April 20, 2025 • 33 mins
Consumers are panic pre-buying because of tariffs. But is that a good idea?
Ask HTM: Bryant wants to know if international investing makes more sense in today's environment.
We're starting to see tariff surcharges, particularly from smaller companies.
Ask HTM: Matt and Joel take listener questions about the downstream impacts of tariffs, ie China retaliation and gold prices.
Ask HTM: Bryant wants to know if international investing makes more sense in today's environment.
We're starting to see tariff surcharges, particularly from smaller companies.
Ask HTM: Matt and Joel take listener questions about the downstream impacts of tariffs, ie China retaliation and gold prices.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Kay if I am six forty you're listening to how
to Money on demand on the iHeartRadio app.
Speaker 2 (00:07):
Do you want to live well without drowning in debt?
Joel and Matt have you covered? This is how to
Money with Joel lars Guard and Matt Ullmax.
Speaker 3 (01:19):
KF. I am six forty live everywhere on the iHeartRadio app.
This is how to Money. I am Matt Altmics.
Speaker 1 (01:25):
And I'm Joel Larscard. Don't forget to sign up for
the how to Money newsletter. You can find that up
at how tomoney dot com slash newsletter.
Speaker 3 (01:32):
So you know what I've been seeing around town lately, Joel,
not only on the interest. I feel like I've seen
them most of the time on the interstate, but even
this morning, as I was biking into our studio, I
see a Tesla past me and it's got the sticker.
You know what I'm gonna say, It's got the h
I bought this before you went crazy sticker on there.
You've seen those, right, I've seen this.
Speaker 1 (01:51):
Yeah. What I found interesting though, I read about the
guy who started a company selling these elon stickers. Apparently
makes like one hundred thousand dollars a month, no selling
these stickers. Now, oh my gosh, it's capitalism as finest man.
Hey if you guys, and then I get it too.
As a Tesla driver, you might want to signal, especially
with the violences being done to Tesla. What do you
(02:13):
think about the signal because you don't want someone to
come up and a cost you for driving to Tesla.
They think maybe it's a political stance, but yeah, for
most people, it's not.
Speaker 3 (02:22):
It's a product that someone has purchased. Like, this is
not a political statement. How did Tesla's go from being
a statement of like I'm trying to help save the
earth and I'm trying to be green, or maybe I
just like to drive a car that's got an amazing
amount of instant torque. So thinking that this is, you know,
a political statement, I think you know how it happened.
(02:42):
But yeah, I think most people are less aware or
care less about the political side of things, and they're
just trying to drive a car that they like. I
guess I get it. It's certainly how much are the stickers?
How much do they cost? I don't know, but apparently
five bucks or something. Yeah, apparently there's enough profit margin
for this guy of these guys, I can get toell
the money. It's a chief form of insurance, right, Like, yeah,
if you are trying to keep folks from kying your
(03:03):
car or slashing your tires, even lighting your car on fire, right,
I certainly, I certainly understand.
Speaker 1 (03:09):
It's just sad that you would have to do that.
Speaker 3 (03:11):
I think it probably depends on where you live, too, right,
because if you are living in an environment where maybe
it's a bit more progressive or left leaning, and you're
driving a Tesla around, you're getting that bombastics? Is it bombastic?
Side eye? Is that what the kids are saying?
Speaker 1 (03:23):
But then again, that's where a lot of those teslas reside.
Think about, like per capita, there's more teslas in California
than there are in like maybe more red leading states.
Speaker 3 (03:31):
So fascinating to see if it truly does become a
political statement of folks who are more right leaning tend
to tend to buy buy vehicles. But speaking of vehicles, actually,
did you see last month that retail car sales increased
by almost five percents? While we're talking about cars here, Yeah,
that's not just evs, but just new vehicles across the
board shot up in anticipation for the upcoming.
Speaker 1 (03:53):
Terrast a little bit of that pre buying action.
Speaker 3 (03:55):
At this point, Americans are expecting higher levels of inflation
than they have and like something close to thirty four years,
which can lead to pre buying. It can lead to
this self fulfilling prophecy of sorts, because yeah, if you
think prices are going to go up, you're more likely
to buy more now, sure, because you don't want to
pay the higher price tag later. I get the impulse,
and I think it can make sense if essentially you're
(04:16):
kind of pulling some of that purchasing forward, right if
it's an item that you were already planning on buying.
But this is also hard to gauge because tariff levels
are constantly changing. If there's anything that we've learned, it's
that which is not normal tariff policy, but it is
the new normal. Like if you bought an iPhone that
perhaps you didn't need, well, you might be kicking yourself
because they were exempted from the terror. Consumer spending at
(04:39):
Apple was up twenty percent in the first week of
April before that carve out, before that reprieve was granted.
Shelf stable foods have even been purchased at higher levels
as well. I think some folks. There's reports of some
folks stocking up on Christmas items as they're looking ahead,
because think about all the plastic that comes.
Speaker 1 (04:56):
From It's not just plastic, but when we buy most
of our toys from China, and if they're is one
hundred and forty five percent tariff that remains on those
Chinese goods that come overseas, Yeah, Christmas is going to
get a heck of a lot more expensive, and companies,
American companies aren't going to be able to shift on
a dime and source those toys elsewhere. So true, I
get some of that impulse, and we don't know how
(05:17):
this is going to shake out ultimately. I will say
the silver lining to buying your Christmas presents early maybe
you do get a better deal, but also you don't
have to worry about Chrismas shopping later on. I mean
that sounds kind.
Speaker 3 (05:26):
Of nice until Christmas rolls around. It's just like, oh, yeah,
I'm not interested in that hobby at all anymore. You're like, well,
sorry tariffs mom, that was just six months ago. Like
you're totally going to disappoint your kids.
Speaker 1 (05:36):
Yeah, well so interesting to see the knock on effects,
right and the kind of domino impact of tariffs and
so like. Used car prices have actually gone up for
the first time in two and a half years because
of tariffs, which.
Speaker 3 (05:49):
We thought that the pandemic was going to be the
last time we ever saw used car prices go up
because of the snarled supply chain, right right, Like that's why,
like everybody was looking to use and we're like, this
is a one time blip, that was anomaly. Here we go, Yep, yep,
another anomaly.
Speaker 1 (06:03):
Another anomaly again in short order. Because the supply chain
of new cars is being threatened by higher prices, it's
leading to less supply that pre buying we're talking about,
and then higher prices on used cars as more people
turned to that market to get what they need.
Speaker 3 (06:19):
Trump is now the ever grand that's stuck sideways in
those Yes, the Pandama Canal.
Speaker 1 (06:27):
Yeah, yeah, actually it's not.
Speaker 3 (06:28):
Well yeah, luckily the Panama Canal has not entered into
the equation that I guess recruiting changed on that one yet.
Speaker 1 (06:34):
Oh man, well, so this is less I think of
capitalizing on a sale and more like buying now because
of looming threats. Right, this is what people are doing.
And I think it's okay to purchase some items ahead
of time, but in these uncertain economic times, man, I
think it's also important to note that cash is important.
Right when you're not sure what's gonna happen with pricing,
and maybe when you're unsure what's going to happen with
(06:56):
your income. Most folks just can't afford to stockpile or
buy significant amounts of items ahead of time, particularly those
more expensive items like I was gonna get an iPhone
next year, I might get it now. Well that's like
a thousand bucks, right, and most people just can't afford
to do that in anticipation of saving twelve hundred bucks
a year from now. I think, more than anything, what
we want to communicate to people is just not don't
(07:18):
buy stuff that you don't need just because you're worried
about price increases, because those, as we've seen, are nearly
impossible to predict, and it's hard to know where tariffs
go from here. And I get the anxiety that people
are feeling, but I also think, well, spending more of
your money and having less less of a cash reserve
isn't necessarily the right way to approach this, and that
(07:41):
could lead to even more anxiety and potential hartware later on.
Speaker 3 (07:44):
People got to have their stuff. Yeah, I think that's
the mentality.
Speaker 1 (07:47):
All right. We've got actually more to get to on
today's show.
Speaker 4 (07:50):
You're listening to how To Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 3 (07:57):
By the way, you can always find more money saving
and information over at howtomoney dot com.
