February 11, 2025 • 33 mins
What are the benefits and differences between exchange-traded funds and mutual funds? Mike in Colorado wants to know. How should Lauren in Florida approach the fixed-income portion of her investment portfolio? Would a balanced fund be good for asset allocation in the decumulation phase for DJ in Missouri? Plus, Karen wants to make a one-time roulette investment. Should she hire a broker or do it herself? Joe Anderson, CFP® and Big Al Clopine, CPA spitball on investing from the basics to the alternatives, today on Your Money, Your Wealth® podcast number 516. But first, something for YMYW’s legion of Old-Fashioned drinkers: find out how you can put your money where your mouth is with our special guest Jeremy Kasler, the founder and CEO of CaskX, making investing in whiskey and bourbon more accessible and transparent for investors.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Andi (00:00):
What are the benefits and differences between exchange traded funds and mutual funds?
(00:04):
Mike in Colorado wants to know. How should Lauren in Florida approach the fixed income portion of
her investment portfolio? Would a balanced fund be good for asset allocation in the decumulation
phase for DJ in Missouri? Plus, Karen wants to make a one-time roulette investment. Should she
hire a broker or do it herself? Joe and Big Al spitball on investing from the basics to the
(00:25):
alternatives, today on Your Money, Your Wealth® podcast number 516. We’ll kick things off with
something for YMYW’s legion of old fashioned drinkers: today we’ll find out how you can
put your money where your mouth with our special guest Jeremy Kasler, the founder and CEO of CaskX,
making investing in whiskey and bourbon more accessible and transparent for investors. I’m
(00:48):
Executive Producer Andi Last, with the hosts of Your Money, Your Wealth®, Joe Anderson,
CFP® and Big Al Clopine, CPA, and Jeremy, those watching on Spotify or YouTube can
see you’ve got a wide array of spirits on the shelves behind you. How does someone go
from buying a bottle of their drink of choice to investing in barrels? Walk us through the steps.
Jeremy (01:08):
Well, yeah, that's a great question. I mean, firstly, most of our investors are whiskey
lovers. So, of course, they love the idea of marrying their love of whiskey. And of course,
their love of hopefully making money. So, of course, we connect with interested parties,
(01:28):
we explain how the process works, the dynamics of investing into something that is tangible,
that's real. So, we're not selling bottles of whiskey, but we're selling casks of new make
whiskey, which, as the name suggests, has just been filled. They just pour the liquid in. And,
(01:49):
we include 8 years of storage and insurance and taxes within the price as well. So we sit down,
we talk to them about why it's a safe bet,
if you like. We're not so much focused on the whiskies that they prefer to drink. It's more,
we'll recommend the, the whiskies that we believe have good potential for growth.
Al (02:12):
Interesting.
Joe (02:14):
Yeah. I see a little bottle of Pappy Van Winkle behind you.
Does that have any opportunity for growth?
Jeremy (02:21):
Well, yeah, price has gone up tremendously in the bottle market as
well. I think a bottle sold for about $50,000 just recently, but that's indicative of the market as
a whole. And whiskey is one of the few asset classes that regardless of market conditions,
it will increase in value because as it's poured into the barrel day one,
(02:45):
it’s moonshine. It's very difficult. You, you know, if you dropped it on the floor,
it would, you know, it would make a hole in the floor. Whereas over time, every day,
it's improving flavor, it's getting better and better. So after 4, 6, 8 years, it's very
different than it was 8 years previously. So it's a very safe asset in that sense. And you know that
(03:09):
if market conditions stay the same or hopefully improve, then the asset will increase in value.
Al (03:14):
So Jeremy, how does this work for an investor? Do they buy a barrel? Do they buy
a fractional interest in a bunch of barrels? Or they buy a bunch of barrels? How does this work?
Jeremy (03:24):
Sure. So the investor would normally buy a minimum of 24 barrels. Like I say, we manage
the investment for that period of 8 years. So it's a very simple process. We of course,
give the advice just as if you were buying a stock or a share. We look at the people
behind the whiskey itself. Do we believe that they're good people, going to grow the business,
(03:51):
going to create a good product? Just like you buy a stock or share, you look at the CEO,
if you like, and then the, the investor, of course, makes that decision. 62Okay. I'd like
to invest into this particular, bourbon or whiskey. And we then do all the paperwork.
Everything goes into the investor's name. It's all very secure, very safe. And we
(04:14):
provide the opportunity for the investor to travel to Lumbee, Kentucky or Tennessee,
meet the people behind these amazing whiskies, stir the corn, kind of be part of the process.
Andi (04:28):
So what happens at the end of 8 years?
Jeremy (04:29):
End of 8 years, and it could be sooner, but we include 8 years to give ourselves a good
buffer. We look to exit the client, of course. Most bourbons that you'll see on the shelves,
they don't actually make the bourbon. Most bourbons actually, most brands buy the
barrels in and bottle them the next day because they don't want to have to wait 8 years to get
(04:53):
paid. So there's a huge market out there for age, good aged bourbon from good distilleries,
that there's very little bourbon that gets to past 4 or 6 years old. So when it gets to that age,
it's rare, it's desirable, it tastes great, and there's a huge market for it.
Joe (05:15):
I got a question. So let's say I'm Knob Creek or whatever bourbon company that is,
with the barrels that you guys are putting together,
so are they funding that up front or they're getting the investment? Explain to me how kind
of the genesis of how this stuff works or are the barrels made and then these big companies
(05:36):
buy it and then they put in their special ingredients at the end as they bottle it?
Jeremy (05:42):
Generally speaking. So for distillery, there's two types of the series. There's those
distilleries that make their own whiskey, have the resources to be able to age it for 6, 8,
10 years. Generally, they're the, you know, the billion dollar companies as opposed to the,
the less big operators. Then there's contract distillers who exclusively make barrels for
(06:06):
other people to put into bottles later down the line. So we deal with a mixture of the two.
It's a good way for the distillery to very quickly monetize their work. But when the barrels are sold
to the brands, they would generally make a blend. It's not a case of right with some say scotches,
(06:30):
where they'll take one barrel and bottle it and release it. So what they're looking for
is consistency over a long period of time from the same distillery. And that's where we also
come in because we place orders every quarter. So for a brand that needs consistency over a number
of years, they'll buy some from this quarter, some from that quarter, so on and so forth.
Joe (06:53):
Let's say I buy 100 barrels.
Jeremy (06:55):
Sure.
Joe (06:56):
So then it's going to age 8 years and
so each year I get a statement and who marks the price or how does that work?
Jeremy (07:05):
Yeah, I mean, the entry-level is that it's $2,400 a barrel initially,
and like I said, that includes all the storage insurance and taxes, so on and so forth.
Joe (07:15):
Can I just take the barrel and bring it home and drink it too?
Jeremy (07:17):
Yeah, well, I guess so.
Al (07:19):
You might want to wait a couple of years.
Jeremy (07:21):
I mean, you can make your own brand, you can bottle it yourself and take the bottles back
home with you should you wish, but you'd have to drink a lot of whiskey or have a lot of friends,
I would say. Yeah, so we give, of course, regular updates. We give regular valuations,
we're looking at the market as a broker. When's the best time to trade a client out? We would
(07:43):
suggest, you know, it's not a short term hold. It's not something you buy today,
and sell in 6 months or sell in a year. You know, you're not going to make money that
way. Certainly we say, look, hold for at least 4 years. If you can hold for 6 years or 8 years,
even better. And if you can do that, you'll no doubt see very good returns.
Al (08:05):
So, so that barrel that was maybe $2400,
6 to 8 years down the road, what might be the price or what have you seen in the past?
