September 7, 2025 • 33 mins
Does hard work still pay off in the good ol' USA? Most Americans don't think so!
Ask HTM: John wants to know if he should keep his condo as an investment or sell it instead.
Stocks are at-all time highs...and record-high valuations. Should that impact how you invest!?
Ask HTM: Jennifer wants to know about ABLE accounts and how to use one effectively.
Ask HTM: John wants to know if he should keep his condo as an investment or sell it instead.
Stocks are at-all time highs...and record-high valuations. Should that impact how you invest!?
Ask HTM: Jennifer wants to know about ABLE accounts and how to use one effectively.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Kf I AM six forty. You're listening to how to
Money on demand on the iHeartRadio app.
Speaker 2 (00:08):
Do you want to live well without drowning in debt?
Speaker 3 (00:11):
Joel and Matt have you covered?
Speaker 2 (00:14):
This is how to Money with Joel lars Guard and
Matt Altmix.
Speaker 1 (00:47):
KFI AM six forty live everywhere on the iHeartRadio app.
Speaker 3 (00:51):
This is how to Money.
Speaker 4 (00:52):
I am one of your hosts, Joel Larsgard and I
am Matt altmixed. By the way, you can always find
more money saving information over at howtomoney dot com.
Speaker 3 (01:02):
All right, let's talk. Let's talk about hard work.
Speaker 1 (01:04):
Most Americans these days don't seem to think that hard
work pays off in the ways that it used to.
This is according to a New Wall Street Journal survey.
So pessimistic beliefs they continue to increase, as something like
seventy percent of Americans they just don't believe or maybe
never believed, that working harder is going to help you
achieve the American dream. So in the year two thousand,
(01:27):
the opposite was true. It was like seventy five plus
percent of people thought that, yeah, if I work harder,
I can achieve the American dream. Even as recently as
two thousand and five, it was a vast majority of
people saying, yeah, I also believe that, But for some
reason the numbers have become diametrically opposed, and a lot
fewer people believe that their life can be better than
(01:49):
the one.
Speaker 3 (01:49):
That their parents lived.
Speaker 1 (01:51):
I don't know about you, but it's kind of hard
for me to pinpoint a specific reason for this lack
of hope. I think maybe higher prices as part of
that inflation, people feel like everything costs more, and maybe
my raises haven't been keeping up with that, and so
that does feel demoralizing, which I get, especially when you're
talking about home prices and younger generations who are saying
I would like to own a home, feels like it's
(02:12):
never going to happen given the current climate, and then
just general worry about the future. That seems to be
kind of maybe at the crux of I totally agree
of how people are feeling, and I think we have
to point out that it is true that the economy
has pain points for a lot of people. It's not
like the economy is hummin along working incredibly for everyone.
Speaker 3 (02:30):
We talk about record.
Speaker 1 (02:31):
Highs, well, people, there's a significant number of Americans who
don't have any money invested in the stock market, so
they're not feeling the benefits. They're not feeling that massive
net worth increase that people who have been consistently investing
have been seeing. And it is true also that hard
work alone doesn't necessarily mean you're going to get meaningful
(02:53):
results and build a whole lot of wealth. But I
think it's crucial to find a way to provide value
right in order to increase your compensation, not just to
work your butt off.
Speaker 3 (03:00):
It's a little bit of both.
Speaker 1 (03:02):
But I also think that pessimism can be this like
self fulfilling prophecy, and despite headwinds, it's still really possible
to live a great life and to build wealth in
this country.
Speaker 3 (03:10):
So it's very possible. Seeing seeing these numbers just kind of,
I don't know, made me sad.
Speaker 4 (03:14):
Yeah, I think this is an instance too where if
it bleeds, it leads right, Like this is the negative headline,
and you know, it made the rounds. I'm sure a
lot of folks have maybe heard folks refer to it.
But like, and I hate to be like the old
man yelling at the sky, but like, I feel like
this could be love it. I feel like this could
be an instance too to where we're just spending too
much time online. Yeah, like we like, I don't want
to make everything about smartphones, but we're sitting there on
(03:35):
our devices. We're too online. We're being endlessly entertained, We're
endlessly scrolling, and even the very act of scrolling without
having as we're getting sucked into the algorithm. Like that
is just this discipline destroyer as opposed to getting out
there kicking butt, trying to find a way.
Speaker 1 (03:52):
To and it feels make your life better. It feels
like everyone else has a better life than us when
we're scrolling.
Speaker 3 (03:56):
You know, guess what.
Speaker 1 (03:57):
It's a part of the algorithm is guess what. That's
exactly how I feel when I scroll. Yeah, And that's
why I try to avoid it, because I know what
happens to me when I scroll. I think other people
are living their best life and I'm over here living
an average one.
Speaker 4 (04:08):
Yep, you don't want to get sucked into that man,
as opposed to the folks who are actually out there
taking risks. And I do think like a part of
the uncertainty, especially that we've experienced over the past five years,
has led to like, when there's uncertainty, you're just not
sure what's what the future holds, and so I think
you are less likely to take risks. But this reminds
me of an article I saw about gen Z entrepreneurs,
(04:28):
because they're the ones out there who are taking those risks,
like working their butts off, and specifically they're also trying
to avoid the office jobs that come with just a
two percent anal race in search of something that's more energizing,
something that's a bit more lucrative.
Speaker 3 (04:42):
High school grads, they are less.
Speaker 4 (04:44):
Interested in paying for that two hundred thousand dollars degree
and instead or hopping into the workforce early, whether it's
this article documented folks becoming real estate agents, which is
a bit tougher to do right now, opting for specialized
like the tra work basically like blue collar work, which man,
I totally appreciate this, you know, the enterprising nature that
(05:06):
gen Z seems to be reviving. And I think the
crucial way to make sure the American dream works for
you is to avoid the major traps, right Like you
want to zig while everyone else is zagging, and if
the college and you know, buying a home route, if
those paths are going to be too expensive. If it's
going to tie you down, well, that's when you have
the opportunity to create a different dream that doesn't involve
(05:28):
those things. And that is the reason why I still
think that the US is still the best place for
you to essentially blaze your own trail.
Speaker 1 (05:36):
It's better than the vast majority of the rest of
the world. And I think maybe two people assume when
we're talking about the American dream that it has to
look like this stock American lifestyle.
Speaker 4 (05:44):
I think the American dream can look like whatever you
wanted to look like. That's what we're saying.
Speaker 1 (05:47):
Here, that's what's cool about it. Yeah, it doesn't have
to look like the four bedroom, three bathroom house with
the white pick of fence. I think for some people
that is their dream, and maybe it's harder to achieve
that now that it has been in the past. But
for other people, it's live in that van life, right
and traveling around the country, which has in many ways
become easier than ever before to pull off. And I
(06:08):
guess I wonder if that's maybe some of the pessimism
too revealed in this survey, is like, well, I can't
live that classic suburban nineteen sixties sort of lifestyle that
my parents lived. But maybe your American dream can look better,
just different, because I do think that people's hopes and
aspirations have actually changed. What people want out of life
(06:28):
has changed since I.
Speaker 3 (06:29):
Think you're saying basically, do you even want that? Right? Yeah?
Speaker 1 (06:32):
And I love I love to see because I think
gen Z there's a lot of you know, intergenerational picking, okay, boomer,
that kind of sort of thing. But I love that
gen Z seems to be taking this tact where they're
kind of grabbing life by the reins and they're saying
by the horns. Yeah, I think a lot of people
are like but I was told to get the college
degree and it was really expensive, and now I find
(06:54):
myself in a place where it's harder for me to
achieve the American dream. And I get that, and that's
a difficult position to be in. But I also I
love that gen Z is kind of starting to question
those things out of the gate and saying no, no, no, no.
I think what I want is this, and I don't
necessarily need the college education to get there, and so
not that college is bad or that everyone should avoid it,
but I.
Speaker 3 (07:13):
Just it's worth asking the question.
Speaker 1 (07:15):
That's worth asking the question, and it's worth thinking a
little differently. Gen Z seems to be to be doing that,
to kind of be responding to the incentives that are
out there and the costs that are being placed on us.
And if we can, like you said, Zig, when other
people are sagging, I think we can live that American dream,
even it doesn't look like the classic idealized version.
Speaker 3 (07:35):
Totally agree.
