February 23, 2025 • 33 mins
Egg prices are through the roof. Does that mean you should get backyard chickens!?
Ask HTM: Greg wants to know if tax loss harvesting in your investment accounts is worth the effort and additional expense.
The President has proposed reciprocal tariffs, which wouldn't be great for American consumers. Tariffs are also hurting craft beer makers and companies are pivoting based on tariff proposals.
Ask HTM: What's the best way to allow your kid to spend money on the go?
Ask HTM: Greg wants to know if tax loss harvesting in your investment accounts is worth the effort and additional expense.
The President has proposed reciprocal tariffs, which wouldn't be great for American consumers. Tariffs are also hurting craft beer makers and companies are pivoting based on tariff proposals.
Ask HTM: What's the best way to allow your kid to spend money on the go?
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Kay.
Speaker 2 (00:01):
If I am six forty you're listening to how to
Money on demand on the iHeartRadio app.
Speaker 3 (00:07):
All Joel and Matt want to do is help you save,
invest and enjoy more of what matters. This is how
to Money with Joel Lar's Guard and Matt aultmixf I.
Speaker 2 (01:03):
Am six forty live everywhere on the iHeartRadio app. This
is how to Money.
Speaker 1 (01:07):
I'm your host, Trol Larsgard, and I am the other host,
Matt Altmix. And 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. It is now signed for the Ludicrous Headline
of the Week, which is from USA Today. Headline reads
(01:30):
can't find eggs? How renting chickens can provide a solution
right in your backyard?
Speaker 2 (01:36):
Yeah, Joel, so we I can see a lot of
people saying, uh, yeah, that does sound good.
Speaker 1 (01:39):
Slam dunk decisions. Of course, I'm going to do that.
We've touched on it on egg prices recently. I guess
last week a couple weeks ago. They've been pretty tough
to stomach right now, They've doubled over the past couple
of years, and they aren't showing signs of slowing. Obviously,
the recent run up has because of the AVM bird flu.
But does that mean backyard chickens actually make more sense
these days? Well, probably not if you're renting them, as
(02:02):
USA Today suggests. The company they profiled is called rent
a Chicken. That's literally what it's called. It's amazing, And
you'll pay five hundred dollars for two chickens for six months.
That's pathetic. You do the math here, because you can.
You can expect to get something like a dozen eggs
a week from those chickens, which isn't enough for your family,
know that, no man. And like if you bought a
(02:24):
dozen eggs from the grocery store, even at current prices,
you'd pay only one hundred and thirty dollars for six
months worth of eggs. So yeah, don't it almost feels predatory,
you know, like it kind of makes me mad. It
makes me feel like the places that where you can
like rent rent to buy an appliance, you just don't
suspect that the that the cute, funny chickens that they'd
be taking advantage of you, but in fact they well
(02:46):
it's not the chickens.
Speaker 2 (02:47):
Well, I don't think they're taking advantage. I just think
the business model it has to cost them so much
because then they got to take the chickens back.
Speaker 1 (02:52):
And maybe they're providing the coup too. I don't know.
Speaker 2 (02:54):
It seems insane, but I would rather people go out
there get their own coup go to tractor supply or
whatever and get their own chickens from a place like
tractor supply as well, or you can mail order chickens.
I mean it's very different than mail order brides, Matt,
but but get get your own actual chickens. We've had
backyard chickens. They are also frail, I will say that.
(03:15):
So we had a couple of them die. A coyote
picked one off. We also might not be or not coyote. Yeah,
I guess the coyote. We might not be the best
chocolder teeth. Yeah, we miss them right now. Well, high
egg prices, yeah, get your own, don't rent them.
Speaker 1 (03:28):
The thing is too it's not a slam dunk from
a financial standpoint either, Like it is a lifestyle choice
because like, you know what, it makes me think of
It makes me think of rental properties. It makes me
think of real estate because folks will hear that you
have chickens and you're like, oh my gosh, you get
free eggs. Oh, it's like a it's like a. I
don't know, it's like sunshine. It's just it happens without fail. No,
it's not quite like them take care of them. You
(03:48):
got to clean the coop, you gotta get the you know,
you got to go and buy the heavy sacks of food.
You got to make sure that they're taken care of.
If they get egg bound, you got to make sure that,
you know, the egg doesn't get stay stuck in us.
Like a part there's all these other things. It's it
truly is like a part time job, and it's sort
of like rental real estate where it's like, yeah, they
got a nice monthly cashual here, but it takes some
(04:10):
work in the same way. Well, it's actually not as good,
like there's much more financial value that's being accrued with
a rental property. But it's again, it's a lifestyle choice.
And if you want the absolute freshest of eggs, then
you can't beat it. We had chickens for years back then.
Our way tastier than what my gosh, the ability to
gather some eggs that morning, make some omelets or you know,
(04:32):
some eggs, that's unbeatable, but it's not a way to
beat inflation. Agreed, Yeah, are you speaking of what we eat? Matt.
Speaker 2 (04:40):
I thought this was really interesting story I saw in
Fast Company. The longer you sit in traffic, the more
fast food you're likely to consume.
Speaker 1 (04:47):
And it kind of makes sense.
Speaker 2 (04:48):
Actually, I guess you got that to our commute. You're like,
I might as well get a bite while I'm on
the road. So maybe it's not the red dye number.
Speaker 1 (04:55):
Eighty two or whatever is that's killing us. It's it's
our commute. Fourteen twenty four, I had a four day
and we suggested this early on in one of the
first episodes of How to Money.
Speaker 2 (05:04):
We called it like, your commute is killing you. And
not only are those long commutes bad for you mentally
and physically, they're bad for air quality. And not only
do they waste a big chunk of your day, but
you're also more likely to stop and grab fast food
because of how tortures your commute is. And these are
new results from the Journal of Urban Economics that found
that for every thirty second increase in traffic delay per
(05:25):
mile traveled, there was a one percent increase in visits
to fast food restaurants.
Speaker 1 (05:29):
So your commute thirty seconder.
Speaker 2 (05:31):
There's a backup or you're just like, hey, my normal
commute is an hour. Like, the longer your commute is,
the more likely you are to pull off in.
Speaker 1 (05:39):
Your additional time. So minute one minute is a two
percent increase, So like a ten minute delay, then you're
twenty percent more likely.
Speaker 2 (05:45):
Yeah, that ends up pretty quick, right, So there's an
extra wreck on your way home, and you're like, all right, I'm.
Speaker 1 (05:51):
Percent more likely to swing in and get some terrible
you know, for you fast food.
Speaker 2 (05:55):
And it's also expensive, right, So I guess my suggestion is,
if you have a long commute that you can't eradicate,
or there are you know, accidents that happen regularly that
extend the time of your commute, pack some stacks in
your car. Yeah right, My homemade biltong recipe comes up
in the talked about that last Friday's right, put that on,
or like, you know, bring some pistachios.
Speaker 1 (06:15):
Or some I don't don't bring pistachias. What a mess?
What's wrong?
Speaker 2 (06:19):
Well, because like get the pre shelled ones that costcos.
Speaker 1 (06:22):
Oh yeah, I've still got like flashbacks over the break
we Yeah West he was in the back and he
was like shelling his pistasches and there's like shells. What
it's like the most it's the messiest food. I can't
think like a parenting issue, I can't. I can't think
anythink that would be easier than any pistachios builtong sure,
or like a chewy granola bar. Yeah, like something that's
but not the nature's valley crumbly one. Yeah. I'm just
(06:44):
trying to minimize the mess in the car, guys. I'm
trying to help all of y'all listeners out.
Speaker 2 (06:47):
Yeah, you don't want to eat the messy stuff, but
the plan to have something on hand and maybe that
will satiate you if your commute time gets a little longer.
Uh is trying to commute less in general is going
to be good for your life.
Speaker 1 (07:00):
But if you have to commute.
Speaker 2 (07:01):
Your job's awesome and you live a little bit further away,
just have those snacks on hands so you can avoid
the these.
Speaker 1 (07:07):
Ter associated with a longer commute. I totally agree, and
I'm by the way, dude, I'm gonna do the beltong thing.