Jeremy (08:13):
Yeah, we've seen historically after around about 4 years that prices will double,
around there. And if we get into 8 years, you know,
you could say somewhere around about the $7,000 to $8,000 mark.
Al (08:26):
Right. Okay.
Joe (08:27):
So what is the liquidity of the investment? Let's say I buy the barrels and 6 months later,
I do need the cash. Is there a lockup period or how liquid is the investment?
Jeremy (08:37):
Yeah. So, so we are governed by the SEC. So it's considered a security. So the
rules are very strict. First of all, we can only deal with accredited investors
in the first place and you cannot sell the asset within one year. So you have
to hold for a minimum of 12 months. Now after that, of course, you've got
(08:59):
the right to sell it. It would be a mistake because you're, you know, you’re not going
to make any money after 12 months because nobody wants to drink one-year-old bourbon.
Al (09:12):
Joe would.
Joe (09:12):
I don't know if you've been to some of my relative’s-
Jeremy (09:15):
Well, maybe some people do, but not around here, they don't. And everybody knows that the
older it is, generally the better it is. So if we're looking at a longer hold in these
conditions, we're going to make more money. So it's, I think it's important that we also help
the distilleries to present their burps in a good way because all our clients hold it for 8
(09:37):
years. So when someone gets to drink, then they'll all be 8 years old and they'll all be delicious.
Al (09:43):
I've got a question, with any investment where there's rewards, there's also risks.
And it seems to me one of the risks would be lack of liquidity. So you've got to hold the
investment long-term certainly would be what the market would bear at the time of sale. But
are there other risks too, like does a barrel ever go bad or there are other kinds of risks?
Andi (10:03):
And what happens if the interest wanes in the whiskey market?
Jeremy (10:07):
Yeah, no, that's a valid point. And I, when we first opened, because we're a security,
I had to sit down and write 15 pages of risk factors. And I was, he was saying, no, we need
more. And I said, "I can't think of any more." So I'm pretty good on risk factors. The distillery
could blow up. I mean, you know, there's your obvious risk that, you know, it's a volatile
(10:29):
substance and, you know, it's great that it's tangible, but the tangible carries risks as well.
We are fully insured, although we’re not fully insured at the current value. So we’re insured
at replacement values because it would just be too difficult to do that. So if 4 years down the line,
(10:51):
the Surrey blows up, then we'll replace all the barrels and we'll start the 8 years again. In
terms of yeah, there can be leakages in barrels, so on and so forth. It's unusual, to be honest,
but it can happen. Again if we see or we find a leakage in any of the barrels, as an act of
(11:11):
good faith will replace them, not even through the insurance. The market itself, of course, although
it does appreciate as it ages, it is affected by market conditions. It's been a tremendous
bourbon boom over the last, you know, 5, 10 years or so. That doesn't look like stopping any time
(11:33):
soon. We're seeing more and more people drinking bourbon and enjoying it as their drink of choice.
Andi (11:38):
So that being the case, with all those bottles behind you,
if you were going to have a drink of choice, what would it be for you?
Jeremy (11:44):
I mean, I love Pappy Van Winkle.
Joe (11:47):
Oh, there it is.
Jeremy (11:52):
Yeah. I really enjoy Bardstown. So I guess it's because we're talking about it
all day and we're so enamored with the business itself that yeah, even the bourbon tastes better.
Joe (12:03):
Very good. Jeremy. What do people find you if they want to invest in some bourbon?
Jeremy (12:07):
Yeah, they can come to caskx.com.
Andi (12:10):
That's Jeremy Kasler from CaskX. Thank you so much for taking the time. We appreciate it.
Jeremy (12:16):
Lovely. Thank you for having me.
Watch Financial Fact vs. Fiction: The Truth May Shock You! On YMYW TV, (12:17):
undefined
Download the Retirement Readiness Guide
Andi (12:17):
Watch the full interview with Jeremy Kasler of CaskX exclusively
on our YouTube channel, find the link in the episode description,
and learn how you can invest in barrels of bourbon by visiting CaskX.com, that’s c-a-s-k-x-.com.
Growing your wealth for retirement begins with some basic assumptions, but many of
us don’t know what’s true or false. Don’t base your entire financial future on misconceptions
(12:41):
that are largely considered to be facts! Learn some truths about investing, Social Security,
Medicare, and health savings accounts this week on YMYW TV, as Joe and Big Al talk Financial Fact vs.
Fiction - and the truth may shock you! Click or tap the links in the episode description to watch
YMYW TV, to download the Retirement Readiness Guide for free, and to share the show and the
(13:03):
free resources with anyone you know who would enjoy some laughter with their financial education.
Joe (13:09):
What's your favorite kind of bourbon?
Al (13:11):
I'm not really a bourbon guy.
Joe (13:13):
You don't? Never? Not?
Al (13:15):
Well, I wouldn't, I, I mean, I used to drink Jack Daniels in college. I tried it, in my 40s.
Andi (13:21):
Didn't everybody?
Al (13:22):
Yes. I, tried it in my 40s. I go, how did I ever drink this? But, I will say I did go to a
brand new whiskey distillery in Chicago when I was there a couple years ago, and I really did kind of
enjoy it. But I couldn't tell you what I enjoyed. I just, no, that's good, that's not, whatever.
Joe (13:39):
You've never had like an old-fashioned?
Al (13:41):
No. Yeah. I'm more of a beer and wine guy.
Joe (13:44):
Okay.
Andi (13:45):
Joe, what's your favorite bourbon or whiskey?
Joe (13:47):
Pappy Van Winkle.
Al (13:49):
Oh, there you go. That's why you noticed.
Andi (13:52):
The really expensive one.
Joe (13:54):
I had, I drank some of that bottle that he had behind him for Christmas.
Al (13:59):
Oh, okay.
Joe (14:00):
Yes, it's very good. Yeah. It's very smooth.
Al (14:06):
Yeah. Okay.
Andi (14:06):
Can you tell the difference between that and something else?
Joe (14:09):
What's that?
Andi (14:10):
Can you tell the difference between the
flavor of the Pappy Van Winkle compared to some of the others?
Joe (14:15):
Oh, yeah.
Andi (14:16):
Can you be like, "Oh yes, this is definitely Pappy."
Joe (14:18):
Well, no, I could never recognize it like a test.
Al (14:21):
A blind test.
Joe (14:22):
I would be like, wow, this is pretty smooth where this is pretty smoky or this is pretty,
you know, this is burning my throat. But no, I'm not, I’ve had it twice in my life.
Al (14:35):
Oh, okay.
Joe (14:36):
But it was good.
Al (14:36):
How about scotch? You like scotch?
Joe (14:38):
Nope. No, not a big scotch guy.
Al (14:40):
Really? Cause it's about the same.
Joe (14:41):
No, I guess I would drink it.
Al (14:44):
It was put in front of you? Yeah, you know,
you're at a dinner or something like that, and they didn't have any Coors Light.
I went to a scotch tasting in Edinburgh when I was there,
in Scotland, and I actually didn't care for that either.
Joe (14:57):
Yeah, I would not go to a scotch tasting or a-
Al (15:00):
You could taste the different, there were different tastes from different regions,
so I did pick up on that, but it's not something I would just do normally.
Joe (15:08):
I don't taste, I drink.
Al (15:12):
You don't care about taste, do you? Got it, okay.
Joe (15:17):
We got Mike from Colorado, goes, “Hello Joe. All right. Big Al,
Andi. I've been a mutual fund investor for quite a while. Recently, I'm reading that
ETFs may be better than mutual funds as they produce less capital gains and have other tax
benefits. Vanguard and other companies have both ETFs and mutual funds that seem to have
identical goals and holdings. Could you do a deep dive into the benefits and differences
(15:42):
between ETFs and mutual funds?” A deep dive. Okay, how deep you want us to go here, Mike?