Speaker 2 (07:37):
You're listening to How to Money with Joel Larsgard on
demand from KFI a M six forty.
Speaker 4 (07:44):
If you have a money question, we'll send it our way.
All you have to do is record your question on
the voice memo app there on your phone and send
it over via email. You can find the simple instructions
at how toomoney dot com, forward slash ask.
Speaker 1 (07:57):
Let's get to one from a listener who's like struggling
about whether or not to keep or sell a real
estate asset he owns.
Speaker 5 (08:05):
Hello, my name is John, and I find the information
on this program very helpful, especially for beginners such as
myself going in the world of financing and planning. I
have heard the topic of condos before on this program
and to me, they generally don't sound like a great investment.
I have had my condo for about four years now,
(08:28):
and from my experience, it has not appreciated much in value,
and a lot of my salary goes towards paying the
property taxes that are due at the end of the year,
and I feel like that money would be better spent
on something else, since I barely get anything in return
from the after paying the property taxes.
Speaker 3 (08:49):
Anyway, I recently rented.
Speaker 5 (08:53):
Out my condo to tenants and they have been there
for several months, and I'm wondering if things will get
better after I pay off the rest of my immediate
expenses and I could finally put the rent and receive
to an account that will pay the mortgage, property tax,
(09:15):
and the HOA. However, after doing calculations, I only still
get about one hundred to two hundred dollars a month
after all that is deducted from the rent, which I
don't see us too great.
Speaker 3 (09:30):
The property is located.
Speaker 5 (09:32):
Near the beach in Los Angeles and I got it
during the COVID times when the interest rate was very
low around two point eight percent. We'll just make my
condo worth keeping, I would really appreciate some advice, and
thank you so much for everything.
Speaker 4 (09:52):
All right, John, I am glad to hear that you
found the show helpful. And your question condos, specifically, you're
talking of about whether or not your condo, whether or
not it's a good investment. But specifically what I want
to ask is should it be a good investment, because
when you buy a condo or when you buy a
single family home, the main.
Speaker 3 (10:12):
Goal is going to be to put a roof over
your head. You're looking for a place to live.
Speaker 4 (10:17):
So in this case, you are or I would say
that you were getting something and otherwise you'd have to
fork over the money in rent. That's that right there,
that's the rent versus by debate, And that answer depends
on personal goals. You know what's happening in the market,
but right now, renting it certainly beats buying almost everywhere
from up your price per month standpoint. But again, so
(10:39):
much is going to depend on your personal your lifestyle goals,
not just what is more affordable right now, not just
what the dollars and cents shows.
Speaker 1 (10:47):
And sometimes right buying, if you have an extended timeline,
you're like, oh, my monthly payment's going to be a
little bit higher, but if it meets your goals, and
also you're talking about locking in that cost over a
long period of time. Rents have not been going up lately,
but typically, you know, rents go up at a fairly
regular pace year after year. And the truth is, Matt,
I think we as a society, we've collectively viewed home
or condo ownership as this way to build wealth. When
(11:10):
you think about the average American, they probably many of
them have more wealth in their home, more equity in
their home, than they have wealth in the stock market.
So by to facto, it is their number one savings vehicle.
And so because of that, they see it as like, oh,
this is my this is my little piggy bank over here,
this is where I'm stashing my cash. And we have
seen right rapid appreciation in recent years, leading many to
(11:31):
expect more of the same. Like I think people are like,
oh great, I've seen what happen in home prices over
the past few years. My real estate agents is saying,
get in before the getting gets impossible. And then you know,
those people are dismayed if the market stutters after you know,
they make their own purchase. But that is happening currently
for some, which is something that you and I have
warned about that, hey, the market can't continue to go
(11:52):
up at this clip forever. Well, the purpose I think
for some it isn't to live in a place they desire,
but to see their equity grow. But the housing market,
it's this complex organism, right, and buying with dreams of
rapid equity accumulation I think just is a bad idea, Like,
don't go into a home or condo purchase with that
in mind. Think of it like a cherry on top,
(12:14):
kind of like you said, Matt, you don't want to
go into it with that being the sole or major goal.
Make your decision on other variables. Have a long enough
ownership timeline in mind, like plan to own that place
for a while, and then if your home price appreciates
faster than average, I would just be like, oh, thank
my lucky starts.
Speaker 3 (12:30):
Yeah.
Speaker 4 (12:30):
Yeah, because they tend to appreciate at a slower rate
than single family homes as well. So you got to
be more You gotta be more patient. And I think
you're setting yourself up for disappointment, even for disaster, if
you're expecting anything more than that.
Speaker 3 (12:42):
But so much does depend on your location.
Speaker 4 (12:45):
And I'm kind of actually surprised to hear John that
you mentioned that you don't think your condo has gone
up in value much over the past four years, because
we have seen outsized price growth across most of the country.
Speaker 3 (12:56):
Yeah, if you said you bought like a year ago,
I'd be like, yeah, maybe not probably.
Speaker 4 (12:59):
I understand a year ago, but four years ago, I
feel like you should have caught that massive uptick. So
I would revisit and just see how accurate those numbers
are and just put it's based on based on like
what you paid, what other units in your complex are
going for, what they've recently sold for. But you you
bring up something else as well, which is essentially plateauing
(13:20):
or receding rents, and I think that can make it
feel like your condo isn't a great investment, and for
many landlords it has impinged on their ability to profit
from the rental. And in your case, the amount that
you're making over and above your mortgage just not surely
doesn't sound very life changing. I think you said one
hundred bucks more is kind of what he's at. That's
(13:42):
why with the current rents are pulling in.
Speaker 3 (13:45):
That's still positive.
Speaker 4 (13:46):
I want to say that I want to provide you
some Yes, yeah, you were in the black, and I
think with that mind, holding onto the condo over the
long term, it could still potentially be a big winner
for you if you are willing to stick with it.
Speaker 1 (14:01):
Yeah, And I think so much comes down to location, right, Matt,
When you talk about some of those West Coast cities
in particular, the numbers, oftentimes landlords are buying for appreciation purposes,
only they're losing money every single month. So the fact
that John is making money on the West Coast with
an LA condo, think about a place like San Francisco.
You can't really hope to buy a place in San
(14:21):
Francisco or New York City. And like he said, he's
close to the beach, right, Like that sounds pretty dang desirable. Honestly,
maybe that's a big part of it, because he's specifically
calling out the addition the taxes and the HOA do
is maybe this is a building that has like turned
things around as far as special assessments, and they're realizing that,
oh man, if we want to make sure this building
(14:42):
doesn't like crumble into the ocean or something like that
we're going to need to start setting aside a lot
more money to ensure that we're taking care of this building.
Speaker 3 (14:49):
Maybe that's what's going on here.
Speaker 1 (14:50):
Yeah, And I would say in a city like Mobile, Alabama,
you're investing for cash flow month after month. In a
city like Los Angeles or New York City or San
francisc or whatever, big cities like that, Seattle, these.
Speaker 3 (15:01):
Are attractive places to live.
Speaker 1 (15:03):
You're probably talking about renting being a landlord more for
appreciation over time of that unit. So that's something you
need a factor in as well. Yeah, you might not
be making much money every month, but hey, you're doing
better than a lot of landlords in your similar location
would be doing. And you asked about how the interest
rate plays into your decision to keep her sell, I
think it matters. I think it's it's a check mark
(15:25):
in the pro category because a locked in mortgage rate
below three percent is almost and I say almost because
I can't quite bring myself, Matt to call that an
asset because it's not, because it is a liability, in fact,
still a debt. It's still a debt.
Speaker 3 (15:38):
From an accounting standpoint, but in.
Speaker 1 (15:39):
Today's economic environment, it sort of feels like that because
it is close, like the floor has been raised, and
it feels like to anything in like the twos and
threes percent almost feels like, wait, wait a minute, I'm
making money, right, which you kind of are if you've
got money in savings and you're not paying down that
morgage more quickly, like you're coming out ahead in that spread. Still,
I think again, and there are a lot more things
(16:00):
to take into consideration, like profitability, what else could you
accomplish with the freed up equity, the financial state of
your homeowners association, Matt, which you kind.
Speaker 3 (16:08):
Of alluded to well, and then whether or not you
like being a landlord.
Speaker 1 (16:11):
I think that's a really really important thing to think about,
and a lot of people.
Speaker 3 (16:14):
Think that might be the most important thing.
