
(09:23):
on that card at all, You don't go anywhere near
that thirty thousand dollars, maybe put like three hundred bucks
on it here and there, then I think you are
probably the kind of person who isn't necessarily tempted by
that increased home equity. But if you are the kind
of person who's just like, woh, they just upgrade. I
got seven more thousand dollars available to me. I just
went from twenty one thousand to twenty eight like time
(09:46):
to keeping track of that, time to go out and spend.
If you, yeah, exactly, if that's if you're that kind
of person, I would also say be careful when it
comes to home equities. So I think there's two things here.
Speaker 2 (09:55):
I think one, don't treat your home like a piggybank,
because if if you do, there are financial repercussions down
the line. And then also kind of going on that
wealth effect thing just because it exists. Don't let that
give you the permission right to spend money in a
more ridiculous way just because you're like, why, yeah, I'm
(10:15):
not bloaded, man, I got like three hundred and fifty
grand in home equity, so I don't need to be
as worried. I can be a little more profligate with
my spending. I don't think that's the case. Or let's
talk about target date funds, Matt. They just crossed an
important threshold. There are now more than four trillion dollars
in assets that are held inside specifically of target date funds,
and morning Star wrote an article about this and they
(10:37):
basically detailed the rise of target date funds in the
last couple of decades. They're also holding up better right now,
right you have in the recent market volatility there because
of their more balanced approach, they're not going to see
as dramatic of a decline typically as somebody who is
invested more like you and I, who's one hundred percent
(10:57):
invested in stocks. On top of this, z fees on
these funds continue to decline. Morning Stars said that in
twenty fifteen they were zero point five to five percent
on average. Now they're point twenty nine percent on average.
So I like that target date funds are experiencing the
same decline in fees in expense ratios that many other
funds have seen as competition has increased, and the big
(11:20):
low cost investment houses like Vanguard, Fidelity, and Schwab.
Speaker 1 (11:24):
Have really pushed the envelope on that.
Speaker 2 (11:26):
And so Vanguard and Fidelity in particular have some of
the best low cost target date fund options. Their expense
ratio is a heck of a lot less than even
the average. We're talking about zero point oh eight percent,
which is pretty darn good. And so for investors who
like simplicity, who like low costs, I do think it's
it is important for us to consistently mention that target
date funds can still be a great option, particularly inside
(11:50):
of your retirement accounts, because if you invest in a
target date fund, it's going to automatically shift the allocation
as you age. It's easy, PZ. It's a set it
and forget it sort of. And I think target date
funds while they're not my one hundred percent favorite fully
optimized way to invest for really young people. I think
they're still like, don't let perfect be the enemy a
(12:11):
good They can still be a good option.
Speaker 1 (12:12):
You're still solid. Yeah, let's talk about another investing trend.
Gold is the talk of the town these days, in
particularly because of the less predictable economic conditions that we've
been experiencing. Actually, gold, it has seen better returns than
the S and P five hundred over the past twenty
years to think about, and it is. Yeah, it's a
bit more of like cherry picking data, I think, but
still twenty here's a long term recent Yeah, I mean,
(12:34):
but if you zoom out to thirty years, the SMP
blows it away. Yeah, you zoomed out to thirty forty fifty. Uh,
you zoom out one hundred years, dude, Like, it's not
even close. Over the last six months, last six months,
last twenty years, surprisingly it has done better. But the
question then comes up, should we all jump on this
gold investing bandwagon on this trend? Most experts out there
(12:58):
would tell you that gold isn't a necessary part of
your investment portfolio, But if you want to hold a
little bit of gold. I think that can makes a
whole lot of sense. We always talk about holding five
percent or less of your overall portfolio in different things
that we think are okay, yeah, like precious metals, bitcoin,
(13:21):
like you just gold could be one of those you
just love this one company and you're like, you know what,
I'm going to go buy me some Warner Brothers like
I did after we talked about Harry Potter being released,
or did you Yeah, I mean, just like one share
part of your play portfolio. It's just for kicks, just
to have time stamps. Oh this is when that happened.
And I don't know. It's just a little something that's
(13:42):
fun to do. But it's worth mentioning because you're going
to see more headlines about gold. You're going to see
more advertisements specifically from gold buying companies, especially with the
runoff and values that we've seen. They're loaded. Then they're
gonna be like, y'all need to get in on this,
and they've got so much money come through our proprietary
system to buy gold because every investor needs some gold
(14:02):
in their lives, and they're gonna do the hard pitch.
We would actually prefer if you want to old some gold.
We would prefer that you stick with some low cost
ETFs that invest in gold specifically, like GLDM. That is
a great option with a very small fee.
Speaker 2 (14:15):
Is Costco still selling the gold bars?
Speaker 1 (14:17):
Depens on the season? Okay? Are they still selling giant
wheels of cheese of Parmisan? Yeah?
Speaker 2 (14:22):
I guess Palmagano. Yeah, I don't know what the regiano
the gold buying season is, but yeah, I wonder. Typically
when they when they put them out there, they sell
it quickly. But even that, like they're.
Speaker 1 (14:31):
Still selling two thousand dollars Yu steaks, I mean probably.
Sometimes they put these things out there and I'm just like,
who the heck somebody is is buying this?
Speaker 2 (14:39):
Obviously somebody is, But I think that you're right, Like
buying it inside of a low cost ETF makes more
sense even than buying like physical gold at a place
like Costco, which is going to give you a better
deal than you're going to get almost anywhere else for
buying gold. And some people like I don't want to
stick it under their mattress or something like that, that's.
Speaker 1 (14:55):
Not a deal.
Speaker 2 (14:56):
Like, if you want some gold exposure, low cost ETFs
are typically the best way to go. Well, we're talking
about investing, Matt. Let's talk about the main headline this week,
the one that hits us right in the sweet spot
in our hearts. Warren Buffett stepping down as the CEO
of Berkshire Hathaway, did you shed a tear when.
Speaker 1 (15:12):
You heard the news? I not really. I'm like, yeah,
he's like so old.
Speaker 2 (15:17):
Good for him at the age of ninety four for
finally like saying I mean again, it doesn't at the
end of the year, in seven months or whatever.
Speaker 1 (15:24):
And maybe because I know you and I we've had
more conversations too, I mean, with Charlie Munger having died,
we talked about Warren Buffett earlier this year. We actually
had David clark On talking about the new towel of
Warren Buffett. Yeah. I don't know, it makes sense. It
totally makes sense. He's old, he's a sharp guy.
Speaker 2 (15:41):
I don't begrudge him this, and I actually encourage him
in this endeavor to like I bag work and live
out the rest of your years with I don't know,
hopefully a little less. But apparently he's going to remain
the chairman of Berkshire, so he's not like closing out
completely altogether. But he really is the goat and and been.
So many of the moves he's made over the decades
that you could highlight have been impressive. And Berkshire's returns
(16:04):
you're talking about the gold versus the S and P.
Will Berkshire his company, those returns have far outpaced in
the S and P during his investing tenure, or something
like basically twenty percent returns versus ten plus percent returns
for the S and P over those many decades. But
I think it's important to highlight the fact that he
is an anomaly and most of us shouldn't aspire to
(16:25):
be like Warren Buffett. I mean, in some ways we should, right,
I appreciate his humility and his intelligence, but his frugal nature. Yeah,
But in other ways, it's like, don't try to do that.
Because I saw the stat Matt Jason's wagen the Wall
Street Journal estimates that Warren Buffett has read more than
one hundred thousand financial statements of companies, and he said,
that's actually probably pretty conservative. I bet Warren thread quite
(16:46):
a bit more than that. And my question to how
the money listeners is are you willing to do that?