Andi (15:47):
Whole show.
Al (15:48):
That's like pretty deep.
Joe (15:51):
I'm gonna probably give 3 differences.
Al (15:53):
Okay. Go for it.
Joe (15:56):
All right. So mutual funds, they're
sold at net asset value versus an ETF that is sold like a stock.
Al (16:06):
Like a security.
Joe (16:08):
You wanna buy a stock right in the market, right? You buy a mutual fund. It’s you purchase
it at the close of business, right? The tax efficiencies of it. Yeah, I agree with that. ETFs,
it's again, but I think index fund, so if I'm looking at an ETF, it's basically you're buying
an index fund within that exchange-traded fund. If I have an actively managed fund,
(16:32):
those aren't necessarily tax efficient. Because there's buying and selling as the mutual fund
manager is changing the allocation within the stocks or bonds, whatever that they're doing,
whatever strategy that they have inside the fund, where an exchange-traded fund
is going to buy all of the stocks within that exchange. And they're going to hold onto those
stocks until there's a reconstitution if a stock comes out or into the overall index.
(16:59):
So that's why they're a little bit more tax-efficient. But if you buy an S&P 500
mutual fund versus an S&P 500 exchange-traded fund, really the major differences is that
you could do some other things on the ETF like, you know, you could put some,
you know, hedging on it or something like that because it trades like a security, right?
Al (17:21):
Right, and I guess trading as a security, what that means is it has the price changes over the
course of the day. Where a mutual fund the price stays fixed until the end of the day. So that's
the price you get whatever it is at the end of the day. I think maybe a more important distinction
is a passive fund versus an active fund. And I think most mutual funds used to be active,
(17:42):
meaning a manager, investment managers trying to time the market and beat the market by buying
and selling. And that causes a lot of capital gains that show up in on your 1099 at year end,
because you are responsible for the gains and losses of that portfolio. And a passive fund
doesn't do that. It just buys and holds in general. Now, a lot of mutual funds
(18:04):
are now passive, particularly the index funds, and some ETFs are now active. So,
I think that's a more important distinction is a passive fund that just holds the market
is going to be much more tax efficient and cheaper, by the way, because you don't have
managers trying to figure out and time the market. So I would think about it that way.
If you have an identical index fund versus the ETF, to me, there's not a lot of difference. I
(18:27):
would probably favor the ETF, but I can't say that there's much difference in my opinion.
Joe (18:32):
Totally agree.
What do we got? We got Lauren from Florida. “Would love if you could do
a show on how you approach the fixed income portion of the portfolio.” Oh,
we got the theme here going, Andi? Is that what we’re doing?
Andi (18:46):
It's investing, yeah. And I want to know how much of your portfolio should be in alternative
assets, like Pappy. Joe (18:50):
Okay. “I'm trying to help my mother who just retired, but the fixed
income portion of her investments. And there's so many options. It's not clear what the best
path is. Individual bonds, bond funds, TIPS, Treasury, CDs, muni bonds, corporate bonds,
Jenny Mays, short term, intermediate term, bop, bubblegum shrimp, Okay. Gumbo shrimp-
Al (19:19):
What do you think?
Joe (19:23):
Yes, there are a lot of options, and they're all good options. What I would do,
in most cases, go into a low-cost bond fund.
Al (19:35):
Yeah, I agree with that. So-or a muni bond if taxes are a problem.
Joe (19:40):
Yes. You go into individual bonds, it's a lot of work, and there's a lot of expertise,
I think, that you need to, build an individual bond ladder. If
you're looking to ladder bonds and get income from the coupons and, you know,
TIPS are fine, but you can buy TIPS through a mutual fund or an ETF.
Al (19:59):
Yeah, TIPS can be more risky than you think though. I mean,
true. Yeah, they go up and down more.
Joe (20:04):
Yeah, it's a treasury, but it's, you know, protected with inflation. CD ladders. Right,
but that's a lot of work and it's all ordinary income. So is it in a retirement account? Is it
not in a retirement account? Corporate bonds are great. You get a little bit higher yield but you
have more risk when you put money to corporate bonds. If you think about a bond, I guess maybe,
(20:24):
Lauren, what a bond is, is a loan. So you're lending your money, let's say, to a corporation.
You're going to give them cash and then return for that money that they're using to build better
infrastructure or higher, you know, better people on their staff or whatever the case they need the
money for, they're going to give you an interest rate. They're going to pay you 3%, 5%, 8%,
(20:46):
whatever that is. And then at the end of the term of the loan, let's say it's 3 or 5 or 10 years,
you get your money back. And then so you can take your money and invest in another corporation,
or you can invest in a municipality. Or you can invest in the government treasury. So,
or you can give it to a bank. And they can lend it out and they're going to give you a
fixed rate such as a CD. So just understanding maybe what the investment is can maybe help
(21:11):
narrow in. What is the appropriate strategy or product, but I think in most cases just buy
mutual fund or ETF that's yeah, maybe short term in nature just to stay away from risk.
Al (21:25):
Yeah, I 100% agree. I like the bond funds. I like muni bond funds if you are in a high
tax bracket. And I don't mind CDs. I don't know that you need to go to a huge CD ladder
strategy. I mean, just having a CD or two with different maturities, now that interest rates
are decent for CDs, but yeah, most people you just use bond funds. It's much simpler.
Andi (21:47):
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(22:08):
income, equities to commodities. Why does a basic 60/40 portfolio generally outperform the average
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(22:30):
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Joe (22:54):
All right, let's go to DJ from Missouri. “Hey, Andi, Big Al, Joe. I know that you
hear it a lot, but I love your podcast. Don't ever retire, any of you.” Oh, Big Al.
Al (23:08):
Yeah, I have to stay.
Joe (23:09):
Yeah, you're knocking on retirement door.
Al (23:11):
According to DJ.
Joe (23:13):
“I listen to you whenever I am when the new
episode drops. What? I listen to you whenever I am when the episode drops.
Al (23:21):
Wherever.
Joe (23:22):
Wherever I am. Oh, just when it drops,
Andi (23:26):
She stops and she listens.
Al (23:28):
I’m taking a shower. I'm turning it on.
Joe (23:30):
Turning it on. All right. “I don't drive anything fancy and I rarely drink,
but I share Big Al's love for all things outdoors.” Al: Ooh.
Oh, all things outdoors.
Al (23:39):
Okay. That's that is me.
Joe (23:40):
“Here is my question. Can a balanced fund be a solid way to asset allocate for my traditional
IRA during the decumulation phase? Some say that in the decumulation phase, the 60/40 balanced
fund for traditional IRA, not talking brokerage account, isn't the best choice since one should
be able to control what ETFs and mutual funds they sell. In other words, one might choose to sell
(24:05):
only a portion of the underlying funds and not some from all the funds, if the stocks are down,
for example. But the idea of having a fixed allocation that balances the risk in return
of stocks and bonds suited to one's overall financial plan in risk tolerance with regular
rebalancing seems like a lot of sense to me.” All right. “When people sell off only a portion
(24:30):
of their ETFs, mutual funds, they're likely to get their asset allocation out of whack while waiting
for the market to rebound. That changes the risk level, right? If you do suggest that it is better
to have individual funds in each asset class in a traditional IRA, how long do you let your asset
(24:51):
allocation stay out of whack? Let's say greater than 5% off, for example. If you are selling
individual ETFs, mutual funds, or in the long run, or is it just fine maintaining the 60/40 globally
diversified ETF in one's traditional IRA? Thanks for all your thoughts, DJ.” Interesting question.
(25:11):
So DJ's talking about maybe alright, there’s maybe a fund of funds or target date fund or-
Al (25:18):
Yeah, or just a balanced fund, a traditional balanced fund that has stocks and bonds.