Speaker 1 (16:16):
Yeah, because we talk about it as a part time job,
not just an investment, unlike investing in the stock market,
just like tossing money and dollar cross averaging every couple
of weeks. And John, you made it sound like the
property taxes this giant thorn in your side, which makes
me want to say, well, hey, you might want to
challenge it if you think it's if it's too high,
if it's unfair.
Speaker 3 (16:34):
Sure, but I'm not sure.
Speaker 1 (16:35):
It sounds like maybe the overall experience of being a
landlord isn't quite your jam either. And if that's the case,
and you're like, should I keep doing this just because
maybe the numbers might work out a little bit better,
I would say probably not. Like, if that's kind of
where your head, where your heart's at, you're probably going
to be frustrated putting in the effort, and there might
be an easier way to build wealth than sticking with
(16:56):
this condoct totally.
Speaker 2 (16:58):
You're listening to to Money with Joel Larsgard on demand
from KFI AM six forty.
Speaker 1 (17:05):
Don't forget to sign up for the how to Money newsletter.
You can find that up at how tomoney dot com
slash newsletter Let's do It. Has anyone noticed anyone out
there noticed that the stock market is doing pretty good? Right,
doing quite well? I noticed all time highs on repeat.
It feels it feels like over over the last many months.
And you know, the tariffs, meddling with the Fed, they
don't Neither of those things seems to have had a
(17:27):
negative impact on investor sentiment. It's a everyone's just hitting
the buy button and this has led not only to
like I said, record highs, but record high valuations. And
so the S and P five hundred is trading at
three point twenty five times earnings, which is actually higher
than it traded before the dot com boom and bust happened. Right,
So I guess what that means. What that signifies is
(17:50):
that the stock market is kind of frothy right now,
and some folks are starting to get nervous. Does this
mean the stock market is overvalued and then a correction
is in it? I don't know, potentially, like anyone's guess,
it's really really hard to say. But it's interesting to see, Matt.
Even some of the people that you and I tend
to tend to look to as really intelligent folks writing
(18:14):
in the investing space, like, for instance, front of the Show,
Nick Madulie just wrote about how he is making slight
changes to his investments because of where stocks are at
from evaluation perspective. But I found it interesting he's only
making a slight change, and the reason he gave for
making the slight change is not even because of high valuations.
It's because of his own goals are changing. There you go,
He's like, hey, I just got married. I'm planning on
(18:35):
buying a home soon. That's why I'm actually going to change.
And I'm still eighty percent invested in stocks, but I
have other goals with some of these some of these
investment dollars. So I guess when it comes down to it,
you and I would say, yeah, correction could happen. There's
a decent chance a correction could happen, right, that's a
normal part of being an investor in the market. Sure,
returns could be lower than average in the coming years.
(18:57):
It wouldn't surprise me. But if you've got a long
enough timeline, I think the advice is still to.
Speaker 3 (19:01):
Stay the course. Yeah, stay the course, man.
Speaker 4 (19:03):
And I think this is a good reminder too, that
the market going up into the right though we can
look back at history and see that the market does
that consistently. Like if you look at an individual month
or even a year, like I think about twenty twenty two,
when the market sure is terrible, but you look at
twenty three and twenty fours, it's like, oh, those are
really good, great years. When you zoom out even further,
(19:25):
you see that the market does consistently go up into
the right. But it doesn't do it consecutively. There are
years when, yeah, you're not going to do so well.
So if you are used to consecutive years of seeing
your returns in the twenty percent plus range, it's not
always going.
Speaker 3 (19:41):
To be that way.
Speaker 4 (19:41):
Yeah, So if you do want to continue to invest, though,
like we would recommend and suggest that you do, which
funds should you choose? There are now more ETFs than
individual stocks these days, as Sam Row he pointed out
morning Star, They've got data and they find that you
can invest in four thousand, three hundred and seventy ETFs,
(20:02):
but there's something there's only like four one and seventy
two individual stocks, which is kind of crazy to think that, wait,
how can there be more etf and there are actual
companies that make up those ETFs. Yeah, I also appreciated
there's they were analogizing it though, to like, hey, there's
only how many notes o there like twelve notes, but
(20:22):
there's like millions of songs out there, or there's like
there's only so many rests or so many ingredients that
go into making a recipe.
Speaker 3 (20:27):
It's just about how you want to slice and.
Speaker 4 (20:30):
Dice it to basically suit your own tastes or like
we're just saying your own goals.
Speaker 1 (20:36):
And ETFs are kind of like the basket of funds
that you choose to invest in that is the recipe. Yeah, yeah,
and you can Yeah, the number of baskets you can
create that is endless really when it comes to these
ETFs configurations.
Speaker 4 (20:50):
Totally Yeah. And it also makes me think about investing
in AI. Let's say that's something that you do want
to You're like, oh, yeah, maybe this is something I
should do well. Which of the three does and specialty
niche ETFs that specialize in AI should you even choose? Joel,
are you investing in any AI funds?
Speaker 1 (21:08):
No investing in companies that do AI? Just by fact
of investing in the s and P five hundred. Thank
you for proving making my point. For eight out of
the ten top companies that are in the SMP are
basically tech slash AI companies and media.
Speaker 4 (21:22):
Microsoft Avida is like the most directly AI related, but like, yeah,
Google slash out A, Amazon and Apple Tesla, these are
all companies that are leaning heavy into the AI AI space,
And honestly, it even concerns me of how much like
back in the day, I remember thinking, no, the future
is all tech, and like to that extent, a large
(21:45):
portion of our portfolio was Vanguard's tech ETF, But over
the years I changed my tune and move more to
the to the SMP. I even feel that way now
where I'm just like, man, the amount of weight that
is going into the tech sector, even with m SMP
makes me a little bit uncomfortable.
Speaker 3 (22:01):
But tech outperformance continue, Yeah, exactly.
Speaker 4 (22:04):
So all that to say, I'm not specifically looking at
something that is AI or tech focus because the SMP
has a whole lot of that. Instead, I'm just sticking
with the general SMP and might even consider kind of
like dialing back even to a little bit more of
just the.
Speaker 3 (22:19):
Total stock market.
Speaker 1 (22:20):
I think too, what this reveals is that there's just
a lot of choice out there for an investor who
individual investors trying to figure out how to proceed when
it comes to investing. And I think that abundance of
choice can actually be difficult, right, Like you see this
laundry list of ETFs and you're like, well, which sector
should I invest in? And inside of that, like which
(22:41):
brand name ETF should I be going with? And like
it can feel really overwhelming and it's like I think ETFs.
I would love for ETFs. I love that companies can
launch whatever ones that they want, But in a lot
of ways, I wish that for individual investors it looked
more like Aldi, where you walk in and.
Speaker 3 (22:58):
You're like, there's just fewer choices.
Speaker 4 (23:00):
Is it've eliminated eliminated that paradox of choice, and so
you just have to create figure out which ETFs make
the most sense for you, uh, and that can be difficult.
Speaker 1 (23:10):
So we suggest low cost, well diversified ETFs. And so Matt,
the one that you're fond of, have been talking about
for years VU, I love VU. That's a great one
to consider. F z Rocks from Fidelity f z r
o x is the symbol is another great fund to
consider for especially for people in the wealth building phase
of their lives. But just know that there's like a
(23:33):
billion choices out there essentially for you when it comes
to investing, but only a few that really make a
lot of sense.
Speaker 3 (23:38):
Are the really or even all that necessary?
Speaker 4 (23:40):
Totally another bad investing move, Well, that might be forgetting
about your account altogether. USA today they report that there
is something like one point seven trillion dollars that's lost.
Currently in four oh one K accounts, the average lost
four one K balance is over fifty thousand dollars, which
you might be thinking, how is that possible. It's like
(24:03):
misplacing your.
Speaker 3 (24:04):
Car or something.
Speaker 1 (24:05):
It's not just like the change in the couch cushions.
This is this far surpasses.
Speaker 4 (24:10):
Yeah, but that being said, you know, it could have
been an account from years ago that was worth maybe
a lot less at that point in time. Certainly it's
grown over time due to compounding, Right, it's basically been
working in the background on autopilot. And I would say,
if there's even a small chance that you meet that
you might be one of these folks, head over to
Unclaimed Retirement Benefits dot Com and you can see if
(24:32):
essentially you're like, oh wait a minute, if forg yeah, yeah,
there's there's this. I had a four one K going
on that I wasn't even contributing to. My employer was
taking care of it for me. We just want to
make sure that you are entitled to all of your
money that might be floating out there.
