Simply Money

Episode Transcript

(00:05):
Tonight, I fed sits tight.How to decide how to invest your furlan
k and will you really work aslong as you think you can. You're
listening to Simply Money presented by allWorth Financial. Immi Wagner along with Steve
Ruby, I have said this manytimes over the past couple of years.
I will reiterate it today. Ifsomeone came to me and said, Amy,
we would like to offer you aposition on the Federal Reserve, I

(00:29):
would say take that job and shoveit things, but no thanks. It
is a lot of pressure, alot of spotlight, a lot of stress,
and today, of course the FederalReserve back in the spotlight with a
real dilemma on their hands. Yeah, they sure do. I mean,
of course they're going to stand patI think that doesn't surprise anybody that that's

(00:50):
zero surprise. You know, inflationis remaining sticky, the economy is still
growing, so they do have achallenge here to get inflation down to its
two percent target. We are notthere at this point, so it's a
matter of digesting the new data.They've said this all along, that they
have a lot of information to lookat to decide what they're going to do

(01:11):
or what they're not going to doin this case, and that information takes
a long time to come out.There's delayed details about different aspects of the
economy that sway the decisions that theymake. So as you said, I'm
in the same boat, I wouldnot for a million dollars a year,
I probably wouldn't do that job.There is so much responsibility and if you

(01:32):
get it wrong, look at PaulVolker in the early eighties in the history
books as being like the loser thattanked the economy. It tanked it twice,
double dip recession. So you knowthat Paul has been saying all along
that they want to learn from thosestakes of the past. And we have
yet to see what's going to happenas far as the economy is concerned in

(01:52):
the near an intermediate term. Butfor now, standing Pat and kind of
playing that continued wait and see gameas new information come. Yeah, standing
Pat, leaving interest rates right wherethey are about five and a quarter to
five and a half percent, takingthat weight and see approach. You know,
we're five months in, but youknow, you look back to the

(02:12):
end of last year and economists werepredicting we would see up to seven interst
rate cuts this year. It's amazingwhat a difference just a few months worth
of economic data can make. Nowyou've got people saying, I don't know
what we see cuts at all thisyear, some projecting definitely not until the
fourth quarter of this year, andI just think, yeah, it's a
really sticky place. We've said thismany times. The Federal Reserve is walking

(02:37):
a tight rope here, trying tobring inflation down while also not completely blowing
up the economy, slowing things downand throwing us into a recession. And
to this point, I will say, they have been really clear about the
fact that we're not going to rushinto anything, and apparently they're not.
And that's that's fine too. Imean, coming into the year thinking that

(03:00):
they're going to decrease interest rates seven, eight times whatever, and then it
being a surprise and having you know, maybe one decrease it, that's okay
because that means that they are lookingat the information that they need to look
at to make these very important decisions. Now, obviously there are impacts on
keeping interest rates higher for longer.On the positive side, that we've been
We've been coaching to this for quitequite some time to our listeners and personally

(03:23):
to the folks that I work withabout taking advantage of some of the benefits
of a high interest rate environment,most notably getting your cash to work.
Yeah, and that's interestingly though,the frustrating thing about the way that these
interest rates is when we saw themstart to rise in the beginning, banks
were really really slow in adapting thesehigher interest rates, right. It took

(03:46):
them forever to sort of creep upto the point where, oh, gosh,
I'm actually making some money in theseCDs or in my savings account.
Well. Now, the interesting thingis several people who I've talked to recently
who have put money into a sortof higher interest rate bearing accounts are saying,
wait a second. We're getting emailssaying we're going to start paying less
and we're going to pull back onwhat we're paying on this account. Yet

(04:09):
the Federal Reserve isn't moving in thisdirection yet, so banks are anticipating what
isn't yet happening. It doesn't seemfair, but yes, this is absolutely
the silver lining in all of this. This is what you can take advantage
of. It's funny the way thathappens, because when interest rates started to
rise. What went up first wasthe cost of your debt. Yeah,
taking on a new loan, creditcard, debt, mortgage, whatever that

(04:31):
might be got more expensive more quickly. Things that benefited the banks got more
expensive faster than things that benefited theconsumer was Yeah, but at the same
time, you know, this isn'tjust high yield savings accounts that you can
capitalize on. There are CDs andtreasuries that come with certain terms. So
you could look at that and ifyou have a pile of cash on the

