Episode Transcript
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Speaker 1 (00:00):
Stanton buck Sexton doing their homework.
Speaker 2 (00:03):
Today at noon because you got to make sense of
it on fifty five KRCD Talk Station.
Speaker 1 (00:10):
Eight oh five.
Speaker 3 (00:11):
And Happy Monday to you, Brian Thomas. Always looking forward
to this segment because you get to learn about money matters.
It is time well money Monday with all their financials.
Brian James. He's a certified financial planners and he's here
to talk about well one thing, the jobs report. Welcome back,
Brian James. Happy Monday to you.
Speaker 1 (00:26):
Back at you. Good morning to you as well. Hope
you had a good weekend.
Speaker 3 (00:29):
I had a great weekend.
Speaker 1 (00:31):
All right.
Speaker 3 (00:32):
So we have this job's report and it looks good
two hundred and fifty six thousand games. However, it's bad
cause you get good news. The employment rate is down
to four point one percent, a lot of additional jobs.
That all sounds like wonderful news. And yet Wall Street's
reaction is the stock market to tank or at least
(00:52):
drop precipitously. How can you reconcile these Brian, Yeah, it
doesn't make a lot of sense, does it. We really
want jobs.
Speaker 4 (00:59):
We need as many people to have jobs as we
can possibly get. If everybody's working. That means everybody has
money to spend, and money makes the.
Speaker 1 (01:06):
World go around.
Speaker 4 (01:07):
It all moves around in a virtuous circle, and we
all do better right well, long term, yes, but short term,
remember what we're battling right now. We've been battling interest
rates for the past several years, through the whole COVID crisis.
And while we're not at the over nine percent inflation
situation that we were out a few summers ago, we're
(01:27):
not back down to where we want to be either.
The Fed's goal is normally to keep inflation in the
two to two and a half percent range, and we're
hovering just above that, somewhere in the three percent range.
And what we're making progress, but at the same time
not where we need to be, and we've been here
for a while, so the concern is keeping the momentum.
What that means, though, is that the economy would preferably
(01:49):
would slow down just for a little bit, so we
can kind of get caught up on that. And a
Job's report of two hundred and fifty six thousand new
jobs created shows that that is not quite happening to
the Fed's life king just yet.
Speaker 3 (02:01):
So obviously, if you have jobs, you have money, and
you're there. There therefore creates demand for goods and services,
which I suppose to some degree are still in shorter
supply and the ripple effect we're still experiencing from COVID
and supply chain issues and things of that nature.
Speaker 1 (02:17):
That's correct.
Speaker 4 (02:18):
Yeah, So the concern all along and I don't remember
the last time I heard the term a hard landing.
We seem to have avoided that knock on wood, but
nobody says that anymore. Right, We've been expecting this, this
fall off the cliff moment where the economy absolutely collapses,
but that is just not happening. As much as the
talking heads UH seem to want want that to happen,
(02:39):
and as much a volume of discussion as there is
around that that has not come to pass, and nobody
uses those terms anymore. So this is evident that we
are not seeing the pullback that we expected we would,
and that's going to be in the short term.
Speaker 1 (02:53):
As we're talking about that.
Speaker 4 (02:54):
That's a that's a challenge from a standpoint of if
the real goal is to keep inflation down, then the
economy has got to stay up on the brakes a
little bit. At some point but as long as we're
out there spending money and creating economic activity and creating
these new jobs, and that's not going to happen, and
we'll have to continue this fight. So what's looking right
right now is that the Federal Reserve is not likely
(03:14):
at this point, as we're sitting here right now with
the information we have, not very likely that the Federal
Reserve is going to continue cutting rates in twenty twenty five.
The prevailing opinion is we're probably going to stand flat
for the balance of the year unless we get new information,
which we always do well.
Speaker 3 (03:29):
And I think, as everybody knows by now, California as
a state is one of the largest economies in the
globe all by itself. Will I mean, I guess to
rebuild Los Angeles as much damage has been done and
it's going to take a lot of work, a lot
of energy, and a lot of materials and supplies that
do that, is that going to feed inflation? Do you
think what have that substantial and effect given the how
(03:53):
sizable the damages and how much of the California economy
comes from the greater Los Angeles area.
Speaker 4 (03:59):
Yasolutely so, the state of California is one of the
largest economies on the face of the earth. Obviously, it's
ranked above even many other countries, most other countries, frankly,
And so when we have this big of a hit,
of course it's gonna have an impact. There are, of course,
supply chain disruptions that can happen. Los Angeles is a
(04:20):
major port.
Speaker 1 (04:21):
And while you.