Are you, Nope, Are you going to spend your days,
your evenings instead of hanging out with your partner or
doing a hobby reading financial statements of companies. Some people
are gonna say, yeah, I am, because that's really fun
for me. Then maybe you are in the Warren Buffett
(17:08):
ilk who can and should invest in single stocks. But
for most of us normies who don't do that, then
I think it's just a good le Hey. Index funds
make the most sense, and that's why, Yeah, we shall
also do what Warren Buffett says, not what he does.
What he says to every day investors is like, yeah,
investing most of your assets into the S and P
five hundred is going to build you wealth over time.
(17:29):
You don't even need to do it the way I
did it. I love that he did it the way
he did it. I think he's passed on a lot
of great lessons to individual investors over the years, patients
long term thinking, the beauty of simplicity. He's just been
such a remarkable fixture in the investing landscape for so long.
But I think this is a good reminder to learn
(17:50):
from Warren Buffett and not necessarily try to mimic him.
Speaker 1 (17:53):
Okay, So I don't know if this is uncouth to
bring this up, but maybe with Warren getting oh yeah,
ninety four years old, maybe this is a good reminder
to review your beneficiaries if you haven't on your different accounts.
I'm sure Warren has this so you know, buttoned up.
I'm sure he does. But I saw a recent article
talking about this. We haven't mentioned this on the show
in a while, but if there have been any major
(18:15):
life changes, make sure that you make those changes within
the back end of your retirement accounts. Contrary to popular belief,
your beneficiary it actually supersedes what is in your will,
so like you don't want the money that you've been
working hard to grow to be left to someone that
maybe you no longer intend for that money to go
to you. In that article they actually mentioned Heath Ledger
(18:37):
and how with his unexpected death, he hadn't named his
daughter as the beneficiary. Instead he had left all the
money to like his sisters and his parents. That's like
a you know, celebrity obviously, so it gets slightly more attention,
but that's just a great example. In the end, they
gave her all the money, so they took care of her,
But that's still the kind of situation that you ideally
want to completely avoid.
Speaker 2 (18:58):
And let's be honest, it'll make you all of forty
five seconds to log into the back end of your
account and do that. And if you don't have the
right beneficiary listed and you were to pass away, like
that's a man, think about the problem that you're leaving
your loved ones. Sure, a random other aside on investing,
Matt real quick, I saw this stat and it shocked me.
You know, the trump coin that got released, it was
(19:20):
widely publics.
Speaker 1 (19:21):
Which one or are there multiple? I feel like, oh,
that's true, but I feel like there have been multiple
stories about grifting taking place front within the White House.
Speaker 2 (19:31):
Well, this is something we've talked about on the show before.
Bitcoin and crypto are kind of completely different things in
a whole lot of ways, and there's a lot more
room for to get swindled, I guess in the crypto space,
and there is if you just invest some in bitcoin
with regularity. Turns out only fifty eight people have made
money owning trump coin. They've made almost a billion dollars
(19:53):
in total. And wow, over seven hundred and fifty thousand
people invested in trump coin, and almost all those people
lost money. So fifty eight out of seven hundred and
fifty thousand people made money, the rest of them lost.
Speaker 1 (20:07):
It sounds like a scam, yep.
Speaker 2 (20:08):
A lot of pump and dump style happening in the
crypto space. Still, beware, I stay behind my term, or
my use of the word grift, Yeah, because like that
is what like talk about wealth transfer. Man, this is
something that we hate seeing. This is regardless of whether
or not you support him, the different policies that he's
going for. I hate to see this, Yeah, and it's
just another reminder to hey, yeah, invest some in bitcoin
(20:30):
if you're so inclined, but don't mess with the rest
of the crypto space. All Right, We've got more to
get to, including we're talking about social security problems and
how you can react. We'll talk about that and more
right after this.
Speaker 1 (20:51):
All right, but we've got more Friday flight to get
to and of course now it is time for the
ludicrous headline of the week, and we're going to take
this segment and talk about credit. There's an article from
CNBC that I am unhappy with because the title of
the article was I don't like seeing you unhappy how
to raise your credit score one hundred and sixty points
(21:12):
in thirty days. Well okay, so specifically, well, it wasn't
the headline, it was what was contained within the story.
Speaker 2 (21:19):
Because yeah, the headline it sounds promising, right, Yeah.
Speaker 1 (21:21):
Yeah, we talk about improving your credit score all the time.
This is something that we it's a regular feature here
on the show. You don't want to ignore your credit score,
and especially raising your credit score this much in just
a month. I am all four, But sadly this article
had some really bad advice that was mixed in with
the good stuff. So first of all the good stuff
they say to pay attention to your credit score, Yeah,
(21:42):
totally true.
Speaker 2 (21:43):
When the reports in particular two right to say, hey,
if there's an error on there, you want to find it.
Speaker 1 (21:48):
Exactly, there are mistakes on a huge percentage of those reports.
Consider reports says that half of folks who actually go looking,
they're going to find an error. So that's something that
you can be on the look at.
Speaker 2 (22:00):
Basically, the credit bureaus not so great at the record keeping,
which is their primary.
Speaker 1 (22:05):
Job on it. But in addition, so that's like a
small example of something that was good in addition to
that the article said to consider hiring a credit repair company,
and also interspersed and mixed throughout this entire article. I
think it was sort of like a pay to play.
It had to be sort of journalism. But you saw
I didn't even check with you, but I assumed you
also saw the I'm not going to call them out specifically,
(22:28):
but it was a lending I'm sorry, a credit repair company,
and they had like some charts to where it looked
like it was a part of the story. But then
there's also ads from the same company. There's like the
small grade out thing that says ad in the bottom
vapor sketchy. Don't like it because this is something that
you can completely deiy. You don't need another expensive monthly subscription,
(22:49):
which is the model that most of these companies operate under.
Speaker 2 (22:52):
It like one hundred and fifty bucks a month or
something like that, right.
Speaker 1 (22:54):
And like you can tell oftentimes when something's a scam,
when there's something called gosh, like a startup fee or
like an onboarding those are the worst. Yeah, like a
setup charge and like what needs to be set up,
like you taking me as a customer. I don't like it,
and we've actually got an article up on the website
with some tips to rebuild your credit score, and it
(23:14):
is a much better article than the one that CNBC
was running.
Speaker 2 (23:17):
If you've got like a question because you feel like
your credit score is not where it needs to be,
send us a question. We'd be happy to take it
on the podcast. But just do not do not sign
up for one of these credit repair companies because they'll
take more than they give and most of the things
that they're offering to do, yeah, you can do yourself.
More bad news on the credit front, Matt medical debt.
(23:38):
It might be staying on credit reports after all. Because
of these policy changes were essentially made by executive order,
and it seems like that's the only way policy changes
get made these days, which just puts more power in
the hands of the president, no matter whether they have
an R or a D by their name. But many
of the changes that were enacted by the previous administration
(24:01):
are now subject to change, and the same will be
true of whoever is in the Oval office next. And
as the Consumer Financial Protection Bureau has been downsized and
its futures in jeopardy, a judge has been asked to
vacate the rule that would have excluded medical debt from
appearing on credit reports moving forward, And so this isn't final,
(24:22):
but it does seem that the medical debt exclusion is
unlikely to stick around. And although I think the credit
bureaus have still basically on their own, of their own volition,
said well, you know, medical debt under five hundred bucks,
we're not going to put.
Speaker 1 (24:36):
On there anyway.
Speaker 2 (24:38):
But with this and what's happening with student loan collections,
it's even more crucial to pay attention to your credit
report and credit score.
Speaker 1 (24:45):
These days.
Speaker 2 (24:45):
We're likely to see average scores I would say, dropping
in the coming years and in the future. I think
it would make sense for both parties to get the
legislative branch involved in writing and passing bills for the
changes that they want to see endure, because otherwise it's
just kind of kind of be this back and forth,
this whiplash of like, no, we're going to do this,
but if it's issued by executive order, the chances of
that thing sticking around over the long term are just minimal.