(04:54):
sidelines and you have an intermediate termgoal six months or a year from now,
maybe locking that in at this pointbefore banks start reducing interest rates in
anticipation of the FED doing just that. Yeah. So that's the good side,
right, the silver lining in this, but also on main street,
the negative side is for those ofyou who have, you know, credit

(05:16):
card debt, you're carrying credit carddebt, you're hoping that interest rate goes
down, It's likely not going todo that anytime soon. For anyone who
wants to buy or sell a homethis year, you know, hoping that
mortgage rates are going to come down, well, you know, likely not,
and we probably will never see subthree percent mortgage rates. I mean,
I think that might be locked foreverin the history books at this point.

(05:38):
We'll see. But you know,I think so many people, so
many of us, are still adjustingto you know, seven percent, six
percent. It sounds so high.So that's going to keep buyers and sellers
on the sidelines, which is reallygoing to continue to sort of lock up
the real estate market. So justkind of a lot of things working against
us during this time. And thenalso though, you've large companies in United

(06:00):
States that are waiting and waiting forit to be cheaper for them to borrow
money, and that's also not happeningright now. No, it's not.
So the question comes, and we'vebeen asking this for quite some time as
well. Will we have a softlanding? Is that even an option?
Is that possible? Are we headedfor a recession? We've been reading predictions

(06:23):
for quite some time as well,and there was a famous headline back in
October of twenty twenty two that Bloombergput out warning that the forecast for a
US recession within a year hits onehundred percent and a blow to bite.
Obviously this proved incorrect. Now,there were some recessions globally. Germany,
the United Kingdom they did slide intorecessions, but not the United States.

(06:45):
You're listening to simply money presented byall Worth Financially mean me Wagner along with
Steve Ruby, as we look atthe fed's latest decision, which was to
do nothing, and what it meansto you, and also digesting some of
the headlines that we've seen over thepast couple of years, you know,
with these sort of doom and gloompredictions of you know, one hundred percent
chance of a recession that did nothappen last year. In the question of

(07:10):
could we still pull off a softlanding. The first time we ever uttered
those words in relation to the situationthat we're in now, it seemed insanely
far fetched that we could ever pullthis off. And then over the course
of twenty twenty three, it seemedto look more and more like a you
know, potential, And now you'vegot an economist saying, hey, I
think there's a fifty percent chance thatwe will still have a soft landing,

(07:32):
and a soft landing just simply meaningwe can bring inflation down while also not
having our economy go into a recession. Right, everyone worried about losing their
jobs. You've had this huge tighteningwe thought that was going to happen,
and it's just been really interesting howresilient the American economy has been. People
are still spending money, people aren'tnecessarily worried about losing their jobs, and

(07:55):
American companies seem to be doing prettywell sort of despite what is you know,
coming up against them with these interestrates, and so all of those
things point to some help. Butthere's also been some economic data coming in
recently that shows sort of cracks inthat sort of super solid foundation. Yeah.
I think a lot of that hasto do with the fact that inflation
is proving to be a little bitstickier than many had anticipated. The first

(08:18):
quarter of twenty twenty four not asrosy as many were thinking it would be.
When we looked at the economic datatransitioning into the new year. You
had mentioned that it's a fifty tofifty shot. According to one person.
This is at the Wharton School inthe University of Pennsylvania. A gentleman there
said that, yeah, maybe afifty to fifty shot of a soft landing.

(08:41):
From there. There was also hesaid a fifteen percent chance of a
no landing scenario and a thirty fivepercent chance of your typical recession at the
end of the day, you know, these experts that they're going to make,
so called experts, they're going tomake their predictions. And what I
would say is do we even needto do anything with this information? And

(09:03):
the answer is a big, old, resounding no. Well, and one
of the things that I love thatwe do on the show, and I
think it provides such great value andperspective is to look at some of these
headlines and absolutely blow holes in them. I mean, who else is looking
back on predictions if someone made ayear ago and saying, hey, did
this scare you then? Because look, zero percent of it ended up being