Speaker 1 (24:44):
Yeah, that's one hundred percent spot on. All right, We've
got actually more to get to on today's show.
Speaker 2 (24:49):
You're listening to How To Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 1 (24:55):
If you're on Facebook, by the way, you want to
join a group of like minded folks who have any
questions who have money insights, please go join the how
to Money Facebook group. Let's get to a question now
about account You and I have touched on before, but
rarely it's a good one.
Speaker 6 (25:11):
Hema Angel, This is Jennifer from South Carolina. Loved the
show and I had a quick question for you. My
husband and I have four boys that range from ages
fourteen to three. Our ten year old has severe special needs,
so we know that we will be caring for him
the remainder of our life. My questions relate to what
we should be doing now to help save for that.
(25:34):
We have retirement plans. My husband has a four oh
one K through his employer. We fully fund a wrath,
and we have an HSA plan. We have set up
five twenty nine plans for our kids when they were born,
and we contribute a small amount each month. We were
considering pausing the contribution to our ten year old and
(25:56):
rolling his into an able plan through the state, but
it sure what your thoughts on that were also thought
maybe I should just contribute to the faut choina and
roll it into a wroth when I'm allowed to do that.
We also have a special needs trust set up as
part of our estate plan in case something were to
happen to my husband, and that anything else that you
(26:18):
know of or can think of that would help us
would be greatly appreciated. Thanks so much, Gus.
Speaker 4 (26:23):
All right, Jennifer, First off, amazing job doing everything that
you can now in order to ensure that you are
setting your son and honestly others who might be involved
with helping to take care of him for less stress
off in the future. Right, So you're kind of you're
frontloading that sacrifice now in order to not have to
worry about this as much later down the road. And specifically,
(26:44):
I want to talk about the special needs trust that
you mentioned. For folks out there, this is really important
because if you have a loved one with a disability,
chances are they rely on different government benefits like Medicaid
or Social Security income. Those programs are super strict about
how much money or assets someone can have, and so
if you were to just you mentioned that you set
(27:07):
this up in case something happens to you and your husband.
Let's say that terrible thing happens, and we're your son
to just inherit that cash, right, or if let's just
say you were to hand them that cash directly, you
might accidentally knock him off that very support that he
is depending on.
Speaker 1 (27:24):
All of a sudden, not qualified anymore for some of
those benefits, so he's used to exactly.
Speaker 4 (27:28):
Yeah, so especial needs trust. It fixes that. It lets
you set money aside for their future without messing up
their benefits. And the trust can cover things like their education,
different therapies, but also even fun stuff like travel or
hobbies as well. It doesn't have to be purely disability related.
(27:48):
And of course I'm certainly glad to hear that you
are taking care of all of your future investing needs
already as well. The four one K you got the ross,
you're even taking advantage of the.
Speaker 3 (27:58):
Triple slash quadruple tax advantage. HSA, y'all.
Speaker 4 (28:02):
It sounds like y'all are knocking it out of the
park on a lot of different accounts here.
Speaker 1 (28:06):
Not easy to do, Matt, It's not easy to do that.
Like check the d all the above box. But that's
what's four boys? Right, we're just joking, right, four not
just It's not like you're just saving for the one
with especially, it's like you've got other kids to get
your own retirement to think about.
Speaker 3 (28:19):
Like that's that's just uh, that's always hard work. Boys
are a lot.
Speaker 4 (28:22):
We were just joking about how a friend of ours
has three boys. I'm like, could you imagine him with
one more? It's uh, I feel like sometimes it can
be crazy enough.
Speaker 1 (28:30):
You have even more bruises on his shins, you know exactly, Jeffer.
I love that you're considering an ABLE plan too. I
mean these are established almost exactly a decade ago, and
their special savings accounts specifically intended for disabled people, and
we'll talk about the benefits for your son. But able
accounts are this cousin of the five twenty nine plants,
so we'll see those kind of interchangeably. Sometimes of five
(28:52):
twenty nine, able is what you might hear called, which
means you're going to get a state tax deduction on
contributions you make up to a certain threshold in some states,
and so similar to a special needs trust, an ABLE
account for disabled folks and their families allows them to
save and invest without jeopardizing those state and federal benefits,
many of which get reduced if your child has a
(29:14):
certain amount of income in his or her name. So yeah,
kind of like you're referring to Matt, like, there's this
possibility that you exceed some of those and a lot
of those limits are super small, so it's not like, oh,
my kids make If your kids starts making fifty grand
a year, they and all likely don't qualify for many
of those benefits, or if they're given a certain sum
of money that's meaningful. Same thing, and all you need
(29:37):
to qualify, by the way, for an able account to
be able to save and invest for your son's future
is a doctor's letter stating that your child became disabled
before the age of twenty six. If you meet that requirement,
if your doctor's willing to write that letter, then you're
good to go. Like an able account is open and
available to you.
Speaker 3 (29:54):
That's right. Yeah, And we are not attorneys.
Speaker 4 (29:57):
Should we start like every podcast with agile that we
that we are not paid tax professionals and do not
listen to our tax and investing advice.
Speaker 3 (30:06):
But with a enable account, you do.
Speaker 4 (30:08):
Those funds are typically ear are ear marked more specifically
for expenses that relate to his disability, So keep.
Speaker 3 (30:15):
That in mind.
Speaker 4 (30:16):
But similar to a five twenty nine plan, you can
invest those dollars for your child as well, so you're
not just saving money there within that able account. You're
investing those funds and just like we do for.
Speaker 3 (30:27):
Our kids when it comes to future education costs, exactly.
Speaker 4 (30:30):
Yeah, man, I've got that fully invested in stocks, the
most aggressive of my investment options because I got years
and years down the road. The beautiful part is that
those funds grow tax free. So since your son is
ten years old, you might not be looking to spend
able dollars anytime soon, but when you get closer to
that point that you do want him to have spending
access to his account, consider pivoting towards some different conservative
(30:55):
options there for him. Again, sounds like you're a ways off,
but keep that in mind. These accounts, they do come
with a debit card that's attached to him, and so
when he's ready to start spending, when he has a
little more autonomy. If that's a position you find yourself in,
it'll make things a little bit easier to access as well.
Speaker 1 (31:13):
And the cool thing is other people can make gifts
to your child's able account.
Speaker 3 (31:16):
Too, so again not unlike a five to twenty nine
right you might say, oh, this is great.
Speaker 1 (31:21):
Actually you might find that grandparents or close family members
are also willing and interested in helping to stash money
into disabled account for your son as well. I've got
generous family members, make sure you let them know. And
then also just there's a lot of fine print about
this stuff, so make sure you dig in and know
the details.
Speaker 3 (31:41):
Like Social Security benefits.
Speaker 1 (31:42):
SSI benefits can be suspended after hitting the one hundred
thousand dollars threshold in your able account, So a lot
of people suspend contributions and they start spending down some
of that balance once they reach that point. To not
put those benefits in jeopardy. By the way, you can
do an able account and a five twenty nine plan
which you could later roll some of those five twenty
nine dollars into a roth IRA. If you want to
(32:04):
do even more to invest for his future, that would
be impressive. Again, you're doing a whole lot for your
own future. Got four boys saving disable account. But if
that's something if you're like, we want to do even more,
like you that's on the table as well, yeah, or
even switching things up, so if you and it partly
depends on your focus as well. I think if it
was me, I would be focusing on the able account
if you are looking to supplement sort of the day
(32:26):
to day expenses sort of thing.
Speaker 3 (32:28):
But if higher education.
Speaker 4 (32:30):
Is in his future, okay, well that's what the five
twenty nine is for, and so the ability to use
that account specifically for what it's designed.
Speaker 1 (32:38):
For, or even especially school that's not college right before, yeah,
K through twelve education, that private education, Yeah, exactly, So
keep that in mind too, because I mean, it's not
an unlimited amount of money that you can roll over
into the roth IRA.
Speaker 4 (32:49):
So I think I would be focusing on the able
given these specific circumstances, knowing that, Okay, there's a little
bit of additional room, some more margin over there within
the five twenty nine, knowing that if he doesn't go
off to higher ad, you got thirty five thousand over
there that you can transfer over to a roth which
of course you can use for any purpose. But Jennifer,
(33:09):
we hope that gives you some some food for thought.