Joe (25:22):
It’s like all right, the portfolio managers managing the stock then-
Al (25:26):
- take care of it for me.
Joe (25:27):
Yeah,
do that or does it make sense to say? I'm going to buy 60% of a stock fund and 40% of a bond fund.
Al (25:37):
Yeah, that way I can decide which to sell at the appropriate time.
Joe (25:40):
I like the latter.
Al (25:41):
Me too. A little more work though.
Joe (25:43):
It is a lot more work.
Al (25:44):
But you just have to know what your balances are. But I think a way to think about this is
when you have, say, two or 3 funds, it's just when you need cash, you sell the one that's too high.
And you, always, you know, stay in balance, or maybe if they're exactly the right allocation,
you sell 60% of stocks and 40% of bonds, if that's your allocation. Very simple. It's
(26:06):
just one extra step. But see, that way, if the stock market has a big correction,
you don't want to be selling your stocks, you sell out of your bonds. If you're in a balanced fund,
you're going to naturally be selling some stocks because they're included in that fund, right?
Joe (26:20):
Well, the markets are fine. It's a totally great strategy. it's great.
They're rebalancing. All right. It's going to get back into whack, using your words,
but when it gets challenging DJs that, all right, now you're retired and you have this balanced
fund and you're taking a certain percentage out each year. And then the market tanks,
you drop 20%, 30% that year, and you still need your income from the overall fund. It
(26:44):
gets very difficult to get caught back up because they're basically selling the
share. And it could be pro-rata depending on what their- the distribution strategy
is of the fund. But most likely you're selling stocks and that's the last thing you want to be
selling is the stocks. You would much rather sell bonds or cash or another asset class.
Al (27:01):
Yeah. And I think you can do this with two mutual funds or two index funds, maybe 3, if you
want to get some international. So maybe think about it as like a total US stock market fund,
maybe a total US bond fund. And if you want to add a little international, have some of
it be an international, total international fund, and just whatever gets out of balance
is the, or the, which everyone has too much in it, that's the one you sell to take care of your cash
(27:26):
flow needs for that month or that quarter or that year, however often you take your distributions.
Joe (27:32):
All right, let's go. “Hello, Joe and Al. I've been telling anyone who'll
listen to watch TV show or listen to all your podcasts since 2019.”
Al (27:42):
Wow.
Joe (27:43):
I love a trooper there.
Al (27:44):
Yeah, I'll say.
Joe (27:45):
“I received great advice from you regarding real estate and estate
planning. You even picked one of my questions to air on your podcast. I
believe you both had fun bantering back and forth with each other about my son-in-law's
situation. I enjoyed it at any rate.” What, we'd make fun of her son-in-law, you think?
Andi (28:03):
You? you wouldn't do that.
Joe (28:06):
Different show.
Al (28:08):
Yeah.
Joe (28:09):
It wasn't us. But she's got another question here. Okay. “I'm retired and
have some extra funds I'm willing to gamble with.” Okay. Gamble. “In the 40s-“ 1940s?
Al (28:25):
Yeah.
Andi (28:26):
Yes. Al
Joe (28:28):
“-my aunt bought AT&T stock, and fortunately my uncle inherited it.” Okay. “He sold it in the
late 90s for a lot. I'm very interested in companies who supply the factory data centers
being built all over the U.S. for AI. When I decide on which stock to buy, I just want to
let it ride for about 10 years.” Alright? “Here's my question. Since I'm ignorant in stock buying,
(28:54):
should I hire a broker for my one-time roulette purchase or just open a brokerage
account myself online with a well-known company? Alright, sincerely, TYIA.” What does that mean?
Andi (29:09):
Thank you in advance. Joe
Al (29:10):
Yeah. Very good.
Joe (29:12):
All right. Karen. Hi Karen.
Al (29:14):
Karen. Certainly Karen.
Joe (29:15):
All right. No, just go to Discount Brokerage and buy it online.
Al (29:19):
Yeah, that's easy.
Joe (29:20):
You go to Schwab, Fidelity, Vanguard, wherever.
Al (29:23):
Yeah. Pick any one of those. Yep. I totally agree with that. And as far as the strategy-
Joe (29:28):
A broker is not going to take your call.
Al (29:30):
No, I got $10,000.
Joe (29:33):
Yeah. I want to, I mean, even if it's $100,000, I want to buy a single stock.
Al (29:38):
Yeah. They're not going to make any money.
Joe (29:39):
Yeah. They'll be like, okay, great.
Al (29:41):
Here you go. Here's the number to Schwab.
Joe (29:44):
Here's a 1-800 number.
Al (29:49):
As far as the strategy. You know what? AT&T was a really good one. Apple was a
really good one. There's been numerous ones. You just have to pick the right one. See,
that's the hard part here. You have to pick the right one.
Joe (30:01):
Well, at least she's calling it right. She's saying it's gambling.
Al (30:04):
It's gambling is, and that's exactly what it is. Now, when it comes to AI,
I agree. This is an industry that is probably has a lot of potential. So I
can see this being a good place to be. But will you pick the right AI
company? That's hard. That's tough. Right? So maybe you do, maybe you don't, you know,
as single stock has the same expected return as the market. It's just a single stock and have a
(30:28):
much wider range of returns could be great, or you could lose all your money. So just be
aware of that. When you do that, you use the word gambling and I agree, that's kind of what it is.
Joe (30:39):
Oh, Aaron, you killed it. You push that the camera button 3 times today.
Sorry to keep you up from your nap. Andi, wonderful job. Thanks for getting Mr.-
Andi (30:51):
Kasler from Cast X, Jeremy Kasler.
Al (30:55):
Talking whiskey, talking bourbon. You're going to invest in bourbon?
Joe (30:59):
No.
Al (30:59):
You might drink it.
Joe (31:00):
Yeah. That's the problem.
Al (31:01):
That's the problem.
Joe (31:01):
Yeah. You would, yeah, you might need a lot of friends. I was like, I don't know.
Al (31:05):
I think you got, just family right there.
Joe (31:08):
Yeah. My mother, Ruthie, she's back in town. She's in town for like a month and a half. All
right. Just probably need to get a barrel for her. All right. Very good. Thank you
all for listening. Keep the questions coming in. Appreciate the listenership. Without all of you,
we would not have a, not have a phone, I was going to sa- but not have a show.
Al (31:29):
Not have a show.
Andi (31:30):
The show wouldn't be a show without the listeners and the viewers.
Joe (31:33):
Yeah, well, I'm sure they listen to it on their phone sometimes.
Al (31:36):
Sometimes.
Joe (31:36):
Yeah, except for that one couple that was listening to it at the dinner table.
Al (31:41):
It happens.
Joe (31:43):
All right, we'll see you next week. Show’s called Your Money, Your Wealth®.
Andi (31:46):
Next week on YMYW, Joe and Big Al spitball for Nancy in Washington state,
Brian in Naperville, Illinois, Joy and her brother, the Skipper in California,
and they take a voice message from Mike in Colorado. Click or tap Ask Joe and
Big Al in the episode description to get your own retirement spitball analysis.
But to really make the most of your money and your wealth in retirement,
you definitely need more than a spitball (32:06):
schedule a financial assessment with the experienced
professionals on Joe and Big Al’s team at Pure. It’s free, and they’ll go deep to help you craft
a financial plan especially customized to meet your tolerance for risk, your needs,
and your goals in retirement. Click or tap the Free Assessment link in the episode description,
or call 888-994-6257 to book yours. You can meet online, or in person - Pure Financial
(32:33):
Advisors has 10 locations around the country now, with more on the way.