(09:24):
true. I mean, there wasabsolutely no truth. Yet for those who
get scared, who panic, whopull their money out of the market,
you missed out. If you wereto pull your money out of the market
at the beginning of you know,twenty twenty three because of this prediction of
you know, an absolute recession,one hundred percent prediction of a recession,
right, you would have missed theinsane upside that we've seen right over the

(09:48):
past year or so. Now we'vecertainly seen more volatility here in early twenty
twenty four. But it just makesthe point again and again, it's not
timing the market. It really istime time in the market. Yeah,
I want to make that clear becausewe're talking about some of these unexpected events
and cracks in the economy, andyou know, some of that can be
spooky, especially if you're reading headlinesout there that reiterate that, you know,

(10:11):
maybe we are going to slide intoa recession because the Fed, you
know, mess something up, orthere's a black swan event like war in
the mid East. There's always somethingto be afraid of. But at the
end of the day, fifty fivepercent of the time, the markets in
a one year period are up rightcorrection fifty five percent of every day they're
up. In a one year period, seventy nine percent chance they're up,

(10:33):
three year period, ninety percent chancethey're up. So when we try to
time the market based on information aboutthe economy, that is a huge mistake.
The best days happen during bear markets. So what I'm trying to say
here is even if some expert atat Wharton School the University of Pennsylvania says
there's a fifty fifty chance of arecession. It doesn't matter at the end

(10:56):
of the day, as long asyou stick to your financial plan. When
there will be a session. Whetherit happens this year or next year or
five years down the road, wedon't know, but we do know that
it's actually a very healthy part ofthe American economy. It is a cycle.
Is it a part that we like? Nope, I mean, no
one enjoys those downtimes. But whenyou understand they're sort of part of it,
then it makes it much more easierto navigate that. Here's the all

(11:18):
Worth advice inflation, interest rates predictions. Man, they are just part of
economic cycles. Do not panic whenyou are bombarded with some of the negative
information. Coming up next, we'retaking a look at whether you will really
work as long as you think youwill, and how all of that could
impact your retirement plans. You're listeningto Simply Money presented by all Worth Financial

(11:39):
here on fifty five KRC, thetalk station. You're listening to Simply Money
presented by all Worth Financial. IMeani Wagner along with Steve Ruby. If
you can't catch our show every night, you don't have to miss the thing
that we talk about. We've gota daily podcast for you. Just search
Simply Money. It's right there onthe iHeart app or wherever you at.

(12:00):
Your podcast coming up on six fortythree, we're taking a deep dive into
your four oh one K. Andhere's the question for you. Have you
taken a deep dive into your fouro one K? Do you know what
you're invested in? We're going totalk about that. You know, when
it comes to Social Security and thosewho are living on Social Security or that
makes up a big part of yourincome in retirement, Any news about cola's

(12:22):
cost of living adjustments are a reallybig deal. Yeah. And what we're
looking at here is as inflation drops. That is the one of the main
measures that's used by the Social SecurityAdministration to determine what that cost of living
adjustment is. And while it's toosoon to predict the exact number colas,

(12:46):
they're based on third quarter inflation dataand with current projections, some experts are
saying that the cost of living forthis time for Social Security could be as
low as about one point seventy fivepercent it happens. And I also want
to provide some perspective and the factthat I've seen several years where it's zero
zero percent, And I think thefrustrating thing about this is then you look

(13:09):
at when when Medicare premiums go up, and usually whatever you get, it's
like with the government giveth it alsotaketh away wash. Anyway, is it
to you with one hand and says, here's your cost of living adjustments.
This should pay us more, youknow, yeah, this should be make
monthly you know, bills much easier. Oh, by the way, speaking
of monthly bills, here's your Medicarebill, and it's going to cost more.

(13:30):
Please, please, please, don'tput yourself in a situation backed into
a corner where cost of living adjustmentsare so crucial to you because every dime
of that Social Security just matters toyou. Understand that this program, when
it was set up in the nineteenthirties, it was only set up to
keep you from living on the streets. You know, you don't want to
be destitute in your later years,so it was set up to only replace

(13:54):
forty percent of your income while you'reworking. So exactly, it's good to
kind of have this on your radarto understand how COLA works. Just please,
please, please, do not liveand die by it. When we
build a financial plan, one ofthe things that we look at is when
you want to stop working. Theproblem is many people will say, I'm
never going to stop working, andthat's my financial plan. Just doesn't usually

