Investment Ideas & Opportunities

Episode Transcript

Speaker 1 (00:00):
Hello, everybody, Welcome to the Greg Kicks Show. We're here
this June weekend. I hope you're having a great early summer.
It's not officially summer yet, but it's almost and we're
glad you tuned in. I'm Greg Kick, certified Financial Planner,
along with Wanda Cooper Financial Advisor and Bo Nicholson's Certified
Financial Planner or commonly known as a CFP. We're glad

(00:22):
to know you're here. And by the way, there's now
one hundred and three thousand cfps in the United States,
so I just read that.

Speaker 2 (00:28):
A little trivia, a little trivia there might help.

Speaker 1 (00:32):
But we're all about finances and money and financial planning,
and you know, that's a pretty big topic to talk
about every week, and because of that, we do all
kinds of different varieties of topics and today we have
a really unique one following in our sequence the last
three weeks of investment ideas and opportunities. But before we
do that, we always like to get you up to

(00:53):
speak on what's going on out there. And one of
the things that a good advisor does is we read
a lot. We are always we call it our radar
is always up because we worry about the government, news,
the tax law, international intrigue like Ukraine war and the
gods of strip war, tariff war, trade war, you name it.

(01:17):
I mean, if you got too deep into the news world,
you would never invest a dime because everything has got risk,
you know. But in the history of investing, it is
a long term good idea to invest along the way
and then increase your wealth and independence. So today, today, guys,
let's talk a little bit about Washington, DC. You know,

(01:38):
you can't avoid the tariff news. The Iranian Iran has
rejected Trump's offer. I feel like their nuclear plants are
going to get blown up by Israel or America in
the next few weeks.

Speaker 2 (01:52):
It feels like.

Speaker 1 (01:53):
And then, you know, putin the guy that wants to
be Peter the Great in Russia. He first has to
retaliate on Ukraine for their brilliant drone attack. And I
thought he told Trump that he first had to retaliate,
And I hope Trump said that was the retaliation on

(02:14):
the three hundred drones you've sent over Kiev the other day.
But anyway, we got a mess going on. But in
spite of that, we still are going to talk about
investments today. So any comments on that guys.

Speaker 3 (02:26):
Well needs certainly impacts everything, and I think, unfortunately, I'm
not so sold on the fact that we should pay
attention to what's being said on media, because I'm not
sure I trust all media, even the financial gurus. I
like to listen to CEOs of companies and see what
they're saying about their company rather than what the group

(02:47):
chat is going on on the air, because I think
we lose sight of the fact that when you buy
good companies and they've been around a long time, you
hold them and nine times out of ten year okay,
So that's the bottom line. I mean, it's diversification of
buying good companies and kind of shutting out the noise.
Although I do know that you know, news is important,

(03:10):
but I think sometimes we rely on it too much
to make decision.

Speaker 1 (03:14):
Well, April second, the news got real important when the
tariff took the market down almost twenty times.

Speaker 3 (03:20):
I know it does, but sometimes that's almost an unfair
thing to do. I mean, it did rally back.

Speaker 4 (03:26):
Yeah, so yeah, yeah, And I mean one of our
main jobs is to help clients cut through the noise
and reiterate the fact that hey, everybody has a why
for their money, And that's our job is to kind
of dissect that. When we meet new clients, we say, Okay,
you got all these assets, why do you have all
this money? That might sound funny to the listeners out there,
but we like to extrapolate, Okay, what is this money

(03:48):
ultimately going to be for you get to retirement? Maybe
it's for that, Maybe it's for your legacy, Maybe it's
for your kids, your grandkids, education, or a combination thereof.
So we set a plan and a diversified asset model,
including alternative investments spoiler alert what we're talking about today
potentially in that plan to help you get to where
you need to be without taking on too much risk,

(04:10):
and in doing so, our job and our goal is
to give you enough confidence in your plan so that
you can lay your head on your pillow at night,
even if Jim Kramer's on CNBC yelling at you about
how this is going to be the next lost decade
and stocks are going to flip upside down and we're
going to see a crash. The crash is imminent. It's
going to be forty five percent. That's all noise. Don't

(04:31):
listen to that stuff. And every financial totally fear migring.
That's what the news does, because that's what sells. People
click on the on the headlines that are in all caps.
It's hard not to. It's human nature. Our job is
to help you kind of sideline that every financial advisor
in America, I think has a chart showing clients that
the longer they're holding period, the higher of the likelihood
of success, the higher of the likelihood of positive returns.

(04:53):
You've probably all seen them. Okay, you put your in
the stock market for five years, you have a whatever
eighty percent chance of success. You're in the stock market
for ten years, chances are, based on history, you're gonna
be up one hundred percent of a time. The market's
going to be up. However, advisors oftentimes dance around the
potential for portfolio drawdowns, and it's about the same the

(05:14):
same odds. So listen to this. The odds of experiencing
a bear market increase by holding period. As you can
possibly imagine, after one year, your odds of experiencing a
bear market are thirty two percent. Two years, it goes
up to fifty percent. In a ten year period, it's
a ninety five percent chance. Fifteen years, one hundred percent chance.