Speaker 4 (04:21):
Want to want to say the wildfires probably aren't going
to affect direct to all those ships coming in, at
the end, any kind of chaos in an area where
goods and services are supposed to be moving through is
going to have an impact. And then, not to mention insurance,
this is probably the big one to keep an eye
on because we all have to the whole purpose of
insurance is that everybody shares the risks. You pay your premium,
you're covering not only your own home, but everybody else's home,
(04:44):
and that because that's how insurance works. So this is
going to have a widespreading effect over time. It's going
to remain to be seen exactly what the impact will be,
but there's no denying that it's going to have an
impact on people who live nowhere near Los Angeles.
Speaker 1 (04:57):
For all these reasons.
Speaker 3 (04:58):
Well, and I think it's a pretty good time for
people to maybe take stock in their own insurance. It's
like a cautionary tale. What's happening out there could very
well happen to you. And one of the interesting things
that was reported, for example, the Marshall fire, which happened
in twenty twenty one in Denver and Boulder, Colorado, they
found out a study was done after that they found
(05:20):
thirty six percent of homeowners homeowners who filed insurance claims
learned that their policies covered less than three quarters of
their home's replacement cost. So you've got a replacement cost
policy and you think you're all, well, that's fine. Usually
the policy will specifically identify what the cap is on
the replacement cost. And I know I had my home
evaluated recently because when I saw what the replacement costs
(05:43):
was valued at on my policy, I'm like, there's no
way in hell this could replace my house. We've been
here for twenty five plus years, we have made a
lot of investments into it on the interior space, and
nobody knows about this, most notably my insurance company. So
if it all burned to the ground, how on the
hell would I prove what the real replacement cost is,
and would it be subject to some kind of cap anyway.
Speaker 4 (06:04):
Right, you've identified a pretty specific risk that affects anybody
who has a home.
Speaker 1 (06:08):
You need to understand where you're exposed.
Speaker 4 (06:10):
And so when you use the term replacement cost, what
you're talking about is the fact that you could find
a home that is very similar to yours on the
market right now, and perhaps you could buy that as
your replacement. But the replacement cost is actually the sum
total of the two by fours in the dry wall,
the insulation, and all the other stuff that make up
your house. That's a lot more than buying a similar
(06:33):
house elsewhere. So your insurance, yeah, your insurance needs to
cover that replacement cost, not just another the value of
a similar home.
Speaker 3 (06:40):
Well, and I suppose it's a cautionary tail. And again
for people to identify all of the things they own
in their home, maybe you can take some sort of
video of it and keep that in a fire safe
or in a safe deposit box or something. Because in
the aftermath of a major disaster like this, the likelihood
you're going to remember everything that was in the house
is slim to none. And the fact I think you're
going to have to demonstrate to your insurance company the
(07:02):
improvements that you made that went up and smoke.
Speaker 1 (07:04):
Yes.
Speaker 4 (07:05):
And remember it's not going to be very right. Right now,
we're still fighting fires. But what's going to come very
shortly is the scammers out of the woodwork, oh, making
claims of things that didn't happen, or offering to help
people that they actually aren't going to deliver on any
of those kinds of things.
Speaker 1 (07:19):
All of that is going to drive the cost of
insurance up as well.
Speaker 3 (07:22):
True that also, I can use that as a little
springboard to remind people of something that I read this morning,
and it's a terrible thing to happen. But since you
brought up scammers, they are targeting people who want to
help out the victims of these wildfires. And there are
always scammers out there. That's really prudent of you to
be very, very very cautious about who you're writing a
check to in terms of providing some aid. There are
(07:45):
people that get on the phone and call and ask
you this solicit It sounds like a legitimate group that
they're not, so be if you're choosing a charitable contribution,
and I'm not going to try to steer anybody away
from helping their fellow Americans in times of need. But
just make sure you're not dealing with a scam organization
and go with someone like you know, Matthew Twenty five
Ministries is one of my favorite to mention because they
are legitimate and every dollar you give to them is
(08:07):
going to land in the hands is someone out there
who needs it. People have forgot about North Carolina too
by now, Brian Jeeves.
Speaker 1 (08:16):
Yeah, yeah, we do.
Speaker 4 (08:17):
Have short attention spans for our natural disasters anymore. But
I know you raise a great point one of those things.
If you are contacted by somebody who is raising funds
on behalf of these the people who have suffered this misfortune,
then what the best thing to do really is take
the information from that organization, then go research it on
your own. If when you ask for the website or
some other outside resource, a legitimate organization will be ecstatic
(08:39):
to give to you over the phone, somebody who is
not legit is going to insist that you need to
give them money right then and there at that moment,
and not let you go to that outside resource.