Speaker 1 (08:02):
Matt, let's get to a question specifically about international investing
in the age of tarifs.
Speaker 5 (08:08):
Hey, guys, this is Bryant and I'm calling in from Cutzer.
My wife and I are both originally from the United States,
but we are currently living and working in Cutzer as professors,
and we are worried about the kind of state of
the US economy, and we we recently decided to keep
(08:34):
living here, so we just turned down job offers Texas,
A and M in order to kind of stay here
and work here. Sellers are higher costs or lower versus
there's some perks involved, and we are kind of wondering
(08:55):
where to go from here with our investments we currently
have most most of our investments are currently in the
US stock market, mostly in the Vanguard ETF v O O.
(09:16):
But given kind of the decline of the dollar and
the kind of fluctuation in the in the stock market
currently and with everything else going on, we are considering
investing internationally. So we've been looking at some European ETFs.
Speaker 3 (09:37):
Like.
Speaker 5 (09:39):
The v g K and some other ones, and we
were kind of just wondering if you have advice about that.
When you think about that, if there's any picks that
you would suggest, Yeah, thanks, Yes.
Speaker 3 (09:55):
Do you like how Bryant said if we had any picks,
We're here to dish out the stock tips.
Speaker 1 (10:01):
He's not at least he's not asking about individual stocks.
He's talking about, Hey, should I diversify internationally? Which is
and it's honestly, that's a question as old as time,
since the beginning of stock market investing.
Speaker 3 (10:11):
Yeah, Brian, he's a part of the VU family. He
feels like a brother to me, Joel, because that's pretty
much fully invested in VU.
Speaker 1 (10:18):
Yeah, I'd be curious to know, by the way, what
it feels like to be living internationally right now, reading
about all this American news from overseas, It's it's like,
right if we feel inundated by it. I wonder if,
because he's in the Middle East, if it feels more
or less impactful. Maybe it feels even a little less
unclear because the coverage is a little more sparse. I
I don't know, but it is it would be interesting
(10:40):
to have that kind of bird's eye view in What
is it actually like living in what? How do you
pronounce it Cutter? I have always had a tough time
pronouncing that one.
Speaker 3 (10:46):
But that's I think that's how you pronounce it if
you are a local, like if you that's how I
always said. Yeah, I mean that's as I think as
English speakers, I've always heard it referred to as katar.
But folks who say cutter, you have to be a
professor living in Cutter to be able to say it
that way. Joe, Yeah, you're not allowed to say it
like that, Okay, I won't, just so you know.
Speaker 1 (11:05):
Good, good, Thanks for clarifying that ahead of time.
Speaker 3 (11:07):
A whole lot of other words you're also not allowed
to say either, right, because of who you are.
Speaker 1 (11:10):
But that's true, okay. But I also I get to
worry that Bryant is experiencing here, right. I think I
think a lot of the norms that we've grown accustomed to.
They're being shaken up right now. You and I were
always talking about how politics shouldn't impact how you invest.
That's particularly true right when we're getting to election season
and people like, oh, if the Democrat of the Republican
gets selected, that maybe I should shake things up because
(11:31):
I don't know if they're going to handle the economy
as well. And that has always been based on the
reality that both the R and the d's they kind
of tend to hold a belief in the benefits of
global free trade. And for the first time in a
long time, Matt, the free trade bias that's essentially been
held for generations, it's being upended. And so yeah, I
do think the discussion of changing your investing strategy takes
(11:54):
on a bit more weight in this environment. Like the
question is different than what if an R or D
gets selected. It's like, well, what if the we think
of the global economy is shifting dramatically?
Speaker 3 (12:02):
Yeah, and it does. I will say it appears like
that sort of free trade approach to global trade as
being upended. There's also a chance, of course, that it
could just sort of be a blip on the radar
in terms of stock market and investments. It could be
just some of that short term volatility that has yet
to be seen, And honestly, that kind of that's the
filter I'm viewing all the questions we're going to kind
(12:25):
of get to today. We're gonna address and try to
answer the questions as best we can given what we
know at the moment. So Bryant's question should he be
investing internationally? There are going to be valid arguments on
both sides whether or not you should continue to invest
solely in the in US companies or if you should
expand that to international indexes as well, because many believe
(12:48):
that US centric ETFs like VU offers enough overseas exposure
that it just minimizes or it even completely eliminates the
need to own funds that own foreign companies specifically. So
basically you're getting enough diversification by owning a single index
like VW because McDonald's, Apple, Amazon, these are all companies
(13:11):
who are doing a lot of business in countries around
the world, which achieves a just like a good enough
kind of result. If you travel to Asia, man, you
know how many KFCs you see?
Speaker 1 (13:19):
A lot are there?
Speaker 3 (13:20):
I don't know, it's been a long time I've been
in Asia, so we have always felt this way, and honestly,
despite the tariff induced market volatility, we still feel that
most folks will do just fine investing in low cost
total stock market index funds or s and P five
hundred ETF.
Speaker 1 (13:36):
Over the years. Yeah, and I think that's for multiple reasons, right,
because despite this growing anti free trade sentiment, the US economy,
it's still the most vibrant in existence, right, and our
business environment is the envy of the world. Like, when
you think about the biggest companies in the world, it's
not even close like the United States, especially when you're
(13:56):
talking about the mag seven or whatever. Companies in other
countries just can't hold a candle to the largest companies
that we have in the United States here. And also
when it comes to the breath and the diversity of
companies and industries that the United States participates in. It's
all our belief too that there's no real stomach for
(14:17):
significant tariffs to remain over the long term.
Speaker 2 (14:19):
Right.
Speaker 1 (14:19):
We've already seen tariffs paused, reduced, rolled back, and then
exceptions created for specific companies and sectors specifically like computers, smartphones.
Right when you think of a company like Apple. They're
lobbying hard to have tariffs reduced on smartphones in particular,
and I think the administration is starting to understand how
negative of an impact lasting tariffs could have. And it's
(14:41):
obviously it's hard to predict when trade policy is kind
of at the mercy of one man's whims right now.
But the willingness to minimize tariffs and to shift when
tides turn, I think that's at least somewhat positive. So one,
we can see that the US economy is incredibly resilient,
and two, it looks like tariff policy can and will
change right as the American economy reacts negatively. Yes, who
(15:04):
the imposition of those tariffs. I think those are two
at least positive signs that being a US centric investor
still seems like a reasonable idea, right.
Speaker 3 (15:12):
But Bryant might feel differently. He might come down, you know,
given the same information, he might make a totally different decision,
And I think that's okay. There are a lot of
really smart people out there who believe that international exposure
is crucial for investors, and this was even before tariffs
came on the scene. Even if international stocks have performed
poorly versus US stocks over the past decade. That still
(15:34):
doesn't mean that they will over the next decade. You know,
like things could turn around, particularly if US policy continues
to march down this road. Brian, if you do feel
that you need to change things up, I would say,
don't change things up like immediately, Like you don't need
to slam on the e break and pull yui. I
would just consider buying other low few funds that offer
(15:55):
non US stock exposures with new investment dollars over time.
This isn't like a call to say just sell everything
and you completely upend your your financial or at least
your investing life. Yeah.
Speaker 1 (16:07):
I think if you're going to change your investing strategy,
like make sure you write it down, be thoughtful about it,
and say no no, because of this, it's changed my
happening in the world. It's changed my belief in this way,
and put pen to paper so that you have an
informed view of why you're making those changes, so you're
not just making them emotionally and halpass exactly. That's a bad.
Speaker 3 (16:27):
Idea and it makes me think too. So at the
beginning or in his question, he was talking about how
they chose to stay there in Qatar based on a
couple of things, based on higher pay as well as
lower lower cost of living. I think is what he
said there. That's great as opposed to thinking that, oh,
it seems like the US economies and shambles. I'm not
(16:47):
totally sure. I mean, he did mention like the weekend
US dollar, but hopefully he primarily made the decision based
on some of these hard, tangible number crunching that he
was able to do, as opposed to projecting into the
future what might be happening in a similar way. That's
how I would want Briant to approach his investing, like, yes,
there's total It's totally fine to say I want to
(17:08):
maybe diversify a little bit more internationally, but make sure
you're doing that with a plan while looking out the numbers,
as opposed to that sort of knee jerk commotional.