I'm totally convinced. And I have some of the fridge
right now. If you want to know, well, I'm not
want to make my own because I want to feed
it to the kids because like, so, you know how
much lunches lunches at our school, they're almost like five
dollars a lunch. It's really expensive, and so because of that,
we pack their own lunches, which means we got fresh fruit, veggies, nuts,
(07:31):
pre shelled pistachios. Actually I don't care if they make
them as a school, but typically when it comes to
the meat that we're including, it's a highly processed deli
sliced sausage or like pepperoni, you know, like thick pepperonis
or whatever, which man, they're like pumped full of preservatives
and stuff like that, and I'm like, man, if I
can get some big old cut of meat on sale,
(07:52):
marining it, dry that thing out and be able the
ability to throw that in there for them, I'm really
I will report back once I do, because I want
to calculate the difference in the cost program of protein
versus what they're getting out of the Pepperoni's in a
bag that we you know, where we throw like ten
of them in their in their lunches. It's also just
a yeah, like a highly superior form of protest. It's
(08:13):
higher quality, and I'm hoping that if the price is
close to what we're paying for like low quality stuff,
that it's totally gonna be worthing.
Speaker 3 (08:20):
Man.
Speaker 1 (08:20):
I agreed. All right, we've got more to get to
on today's show.
Speaker 4 (08:24):
You're listening to How to Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 1 (08:32):
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. Let's hear from another listener, Joel.
This is a listener who has a question about direct indexing,
which is not something I think we've talked about here
on the show.
Speaker 5 (08:49):
Hey, Matt, Joel Greg here calling from Lynnwood, Washington, and
I have a question about direct indexing through an SMA.
I'm thirty two, married, we have about three hundred and
fifty thousand income and our portfolios five hundred thousand with
half in retirement and half in a brokerage account. So
with the brokerage account, I have an advisor. I'm not
paying a fee. It's through Fidelity, and they make that
(09:11):
available if you have more than two hundred and fifty
thousand invested with Fidelity. But he's suggesting a direct indexing approach.
Opening an SMA, it has to be one hundred thousand
plus and there's a point four percent fee, and just
using easy mac here.
Speaker 1 (09:28):
His suggestion is, you.
Speaker 5 (09:30):
Know we can we can donate the winners the top
gains and tax loss harvest the losers.
Speaker 1 (09:36):
So out of one.
Speaker 5 (09:36):
Hundred thousand portfolio, say we grew to one hundred and
ten in an ETF fund, you just have your holdings
grew to one hundred and ten. In a direct indexing approach,
you might have stocks that grew by fifty percent and
you have other stocks that lost fifty percent. So instead
of having you know, just a plus ten thousand, you
(09:58):
might have plus fifty and minus forty.
Speaker 1 (10:01):
And in that.
Speaker 5 (10:02):
Instance you could donate the ones that gained a lot
and rebuy at a higher cost basis plus. Then you
can tax loss harvest the losers and reduce your taxable
income this year. So I think the math works here.
The point four percent fee is going to be more
(10:23):
than returned with that tax efficiency. But I wanted to
run it by you in case I'm missing anything.
Speaker 1 (10:29):
Thanks so much, ooh man. I like this question and
a lot of masks.
Speaker 2 (10:34):
It does show that that actually some of the changes
that have happened on the investing front are not insignificant
when it comes to individual investors being able to save
on taxes.
Speaker 1 (10:44):
And I'm glad that Greg is with Fidelity, by the way.
Speaker 2 (10:46):
I mean, although I have read that they regularly try
to pitch folks on signing up for the more expensive
account management services.
Speaker 1 (10:54):
But yeah, I am not happy with the scenario that
it sounds like Greg is finding himself in because when
it comes to f Z Rocks and the other zero funds, yeah,
that's great, But when it comes to some of these
other services that they're offering, I think there might be
some better options out there that we'll get to.
Speaker 2 (11:09):
Although just the fact that he had this conversation and
he's asking this question, I think it sounds like Greg
has the ability to save money on taxes in ways
that he hadn't really thought of before.
Speaker 1 (11:19):
That's true. Yeah, So we're talking about tax loss harvesting
right now, which is one of the things that direct
indexing takes advantage of. And you know, this is kind
of like how we talk about the need for folks
who have more complex tax situations the pay a pro
If the tax savings outweigh the fee that you're going
to pay, well, you'd be shortsighted to not pay. And
when it comes to tax lost harvesting, it's similar. So
(11:42):
let's define it real quick. Tax loss harvesting is when
you sell an investment at a loss in order to
offset other gains that you might have received, and if
your losses exceed your gains, well, you can then deduct
those losses in a given year. It's up to three
thousand dollars if you are married filing jointly for that
given year, in order to reduce your ordinary income. If
(12:04):
your losses are larger than that, well, you can then
carry those losses forward claim those losses to offset ordinary
income in future years. And it's not an insignificant amount
of money here, and a good advisor who is paying
attention can help you to save on taxes by selling
and buying in a timely manner without changing your portfolio
allocation all that much.
Speaker 2 (12:24):
Yeah, it's important to mention that the tax loss harvesting
only works inside of a brokerage account. You're not creating,
that's true, a taxable event when you sell a fund
inside of your four oh and K or your IRA. Also,
tax loss harvesting is more effective for higher income earners.
So you know, Greg, he was pretty honest about what
he makes. He makes a lot of money, close to
three hundred and fifty KY, which means that his highest
(12:45):
marginal tax bracket is getting up there. He's not far
from at least some of those dollars being taxed in
the thirty two percent range if he continues to crush,
which means the stakes are higher and that a tax
loss harvesting strategy could have I would say, a not
insignificant impact on his tax situation. Still, the point four
percent fee, it's not cheap, and tax lost harvesting is
(13:08):
something you can do yourself without an insane amount of effort.
But this direct indexing approach, I would say that the
fidelity rep is talking about does make it easier kind
of in the way that Greg outlined, making it easier
essentially to call the losers and to grab those tax
savings than if you're talking about owning just a couple
of funds inside of your brokerage account.
Speaker 1 (13:30):
Yeah, direct indexing it's a relatively new product. It's gaining steam,
but it's an attempt to mirror the index strategy that
you find with something like let's say an smpfif ETF
or something similar, but you've got fractional shares, you've got
zero comission trades, and both of these advancements in investing
has made this method more widely available to investors in
(13:51):
recent years. So instead of just buying a simple index fund,
what instead's happening is you buy small amounts of individual
stocks that make up that in and then this offers
the potential for smarter tax moves are when there is
volatility there in the market.
Speaker 2 (14:06):
Okay, what should Greg do here? And should he succumb
to the fidelity pitch go with their separately managed account
in order to have access to these tax loss harvesting benefits.
I don't think so. And I also don't necessarily think
it means that Greg needs to diyat himself, although he could,
but there are ways to actually I think maybe split
(14:29):
the baby and get the best of both worlds. Betterment
is a robo advisor that we're fans of, and tax
lost harvesting is included in the feed that Betterment charges,
which is only a quarter of a percent instead of
four tenths of a percent. And the bigger that portfolio gets,
the more that fee matters. So that's actually a substantial
difference in price. And I think that's a big deal.
Reducing taxes matters, yes, and I think it's important to
(14:51):
highlight that. But Betterment has, you know, an automated algorithm
that harvests losses without creating additional training costs, while also
helping you avoid running a foul of the irs, which
is I guess from they perspective, that's the biggest potential
pitfall is that you don't do it properly, either from
a planning perspective or from a tax perspective. And hey,
it turns out you didn't tax lost harvest to its
(15:14):
maximum ability. And while we love Fidelity, moving over to
Betterment might be best for Craig in this situation. Betterment
also highlights on their website that seven out of ten
Betterment customers have their taxable advisory fee, their Betterment fee
covered by the likely tax savings of tax lost harvesting,
and Greg would almost certainly be one of them, especially
(15:34):
when he ran the numbers and he's like, hey, I'm
going to come out ahead with the higher fee from Fidelity. Well,
then you're definitely going to come out more than a
head with the lower fee from Betterment. So I think
you can maybe have your cake and eat it too,
just by doing business at the right place.
Speaker 1 (15:48):
Yeah. And I think more than anything, the red flag
that gets raised in this an area is the fact
that it feels like a pitch. It feels like a
pitch from Fidelity. And while there are many things that
we love about Fidelity, specifically there's zero cost funds, it
feels like that they're trying to sell you on this
and perhaps in order to gain more of your business
and have you pay for slightly more expensive services that
(16:10):
they're making slightly more profit on. And it's not That's
the thing. It's not a ridiculous amount. Point four really
isn't that bad.
Speaker 2 (16:15):
It's not going a lot better than a lot of
about other advisors than one percent, for sure, one percent
of assets under management.