Your Money, Your Wealth is presented by Pure Financial Advisors, a registered
investment advisor. This show does not intend to provide personalized
investment advice through this podcast and does not represent that the securities or
services discussed are suitable for any investor. As rules and regulations change,
podcast content may become outdated. Investors are advised not to rely on any information contained
(32:56):
in the podcast in the process of making a full and informed investment decision.
What are the benefits and differences between exchange traded funds and mutual funds?
(00:04):
Mike in Colorado wants to know. How should Lauren in Florida approach the fixed income portion of
her investment portfolio? Would a balanced fund be good for asset allocation in the decumulation
phase for DJ in Missouri? Plus, Karen wants to make a one-time roulette investment. Should she
hire a broker or do it herself? Joe and Big Al spitball on investing from the basics to the
(00:25):
alternatives, today on Your Money, Your Wealth® podcast number 516. We’ll kick things off with
something for YMYW’s legion of old fashioned drinkers: today we’ll find out how you can
put your money where your mouth with our special guest Jeremy Kasler, the founder and CEO of CaskX,
making investing in whiskey and bourbon more accessible and transparent for investors. I’m
(00:48):
Executive Producer Andi Last, with the hosts of Your Money, Your Wealth®, Joe Anderson,
CFP® and Big Al Clopine, CPA, and Jeremy, those watching on Spotify or YouTube can
see you’ve got a wide array of spirits on the shelves behind you. How does someone go
from buying a bottle of their drink of choice to investing in barrels? Walk us through the steps.
Jeremy (01:08):
Well, yeah, that's a great question. I mean, firstly, most of our investors are whiskey
lovers. So, of course, they love the idea of marrying their love of whiskey. And of course,
their love of hopefully making money. So, of course, we connect with interested parties,
(01:28):
we explain how the process works, the dynamics of investing into something that is tangible,
that's real. So, we're not selling bottles of whiskey, but we're selling casks of new make
whiskey, which, as the name suggests, has just been filled. They just pour the liquid in. And,
(01:49):
we include 8 years of storage and insurance and taxes within the price as well. So we sit down,
we talk to them about why it's a safe bet,
if you like. We're not so much focused on the whiskies that they prefer to drink. It's more,
we'll recommend the, the whiskies that we believe have good potential for growth.
Al (02:12):
Interesting.
Joe (02:14):
Yeah. I see a little bottle of Pappy Van Winkle behind you.
Does that have any opportunity for growth?
Jeremy (02:21):
Well, yeah, price has gone up tremendously in the bottle market as
well. I think a bottle sold for about $50,000 just recently, but that's indicative of the market as
a whole. And whiskey is one of the few asset classes that regardless of market conditions,
it will increase in value because as it's poured into the barrel day one,
(02:45):
it’s moonshine. It's very difficult. You, you know, if you dropped it on the floor,
it would, you know, it would make a hole in the floor. Whereas over time, every day,
it's improving flavor, it's getting better and better. So after 4, 6, 8 years, it's very
different than it was 8 years previously. So it's a very safe asset in that sense. And you know that
(03:09):
if market conditions stay the same or hopefully improve, then the asset will increase in value.
Al (03:14):
So Jeremy, how does this work for an investor? Do they buy a barrel? Do they buy
a fractional interest in a bunch of barrels? Or they buy a bunch of barrels? How does this work?
Jeremy (03:24):
Sure. So the investor would normally buy a minimum of 24 barrels. Like I say, we manage
the investment for that period of 8 years. So it's a very simple process. We of course,
give the advice just as if you were buying a stock or a share. We look at the people
behind the whiskey itself. Do we believe that they're good people, going to grow the business,
(03:51):
going to create a good product? Just like you buy a stock or share, you look at the CEO,
if you like, and then the, the investor, of course, makes that decision. 62Okay. I'd like
to invest into this particular, bourbon or whiskey. And we then do all the paperwork.
Everything goes into the investor's name. It's all very secure, very safe. And we
(04:14):
provide the opportunity for the investor to travel to Lumbee, Kentucky or Tennessee,
meet the people behind these amazing whiskies, stir the corn, kind of be part of the process.
Andi (04:28):
So what happens at the end of 8 years?
Jeremy (04:29):
End of 8 years, and it could be sooner, but we include 8 years to give ourselves a good
buffer. We look to exit the client, of course. Most bourbons that you'll see on the shelves,
they don't actually make the bourbon. Most bourbons actually, most brands buy the
barrels in and bottle them the next day because they don't want to have to wait 8 years to get
(04:53):
paid. So there's a huge market out there for age, good aged bourbon from good distilleries,
that there's very little bourbon that gets to past 4 or 6 years old. So when it gets to that age,
it's rare, it's desirable, it tastes great, and there's a huge market for it.
Joe (05:15):
I got a question. So let's say I'm Knob Creek or whatever bourbon company that is,
with the barrels that you guys are putting together,
so are they funding that up front or they're getting the investment? Explain to me how kind
of the genesis of how this stuff works or are the barrels made and then these big companies
(05:36):
buy it and then they put in their special ingredients at the end as they bottle it?
Jeremy (05:42):
Generally speaking. So for distillery, there's two types of the series. There's those
distilleries that make their own whiskey, have the resources to be able to age it for 6, 8,
10 years. Generally, they're the, you know, the billion dollar companies as opposed to the,
the less big operators. Then there's contract distillers who exclusively make barrels for
(06:06):
other people to put into bottles later down the line. So we deal with a mixture of the two.
It's a good way for the distillery to very quickly monetize their work. But when the barrels are sold
to the brands, they would generally make a blend. It's not a case of right with some say scotches,
(06:30):
where they'll take one barrel and bottle it and release it. So what they're looking for
is consistency over a long period of time from the same distillery. And that's where we also
come in because we place orders every quarter. So for a brand that needs consistency over a number
of years, they'll buy some from this quarter, some from that quarter, so on and so forth.
Joe (06:53):
Let's say I buy 100 barrels.
Jeremy (06:55):
Sure.
Joe (06:56):
So then it's going to age 8 years and
so each year I get a statement and who marks the price or how does that work?
Jeremy (07:05):
Yeah, I mean, the entry-level is that it's $2,400 a barrel initially,
and like I said, that includes all the storage insurance and taxes, so on and so forth.
Joe (07:15):
Can I just take the barrel and bring it home and drink it too?
Jeremy (07:17):
Yeah, well, I guess so.
Al (07:19):
You might want to wait a couple of years.
Jeremy (07:21):
I mean, you can make your own brand, you can bottle it yourself and take the bottles back
home with you should you wish, but you'd have to drink a lot of whiskey or have a lot of friends,
I would say. Yeah, so we give, of course, regular updates. We give regular valuations,
we're looking at the market as a broker. When's the best time to trade a client out? We would
(07:43):
suggest, you know, it's not a short term hold. It's not something you buy today,
and sell in 6 months or sell in a year. You know, you're not going to make money that
way. Certainly we say, look, hold for at least 4 years. If you can hold for 6 years or 8 years,
even better. And if you can do that, you'll no doubt see very good returns.
Al (08:05):
So, so that barrel that was maybe $2400,
6 to 8 years down the road, what might be the price or what have you seen in the past?
Jeremy (08:13):
Yeah, we've seen historically after around about 4 years that prices will double,
around there. And if we get into 8 years, you know,
you could say somewhere around about the $7,000 to $8,000 mark.
Al (08:26):
Right. Okay.
Joe (08:27):
So what is the liquidity of the investment? Let's say I buy the barrels and 6 months later,
I do need the cash. Is there a lockup period or how liquid is the investment?