Speaker 1 (17:16):
Reaction in a proactive not reactive way. And the proactive,
I think is exactly what you mentioned, Matt, just kind
of buying into other index funds internationally over time to
increase your exposure there, instead of making some sort of
whiplash sell by sort of thing in one of your
tax advantage retirement accounts.
Speaker 3 (17:34):
That's right, buddy.
Speaker 4 (17:36):
You're listening to How To Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 1 (17:42):
If you're on Facebook, by the way, you want to
join a group of like minded folks who have money questions,
who have money insights, please go join the how to
Money Facebook group.
Speaker 3 (17:51):
Hey, let's talk about pandemic throwbacks for a second longer here.
Remember the restaurant surcharges back during COVID.
Speaker 1 (17:57):
Oh yeah, the was it.
Speaker 3 (17:59):
Like a specifically for PPE.
Speaker 1 (18:01):
The protectiveness was what do I even stay for protection
equipment or something like that. And I think people didn't
mind it in the moment, But the longer those tariffs
surcharges lingered on restaurant bills, that's when people started to get.
Speaker 3 (18:14):
Yeah, yeah, it's just like, isn't the government sending out
like free tests and their masks everywhere now? Like early again,
everyone gets a buy early on when we had no
idea what was going on. But yeah, it didn't take
very long before I at least was annoyed at some
of the search charges that we're seeing specifically at restaurants. Well,
on that note, more companies are now imposing tariff surcharges,
(18:38):
So instead of jacking up their prices, they're funding a
way to communicate and to let their customers know that, hey,
the government policy is to blame here for this bigger bill.
And depending on where different companies are sourcing their products from,
depending on how quickly they're able to pivot, it won't
just be a tariff surcharge that you're seeing, but actual
higher base prices as well. Companies out there, particularly particularly
(19:03):
these small and medium sized ones, they're in a tough spot.
You know, they're kind of stuck between a rock and
a hard place. They're trying to figure out how to proceed.
And while there is a whole lot of uncertainty. Now,
I think it's again sort of like early on during
the pandemic, let's just kind of be kind to everyone,
to all businesses as they in particular are trying to
figure out how to proceed and how to stay solvent.
Speaker 1 (19:25):
Yeah, especially Yeah, I talked to someone the other day
and they have a side business and they buy cookwear
from China, and they just canceled a large order because
they were like, well, we can't we don't know if
we can be profitable right with this tariff in place,
and so right now, like this business is on hold,
and I think there's a lot of people that are
in a situation like that. And for businesses that can't
(19:48):
afford to do that, they still have a product they
have to get to their customers, and they don't want
to want it to look like their prices are jumping dramatically,
and they want to communicate. Like you said, Matt, hey,
this is the reality we're all living in right now.
Here's how much more it is costing. Here's why I'm
passing on this higher cost. I think it makes more
sense than maybe some of the long lasting restaurants surch
charges we saw. Sure, but I would say use this
(20:12):
maybe as an excuse as an individual consumer to start
buying secondhand. Right because tariffs and then the threat of
more widespread tarrafs, particularly on the countries that manufacture so
many of our clothes, they've been great for thrift stores.
People are shopping at thrift stores more often. You and
I were like, Hey, no matter what's happening to the economy,
shop at your local thrift store anyway. So it's not
(20:32):
just that folks are trying to avoid paying more for
their garments. They're just also worried about more lean economic
times coming about and downturns. Man, what happens in a
downturn always is barket basement options. They tend to see
a whole lot more traffic. And it's also interesting, when
the economy is booming, people save less. When the economy
(20:53):
is tightening, people tend to save more. It's like the
opposite reaction you would assume. And we're already keen on
places like Facebook, Marketplace. We like yard sales, Matt. I
know you like freebies on the curb too, that's kind
of your jam curb alerts. Yeah, but don't forget about
like good Will and then just making do with less.
And I think I might sound odd, but I don't
think of these shifts in shopping as like a negative thing. Really,
(21:17):
what you're doing is you're making smart changes to stretch
your money. I don't think there's any shame in that.
And I think, actually, like I wear my awesome good
Will finds with a badge of honor, I think it's
instead of a status symbol being a fancy car, it's
the cool shirt I found that nobody else has because
it's one of a kind, because I got it from
the good will.
Speaker 3 (21:34):
Or the shirt's one of a kind because it's got
holes in it, which literally, I'm gonna turn around here.
Can you see my back?
Speaker 1 (21:42):
Oh yeah, that's a big hole.
Speaker 2 (21:45):
You know what.
Speaker 3 (21:46):
I like this pocket tea and I was like this
close to talk to.
Speaker 1 (21:49):
Your recession hair. Combined with the holes in your shirt,
people are probably worried about your bunny.
Speaker 3 (21:52):
We will get to that one here in a little bit,
but let's talk about a recent TikTok trend that has
been gathering steam. There have been videos from influencers online.
Maybe you've even seen some of these influencers because you
follow them, But they are claiming that luxury handbags or
Lulu Lemon leggings that are being made in China, that
you yourself can in fact have them for a steal by
buying directly from these Chinese manufacturers. Why it sounds enticing
(22:15):
cut off the middleman? Yes, Why would you be willing
to pay burbery prices when you can get that same
luxury item for pennies on the dollar jowl? And it
sounds pretty cool? That's not necessarily true. A decent chunk
of high end luxury products are actually made in France
and Italy. They're not made in these Chinese factories. The
vast majority of Gucci items, for instance, are made in Italy,
(22:38):
the same with Louis Vatan. Some even make products in
the US. That experiment actually hasn't gone well. There's been
reports of trying to train up US workers to make
leather handbags and it's like, oh, yeah, they're really bad
at that.
Speaker 1 (22:54):
The artisans in Europe are better than this.
Speaker 3 (22:55):
It's taken years and all they're doing is just like
a minimal leather pocket or something like that on a handbag.
It's actually pretty funny. But many luxury items are actually
manufactured in China and then shipped elsewhere to be quote
unquote finished. So if you opt to go this route,
this is it reminds me of buying on the streets
of New York, Joel. There is a reasonable chance that
(23:17):
by the allure of trying to snag some of these
luxury items for cheap, well, in fact, you're going to
get a knockoff product. You're not getting a crazy deal
because you bought direct, you're buying You're buying a fake product.
Have you ever specifically gone up to New York and
gone to Canal Street, Oh.
Speaker 1 (23:31):
For sure, going in high school, and we called them
folk lease because Oakley's were very cool back then, and
you would buy a pair of Fokeles, you knew what
you were getting. I mean, you knew they were eight
dollars for a reason, not because they were real Oakley's
that had been cut out the middleman. I it was
because they were knockoff that was much cheaper.
Speaker 3 (23:47):
I think that there's a certain sort of badge of
honor in getting certain fake items. Like the first time
I went to New York, I drove up there in
my jeep with my buddy Kyle. Actually, so we didn't
drive to New York. We drove to Poughkeepsi. It took
a train from Poughkeepsi to New York. It was the
opposite of the something Corporate song. We didn't wake up
in the car, but we specifically. Of course, you're wanting
(24:10):
to do like hit all the highlights in New York City.
And I can't remember what kind of watch was. I
think it was like a Brightling, but of course I
knew I was getting a fake. I think it was
like a Prightling or something like that. I know, but
I like the hands on the face of the dial, right,
like they fell off in like a year, but like
I knew that was gonna happen. But it's also that's
part of the allure, Yeah, exactly.
Speaker 1 (24:28):
I mean it's like a fraction of the price and
most luxury goods, of course we all know this. They're
an attempt at signaling wealth. But if you spend a
lot of money on luxury stuff, it has the opposite impact. Yeah,
you're draining your bank account to signal wealth that you
no longer have. And I think there are always exceptions,
there are ways to get something similar in this kind
(24:49):
of wild West consumer environment that we live in. But
you got to do your due diligence, and you got
to realize that the thing that's being sold to you
for five bucks is not the same thing as being
sold to you for fifteen hundred, and hey, maybe you
don't need either.