Speaker 1 (08:47):
So be careful who you're listening.
Speaker 3 (08:48):
To amen that We're going to continue with all our financials,
Brian James and find out the details on apparently something
that's very popular. But is it the right thing for you?
Speaker 1 (09:01):
What is this? What are these things called TDT date funds?
Target date fund, target date fund?
Speaker 4 (09:08):
These are funds that are supposed to be set and forget.
Speaker 3 (09:11):
Let's learn together, because I'm not familiar with target date funds,
and I always like to point out there's not a
day that goes by in the morning show where I
don't learn something. Today, I'm going to learn something from
Brian James, which is something that usually happens. Come up
an eight fifteen fifty five KRC the talk station, don't
go away, We.
Speaker 2 (09:25):
Right back fifty five kransrust Brian James doing that money
Monday thing. Hey Brian, Before we get onto target date funds,
what are they and whether we should be in him
or not? On interest rates, we talked about the idea
of this in the current inflation rate that the the
stellar jobs report, which means a lot of people are
more people are employed, obviously potentially fueling the the the
(09:48):
inflationary concerns. You mentioned that the Feds probably no longer
likely to cut interest rates. But I saw this, Matt Rowe,
portfolio manager over at Norma Capital Management, this article you
pointed you forwarded along saying that they may even raise rates.
Speaker 4 (10:04):
Now, yeah, that's highly possible because again, remember it's all
about inflation.
Speaker 1 (10:08):
We want to get inflation under control. And for the
last couple of years.
Speaker 4 (10:12):
We've been on a pace of having stopped it and
then driven it down all the way down from that
nine percent range. But now that we've kind of plateaued,
there's a chance that it could turn around and go
the other way. So yeah, I mean, I think that's
a fairly obvious conclusion for this gentleman to come to,
just to say that if things start to if we
see start see prices go up.
Speaker 1 (10:32):
Again, then we may be raising rates.
Speaker 4 (10:34):
Now, what we haven't talked about yet this morning, Brian,
is the incoming administration and what their thoughts are. It's
one thing to want to increase the position of the
United States with regard to its trading partners with tariffs,
but we can't pretend that that's going to happen in
a vacuum. Tariffs are the purposeful raising of prices on somebody.
The goal is or at least on paper, we would
(10:56):
want to raise prices on people who want to export
their goods on country who want to export their goods
to our country. But what that is always going to
lead to is increase prices because they're simply going to
recover those from the consumers. If you are a producer,
you have that control. If you are a consumer, then
you eat it. So I think there's a there's a
bigger and bigger drum beat for the fact that interest
(11:17):
rates are not only going to at best stay flat,
like you just said, that could also increase. It remains
to be seen.
Speaker 3 (11:23):
Well, and some people view that as a political measure,
and I know it was observed in these comments from
Matt Rowe that, well, the political will of the Trump
administration will certainly be to keep rates down and be
upset if they get raised. But that reminds me of
this of the argument that I believe it was Jimmy
Carter had with wasn't it Alan green Span at the
time he begged and begged and begged and pleted to
(11:45):
lower the interest rates because they were so onerous, but
what the stagflation that was going on. It was like, no,
we have to do this in order to bring to
write the condition. So Jerme Powell may raise rates, but
it probably won't be a politically motivated I guess is
the conclusion we must draw.
Speaker 4 (12:02):
Right, So, Jerome Powell as the Fed Chair is not
subject completely to the whims of the president.
Speaker 1 (12:09):
He's not a cabinet member.
Speaker 4 (12:10):
So if the President wants to get rid of the
Federal Reserve Chair, he has to prove legal cause. There
has to actually be something other than I don't like you.
So he doesn't have to be as Jerome does not
have to be as politically sensitive as many other cabinet
members do as a decision maker.
Speaker 3 (12:26):
All right, let's move over and together learn maybe you
will for the first time. I know I am target
date funds. What's the story on these? They apparently are
quite popular for four to one k's.
Speaker 4 (12:36):
Yeah, target date funds the Kellogg's Variety pack of investments.
So the purpose of a target date fund is one
fund that owns a bunch of other things, and the
intent is kind of a one stop shop for a
properly allocated portfolio according to what your retirement date might be.
So these frequently appear more and more. They're appearing in
(12:57):
four oh one CA's and it's believed that they're going
to capture out two thirds of all four to oh
and K contributions by twenty twenty seven, and so they're
already in there. You probably have them in your four
oh and k R four or three B or whatever
your employer offers as your retirement plan. And the goal
here again is to most of them have a number
in the in the name of the fund. So twenty
(13:17):
forty five, twenty thirty five, twenty fifty, whatever that may be.