Speaker 1 (16:21):
It's not predatory. And that's the part that feels a
little weird about this is that like, it's good enough
further to be folks who are satisfied with the services
that they're receiving for that dollar amount. But what we're
just saying is that, hey, go with Betterment and you'll
be able to get the same thing. Basically, you don't
have somebody that you're talking to, but you're going to
get the same kind of service, the same tax loss
harvesting there within your brokerage. And he said that that
(16:44):
Fidelity advisor was saying that, hey, by the way, for
the ones that gain that have seen a lot of gains,
you can donate those and so you're not realizing your
capital gains there. Well, that's not a unique selling proposition
of Fidelity. You can do that with any brokerage, any
brokerage account that's like yeah, worth their salt. You can
donate stocks or funds out of those brokerages, and so
(17:04):
that's not you can do that with Betterment as well.
So in a similar way, it's like, well, you're getting
all the benefit literally that you've mentioned with Betterment at
a lower cost as opposed to going with the same
services that are being offered there at Fidelity.
Speaker 2 (17:18):
Yeah, you're spot on, my friend. All right, Hey, we
got more money saving information to get to.
Speaker 4 (17:23):
You're listening to how To Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 2 (17:29):
We're glad to have you along for the show today.
By the way, if you're looking for the right credit
card for your wallet, well you want to be able
to use it responsibly. But if you do that, if
you pay your credit card on time and in full
every single month, well check out our credit card tool.
You can find that up on the website at howtomoney
dot com. Or let's talk teriffs for a second, Matt.
President Trump has discussed implementing reciprocal tariffs, basically charging other
(17:54):
countries what they charge us for importing goods.
Speaker 1 (17:57):
So say, like, wait, you're.
Speaker 2 (17:59):
Charging fifteen percent on imports of this and such thing,
We're just going to do the same thing to you.
We're going to slap it on reciprocally. We're not even
necessarily formulating our own policy. We're just kind of going
with the exact policy that other countries have set for us.
You and I we don't really like tariffs at all,
so we're not fans of a reciprocal tariff policy because
it just means more teriffs, and we hope that it
(18:21):
doesn't come to pass. Also, something that we're big fans
of is craft beer, which would get crushed and seems
to be maybe getting crushed by some recent tariffs that
were implemented that industry. It's already in a tough spot
craft beer. It's not as popular as it was a
few years back, but steel and aluminum tariffs in particular
would make brewing equipment and beer cans more expensive. Breweries
(18:43):
then are going to pass those costs on to consumers
and they have to or else they have to find
domestic suppliers.
Speaker 1 (18:49):
Craft beer is already not cheap.
Speaker 2 (18:51):
Think about that four pack of your favorite ipa, what
it costs now compared to what it costs ten years ago.
And yeah, some of them, it's just quality has gotten better.
Those IPAs have gotten incredible. They're putting more hops into it.
But if the cans and the brewing equipment get more
expensive too, all the hops. Yeah, I mean, those delicious,
hoppy IPAs are going to go from twenty bucks to
four pack to like twenty four to twenty five pretty quick.
Speaker 1 (19:11):
A lot of aluminum, a lot of stainless steel involved
with making beer. It's it's also important to note that companies,
they don't tend to just take tariffs lying down. They pivot,
they innovate. So like coke, well, they might trend towards
using even more plastic bottles because of this. And again
it's not that terists are good. It's not that they're
stimulating growth or anything. But like we talked about with
(19:32):
Noah Smith last week, the economist, businesses will figure out
different ingenious ways to keep their costs down in order
to remain competitive. Eventually that this will happen. So going
back to coke, you know, it could mean let's say,
fewer twelve packs of cans, and maybe it could just
mean more six packs of plastic bottles. Maybe I don't know,
maybe even all larger format. Is there a four leader?
(19:55):
Have you ever heard of that?
Speaker 5 (19:57):
Are?
Speaker 1 (19:57):
Two leader and three leaders? Even the thing anymore? I
remember as a kids, are I don't think like no,
three leaders will always drink cokes out of you know,
in the two leaders like that was the cheapest price
per liquid ounce? Right, I guess so, but we just
don't we don't drink a whole lot of soda in
our house anyway. But while we're talking about terrafts, they
could also make car insurance more expensive as well. How well,
if car parts go up in price, which let's see,
(20:19):
car parts tend to be made of all sorts of
metals and things that are producing in other countries. Yeah,
they're going back and forth across the border constantly. Repair
bills are going to increase in costs as well, and
then insurers are going to have to raise rates in
order to keep up. So this is just a small,
just another small example that terrists impact everything. Basically, if
you're looking to get prices to come down, I feel
like implementing terrists. They're they're kind of the antithesis of
(20:42):
what it is that we should be doing one hundred percent.
Speaker 2 (20:45):
And that brings up the question, Matt, of how you
could maybe hedge against inflation. So will or won't the
tariffs come to the past, and in what form and
how much that's anybody's guess. But the answer to hedging
against inflation is actually kind of simple. It's investing in
the stock market. That's already proven to be true. So
in the heart of the inflation crisis, which is twenty
(21:05):
twenty one to twenty twenty two, prices went up by
more than twelve percent. Pay rose by less than nine percent,
so almost everyone felt that pinch, although that has dynamic
has shifted. But asset prices went up significantly, and so
did dividends, out pacing inflation. So people who had stock
market exposure in the heart of inflation, not that it's
(21:27):
gone away completely. The people who kept investing, they found
themselves getting richer even as the purchasing power of their
cash was going down at a faster clip. It's just
another reason that we would say, and it's Nick Madulia's line,
just keep buying.
Speaker 1 (21:41):
Because if you're like, ah.
Speaker 2 (21:42):
Inflation, how do I make sure I don't get slammed
super hard by it? Well, one, get your money out
of the big banks where they pay point zero one percent,
and go with a high held savings account with one
of our favorite banks. But on top of that, make
sure you're investing. You're getting exposure to companies who are
priding goods and services that we all use. Because if
you're investing in those companies, that's a sure fire away
(22:05):
to kind of build your wealth that helps to combat inflation.
Speaker 1 (22:09):
Heck yeah. Okay, So while we're talking about investing, most
Americans now have access to a workplace retirement account, and
we've just crossed an important threshold where over fifty percent
of Americans are now using a four to win K
to invest for the future, with more plans automatically enrolling
workers into making contributions the This is encouraging because the
(22:29):
future retirement reality is starting to look a bit brighter
for the average person. And plus, there are a slew
of low cost providers out there who are helping small
businesses launch their own four win K plans as well
if you are someone who has started your own business.
So this is all great news, man, because the pivot
from pensions to four to win ks, it hasn't always
(22:49):
been easy, but this is great news as more folks
are taking more personal responsibility like the onus. It has
been on us for a while to be able to
secure comfortable future, but there was a gap between the
folks who were doing it and the folks who needed
to do it, and that gap it seems like that
that gap is closing, which I love to see it. Agreed, Well,
I mean, this is what we've been talking about here
(23:10):
on the show for years now.
Speaker 2 (23:11):
Yeah, part of it's that Secure Act changes that kind
of made employers automatically enroll their employees. That's just increasing
the amount of people who are participating, which is great.
And most average folks who are saving money for their future,
they've gotten the memo too that index funds are a
great way to go, which is something we've said for
a long time here. You don't have to be a genius,
(23:32):
and we've been consistent about these two things, guys. Right,
you barely have to pay attention. You just have to
kind of do the thing dollar cross average and chill
into index funds. And you know, there are different index
funds out there, Matt, and they are a variety of
ticker symbols for funds that are essentially the exact same.
Speaker 1 (23:45):
So I think that can be confusing to people.
Speaker 2 (23:48):
They're essentially all mirrors reflecting the same underlying investment options. Now,
Vanguard's vu voo has become the largest ETF in existence.
Throwned spy for that honor, Yeah, which is interesting because
these both are tracking the same exact index.
Speaker 1 (24:06):
So they kick that spider to the curve man, right,
So I think they just had a branding leg up
like it was one of the earlier on sm P
five hundred ETFs that were out there, and because that,
it gained a lot of market share initially. But I
gotta want to give us all the credit. But we've
been waiving the VU flag for oh for sure, quite
a while now. Well.
Speaker 2 (24:25):
And when you look into the details, like, both of
these funds track the S and P, but one does
it at a third of the cost, right, So VU
is the cheaper one.
Speaker 1 (24:33):
Why would you pay point zero nine percent when you
could be paying point zero three percent for the literal
exact same thing.