Speaker 3 (25:00):
That's right, man.
Speaker 4 (25:02):
You're listening to how to Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 3 (25:08):
If you are over on Facebook and you want to
join a group of like minded folks who have money
questions and insight, please go ahead and join the how
to Money Facebook group. But let's see Becca, she asked
about retaliation. She was talking asking about gold and crypto
as well. Joel, what are your thoughts there? Do you
get any thoughts specifically about the trade war? That's the
(25:30):
part that seems the most ominous. Yeah, I feel like
that's kind of freaking people off, you knows.
Speaker 1 (25:34):
I agree, And I think I'm glad she asked about this,
because retaliation is real, right, you can you can punch
somebody in the nose, but then I don't know if
they punch you in the ear back, like you're both hurting,
So you have to take that into account. You might say, great,
we got the upper hand here in the beginning, but
do you ultimately get kicked in the pants? Right? Do
you ultimately have the upper hand? That's the question. And
(25:55):
I think tariffs are a kind of a too complay
at this game scenario. And we're already seeing other countries,
a lot of our Canadian neighbors to the north canceling
trips to the US, other countries too, just saying I'm
not vacationing there because I'm so mad about the US
trade policy, and that impacts the airlines, that impacts hotels,
that impacts other travel leisure industries, And so if the
(26:18):
US continues to have an antagonistic approach to trading partners,
particularly friendly ones or ones we've been friendly with over many,
many decades, it could hurt the bottom line of US
companies who sell some of their goods and services abroad.
I'm just thinking of a company like McDonald's. I could
see consumers in other countries saying, like boycotting, Yeah, yeah,
I'm not I'm switching to my local fair instead. So
(26:41):
not only will their cost rize US companies cost rises,
but demand can go down to internationally. And so I
do think that erosion of faith in the US as
a mutually beneficial trading partner, it could potentially create some
of the most harm totally.
Speaker 3 (26:57):
And that's the part that doesn't make the like any
at all. Like China, Okay, I totally understand that. Like
if you start doing some research or reading reading about
the amount of intellectual property theft that has taken place
from China and like the billions of dollars annually that
you could assign a dollar amount to. Okay, I kind
of understand the argument there, But the argument is more
of an adversarial relationship there. Yes, absolutely as the other
(27:20):
predominant world power. But when it comes to like Canada
and even Mexico, I understood at the very beginning when
border crossings were still a thing, and that's something that
the Trump camp that they campaigned on, like shutting the border.
But that's like all but completely gone away, and so
the and what gives with Canada, there's like hardly any
illegal crossings. Oh my gosh. Like the fentanyl stats about
(27:43):
the number of pounds that were crossing the Mexican border
as opposed to the Canadian border was like laughable, Like
I don't these aren't real numbers. But it was something
like every thirty days, like three thousand pounds a fentanyl
from Mexico and it was something like seven from Canada.
And so the adverage aerial relationship in particular to Canada
makes very little sense to me. But BECO is also
(28:05):
asking about gold and crypto, how that would be impacted,
and so we'll start with gold because it's done quite
well for investors as they've turned there during uncertain times.
It's actually outperformed the SMP by a lot over this
past year. Given the volatility that we've seen. If you
zoom out a little bit more. You see that it's
essentially matched the SMP over the past five years, but
(28:29):
then beyond that it doesn't do so well. And especially
if you look at the last even the last five
to ten years, and you eliminate the past most recent
four months, things start looking a whole lot more normal.
It's the volatility that we've most recently experienced that's really
thrown the average returns off.
Speaker 1 (28:46):
Which is on average, when people turn to gold, it's
like a flight to safety. And so I think that's
why beck is asked about this, well, should I be
flying to safety? And part of that depends, I guess,
on your view of where the world is headed.
Speaker 3 (28:56):
Yes, but so still, if you have time on your
side as an investor or look into the stock market,
that's going to be a better choice. From a long
term historical perspective. As far as crypto goes, we still
dislike crypto generally speaking, and we've got a carve out
though for bitcoin. Bitcoin is not unlike the other cryptocurrencies,
but inflation, tariffs, currency fluctuations as well currency inflation. This
(29:21):
could lead to more investors moving into the bitcoin direction.
It's still highly volatile and basically it's still acting like
a security. It's acting like socks. You got to be
aware of that, and we want you, Becca, as well
as all how to many listeners out there, to stay
invested in the market. But I certainly think having some
bitcoin might be wise, certainly dabbling a little bit, no
(29:43):
more than five percent. I get that A thumbs up.
Speaker 1 (29:46):
Yeah again, going back to kind of something we mentioned earlier, though,
making huge shifts in how you're invested makes very little sense.
But if you're making smart, calculated moves in different directions
because you are being thoughtful about the future of bitcoin,
of money, of companies, of US based companies specifically, I
get that. But you still you don't want to make
(30:08):
knee jerk responses.
Speaker 3 (30:09):
Yeah, in a large part because I think we are
optimistic and we're hopeful that things are going to go
back to normal, like not too far future. Yeah, yeah,
I did say that, well, but you know what I mean. Yeah.
Speaker 1 (30:20):
Let's get to a question from listener Sarah. She says,
I have a current college student. We used five twenty
nine funds for freshman year, but it's now depleted. Student's
father wants to keep adding to five two nine. I
want to save in a high old savings account. What
are your thoughts with the current volatility in investments right now?
Speaker 3 (30:38):
I think Sarah and the student's father are both right
to a certain extent. I'm not sure where Sarah lives,
but much of the answer comes down to the state
that she lives in, because if she gets a tax
break for funneling those dollars through a five twenty nine, well,
of course do that. If not, well, then the high
yield savings account is the right answer. We're gonna get
(30:59):
to why I said that. I think you're both right here.
Let's say you do live in a state that gives
you a tax break. That still doesn't mean we want
you to invest those dollars once you put those dollars
into the five twenty nine. Notice I said to funnel
those dollars through the five twenty nine as opposed to
like parking it there in like a long term like
airport parking. No no, no, Like we're talking about like
(31:19):
you doing the drop off, like at the at the
gate or at the you know what, they got the
numbers there at the airport. We're not talking about like
the long term parking where you're having a height.
Speaker 1 (31:28):
It's almost like a legal form of money laundering, right
where you're literally funneling it through this account passenger just
to get a tax break. But you don't have to
take much action with those that money beyond that it's
total and then you can spend it at your discretion
for college needs.
Speaker 3 (31:41):
Yeah, in most five twenty nine plans, they offer fixed
income choices that do resemble the returns that you're going
to see with a high held savings account, albeit with
slightly lower returns. But put the money in the account,
you get the tax break, but then keep the money
in the most conservative choice, which is probably going to
be like a money market equivalent kind of fun. So
you're not actually investing those dollars it is. You are
(32:03):
treating it a bit more like cash.
Speaker 1 (32:04):
And that's essentially the advice we would give you tariffs
or not, right, a market volatility or not. It is
one of those things where if the money needs to
be spent immediately or in the very near term, you
don't want to invest those dollars, even if it's twenty
twenty three, right and you're like, the market's roaring, this
is great. Should I be investing? No, you shouldn't if
you need the money soon would We've always said, you know,
for people with young kids, we're all about investing inside
(32:26):
of those five twenty nine funds if you're doing the
other investments you need to make as an individual in
your tax advantage retirement accounts first. But yes, we do
want you putting money then in the five twenty nine
fund and investing those dollars for their future. You want
that tax advantage money to grow. But when you're getting
closer to needing to spend that money down, you got
a d risk, right. You want to make sure your
(32:47):
five twenty nine planned money is not invested in something
that could cause you to see significant drops in the
balance in a short period of time. And so at
this point you're investing in like a heavy stock based
portfolio inside of the twenty nine plan. Would be the
furthest thing from smart like you would be a terrible
idea that the risks of losing a chunk of this
money so close to needing, it's just not worth the
(33:10):
potential rewards. So exactly, you might say, oh, man, the
fixed income fund is paying like two and a half
three percent, and.
Speaker 3 (33:16):
That seems lame.