Speaker 1 (25:09):
You're advocating for some sticky legislation, Yes, I totally agree. Man.
So another article that was also ludicrous. So a little
two for one today, but this one was from USA Today.
Americans saved money in FinTechs. When money went missing, FDIC
was nowhere to be found. This was okay. So this
is like the opposite of the CNBC article. This is
(25:30):
a you know, some good reporting that was taking place.
And this article highlighted the way that fintech banks grew
into these juggernauts for savers. They're promising higher rates, they're
promising better perks, and the rise of these cool online banks.
That's really a story of actual fintech growth. But as
we have mentioned before, many of these fintech banks are
(25:51):
on shaky ground. And what happens inevitably when customers of
some of these neo banks lost or savings, the FDIC
they had nothing to do about it.
Speaker 2 (25:59):
They're like, what huh are you? Are you reaching out
to us because like that in our jurisdiction.
Speaker 1 (26:03):
Yeah.
Speaker 2 (26:04):
And so the reason for this is basically it's like
that Spider Man meme where every one's pointing and the
FDIC is pointing.
Speaker 1 (26:09):
That is exactly these our fault. So the company, these
new startups, they aren't actual banks. Instead, what happens they
work with FDIC insured banks through an intermediary. But still
when these banks experienced again, when these tech companies experienced issues,
the FDIC didn't do anything in order to help These customers.
Call it I'm glad you call them tech companies because
they're not They're not banks. They look and feel. That's
(26:30):
the problem. Though on the website market themselves like a bank,
they say that they are not banks, and so some
of them. But if you just at first glance as
a consumer, you it would be understandable that you would
think they were exactly But this is why this has
been a drum that we've continued to beat. We want
folks to stay away from this. We want you to
actually go with a real online bank, an actual company
that's been around for a minute, that has their very
(26:52):
own FDIC insurance.
Speaker 2 (26:53):
Yeah, it's we mentioned them consistently. We say Ally, C, I, T,
Discover Capital one. Those are all online banks, but they're
fully fledged banks. They're not super cutesy and stuff like
that with the fintech names and the extra oh, get
your paycheck two days early. They don't really have that
kind of fancy stuff going on. But it's fine, Like,
(27:15):
we don't think you need that stuff. They still pay
competitive rates, they keep their fees low. We love those
online banks. They're better than the traditional brick and mortar
giant banks, and you can kind of get the best
of both worlds with them, and you're not at risk
of losing your money like you are with some of
these fintech banks. I'm still curious to see how this
shakes out and whether some of those consumers who had
(27:36):
money with the fintech banks are going to get the
fintech fox banks. I guess what we should you call them,
are going to get their money back. That remains to
be seen.
Speaker 1 (27:44):
Matt.
Speaker 2 (27:44):
Let's talk about Social Security for a second. The spotlight
is on Social Security right now. Problems seem to be
getting worse at the Social Security Administration. We've got staff cuts,
changing requirements to claim benefits, have some folks on edge
on top of that, which we've detailed this before on
the show. We did dedicated a whole episode to it
(28:05):
a couple of years back. The Social Security Trust Fund
is set to run out sooner than expected in that year.
It feels like that year keeps of when the trust
funds gonna run out keeps getting pushed up and up,
so in less than a decade. That's when the trust
fund is set to expire, which has retirees worried about
receiving the benefit they're entitled to. They might not get
what's coming to them, what they've paid into for their
(28:27):
whole lives. So what happens if or when we reach
that point, well, benefits get automatically cut by essentially like
a quarter. So retirees and soon to be retirees they're
getting fearful about the solvency of Social Security. It's leading
to early claims and so instead of wait until sixty
seven or even later, they're starting to get that monthly
check at sixty five or even earlier. And this is
(28:48):
a personal decision. There's a lot at play in when
you claim Social Security, and the reality is that there's
trade offs right to claiming early and to waiting, especially
if you're not in great health, like waiting till seventy
if you're not doing so hot, well, I get why
you might claim early, but a good chunk of folks
would be when you run the numbers, better off waiting longer.
(29:08):
Even with this kind of increased uncertainty around Social Security.
And I also just think people in their sixties should
be less worried about the future of social Security. It's
people in their twenties and thirties and forties who should
be like, hmm, player impact on them planning a little more,
investing more for their own future retirement, and banking less
on the reality of Social Security being a major major
part of their retirement income plans.
Speaker 1 (29:29):
Yeah, let's talk about the specific numbers. Because the benefit
is roughly seventy five percent higher if you wait, If
you claim at age seventy as opposed to age sixty two,
those early claims are going to reduce benefits for decades
to come, and for if you're healthy, right, if you're
a healthy retiree, the overall amount received could be reduced
by up to six figures over your lifetime, essentially.
Speaker 2 (29:53):
One hundred and twenty thousand dollars less in your pocket
because it's significant claim too early, right.
Speaker 1 (29:57):
Yeah, And obviously none of us out there know how
long we're going to But if you are in good
health at retirement age, if you can afford to wait,
it's still likely the best option. If you want a
little bit of additional reassurance, you can consult this fairly
inexpensive software that's out there. There's this one called maximize
my Social Security. If this is something you're trying to
really crunch the numbers on. And again, like you mentioned Jil,
(30:20):
for younger listeners, it is going to impact you more
than if you're like sixty years old. But even still,
I think it's going to be around for all of us.
If you're listening to this just in a diminished fashion. Yeah,
in some form of fashion, it's going to be there.
But I do think our benefits are unlikely to be
as high as what it's saying over at Social Security
do like GOV.
Speaker 2 (30:39):
Yeah, if you log in, it'll give you kind of
a projection for what your Social Security income is likely
to be. I would take that with a grain of salt.
I would reduce that meaningfully into my retirement projections, like
something will be there in all likelihood. But the fact
that our politicians have let it get to this point
where social Security is kind of living on the precipice
(30:59):
that it boggles the mind. And there's just it's gonna
take some political will to change the future of Social
Security so that it's going to be around stick around
for the rest of us.
Speaker 1 (31:10):
It's a real issue that's going to like there are
some things that are worth talking about or the politicians
actually addressing, and there are some things that really aren't
and it's just for show. This is like one of
the real things that needs to be addressed, or's like
it taking from a time bomb from exactly from a
policy standpoint, But I want to go back as well
to the like you mentioned that the personal factors and
some of the different trade offs. You got to keep
in mind too, some of the different life goals that
(31:31):
you have, because I like, I for folks out there
who are tapping it, who are tapping it early, right, Like,
so so far, like we kind of we address the
numbers sort of side of the equation, but like think
through what it is that you want to be able
to accomplish in your life while you still have the
ability to write. And so for retirees, if you're like,
you know, yeah, we could wait until age seventy and
(31:52):
you know we're going to be wealthier. Yes, you definitely will.
But that's that's like a no brainer, right, Like anytime
you cruach.
Speaker 2 (31:59):
The numbers, waiting is always going to lead to you having.
Speaker 1 (32:02):
More a higher net worth. And so like I think
the more important questions to ask are what am I
likely going to want to be able to do within
my retirement years or like what life goals am I
trying to accomplish? What kind of impact am I looking
to have? And I'll be like, maybe this is like
a little bit of that confession time. I'm not having
like retirement like questions. But Kate and I we've been
(32:23):
talking about this more and we're not talking about are
you going to claim now? Yeah, we're not like I'm sorry,
sir to you you need a yeah come back three years?
Uh wait hell am I? Yeah? But the ability to
wrestle with some of these thornier issues. I think it's
really important because and we're not again, so we're not
talking about tapping retirement, but other dollars that we've invested,
(32:46):
and it's kind of hard to wrap your mind around, like, Okay,
this is something that we've been putting money into for
a very long time. Uh, and so this is within
a brokerage, But what do we want now what to
do with that money? What is that going to allow
us to accomplish that we may not have the ability
to do a decade from now, two decades from now,
knowing that yes, by waiting, it's going to lead to
(33:08):
a larger sum of money, but what are the other
factors that you need to take into account?