(14:20):
work out that way for you.It's surprising how often we really do hear
that from folks that we work with. I'm just going to work forever.
I would be bored. I can'tdo it. I love my job to
spend my time. Yeah, Ilove my job. I love the social
aspect of it. I love havingpurpose. There's a lot of reasons why
somebody may want to keep working.Other times it's maybe because they didn't plan
accordingly. The life rooms and curveballs, and they didn't save enough, or

(14:43):
something happened that affected their savings.Ultimately, there is a new study that
show that twenty eight percent of workerssay they expected to retire at sixty five,
which is up from twenty three percentfrom a year ago. However,
the gap between how workers envision thetiming of retire in the reality for these
retirees is pretty wide well, andI think what we end up seeing is

(15:05):
and there's all kinds of research onthis study after study shows that the average
American worker actually ends up retiring atsixty two. So you can tell us
I'm going to work to sixty fiveor many people, as you said,
have said, I'm just going tokeep working in in my seventies. You
know, my retirement plan is actuallyto never retire. And you think that's
one hundred percent within your control.And I think that's just really interesting.

(15:28):
Met with them someone yesterday who said, I have worked at the same job
for thirty eight years and have absolutelyloved it. In over the past couple
of years, all of a suddento something changed. You know, there's
just some minor changes. It works, some shifts. I'm not feeling the
same way about it anymore, andI'm done. Okay, Well, luckily
this person had also saved for retirement. That's very good. If they had

(15:50):
not, the entire way that theyfeel about their job would have changed,
but they would have zero ability todo anything about it and retire when they
want to do so. And Ithink just beyond that, you know,
you can't control if you get adiagnosis that means you can't work anymore,
or someone that you love gets adiagnosis that means you need to stay home

(16:11):
and take care of them, oryour boss decides we're done with you,
right. I mean, you neverknow. When you leave work on a
Friday, you could be coming intoa pink slip on Monday. I hate
to say that, but it happensmore often than you would think. So
you often don't have control over this. And I don't mean to stress anyone
out, but I just want togive you the fact so that you can
plan for them. Yeah, planningaccordingly is very important here, because when

(16:36):
it comes to retirement planning, maybeit should be called financial freedom planning.
You know, the point where youreach an area in your life where you
just don't have to work anymore becauseyou may not have a decision in the
matter. Like you said, itcould be external factors, could be internal,
could be health, could be achange to the job. There are
many things that can throw us acurveball to the point where we're just not

(16:57):
able to work anymore. In fact, the same study we're talking about said
that's seventy five percent of retirees expectto pay for their retirement via work to
some capacity, but only thirty percenthave actually done. So that's a big
gap. Yeah, so maybe you'rethinking, well, the job that I
have right now, you know,is stressful, or I don't love my

(17:18):
boss, so I'm going to leaveit. But then I'm gonna get another
job. I'm gonna at least goingto work part time. I'm at least
gonna have some benefits through it.And then it just doesn't work out that
way, which is again, ifthat does work out, great, maybe
that's icing on the cake for you. Maybe that's extra money. Guys stopped
me a few weeks ago and said, well, I retired, but I
have this sort of job on theside of landscaping and it pays for my

(17:42):
Bengals tickets. Great, that worksout well for you. He didn't say
this job actually keeps us paying ourbills and we're hardly scraping by he planned
for retirement. The extra job isjust fun money that he uses for something
that he really enjoys. That canabsolutely work out. But there is a
disconnect so many times between your currentself and being able to picture what you

(18:03):
will need or want in the future. If you are forty seven years old
right now, or fifty five yearsold, or even sixty or thirty,
doesn't matter. It's really hard tosay I'm really healthy right now, so
you know, saving for healthcare andretirement seems dumb because I'm just going to
be healthy. Or I love myjob and it's so fulfilling and there's never
going to be a day when idon't love it. So I'm just not

(18:26):
going to plan for retirement because I'mgoing to work forever. You're completely like
discounting what could happen in the futureand only able to look at where you
are today. And that's a biasI think that many people deal with.
They just don't realize it. Ithink Steve Sprovak is a good example of
this. He had heart issues.He had major heart surgery, and it