Jeremy (08:37):
Yeah. So, so we are governed by the SEC. So it's considered a security. So the
rules are very strict. First of all, we can only deal with accredited investors
in the first place and you cannot sell the asset within one year. So you have
to hold for a minimum of 12 months. Now after that, of course, you've got
(08:59):
the right to sell it. It would be a mistake because you're, you know, you’re not going
to make any money after 12 months because nobody wants to drink one-year-old bourbon.
Al (09:12):
Joe would.
Joe (09:12):
I don't know if you've been to some of my relative’s-
Jeremy (09:15):
Well, maybe some people do, but not around here, they don't. And everybody knows that the
older it is, generally the better it is. So if we're looking at a longer hold in these
conditions, we're going to make more money. So it's, I think it's important that we also help
the distilleries to present their burps in a good way because all our clients hold it for 8
(09:37):
years. So when someone gets to drink, then they'll all be 8 years old and they'll all be delicious.
Al (09:43):
I've got a question, with any investment where there's rewards, there's also risks.
And it seems to me one of the risks would be lack of liquidity. So you've got to hold the
investment long-term certainly would be what the market would bear at the time of sale. But
are there other risks too, like does a barrel ever go bad or there are other kinds of risks?
Andi (10:03):
And what happens if the interest wanes in the whiskey market?
Jeremy (10:07):
Yeah, no, that's a valid point. And I, when we first opened, because we're a security,
I had to sit down and write 15 pages of risk factors. And I was, he was saying, no, we need
more. And I said, "I can't think of any more." So I'm pretty good on risk factors. The distillery
could blow up. I mean, you know, there's your obvious risk that, you know, it's a volatile
(10:29):
substance and, you know, it's great that it's tangible, but the tangible carries risks as well.
We are fully insured, although we’re not fully insured at the current value. So we’re insured
at replacement values because it would just be too difficult to do that. So if 4 years down the line,
(10:51):
the Surrey blows up, then we'll replace all the barrels and we'll start the 8 years again. In
terms of yeah, there can be leakages in barrels, so on and so forth. It's unusual, to be honest,
but it can happen. Again if we see or we find a leakage in any of the barrels, as an act of
(11:11):
good faith will replace them, not even through the insurance. The market itself, of course, although
it does appreciate as it ages, it is affected by market conditions. It's been a tremendous
bourbon boom over the last, you know, 5, 10 years or so. That doesn't look like stopping any time
(11:33):
soon. We're seeing more and more people drinking bourbon and enjoying it as their drink of choice.
Andi (11:38):
So that being the case, with all those bottles behind you,
if you were going to have a drink of choice, what would it be for you?
Jeremy (11:44):
I mean, I love Pappy Van Winkle.
Joe (11:47):
Oh, there it is.
Jeremy (11:52):
Yeah. I really enjoy Bardstown. So I guess it's because we're talking about it
all day and we're so enamored with the business itself that yeah, even the bourbon tastes better.
Joe (12:03):
Very good. Jeremy. What do people find you if they want to invest in some bourbon?
Jeremy (12:07):
Yeah, they can come to caskx.com.
Andi (12:10):
That's Jeremy Kasler from CaskX. Thank you so much for taking the time. We appreciate it.
Jeremy (12:16):
Lovely. Thank you for having me.
Watch Financial Fact vs. Fiction: The Truth May Shock You! On YMYW TV, (12:17):
undefined
Download the Retirement Readiness Guide
Andi (12:17):
Watch the full interview with Jeremy Kasler of CaskX exclusively
on our YouTube channel, find the link in the episode description,
and learn how you can invest in barrels of bourbon by visiting CaskX.com, that’s c-a-s-k-x-.com.
Growing your wealth for retirement begins with some basic assumptions, but many of
us don’t know what’s true or false. Don’t base your entire financial future on misconceptions
(12:41):
that are largely considered to be facts! Learn some truths about investing, Social Security,
Medicare, and health savings accounts this week on YMYW TV, as Joe and Big Al talk Financial Fact vs.
Fiction - and the truth may shock you! Click or tap the links in the episode description to watch
YMYW TV, to download the Retirement Readiness Guide for free, and to share the show and the
(13:03):
free resources with anyone you know who would enjoy some laughter with their financial education.
Joe (13:09):
What's your favorite kind of bourbon?
Al (13:11):
I'm not really a bourbon guy.
Joe (13:13):
You don't? Never? Not?
Al (13:15):
Well, I wouldn't, I, I mean, I used to drink Jack Daniels in college. I tried it, in my 40s.
Andi (13:21):
Didn't everybody?
Al (13:22):
Yes. I, tried it in my 40s. I go, how did I ever drink this? But, I will say I did go to a
brand new whiskey distillery in Chicago when I was there a couple years ago, and I really did kind of
enjoy it. But I couldn't tell you what I enjoyed. I just, no, that's good, that's not, whatever.
Joe (13:39):
You've never had like an old-fashioned?
Al (13:41):
No. Yeah. I'm more of a beer and wine guy.
Joe (13:44):
Okay.
Andi (13:45):
Joe, what's your favorite bourbon or whiskey?
Joe (13:47):
Pappy Van Winkle.
Al (13:49):
Oh, there you go. That's why you noticed.
Andi (13:52):
The really expensive one.
Joe (13:54):
I had, I drank some of that bottle that he had behind him for Christmas.
Al (13:59):
Oh, okay.
Joe (14:00):
Yes, it's very good. Yeah. It's very smooth.
Al (14:06):
Yeah. Okay.
Andi (14:06):
Can you tell the difference between that and something else?
Joe (14:09):
What's that?
Andi (14:10):
Can you tell the difference between the
flavor of the Pappy Van Winkle compared to some of the others?
Joe (14:15):
Oh, yeah.
Andi (14:16):
Can you be like, "Oh yes, this is definitely Pappy."
Joe (14:18):
Well, no, I could never recognize it like a test.
Al (14:21):
A blind test.
Joe (14:22):
I would be like, wow, this is pretty smooth where this is pretty smoky or this is pretty,
you know, this is burning my throat. But no, I'm not, I’ve had it twice in my life.
Al (14:35):
Oh, okay.
Joe (14:36):
But it was good.
Al (14:36):
How about scotch? You like scotch?
Joe (14:38):
Nope. No, not a big scotch guy.
Al (14:40):
Really? Cause it's about the same.
Joe (14:41):
No, I guess I would drink it.
Al (14:44):
It was put in front of you? Yeah, you know,
you're at a dinner or something like that, and they didn't have any Coors Light.
I went to a scotch tasting in Edinburgh when I was there,
in Scotland, and I actually didn't care for that either.
Joe (14:57):
Yeah, I would not go to a scotch tasting or a-
Al (15:00):
You could taste the different, there were different tastes from different regions,
so I did pick up on that, but it's not something I would just do normally.
Joe (15:08):
I don't taste, I drink.
Al (15:12):
You don't care about taste, do you? Got it, okay.
Joe (15:17):
We got Mike from Colorado, goes, “Hello Joe. All right. Big Al,
Andi. I've been a mutual fund investor for quite a while. Recently, I'm reading that
ETFs may be better than mutual funds as they produce less capital gains and have other tax
benefits. Vanguard and other companies have both ETFs and mutual funds that seem to have
identical goals and holdings. Could you do a deep dive into the benefits and differences
(15:42):
between ETFs and mutual funds?” A deep dive. Okay, how deep you want us to go here, Mike?
Andi (15:47):
Whole show.
Al (15:48):
That's like pretty deep.
Joe (15:51):
I'm gonna probably give 3 differences.
Al (15:53):
Okay. Go for it.
Joe (15:56):
All right. So mutual funds, they're
sold at net asset value versus an ETF that is sold like a stock.
Al (16:06):
Like a security.