Speaker 2 (24:39):
And they're both those those cost bases is are much
smaller than like with the average ETF charges, but still like,
if you have the choice and they're doing the same
exact thing, I'll choose the one that costs a third lesson.
So yeah, VU is like a no brainer option for
people when it comes to when people are like what
fund should I invest in? Matt and Joel, that's typically
the first thing at the tip of our tongues for
(25:00):
the average person who's in that wealth building phase of
their life. So congrats to Vanguard and Voo. We've loved
it for a long time.
Speaker 1 (25:06):
For a long long time, and actually so I logged
into my Vanguard account and like celebration to be like,
oh yeah, that's right VU. And we know what I realized,
Like I've always said for years that I'm like one
hundred percent I'll in on VOO aside from my five
percent or less that I like to dabble. Have you
been lying, Crystal, I have been. I forgot that. I
so back in twenty two when the market tanked a
little bit, I harvested some losses and I sold half
(25:29):
of my VU and I bought VTI, which is Vanguard's
Total market ETF, which is basically the same thing, very
very similar. I kind of want to get back over
to my first love to VU. What's the expens rature
on BTI's probably got to be the same. It's the
same thing, okay, point is I mean? And if you
track it, if you look at it, it's literally I mean,
it's the same movement, but it's the total stock market
as opposed to the SMP. Both are point zero three percent.
(25:52):
But that is a so like you avoid the wash
sale rule gives us a little excuse to be able
to talk about this. And if you sell something, you
can't rebuy the same thing. It's got to be materially
different enough so that you don't get hammered by the irs.
And so to as if you had sold that and
bought Spy, you would even though it's got a different
brand name, it's under the hood, it's the same thing.
(26:14):
And so they wanted to under the hood be something
very different. And so that's a way to be able
to harver some losses. If you do have a bunch
of you, consider something like VTI or even Vice versa
next time the market tanks.
Speaker 2 (26:25):
There you go, all right, we've got actually more to
get to on today's show.
Speaker 4 (26:29):
You're listening to How To Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 2 (26:35):
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 get to the Facebook question of the week.
This one comes from Chad. He posted this in the
how to Money Facebook group. He said, authorized user or
checking account. We got my eleven year old fifth grader
and Apple Watch with cellular capabilities, and I'm pretty sure
you didn't have any fancy technology like that in fifth grade.
Speaker 1 (26:57):
Of course I didn't, Chad said, my current fifth grade. Well,
I don't have current fifth grader, but my kids right
now don't even have a fancy tech like that. I
get that.
Speaker 2 (27:05):
Sorry to interrupt, Chad says, I want to be able
to give him the ability to use his watch to
make purchases at the various events he attends bowling club,
sporting events, et cetera, instead of having him use actually
more like lose cash. Which do you think is better.
I know that Chase has a checking account for kids,
maybe it's for teens. I could fund that and put
his debit card onto his watch. I could make him
(27:26):
an authorized user on one of my Chase cards and
set a really low limit on there so he can
just use the watch.
Speaker 1 (27:31):
To pay for stuff. Thoughts, Well, maybe I give it
away a little bit. I'm not opposed to cash, and
I will say I also, Chad, I've got an eleven
year old who's a sixth grader, not a fifth grader,
And over the past couple of years there have been
numerous like basketball games, hangs with friends where they're out
in public where they can like make their own purchases.
And in all of those scenarios. She's taken her own
cash with her, and I guess the way I think
(27:54):
about it, I'm like, would I rather her like lose
an Apple watch or and have like direct access to
all of her funds there or just the ability to
outmost lose the amount of money that she's taken with her.
So personally, man for us, at least, the going with
the old school physical cash method.
Speaker 2 (28:12):
For us has worked out fine. I can't imagine he's
gonna lose the watch, right, but I don't know. I
think you could lose some loose money. So I get
where Chad's coming from. And maybe his son has lost
twenty bucks here or there before and he's like cash
the day. Yeah, man, if you could just tap with
his wrist, it's gonna make this a whole lot easier.
And I totally understand what you're saying. And I think,
especially for younger kids, cash makes the most sense.
Speaker 1 (28:32):
Because sometimes MO money more problems. You know, like you
want to go digital, and okay, so now you've got
something that you've got to provide service for. That's true
because like not only is the cost of the device
or the phone or the watch or whatever, but then
I mean, it's not cheap to pay for the cell
plans for these individual devices. All it's gotten a lot cheaper.
Speaker 2 (28:48):
Actually, we've talked about that is true US Mobile on
the show and how you and I are US Mobile
customers now for our cell plans, they're incredibly cheap. But
they also have now service for smart watches. I think
six dollars and fifty cents a month, which if that's
what you.
Speaker 1 (29:03):
Want, as it goes, it is affordable.
Speaker 5 (29:04):
Yeah.
Speaker 2 (29:05):
If he's already got the Apple Watch and you're like, man,
we just need to save money on that because it's
costing us a lot more with one of the big guys,
We'll look at US Mobile. That's the best price I've seen.
And I think getting used to digital money, this is
probably right about the right time. I'm getting my sixth
grader or fourth grader kind of used to it right now.
I did cash kind of thrown in the towel on that. Honestly,
it was mostly my fault in the butt. Yeah, I
(29:26):
will say that was not as good and dedicated to
it as I should have been. So that's not my
kids on my kids, that's on me. Although when we
try to go digital too early that didn't work either,
so it's a little bit of trial and error in
our household. But yeah, we opted actually for free teen
accounts from Capital One. They come with a debit card
and so now it's really easy for me to transfer
money to them for my Capital One account to theirs.
(29:47):
They've got a debit card, they could take it with them,
and that's actually been kind of the best solution for
our family. They don't have fancy watches to attach that
card to, but you could. Yeah, I mean, if you
do have that account, of course, you can take that
debit card, stick it in the wallet app and he
could pay from his watch. You could actually you could
even attach it to Apple's new Apple Cash feature which
exists within like the iOS framework, where you can even
(30:10):
you know, you send your son money to his Apple
Cash account via like text message. Not that this is
something you should be doing, I guess on the rag,
but it's worth highlighting that it's even simpler than like
Venmo or cash app if.
Speaker 1 (30:23):
You're so inclined and if this is something that you
do want to.
Speaker 2 (30:25):
Do, Yeah, And I think the other thing Chad mentioned was, oh, sure,
I'll make him an authorized user on one of my
credit cards so that he can, you know, use the
watch to pay for stuff with that card. Well, I
think you can, and probably should make him an authorized
user on your credit card. That'll help with him building credit,
assuming you handle your credit well, he'll become a teenager
(30:46):
and he'll have a score that many adults can only
hope for. And if that's the case, if you have
a long, great credit history, but he wouldn't want you
to give him access to pay with that credit card
to send your name. If you make him authorized user,
don't actually get him the physical credit card, But being
an authorized user on yours and then having his own
account like the Capital One account that I mentioned that
allows him to use his money that you have at
(31:08):
least some oversight of seems like the right balance to me.
I just don't want Matt to have a credit card
that's mine and my kids using that card. They're way
too young in my opinion for that, and I stand
to lose more in that case too. So I just
kind of like that that separation of powers, Like I
like them having their own card, their own accounts.
Speaker 1 (31:29):
You don't them messing up your stuff, Not that they would,
but I just, uh, there's always the risk. Yeah, there's
the risk of them going and buying something that they
couldn't actually afford and then on my credit card, whereas hey,
they've got a finite amount that's in there. It's in
their account on the team account through Capital One, and
(31:50):
so downside being if there is any fraud or something
that happens, they're out their own money. I guess while
you're trying to claw that back, because that's obviously one
of the benefits of using credit cards that we like,
there are those extra protections built in. If I ever
considered using a credit card, it would be for those protections,
not because I was looking to try to like completely
optimize and to teach my kids about how to use
(32:11):
credit card cash back and rewards and points. Like, if
that's what you're thinking, I think it's a little too premature,
at least at this point in the game. I think
if you've got teenagers that are older like seventeen eighteen, hey,
trying to start talking about points and cash back and
how paying on time in fact ahead of time before
the statement even hits at the end of the month,
So why not run that through the credit card company.
(32:32):
But at this point, at least at eleven years old.
That would not at all be on my mind at
all trying to teach my kid how to use your
credit card like a pro.
Speaker 2 (32:39):
Right, Yeah, you're not ready to gain that system at eleven, Yeah, exactly.
But I think this is like a perfect fora getting
him the right account, attaching it to the watch, and
making sure he has money at his disposal. He knows
how to spend, he knows where the money comes from.