(05:34):
We've had a little blip of a bear market. We
had one around COVID twenty twenty and we were out
of it in no time. We haven't had a real
significant bear market since was it two thousand and eight.
I'm saying bear market, I'm also talking about recession. I'm
talking about the big like the big draw down, and
that's a little unusual. I'm not saying we're overdue for one,

(05:58):
because just because we haven't had one and twenty years
almost doesn't make it more likely. But I would suggest
talking to an advisor or giving us a call to
make sure you're not taking on too much risk in
your portfolio. A lot of people have kind of set
it and forget it, let things remain status quo. Stocks
have been going up. Okay, that's great, but it's important

(06:19):
to have active oversight management to make sure that you
have factored in everything and all the risks that are
out there. We love to sit down and talk to
you and identify areas for improvement in your plan. Nine
one nine eight five six one nine six eight is
the number to call, and I.

Speaker 1 (06:33):
Would piggyback that to say, the biggest complaint we get
when we meet radio listeners. Is my current advisor never
talks to me or never contacts me, Well, I.

Speaker 5 (06:42):
Sign up with one and meet with another.

Speaker 1 (06:44):
Yeah, that monitoring idea that Bo was talking about. You
don't just invest in don't look at it for five
years or ten years. You monitor it along the way
because things do change. There may be times where you
should be buying real estate. There could be times where
you should be buying tech. Because you're monitoring, your advisors

(07:05):
should be helping you adjust to the times. The tax
laws change all the time.

Speaker 2 (07:11):
Congresses.

Speaker 1 (07:11):
Right now the Senate is pending a bill to lock
in the Trump tax law and also change things like
lowering the eligibility, raising the eligibility from medicaid.

Speaker 2 (07:24):
You think, well, that won't affect.

Speaker 1 (07:25):
Me, But if it saves US eighty billion dollars a year,
that does affect you because your taxes are being used
in a better place. So so you know, you need
someone to help help monitor and kind of guide and
moving and massage your account. I've met with several people
that are it's pretty shocking where they opened a four

(07:48):
and one K when they were thirty two and they're
sixty two and they're going to retire in two years
and they still have the same exact funds.

Speaker 2 (07:55):
Now that's so common.

Speaker 1 (07:57):
That may be okay, but it could be bad. Like
if you have retired by the way, Bo you're younger
of course and Wind and I. But in seven I
had several clients retire right before the eighth nine crash.

Speaker 2 (08:11):
The S and P went down forty eight percent.

Speaker 1 (08:13):
So if they had all their money and the S
and P fund in the four and one K, the
year after they retire, eighteen months after retirement, they're down forty.

Speaker 3 (08:21):
That's why you diss alternative strategy.

Speaker 1 (08:23):
And you have to divers that.

Speaker 2 (08:25):
You have to get prepared for that.

Speaker 4 (08:27):
Well. So it's funny you mentioned that, Greg. We all
have clients that we haven't been able to get in
touch with for two three years. Sometimes they have millions
of dollars with us, and they're like, you know, everything's
fine and dandy, y'all. Y'all are doing a good job.
Market's going up. I don't need an update from you,
and I remind them us getting together is not as
much about me giving you an update and telling you

(08:47):
we're moving a little bit from small cap to international.
Because nine out of ten. Clients don't care about that stuff.
We're happy to talk about it if you want. But
what matters to us is making sure that what we
have in place for you still makes sense. We have
seen you in two years. Surely something has changed in
your life that.

Speaker 5 (09:03):
Will want more than like the change.

Speaker 4 (09:05):
Yeah right, And so for clients, we got to get that.
And so Greg to your point, people retiring at tough
times like two thousand and eight or even twenty twenty
two and having their four to one K investments just
sit there for their entire time that they've worked at
this company. We talk about target date funds on this
on this show all the time, but I have a
stat here of its staggering. The Fidelity twenty twenty fund.

(09:27):
This is the fund that people invested in that we're
going to retire in twenty twenty and the twenty twenty
five fund. Same deal. You're going to retire in twenty
twenty five. You put your money in the Fidelity twenty
twenty five fund. Well, listen to this. The twenty twenty
fund was down thirty two percent in twenty twenty two,
So that's two years after the target retirement date. Your
million dollars is now six hundred and eighty thousand dollars today.

(09:49):
It's still down eighteen percent from then the twenty twenty
five fund. So you're retiring this year. Well, just three
years ago it dropped thirty two percent and it's still
down fifteen percent today. So that's why the setting and
forget it strategy doesn't always work. It's important to work
with an advisor who knows you and knows your situation.
Nine one nine eight five six one nine six eight.

(10:10):
We've got so much exciting stuff to talk about today,
I'll stick with us. We'll be right back.

Speaker 1 (10:13):
Welcome back to the second segment of the Great Kick Show.
We're glad you tuned in. Bo Nichols had wont to
Cooper and I are here every weekend at your service
and the Raleigh area, especially on the radio show one
six one FM Talk and at the Crystal Coast in
Moorhead City, Newbern Pine, nol Shores where I have a
little condo. All those beautiful beach areas as well. We're

(10:38):
on it's kind of interesting down there. We're on talk
radio down there seven am Saturday morning and three pm Sunday,
and the Raleigh metro area. We're on our station at
two o'clock both Saturday and Sunday, so we get double time.
If you miss half the show on Saturday, you can
catch the other half on a Sunday. We also archive
our shows. There are archive both on the Raley Radio station.