Joe (16:08):
You wanna buy a stock right in the market, right? You buy a mutual fund. It’s you purchase
it at the close of business, right? The tax efficiencies of it. Yeah, I agree with that. ETFs,
it's again, but I think index fund, so if I'm looking at an ETF, it's basically you're buying
an index fund within that exchange-traded fund. If I have an actively managed fund,
(16:32):
those aren't necessarily tax efficient. Because there's buying and selling as the mutual fund
manager is changing the allocation within the stocks or bonds, whatever that they're doing,
whatever strategy that they have inside the fund, where an exchange-traded fund
is going to buy all of the stocks within that exchange. And they're going to hold onto those
stocks until there's a reconstitution if a stock comes out or into the overall index.
(16:59):
So that's why they're a little bit more tax-efficient. But if you buy an S&P 500
mutual fund versus an S&P 500 exchange-traded fund, really the major differences is that
you could do some other things on the ETF like, you know, you could put some,
you know, hedging on it or something like that because it trades like a security, right?
Al (17:21):
Right, and I guess trading as a security, what that means is it has the price changes over the
course of the day. Where a mutual fund the price stays fixed until the end of the day. So that's
the price you get whatever it is at the end of the day. I think maybe a more important distinction
is a passive fund versus an active fund. And I think most mutual funds used to be active,
(17:42):
meaning a manager, investment managers trying to time the market and beat the market by buying
and selling. And that causes a lot of capital gains that show up in on your 1099 at year end,
because you are responsible for the gains and losses of that portfolio. And a passive fund
doesn't do that. It just buys and holds in general. Now, a lot of mutual funds
(18:04):
are now passive, particularly the index funds, and some ETFs are now active. So,
I think that's a more important distinction is a passive fund that just holds the market
is going to be much more tax efficient and cheaper, by the way, because you don't have
managers trying to figure out and time the market. So I would think about it that way.
If you have an identical index fund versus the ETF, to me, there's not a lot of difference. I
(18:27):
would probably favor the ETF, but I can't say that there's much difference in my opinion.
Joe (18:32):
Totally agree.
What do we got? We got Lauren from Florida. “Would love if you could do
a show on how you approach the fixed income portion of the portfolio.” Oh,
we got the theme here going, Andi? Is that what we’re doing?
Andi (18:46):
It's investing, yeah. And I want to know how much of your portfolio should be in alternative
assets, like Pappy. Joe (18:50):
Okay. “I'm trying to help my mother who just retired, but the fixed
income portion of her investments. And there's so many options. It's not clear what the best
path is. Individual bonds, bond funds, TIPS, Treasury, CDs, muni bonds, corporate bonds,
Jenny Mays, short term, intermediate term, bop, bubblegum shrimp, Okay. Gumbo shrimp-
Al (19:19):
What do you think?
Joe (19:23):
Yes, there are a lot of options, and they're all good options. What I would do,
in most cases, go into a low-cost bond fund.
Al (19:35):
Yeah, I agree with that. So-or a muni bond if taxes are a problem.
Joe (19:40):
Yes. You go into individual bonds, it's a lot of work, and there's a lot of expertise,
I think, that you need to, build an individual bond ladder. If
you're looking to ladder bonds and get income from the coupons and, you know,
TIPS are fine, but you can buy TIPS through a mutual fund or an ETF.
Al (19:59):
Yeah, TIPS can be more risky than you think though. I mean,
true. Yeah, they go up and down more.
Joe (20:04):
Yeah, it's a treasury, but it's, you know, protected with inflation. CD ladders. Right,
but that's a lot of work and it's all ordinary income. So is it in a retirement account? Is it
not in a retirement account? Corporate bonds are great. You get a little bit higher yield but you
have more risk when you put money to corporate bonds. If you think about a bond, I guess maybe,
(20:24):
Lauren, what a bond is, is a loan. So you're lending your money, let's say, to a corporation.
You're going to give them cash and then return for that money that they're using to build better
infrastructure or higher, you know, better people on their staff or whatever the case they need the
money for, they're going to give you an interest rate. They're going to pay you 3%, 5%, 8%,
(20:46):
whatever that is. And then at the end of the term of the loan, let's say it's 3 or 5 or 10 years,
you get your money back. And then so you can take your money and invest in another corporation,
or you can invest in a municipality. Or you can invest in the government treasury. So,
or you can give it to a bank. And they can lend it out and they're going to give you a
fixed rate such as a CD. So just understanding maybe what the investment is can maybe help
(21:11):
narrow in. What is the appropriate strategy or product, but I think in most cases just buy
mutual fund or ETF that's yeah, maybe short term in nature just to stay away from risk.
Al (21:25):
Yeah, I 100% agree. I like the bond funds. I like muni bond funds if you are in a high
tax bracket. And I don't mind CDs. I don't know that you need to go to a huge CD ladder
strategy. I mean, just having a CD or two with different maturities, now that interest rates
are decent for CDs, but yeah, most people you just use bond funds. It's much simpler.
Andi (21:47):
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(22:08):
income, equities to commodities. Why does a basic 60/40 portfolio generally outperform the average
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(22:30):
Then, try our Financial Blueprint tool for free too - input your financial details like cash flow,
assets, and what you expect to spend in retirement and it’ll output a detailed report with three
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both free, both courtesy of Your Money, Your Wealth and Pure Financial Advisors.
Joe (22:54):
All right, let's go to DJ from Missouri. “Hey, Andi, Big Al, Joe. I know that you
hear it a lot, but I love your podcast. Don't ever retire, any of you.” Oh, Big Al.
Al (23:08):
Yeah, I have to stay.
Joe (23:09):
Yeah, you're knocking on retirement door.
Al (23:11):
According to DJ.
Joe (23:13):
“I listen to you whenever I am when the new
episode drops. What? I listen to you whenever I am when the episode drops.
Al (23:21):
Wherever.
Joe (23:22):
Wherever I am. Oh, just when it drops,
Andi (23:26):
She stops and she listens.
Al (23:28):
I’m taking a shower. I'm turning it on.
Joe (23:30):
Turning it on. All right. “I don't drive anything fancy and I rarely drink,
but I share Big Al's love for all things outdoors.” Al: Ooh.
Oh, all things outdoors.
Al (23:39):
Okay. That's that is me.
Joe (23:40):
“Here is my question. Can a balanced fund be a solid way to asset allocate for my traditional
IRA during the decumulation phase? Some say that in the decumulation phase, the 60/40 balanced
fund for traditional IRA, not talking brokerage account, isn't the best choice since one should
be able to control what ETFs and mutual funds they sell. In other words, one might choose to sell
(24:05):
only a portion of the underlying funds and not some from all the funds, if the stocks are down,
for example. But the idea of having a fixed allocation that balances the risk in return
of stocks and bonds suited to one's overall financial plan in risk tolerance with regular
rebalancing seems like a lot of sense to me.” All right. “When people sell off only a portion
(24:30):
of their ETFs, mutual funds, they're likely to get their asset allocation out of whack while waiting
for the market to rebound. That changes the risk level, right? If you do suggest that it is better
to have individual funds in each asset class in a traditional IRA, how long do you let your asset
(24:51):
allocation stay out of whack? Let's say greater than 5% off, for example. If you are selling
individual ETFs, mutual funds, or in the long run, or is it just fine maintaining the 60/40 globally
diversified ETF in one's traditional IRA? Thanks for all your thoughts, DJ.” Interesting question.
(25:11):
So DJ's talking about maybe alright, there’s maybe a fund of funds or target date fund or-
Al (25:18):
Yeah, or just a balanced fund, a traditional balanced fund that has stocks and bonds.
Joe (25:22):
It’s like all right, the portfolio managers managing the stock then-
Al (25:26):
- take care of it for me.
Joe (25:27):
Yeah,
do that or does it make sense to say? I'm going to buy 60% of a stock fund and 40% of a bond fund.