Speaker 1 (33:17):
Average return of the DSPU. The guy's site that all
the time on the show Man, that's like an average
AMAL return of something like ten percent. This I should
be invested in the stock market. Well, no, you don't
want to take that risk when you need the money soon.
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
(33:40):
on demand on the iHeartRadio app.
Kay if I am six forty you're listening to how
to Money on demand on the iHeartRadio app.
Speaker 2 (00:07):
Do you want to live well without drowning in debt?
Joel and Matt have you covered? This is how to
Money with Joel lars Guard and Matt Ullmax.
Speaker 3 (01:19):
KF. I am six forty live everywhere on the iHeartRadio app.
This is how to Money. I am Matt Altmics.
Speaker 1 (01:25):
And I'm Joel Larscard. Don't forget to sign up for
the how to Money newsletter. You can find that up
at how tomoney dot com slash newsletter.
Speaker 3 (01:32):
So you know what I've been seeing around town lately, Joel,
not only on the interest. I feel like I've seen
them most of the time on the interstate, but even
this morning, as I was biking into our studio, I
see a Tesla past me and it's got the sticker.
You know what I'm gonna say, It's got the h
I bought this before you went crazy sticker on there.
You've seen those, right, I've seen this.
Speaker 1 (01:51):
Yeah. What I found interesting though, I read about the
guy who started a company selling these elon stickers. Apparently
makes like one hundred thousand dollars a month, no selling
these stickers. Now, oh my gosh, it's capitalism as finest man.
Hey if you guys, and then I get it too.
As a Tesla driver, you might want to signal, especially
with the violences being done to Tesla. What do you
(02:13):
think about the signal because you don't want someone to
come up and a cost you for driving to Tesla.
They think maybe it's a political stance, but yeah, for
most people, it's not.
Speaker 3 (02:22):
It's a product that someone has purchased. Like, this is
not a political statement. How did Tesla's go from being
a statement of like I'm trying to help save the
earth and I'm trying to be green, or maybe I
just like to drive a car that's got an amazing
amount of instant torque. So thinking that this is, you know,
a political statement, I think you know how it happened.
(02:42):
But yeah, I think most people are less aware or
care less about the political side of things, and they're
just trying to drive a car that they like. I
guess I get it. It's certainly how much are the stickers?
How much do they cost? I don't know, but apparently
five bucks or something. Yeah, apparently there's enough profit margin
for this guy of these guys, I can get toell
the money. It's a chief form of insurance, right, Like, yeah,
if you are trying to keep folks from kying your
(03:03):
car or slashing your tires, even lighting your car on fire, right,
I certainly, I certainly understand.
Speaker 1 (03:09):
It's just sad that you would have to do that.
Speaker 3 (03:11):
I think it probably depends on where you live, too, right,
because if you are living in an environment where maybe
it's a bit more progressive or left leaning, and you're
driving a Tesla around, you're getting that bombastics? Is it bombastic?
Side eye? Is that what the kids are saying?
Speaker 1 (03:23):
But then again, that's where a lot of those teslas reside.
Think about, like per capita, there's more teslas in California
than there are in like maybe more red leading states.
Speaker 3 (03:31):
So fascinating to see if it truly does become a
political statement of folks who are more right leaning tend
to tend to buy buy vehicles. But speaking of vehicles, actually,
did you see last month that retail car sales increased
by almost five percents? While we're talking about cars here, Yeah,
that's not just evs, but just new vehicles across the
board shot up in anticipation for the upcoming.
Speaker 1 (03:53):
Terrast a little bit of that pre buying action.
Speaker 3 (03:55):
At this point, Americans are expecting higher levels of inflation
than they have and like something close to thirty four years,
which can lead to pre buying. It can lead to
this self fulfilling prophecy of sorts, because yeah, if you
think prices are going to go up, you're more likely
to buy more now, sure, because you don't want to
pay the higher price tag later. I get the impulse,
and I think it can make sense if essentially you're
(04:16):
kind of pulling some of that purchasing forward, right if
it's an item that you were already planning on buying.
But this is also hard to gauge because tariff levels
are constantly changing. If there's anything that we've learned, it's
that which is not normal tariff policy, but it is
the new normal. Like if you bought an iPhone that
perhaps you didn't need, well, you might be kicking yourself
because they were exempted from the terror. Consumer spending at
(04:39):
Apple was up twenty percent in the first week of
April before that carve out, before that reprieve was granted.
Shelf stable foods have even been purchased at higher levels
as well. I think some folks. There's reports of some
folks stocking up on Christmas items as they're looking ahead,
because think about all the plastic that comes.
Speaker 1 (04:56):
From It's not just plastic, but when we buy most
of our toys from China, and if they're is one
hundred and forty five percent tariff that remains on those
Chinese goods that come overseas, Yeah, Christmas is going to
get a heck of a lot more expensive, and companies,
American companies aren't going to be able to shift on
a dime and source those toys elsewhere. So true, I
get some of that impulse, and we don't know how
(05:17):
this is going to shake out ultimately. I will say
the silver lining to buying your Christmas presents early maybe
you do get a better deal, but also you don't
have to worry about Chrismas shopping later on. I mean
that sounds kind.
Speaker 3 (05:26):
Of nice until Christmas rolls around. It's just like, oh, yeah,
I'm not interested in that hobby at all anymore. You're like, well,
sorry tariffs mom, that was just six months ago. Like
you're totally going to disappoint your kids.
Speaker 1 (05:36):
Yeah, well so interesting to see the knock on effects,
right and the kind of domino impact of tariffs and
so like. Used car prices have actually gone up for
the first time in two and a half years because
of tariffs, which.
Speaker 3 (05:49):
We thought that the pandemic was going to be the
last time we ever saw used car prices go up
because of the snarled supply chain, right right, Like that's why,
like everybody was looking to use and we're like, this
is a one time blip, that was anomaly. Here we go, Yep, yep,
another anomaly.
Speaker 1 (06:03):
Another anomaly again in short order. Because the supply chain
of new cars is being threatened by higher prices, it's
leading to less supply that pre buying we're talking about,
and then higher prices on used cars as more people
turned to that market to get what they need.
Speaker 3 (06:19):
Trump is now the ever grand that's stuck sideways in
those Yes, the Pandama Canal.
Speaker 1 (06:27):
Yeah, yeah, actually it's not.
Speaker 3 (06:28):
Well yeah, luckily the Panama Canal has not entered into
the equation that I guess recruiting changed on that one yet.
Speaker 1 (06:34):
Oh man, well, so this is less I think of
capitalizing on a sale and more like buying now because
of looming threats. Right, this is what people are doing.
And I think it's okay to purchase some items ahead
of time, but in these uncertain economic times, man, I
think it's also important to note that cash is important.
Right when you're not sure what's gonna happen with pricing,
and maybe when you're unsure what's going to happen with
(06:56):
your income. Most folks just can't afford to stockpile or
buy significant amounts of items ahead of time, particularly those
more expensive items like I was gonna get an iPhone
next year, I might get it now. Well that's like
a thousand bucks, right, and most people just can't afford
to do that in anticipation of saving twelve hundred bucks
a year from now. I think, more than anything, what
we want to communicate to people is just not don't
(07:18):
buy stuff that you don't need just because you're worried
about price increases, because those, as we've seen, are nearly
impossible to predict, and it's hard to know where tariffs
go from here. And I get the anxiety that people
are feeling, but I also think, well, spending more of
your money and having less less of a cash reserve
isn't necessarily the right way to approach this, and that
(07:41):
could lead to even more anxiety and potential hartware later on.
Speaker 3 (07:44):
People got to have their stuff. Yeah, I think that's
the mentality.
Speaker 1 (07:47):
All right. We've got actually more to get to on
today's show.
Speaker 4 (07:50):
You're listening to how To Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 3 (07:57):
By the way, you can always find more money saving
and information over at howtomoney dot com.
Speaker 1 (08:02):
Matt, let's get to a question specifically about international investing
in the age of tarifs.
Speaker 5 (08:08):
Hey, guys, this is Bryant and I'm calling in from Cutzer.