(11:01):
We also have podcasts under the Great Hicks Show title.
You can listen all the time. And the good thing
about that also our website FRMNC dot com. The FRM
stands for Financial Resource Management. That's our business name, FRMNC
dot com. And on that website there's a little radio

(11:23):
section and you can click that on and go back.
Our shows are archived, so you can go back and
listen to a subject where you're like, I need to
know I'm going to retire next year, or maybe you
inherited money or got a divorce, or you paid a
boatload in taxes and you're trying to figure out why
all those things. We do shows on multiple topics, so
be sure to click on that radio tab and go

(11:45):
back and find out stuff. And we're really informational and
educational in our hearts. We love to teach and advise people,
so we cover a multitude of topics, so take advantage
of that. And also, of course you can call us
and talk personally. Eight five six, nineteen sixty eight. Now
this is our fourth week on the investment shows. So

(12:09):
we talked about stocks and mutual funds and real estate,
three huge areas of investing. Today we're going to talk
about something the Wall Street crowd calls them alternative investments. Now,
why didn't I have been in this business long enough
to We were doing alternatives before alternatives were sexy.

Speaker 5 (12:28):
Right one.

Speaker 1 (12:29):
So let me give you all a definition and then
we can kind of go down the line. We always
talk to you guys on the show about diversification, absolutely
critical to make sure you lower your volatility and increase
your potential return over the long term. But let me
read a simple definition. What is an alternative. It's an

(12:51):
investment asset that does not fall into one of the
conventional investment categories such as stocks, bonds, funds, in cash.
Those are kind of your traditional investments. The alternative investments
will include things like, and I'll just go down a
short list, private equity, what does that mean? Venture capital,

(13:13):
hedge funds, managed futures, arc antiques, commodities, even oil and gas, gold, silver,
and even some of the annuities that we do are
kind of alternatives because they're so different than the traditional investment.
So we're going to cover all of those areas. And

(13:36):
you may say, well, I'm not interested in those, but
sometimes those alternatives give you a better overall return and
also lower your volatility, so they're worth investigating. Now we're
not saying put fifty or eighty percent in alternative investing.
We're not saying that today. But you need to know
that these things exist and maybe you should look at
them as some ideas to consider so you can.

Speaker 5 (13:58):
Be you can do.

Speaker 3 (13:59):
I like to call it alternative strategies, not just alternative investments,
because you could when I meet with a client that
is looking for tax savings, maybe they're taking required distributions.
They didn't realize you could give some of that distribution
to a charity, you know there past seventy three and
their need to take the government saying you've got to

(14:20):
take a certain percent, and so an alternative strategy is
keep some, give some, and then you don't pay taxes
on it all. Maybe they meet with me and they're like, well,
I've got to make sure that you know I'm going
to have enough income in retirement, and clearly they are
if we do some alternative strategies, and that might be,
you know, moving some of that money to an income
annuity that covers all of their expenses and then the

(14:44):
rest of us free to grow, free to grow and
be used for fun things or trips or whatever. So
it's not just about alternative investments. It's about creating a
situation for a client that gives them alternatives to the
way they were doing things to make it better.

Speaker 4 (15:00):
Outside the box ideas. And just to jump back into
alternative investments in just one second. But on the note
you said about qualified charitable distributions. That's taking money out
of your IRA when you're seventy and a half, you
can do this and giving it to a charity. Well,
what that also does is it preserves your standard deduction.
I met with two clients this week actually, and I

(15:21):
was like, are you charitable? Yes, how much do you
give a charity above the standard deduction? Good for them,
they were making that effort. So they gave maybe forty
thousand dollars a year to church or a combination of
all the charities that they like. And I said, well, hey,
they were at both over seventy and a half. Why
don't we take that charitable distribution and fund it from
your IRA and what we've done there and now we

(15:42):
preserve your standard deduction for other things. And it works
out so well, and they're going to end the year
next year after we implement this strategy with so much
more money in their pocket. So very good point, Wanda.
But Greg mentioned private equity is one of the alternative
avenues that you can take out there, and private equity
back in the old days used to be just for

(16:03):
the ultra high net worth and family offices because only
only what is this? How do I say this the
right way? Less than less than one percent of US
companies are publicly traded, isn't that astounding? Ninety nine percent
of companies out there are private America, and you want
to be able to invest in those, right So, like

(16:25):
if I had an avenue to invest in Chick fil A,
I think I would forego diversification and put one hundred
percent of my money in Chick fil A. Another another
publicly or private company Ikea, Publics, Wegmans, Mars, Candy Bars, Enterprise,
car Rentals, Deloitte, Taxes, Fidelity, Investments in our industry.

Speaker 2 (16:43):
These are all private company.

Speaker 4 (16:45):
These are all private companies that a lot of people
were familiar with. They know those names, but there's no
traditional way to invest in those through the stock markets.
So you have access to private equity. You can if
you have you know, if you don't have two hundred
and fifty thousand dollars, which is oftentimes the minimum that
you want to invest in private equity, you can do
what are called interval funds with lower amounts of money

(17:06):
starting points, maybe fifty thousand dollars in private equity, and
it's a good way, as Greg mentioned, to kind of
smooth the ride out because that's what we like. We
don't want one hundred percent of your money to be
in the stock market, even if it's dividend paying aristocrats
or whatever. We don't, you know, maybe a sixty forty
portfolio is okay with you. Sixty percent stocks, forty percent bonds.
But it's our job to just shed light on what

(17:28):
else is out there that could help you reach your
goals and not be so volatile between now and when
we have to get there.