It sounds like Chad is, you know, handling money lessons
with his son like a pro. Okay, thank you as
(33:02):
always for listening to the show. We appreciate your time
and attention. You can always find more money saving information
up on our website at howtomoney dot com.
Speaker 1 (33:10):
We'll see you back here next week.
Speaker 2 (33:12):
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
Kay.
Speaker 2 (00:01):
If I am six forty you're listening to how to
Money on demand on the iHeartRadio app.
Speaker 3 (00:07):
All Joel and Matt want to do is help you save,
invest and enjoy more of what matters. This is how
to Money with Joel Lar's Guard and Matt aultmixf I.
Speaker 2 (01:03):
Am six forty live everywhere on the iHeartRadio app. This
is how to Money.
Speaker 1 (01:07):
I'm your host, Trol Larsgard, and I am the other host,
Matt Altmix. And 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. It is now signed for the Ludicrous Headline
of the Week, which is from USA Today. Headline reads
(01:30):
can't find eggs? How renting chickens can provide a solution
right in your backyard?
Speaker 2 (01:36):
Yeah, Joel, so we I can see a lot of
people saying, uh, yeah, that does sound good.
Speaker 1 (01:39):
Slam dunk decisions. Of course, I'm going to do that.
We've touched on it on egg prices recently. I guess
last week a couple weeks ago. They've been pretty tough
to stomach right now, They've doubled over the past couple
of years, and they aren't showing signs of slowing. Obviously,
the recent run up has because of the AVM bird flu.
But does that mean backyard chickens actually make more sense
these days? Well, probably not if you're renting them, as
(02:02):
USA Today suggests. The company they profiled is called rent
a Chicken. That's literally what it's called. It's amazing, And
you'll pay five hundred dollars for two chickens for six months.
That's pathetic. You do the math here, because you can.
You can expect to get something like a dozen eggs
a week from those chickens, which isn't enough for your family,
know that, no man. And like if you bought a
(02:24):
dozen eggs from the grocery store, even at current prices,
you'd pay only one hundred and thirty dollars for six
months worth of eggs. So yeah, don't it almost feels predatory,
you know, like it kind of makes me mad. It
makes me feel like the places that where you can
like rent rent to buy an appliance, you just don't
suspect that the that the cute, funny chickens that they'd
be taking advantage of you, but in fact they well
(02:46):
it's not the chickens.
Speaker 2 (02:47):
Well, I don't think they're taking advantage. I just think
the business model it has to cost them so much
because then they got to take the chickens back.
Speaker 1 (02:52):
And maybe they're providing the coup too. I don't know.
Speaker 2 (02:54):
It seems insane, but I would rather people go out
there get their own coup go to tractor supply or
whatever and get their own chickens from a place like
tractor supply as well, or you can mail order chickens.
I mean it's very different than mail order brides, Matt,
but but get get your own actual chickens. We've had
backyard chickens. They are also frail, I will say that.
(03:15):
So we had a couple of them die. A coyote
picked one off. We also might not be or not coyote. Yeah,
I guess the coyote. We might not be the best
chocolder teeth. Yeah, we miss them right now. Well, high
egg prices, yeah, get your own, don't rent them.
Speaker 1 (03:28):
The thing is too it's not a slam dunk from
a financial standpoint either, Like it is a lifestyle choice
because like, you know what, it makes me think of
It makes me think of rental properties. It makes me
think of real estate because folks will hear that you
have chickens and you're like, oh my gosh, you get
free eggs. Oh, it's like a it's like a. I
don't know, it's like sunshine. It's just it happens without fail. No,
it's not quite like them take care of them. You
(03:48):
got to clean the coop, you gotta get the you know,
you got to go and buy the heavy sacks of food.
You got to make sure that they're taken care of.
If they get egg bound, you got to make sure that,
you know, the egg doesn't get stay stuck in us.
Like a part there's all these other things. It's it
truly is like a part time job, and it's sort
of like rental real estate where it's like, yeah, they
got a nice monthly cashual here, but it takes some
(04:10):
work in the same way. Well, it's actually not as good,
like there's much more financial value that's being accrued with
a rental property. But it's again, it's a lifestyle choice.
And if you want the absolute freshest of eggs, then
you can't beat it. We had chickens for years back then.
Our way tastier than what my gosh, the ability to
gather some eggs that morning, make some omelets or you know,
(04:32):
some eggs, that's unbeatable, but it's not a way to
beat inflation. Agreed, Yeah, are you speaking of what we eat? Matt.
Speaker 2 (04:40):
I thought this was really interesting story I saw in
Fast Company. The longer you sit in traffic, the more
fast food you're likely to consume.
Speaker 1 (04:47):
And it kind of makes sense.
Speaker 2 (04:48):
Actually, I guess you got that to our commute. You're like,
I might as well get a bite while I'm on
the road. So maybe it's not the red dye number.
Speaker 1 (04:55):
Eighty two or whatever is that's killing us. It's it's
our commute. Fourteen twenty four, I had a four day
and we suggested this early on in one of the
first episodes of How to Money.
Speaker 2 (05:04):
We called it like, your commute is killing you. And
not only are those long commutes bad for you mentally
and physically, they're bad for air quality. And not only
do they waste a big chunk of your day, but
you're also more likely to stop and grab fast food
because of how tortures your commute is. And these are
new results from the Journal of Urban Economics that found
that for every thirty second increase in traffic delay per
(05:25):
mile traveled, there was a one percent increase in visits
to fast food restaurants.
Speaker 1 (05:29):
So your commute thirty seconder.
Speaker 2 (05:31):
There's a backup or you're just like, hey, my normal
commute is an hour. Like, the longer your commute is,
the more likely you are to pull off in.
Speaker 1 (05:39):
Your additional time. So minute one minute is a two
percent increase, So like a ten minute delay, then you're
twenty percent more likely.
Speaker 2 (05:45):
Yeah, that ends up pretty quick, right, So there's an
extra wreck on your way home, and you're like, all right, I'm.
Speaker 1 (05:51):
Percent more likely to swing in and get some terrible
you know, for you fast food.
Speaker 2 (05:55):
And it's also expensive, right, So I guess my suggestion is,
if you have a long commute that you can't eradicate,
or there are you know, accidents that happen regularly that
extend the time of your commute, pack some stacks in
your car. Yeah right, My homemade biltong recipe comes up
in the talked about that last Friday's right, put that on,
or like, you know, bring some pistachios.
Speaker 1 (06:15):
Or some I don't don't bring pistachias. What a mess?
What's wrong?
Speaker 2 (06:19):
Well, because like get the pre shelled ones that costcos.
Speaker 1 (06:22):
Oh yeah, I've still got like flashbacks over the break
we Yeah West he was in the back and he
was like shelling his pistasches and there's like shells. What
it's like the most it's the messiest food. I can't
think like a parenting issue, I can't. I can't think
anythink that would be easier than any pistachios builtong sure,
or like a chewy granola bar. Yeah, like something that's
but not the nature's valley crumbly one. Yeah. I'm just
(06:44):
trying to minimize the mess in the car, guys. I'm
trying to help all of y'all listeners out.
Speaker 2 (06:47):
Yeah, you don't want to eat the messy stuff, but
the plan to have something on hand and maybe that
will satiate you if your commute time gets a little longer.
Uh is trying to commute less in general is going
to be good for your life.
Speaker 1 (07:00):
But if you have to commute.
Speaker 2 (07:01):
Your job's awesome and you live a little bit further away,
just have those snacks on hands so you can avoid
the these.
Speaker 1 (07:07):
Ter associated with a longer commute. I totally agree, and
I'm by the way, dude, I'm gonna do the beltong thing.
I'm totally convinced. And I have some of the fridge
right now. If you want to know, well, I'm not
want to make my own because I want to feed
it to the kids because like, so, you know how
much lunches lunches at our school, they're almost like five
dollars a lunch. It's really expensive, and so because of that,
we pack their own lunches, which means we got fresh fruit, veggies, nuts,
(07:31):
pre shelled pistachios. Actually I don't care if they make
them as a school, but typically when it comes to
the meat that we're including, it's a highly processed deli
sliced sausage or like pepperoni, you know, like thick pepperonis
or whatever, which man, they're like pumped full of preservatives
and stuff like that, and I'm like, man, if I
can get some big old cut of meat on sale,
(07:52):
marining it, dry that thing out and be able the
ability to throw that in there for them, I'm really
I will report back once I do, because I want
to calculate the difference in the cost program of protein
versus what they're getting out of the Pepperoni's in a
bag that we you know, where we throw like ten
of them in their in their lunches. It's also just
a yeah, like a highly superior form of protest. It's
(08:13):
higher quality, and I'm hoping that if the price is
close to what we're paying for like low quality stuff,
that it's totally gonna be worthing.