(18:48):
lit up a fire underneath him tosay, maybe I do want to pull
the trigger on retirement. He'd beenhelping people for what forty years transition into
retirement at sixty sixty two years old, and then he reached that point,
had some moalth issues and said,you know, I'm not going to keep
working, that it is time forme. So things change. Your perspective,
changes, your perspective on life,your ability to continue working. So

(19:11):
banking on the fact that you're goingto be able to work forever is not
a retirement plan. And here's somethingelse that people get wrong. Over half
of those surveys said when they gotto retirement, they spent more than they
thought they would. So this iswhy you got to have a plan.
It has to be realistic and thenif you continue to work beyond that.
Again icing on the cake, here'sthe all Worth advice. Make sure you

(19:33):
have that robust emergency fund and aplan in place, because you just never
know when the unexpected could happen.Coming up next, what to consider if
you're thinking about moving to a newcity. You're listening to Simply Money presented
by all Worth Financial here on fiftyfive KRC, the talk station. You're
listening to Simply Money presented by allWorth Financial. I'm Amy Wagner. We

(19:59):
talk to people all the time abouthow to retire, how to retire well.
And as we sit down across thetable from many people asking them what
they're hoped and dreams for in retirement, a lot of them talk about vacation
homes. They talk about retirement homes. Joining us tonight with her perspective on
this from a real estate standpoint isour real estate expert Michelle Sloan. Of

(20:21):
course you can catch your show.Sloan sells homes here on fifty five KRC
every Sunday afternoon. She's the ownerof Remax Time for many many people,
Michelle, this is a dream.But from a practical standpoint, how do
we make this happen? What dothey need to be thinking through? There
are so many things that you wantto consider before. You may have a
dream of moving to Florida. Let'ssay, but do you really know what's

(20:45):
happening in the Florida market. Youknow, maybe you want to go to
Arizona. You know, most ofus in somewhere in northern Kentucky. We
want to go someplace where it's warmall the time, or maybe have a
vacation home that we can go toin the January February March timeframe and get

(21:07):
away from the cold. But thenagain, if you own a property somewhere
else and you're living in two locations, there are an awful lot of things
to consider unless you have boatloads ofmoney and you just don't care if you're
going to lose money on that prospect. So I think about friends of my
parents who years ago they love golf, They wanted to spend those colder months

(21:30):
here in Florida. They went allin on a golf community in Florida about
a property down there, didn't necessarilyreally think through all the hurricane insurance,
so it could costs a little morethan they thought. But they were all
in and they realized, gosh,like the upkeep and we're not here is
a lot and it's really expensive.What they ultimately ended up doing was,

(21:52):
I think they actually sold it fora loss and then ended up renting something
for the couple of months that theywanted to be down there. So it
wasn't a devastating financial decision for them, but it was not the best thing.
So I think going into this witheyes wide to open is absolutely critical.
It absolutely is, because you know, you may think, and you
may hear me talk about, oh, the market in Cincinnati is crazy,

(22:17):
multiple offers, high high, morethan list price sales and very very little
inventory. But that's not the sameall around the country. And so that's
where it is really really smart todo your homework or at the very least
talk to someone who is an expertin the area where you want to go.
And so that's really the key.The other thing that you want to

(22:41):
think about, Okay, you lovedgolf, how much is the initiation to
golf? And I'm sure that you'vetalked to you to many, many people,
because an initiation into a golf clubin Florida can cost sixty thousand dollars
or more. And it's like,Okay, you're going to buy that.
Then you're going to buy your house, and then you're probably going to have
really high HOA fees. Yeah,and then you're gonna have insurance. And

(23:02):
insurance in Florida specifically has more thandoubled over the last couple of years because
the weather and hurricanes. Anywhere thatis coastal right now is struggling just a
bit. So purchasing a home ata high, high price on the coast
right now, you really want tothink about it because can you afford,

(23:26):
like you said, the upkeep ifyou're not there twenty four to seven?
Is it rentable? Who's going tolook after it? Do you have to
hire a property management company? Areyou gonna make enough? Do you want
other people to live in your house? Oh my gosh, you know people
are pigs, please they can beAnd do you want just random people living

(23:47):
in your home? And you're notanywhere near it to sort of police it.
So it's funny. Actually, wasjust in Florida. My daughter's you
know, a senior in high school, A bunch of US moms in Greece's
friends all went to Florida rented alovely house in a destined area. I
guess there was a group of collegeboys who had been in the house before.