Speaker 1 (17:35):
And by the way, just for clarity, private equity means
just think of public stock trading, private equity. Equity means
stock and private means you can't trade it every day.
Therefore it's not as volatile.

Speaker 5 (17:48):
But you can get into it through those.

Speaker 1 (17:50):
Through the funds. Yeah, so anyway, it's available there out there.
Another really good investment recently in the alternative space is gold.
Goal is at an all time high, and a lot
of people misunderstand gold. I used the ETF Gold Bullion Fund.
That symbol is GLD. That I'm not saying by it

(18:12):
now sitting an all time high, by the way, but
GLD is all gold bullon so and they have one
in the silver world too. SLV is a silver bullion.
But anyway, a lot of people now are saying I
should buy gold now, and I said, no, you should
have bought it three or four years ago when we
bought it, because gold from twenty thirteen to twenty twenty

(18:36):
or twenty one did not do squat. Gold is an
investment that the value goes up and down. So don't
you say, I'm on buy gold and it's always going
to go up. I mean, if you bought it in thirteen,
you had to wait seven years to break even. But
on the other hand, if you bought it in twenty
twenty or twenty one or two, when markets were bad
and turbulence was coming. You remember, we were seeing the

(18:57):
war in Ukraine and blah blah blah. Now you're way
up and so but anyway, gold and silver, by the way,
I got to say that this is funny. I think
for fifteen years I've heard the guy that used to
be on Dallas or one of those famous.

Speaker 5 (19:11):
Old ye forgive Robert something.

Speaker 1 (19:14):
Anyway, now he's like two am I by gold from
whatever and with all every time I get a chance
because I and so I've always said over the last
fifteen years.

Speaker 5 (19:24):
He was in the grass on Dallas.

Speaker 4 (19:27):
He was some things don't change.

Speaker 1 (19:29):
But anyway, my comment about him is if you say
that long enough, there will be a day when you're right,
that gold will go up.

Speaker 2 (19:37):
But he had he had to do it for ten
years to find that that.

Speaker 4 (19:40):
Just like the guys out there who are calling the
next big stock market crash, they've been doing it for
fifteen years.

Speaker 2 (19:46):
Eventually it'll happen.

Speaker 1 (19:47):
Anyway, Golden gold coins, by the way, I have clients
that own gold coins and silver coins and antique coins.
By the way, I have clients that have that nothing
wrong with that. Makes sure or they're safe. Make sure
you get a reliable person that understands. We happen to
have a client in the Raleigh area who also audits

(20:09):
university gifts and stuff in the area of gold and
silver and rare coins. So there, don't just go on
the internet and go how much is my rare coin worth?

Speaker 2 (20:19):
You'll get screwed probably.

Speaker 1 (20:20):
So anyway, remember that is an alternative investment to consider.

Speaker 4 (20:24):
So on gold real quick. The returns have been astounding,
especially in the past year. So last year, gold's up
forty two percent, and gold has actually beat the SMP
on a one year, a twenty year and a twenty
five year. Yes, what it has. Yeah, if you invested
all your money into gold at the start of two
thousand and you're like, you know, new Millennia, I'm a
gold man now, you'd be doing pretty good.

Speaker 5 (20:47):
One fun so they get all the medals.

Speaker 1 (20:49):
Well, prescious precious metal funds are diversification in the in
that that's what.

Speaker 5 (20:53):
I prefer to do. But maybe I should have done't.

Speaker 2 (20:55):
No, No, you had.

Speaker 4 (20:56):
Gold and so we had that time machine.

Speaker 1 (20:58):
Yeah, but anyway, that's something easy for you. Now go
back to our definition it's not a stock bond, mutual
funder cash, it's different gold and silver.

Speaker 2 (21:08):
So that will take a break.

Speaker 1 (21:09):
We have about three or four other interesting ideas to consider.
Stay tuned, Welcome back to the second half of the
Greg Hicks Show. We are so glad you tuned in
this weekend. Or maybe you're listening on a podcast. We
got a call from podcast listener not long ago and
they're just lovely.

Speaker 5 (21:25):
Maybe me feel so young lovely.

Speaker 2 (21:26):
Couple, Yeah, tell me that. There we go.

Speaker 1 (21:29):
So anyway, great to have you on the show. Remember
our number if you want to talk to us. We
love talking to listeners. Nine one, nine eight five six,
nineteen sixty eight. Today our topic is alternative investments and
we are we are on. This is the fourth of
a series on investments, and now we're going to kind
of kind of branch off into some other areas. So

(21:50):
just to give you a heads up. Next week we're
going to talk about long term care insurance that affects
so many seniors. If you're a young adult, it will
affect your parents or grandparents. And then in two weeks
we're going to talk about choosing a financial advisor. That's
a huge subject. We love that, and of course we
always say you can choose us if you like, and
then we're into the fourth of July week, which is crazy.

(22:12):
We'll do the best of the great cake, so we'll
pick a topic that everybody loves to hear. So anyway,
that's just a reminder that we change topics every week
and we love doing that. We also create new topics
periodically and those are fun too to explore. We're trying
to always keep on top of what we hear out there,
what's going on in the world that people need to

(22:33):
know about their financial life. So that's why we change
topics every week, and we don't beat a dead horse
with the same topic.

Speaker 2 (22:39):
Over and over and over.