Speaker 3 (08:20):
Man.
Speaker 1 (08:20):
I agreed. All right, we've got more to get to
on today's show.
Speaker 4 (08:24):
You're listening to How to Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 1 (08:32):
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. Let's hear from another listener, Joel.
This is a listener who has a question about direct indexing,
which is not something I think we've talked about here
on the show.
Speaker 5 (08:49):
Hey, Matt, Joel Greg here calling from Lynnwood, Washington, and
I have a question about direct indexing through an SMA.
I'm thirty two, married, we have about three hundred and
fifty thousand income and our portfolios five hundred thousand with
half in retirement and half in a brokerage account. So
with the brokerage account, I have an advisor. I'm not
paying a fee. It's through Fidelity, and they make that
(09:11):
available if you have more than two hundred and fifty
thousand invested with Fidelity. But he's suggesting a direct indexing approach.
Opening an SMA, it has to be one hundred thousand
plus and there's a point four percent fee, and just
using easy mac here.
Speaker 1 (09:28):
His suggestion is, you.
Speaker 5 (09:30):
Know we can we can donate the winners the top
gains and tax loss harvest the losers.
Speaker 1 (09:36):
So out of one.
Speaker 5 (09:36):
Hundred thousand portfolio, say we grew to one hundred and
ten in an ETF fund, you just have your holdings
grew to one hundred and ten. In a direct indexing approach,
you might have stocks that grew by fifty percent and
you have other stocks that lost fifty percent. So instead
of having you know, just a plus ten thousand, you
(09:58):
might have plus fifty and minus forty.
Speaker 1 (10:01):
And in that.
Speaker 5 (10:02):
Instance you could donate the ones that gained a lot
and rebuy at a higher cost basis plus. Then you
can tax loss harvest the losers and reduce your taxable
income this year. So I think the math works here.
The point four percent fee is going to be more
(10:23):
than returned with that tax efficiency. But I wanted to
run it by you in case I'm missing anything.
Speaker 1 (10:29):
Thanks so much, ooh man. I like this question and
a lot of masks.
Speaker 2 (10:34):
It does show that that actually some of the changes
that have happened on the investing front are not insignificant
when it comes to individual investors being able to save
on taxes.
Speaker 1 (10:44):
And I'm glad that Greg is with Fidelity, by the way.
Speaker 2 (10:46):
I mean, although I have read that they regularly try
to pitch folks on signing up for the more expensive
account management services.
Speaker 1 (10:54):
But yeah, I am not happy with the scenario that
it sounds like Greg is finding himself in because when
it comes to f Z Rocks and the other zero funds, yeah,
that's great, But when it comes to some of these
other services that they're offering, I think there might be
some better options out there that we'll get to.
Speaker 2 (11:09):
Although just the fact that he had this conversation and
he's asking this question, I think it sounds like Greg
has the ability to save money on taxes in ways
that he hadn't really thought of before.
Speaker 1 (11:19):
That's true. Yeah, So we're talking about tax loss harvesting
right now, which is one of the things that direct
indexing takes advantage of. And you know, this is kind
of like how we talk about the need for folks
who have more complex tax situations the pay a pro
If the tax savings outweigh the fee that you're going
to pay, well, you'd be shortsighted to not pay. And
when it comes to tax lost harvesting, it's similar. So
(11:42):
let's define it real quick. Tax loss harvesting is when
you sell an investment at a loss in order to
offset other gains that you might have received, and if
your losses exceed your gains, well, you can then deduct
those losses in a given year. It's up to three
thousand dollars if you are married filing jointly for that
given year, in order to reduce your ordinary income. If
(12:04):
your losses are larger than that, well, you can then
carry those losses forward claim those losses to offset ordinary
income in future years. And it's not an insignificant amount
of money here, and a good advisor who is paying
attention can help you to save on taxes by selling
and buying in a timely manner without changing your portfolio
allocation all that much.
Speaker 2 (12:24):
Yeah, it's important to mention that the tax loss harvesting
only works inside of a brokerage account. You're not creating,
that's true, a taxable event when you sell a fund
inside of your four oh and K or your IRA. Also,
tax loss harvesting is more effective for higher income earners.
So you know, Greg, he was pretty honest about what
he makes. He makes a lot of money, close to
three hundred and fifty KY, which means that his highest
(12:45):
marginal tax bracket is getting up there. He's not far
from at least some of those dollars being taxed in
the thirty two percent range if he continues to crush,
which means the stakes are higher and that a tax
loss harvesting strategy could have I would say, a not
insignificant impact on his tax situation. Still, the point four
percent fee, it's not cheap, and tax lost harvesting is
(13:08):
something you can do yourself without an insane amount of effort.
But this direct indexing approach, I would say that the
fidelity rep is talking about does make it easier kind
of in the way that Greg outlined, making it easier
essentially to call the losers and to grab those tax
savings than if you're talking about owning just a couple
of funds inside of your brokerage account.
Speaker 1 (13:30):
Yeah, direct indexing it's a relatively new product. It's gaining steam,
but it's an attempt to mirror the index strategy that
you find with something like let's say an smpfif ETF
or something similar, but you've got fractional shares, you've got
zero comission trades, and both of these advancements in investing
has made this method more widely available to investors in
(13:51):
recent years. So instead of just buying a simple index fund,
what instead's happening is you buy small amounts of individual
stocks that make up that in and then this offers
the potential for smarter tax moves are when there is
volatility there in the market.
Speaker 2 (14:06):
Okay, what should Greg do here? And should he succumb
to the fidelity pitch go with their separately managed account
in order to have access to these tax loss harvesting benefits.
I don't think so. And I also don't necessarily think
it means that Greg needs to diyat himself, although he could,
but there are ways to actually I think maybe split
(14:29):
the baby and get the best of both worlds. Betterment
is a robo advisor that we're fans of, and tax
lost harvesting is included in the feed that Betterment charges,
which is only a quarter of a percent instead of
four tenths of a percent. And the bigger that portfolio gets,
the more that fee matters. So that's actually a substantial
difference in price. And I think that's a big deal.
Reducing taxes matters, yes, and I think it's important to
(14:51):
highlight that. But Betterment has, you know, an automated algorithm
that harvests losses without creating additional training costs, while also
helping you avoid running a foul of the irs, which
is I guess from they perspective, that's the biggest potential
pitfall is that you don't do it properly, either from
a planning perspective or from a tax perspective. And hey,
it turns out you didn't tax lost harvest to its
(15:14):
maximum ability. And while we love Fidelity, moving over to
Betterment might be best for Craig in this situation. Betterment
also highlights on their website that seven out of ten
Betterment customers have their taxable advisory fee, their Betterment fee
covered by the likely tax savings of tax lost harvesting,
and Greg would almost certainly be one of them, especially
(15:34):
when he ran the numbers and he's like, hey, I'm
going to come out ahead with the higher fee from Fidelity. Well,
then you're definitely going to come out more than a
head with the lower fee from Betterment. So I think
you can maybe have your cake and eat it too,
just by doing business at the right place.
Speaker 1 (15:48):
Yeah. And I think more than anything, the red flag
that gets raised in this an area is the fact
that it feels like a pitch. It feels like a
pitch from Fidelity. And while there are many things that
we love about Fidelity, specifically there's zero cost funds, it
feels like that they're trying to sell you on this
and perhaps in order to gain more of your business
and have you pay for slightly more expensive services that
(16:10):
they're making slightly more profit on. And it's not That's
the thing. It's not a ridiculous amount. Point four really
isn't that bad.
Speaker 2 (16:15):
It's not going a lot better than a lot of
about other advisors than one percent, for sure, one percent
of assets under management.
Speaker 1 (16:21):
It's not predatory. And that's the part that feels a
little weird about this is that like, it's good enough
further to be folks who are satisfied with the services
that they're receiving for that dollar amount. But what we're
just saying is that, hey, go with Betterment and you'll
be able to get the same thing. Basically, you don't
have somebody that you're talking to, but you're going to
get the same kind of service, the same tax loss
harvesting there within your brokerage. And he said that that
(16:44):
Fidelity advisor was saying that, hey, by the way, for
the ones that gain that have seen a lot of gains,
you can donate those and so you're not realizing your
capital gains there. Well, that's not a unique selling proposition
of Fidelity. You can do that with any brokerage, any
brokerage account that's like yeah, worth their salt. You can
donate stocks or funds out of those brokerages, and so
(17:04):
that's not you can do that with Betterment as well.