What that number is intended to be is approximately the
year you might retire. So the intent is that it
will build a portfolio with one, one single option.
Speaker 1 (13:30):
You don't have to choose anything.
Speaker 4 (13:31):
It's just going to build a portfolio that is targeted
toward that date, and then as time goes by, the
portfolio itself will become more conservative. So, for example, a
twenty fifty fund is probably you know, that's somebody who's
gonna be working for another twenty five years. That's a
long term timeframe that's going to be mostly stocks. Ten
years from now, are fifteen years from now, in twenty
forty it's probably going to be about a seventy percent
(13:54):
stock thirty percent bond type of a portfolio. That's generally
how they work. It's a set it and forget it approach.
So these are good tools. I'm not somebody who believes
that all target date funds are bad. That's what if
you read the headlines, that's kind of what can come across.
But it's not something that you can completely, just solely
rely on. You have to pay attention to the same
things you would any other investment. First and foremost, what's
(14:17):
under the hood. Just because it has a number in
the name of the fund doesn't mean that it's a
portfolio you necessarily that applies to you. So a fund
with a twenty year time frame can be anywhere from
eighty percent stocks to one hundred percent stocks. It's just
the opinion of the fund firm underneath. So you still
got to look under the hood to see what it's
invested in.
Speaker 3 (14:36):
But they are actively managed in the sense that you're
just not They're not just compiled of one set group
for all time of stocks. Because I mean the point
that you made that there's some gets moved over to
bonds over time suggests that there is some active management.
Are they constantly shifting and changing what these specific stocks
are that are invested in this this type of target fund.
Speaker 1 (14:57):
And date fund.
Speaker 4 (14:58):
Great question, So the answer is somewhere in the middle.
So they're essentially active management of passive indexes. So in
other words, the S and P five hundred, which we
all know is basically the five hundred largest United States
based publicly traded companies that's going to make up a
good core of all these funds. So they're not really
target date funds, are not deciding they're going to sell
(15:20):
PNG and buy more Apple or anything like that. They're
simply following the index. But there will be ten, fifteen,
twenty different indices inside this fund. So the active management
occurs in how much are we going to expose to
stocks big stocks, little stock, small stocks, and how much
are we going to expose to bonds. It's not at
the individual security level of the individual bond or the stock.
(15:41):
It's really at the index level to control the risk
and the volatility of the portfolio.
Speaker 3 (15:47):
Well, and I would argue, because my financial planners have
been over my selections. We have a variety of different
funds we can invest in here through my four oh
one k at iHeart, my financial planner has looked at
what I am invested in and occasionally will make recommendations
about you should change the percentage allocation, because you know,
there's international investments, there's currency investments, there's all kinds of
(16:08):
different options for you. But since this is out of
my element and I wouldn't profess for a minute to
know anything about investing, I let you know my financial
planner make the recommendations for me. I suppose anybody who
has a four h one K plan should still probably
have a financial planner to help them make sure that
they're selecting the right funds.
Speaker 4 (16:26):
Yes, absolutely, because you need somebody in arms length away
who is going to frankly protect you from yourself.
Speaker 1 (16:31):
Yeah. Yeah. Unless you do this all.
Speaker 4 (16:33):
Day, every day, you'll be tempted to react to whatever
has happened over the last couple of weeks and months.
And that's never the way to manage a portfolio, because
we need to be targeting the different piles of money
we have for specific goals, whether that's a goal thirty
years from now means you can be aggressive, or if
it's a goal in the next year going to buy
a house, or you got a kid going to college
or something like that each of those goals is going
(16:54):
to have a unique solution that's going to be best
for that situation, and a financial planner can help you
prioritize which ones are non negotiable, which ones can you
fudge on? If you can't afford to do them all
at once, how do you organize it all?
Speaker 3 (17:06):
Phebas is the way to go because that means have
a fiduciary obligation to you, and that's really important as well.
Brian James, always a pleasure having you on for the
Monday segment. Money Monday is what we call it. The
podcast will be availablet fifty five KRC dot com. We'll
talk again next Monday. Have a great week, Brian, have
a good weeks day warm thank you brother e twenty
six fifty five KRC DE Talk Station back to talk
about the similarities between the La Fire and the Lehina
(17:29):
Fire and Maui. Stephanie Perucci. She's the author of the
books we went over last time. She was on the
program Burn Back Better Lahaina, A Perfect Storm or a
Perfect Crime, the follow up book, Sound the Alarm, the
Maui disaster that sparked a global awakening. Stephanie Perucci be
up next, Don't Go Away fifty five KRC
Stanton buck Sexton doing their homework.