My wife and I are both originally from the United States,
but we are currently living and working in Cutzer as professors,
and we are worried about the kind of state of
the US economy, and we we recently decided to keep
(08:34):
living here, so we just turned down job offers Texas,
A and M in order to kind of stay here
and work here. Sellers are higher costs or lower versus
there's some perks involved, and we are kind of wondering
(08:55):
where to go from here with our investments we currently
have most most of our investments are currently in the
US stock market, mostly in the Vanguard ETF v O O.
(09:16):
But given kind of the decline of the dollar and
the kind of fluctuation in the in the stock market
currently and with everything else going on, we are considering
investing internationally. So we've been looking at some European ETFs.
Speaker 3 (09:37):
Like.
Speaker 5 (09:39):
The v g K and some other ones, and we
were kind of just wondering if you have advice about that.
When you think about that, if there's any picks that
you would suggest, Yeah, thanks, Yes.
Speaker 3 (09:55):
Do you like how Bryant said if we had any picks,
We're here to dish out the stock tips.
Speaker 1 (10:01):
He's not at least he's not asking about individual stocks.
He's talking about, Hey, should I diversify internationally? Which is
and it's honestly, that's a question as old as time,
since the beginning of stock market investing.
Speaker 3 (10:11):
Yeah, Brian, he's a part of the VU family. He
feels like a brother to me, Joel, because that's pretty
much fully invested in VU.
Speaker 1 (10:18):
Yeah, I'd be curious to know, by the way, what
it feels like to be living internationally right now, reading
about all this American news from overseas, It's it's like,
right if we feel inundated by it. I wonder if,
because he's in the Middle East, if it feels more
or less impactful. Maybe it feels even a little less
unclear because the coverage is a little more sparse. I
I don't know, but it is it would be interesting
(10:40):
to have that kind of bird's eye view in What
is it actually like living in what? How do you
pronounce it Cutter? I have always had a tough time
pronouncing that one.
Speaker 3 (10:46):
But that's I think that's how you pronounce it if
you are a local, like if you that's how I
always said. Yeah, I mean that's as I think as
English speakers, I've always heard it referred to as katar.
But folks who say cutter, you have to be a
professor living in Cutter to be able to say it
that way. Joe, Yeah, you're not allowed to say it
like that, Okay, I won't, just so you know.
Speaker 1 (11:05):
Good, good, Thanks for clarifying that ahead of time.
Speaker 3 (11:07):
A whole lot of other words you're also not allowed
to say either, right, because of who you are.
Speaker 1 (11:10):
But that's true, okay. But I also I get to
worry that Bryant is experiencing here, right. I think I
think a lot of the norms that we've grown accustomed to.
They're being shaken up right now. You and I were
always talking about how politics shouldn't impact how you invest.
That's particularly true right when we're getting to election season
and people like, oh, if the Democrat of the Republican
gets selected, that maybe I should shake things up because
(11:31):
I don't know if they're going to handle the economy
as well. And that has always been based on the
reality that both the R and the d's they kind
of tend to hold a belief in the benefits of
global free trade. And for the first time in a
long time, Matt, the free trade bias that's essentially been
held for generations, it's being upended. And so yeah, I
do think the discussion of changing your investing strategy takes
(11:54):
on a bit more weight in this environment. Like the
question is different than what if an R or D
gets selected. It's like, well, what if the we think
of the global economy is shifting dramatically?
Speaker 3 (12:02):
Yeah, and it does. I will say it appears like
that sort of free trade approach to global trade as
being upended. There's also a chance, of course, that it
could just sort of be a blip on the radar
in terms of stock market and investments. It could be
just some of that short term volatility that has yet
to be seen, And honestly, that kind of that's the
filter I'm viewing all the questions we're going to kind
(12:25):
of get to today. We're gonna address and try to
answer the questions as best we can given what we
know at the moment. So Bryant's question should he be
investing internationally? There are going to be valid arguments on
both sides whether or not you should continue to invest
solely in the in US companies or if you should
expand that to international indexes as well, because many believe
(12:48):
that US centric ETFs like VU offers enough overseas exposure
that it just minimizes or it even completely eliminates the
need to own funds that own foreign companies specifically. So
basically you're getting enough diversification by owning a single index
like VW because McDonald's, Apple, Amazon, these are all companies
(13:11):
who are doing a lot of business in countries around
the world, which achieves a just like a good enough
kind of result. If you travel to Asia, man, you
know how many KFCs you see?
Speaker 1 (13:19):
A lot are there?
Speaker 3 (13:20):
I don't know, it's been a long time I've been
in Asia, so we have always felt this way, and honestly,
despite the tariff induced market volatility, we still feel that
most folks will do just fine investing in low cost
total stock market index funds or s and P five
hundred ETF.
Speaker 1 (13:36):
Over the years. Yeah, and I think that's for multiple reasons, right,
because despite this growing anti free trade sentiment, the US economy,
it's still the most vibrant in existence, right, and our
business environment is the envy of the world. Like, when
you think about the biggest companies in the world, it's
not even close like the United States, especially when you're
(13:56):
talking about the mag seven or whatever. Companies in other
countries just can't hold a candle to the largest companies
that we have in the United States here. And also
when it comes to the breath and the diversity of
companies and industries that the United States participates in. It's
all our belief too that there's no real stomach for
(14:17):
significant tariffs to remain over the long term.
Speaker 2 (14:19):
Right.
Speaker 1 (14:19):
We've already seen tariffs paused, reduced, rolled back, and then
exceptions created for specific companies and sectors specifically like computers, smartphones.
Right when you think of a company like Apple. They're
lobbying hard to have tariffs reduced on smartphones in particular,
and I think the administration is starting to understand how
negative of an impact lasting tariffs could have. And it's
(14:41):
obviously it's hard to predict when trade policy is kind
of at the mercy of one man's whims right now.
But the willingness to minimize tariffs and to shift when
tides turn, I think that's at least somewhat positive. So one,
we can see that the US economy is incredibly resilient,
and two, it looks like tariff policy can and will
change right as the American economy reacts negatively. Yes, who
(15:04):
the imposition of those tariffs. I think those are two
at least positive signs that being a US centric investor
still seems like a reasonable idea, right.
Speaker 3 (15:12):
But Bryant might feel differently. He might come down, you know,
given the same information, he might make a totally different decision,
And I think that's okay. There are a lot of
really smart people out there who believe that international exposure
is crucial for investors, and this was even before tariffs
came on the scene. Even if international stocks have performed
poorly versus US stocks over the past decade. That still
(15:34):
doesn't mean that they will over the next decade. You know,
like things could turn around, particularly if US policy continues
to march down this road. Brian, if you do feel
that you need to change things up, I would say,
don't change things up like immediately, Like you don't need
to slam on the e break and pull yui. I
would just consider buying other low few funds that offer
(15:55):
non US stock exposures with new investment dollars over time.
This isn't like a call to say just sell everything
and you completely upend your your financial or at least
your investing life. Yeah.
Speaker 1 (16:07):
I think if you're going to change your investing strategy,
like make sure you write it down, be thoughtful about it,
and say no no, because of this, it's changed my
happening in the world. It's changed my belief in this way,
and put pen to paper so that you have an
informed view of why you're making those changes, so you're
not just making them emotionally and halpass exactly. That's a bad.
Speaker 3 (16:27):
Idea and it makes me think too. So at the
beginning or in his question, he was talking about how
they chose to stay there in Qatar based on a
couple of things, based on higher pay as well as
lower lower cost of living. I think is what he
said there. That's great as opposed to thinking that, oh,
it seems like the US economies and shambles. I'm not
(16:47):
totally sure. I mean, he did mention like the weekend
US dollar, but hopefully he primarily made the decision based
on some of these hard, tangible number crunching that he
was able to do, as opposed to projecting into the
future what might be happening in a similar way. That's
how I would want Briant to approach his investing, like, yes,
there's total It's totally fine to say I want to
(17:08):
maybe diversify a little bit more internationally, but make sure
you're doing that with a plan while looking out the numbers,
as opposed to that sort of knee jerk commotional.