(24:10):
It took multiple cleaning crews hours laterin lots of things in the house
were broken after and you know,we didn't pay for that, you know,
so that the people who own theproperty had to shell out the money
to cover these things, or maybethey charged them more. I don't know,
But you don't have control over who'sgoing to be renting that house if
if that's what you're going to dowith it, and rely on that as

(24:33):
a stream of income for it.Correct And in some homeowners' association communities,
you cannot rent like a weekly orwhatever. And that's another thing if you're
planning to rent one community that's gottenI looked at you could only rent two
times throughout the a six month orone time six month period or something like

(24:55):
that, and it had to bea month long lease. Meaning somebody was
going to stay in the home andit wasn't going to be real transient.
And so again, if you're thinkingabout doing something like that and you're like,
oh, man, I could haveother people pay my mortgage, which
is always a great thing in theory, but then you do have to understand

(25:15):
it's going to cost you more ininsurance because you're not living in the home.
It's going to be costing you morein hiring people to manage the property.
So you have to really consider yourlifestyle and how often you're going to
be there. Even people who buyproperties like on Lake Cumberland or someplace it's

(25:36):
not quite as far away, butyou're not there every single weekend most likely,
so if it's a second home ora vacation home. So you just
really have to think about that andtalk to you amy your financial planner because
there's a lot to consider. Andwhile I always believe that investing in real
estate is one of the best investmentsthat you can ever make in your life,

(26:00):
it can also be a bit ofan albatross. It can hurt you
as well. Right there's you know, great stories with great outcomes, and
there's also terrible ones that I thinkthe difference between the two is the planning
and the research that goes into them. I mean, you were just mentioning,
Michelle that while here in the GreaterCincinnati area there's a ton of competition.

(26:21):
You and I have talked about thisbefore. One of my favorite pastimes
is just looking at property in theFlorida area. I just really hate winters
around here, and you can lookat it and you can see it is
coming down. And while that canbe really exciting, it is coming down
for a reason. People are sellingand getting out of Florida for a reason.
And you know, do you thenjump into that market and completely overlook

(26:44):
why everyone else is leaving and thenmaybe try to sell that house in a
couple of years and no one wantsit, you know, correct? And
that could be really a financial loss. Yes, and we've seen it happen.
You know. It's the world ofreal estate stocks, everything that we
own that is worth money. There'sebbs and flows. There are highs and

(27:07):
there's lows, and so you againwant to try to time the market as
much as possible. But I'm findingyou almost twenty percent of our population is
sixty five or older. So Italk to so many people who are ready
to downsize, right size, butthey want to be close to family,
but they want to enjoy their life. There's a lot of decisions to make,

(27:29):
and it doesn't hurt to talk tosomeone like myself as a real estate
expert, talk to someone like youwho's the financial expert, and then figure
out what's right for you, becauseit is different for everybody, Michelle.
The people who get it right,who who end up buying a vacation home
or retirement home, moving to anew city, whatever that looks like,

(27:51):
that feel like it was a gooddecision. Could you give us a couple
of things that you think that theydo right that makes it and turn out
well for them in the end.I think it's that's a really good question
because I have seen some people whojust absolutely love the fact that they can
have a home base. Let's justsay here in Cincinnati. So you have

(28:14):
a home base here, and youhave a home base someplace else, and
they can come back and forth,and they have the freedom to have a
place to land and they don't haveto live or get a hotel room or
live with their children or grandchildren orsomething like that and be sort of put
out because as adults, we alllike our own space. So I've seen

(28:34):
so many people who have just absolutelyrelished the fact that they love where they
are. They love their neighbors there, they love this area, they love
their family here. And although here'sthe thing that I'm also seeing is more
and more people are selling the mainproperty here and just getting something smaller like
a condo that they wouldn't have tomaintain nearly as much, and then getting

(28:57):
a single family home in Florida,Arizona, wherever. So it just depends
on what you want, where youwant to be, and guess what,
it's usually not permanent. So ifyou decide, okay, I'm going to
make this bold move number one,I like to tell people, maybe you
want to rent for six months andmake sure you'd like it there, because