Al (25:37):
Yeah, that way I can decide which to sell at the appropriate time.
Joe (25:40):
I like the latter.
Al (25:41):
Me too. A little more work though.
Joe (25:43):
It is a lot more work.
Al (25:44):
But you just have to know what your balances are. But I think a way to think about this is
when you have, say, two or 3 funds, it's just when you need cash, you sell the one that's too high.
And you, always, you know, stay in balance, or maybe if they're exactly the right allocation,
you sell 60% of stocks and 40% of bonds, if that's your allocation. Very simple. It's
(26:06):
just one extra step. But see, that way, if the stock market has a big correction,
you don't want to be selling your stocks, you sell out of your bonds. If you're in a balanced fund,
you're going to naturally be selling some stocks because they're included in that fund, right?
Joe (26:20):
Well, the markets are fine. It's a totally great strategy. it's great.
They're rebalancing. All right. It's going to get back into whack, using your words,
but when it gets challenging DJs that, all right, now you're retired and you have this balanced
fund and you're taking a certain percentage out each year. And then the market tanks,
you drop 20%, 30% that year, and you still need your income from the overall fund. It
(26:44):
gets very difficult to get caught back up because they're basically selling the
share. And it could be pro-rata depending on what their- the distribution strategy
is of the fund. But most likely you're selling stocks and that's the last thing you want to be
selling is the stocks. You would much rather sell bonds or cash or another asset class.
Al (27:01):
Yeah. And I think you can do this with two mutual funds or two index funds, maybe 3, if you
want to get some international. So maybe think about it as like a total US stock market fund,
maybe a total US bond fund. And if you want to add a little international, have some of
it be an international, total international fund, and just whatever gets out of balance
is the, or the, which everyone has too much in it, that's the one you sell to take care of your cash
(27:26):
flow needs for that month or that quarter or that year, however often you take your distributions.
Joe (27:32):
All right, let's go. “Hello, Joe and Al. I've been telling anyone who'll
listen to watch TV show or listen to all your podcasts since 2019.”
Al (27:42):
Wow.
Joe (27:43):
I love a trooper there.
Al (27:44):
Yeah, I'll say.
Joe (27:45):
“I received great advice from you regarding real estate and estate
planning. You even picked one of my questions to air on your podcast. I
believe you both had fun bantering back and forth with each other about my son-in-law's
situation. I enjoyed it at any rate.” What, we'd make fun of her son-in-law, you think?
Andi (28:03):
You? you wouldn't do that.
Joe (28:06):
Different show.
Al (28:08):
Yeah.
Joe (28:09):
It wasn't us. But she's got another question here. Okay. “I'm retired and
have some extra funds I'm willing to gamble with.” Okay. Gamble. “In the 40s-“ 1940s?
Al (28:25):
Yeah.
Andi (28:26):
Yes. Al
Joe (28:28):
“-my aunt bought AT&T stock, and fortunately my uncle inherited it.” Okay. “He sold it in the
late 90s for a lot. I'm very interested in companies who supply the factory data centers
being built all over the U.S. for AI. When I decide on which stock to buy, I just want to
let it ride for about 10 years.” Alright? “Here's my question. Since I'm ignorant in stock buying,
(28:54):
should I hire a broker for my one-time roulette purchase or just open a brokerage
account myself online with a well-known company? Alright, sincerely, TYIA.” What does that mean?
Andi (29:09):
Thank you in advance. Joe
Al (29:10):
Yeah. Very good.
Joe (29:12):
All right. Karen. Hi Karen.
Al (29:14):
Karen. Certainly Karen.
Joe (29:15):
All right. No, just go to Discount Brokerage and buy it online.
Al (29:19):
Yeah, that's easy.
Joe (29:20):
You go to Schwab, Fidelity, Vanguard, wherever.
Al (29:23):
Yeah. Pick any one of those. Yep. I totally agree with that. And as far as the strategy-
Joe (29:28):
A broker is not going to take your call.
Al (29:30):
No, I got $10,000.
Joe (29:33):
Yeah. I want to, I mean, even if it's $100,000, I want to buy a single stock.
Al (29:38):
Yeah. They're not going to make any money.
Joe (29:39):
Yeah. They'll be like, okay, great.
Al (29:41):
Here you go. Here's the number to Schwab.
Joe (29:44):
Here's a 1-800 number.
Al (29:49):
As far as the strategy. You know what? AT&T was a really good one. Apple was a
really good one. There's been numerous ones. You just have to pick the right one. See,
that's the hard part here. You have to pick the right one.
Joe (30:01):
Well, at least she's calling it right. She's saying it's gambling.
Al (30:04):
It's gambling is, and that's exactly what it is. Now, when it comes to AI,
I agree. This is an industry that is probably has a lot of potential. So I
can see this being a good place to be. But will you pick the right AI
company? That's hard. That's tough. Right? So maybe you do, maybe you don't, you know,
as single stock has the same expected return as the market. It's just a single stock and have a
(30:28):
much wider range of returns could be great, or you could lose all your money. So just be
aware of that. When you do that, you use the word gambling and I agree, that's kind of what it is.
Joe (30:39):
Oh, Aaron, you killed it. You push that the camera button 3 times today.
Sorry to keep you up from your nap. Andi, wonderful job. Thanks for getting Mr.-
Andi (30:51):
Kasler from Cast X, Jeremy Kasler.
Al (30:55):
Talking whiskey, talking bourbon. You're going to invest in bourbon?
Joe (30:59):
No.
Al (30:59):
You might drink it.
Joe (31:00):
Yeah. That's the problem.
Al (31:01):
That's the problem.
Joe (31:01):
Yeah. You would, yeah, you might need a lot of friends. I was like, I don't know.
Al (31:05):
I think you got, just family right there.
Joe (31:08):
Yeah. My mother, Ruthie, she's back in town. She's in town for like a month and a half. All
right. Just probably need to get a barrel for her. All right. Very good. Thank you
all for listening. Keep the questions coming in. Appreciate the listenership. Without all of you,
we would not have a, not have a phone, I was going to sa- but not have a show.
Al (31:29):
Not have a show.
Andi (31:30):
The show wouldn't be a show without the listeners and the viewers.
Joe (31:33):
Yeah, well, I'm sure they listen to it on their phone sometimes.
Al (31:36):
Sometimes.
Joe (31:36):
Yeah, except for that one couple that was listening to it at the dinner table.
Al (31:41):
It happens.
Joe (31:43):
All right, we'll see you next week. Show’s called Your Money, Your Wealth®.
Andi (31:46):
Next week on YMYW, Joe and Big Al spitball for Nancy in Washington state,
Brian in Naperville, Illinois, Joy and her brother, the Skipper in California,
and they take a voice message from Mike in Colorado. Click or tap Ask Joe and
Big Al in the episode description to get your own retirement spitball analysis.
But to really make the most of your money and your wealth in retirement,
you definitely need more than a spitball (32:06):
schedule a financial assessment with the experienced
professionals on Joe and Big Al’s team at Pure. It’s free, and they’ll go deep to help you craft
a financial plan especially customized to meet your tolerance for risk, your needs,
and your goals in retirement. Click or tap the Free Assessment link in the episode description,
or call 888-994-6257 to book yours. You can meet online, or in person - Pure Financial
(32:33):
Advisors has 10 locations around the country now, with more on the way.
Your Money, Your Wealth is presented by Pure Financial Advisors, a registered
investment advisor. This show does not intend to provide personalized
investment advice through this podcast and does not represent that the securities or
services discussed are suitable for any investor. As rules and regulations change,
podcast content may become outdated. Investors are advised not to rely on any information contained
(32:56):
in the podcast in the process of making a full and informed investment decision.
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