Speaker 1 (33:13):
You've been listening to how to money with Joel Larsgard.
You can always hear us live on KFI Am six
forty twelve pm to two pm on Sunday, and anytime
on demand on the iHeartRadio app
Kf I AM six forty. You're listening to how to
Money on demand on the iHeartRadio app.
Speaker 2 (00:08):
Do you want to live well without drowning in debt?
Speaker 3 (00:11):
Joel and Matt have you covered?
Speaker 2 (00:14):
This is how to Money with Joel lars Guard and
Matt Altmix.
Speaker 1 (00:47):
KFI AM six forty live everywhere on the iHeartRadio app.
Speaker 3 (00:51):
This is how to Money.
Speaker 4 (00:52):
I am one of your hosts, Joel Larsgard and I
am Matt altmixed. By the way, you can always find
more money saving information over at howtomoney dot com.
Speaker 3 (01:02):
All right, let's talk. Let's talk about hard work.
Speaker 1 (01:04):
Most Americans these days don't seem to think that hard
work pays off in the ways that it used to.
This is according to a New Wall Street Journal survey.
So pessimistic beliefs they continue to increase, as something like
seventy percent of Americans they just don't believe or maybe
never believed, that working harder is going to help you
achieve the American dream. So in the year two thousand,
(01:27):
the opposite was true. It was like seventy five plus
percent of people thought that, yeah, if I work harder,
I can achieve the American dream. Even as recently as
two thousand and five, it was a vast majority of
people saying, yeah, I also believe that, But for some
reason the numbers have become diametrically opposed, and a lot
fewer people believe that their life can be better than
(01:49):
the one.
Speaker 3 (01:49):
That their parents lived.
Speaker 1 (01:51):
I don't know about you, but it's kind of hard
for me to pinpoint a specific reason for this lack
of hope. I think maybe higher prices as part of
that inflation, people feel like everything costs more, and maybe
my raises haven't been keeping up with that, and so
that does feel demoralizing, which I get, especially when you're
talking about home prices and younger generations who are saying
I would like to own a home, feels like it's
(02:12):
never going to happen given the current climate, and then
just general worry about the future. That seems to be
kind of maybe at the crux of I totally agree
of how people are feeling, and I think we have
to point out that it is true that the economy
has pain points for a lot of people. It's not
like the economy is hummin along working incredibly for everyone.
Speaker 3 (02:30):
We talk about record.
Speaker 1 (02:31):
Highs, well, people, there's a significant number of Americans who
don't have any money invested in the stock market, so
they're not feeling the benefits. They're not feeling that massive
net worth increase that people who have been consistently investing
have been seeing. And it is true also that hard
work alone doesn't necessarily mean you're going to get meaningful
(02:53):
results and build a whole lot of wealth. But I
think it's crucial to find a way to provide value
right in order to increase your compensation, not just to
work your butt off.
Speaker 3 (03:00):
It's a little bit of both.
Speaker 1 (03:02):
But I also think that pessimism can be this like
self fulfilling prophecy, and despite headwinds, it's still really possible
to live a great life and to build wealth in
this country.
Speaker 3 (03:10):
So it's very possible. Seeing seeing these numbers just kind of,
I don't know, made me sad.
Speaker 4 (03:14):
Yeah, I think this is an instance too where if
it bleeds, it leads right, Like this is the negative headline,
and you know, it made the rounds. I'm sure a
lot of folks have maybe heard folks refer to it.
But like, and I hate to be like the old
man yelling at the sky, but like, I feel like
this could be love it. I feel like this could
be an instance too to where we're just spending too
much time online. Yeah, like we like, I don't want
to make everything about smartphones, but we're sitting there on
(03:35):
our devices. We're too online. We're being endlessly entertained, We're
endlessly scrolling, and even the very act of scrolling without
having as we're getting sucked into the algorithm. Like that
is just this discipline destroyer as opposed to getting out
there kicking butt, trying to find a way.
Speaker 1 (03:52):
To and it feels make your life better. It feels
like everyone else has a better life than us when
we're scrolling.
Speaker 3 (03:56):
You know, guess what.
Speaker 1 (03:57):
It's a part of the algorithm is guess what. That's
exactly how I feel when I scroll. Yeah, And that's
why I try to avoid it, because I know what
happens to me when I scroll. I think other people
are living their best life and I'm over here living
an average one.
Speaker 4 (04:08):
Yep, you don't want to get sucked into that man,
as opposed to the folks who are actually out there
taking risks. And I do think like a part of
the uncertainty, especially that we've experienced over the past five years,
has led to like, when there's uncertainty, you're just not
sure what's what the future holds, and so I think
you are less likely to take risks. But this reminds
me of an article I saw about gen Z entrepreneurs,
(04:28):
because they're the ones out there who are taking those risks,
like working their butts off, and specifically they're also trying
to avoid the office jobs that come with just a
two percent anal race in search of something that's more energizing,
something that's a bit more lucrative.
Speaker 3 (04:42):
High school grads, they are less.
Speaker 4 (04:44):
Interested in paying for that two hundred thousand dollars degree
and instead or hopping into the workforce early, whether it's
this article documented folks becoming real estate agents, which is
a bit tougher to do right now, opting for specialized
like the tra work basically like blue collar work, which man,
I totally appreciate this, you know, the enterprising nature that
(05:06):
gen Z seems to be reviving. And I think the
crucial way to make sure the American dream works for
you is to avoid the major traps, right Like you
want to zig while everyone else is zagging, and if
the college and you know, buying a home route, if
those paths are going to be too expensive. If it's
going to tie you down, well, that's when you have
the opportunity to create a different dream that doesn't involve
(05:28):
those things. And that is the reason why I still
think that the US is still the best place for
you to essentially blaze your own trail.
Speaker 1 (05:36):
It's better than the vast majority of the rest of
the world. And I think maybe two people assume when
we're talking about the American dream that it has to
look like this stock American lifestyle.
Speaker 4 (05:44):
I think the American dream can look like whatever you
wanted to look like. That's what we're saying.
Speaker 1 (05:47):
Here, that's what's cool about it. Yeah, it doesn't have
to look like the four bedroom, three bathroom house with
the white pick of fence. I think for some people
that is their dream, and maybe it's harder to achieve
that now that it has been in the past. But
for other people, it's live in that van life, right
and traveling around the country, which has in many ways
become easier than ever before to pull off. And I
(06:08):
guess I wonder if that's maybe some of the pessimism
too revealed in this survey, is like, well, I can't
live that classic suburban nineteen sixties sort of lifestyle that
my parents lived. But maybe your American dream can look better,
just different, because I do think that people's hopes and
aspirations have actually changed. What people want out of life
(06:28):
has changed since I.
Speaker 3 (06:29):
Think you're saying basically, do you even want that? Right? Yeah?
Speaker 1 (06:32):
And I love I love to see because I think
gen Z there's a lot of you know, intergenerational picking, okay, boomer,
that kind of sort of thing. But I love that
gen Z seems to be taking this tact where they're
kind of grabbing life by the reins and they're saying
by the horns. Yeah, I think a lot of people
are like but I was told to get the college
degree and it was really expensive, and now I find
(06:54):
myself in a place where it's harder for me to
achieve the American dream. And I get that, and that's
a difficult position to be in. But I also I
love that gen Z is kind of starting to question
those things out of the gate and saying no, no, no, no.
I think what I want is this, and I don't
necessarily need the college education to get there, and so
not that college is bad or that everyone should avoid it,
but I.
Speaker 3 (07:13):
Just it's worth asking the question.
Speaker 1 (07:15):
That's worth asking the question, and it's worth thinking a
little differently. Gen Z seems to be to be doing that,
to kind of be responding to the incentives that are
out there and the costs that are being placed on us.
And if we can, like you said, Zig, when other
people are sagging, I think we can live that American dream,
even it doesn't look like the classic idealized version.
Speaker 3 (07:35):
Totally agree.
Speaker 2 (07:37):
You're listening to How to Money with Joel Larsgard on
demand from KFI a M six forty.
Speaker 4 (07:44):
If you have a money question, we'll send it our way.
All you have to do is record your question on
the voice memo app there on your phone and send
it over via email. You can find the simple instructions
at how toomoney dot com, forward slash ask.