(29:18):
so many people have moved to differentareas, are like, oh, this
isn't what I thought. You can'thave vacation every day. It's like Christmas
every day at least you yeah,exactly. Great advice from Michelle Slone are
real estate expert. You're listening toSimply Money presented by all Worth Financial here
in fifty five krs. The talkstation you're listening to simply money presented by

(29:41):
all Worth Financial. I mean,wag you're alone with Steve Ruby. You
have a financial question that you justcan't figure out on your own. There's
a red button you can click onwhile you're listening to the show right there
on the iHeart app record your question. It's coming straight to us and straight
ahead. Should you buy a homeor rent a home when you get old?
We're going to run the numbers foryou. We'll tell you about here

(30:03):
in Cincinnati versus other places in thecountry. I see this all the time,
Steve, and it makes me wantto pull my hair out. Most
of us, and I mean thisis like, you got to look yourself
in the mirror on this one andadmit it. If it's true for you,
Most people spend more time planning yoursummer vacation than you ever do looking
at your four oh one K knowingwhat you're getting in a company match,

(30:26):
knowing what you're really invested in.And my problem with that is for most
of us are four to one Kis the number one thing that we're using
to be able to retire. Youplan that vacation, it lasts a week.
You plan that retirement, it lastsdecades. Yeah, it's pretty remarkable.
It's remarkable. The thing is planningof Admittedly, planning a vacation can

(30:48):
be fun, that's the thing.I'll give people that as an excuse,
but it's not good. Retirement canbe fun exactly exactly what's that It should
be fun, it should be absolutelyAnd when it comes to their four to
one ks, and I've seen thisover the course of my career as well,
people will start a job this isprior to working with me because fiduciary

(31:11):
financial planners self, others in theindustry when we're helping clients with investment strategies,
who should be helping with all ofit. But for individuals that have
gone added alone, they'll look atthe lineup in their four on one K.
They'll say, all right, theseones in the last five and ten
years they've done the best. Sothat's ones I'm choosing. Boom done.
That's it. Let me give youan example of why that may not work,

(31:33):
especially right now you're starting a newjob. They give you the four
to one K information, you're lookingat returns. I'm going to pick the
ones that have done them best overthe past year. Likely those funds are
going to be super tech heavy.Right. We've talked on the show a
lot about the Magnificent Seven, thesejust dominating stocks and companies and US economy,
Meta, Amazon, Navidia, Tesla. Right, these major, huge

(31:59):
companies were great, They've done wellover the past year. Some of them
are showing signs though, of notdoing so great. And you're completely not
diversified. You're all in on tech, and we've seen many many times.
You know, going all in onone sector can really backfire. Now,
you're not going to know that whenyou're picking these stocks based on returns,
but if you were to dig alittle deeper, that's exactly what you would

(32:19):
be doing. Yeah, And it'sreally remarkable how that can completely derail your
investment strategy. Because there's this chartthat Andy Stout, chief investment officer of
all Worth Financials, put together calledthe asset Allocation Quilt, and it shows
all the different sub asset classes andhow they perform in any given year.

(32:40):
And you'd mentioned tech tech being reallywonderful, wonderful performer recently. That's not
always going to be the case.There are some outliers where they'll be the
best performer, like reats, forexample, in a given year might be
the best performer in one year andthen the worst in the next great so
you could position yourself to lose alot lot of money in your four O
on K if you don't appropriately buildyour strategy. So I'm talking about what

(33:06):
research are you looking at to determinewhich funds your employer gives you to pick
and choose from to narrow down whichfunds may be the best ones. Are
are we looking at the underlying fees? Are we looking at things like morning
Star ratings? Once you have yourfinger on the pulse of the research that
you're actually going to look at tonarrow down the choices. What investments are

(33:27):
you selecting to fulfill your tolerance forrisk to build your asset allocation? Is
it sixty forty, is it eightytwenty, is it seventy thirty. There's
a lot of moving parts that comeinto picking and choosing your investments. Well,
you just mentioned risk tolerance, andI think that's where you start.
But I think if for many peoplewho aren't working with a fiduciary financial advisor,