So in a similar way, it's like, well, you're getting
all the benefit literally that you've mentioned with Betterment at
a lower cost as opposed to going with the same
services that are being offered there at Fidelity.
Speaker 2 (17:18):
Yeah, you're spot on, my friend. All right, Hey, we
got more money saving information to get to.
Speaker 4 (17:23):
You're listening to how To Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 2 (17:29):
We're glad to have you along for the show today.
By the way, if you're looking for the right credit
card for your wallet, well you want to be able
to use it responsibly. But if you do that, if
you pay your credit card on time and in full
every single month, well check out our credit card tool.
You can find that up on the website at howtomoney
dot com. Or let's talk teriffs for a second, Matt.
President Trump has discussed implementing reciprocal tariffs, basically charging other
(17:54):
countries what they charge us for importing goods.
Speaker 1 (17:57):
So say, like, wait, you're.
Speaker 2 (17:59):
Charging fifteen percent on imports of this and such thing,
We're just going to do the same thing to you.
We're going to slap it on reciprocally. We're not even
necessarily formulating our own policy. We're just kind of going
with the exact policy that other countries have set for us.
You and I we don't really like tariffs at all,
so we're not fans of a reciprocal tariff policy because
it just means more teriffs, and we hope that it
(18:21):
doesn't come to pass. Also, something that we're big fans
of is craft beer, which would get crushed and seems
to be maybe getting crushed by some recent tariffs that
were implemented that industry. It's already in a tough spot
craft beer. It's not as popular as it was a
few years back, but steel and aluminum tariffs in particular
would make brewing equipment and beer cans more expensive. Breweries
(18:43):
then are going to pass those costs on to consumers
and they have to or else they have to find
domestic suppliers.
Speaker 1 (18:49):
Craft beer is already not cheap.
Speaker 2 (18:51):
Think about that four pack of your favorite ipa, what
it costs now compared to what it costs ten years ago.
And yeah, some of them, it's just quality has gotten better.
Those IPAs have gotten incredible. They're putting more hops into it.
But if the cans and the brewing equipment get more
expensive too, all the hops. Yeah, I mean, those delicious,
hoppy IPAs are going to go from twenty bucks to
four pack to like twenty four to twenty five pretty quick.
Speaker 1 (19:11):
A lot of aluminum, a lot of stainless steel involved
with making beer. It's it's also important to note that companies,
they don't tend to just take tariffs lying down. They pivot,
they innovate. So like coke, well, they might trend towards
using even more plastic bottles because of this. And again
it's not that terists are good. It's not that they're
stimulating growth or anything. But like we talked about with
(19:32):
Noah Smith last week, the economist, businesses will figure out
different ingenious ways to keep their costs down in order
to remain competitive. Eventually that this will happen. So going
back to coke, you know, it could mean let's say,
fewer twelve packs of cans, and maybe it could just
mean more six packs of plastic bottles. Maybe I don't know,
maybe even all larger format. Is there a four leader?
(19:55):
Have you ever heard of that?
Speaker 5 (19:57):
Are?
Speaker 1 (19:57):
Two leader and three leaders? Even the thing anymore? I
remember as a kids, are I don't think like no,
three leaders will always drink cokes out of you know,
in the two leaders like that was the cheapest price
per liquid ounce? Right, I guess so, but we just
don't we don't drink a whole lot of soda in
our house anyway. But while we're talking about terrafts, they
could also make car insurance more expensive as well. How well,
if car parts go up in price, which let's see,
(20:19):
car parts tend to be made of all sorts of
metals and things that are producing in other countries. Yeah,
they're going back and forth across the border constantly. Repair
bills are going to increase in costs as well, and
then insurers are going to have to raise rates in
order to keep up. So this is just a small,
just another small example that terrists impact everything. Basically, if
you're looking to get prices to come down, I feel
like implementing terrists. They're they're kind of the antithesis of
(20:42):
what it is that we should be doing one hundred percent.
Speaker 2 (20:45):
And that brings up the question, Matt, of how you
could maybe hedge against inflation. So will or won't the
tariffs come to the past, and in what form and
how much that's anybody's guess. But the answer to hedging
against inflation is actually kind of simple. It's investing in
the stock market. That's already proven to be true. So
in the heart of the inflation crisis, which is twenty
(21:05):
twenty one to twenty twenty two, prices went up by
more than twelve percent. Pay rose by less than nine percent,
so almost everyone felt that pinch, although that has dynamic
has shifted. But asset prices went up significantly, and so
did dividends, out pacing inflation. So people who had stock
market exposure in the heart of inflation, not that it's
(21:27):
gone away completely. The people who kept investing, they found
themselves getting richer even as the purchasing power of their
cash was going down at a faster clip. It's just
another reason that we would say, and it's Nick Madulia's line,
just keep buying.
Speaker 1 (21:41):
Because if you're like, ah.
Speaker 2 (21:42):
Inflation, how do I make sure I don't get slammed
super hard by it? Well, one, get your money out
of the big banks where they pay point zero one percent,
and go with a high held savings account with one
of our favorite banks. But on top of that, make
sure you're investing. You're getting exposure to companies who are
priding goods and services that we all use. Because if
you're investing in those companies, that's a sure fire away
(22:05):
to kind of build your wealth that helps to combat inflation.
Speaker 1 (22:09):
Heck yeah. Okay, So while we're talking about investing, most
Americans now have access to a workplace retirement account, and
we've just crossed an important threshold where over fifty percent
of Americans are now using a four to win K
to invest for the future, with more plans automatically enrolling
workers into making contributions the This is encouraging because the
(22:29):
future retirement reality is starting to look a bit brighter
for the average person. And plus, there are a slew
of low cost providers out there who are helping small
businesses launch their own four win K plans as well
if you are someone who has started your own business.
So this is all great news, man, because the pivot
from pensions to four to win ks, it hasn't always
(22:49):
been easy, but this is great news as more folks
are taking more personal responsibility like the onus. It has
been on us for a while to be able to
secure comfortable future, but there was a gap between the
folks who were doing it and the folks who needed
to do it, and that gap it seems like that
that gap is closing, which I love to see it. Agreed, Well,
I mean, this is what we've been talking about here
(23:10):
on the show for years now.
Speaker 2 (23:11):
Yeah, part of it's that Secure Act changes that kind
of made employers automatically enroll their employees. That's just increasing
the amount of people who are participating, which is great.
And most average folks who are saving money for their future,
they've gotten the memo too that index funds are a
great way to go, which is something we've said for
a long time here. You don't have to be a genius,
(23:32):
and we've been consistent about these two things, guys. Right,
you barely have to pay attention. You just have to
kind of do the thing dollar cross average and chill
into index funds. And you know, there are different index
funds out there, Matt, and they are a variety of
ticker symbols for funds that are essentially the exact same.
Speaker 1 (23:45):
So I think that can be confusing to people.
Speaker 2 (23:48):
They're essentially all mirrors reflecting the same underlying investment options. Now,
Vanguard's vu voo has become the largest ETF in existence.
Throwned spy for that honor, Yeah, which is interesting because
these both are tracking the same exact index.
Speaker 1 (24:06):
So they kick that spider to the curve man, right,
So I think they just had a branding leg up
like it was one of the earlier on sm P
five hundred ETFs that were out there, and because that,
it gained a lot of market share initially. But I
gotta want to give us all the credit. But we've
been waiving the VU flag for oh for sure, quite
a while now. Well.
Speaker 2 (24:25):
And when you look into the details, like, both of
these funds track the S and P, but one does
it at a third of the cost, right, So VU
is the cheaper one.
Speaker 1 (24:33):
Why would you pay point zero nine percent when you
could be paying point zero three percent for the literal
exact same thing.
Speaker 2 (24:39):
And they're both those those cost bases is are much
smaller than like with the average ETF charges, but still like,
if you have the choice and they're doing the same
exact thing, I'll choose the one that costs a third lesson.
So yeah, VU is like a no brainer option for
people when it comes to when people are like what
fund should I invest in? Matt and Joel, that's typically
the first thing at the tip of our tongues for
(25:00):
the average person who's in that wealth building phase of
their life. So congrats to Vanguard and Voo. We've loved
it for a long time.