Speaker 1 (07:57):
Let's get to one from a listener who's like struggling
about whether or not to keep or sell a real
estate asset he owns.
Speaker 5 (08:05):
Hello, my name is John, and I find the information
on this program very helpful, especially for beginners such as
myself going in the world of financing and planning. I
have heard the topic of condos before on this program
and to me, they generally don't sound like a great investment.
I have had my condo for about four years now,
(08:28):
and from my experience, it has not appreciated much in value,
and a lot of my salary goes towards paying the
property taxes that are due at the end of the year,
and I feel like that money would be better spent
on something else, since I barely get anything in return
from the after paying the property taxes.
Speaker 3 (08:49):
Anyway, I recently rented.
Speaker 5 (08:53):
Out my condo to tenants and they have been there
for several months, and I'm wondering if things will get
better after I pay off the rest of my immediate
expenses and I could finally put the rent and receive
to an account that will pay the mortgage, property tax,
(09:15):
and the HOA. However, after doing calculations, I only still
get about one hundred to two hundred dollars a month
after all that is deducted from the rent, which I
don't see us too great.
Speaker 3 (09:30):
The property is located.
Speaker 5 (09:32):
Near the beach in Los Angeles and I got it
during the COVID times when the interest rate was very
low around two point eight percent. We'll just make my
condo worth keeping, I would really appreciate some advice, and
thank you so much for everything.
Speaker 4 (09:52):
All right, John, I am glad to hear that you
found the show helpful. And your question condos, specifically, you're
talking of about whether or not your condo, whether or
not it's a good investment. But specifically what I want
to ask is should it be a good investment, because
when you buy a condo or when you buy a
single family home, the main.
Speaker 3 (10:12):
Goal is going to be to put a roof over
your head. You're looking for a place to live.
Speaker 4 (10:17):
So in this case, you are or I would say
that you were getting something and otherwise you'd have to
fork over the money in rent. That's that right there,
that's the rent versus by debate, And that answer depends
on personal goals. You know what's happening in the market,
but right now, renting it certainly beats buying almost everywhere
from up your price per month standpoint. But again, so
(10:39):
much is going to depend on your personal your lifestyle goals,
not just what is more affordable right now, not just
what the dollars and cents shows.
Speaker 1 (10:47):
And sometimes right buying, if you have an extended timeline,
you're like, oh, my monthly payment's going to be a
little bit higher, but if it meets your goals, and
also you're talking about locking in that cost over a
long period of time. Rents have not been going up lately,
but typically, you know, rents go up at a fairly
regular pace year after year. And the truth is, Matt,
I think we as a society, we've collectively viewed home
or condo ownership as this way to build wealth. When
(11:10):
you think about the average American, they probably many of
them have more wealth in their home, more equity in
their home, than they have wealth in the stock market.
So by to facto, it is their number one savings vehicle.
And so because of that, they see it as like, oh,
this is my this is my little piggy bank over here,
this is where I'm stashing my cash. And we have
seen right rapid appreciation in recent years, leading many to
(11:31):
expect more of the same. Like I think people are like,
oh great, I've seen what happen in home prices over
the past few years. My real estate agents is saying,
get in before the getting gets impossible. And then you know,
those people are dismayed if the market stutters after you know,
they make their own purchase. But that is happening currently
for some, which is something that you and I have
warned about that, hey, the market can't continue to go
(11:52):
up at this clip forever. Well, the purpose I think
for some it isn't to live in a place they desire,
but to see their equity grow. But the housing market,
it's this complex organism, right, and buying with dreams of
rapid equity accumulation I think just is a bad idea, Like,
don't go into a home or condo purchase with that
in mind. Think of it like a cherry on top,
(12:14):
kind of like you said, Matt, you don't want to
go into it with that being the sole or major goal.
Make your decision on other variables. Have a long enough
ownership timeline in mind, like plan to own that place
for a while, and then if your home price appreciates
faster than average, I would just be like, oh, thank
my lucky starts.
Speaker 3 (12:30):
Yeah.
Speaker 4 (12:30):
Yeah, because they tend to appreciate at a slower rate
than single family homes as well. So you got to
be more You gotta be more patient. And I think
you're setting yourself up for disappointment, even for disaster, if
you're expecting anything more than that.
Speaker 3 (12:42):
But so much does depend on your location.
Speaker 4 (12:45):
And I'm kind of actually surprised to hear John that
you mentioned that you don't think your condo has gone
up in value much over the past four years, because
we have seen outsized price growth across most of the country.
Speaker 3 (12:56):
Yeah, if you said you bought like a year ago,
I'd be like, yeah, maybe not probably.
Speaker 4 (12:59):
I understand a year ago, but four years ago, I
feel like you should have caught that massive uptick. So
I would revisit and just see how accurate those numbers
are and just put it's based on based on like
what you paid, what other units in your complex are
going for, what they've recently sold for. But you you
bring up something else as well, which is essentially plateauing
(13:20):
or receding rents, and I think that can make it
feel like your condo isn't a great investment, and for
many landlords it has impinged on their ability to profit
from the rental. And in your case, the amount that
you're making over and above your mortgage just not surely
doesn't sound very life changing. I think you said one
hundred bucks more is kind of what he's at. That's
(13:42):
why with the current rents are pulling in.
Speaker 3 (13:45):
That's still positive.
Speaker 4 (13:46):
I want to say that I want to provide you
some Yes, yeah, you were in the black, and I
think with that mind, holding onto the condo over the
long term, it could still potentially be a big winner
for you if you are willing to stick with it.
Speaker 1 (14:01):
Yeah, And I think so much comes down to location, right, Matt,
When you talk about some of those West Coast cities
in particular, the numbers, oftentimes landlords are buying for appreciation purposes,
only they're losing money every single month. So the fact
that John is making money on the West Coast with
an LA condo, think about a place like San Francisco.
You can't really hope to buy a place in San
(14:21):
Francisco or New York City. And like he said, he's
close to the beach, right, Like that sounds pretty dang desirable. Honestly,
maybe that's a big part of it, because he's specifically
calling out the addition the taxes and the HOA do
is maybe this is a building that has like turned
things around as far as special assessments, and they're realizing that,
oh man, if we want to make sure this building
(14:42):
doesn't like crumble into the ocean or something like that
we're going to need to start setting aside a lot
more money to ensure that we're taking care of this building.
Speaker 3 (14:49):
Maybe that's what's going on here.
Speaker 1 (14:50):
Yeah, And I would say in a city like Mobile, Alabama,
you're investing for cash flow month after month. In a
city like Los Angeles or New York City or San
francisc or whatever, big cities like that, Seattle, these.
Speaker 3 (15:01):
Are attractive places to live.
Speaker 1 (15:03):
You're probably talking about renting being a landlord more for
appreciation over time of that unit. So that's something you
need a factor in as well. Yeah, you might not
be making much money every month, but hey, you're doing
better than a lot of landlords in your similar location
would be doing. And you asked about how the interest
rate plays into your decision to keep her sell, I
think it matters. I think it's it's a check mark
(15:25):
in the pro category because a locked in mortgage rate
below three percent is almost and I say almost because
I can't quite bring myself, Matt to call that an
asset because it's not, because it is a liability, in fact,
still a debt. It's still a debt.
Speaker 3 (15:38):
From an accounting standpoint, but in.
Speaker 1 (15:39):
Today's economic environment, it sort of feels like that because
it is close, like the floor has been raised, and
it feels like to anything in like the twos and
threes percent almost feels like, wait, wait a minute, I'm
making money, right, which you kind of are if you've
got money in savings and you're not paying down that
morgage more quickly, like you're coming out ahead in that spread. Still,
I think again, and there are a lot more things
(16:00):
to take into consideration, like profitability, what else could you
accomplish with the freed up equity, the financial state of
your homeowners association, Matt, which you kind.
Speaker 3 (16:08):
Of alluded to well, and then whether or not you
like being a landlord.
Speaker 1 (16:11):
I think that's a really really important thing to think about,
and a lot of people.
Speaker 3 (16:14):
Think that might be the most important thing.
Speaker 1 (16:16):
Yeah, because we talk about it as a part time job,
not just an investment, unlike investing in the stock market,
just like tossing money and dollar cross averaging every couple
of weeks. And John, you made it sound like the
property taxes this giant thorn in your side, which makes
me want to say, well, hey, you might want to
challenge it if you think it's if it's too high,
if it's unfair.