Speaker 2 (00:03):
Today at noon because you got to make sense of
it on fifty five KRCD Talk Station.
Speaker 1 (00:10):
Eight oh five.
Speaker 3 (00:11):
And Happy Monday to you, Brian Thomas. Always looking forward
to this segment because you get to learn about money matters.
It is time well money Monday with all their financials.
Brian James. He's a certified financial planners and he's here
to talk about well one thing, the jobs report. Welcome back,
Brian James. Happy Monday to you.
Speaker 1 (00:26):
Back at you. Good morning to you as well. Hope
you had a good weekend.
Speaker 3 (00:29):
I had a great weekend.
Speaker 1 (00:31):
All right.
Speaker 3 (00:32):
So we have this job's report and it looks good
two hundred and fifty six thousand games. However, it's bad
cause you get good news. The employment rate is down
to four point one percent, a lot of additional jobs.
That all sounds like wonderful news. And yet Wall Street's
reaction is the stock market to tank or at least
(00:52):
drop precipitously. How can you reconcile these Brian, Yeah, it
doesn't make a lot of sense, does it. We really
want jobs.
Speaker 4 (00:59):
We need as many people to have jobs as we
can possibly get. If everybody's working. That means everybody has
money to spend, and money makes the.
Speaker 1 (01:06):
World go around.
Speaker 4 (01:07):
It all moves around in a virtuous circle, and we
all do better right well, long term, yes, but short term,
remember what we're battling right now. We've been battling interest
rates for the past several years, through the whole COVID crisis.
And while we're not at the over nine percent inflation
situation that we were out a few summers ago, we're
(01:27):
not back down to where we want to be either.
The Fed's goal is normally to keep inflation in the
two to two and a half percent range, and we're
hovering just above that, somewhere in the three percent range.
And what we're making progress, but at the same time
not where we need to be, and we've been here
for a while, so the concern is keeping the momentum.
What that means, though, is that the economy would preferably
(01:49):
would slow down just for a little bit, so we
can kind of get caught up on that. And a
Job's report of two hundred and fifty six thousand new
jobs created shows that that is not quite happening to
the Fed's life king just yet.
Speaker 3 (02:01):
So obviously, if you have jobs, you have money, and
you're there. There therefore creates demand for goods and services,
which I suppose to some degree are still in shorter
supply and the ripple effect we're still experiencing from COVID
and supply chain issues and things of that nature.
Speaker 1 (02:17):
That's correct.
Speaker 4 (02:18):
Yeah, So the concern all along and I don't remember
the last time I heard the term a hard landing.
We seem to have avoided that knock on wood, but
nobody says that anymore. Right, We've been expecting this, this
fall off the cliff moment where the economy absolutely collapses,
but that is just not happening. As much as the
talking heads UH seem to want want that to happen,
(02:39):
and as much a volume of discussion as there is
around that that has not come to pass, and nobody
uses those terms anymore. So this is evident that we
are not seeing the pullback that we expected we would,
and that's going to be in the short term.
Speaker 1 (02:53):
As we're talking about that.
Speaker 4 (02:54):
That's a that's a challenge from a standpoint of if
the real goal is to keep inflation down, then the
economy has got to stay up on the brakes a
little bit. At some point but as long as we're
out there spending money and creating economic activity and creating
these new jobs, and that's not going to happen, and
we'll have to continue this fight. So what's looking right
right now is that the Federal Reserve is not likely
(03:14):
at this point, as we're sitting here right now with
the information we have, not very likely that the Federal
Reserve is going to continue cutting rates in twenty twenty five.
The prevailing opinion is we're probably going to stand flat
for the balance of the year unless we get new information,
which we always do well.
Speaker 3 (03:29):
And I think, as everybody knows by now, California as
a state is one of the largest economies in the
globe all by itself. Will I mean, I guess to
rebuild Los Angeles as much damage has been done and
it's going to take a lot of work, a lot
of energy, and a lot of materials and supplies that
do that, is that going to feed inflation? Do you
think what have that substantial and effect given the how
(03:53):
sizable the damages and how much of the California economy
comes from the greater Los Angeles area.
Speaker 4 (03:59):
Yasolutely so, the state of California is one of the
largest economies on the face of the earth. Obviously, it's
ranked above even many other countries, most other countries, frankly,
And so when we have this big of a hit,
of course it's gonna have an impact. There are, of course,
supply chain disruptions that can happen. Los Angeles is a
(04:20):
major port.
Speaker 1 (04:21):
And while you.