Speaker 1 (17:16):
Reaction in a proactive not reactive way. And the proactive,
I think is exactly what you mentioned, Matt, just kind
of buying into other index funds internationally over time to
increase your exposure there, instead of making some sort of
whiplash sell by sort of thing in one of your
tax advantage retirement accounts.
Speaker 3 (17:34):
That's right, buddy.
Speaker 4 (17:36):
You're listening to How To Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 1 (17:42):
If you're on Facebook, by the way, you want to
join a group of like minded folks who have money questions,
who have money insights, please go join the how to
Money Facebook group.
Speaker 3 (17:51):
Hey, let's talk about pandemic throwbacks for a second longer here.
Remember the restaurant surcharges back during COVID.
Speaker 1 (17:57):
Oh yeah, the was it.
Speaker 3 (17:59):
Like a specifically for PPE.
Speaker 1 (18:01):
The protectiveness was what do I even stay for protection
equipment or something like that. And I think people didn't
mind it in the moment, But the longer those tariffs
surcharges lingered on restaurant bills, that's when people started to get.
Speaker 3 (18:14):
Yeah, yeah, it's just like, isn't the government sending out
like free tests and their masks everywhere now? Like early again,
everyone gets a buy early on when we had no
idea what was going on. But yeah, it didn't take
very long before I at least was annoyed at some
of the search charges that we're seeing specifically at restaurants. Well,
on that note, more companies are now imposing tariff surcharges,
(18:38):
So instead of jacking up their prices, they're funding a
way to communicate and to let their customers know that, hey,
the government policy is to blame here for this bigger bill.
And depending on where different companies are sourcing their products from,
depending on how quickly they're able to pivot, it won't
just be a tariff surcharge that you're seeing, but actual
higher base prices as well. Companies out there, particularly particularly
(19:03):
these small and medium sized ones, they're in a tough spot.
You know, they're kind of stuck between a rock and
a hard place. They're trying to figure out how to proceed.
And while there is a whole lot of uncertainty. Now,
I think it's again sort of like early on during
the pandemic, let's just kind of be kind to everyone,
to all businesses as they in particular are trying to
figure out how to proceed and how to stay solvent.
Speaker 1 (19:25):
Yeah, especially Yeah, I talked to someone the other day
and they have a side business and they buy cookwear
from China, and they just canceled a large order because
they were like, well, we can't we don't know if
we can be profitable right with this tariff in place,
and so right now, like this business is on hold,
and I think there's a lot of people that are
in a situation like that. And for businesses that can't
(19:48):
afford to do that, they still have a product they
have to get to their customers, and they don't want
to want it to look like their prices are jumping dramatically,
and they want to communicate. Like you said, Matt, hey,
this is the reality we're all living in right now.
Here's how much more it is costing. Here's why I'm
passing on this higher cost. I think it makes more
sense than maybe some of the long lasting restaurants surch
charges we saw. Sure, but I would say use this
(20:12):
maybe as an excuse as an individual consumer to start
buying secondhand. Right because tariffs and then the threat of
more widespread tarrafs, particularly on the countries that manufacture so
many of our clothes, they've been great for thrift stores.
People are shopping at thrift stores more often. You and
I were like, Hey, no matter what's happening to the economy,
shop at your local thrift store anyway. So it's not
(20:32):
just that folks are trying to avoid paying more for
their garments. They're just also worried about more lean economic
times coming about and downturns. Man, what happens in a
downturn always is barket basement options. They tend to see
a whole lot more traffic. And it's also interesting, when
the economy is booming, people save less. When the economy
(20:53):
is tightening, people tend to save more. It's like the
opposite reaction you would assume. And we're already keen on
places like Facebook, Marketplace. We like yard sales, Matt. I
know you like freebies on the curb too, that's kind
of your jam curb alerts. Yeah, but don't forget about
like good Will and then just making do with less.
And I think I might sound odd, but I don't
think of these shifts in shopping as like a negative thing. Really,
(21:17):
what you're doing is you're making smart changes to stretch
your money. I don't think there's any shame in that.
And I think, actually, like I wear my awesome good
Will finds with a badge of honor, I think it's
instead of a status symbol being a fancy car, it's
the cool shirt I found that nobody else has because
it's one of a kind, because I got it from
the good will.
Speaker 3 (21:34):
Or the shirt's one of a kind because it's got
holes in it, which literally, I'm gonna turn around here.
Can you see my back?
Speaker 1 (21:42):
Oh yeah, that's a big hole.
Speaker 2 (21:45):
You know what.
Speaker 3 (21:46):
I like this pocket tea and I was like this
close to talk to.
Speaker 1 (21:49):
Your recession hair. Combined with the holes in your shirt,
people are probably worried about your bunny.
Speaker 3 (21:52):
We will get to that one here in a little bit,
but let's talk about a recent TikTok trend that has
been gathering steam. There have been videos from influencers online.
Maybe you've even seen some of these influencers because you
follow them, But they are claiming that luxury handbags or
Lulu Lemon leggings that are being made in China, that
you yourself can in fact have them for a steal by
buying directly from these Chinese manufacturers. Why it sounds enticing
(22:15):
cut off the middleman? Yes, Why would you be willing
to pay burbery prices when you can get that same
luxury item for pennies on the dollar jowl? And it
sounds pretty cool? That's not necessarily true. A decent chunk
of high end luxury products are actually made in France
and Italy. They're not made in these Chinese factories. The
vast majority of Gucci items, for instance, are made in Italy,
(22:38):
the same with Louis Vatan. Some even make products in
the US. That experiment actually hasn't gone well. There's been
reports of trying to train up US workers to make
leather handbags and it's like, oh, yeah, they're really bad
at that.
Speaker 1 (22:54):
The artisans in Europe are better than this.
Speaker 3 (22:55):
It's taken years and all they're doing is just like
a minimal leather pocket or something like that on a handbag.
It's actually pretty funny. But many luxury items are actually
manufactured in China and then shipped elsewhere to be quote
unquote finished. So if you opt to go this route,
this is it reminds me of buying on the streets
of New York, Joel. There is a reasonable chance that
(23:17):
by the allure of trying to snag some of these
luxury items for cheap, well, in fact, you're going to
get a knockoff product. You're not getting a crazy deal
because you bought direct, you're buying You're buying a fake product.
Have you ever specifically gone up to New York and
gone to Canal Street, Oh.
Speaker 1 (23:31):
For sure, going in high school, and we called them
folk lease because Oakley's were very cool back then, and
you would buy a pair of Fokeles, you knew what
you were getting. I mean, you knew they were eight
dollars for a reason, not because they were real Oakley's
that had been cut out the middleman. I it was
because they were knockoff that was much cheaper.
Speaker 3 (23:47):
I think that there's a certain sort of badge of
honor in getting certain fake items. Like the first time
I went to New York, I drove up there in
my jeep with my buddy Kyle. Actually, so we didn't
drive to New York. We drove to Poughkeepsi. It took
a train from Poughkeepsi to New York. It was the
opposite of the something Corporate song. We didn't wake up
in the car, but we specifically. Of course, you're wanting
(24:10):
to do like hit all the highlights in New York City.
And I can't remember what kind of watch was. I
think it was like a Brightling, but of course I
knew I was getting a fake. I think it was
like a Prightling or something like that. I know, but
I like the hands on the face of the dial, right,
like they fell off in like a year, but like
I knew that was gonna happen. But it's also that's
part of the allure, Yeah, exactly.
Speaker 1 (24:28):
I mean it's like a fraction of the price and
most luxury goods, of course we all know this. They're
an attempt at signaling wealth. But if you spend a
lot of money on luxury stuff, it has the opposite impact. Yeah,
you're draining your bank account to signal wealth that you
no longer have. And I think there are always exceptions,
there are ways to get something similar in this kind
(24:49):
of wild West consumer environment that we live in. But
you got to do your due diligence, and you got
to realize that the thing that's being sold to you
for five bucks is not the same thing as being
sold to you for fifteen hundred, and hey, maybe you
don't need either.
Speaker 3 (25:00):
That's right, man.