Speaker 2 (33:13):
And the game plan can change, right, So I've talked
about this on the show. When my mom was diagnosed
with cancer, like, the thought was, well, we will tap
some of our retirement funds, maybe a little bit more
than we otherwise would, just to be able to hold
off on taking Social Security. And the plan flipped once
my mom's diagnosis happened and it was like, no, no, no,
we're I want as many months of Social Security as
(33:34):
I can get because I don't know how long I'm
going to be around. And then we'll leave the retirement
funds a little more intact. And so this isn't necessarily
a cut and dry always easy to figure out this scenario.
Speaker 1 (33:44):
I think this is like one of the hardest things
to figure out, Like this truly is like one of
the toughest nuts to crack. And Kate and I have
had a lot of different conversations over the years about
personal finances and business and like, okay, strategy different things
like that, but man, this is it's so difficult, and
I get we know we're not thinking through like life
expectancy that like those are less the questions I guess
(34:04):
that we're thinking about right now. But even still, like,
am I guaranteed the ability to wake up a week
from now and continue along doing the same things that
I'm doing today now? And I'm not saying in the
next week I'm gonna yolo durin my accounts? So you
got to find some sort of balance though, between yolo
or only looking to the long term, because that I
(34:26):
feel like that can be just as seductive, right, Like.
Speaker 2 (34:29):
Let me build up the account balance as big as
I humanly can. Let me guarantee the fattest social Security check.
Speaker 1 (34:34):
I've run. Guess what, I've run the compounding interest calculator,
I've run through the different glide pass and scenarios, and like,
that's a really easy button to hit. And if that
is all you're doing, the easy button is also to
just take social Security as quickly as you can be like,
let me give that money.
Speaker 2 (34:47):
Yeah, and then you wake up five years down the
road and you're like, this check isn't as big as.
Speaker 1 (34:51):
I wish it was or need it to be. Both
ends of the spectrum can be really easing a little
bit of layed gratification would have done me better. Yeah
so now, Yeah, I think the ability for folks to
address these sort of thorny topics more head on could
lead to productive conversations not only with like your partner
or your spouse, but even like maybe you don't you
don't have a partner like you yourself to like like think,
(35:11):
like spend some time thinking about this and like journaling
to perhaps uncover some of the different Yeah, what's going
on the under the hood? Yeah, what else are you
are you looking to accomplish?
Speaker 2 (35:20):
Even that social security software? Are those calculators they don't
account for that, they don't have the journaling feature included,
So you do have to take some personal stuff into consideration.
It's the numbers matter, but the numbers aren't the only
thing that matters totally. All right, Matt, that's gonna do it.
For this episode, we'll have links to some of the
resources that we mentioned, including that maximize my social security
link up on our website at howtomoney dot com.
Speaker 1 (35:42):
You know it. But until next time, best Friends Out,
Best Friends Out,
Welcome to Out of Money. I'm Joel.
Speaker 2 (00:02):
I am Matt, and today we're talking paper, wealth, target,
date trends, and bye bye Buffett.
Speaker 1 (00:26):
You know what, buddy, this is our Friday flight where
we're going to tackle the most pressing personal finance headlines
out there, specifically how they pertain to your wallet. Joel,
you got to note here about Walmart. What's what's the
latest with Walmart?
Speaker 2 (00:40):
I want to give you a big fan I want
to give a quick I'm not not a fan of Walmart.
Speaker 1 (00:44):
Walmart. Yeah, so we've been doing more shopping there lately.
It's just not our you know, there's only one place
in my heart, and it's shaped like Aldi.
Speaker 2 (00:52):
You should actually get an Aldie tattoo over your heart.
I think that'd be great, maybe one of these days.
So okay to two different retailer police. Then I wanted
to highlight here one that's consumer friendly in one that's
not so Walmart. And I didn't realize this until I
went in the other day. I bought some shoes from
my little dude online and turns out they were too big,
(01:13):
so I had to go in the store.
Speaker 1 (01:14):
You're not gonna hang on to them, wait for them
to grow into them.
Speaker 2 (01:17):
You're right, I probably could, but I had to go
in anyway, okay, right to buy the right size, and
they the when I got there, the price at the
store for those shoes was higher than it was online,
and they wouldn't let me do an exchange. And they
wouldn't so I could return and then I could buy
and then if but then I was going to be
spending more than what I would have paid online. So
(01:38):
they that I was just unfamiliar with the fact that
Walmart does not match online prices in stores, which to
me does not seem And I guess I would get
it too, because there's more third party sellers on Walmart. Now,
if it wasn't actually sold by Walmart, it's like, all right,
I get that, don't price match that. But if it
is sold in Walmart item, Yeah, if it's sold in
(01:58):
ship by Walmart, why wouldn't they match it?
Speaker 1 (02:00):
You know, who would match that? Who's that Aldi? Would
I don't know how many pairs of shoes they're buying
an Aldi, But you know, like Kate and I we
joke about this. Anytime there's something kind of random that
we need, we just look at each other and I'm like, oh,
we've just voiced it into existence, because then you walk
down that seasonal aisle or like I swear it pops up,
(02:21):
it's there, Like you were recently talking about getting a
composter tapped into your home. I think it just means
that I'm just way more typical average American consumer than
maybe I would like to admit. That could be. That's
all I go.
Speaker 2 (02:35):
So I highlighted I highlighted a negative store policy. Let
me highlight a positive one from best Buy. So my
dad texted me and he's like, hey, I know you're
like where you live, they're better about picking up old
electronic items and stuff like that. Can can I drop
them off at your house? And can you ask your
trash provider to pick it up? And I was like, yeah,
but you know you could take this stuff to best
(02:55):
Buy instead. And when you go to best Buy, look
at their like electronics recycling page. They will take almost
anything for for free. So if you've got like my
dad had, like old modems and DVD players and stuff
lying around remotes, they'll take old TV's under a certain size.
So if you're like I've kind of accumulated a lot
of junk electronics that's past their prime and they're not
(03:17):
you can't sell them, and you're gonna actually have to
actually pay money to dispose of them.
Speaker 1 (03:20):
See take them to best Buy. I know you're supposed
to recycle, but I think there's a whole lot of folks, dude,
who are out there just tossing that stuff. You know.
I think that's probably like do you ever feel that
way about recycling?
Speaker 2 (03:29):
Kind of can't with a fifty five inch TV, but
you probably can with that old murder.
Speaker 1 (03:33):
But could he not sell that fifty five inch even
for like well it was maybe. I mean that's a
good point too, because like a no, no, here's a
flas screen, but like the screen just went out, you
can't sell that.
Speaker 2 (03:44):
Yeah, I was gonna say, I mean maybe there's some
tinkerer hobbyists who would be interested in that.
Speaker 1 (03:48):
You know. What I was gonna say was that sometimes
I feel like it is not a futile endeavor, but
like it, like recycling, like I do regular recycling. Like
this morning, even I was preparing some strawberries from my lunch,
Like what did I do with a plastic strawberry container?
Tossed it in the recycling bin, like we could know
we're even composting actually, like we are, like we're cutting
(04:09):
the little tops off and so hip we are reducing
our wasst and so we are doing our small little part.
But like sometimes when I think about it, I feel
like we are only moving the needle, like points zero
zero zero zero, Like I don't know, you can put
tons of zeros one percent, like just even in our country.
Like and when I start thinking about the world large,
like at large, like you think about China, if you
(04:30):
think about countries that are burning massive amounts of coal
fossil fuels, and how does that they handle waste, I'm
just like, man, maybe like for our little neighborhood over here,
we're doing a good thing. But I don't know, sometimes
I get discouraged when I think about just the world
at large, man, and all that's going on. Oh man,
we went broad. You should still do the right thing.