Speaker 4 (04:21):
Want to want to say the wildfires probably aren't going
to affect direct to all those ships coming in, at
the end, any kind of chaos in an area where
goods and services are supposed to be moving through is
going to have an impact. And then, not to mention insurance,
this is probably the big one to keep an eye
on because we all have to the whole purpose of
insurance is that everybody shares the risks. You pay your premium,
you're covering not only your own home, but everybody else's home,
(04:44):
and that because that's how insurance works. So this is
going to have a widespreading effect over time. It's going
to remain to be seen exactly what the impact will be,
but there's no denying that it's going to have an
impact on people who live nowhere near Los Angeles.
Speaker 1 (04:57):
For all these reasons.
Speaker 3 (04:58):
Well, and I think it's a pretty good time for
people to maybe take stock in their own insurance. It's
like a cautionary tale. What's happening out there could very
well happen to you. And one of the interesting things
that was reported, for example, the Marshall fire, which happened
in twenty twenty one in Denver and Boulder, Colorado, they
found out a study was done after that they found
(05:20):
thirty six percent of homeowners homeowners who filed insurance claims
learned that their policies covered less than three quarters of
their home's replacement cost. So you've got a replacement cost
policy and you think you're all, well, that's fine. Usually
the policy will specifically identify what the cap is on
the replacement cost. And I know I had my home
evaluated recently because when I saw what the replacement costs
(05:43):
was valued at on my policy, I'm like, there's no
way in hell this could replace my house. We've been
here for twenty five plus years, we have made a
lot of investments into it on the interior space, and
nobody knows about this, most notably my insurance company. So
if it all burned to the ground, how on the
hell would I prove what the real replacement cost is,
and would it be subject to some kind of cap anyway.
Speaker 4 (06:04):
Right, you've identified a pretty specific risk that affects anybody
who has a home.
Speaker 1 (06:08):
You need to understand where you're exposed.
Speaker 4 (06:10):
And so when you use the term replacement cost, what
you're talking about is the fact that you could find
a home that is very similar to yours on the
market right now, and perhaps you could buy that as
your replacement. But the replacement cost is actually the sum
total of the two by fours in the dry wall,
the insulation, and all the other stuff that make up
your house. That's a lot more than buying a similar
(06:33):
house elsewhere. So your insurance, yeah, your insurance needs to
cover that replacement cost, not just another the value of
a similar home.
Speaker 3 (06:40):
Well, and I suppose it's a cautionary tail. And again
for people to identify all of the things they own
in their home, maybe you can take some sort of
video of it and keep that in a fire safe
or in a safe deposit box or something. Because in
the aftermath of a major disaster like this, the likelihood
you're going to remember everything that was in the house
is slim to none. And the fact I think you're
going to have to demonstrate to your insurance company the
(07:02):
improvements that you made that went up and smoke.
Speaker 1 (07:04):
Yes.
Speaker 4 (07:05):
And remember it's not going to be very right. Right now,
we're still fighting fires. But what's going to come very
shortly is the scammers out of the woodwork, oh, making
claims of things that didn't happen, or offering to help
people that they actually aren't going to deliver on any
of those kinds of things.
Speaker 1 (07:19):
All of that is going to drive the cost of
insurance up as well.
Speaker 3 (07:22):
True that also, I can use that as a little
springboard to remind people of something that I read this morning,
and it's a terrible thing to happen. But since you
brought up scammers, they are targeting people who want to
help out the victims of these wildfires. And there are
always scammers out there. That's really prudent of you to
be very, very very cautious about who you're writing a
check to in terms of providing some aid. There are
(07:45):
people that get on the phone and call and ask
you this solicit It sounds like a legitimate group that
they're not, so be if you're choosing a charitable contribution,
and I'm not going to try to steer anybody away
from helping their fellow Americans in times of need. But
just make sure you're not dealing with a scam organization
and go with someone like you know, Matthew Twenty five
Ministries is one of my favorite to mention because they
are legitimate and every dollar you give to them is
(08:07):
going to land in the hands is someone out there
who needs it. People have forgot about North Carolina too
by now, Brian Jeeves.
Speaker 1 (08:16):
Yeah, yeah, we do.
Speaker 4 (08:17):
Have short attention spans for our natural disasters anymore. But
I know you raise a great point one of those things.
If you are contacted by somebody who is raising funds
on behalf of these the people who have suffered this misfortune,
then what the best thing to do really is take
the information from that organization, then go research it on
your own. If when you ask for the website or
some other outside resource, a legitimate organization will be ecstatic
(08:39):
to give to you over the phone, somebody who is
not legit is going to insist that you need to
give them money right then and there at that moment,
and not let you go to that outside resource.