Speaker 4 (25:02):
You're listening to how to Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 3 (25:08):
If you are over on Facebook and you want to
join a group of like minded folks who have money
questions and insight, please go ahead and join the how
to Money Facebook group. But let's see Becca, she asked
about retaliation. She was talking asking about gold and crypto
as well. Joel, what are your thoughts there? Do you
get any thoughts specifically about the trade war? That's the
(25:30):
part that seems the most ominous. Yeah, I feel like
that's kind of freaking people off, you knows.
Speaker 1 (25:34):
I agree, And I think I'm glad she asked about this,
because retaliation is real, right, you can you can punch
somebody in the nose, but then I don't know if
they punch you in the ear back, like you're both hurting,
So you have to take that into account. You might say, great,
we got the upper hand here in the beginning, but
do you ultimately get kicked in the pants? Right? Do
you ultimately have the upper hand? That's the question. And
(25:55):
I think tariffs are a kind of a too complay
at this game scenario. And we're already seeing other countries,
a lot of our Canadian neighbors to the north canceling
trips to the US, other countries too, just saying I'm
not vacationing there because I'm so mad about the US
trade policy, and that impacts the airlines, that impacts hotels,
that impacts other travel leisure industries, And so if the
(26:18):
US continues to have an antagonistic approach to trading partners,
particularly friendly ones or ones we've been friendly with over many,
many decades, it could hurt the bottom line of US
companies who sell some of their goods and services abroad.
I'm just thinking of a company like McDonald's. I could
see consumers in other countries saying, like boycotting, Yeah, yeah,
I'm not I'm switching to my local fair instead. So
(26:41):
not only will their cost rize US companies cost rises,
but demand can go down to internationally. And so I
do think that erosion of faith in the US as
a mutually beneficial trading partner, it could potentially create some
of the most harm totally.
Speaker 3 (26:57):
And that's the part that doesn't make the like any
at all. Like China, Okay, I totally understand that. Like
if you start doing some research or reading reading about
the amount of intellectual property theft that has taken place
from China and like the billions of dollars annually that
you could assign a dollar amount to. Okay, I kind
of understand the argument there, But the argument is more
of an adversarial relationship there. Yes, absolutely as the other
(27:20):
predominant world power. But when it comes to like Canada
and even Mexico, I understood at the very beginning when
border crossings were still a thing, and that's something that
the Trump camp that they campaigned on, like shutting the border.
But that's like all but completely gone away, and so
the and what gives with Canada, there's like hardly any
illegal crossings. Oh my gosh. Like the fentanyl stats about
(27:43):
the number of pounds that were crossing the Mexican border
as opposed to the Canadian border was like laughable, Like
I don't these aren't real numbers. But it was something
like every thirty days, like three thousand pounds a fentanyl
from Mexico and it was something like seven from Canada.
And so the adverage aerial relationship in particular to Canada
makes very little sense to me. But BECO is also
(28:05):
asking about gold and crypto, how that would be impacted,
and so we'll start with gold because it's done quite
well for investors as they've turned there during uncertain times.
It's actually outperformed the SMP by a lot over this
past year. Given the volatility that we've seen. If you
zoom out a little bit more. You see that it's
essentially matched the SMP over the past five years, but
(28:29):
then beyond that it doesn't do so well. And especially
if you look at the last even the last five
to ten years, and you eliminate the past most recent
four months, things start looking a whole lot more normal.
It's the volatility that we've most recently experienced that's really
thrown the average returns off.
Speaker 1 (28:46):
Which is on average, when people turn to gold, it's
like a flight to safety. And so I think that's
why beck is asked about this, well, should I be
flying to safety? And part of that depends, I guess,
on your view of where the world is headed.
Speaker 3 (28:56):
Yes, but so still, if you have time on your
side as an investor or look into the stock market,
that's going to be a better choice. From a long
term historical perspective. As far as crypto goes, we still
dislike crypto generally speaking, and we've got a carve out
though for bitcoin. Bitcoin is not unlike the other cryptocurrencies,
but inflation, tariffs, currency fluctuations as well currency inflation. This
(29:21):
could lead to more investors moving into the bitcoin direction.
It's still highly volatile and basically it's still acting like
a security. It's acting like socks. You got to be
aware of that, and we want you, Becca, as well
as all how to many listeners out there, to stay
invested in the market. But I certainly think having some
bitcoin might be wise, certainly dabbling a little bit, no
(29:43):
more than five percent. I get that A thumbs up.
Speaker 1 (29:46):
Yeah again, going back to kind of something we mentioned earlier, though,
making huge shifts in how you're invested makes very little sense.
But if you're making smart, calculated moves in different directions
because you are being thoughtful about the future of bitcoin,
of money, of companies, of US based companies specifically, I
get that. But you still you don't want to make
(30:08):
knee jerk responses.
Speaker 3 (30:09):
Yeah, in a large part because I think we are
optimistic and we're hopeful that things are going to go
back to normal, like not too far future. Yeah, yeah,
I did say that, well, but you know what I mean. Yeah.
Speaker 1 (30:20):
Let's get to a question from listener Sarah. She says,
I have a current college student. We used five twenty
nine funds for freshman year, but it's now depleted. Student's
father wants to keep adding to five two nine. I
want to save in a high old savings account. What
are your thoughts with the current volatility in investments right now?
Speaker 3 (30:38):
I think Sarah and the student's father are both right
to a certain extent. I'm not sure where Sarah lives,
but much of the answer comes down to the state
that she lives in, because if she gets a tax
break for funneling those dollars through a five twenty nine, well,
of course do that. If not, well, then the high
yield savings account is the right answer. We're gonna get
(30:59):
to why I said that. I think you're both right here.
Let's say you do live in a state that gives
you a tax break. That still doesn't mean we want
you to invest those dollars once you put those dollars
into the five twenty nine. Notice I said to funnel
those dollars through the five twenty nine as opposed to
like parking it there in like a long term like
airport parking. No no, no, Like we're talking about like
(31:19):
you doing the drop off, like at the at the
gate or at the you know what, they got the
numbers there at the airport. We're not talking about like
the long term parking where you're having a height.
Speaker 1 (31:28):
It's almost like a legal form of money laundering, right
where you're literally funneling it through this account passenger just
to get a tax break. But you don't have to
take much action with those that money beyond that it's
total and then you can spend it at your discretion
for college needs.
Speaker 3 (31:41):
Yeah, in most five twenty nine plans, they offer fixed
income choices that do resemble the returns that you're going
to see with a high held savings account, albeit with
slightly lower returns. But put the money in the account,
you get the tax break, but then keep the money
in the most conservative choice, which is probably going to
be like a money market equivalent kind of fun. So
you're not actually investing those dollars it is. You are
(32:03):
treating it a bit more like cash.
Speaker 1 (32:04):
And that's essentially the advice we would give you tariffs
or not, right, a market volatility or not. It is
one of those things where if the money needs to
be spent immediately or in the very near term, you
don't want to invest those dollars, even if it's twenty
twenty three, right and you're like, the market's roaring, this
is great. Should I be investing? No, you shouldn't if
you need the money soon would We've always said, you know,
for people with young kids, we're all about investing inside
(32:26):
of those five twenty nine funds if you're doing the
other investments you need to make as an individual in
your tax advantage retirement accounts first. But yes, we do
want you putting money then in the five twenty nine
fund and investing those dollars for their future. You want
that tax advantage money to grow. But when you're getting
closer to needing to spend that money down, you got
a d risk, right. You want to make sure your
(32:47):
five twenty nine planned money is not invested in something
that could cause you to see significant drops in the
balance in a short period of time. And so at
this point you're investing in like a heavy stock based
portfolio inside of the twenty nine plan. Would be the
furthest thing from smart like you would be a terrible
idea that the risks of losing a chunk of this
money so close to needing, it's just not worth the
(33:10):
potential rewards. So exactly, you might say, oh, man, the
fixed income fund is paying like two and a half
three percent, and.
Speaker 3 (33:16):
That seems lame.
Speaker 1 (33:17):
Average return of the DSPU. The guy's site that all
the time on the show Man, that's like an average
AMAL return of something like ten percent. This I should
be invested in the stock market. Well, no, you don't
want to take that risk when you need the money soon.
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
(33:40):
on demand on the iHeartRadio app.
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