Speaker 1 (22:41):
Okay, back to the alternative idea. Anything that's not in
a conventional investment category such as a stock, bond, and
mutual fund or cash are typically called a alternatives. So
we talked about gold and silver. We talked about hedge funds,
private private equity funds that are out there now for
people with less than a million dollars that they want

(23:01):
to invest. So let's talk about This is a big
one and it's kind of ironic. We did a whole
show on it, but let's talk about real estate. There
are tons of ways to invest.

Speaker 2 (23:11):
In real estate, so let's to save taxes on it.

Speaker 1 (23:14):
Well, real estate by nature has tax benefits right thanks
to the government, the old government, the old guys in
the in the day. By the way, I want to
remind people that America was the first country that ever
gave u its citizens the right to own land.

Speaker 4 (23:31):
Everywhere else in the world in history until they change
their mind.

Speaker 2 (23:34):
The rich and powerful, they want it back, they want
it back. Yeah.

Speaker 1 (23:37):
And we just talked about imminent domain in the in
the break. But let's talk about real estate. There's all
kinds of little tax plays that are fantastic, like opportunity zones,
private land.

Speaker 2 (23:48):
Uh.

Speaker 1 (23:48):
And by the way, we don't we don't poo poo
anything a client says about these because sometimes they'll say,
have a chance to buy a farm, or have a
chance to buy a rental house. We actually help the
clients say, oh no, we want all your money and
my annuity or in my mutual throne.

Speaker 2 (24:04):
We don't do that. We can do what's best interest
to the client.

Speaker 4 (24:07):
It's always funny when a client. I tell a client, hey,
you should go ahead and pay off your mortgage because
I can tell it bothers you. Sometimes sometimes objective advice
is overshadowed and overtaken by emotional advice very rarely, but
you know, my job, ultimately and are our job is
to help be the objective sounding board for the client.
But with mortgages, when I can tell that it bothers

(24:28):
a client and they're going into retirement and they have
all this cash sitting there, I'm like, just pay that
sucker off. You'll be so much happier when you do it.
And I have met so many people who have said, man,
my old advisor told me to keep that money invested,
and I look back and I'm be like, I wonder
why he did that. It's nice to collect that one
point five percent fee on that additional three hundred and

(24:50):
fifty grand.

Speaker 3 (24:51):
So yeah, well, And also the other thing with real
estate I know many of you out there have experienced
is maybe you had a farm that you inherited or
you know, big family land and you needed to sell it,
or maybe you held onto for a few years and
now you've really got growth in it, and so there
would be taxes. There are things like ten thirty one

(25:12):
exchanges that you can do and you don't have to
identify the property. There are companies out there that can
do that for you, and you get into properties that
you don't have to manage and you just get the
income from it. And they've been around for a long time.
They call upreachs. You can do that, and you can
even get out of it by selling some shares. So

(25:32):
it's not like, yes, you're deferring the capital games. So
even and I know some of you out there, I've
heard the stories. You know, five forty is coming into
part of Wake County, and so some of these people
are being offered exorbitant amounts of money and some of
them having to relocate and things like that, and then
they're wondering, how do I avoid or minimize the tax? Bye, Well,

(25:55):
you can do the you know, because the government's going
to do iminent domain, you know, and then they're going
to do condom if you don't agree. But even if
they do condemnation, you can still do it's called a
ten thirty three exchange and move that tax burden on
down the road. I'm telling you it's something worth exploring.
If you're in that situation in Wake County or any county,
give us a call nine one nine A five six

(26:18):
nineteen sixty eight. We have the resources to put you
in touch with to help you do this and not
pay a boatload of taxes.

Speaker 1 (26:26):
We also have something called opportunity zones, which also are similar.
They defer your taxes too much later, and that's being renewed,
I understand in the new Trump tax plan that's in
the Senate right now, probably going to pass. But anyway,
op zones is a great way to delay capital gains
and so forth. And there's also we don't talk a

(26:48):
lot about this, but there's charitable trust. If you're charitably minded,
you can take old land. Let's say you inherited land
that was worth one hundred grand and now in Wake County,
North Carolina's worth a million dollars. But you can't sell
it because you don't want to pay two hundred grand
in taxes. But you can move it to a charitable trust.
To trust two different kinds. One of them pays you

(27:08):
an income for life until you die, and then whatever
is left in it goes to charity. The other kind
pays the charity for twenty years and then you get
the rest of it tax free. So for you people
that are in that category and you like real estate
and you're kind of hung out to dry locked in
on capital gains taxes, so you can't sell. Give us

(27:29):
a call at nine one, nine eighty five six, nineteen
sixty eight. And like we said, real estate can be
super useful in the tax area.