(04:52):
I like, we are still recycling, but sometimes I have
a hard time, I guess, get getting super excited about that.
But that being said, I'm glad you brought the policy up.
Talk about the deforestation of the Amazon rainforest. Now, Matt,
it's and it's certainly great that there are companies out
there who are processing these electronics, making sure that there's
not what is it lad and mercury getting into the
water supply and different things like that. Agree, glad that
(05:14):
they're taking care of that, because I don't want to
be living somewhere man where those forever chemicals and whatever.
Is that that what they're called forever chemicals? Yeah, forever
thinks forever plastics. Yeah, that's the new thing now, plastics, microplastics.
We're all eating the microplastics inside of us. It's true.
Speaker 2 (05:29):
So trying to highlight something good and bad, I feel
like we have down more of the bad path.
Speaker 1 (05:33):
Not bad.
Speaker 2 (05:34):
Maybe, Okay, let's highlight something else that's good though here
because we talked what last week about the slate truck
that's twenty grand, which is awesome thing. Love that that's
good news. Well, now, not just our cars shrinking and
getting less expensive, but we're seeing signs that new homes
in the United States they're continuing to shrink in size.
(05:56):
So I think part of that is because of negative news,
the higher cost the building, and the fact that prices
are remaining elevated. Builders are like, well, I can produce
the square footage of the house that I'm building, and
I could do just fine and make a profit, and
I'm gonnapeld more buyers. So and we are seeing some
price cuts too in the housing market. We're actually going
(06:16):
to dedicate a whole lot of money newsletter to housing soon,
so please sign up for that. But yeah, some of
the new apartment sizes are actually shrinking in size two.
So when new apartments are being built, especially gen zs,
they're like, yeah, give me all the amenities, but give
me a tiny box in which to stick my bed
and I'll be fine. So I think this is a
(06:37):
good thing. I think bigger isn't always better, And in fact,
when you think about it, bigger means more maintenance costs.
It means higher utility bills. The five thousand square foot
house versus the twenty five hundred square foot house, Yeah,
it's going to cost you a lot more money to maintain.
We talked about secondary cost last week, Well you got
a factor in the secondary cost of home ownership two.
(06:57):
And like, I think just bigger is better mentality, maybe
it's falling by the wayside a little bit. Finally, I
just think being content to live in smaller quarters, it
just it means less money going towards housing, and more
money that you have to save and invest to grow
your net worth, to have more options when it comes
to work and free time. The more we tossed into
our homes, the less flexibility we have.
Speaker 1 (07:19):
Totally agree. Yeah, I also wonder if the pendulum is
swinging back as well as fewer folks are working from home.
Now I'm having to go in so I'm just looking
for a place to crash at night. For the most part,
I think that's probably true.
Speaker 2 (07:29):
Yeah, for a minute, there was that push towards especially
I remember my little sister living in a studio apartment.
Speaker 1 (07:36):
That's when they upgraded, right, Yeah, and they were like,
we can't both work from home here exactly. It makes sense.
So while we're speaking of homes, the average American homeowner
is also rich in home equity. Collectively speaking, we've got
more than thirty five trillion dollars in our homes thanks
to the appreciation that they've experienced over time. And so
if you, let's say, bought a house in the last
(07:57):
ten to fifteen years, you have inevitably increase your net
worth because of that home, just because of the trend. Yeah,
it's it is up something like eighty percent since twenty twenty,
so even the more recent years it has been even
more significant. But it is really only wealth on paper,
and it can add to this thing called the wealth effect.
(08:18):
And let me explain that basically, you feel richer, it
can lead to increased spending. Because of that, you spend
a little bit more freely. But you know, the tough
thing is home equity. It isn't all that liquid. And
because we are typically beneficiaries of home appreciation right like,
we are not necessarily working for it. I think it
could mean for some folks out there that it's easier
(08:40):
to borrow and spend, kind of like an easy come,
easy go sort of thing. I think. So I want
to put this on folks radar because I want them
to be careful of this. You want to be careful
of this temptation. I think more than ever, it's important
to I think the rule of thumb here is to
know thyself, because I do think that there are some
folks like I don't think about the homes that we
own like investment properties at all when I calculate my
my net worth, when I calculate some far off payout
(09:03):
amount once the homes are paid for that kind of thing.
But I think there might be some folks where, you know,
if they still got the Zillow app on their phone
and they're like, oh, it's increasing again, that's elevating over
every price of use. Yeah. It kind of makes me
think of like credit lines. Like if you are the
kind of person who can handle a thirty thousand dollars
available credit on your credit card and you hardly spend
(09:23):
on that card at all, You don't go anywhere near
that thirty thousand dollars, maybe put like three hundred bucks
on it here and there, then I think you are
probably the kind of person who isn't necessarily tempted by
that increased home equity. But if you are the kind
of person who's just like, woh, they just upgrade. I
got seven more thousand dollars available to me. I just
went from twenty one thousand to twenty eight like time
(09:46):
to keeping track of that, time to go out and spend.
If you, yeah, exactly, if that's if you're that kind
of person, I would also say be careful when it
comes to home equities. So I think there's two things here.
Speaker 2 (09:55):
I think one, don't treat your home like a piggybank,
because if if you do, there are financial repercussions down
the line. And then also kind of going on that
wealth effect thing just because it exists. Don't let that
give you the permission right to spend money in a
more ridiculous way just because you're like, why, yeah, I'm
(10:15):
not bloaded, man, I got like three hundred and fifty
grand in home equity, so I don't need to be
as worried. I can be a little more profligate with
my spending. I don't think that's the case. Or let's
talk about target date funds, Matt. They just crossed an
important threshold. There are now more than four trillion dollars
in assets that are held inside specifically of target date funds,
and morning Star wrote an article about this and they
(10:37):
basically detailed the rise of target date funds in the
last couple of decades. They're also holding up better right now,
right you have in the recent market volatility there because
of their more balanced approach, they're not going to see
as dramatic of a decline typically as somebody who is
invested more like you and I, who's one hundred percent
(10:57):
invested in stocks. On top of this, z fees on
these funds continue to decline. Morning Stars said that in
twenty fifteen they were zero point five to five percent
on average. Now they're point twenty nine percent on average.
So I like that target date funds are experiencing the
same decline in fees in expense ratios that many other
funds have seen as competition has increased, and the big
(11:20):
low cost investment houses like Vanguard, Fidelity, and Schwab.
Speaker 1 (11:24):
Have really pushed the envelope on that.
Speaker 2 (11:26):
And so Vanguard and Fidelity in particular have some of
the best low cost target date fund options. Their expense
ratio is a heck of a lot less than even
the average. We're talking about zero point oh eight percent,
which is pretty darn good. And so for investors who
like simplicity, who like low costs, I do think it's
it is important for us to consistently mention that target
date funds can still be a great option, particularly inside
(11:50):
of your retirement accounts, because if you invest in a
target date fund, it's going to automatically shift the allocation
as you age. It's easy, PZ. It's a set it
and forget it sort of. And I think target date
funds while they're not my one hundred percent favorite fully
optimized way to invest for really young people. I think
they're still like, don't let perfect be the enemy a
(12:11):
good They can still be a good option.
Speaker 1 (12:12):
You're still solid. Yeah, let's talk about another investing trend.