Speaker 3 (16:34):
Sure, but I'm not sure.
Speaker 1 (16:35):
It sounds like maybe the overall experience of being a
landlord isn't quite your jam either. And if that's the case,
and you're like, should I keep doing this just because
maybe the numbers might work out a little bit better,
I would say probably not. Like, if that's kind of
where your head, where your heart's at, you're probably going
to be frustrated putting in the effort, and there might
be an easier way to build wealth than sticking with
(16:56):
this condoct totally.
Speaker 2 (16:58):
You're listening to to Money with Joel Larsgard on demand
from KFI AM six forty.
Speaker 1 (17:05):
Don't forget to sign up for the how to Money newsletter.
You can find that up at how tomoney dot com
slash newsletter Let's do It. Has anyone noticed anyone out
there noticed that the stock market is doing pretty good? Right,
doing quite well? I noticed all time highs on repeat.
It feels it feels like over over the last many months.
And you know, the tariffs, meddling with the Fed, they
don't Neither of those things seems to have had a
(17:27):
negative impact on investor sentiment. It's a everyone's just hitting
the buy button and this has led not only to
like I said, record highs, but record high valuations. And
so the S and P five hundred is trading at
three point twenty five times earnings, which is actually higher
than it traded before the dot com boom and bust happened. Right,
So I guess what that means. What that signifies is
(17:50):
that the stock market is kind of frothy right now,
and some folks are starting to get nervous. Does this
mean the stock market is overvalued and then a correction
is in it? I don't know, potentially, like anyone's guess,
it's really really hard to say. But it's interesting to see, Matt.
Even some of the people that you and I tend
to tend to look to as really intelligent folks writing
(18:14):
in the investing space, like, for instance, front of the Show,
Nick Madulie just wrote about how he is making slight
changes to his investments because of where stocks are at
from evaluation perspective. But I found it interesting he's only
making a slight change, and the reason he gave for
making the slight change is not even because of high valuations.
It's because of his own goals are changing. There you go,
He's like, hey, I just got married. I'm planning on
(18:35):
buying a home soon. That's why I'm actually going to change.
And I'm still eighty percent invested in stocks, but I
have other goals with some of these some of these
investment dollars. So I guess when it comes down to it,
you and I would say, yeah, correction could happen. There's
a decent chance a correction could happen, right, that's a
normal part of being an investor in the market. Sure,
returns could be lower than average in the coming years.
(18:57):
It wouldn't surprise me. But if you've got a long
enough timeline, I think the advice is still to.
Speaker 3 (19:01):
Stay the course. Yeah, stay the course, man.
Speaker 4 (19:03):
And I think this is a good reminder too, that
the market going up into the right though we can
look back at history and see that the market does
that consistently. Like if you look at an individual month
or even a year, like I think about twenty twenty two,
when the market sure is terrible, but you look at
twenty three and twenty fours, it's like, oh, those are
really good, great years. When you zoom out even further,
(19:25):
you see that the market does consistently go up into
the right. But it doesn't do it consecutively. There are
years when, yeah, you're not going to do so well.
So if you are used to consecutive years of seeing
your returns in the twenty percent plus range, it's not
always going.
Speaker 3 (19:41):
To be that way.
Speaker 4 (19:41):
Yeah, So if you do want to continue to invest, though,
like we would recommend and suggest that you do, which
funds should you choose? There are now more ETFs than
individual stocks these days, as Sam Row he pointed out
morning Star, They've got data and they find that you
can invest in four thousand, three hundred and seventy ETFs,
(20:02):
but there's something there's only like four one and seventy
two individual stocks, which is kind of crazy to think that, wait,
how can there be more etf and there are actual
companies that make up those ETFs. Yeah, I also appreciated
there's they were analogizing it though, to like, hey, there's
only how many notes o there like twelve notes, but
(20:22):
there's like millions of songs out there, or there's like
there's only so many rests or so many ingredients that
go into making a recipe.
Speaker 3 (20:27):
It's just about how you want to slice and.
Speaker 4 (20:30):
Dice it to basically suit your own tastes or like
we're just saying your own goals.
Speaker 1 (20:36):
And ETFs are kind of like the basket of funds
that you choose to invest in that is the recipe. Yeah, yeah,
and you can Yeah, the number of baskets you can
create that is endless really when it comes to these
ETFs configurations.
Speaker 4 (20:50):
Totally Yeah. And it also makes me think about investing
in AI. Let's say that's something that you do want
to You're like, oh, yeah, maybe this is something I
should do well. Which of the three does and specialty
niche ETFs that specialize in AI should you even choose? Joel,
are you investing in any AI funds?
Speaker 1 (21:08):
No investing in companies that do AI? Just by fact
of investing in the s and P five hundred. Thank
you for proving making my point. For eight out of
the ten top companies that are in the SMP are
basically tech slash AI companies and media.
Speaker 4 (21:22):
Microsoft Avida is like the most directly AI related, but like, yeah,
Google slash out A, Amazon and Apple Tesla, these are
all companies that are leaning heavy into the AI AI space,
And honestly, it even concerns me of how much like
back in the day, I remember thinking, no, the future
is all tech, and like to that extent, a large
(21:45):
portion of our portfolio was Vanguard's tech ETF, But over
the years I changed my tune and move more to
the to the SMP. I even feel that way now
where I'm just like, man, the amount of weight that
is going into the tech sector, even with m SMP
makes me a little bit uncomfortable.
Speaker 3 (22:01):
But tech outperformance continue, Yeah, exactly.
Speaker 4 (22:04):
So all that to say, I'm not specifically looking at
something that is AI or tech focus because the SMP
has a whole lot of that. Instead, I'm just sticking
with the general SMP and might even consider kind of
like dialing back even to a little bit more of
just the.
Speaker 3 (22:19):
Total stock market.
Speaker 1 (22:20):
I think too, what this reveals is that there's just
a lot of choice out there for an investor who
individual investors trying to figure out how to proceed when
it comes to investing. And I think that abundance of
choice can actually be difficult, right, Like you see this
laundry list of ETFs and you're like, well, which sector
should I invest in? And inside of that, like which
(22:41):
brand name ETF should I be going with? And like
it can feel really overwhelming and it's like I think ETFs.
I would love for ETFs. I love that companies can
launch whatever ones that they want, But in a lot
of ways, I wish that for individual investors it looked
more like Aldi, where you walk in and.
Speaker 3 (22:58):
You're like, there's just fewer choices.
Speaker 4 (23:00):
Is it've eliminated eliminated that paradox of choice, and so
you just have to create figure out which ETFs make
the most sense for you, uh, and that can be difficult.
Speaker 1 (23:10):
So we suggest low cost, well diversified ETFs. And so Matt,
the one that you're fond of, have been talking about
for years VU, I love VU. That's a great one
to consider. F z Rocks from Fidelity f z r
o x is the symbol is another great fund to
consider for especially for people in the wealth building phase
of their lives. But just know that there's like a
(23:33):
billion choices out there essentially for you when it comes
to investing, but only a few that really make a
lot of sense.
Speaker 3 (23:38):
Are the really or even all that necessary?
Speaker 4 (23:40):
Totally another bad investing move, Well, that might be forgetting
about your account altogether. USA today they report that there
is something like one point seven trillion dollars that's lost.
Currently in four oh one K accounts, the average lost
four one K balance is over fifty thousand dollars, which
you might be thinking, how is that possible. It's like
(24:03):
misplacing your.
Speaker 3 (24:04):
Car or something.
Speaker 1 (24:05):
It's not just like the change in the couch cushions.
This is this far surpasses.
Speaker 4 (24:10):
Yeah, but that being said, you know, it could have
been an account from years ago that was worth maybe
a lot less at that point in time. Certainly it's
grown over time due to compounding, Right, it's basically been
working in the background on autopilot. And I would say,
if there's even a small chance that you meet that
you might be one of these folks, head over to
Unclaimed Retirement Benefits dot Com and you can see if
(24:32):
essentially you're like, oh wait a minute, if forg yeah, yeah,
there's there's this. I had a four one K going
on that I wasn't even contributing to. My employer was
taking care of it for me. We just want to
make sure that you are entitled to all of your
money that might be floating out there.
Speaker 1 (24:44):
Yeah, that's one hundred percent spot on. All right, We've
got actually more to get to on today's show.