Speaker 4 (27:37):
And although there are a lot of tax strategies that
we fully endorse and use with our clients in the
real estate sector, there are I know for a fact,
because I've met with a lot of people who have
come in for a second opinion, there are some financial
planners out there who are maybe exploiting the real estate
tax laws a little much. And one of the ways

(27:57):
they're doing that is saying, Okay, if you have a
million IRA and you invest in this real estate investment,
maybe it's a conservation easement or something else, we will
we will immediately revalue that down to one hundred thousand dollars.
So now your million dollar IRA is one hundred thousand dollars, hey,
And what we'll do is we'll take it and we'll
convert it over to WROTH. So now you're only paying

(28:18):
taxes on one hundred thousand dollars that you move from
your ira to wroth and then guess what it's gonna
get revalued in a year or two years and go
back to a million. Now, if you think that doesn't
make you the number one candidate for an audit next
year and you're gonna have to pay all those taxes back,
you might be a little crazy, because that is something

(28:39):
that the IRS has actually addressed previously. And I would
just be very careful. Always when something sounds too good
to be true, it's a novel idea and compliment to
you the advisor for thinking about it. However, it sets
you up for an inordinate amount of risk and a
huge surprise down the road, and we don't like surprises,

(29:01):
so again, it's all about setting expectations, and I would
just be very careful with that. If you're a listener
who has heard that strategy before, maybe give us a
call so that we can take a look at it.
Nine one nine eight five six one nine six eight.

Speaker 3 (29:13):
May do you remember back in the mid nineties, I
think it might have been early nineties there was some
kind of movement going on where and I don't know
who started it or who did it, but I had
clients call me about it. It was buying real estate
in like Costa Rica or Puerto Rico, and they would
do it through their IRA.

Speaker 4 (29:33):
Is this the Nigerian Prince?

Speaker 5 (29:35):
I don't know.

Speaker 1 (29:36):
Do you remember that we had we had some client
actually do it apart from us, and then of course
the land was worth nothing.

Speaker 5 (29:44):
Yeah.

Speaker 3 (29:44):
Well, I had somebody come to me and I said
I would not do it. I would not do it.
And and basically she said, so you're telling me you're
not going to do I said, I don't. I know,
I'm not going to do it because I think you're
setting yourself up. You've got UBTI which is unrelated business
tax income to consider in an IR, which typically doesn't apply,
but you do have to. And so she literally moved

(30:05):
her account because anyway, and did anyway.

Speaker 5 (30:08):
I don't.

Speaker 3 (30:09):
I didn't follow up to see what happened. It would
be interesting, but I checked with our compliance department and
they were like absolutely not. You know, no, we were
not endorsed.

Speaker 5 (30:20):
That at all. And you know, it was to me,
but there was some kind of movement.

Speaker 3 (30:24):
I don't know what it was, but several people brought
that to my attention wanting to do it. I don't
know whether there was a you know, Hamptony and seminar
or something somewhere that somebody did with reads or whatever.
But yeah, be careful of what's Like BO said, what
sounds too good to be true. I think this guy's
setting himself up to be audited as well as the clients.

Speaker 4 (30:45):
And what you're mentioning. The self directed IRA, there are
only a few custodians out there who do it just
because of the complications and the tax law that's there.
Not everything is always tax free, and you have to
be very mindful of what you're buying in there. They
also oftentimes have inordinate minimums, like relationship minimums, you know,
fifty million dollars sometimes. Equity Trust, Madison Trust are a

(31:10):
couple companies that I've heard of that do that. But
the clients I know that have experienced doing that have
actually closed them out because they were too cumbersome. And
so even though again it sounds like a fascinating idea
to invest in real estate within your IRA, there's a
lot of provisions there that actually make it a little
less attractive than you might think. So maybe stick to
the basics in that department.

Speaker 1 (31:31):
Yeah, yeah, that's right. And by the way, we mentioned
on our real estate show. A lot of people like
liquidity plus real estate, so you can buy something called
a REP to real Estate Investment Trust are eit and
all the dividends ninety percent of the earnings of Arik
Company have to be forwarded down to the investor in

(31:53):
stockholder in the form of a dividend, and it's usually
about fifty or sixty percent tax free on the income
sat there. So real estate is an interesting alternative investment period.
But secondly, it has a lot of ways to shelter taxes,
so it's very kind of interesting stuff, a little bit sophisticated.
Let's talk about something. We don't do this, but I

(32:15):
do want to mention it. Art and antiques can be
an alternative. We don't recommend necessarily, but anyway, we just
want to mention that before our break. And yeah, yeah, yeah,
we have cabbage patch dolls by the boatload in our garage,
but anyway, just reminder of that that those are real
things too as well. Now we're going to take our

(32:37):
last break and come back in a short minute. Stay tuned.
All right, welcome back to the segment four of the
Greg Kicks Show. Boy, this show has gone fast. I'm
Greg kick Serfi Financial Planner along with Wadena Cooper Financial
Advisor and Bo Nicholson's Certified Financial Planner. We work for
a small business called Financial Resource Management, headquartered in Ralely,
North Carolina and one of the fastest growing cities in

(32:59):
the world a percentage wise anyway. And we also have
a beach office in Atlantic Beach, North Carolina with a
beautiful view. It's small but beautiful, so we can meet
you there as well, and we can also occasionally do zoom.
We did a zoom call this week with a prospective client,
and so you know we'd love to talk to you.
Call us at nine one, nine eight five six, nineteen

(33:22):
sixty eight. Now, our show today is on alternatives, and
we've talked about a lot of things. By the way,
heads up, next week we're going to talk about long
term care insurance and insurance in general. Avoiding risk is
a way. One way to do it is insurance, so
we talk about that as well, and then two weeks
choosing a financial advisor. So heads up on this show's

(33:42):
coming up. One thing I want to mention, and I
would call this probably an alternative by definition, there is
something called buffer annuities and the non annuity. Way to
do it is something called structured notes.

Speaker 5 (34:00):
For you're going to mention it.