Gold is the talk of the town these days, in
particularly because of the less predictable economic conditions that we've
been experiencing. Actually, gold, it has seen better returns than
the S and P five hundred over the past twenty
years to think about, and it is. Yeah, it's a
bit more of like cherry picking data, I think, but
still twenty here's a long term recent Yeah, I mean,
(12:34):
but if you zoom out to thirty years, the SMP
blows it away. Yeah, you zoomed out to thirty forty fifty. Uh,
you zoom out one hundred years, dude, Like, it's not
even close. Over the last six months, last six months,
last twenty years, surprisingly it has done better. But the
question then comes up, should we all jump on this
gold investing bandwagon on this trend? Most experts out there
(12:58):
would tell you that gold isn't a necessary part of
your investment portfolio, But if you want to hold a
little bit of gold. I think that can makes a
whole lot of sense. We always talk about holding five
percent or less of your overall portfolio in different things
that we think are okay, yeah, like precious metals, bitcoin,
(13:21):
like you just gold could be one of those you
just love this one company and you're like, you know what,
I'm going to go buy me some Warner Brothers like
I did after we talked about Harry Potter being released,
or did you Yeah, I mean, just like one share
part of your play portfolio. It's just for kicks, just
to have time stamps. Oh this is when that happened.
And I don't know. It's just a little something that's
(13:42):
fun to do. But it's worth mentioning because you're going
to see more headlines about gold. You're going to see
more advertisements specifically from gold buying companies, especially with the
runoff and values that we've seen. They're loaded. Then they're
gonna be like, y'all need to get in on this,
and they've got so much money come through our proprietary
system to buy gold because every investor needs some gold
(14:02):
in their lives, and they're gonna do the hard pitch.
We would actually prefer if you want to old some gold.
We would prefer that you stick with some low cost
ETFs that invest in gold specifically, like GLDM. That is
a great option with a very small fee.
Speaker 2 (14:15):
Is Costco still selling the gold bars?
Speaker 1 (14:17):
Depens on the season? Okay? Are they still selling giant
wheels of cheese of Parmisan? Yeah?
Speaker 2 (14:22):
I guess Palmagano. Yeah, I don't know what the regiano
the gold buying season is, but yeah, I wonder. Typically
when they when they put them out there, they sell
it quickly. But even that, like they're.
Speaker 1 (14:31):
Still selling two thousand dollars Yu steaks, I mean probably.
Sometimes they put these things out there and I'm just like,
who the heck somebody is is buying this?
Speaker 2 (14:39):
Obviously somebody is, But I think that you're right, Like
buying it inside of a low cost ETF makes more
sense even than buying like physical gold at a place
like Costco, which is going to give you a better
deal than you're going to get almost anywhere else for
buying gold. And some people like I don't want to
stick it under their mattress or something like that, that's.
Speaker 1 (14:55):
Not a deal.
Speaker 2 (14:56):
Like, if you want some gold exposure, low cost ETFs
are typically the best way to go. Well, we're talking
about investing, Matt. Let's talk about the main headline this week,
the one that hits us right in the sweet spot
in our hearts. Warren Buffett stepping down as the CEO
of Berkshire Hathaway, did you shed a tear when.
Speaker 1 (15:12):
You heard the news? I not really. I'm like, yeah,
he's like so old.
Speaker 2 (15:17):
Good for him at the age of ninety four for
finally like saying I mean again, it doesn't at the
end of the year, in seven months or whatever.
Speaker 1 (15:24):
And maybe because I know you and I we've had
more conversations too, I mean, with Charlie Munger having died,
we talked about Warren Buffett earlier this year. We actually
had David clark On talking about the new towel of
Warren Buffett. Yeah. I don't know, it makes sense. It
totally makes sense. He's old, he's a sharp guy.
Speaker 2 (15:41):
I don't begrudge him this, and I actually encourage him
in this endeavor to like I bag work and live
out the rest of your years with I don't know,
hopefully a little less. But apparently he's going to remain
the chairman of Berkshire, so he's not like closing out
completely altogether. But he really is the goat and and been.
So many of the moves he's made over the decades
that you could highlight have been impressive. And Berkshire's returns
(16:04):
you're talking about the gold versus the S and P.
Will Berkshire his company, those returns have far outpaced in
the S and P during his investing tenure, or something
like basically twenty percent returns versus ten plus percent returns
for the S and P over those many decades. But
I think it's important to highlight the fact that he
is an anomaly and most of us shouldn't aspire to
(16:25):
be like Warren Buffett. I mean, in some ways we should, right,
I appreciate his humility and his intelligence, but his frugal nature. Yeah,
But in other ways, it's like, don't try to do that.
Because I saw the stat Matt Jason's wagen the Wall
Street Journal estimates that Warren Buffett has read more than
one hundred thousand financial statements of companies, and he said,
that's actually probably pretty conservative. I bet Warren thread quite
(16:46):
a bit more than that. And my question to how
the money listeners is are you willing to do that?
Are you, Nope, Are you going to spend your days,
your evenings instead of hanging out with your partner or
doing a hobby reading financial statements of companies. Some people
are gonna say, yeah, I am, because that's really fun
for me. Then maybe you are in the Warren Buffett
(17:08):
ilk who can and should invest in single stocks. But
for most of us normies who don't do that, then
I think it's just a good le Hey. Index funds
make the most sense, and that's why, Yeah, we shall
also do what Warren Buffett says, not what he does.
What he says to every day investors is like, yeah,
investing most of your assets into the S and P
five hundred is going to build you wealth over time.
(17:29):
You don't even need to do it the way I
did it. I love that he did it the way
he did it. I think he's passed on a lot
of great lessons to individual investors over the years, patients
long term thinking, the beauty of simplicity. He's just been
such a remarkable fixture in the investing landscape for so long.
But I think this is a good reminder to learn
(17:50):
from Warren Buffett and not necessarily try to mimic him.
Speaker 1 (17:53):
Okay, So I don't know if this is uncouth to
bring this up, but maybe with Warren getting oh yeah,
ninety four years old, maybe this is a good reminder
to review your beneficiaries if you haven't on your different accounts.
I'm sure Warren has this so you know, buttoned up.
I'm sure he does. But I saw a recent article
talking about this. We haven't mentioned this on the show
in a while, but if there have been any major
(18:15):
life changes, make sure that you make those changes within
the back end of your retirement accounts. Contrary to popular belief,
your beneficiary it actually supersedes what is in your will,
so like you don't want the money that you've been
working hard to grow to be left to someone that
maybe you no longer intend for that money to go
to you. In that article they actually mentioned Heath Ledger
(18:37):
and how with his unexpected death, he hadn't named his
daughter as the beneficiary. Instead he had left all the
money to like his sisters and his parents. That's like
a you know, celebrity obviously, so it gets slightly more attention,
but that's just a great example. In the end, they
gave her all the money, so they took care of her,
But that's still the kind of situation that you ideally
want to completely avoid.
Speaker 2 (18:58):
And let's be honest, it'll make you all of forty
five seconds to log into the back end of your
account and do that. And if you don't have the
right beneficiary listed and you were to pass away, like
that's a man, think about the problem that you're leaving
your loved ones. Sure, a random other aside on investing,
Matt real quick, I saw this stat and it shocked me.
You know, the trump coin that got released, it was
(19:20):
widely publics.
Speaker 1 (19:21):
Which one or are there multiple? I feel like, oh,
that's true, but I feel like there have been multiple
stories about grifting taking place front within the White House.
Speaker 2 (19:31):
Well, this is something we've talked about on the show before.
Bitcoin and crypto are kind of completely different things in
a whole lot of ways, and there's a lot more
room for to get swindled, I guess in the crypto space,
and there is if you just invest some in bitcoin
with regularity. Turns out only fifty eight people have made
money owning trump coin. They've made almost a billion dollars
(19:53):
in total. And wow, over seven hundred and fifty thousand
people invested in trump coin, and almost all those people
lost money. So fifty eight out of seven hundred and
fifty thousand people made money, the rest of them lost.
Speaker 1 (20:07):
It sounds like a scam, yep.