Speaker 1 (08:47):
So be careful who you're listening.
Speaker 3 (08:48):
To amen that We're going to continue with all our financials,
Brian James and find out the details on apparently something
that's very popular. But is it the right thing for you?
Speaker 1 (09:01):
What is this? What are these things called TDT date funds?
Target date fund, target date fund?
Speaker 4 (09:08):
These are funds that are supposed to be set and forget.
Speaker 3 (09:11):
Let's learn together, because I'm not familiar with target date funds,
and I always like to point out there's not a
day that goes by in the morning show where I
don't learn something. Today, I'm going to learn something from
Brian James, which is something that usually happens. Come up
an eight fifteen fifty five KRC the talk station, don't
go away, We.
Speaker 2 (09:25):
Right back fifty five kransrust Brian James doing that money
Monday thing. Hey Brian, Before we get onto target date funds,
what are they and whether we should be in him
or not? On interest rates, we talked about the idea
of this in the current inflation rate that the the
stellar jobs report, which means a lot of people are
more people are employed, obviously potentially fueling the the the
(09:48):
inflationary concerns. You mentioned that the Feds probably no longer
likely to cut interest rates. But I saw this, Matt Rowe,
portfolio manager over at Norma Capital Management, this article you
pointed you forwarded along saying that they may even raise rates.
Speaker 4 (10:04):
Now, yeah, that's highly possible because again, remember it's all
about inflation.
Speaker 1 (10:08):
We want to get inflation under control. And for the
last couple of years.
Speaker 4 (10:12):
We've been on a pace of having stopped it and
then driven it down all the way down from that
nine percent range. But now that we've kind of plateaued,
there's a chance that it could turn around and go
the other way. So yeah, I mean, I think that's
a fairly obvious conclusion for this gentleman to come to,
just to say that if things start to if we
see start see prices go up.
Speaker 1 (10:32):
Again, then we may be raising rates.
Speaker 4 (10:34):
Now, what we haven't talked about yet this morning, Brian,
is the incoming administration and what their thoughts are. It's
one thing to want to increase the position of the
United States with regard to its trading partners with tariffs,
but we can't pretend that that's going to happen in
a vacuum. Tariffs are the purposeful raising of prices on somebody.
The goal is or at least on paper, we would
(10:56):
want to raise prices on people who want to export
their goods on country who want to export their goods
to our country. But what that is always going to
lead to is increase prices because they're simply going to
recover those from the consumers. If you are a producer,
you have that control. If you are a consumer, then
you eat it. So I think there's a there's a
bigger and bigger drum beat for the fact that interest
(11:17):
rates are not only going to at best stay flat,
like you just said, that could also increase. It remains
to be seen.
Speaker 3 (11:23):
Well, and some people view that as a political measure,
and I know it was observed in these comments from
Matt Rowe that, well, the political will of the Trump
administration will certainly be to keep rates down and be
upset if they get raised. But that reminds me of
this of the argument that I believe it was Jimmy
Carter had with wasn't it Alan green Span at the
time he begged and begged and begged and pleted to
(11:45):
lower the interest rates because they were so onerous, but
what the stagflation that was going on. It was like, no,
we have to do this in order to bring to
write the condition. So Jerme Powell may raise rates, but
it probably won't be a politically motivated I guess is
the conclusion we must draw.
Speaker 4 (12:02):
Right, So, Jerome Powell as the Fed Chair is not
subject completely to the whims of the president.
Speaker 1 (12:09):
He's not a cabinet member.
Speaker 4 (12:10):
So if the President wants to get rid of the
Federal Reserve Chair, he has to prove legal cause. There
has to actually be something other than I don't like you.
So he doesn't have to be as Jerome does not
have to be as politically sensitive as many other cabinet
members do as a decision maker.
Speaker 3 (12:26):
All right, let's move over and together learn maybe you
will for the first time. I know I am target
date funds. What's the story on these? They apparently are
quite popular for four to one k's.
Speaker 4 (12:36):
Yeah, target date funds the Kellogg's Variety pack of investments.
So the purpose of a target date fund is one
fund that owns a bunch of other things, and the
intent is kind of a one stop shop for a
properly allocated portfolio according to what your retirement date might be.
So these frequently appear more and more. They're appearing in
(12:57):
four oh one CA's and it's believed that they're going
to capture out two thirds of all four to oh
and K contributions by twenty twenty seven, and so they're
already in there. You probably have them in your four
oh and k R four or three B or whatever
your employer offers as your retirement plan. And the goal
here again is to most of them have a number
in the in the name of the fund. So twenty
(13:17):
forty five, twenty thirty five, twenty fifty, whatever that may be.