Speaker 1 (34:00):
Yeah, structured notes so used to be kind of like
BO talked about while ago for some of these private
equity funds. Structured notes used to be have a million
dollar minimum for wealthy people. Now you can put one
thousand or five thousand in them. But I'll explain briefly
and then you guys can add add comments. A buffer
annuity is like you pick a fixed time frame one year,

(34:22):
three year, six year old. You can pick your buffer,
meaning how much loss protection do you want? Ten percent,
twenty thirty, even one hundred percent loss And a buffer
just means let's take one hundred thousand and a twenty
percent buffer. Three years later, it goes down nineteen percent, whoops,
bad idea. But guess what to twenty percent buffer provided

(34:44):
by the annuity company. They will restore you whole the
next day back to one hundred. If it went down
twenty one percent and you had a twenty percent buffer,
you lose one percent in exchange for that protection. They
give you an upside. So if it went up, maybe
your upside is you know, thirty one percent. If it
goes up forty percent, you get thirty one. If it

(35:04):
goes up ten percent, you get ten. So you can
do that in an annuity there's normally no fee annual
fee on that annuity, or you can do it in
something called structured notes. It's the same exact idea. I
use structured notes sometimes when I buy the S and
P index, and I'll go out three years, five years
and protect my clients in case it happens to go down.

Speaker 2 (35:28):
One thing I've said, it's funny. In the last week.

Speaker 1 (35:30):
I've said this to about five different clients. Timing is everything.
Timing is just as important as the investment itself. If
you buy it at the wrong time, you're probably going
to lose. If you buy it at the right time,
you're probably going to win. So the reason buffer, structured
notes and buffernuities are good is you don't have to
worry as much about your.

Speaker 4 (35:51):
Timing, especially if you're not adding to an investment account. Yeah,
timing is everything, But if you continuously time it and
you're investing five thousand dollars a month or whatever it is,
you're buying in at different levels of the market, and
your chance of success goes up significantly.

Speaker 3 (36:05):
Absolutely. Well, I also use annuities another way. I use
one that's acts almost like a CD or a bond,
and the annuity company allows you to participate in the market.
But and hell, five years, there's no risk to your
principle at all, and but there could be a respectable return,
you know. So I like annuities for various reasons. I

(36:26):
don't do everything in an annuity, unlike some of the.

Speaker 5 (36:29):
Radio people that do our type of work.

Speaker 3 (36:33):
I've seen people these fifteen year annuities at surrender yees
seventy two years old.

Speaker 5 (36:41):
Well you do the math for that one.

Speaker 3 (36:42):
Sad, sad, sad. We don't do that, but if it
makes sense, we do show that to you.

Speaker 4 (36:47):
We do small portion of your money potentially. And so
we have a we have a bullet point on our
show outlined today about risk and I just want to
focus on one risk, which is called renewal rate risk.
And this is a risk that I don't want to
be too obvious in who I'm talking about here. But

(37:08):
another maybe radio guy does not mention. And so Greg
mentioned the fifteen year annuity. Well, we've seen that people
come into our office and they say fifteen years surrender
fee which means you commit your money today, you can't
get it out without significant penalty for fifteen years. Who
knows what you're gonna be doing in fifteen years. Think

(37:29):
back fifteen years ago. That's a completely different season of
your life.

Speaker 5 (37:33):
Fifteen years to the he old.

Speaker 4 (37:34):
Mean, seriously, you're gonna be around so renewal rate risk.
They make all these promises at the start of you
buying that annuity for fifteen years or ten years or
whatever it is. Here's what's gonna happen. You're never gonna
lose a dime. And if the market goes up, you're
gonna get twelve percent. So you're gonna be capped at
twelve percent. Greg mentioned market goes up five percent, you
get all five goes up fifteen. Well you're capped at

(37:55):
twelve percent. Sounds kind of nice, and in the first year,
sure it is nice. But what happens fourteen years? What
happens year two to fifteen, The fourteen years after that, well,
this is when that renewal rate risk comes into play.
So let's just say interest rates go down a little bit. Well,
now your twelve percent cap might go to a six
percent cap. That insurance company annuity company is never going

(38:18):
to increase that cap. Well, let's say then the six
percent cap goes down to a three percent cap. Now
you're stuck at a three percent cap us treasure. You
could have bought a US treasury three years ago and
done a whole lot better than this. So you're stuck
in this investment that's not really gonna do anything. Your
money is just sitting there now for thirteen more years,
and you can't do anything about it without penalty. These

(38:40):
are the dangers of annuities. This is why annuities get
bad raps, because there are dishonest salespeople out there who
put money into annuities and do not address the risks.
And so this is us doing a service to all
the other radio listeners who might listen to other radio
shows and get hoodwinked or trying to prevent that from happening.
Give us a call. We're always here for a second opinion.

(39:01):
Nine one nine eight five six one nine six eight.

Speaker 3 (39:04):
And what about the twenty percent bonus?

Speaker 5 (39:05):
Have you heard that one?