Speaker 1 (25:06):
For a long long time, and actually so I logged
into my Vanguard account and like celebration to be like,
oh yeah, that's right VU. And we know what I realized,
Like I've always said for years that I'm like one
hundred percent I'll in on VOO aside from my five
percent or less that I like to dabble. Have you
been lying, Crystal, I have been. I forgot that. I
so back in twenty two when the market tanked a
little bit, I harvested some losses and I sold half
(25:29):
of my VU and I bought VTI, which is Vanguard's
Total market ETF, which is basically the same thing, very
very similar. I kind of want to get back over
to my first love to VU. What's the expens rature
on BTI's probably got to be the same. It's the
same thing, okay, point is I mean? And if you
track it, if you look at it, it's literally I mean,
it's the same movement, but it's the total stock market
as opposed to the SMP. Both are point zero three percent.
(25:52):
But that is a so like you avoid the wash
sale rule gives us a little excuse to be able
to talk about this. And if you sell something, you
can't rebuy the same thing. It's got to be materially
different enough so that you don't get hammered by the irs.
And so to as if you had sold that and
bought Spy, you would even though it's got a different
brand name, it's under the hood, it's the same thing.
(26:14):
And so they wanted to under the hood be something
very different. And so that's a way to be able
to harver some losses. If you do have a bunch
of you, consider something like VTI or even Vice versa
next time the market tanks.
Speaker 2 (26:25):
There you go, all right, we've got actually more to
get to on today's show.
Speaker 4 (26:29):
You're listening to How To Money with Joel Larsgard on
demand from KFI AM six forty.
Speaker 2 (26:35):
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 get to the Facebook question of the week.
This one comes from Chad. He posted this in the
how to Money Facebook group. He said, authorized user or
checking account. We got my eleven year old fifth grader
and Apple Watch with cellular capabilities, and I'm pretty sure
you didn't have any fancy technology like that in fifth grade.
Speaker 1 (26:57):
Of course I didn't, Chad said, my current fifth grade. Well,
I don't have current fifth grader, but my kids right
now don't even have a fancy tech like that. I
get that.
Speaker 2 (27:05):
Sorry to interrupt, Chad says, I want to be able
to give him the ability to use his watch to
make purchases at the various events he attends bowling club,
sporting events, et cetera, instead of having him use actually
more like lose cash. Which do you think is better.
I know that Chase has a checking account for kids,
maybe it's for teens. I could fund that and put
his debit card onto his watch. I could make him
(27:26):
an authorized user on one of my Chase cards and
set a really low limit on there so he can
just use the watch.
Speaker 1 (27:31):
To pay for stuff. Thoughts, Well, maybe I give it
away a little bit. I'm not opposed to cash, and
I will say I also, Chad, I've got an eleven
year old who's a sixth grader, not a fifth grader,
And over the past couple of years there have been
numerous like basketball games, hangs with friends where they're out
in public where they can like make their own purchases.
And in all of those scenarios. She's taken her own
cash with her, and I guess the way I think
(27:54):
about it, I'm like, would I rather her like lose
an Apple watch or and have like direct access to
all of her funds there or just the ability to
outmost lose the amount of money that she's taken with her.
So personally, man for us, at least, the going with
the old school physical cash method.
Speaker 2 (28:12):
For us has worked out fine. I can't imagine he's
gonna lose the watch, right, but I don't know. I
think you could lose some loose money. So I get
where Chad's coming from. And maybe his son has lost
twenty bucks here or there before and he's like cash
the day. Yeah, man, if you could just tap with
his wrist, it's gonna make this a whole lot easier.
And I totally understand what you're saying. And I think,
especially for younger kids, cash makes the most sense.
Speaker 1 (28:32):
Because sometimes MO money more problems. You know, like you
want to go digital, and okay, so now you've got
something that you've got to provide service for. That's true
because like not only is the cost of the device
or the phone or the watch or whatever, but then
I mean, it's not cheap to pay for the cell
plans for these individual devices. All it's gotten a lot cheaper.
Speaker 2 (28:48):
Actually, we've talked about that is true US Mobile on
the show and how you and I are US Mobile
customers now for our cell plans, they're incredibly cheap. But
they also have now service for smart watches. I think
six dollars and fifty cents a month, which if that's
what you.
Speaker 1 (29:03):
Want, as it goes, it is affordable.
Speaker 5 (29:04):
Yeah.
Speaker 2 (29:05):
If he's already got the Apple Watch and you're like, man,
we just need to save money on that because it's
costing us a lot more with one of the big guys,
We'll look at US Mobile. That's the best price I've seen.
And I think getting used to digital money, this is
probably right about the right time. I'm getting my sixth
grader or fourth grader kind of used to it right now.
I did cash kind of thrown in the towel on that. Honestly,
it was mostly my fault in the butt. Yeah, I
(29:26):
will say that was not as good and dedicated to
it as I should have been. So that's not my
kids on my kids, that's on me. Although when we
try to go digital too early that didn't work either,
so it's a little bit of trial and error in
our household. But yeah, we opted actually for free teen
accounts from Capital One. They come with a debit card
and so now it's really easy for me to transfer
money to them for my Capital One account to theirs.
(29:47):
They've got a debit card, they could take it with them,
and that's actually been kind of the best solution for
our family. They don't have fancy watches to attach that
card to, but you could. Yeah, I mean, if you
do have that account, of course, you can take that
debit card, stick it in the wallet app and he
could pay from his watch. You could actually you could
even attach it to Apple's new Apple Cash feature which
exists within like the iOS framework, where you can even
(30:10):
you know, you send your son money to his Apple
Cash account via like text message. Not that this is
something you should be doing, I guess on the rag,
but it's worth highlighting that it's even simpler than like
Venmo or cash app if.
Speaker 1 (30:23):
You're so inclined and if this is something that you
do want to.
Speaker 2 (30:25):
Do, Yeah, And I think the other thing Chad mentioned was, oh, sure,
I'll make him an authorized user on one of my
credit cards so that he can, you know, use the
watch to pay for stuff with that card. Well, I
think you can, and probably should make him an authorized
user on your credit card. That'll help with him building credit,
assuming you handle your credit well, he'll become a teenager
(30:46):
and he'll have a score that many adults can only
hope for. And if that's the case, if you have
a long, great credit history, but he wouldn't want you
to give him access to pay with that credit card
to send your name. If you make him authorized user,
don't actually get him the physical credit card, But being
an authorized user on yours and then having his own
account like the Capital One account that I mentioned that
allows him to use his money that you have at
(31:08):
least some oversight of seems like the right balance to me.
I just don't want Matt to have a credit card
that's mine and my kids using that card. They're way
too young in my opinion for that, and I stand
to lose more in that case too. So I just
kind of like that that separation of powers, Like I
like them having their own card, their own accounts.
Speaker 1 (31:29):
You don't them messing up your stuff, Not that they would,
but I just, uh, there's always the risk. Yeah, there's
the risk of them going and buying something that they
couldn't actually afford and then on my credit card, whereas hey,
they've got a finite amount that's in there. It's in
their account on the team account through Capital One, and
(31:50):
so downside being if there is any fraud or something
that happens, they're out their own money. I guess while
you're trying to claw that back, because that's obviously one
of the benefits of using credit cards that we like,
there are those extra protections built in. If I ever
considered using a credit card, it would be for those protections,
not because I was looking to try to like completely
optimize and to teach my kids about how to use
(32:11):
credit card cash back and rewards and points. Like, if
that's what you're thinking, I think it's a little too premature,
at least at this point in the game. I think
if you've got teenagers that are older like seventeen eighteen, hey,
trying to start talking about points and cash back and
how paying on time in fact ahead of time before
the statement even hits at the end of the month,
So why not run that through the credit card company.
(32:32):
But at this point, at least at eleven years old.
That would not at all be on my mind at
all trying to teach my kid how to use your
credit card like a pro.
Speaker 2 (32:39):
Right, Yeah, you're not ready to gain that system at eleven, Yeah, exactly.
But I think this is like a perfect fora getting
him the right account, attaching it to the watch, and
making sure he has money at his disposal. He knows
how to spend, he knows where the money comes from.
It sounds like Chad is, you know, handling money lessons
with his son like a pro. Okay, thank you as
(33:02):
always for listening to the show. We appreciate your time
and attention. You can always find more money saving information
up on our website at howtomoney dot com.
Speaker 1 (33:10):
We'll see you back here next week.
Speaker 2 (33:12):
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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