What that number is intended to be is approximately the
year you might retire. So the intent is that it
will build a portfolio with one, one single option.
Speaker 1 (13:30):
You don't have to choose anything.
Speaker 4 (13:31):
It's just going to build a portfolio that is targeted
toward that date, and then as time goes by, the
portfolio itself will become more conservative. So, for example, a
twenty fifty fund is probably you know, that's somebody who's
gonna be working for another twenty five years. That's a
long term timeframe that's going to be mostly stocks. Ten
years from now, are fifteen years from now, in twenty
forty it's probably going to be about a seventy percent
(13:54):
stock thirty percent bond type of a portfolio. That's generally
how they work. It's a set it and forget it approach.
So these are good tools. I'm not somebody who believes
that all target date funds are bad. That's what if
you read the headlines, that's kind of what can come across.
But it's not something that you can completely, just solely
rely on. You have to pay attention to the same
things you would any other investment. First and foremost, what's
(14:17):
under the hood. Just because it has a number in
the name of the fund doesn't mean that it's a
portfolio you necessarily that applies to you. So a fund
with a twenty year time frame can be anywhere from
eighty percent stocks to one hundred percent stocks. It's just
the opinion of the fund firm underneath. So you still
got to look under the hood to see what it's
invested in.
Speaker 3 (14:36):
But they are actively managed in the sense that you're
just not They're not just compiled of one set group
for all time of stocks. Because I mean the point
that you made that there's some gets moved over to
bonds over time suggests that there is some active management.
Are they constantly shifting and changing what these specific stocks
are that are invested in this this type of target fund.
Speaker 1 (14:57):
And date fund.
Speaker 4 (14:58):
Great question, So the answer is somewhere in the middle.
So they're essentially active management of passive indexes. So in
other words, the S and P five hundred, which we
all know is basically the five hundred largest United States
based publicly traded companies that's going to make up a
good core of all these funds. So they're not really
target date funds, are not deciding they're going to sell
(15:20):
PNG and buy more Apple or anything like that. They're
simply following the index. But there will be ten, fifteen,
twenty different indices inside this fund. So the active management
occurs in how much are we going to expose to
stocks big stocks, little stock, small stocks, and how much
are we going to expose to bonds. It's not at
the individual security level of the individual bond or the stock.
(15:41):
It's really at the index level to control the risk
and the volatility of the portfolio.
Speaker 3 (15:47):
Well, and I would argue, because my financial planners have
been over my selections. We have a variety of different
funds we can invest in here through my four oh
one k at iHeart, my financial planner has looked at
what I am invested in and occasionally will make recommendations
about you should change the percentage allocation, because you know,
there's international investments, there's currency investments, there's all kinds of
(16:08):
different options for you. But since this is out of
my element and I wouldn't profess for a minute to
know anything about investing, I let you know my financial
planner make the recommendations for me. I suppose anybody who
has a four h one K plan should still probably
have a financial planner to help them make sure that
they're selecting the right funds.
Speaker 4 (16:26):
Yes, absolutely, because you need somebody in arms length away
who is going to frankly protect you from yourself.
Speaker 1 (16:31):
Yeah. Yeah. Unless you do this all.
Speaker 4 (16:33):
Day, every day, you'll be tempted to react to whatever
has happened over the last couple of weeks and months.
And that's never the way to manage a portfolio, because
we need to be targeting the different piles of money
we have for specific goals, whether that's a goal thirty
years from now means you can be aggressive, or if
it's a goal in the next year going to buy
a house, or you got a kid going to college
or something like that each of those goals is going
(16:54):
to have a unique solution that's going to be best
for that situation, and a financial planner can help you
prioritize which ones are non negotiable, which ones can you
fudge on? If you can't afford to do them all
at once, how do you organize it all?
Speaker 3 (17:06):
Phebas is the way to go because that means have
a fiduciary obligation to you, and that's really important as well.
Brian James, always a pleasure having you on for the
Monday segment. Money Monday is what we call it. The
podcast will be availablet fifty five KRC dot com. We'll
talk again next Monday. Have a great week, Brian, have
a good weeks day warm thank you brother e twenty
six fifty five KRC DE Talk Station back to talk
about the similarities between the La Fire and the Lehina
(17:29):
Fire and Maui. Stephanie Perucci. She's the author of the
books we went over last time. She was on the
program Burn Back Better Lahaina, A Perfect Storm or a
Perfect Crime, the follow up book, Sound the Alarm, the
Maui disaster that sparked a global awakening. Stephanie Perucci be
up next, Don't Go Away fifty five KRC
Brian Thomas News
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