Speaker 4 (39:06):
The twenty percent bonus? Okay, really quick, I'll explain a
twenty percent bonus. The twenty percent bonus is not real money.
You get a twenty percent bonus on what's called your
benefit base. With annuities, there are two values. Oftentimes there's
the actual contract value, which is money to you, basically
the surrender value. If you want to pull your money out, now,
what's it going to be that's real dollars. There's the

(39:28):
benefit base. What is the income that this thing promises
based on. It's a nebulous number. It means nothing. It's
a marketing tool. They could just instead say your income
in five years is going to be this. It would
be plain, vanilla, black and white, easy to understand, which
is what we do, which is what we solve for. Instead,
they know that there are some salespeople out there who

(39:50):
will be dishonest and say, hey, this bonus, this twenty
percent bonus that you get happens on day one, not
real money. Do not fall for these scams. Nine five
s one non sixty eight. Protect yourself.

Speaker 1 (40:03):
Let me mention one thing that sometimes is inside of
alternative investments in one of the things y'all are talking about,
you know, the surrender fee. Sometimes alternative investments are non
liquid for a while, like the opportunity zone that you
can defer taxes for another year and then if you
hold the property ten years and they sell it for

(40:25):
a big gain, you don't pay capital gains tax. Well,
when you go in it, your your plan is to
hold it ten years. So some of the private equity
funds have a holding period. So my point is this,
always ask all the questions is what's the annual fee?
Is there a surrender fee? What's the liquidity factor annuities? Actually,

(40:47):
you can by law pull out ten percent of an
annuity every year without paying surrender. So even a long
surrenderfy annuity has that ten percent option. But I'm just
saying sometimes alternative investments, it's not like you can call us.
I can do a trade on the phone in ten
seconds and it shows up in four seconds, it's over.

(41:09):
But you can't trade an opportunity zone. You can't trade
a piece of roll in in ten seconds. Even gold
and silver. You can have your in your closet a
little safe with eighty thousand of gold bullion, you can't
just sell it, go to the bank and sell it.
I mean, so keep that in mind. There's always something

(41:29):
out there that either restricts your movement. An interval fund
means you can sell it, you can buy it any
day of the week. It looks like a mutual fund,
but you can only sell it one day per quarter.
So again, those are things that your advisor needs to
sell up front, and if you're an investor, you need
to ask questions upfront and when you're filling out a form.

(41:51):
I talked to a client recently. He bought an annuity
about let's see, about twelve years ago. It had a
sixteen years from unbelievable and he said, and now that
realized memory, you know memory a long ways back. He said,
I don't remember that there was a surrender fy at all.
But in our annuity forms, we we have to write

(42:13):
in the surrender FY and let the client see it
and they sign it. That's what an advisor with integrity does.
So just ask questions. Nothing wrong with than alternatives.

Speaker 2 (42:25):
We never put.

Speaker 5 (42:25):
More definitely nothing wrong with annuities.

Speaker 1 (42:27):
Yeah, we never put more than five to ten or
twelve percent and alternatives and more than what fifty percent
or forty percent and annuities.

Speaker 2 (42:35):
But just ask questions. That's the key right there.

Speaker 4 (42:37):
Thoughtful diversification and making sure there's liquidity.

Speaker 3 (42:40):
Out Well, the thing that I've heard lately, and I
told you this yesterday, three people came to me for
a second opinion. All three said I did not realize
I purchased an annuity.

Speaker 5 (42:52):
So I can't.

Speaker 3 (42:53):
Believe there's three people that possible.

Speaker 5 (42:55):
I don't know. I don't know.

Speaker 3 (42:57):
I can't believe three people either. They weren't It wasn't
disclosed properly.

Speaker 5 (43:02):
All three misunderstood.

Speaker 3 (43:03):
I find that hard to believe if they signed the
paperwork appropriately.

Speaker 5 (43:08):
So, but yeah, I think it's kind of sad.

Speaker 4 (43:10):
It's fifteen years is a long time. Yeah, you know
what happens to your memory after two three years, Yeah,
I know what happens to mine about after three days.
I two kids at home, I know, I know.

Speaker 3 (43:20):
But to find to hear that three times back to
back was kind of And these weren't old people, That's
what I'm saying.

Speaker 1 (43:25):
Yeah, yeah, yeah, And so just get all the information,
make sure you're comfortable and you can sleep at night.
I had a person come in a few months ago
and they had already and this was ironic, but they
had already signed papers to transfer their account to someone else.
But they couldn't sleep at night. So they came to
me for a second opinion. But no offense, but don't

(43:48):
come to me after you or a second opinion. If
you signed the papers. I mean, it's hard to undo
sometimes what you've already done. So so if you're retiring,
or if you inherited money, or whatever is happening in
your life, get two or three opinions first.

Speaker 2 (44:04):
I had.

Speaker 1 (44:05):
I had a meeting the other day with someone who
said to me, I'm going to talk to two other people.

Speaker 2 (44:09):
And you know what I said.

Speaker 1 (44:10):
I said, I want you to I don't want a
client that wonders if I'm doing the right thing. There's
a relationship there, and I wish we had more time.
But in two weeks we're going to talk about choosing
a financial advisor. But we're going to have to wrap
this show up. But anyway, next week long term care,
two weeks choosing an advisor. Our website is FRMNC dot

(44:31):
com and if you need to call us, we'd love
to talk to you. Eight hundred and four eight seven
one seven eighty six. And remember this, it's your money,
it's your future, don't blow it.

Speaker 4 (44:42):
Advisory services through Capital Investment Advisory Services LLC security is
offered through Capital Investment Group Bank remember Finra and sipik
one thousand, e six Forks Road, Raleigh, North Carolina, nine
one nine three one twenty three seventy. Past performance is
not indicative of future results.