Speaker 2 (24:49):
You're listening to How To Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 1 (24:55):
If you're on Facebook, by the way, you want to
join a group of like minded folks who have any
questions who have money insights, please go join the how
to Money Facebook group. Let's get to a question now
about account You and I have touched on before, but
rarely it's a good one.
Speaker 6 (25:11):
Hema Angel, This is Jennifer from South Carolina. Loved the
show and I had a quick question for you. My
husband and I have four boys that range from ages
fourteen to three. Our ten year old has severe special needs,
so we know that we will be caring for him
the remainder of our life. My questions relate to what
we should be doing now to help save for that.
(25:34):
We have retirement plans. My husband has a four oh
one K through his employer. We fully fund a wrath,
and we have an HSA plan. We have set up
five twenty nine plans for our kids when they were born,
and we contribute a small amount each month. We were
considering pausing the contribution to our ten year old and
(25:56):
rolling his into an able plan through the state, but
it sure what your thoughts on that were also thought
maybe I should just contribute to the faut choina and
roll it into a wroth when I'm allowed to do that.
We also have a special needs trust set up as
part of our estate plan in case something were to
happen to my husband, and that anything else that you
(26:18):
know of or can think of that would help us
would be greatly appreciated. Thanks so much, Gus.
Speaker 4 (26:23):
All right, Jennifer, First off, amazing job doing everything that
you can now in order to ensure that you are
setting your son and honestly others who might be involved
with helping to take care of him for less stress
off in the future. Right, So you're kind of you're
frontloading that sacrifice now in order to not have to
worry about this as much later down the road. And specifically,
(26:44):
I want to talk about the special needs trust that
you mentioned. For folks out there, this is really important
because if you have a loved one with a disability,
chances are they rely on different government benefits like Medicaid
or Social Security income. Those programs are super strict about
how much money or assets someone can have, and so
if you were to just you mentioned that you set
(27:07):
this up in case something happens to you and your husband.
Let's say that terrible thing happens, and we're your son
to just inherit that cash, right, or if let's just
say you were to hand them that cash directly, you
might accidentally knock him off that very support that he
is depending on.
Speaker 1 (27:24):
All of a sudden, not qualified anymore for some of
those benefits, so he's used to exactly.
Speaker 4 (27:28):
Yeah, so especial needs trust. It fixes that. It lets
you set money aside for their future without messing up
their benefits. And the trust can cover things like their education,
different therapies, but also even fun stuff like travel or
hobbies as well. It doesn't have to be purely disability related.
(27:48):
And of course I'm certainly glad to hear that you
are taking care of all of your future investing needs
already as well. The four one K you got the ross,
you're even taking advantage of the.
Speaker 3 (27:58):
Triple slash quadruple tax advantage. HSA, y'all.
Speaker 4 (28:02):
It sounds like y'all are knocking it out of the
park on a lot of different accounts here.
Speaker 1 (28:06):
Not easy to do, Matt, It's not easy to do that.
Like check the d all the above box. But that's
what's four boys? Right, we're just joking, right, four not
just It's not like you're just saving for the one
with especially, it's like you've got other kids to get
your own retirement to think about.
Speaker 3 (28:19):
Like that's that's just uh, that's always hard work. Boys
are a lot.
Speaker 4 (28:22):
We were just joking about how a friend of ours
has three boys. I'm like, could you imagine him with
one more? It's uh, I feel like sometimes it can
be crazy enough.
Speaker 1 (28:30):
You have even more bruises on his shins, you know exactly, Jeffer.
I love that you're considering an ABLE plan too. I
mean these are established almost exactly a decade ago, and
their special savings accounts specifically intended for disabled people, and
we'll talk about the benefits for your son. But able
accounts are this cousin of the five twenty nine plants,
so we'll see those kind of interchangeably. Sometimes of five
(28:52):
twenty nine, able is what you might hear called, which
means you're going to get a state tax deduction on
contributions you make up to a certain threshold in some states,
and so similar to a special needs trust, an ABLE
account for disabled folks and their families allows them to
save and invest without jeopardizing those state and federal benefits,
many of which get reduced if your child has a
(29:14):
certain amount of income in his or her name. So yeah,
kind of like you're referring to Matt, like, there's this
possibility that you exceed some of those and a lot
of those limits are super small, so it's not like, oh,
my kids make If your kids starts making fifty grand
a year, they and all likely don't qualify for many
of those benefits, or if they're given a certain sum
of money that's meaningful. Same thing, and all you need
(29:37):
to qualify, by the way, for an able account to
be able to save and invest for your son's future
is a doctor's letter stating that your child became disabled
before the age of twenty six. If you meet that requirement,
if your doctor's willing to write that letter, then you're
good to go. Like an able account is open and
available to you.
Speaker 3 (29:54):
That's right. Yeah, And we are not attorneys.
Speaker 4 (29:57):
Should we start like every podcast with agile that we
that we are not paid tax professionals and do not
listen to our tax and investing advice.
Speaker 3 (30:06):
But with a enable account, you do.
Speaker 4 (30:08):
Those funds are typically ear are ear marked more specifically
for expenses that relate to his disability, So keep.
Speaker 3 (30:15):
That in mind.
Speaker 4 (30:16):
But similar to a five twenty nine plan, you can
invest those dollars for your child as well, so you're
not just saving money there within that able account. You're
investing those funds and just like we do for.
Speaker 3 (30:27):
Our kids when it comes to future education costs, exactly.
Speaker 4 (30:30):
Yeah, man, I've got that fully invested in stocks, the
most aggressive of my investment options because I got years
and years down the road. The beautiful part is that
those funds grow tax free. So since your son is
ten years old, you might not be looking to spend
able dollars anytime soon, but when you get closer to
that point that you do want him to have spending
access to his account, consider pivoting towards some different conservative
(30:55):
options there for him. Again, sounds like you're a ways off,
but keep that in mind. These accounts, they do come
with a debit card that's attached to him, and so
when he's ready to start spending, when he has a
little more autonomy. If that's a position you find yourself in,
it'll make things a little bit easier to access as well.
Speaker 1 (31:13):
And the cool thing is other people can make gifts
to your child's able account.
Speaker 3 (31:16):
Too, so again not unlike a five to twenty nine
right you might say, oh, this is great.
Speaker 1 (31:21):
Actually you might find that grandparents or close family members
are also willing and interested in helping to stash money
into disabled account for your son as well. I've got
generous family members, make sure you let them know. And
then also just there's a lot of fine print about
this stuff, so make sure you dig in and know
the details.
Speaker 3 (31:41):
Like Social Security benefits.
Speaker 1 (31:42):
SSI benefits can be suspended after hitting the one hundred
thousand dollars threshold in your able account, So a lot
of people suspend contributions and they start spending down some
of that balance once they reach that point. To not
put those benefits in jeopardy. By the way, you can
do an able account and a five twenty nine plan
which you could later roll some of those five twenty
nine dollars into a roth IRA. If you want to
(32:04):
do even more to invest for his future, that would
be impressive. Again, you're doing a whole lot for your
own future. Got four boys saving disable account. But if
that's something if you're like, we want to do even more,
like you that's on the table as well, yeah, or
even switching things up, so if you and it partly
depends on your focus as well. I think if it
was me, I would be focusing on the able account
if you are looking to supplement sort of the day
(32:26):
to day expenses sort of thing.
Speaker 3 (32:28):
But if higher education.
Speaker 4 (32:30):
Is in his future, okay, well that's what the five
twenty nine is for, and so the ability to use
that account specifically for what it's designed.
Speaker 1 (32:38):
For, or even especially school that's not college right before, yeah,
K through twelve education, that private education, Yeah, exactly, So
keep that in mind too, because I mean, it's not
an unlimited amount of money that you can roll over
into the roth IRA.
Speaker 4 (32:49):
So I think I would be focusing on the able
given these specific circumstances, knowing that, Okay, there's a little
bit of additional room, some more margin over there within
the five twenty nine, knowing that if he doesn't go
off to higher ad, you got thirty five thousand over
there that you can transfer over to a roth which
of course you can use for any purpose. But Jennifer,
(33:09):
we hope that gives you some some food for thought.
Speaker 1 (33:13):
You've been listening to how to money with Joel Larsgard.
You can always hear us live on KFI Am six
forty twelve pm to two pm on Sunday, and anytime
on demand on the iHeartRadio app
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