Speaker 2 (20:08):
A lot of pump and dump style happening in the
crypto space. Still, beware, I stay behind my term, or
my use of the word grift, Yeah, because like that
is what like talk about wealth transfer. Man, this is
something that we hate seeing. This is regardless of whether
or not you support him, the different policies that he's
going for. I hate to see this, Yeah, and it's
just another reminder to hey, yeah, invest some in bitcoin
(20:30):
if you're so inclined, but don't mess with the rest
of the crypto space. All Right, We've got more to
get to, including we're talking about social security problems and
how you can react. We'll talk about that and more
right after this.
Speaker 1 (20:51):
All right, but we've got more Friday flight to get
to and of course now it is time for the
ludicrous headline of the week, and we're going to take
this segment and talk about credit. There's an article from
CNBC that I am unhappy with because the title of
the article was I don't like seeing you unhappy how
to raise your credit score one hundred and sixty points
(21:12):
in thirty days. Well okay, so specifically, well, it wasn't
the headline, it was what was contained within the story.
Speaker 2 (21:19):
Because yeah, the headline it sounds promising, right, Yeah.
Speaker 1 (21:21):
Yeah, we talk about improving your credit score all the time.
This is something that we it's a regular feature here
on the show. You don't want to ignore your credit score,
and especially raising your credit score this much in just
a month. I am all four, But sadly this article
had some really bad advice that was mixed in with
the good stuff. So first of all the good stuff
they say to pay attention to your credit score, Yeah,
(21:42):
totally true.
Speaker 2 (21:43):
When the reports in particular two right to say, hey,
if there's an error on there, you want to find it.
Speaker 1 (21:48):
Exactly, there are mistakes on a huge percentage of those reports.
Consider reports says that half of folks who actually go looking,
they're going to find an error. So that's something that
you can be on the look at.
Speaker 2 (22:00):
Basically, the credit bureaus not so great at the record keeping,
which is their primary.
Speaker 1 (22:05):
Job on it. But in addition, so that's like a
small example of something that was good in addition to
that the article said to consider hiring a credit repair company,
and also interspersed and mixed throughout this entire article. I
think it was sort of like a pay to play.
It had to be sort of journalism. But you saw
I didn't even check with you, but I assumed you
also saw the I'm not going to call them out specifically,
(22:28):
but it was a lending I'm sorry, a credit repair company,
and they had like some charts to where it looked
like it was a part of the story. But then
there's also ads from the same company. There's like the
small grade out thing that says ad in the bottom
vapor sketchy. Don't like it because this is something that
you can completely deiy. You don't need another expensive monthly subscription,
(22:49):
which is the model that most of these companies operate under.
Speaker 2 (22:52):
It like one hundred and fifty bucks a month or
something like that, right.
Speaker 1 (22:54):
And like you can tell oftentimes when something's a scam,
when there's something called gosh, like a startup fee or
like an onboarding those are the worst. Yeah, like a
setup charge and like what needs to be set up,
like you taking me as a customer. I don't like it,
and we've actually got an article up on the website
with some tips to rebuild your credit score, and it
(23:14):
is a much better article than the one that CNBC
was running.
Speaker 2 (23:17):
If you've got like a question because you feel like
your credit score is not where it needs to be,
send us a question. We'd be happy to take it
on the podcast. But just do not do not sign
up for one of these credit repair companies because they'll
take more than they give and most of the things
that they're offering to do, yeah, you can do yourself.
More bad news on the credit front, Matt medical debt.
(23:38):
It might be staying on credit reports after all. Because
of these policy changes were essentially made by executive order,
and it seems like that's the only way policy changes
get made these days, which just puts more power in
the hands of the president, no matter whether they have
an R or a D by their name. But many
of the changes that were enacted by the previous administration
(24:01):
are now subject to change, and the same will be
true of whoever is in the Oval office next. And
as the Consumer Financial Protection Bureau has been downsized and
its futures in jeopardy, a judge has been asked to
vacate the rule that would have excluded medical debt from
appearing on credit reports moving forward, And so this isn't final,
(24:22):
but it does seem that the medical debt exclusion is
unlikely to stick around. And although I think the credit
bureaus have still basically on their own, of their own volition,
said well, you know, medical debt under five hundred bucks,
we're not going to put.
Speaker 1 (24:36):
On there anyway.
Speaker 2 (24:38):
But with this and what's happening with student loan collections,
it's even more crucial to pay attention to your credit
report and credit score.
Speaker 1 (24:45):
These days.
Speaker 2 (24:45):
We're likely to see average scores I would say, dropping
in the coming years and in the future. I think
it would make sense for both parties to get the
legislative branch involved in writing and passing bills for the
changes that they want to see endure, because otherwise it's
just kind of kind of be this back and forth,
this whiplash of like, no, we're going to do this,
but if it's issued by executive order, the chances of
that thing sticking around over the long term are just minimal.
Speaker 1 (25:09):
You're advocating for some sticky legislation, Yes, I totally agree. Man.
So another article that was also ludicrous. So a little
two for one today, but this one was from USA Today.
Americans saved money in FinTechs. When money went missing, FDIC
was nowhere to be found. This was okay. So this
is like the opposite of the CNBC article. This is
(25:30):
a you know, some good reporting that was taking place.
And this article highlighted the way that fintech banks grew
into these juggernauts for savers. They're promising higher rates, they're
promising better perks, and the rise of these cool online banks.
That's really a story of actual fintech growth. But as
we have mentioned before, many of these fintech banks are
(25:51):
on shaky ground. And what happens inevitably when customers of
some of these neo banks lost or savings, the FDIC
they had nothing to do about it.
Speaker 2 (25:59):
They're like, what huh are you? Are you reaching out
to us because like that in our jurisdiction.
Speaker 1 (26:03):
Yeah.
Speaker 2 (26:04):
And so the reason for this is basically it's like
that Spider Man meme where every one's pointing and the
FDIC is pointing.
Speaker 1 (26:09):
That is exactly these our fault. So the company, these
new startups, they aren't actual banks. Instead, what happens they
work with FDIC insured banks through an intermediary. But still
when these banks experienced again, when these tech companies experienced issues,
the FDIC didn't do anything in order to help These customers.
Call it I'm glad you call them tech companies because
they're not They're not banks. They look and feel. That's
(26:30):
the problem. Though on the website market themselves like a bank,
they say that they are not banks, and so some
of them. But if you just at first glance as
a consumer, you it would be understandable that you would
think they were exactly But this is why this has
been a drum that we've continued to beat. We want
folks to stay away from this. We want you to
actually go with a real online bank, an actual company
that's been around for a minute, that has their very
(26:52):
own FDIC insurance.
Speaker 2 (26:53):
Yeah, it's we mentioned them consistently. We say Ally, C, I, T,
Discover Capital one. Those are all online banks, but they're
fully fledged banks. They're not super cutesy and stuff like
that with the fintech names and the extra oh, get
your paycheck two days early. They don't really have that
kind of fancy stuff going on. But it's fine, Like,
(27:15):
we don't think you need that stuff. They still pay
competitive rates, they keep their fees low. We love those
online banks. They're better than the traditional brick and mortar
giant banks, and you can kind of get the best
of both worlds with them, and you're not at risk
of losing your money like you are with some of
these fintech banks. I'm still curious to see how this
shakes out and whether some of those consumers who had
(27:36):
money with the fintech banks are going to get the
fintech fox banks. I guess what we should you call them,
are going to get their money back. That remains to
be seen.
Speaker 1 (27:44):
Matt.
Speaker 2 (27:44):
Let's talk about Social Security for a second. The spotlight
is on Social Security right now. Problems seem to be
getting worse at the Social Security Administration. We've got staff cuts,
changing requirements to claim benefits, have some folks on edge
on top of that, which we've detailed this before on
the show. We did dedicated a whole episode to it
(28:05):
a couple of years back. The Social Security Trust Fund
is set to run out sooner than expected in that year.
It feels like that year keeps of when the trust
funds gonna run out keeps getting pushed up and up,
so in less than a decade. That's when the trust
fund is set to expire, which has retirees worried about
receiving the benefit they're entitled to. They might not get
what's coming to them, what they've paid into for their
(28:27):
whole lives. So what happens if or when we reach
that point, well, benefits get automatically cut by essentially like
a quarter. So retirees and soon to be retirees they're
getting fearful about the solvency of Social Security. It's leading
to early claims and so instead of wait until sixty
seven or even later, they're starting to get that monthly
check at sixty five or even earlier. And this is
(28:48):
a personal decision. There's a lot at play in when
you claim Social Security, and the reality is that there's
trade offs right to claiming early and to waiting, especially
if you're not in great health, like waiting till seventy
if you're not doing so hot, well, I get why
you might claim early, but a good chunk of folks
would be when you run the numbers, better off waiting longer.
(29:08):
Even with this kind of increased uncertainty around Social Security.
And I also just think people in their sixties should
be less worried about the future of social Security. It's
people in their twenties and thirties and forties who should
be like, hmm, player impact on them planning a little more,
investing more for their own future retirement, and banking less
on the reality of Social Security being a major major
part of their retirement income plans.
Speaker 1 (29:29):
Yeah, let's talk about the specific numbers. Because the benefit
is roughly seventy five percent higher if you wait, If
you claim at age seventy as opposed to age sixty two,
those early claims are going to reduce benefits for decades
to come, and for if you're healthy, right, if you're
a healthy retiree, the overall amount received could be reduced
by up to six figures over your lifetime, essentially.
Speaker 2 (29:53):
One hundred and twenty thousand dollars less in your pocket
because it's significant claim too early, right.
Speaker 1 (29:57):
Yeah, And obviously none of us out there know how
long we're going to But if you are in good
health at retirement age, if you can afford to wait,
it's still likely the best option. If you want a
little bit of additional reassurance, you can consult this fairly
inexpensive software that's out there. There's this one called maximize
my Social Security. If this is something you're trying to
really crunch the numbers on. And again, like you mentioned Jil,
(30:20):
for younger listeners, it is going to impact you more
than if you're like sixty years old. But even still,
I think it's going to be around for all of us.
If you're listening to this just in a diminished fashion. Yeah,
in some form of fashion, it's going to be there.
But I do think our benefits are unlikely to be
as high as what it's saying over at Social Security
do like GOV.
Speaker 2 (30:39):
Yeah, if you log in, it'll give you kind of
a projection for what your Social Security income is likely
to be. I would take that with a grain of salt.
I would reduce that meaningfully into my retirement projections, like
something will be there in all likelihood. But the fact
that our politicians have let it get to this point
where social Security is kind of living on the precipice
(30:59):
that it boggles the mind. And there's just it's gonna
take some political will to change the future of Social
Security so that it's going to be around stick around
for the rest of us.
Speaker 1 (31:10):
It's a real issue that's going to like there are
some things that are worth talking about or the politicians
actually addressing, and there are some things that really aren't
and it's just for show. This is like one of
the real things that needs to be addressed, or's like
it taking from a time bomb from exactly from a
policy standpoint, But I want to go back as well
to the like you mentioned that the personal factors and
some of the different trade offs. You got to keep
in mind too, some of the different life goals that
(31:31):
you have, because I like, I for folks out there
who are tapping it, who are tapping it early, right, Like,
so so far, like we kind of we address the
numbers sort of side of the equation, but like think
through what it is that you want to be able
to accomplish in your life while you still have the
ability to write. And so for retirees, if you're like,
you know, yeah, we could wait until age seventy and
(31:52):
you know we're going to be wealthier. Yes, you definitely will.
But that's that's like a no brainer, right, Like anytime
you cruach.
Speaker 2 (31:59):
The numbers, waiting is always going to lead to you having.
Speaker 1 (32:02):
More a higher net worth. And so like I think
the more important questions to ask are what am I
likely going to want to be able to do within
my retirement years or like what life goals am I
trying to accomplish? What kind of impact am I looking
to have? And I'll be like, maybe this is like
a little bit of that confession time. I'm not having
like retirement like questions. But Kate and I we've been
(32:23):
talking about this more and we're not talking about are
you going to claim now? Yeah, we're not like I'm sorry,
sir to you you need a yeah come back three years?
Uh wait hell am I? Yeah? But the ability to
wrestle with some of these thornier issues. I think it's
really important because and we're not again, so we're not
talking about tapping retirement, but other dollars that we've invested,
(32:46):
and it's kind of hard to wrap your mind around, like, Okay,
this is something that we've been putting money into for
a very long time. Uh, and so this is within
a brokerage, But what do we want now what to
do with that money? What is that going to allow
us to accomplish that we may not have the ability
to do a decade from now, two decades from now,
knowing that yes, by waiting, it's going to lead to
(33:08):
a larger sum of money, but what are the other
factors that you need to take into account?
Speaker 2 (33:13):
And the game plan can change, right, So I've talked
about this on the show. When my mom was diagnosed
with cancer, like, the thought was, well, we will tap
some of our retirement funds, maybe a little bit more
than we otherwise would, just to be able to hold
off on taking Social Security. And the plan flipped once
my mom's diagnosis happened and it was like, no, no, no,
we're I want as many months of Social Security as
(33:34):
I can get because I don't know how long I'm
going to be around. And then we'll leave the retirement
funds a little more intact. And so this isn't necessarily
a cut and dry always easy to figure out this scenario.
Speaker 1 (33:44):
I think this is like one of the hardest things
to figure out, Like this truly is like one of
the toughest nuts to crack. And Kate and I have
had a lot of different conversations over the years about
personal finances and business and like, okay, strategy different things
like that, but man, this is it's so difficult, and
I get we know we're not thinking through like life
expectancy that like those are less the questions I guess
(34:04):
that we're thinking about right now. But even still, like,
am I guaranteed the ability to wake up a week
from now and continue along doing the same things that
I'm doing today now? And I'm not saying in the
next week I'm gonna yolo durin my accounts? So you
got to find some sort of balance though, between yolo
or only looking to the long term, because that I
(34:26):
feel like that can be just as seductive, right, Like.
Speaker 2 (34:29):
Let me build up the account balance as big as
I humanly can. Let me guarantee the fattest social Security check.
Speaker 1 (34:34):
I've run. Guess what, I've run the compounding interest calculator,
I've run through the different glide pass and scenarios, and like,
that's a really easy button to hit. And if that
is all you're doing, the easy button is also to
just take social Security as quickly as you can be like,
let me give that money.
Speaker 2 (34:47):
Yeah, and then you wake up five years down the
road and you're like, this check isn't as big as.
Speaker 1 (34:51):
I wish it was or need it to be. Both
ends of the spectrum can be really easing a little
bit of layed gratification would have done me better. Yeah
so now, Yeah, I think the ability for folks to
address these sort of thorny topics more head on could
lead to productive conversations not only with like your partner
or your spouse, but even like maybe you don't you
don't have a partner like you yourself to like like think,
(35:11):
like spend some time thinking about this and like journaling
to perhaps uncover some of the different Yeah, what's going
on the under the hood? Yeah, what else are you
are you looking to accomplish?
Speaker 2 (35:20):
Even that social security software? Are those calculators they don't
account for that, they don't have the journaling feature included,
So you do have to take some personal stuff into consideration.
It's the numbers matter, but the numbers aren't the only
thing that matters totally. All right, Matt, that's gonna do it.
For this episode, we'll have links to some of the
resources that we mentioned, including that maximize my social security
link up on our website at howtomoney dot com.
Speaker 1 (35:42):
You know it. But until next time, best Friends Out,
Best Friends Out,
Hosts And Creators
Joel Larsgaard
Matthew Altmix
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