(33:49):
it's not where you start. Youstart by looking at the returns the
most recent year or five years,but the risk tolerance is kind of your
Goldilocks factor, right, how muchrisk can you take on? How much
exposure to the stock market can youtake on and still be able to sleep
while at night? Right? Onceyou figure that out, and we have
a sort of a ten question surveythat we run the investors that we work

(34:13):
with through to help them figure outwhat that number is, okay, and
then what we figure out Once wefigure out that number, then we can
look at what are the best investmentsthat are really well suited for your risk
tolerance. And then you can sliceit and dice it a thousand different ways.
You know, stocks versus bond,emerging markets versus US companies, small
caps versus large caps. I mean, there's different sort of ways to look

(34:36):
at this, and I think you'vegot to consider all of those things if
you're going to be truly diversified.Now it can sound overwhelming, but this
is where you know you're either goingto need to do the research yourself or
find someone that you can partner withthat can help you figure this out.
But sort of blindly willy nilly fillingthis thing out and hoping, like when
I'm wing in a prayer, thatit's going to get you to retirement is

(34:57):
not the answer. It's not thatoften that I have kate for a target
date retirement fund. But this isa potential solution. That's when you choose
the fund that your employer gives youbased on and assume time frame leof to
retirement. Because at least it isa form of active management. So if
you don't have a process in mindthat's going to help you research, choose
the right investments, build your assetallocation and rebalance periodically, then maybe that's
a solution for you. If notworking with a fiduciary financial planner, here's

(35:20):
the all Worth advice. Make sureyou're doing everything you can to maximize that
four one K. In many casesit's the number one thing you have getting
you to retirement. Coming up isrenting the cheaper option as you get older
and maybe you want to downsize.We're going to take a look at that
next. You're listening to Simply Moneypresented by all Worth Financial here on fifty
five KRC. The talk station listeningto Simply Money presented by all Worth Financial.

(35:45):
I Meani Wagner along with ste Ruby. I don't think a lot of
people really think about this. Youknow, many people will say, oh,
I'm going to downsize when I getto retirement, or we're going to
move somewhere else, closer to grandkids, or closer to the bach, or
somewhere where the weather's warmer. Butpart of that conversation doesn't revolve around when

(36:06):
we get there, does it makemore sense to buy something or to rent
it? Well, a new bankRade analysis shows that renting is more cost
effective than buying a home across mostmajor US cities here in the nation,
and that is remarkable. It's actuallythe gap is thirty seven percent more to

(36:28):
buy than it is to rent ona monthly basis on average, And keep
in mind the cost of renting isinsanely high right now. Okay, So
here in Cincinnati, the typical monthlyrent fifteen hundred dollars and then the typical
monthly mortgage payment is about eighteen sixtyit. So it costs about twenty four
percent more to buy here in Cincinnatiinstead of renting, which is interesting.

(36:52):
It's actually one of the ten smallestgaps when they looked at the fifty largest
metro areas. Smallest gap between thecost to rent in the cost of buy.
So here are the difference may notbe as monumental certain other places,
though there can be a huge difference. Yeah, in Miami Fort Lauderdale.
So for those of us that wanta snowbird at some point, fifty five

(37:14):
percent difference. In Orlando it's alittle bit cheaper at thirty three percent.
Phoenix fifty percent more to buy thanit is to rent. Now, I
will say that about eighty percent ofAmericans say that owning a home is part
of the American dream. Yes,so that is where footing the bill to
actually own could be worth it ifyou plan accordingly. I think that's a

(37:38):
trend that you hear if you listento the show Planning Accordingly. If you
plan to move somewhere like let's saySan Francisco, how about this one.
One hundred and eighty percent more toown than it is to rent one hundred
and eighty percent. Yikes. Thisis why I will never live in the
Bay Area or honestly anywhere on theWest Coast. Get those you know cost

(38:00):
the mortgage out there, and itis just insane. Listen. We talked
to so many people who at leasttalk about or consider a move in their
later years, whether part of itis downsizing or moving somewhere else. We're
not saying this should be the overalldeciding factor, but we think this is
a piece of information that should beconsidered as you're figuring out what makes the

(38:20):
most sense for you. Thanks forlistening tonight. We hope we're going to
tune in tomorrow. We're talking abouthow to overcome just the biggest fears about
retirement. What we want you toknow E've been listening to Simply Money,
presented by all Worth Financial. Herein fifty five KRC, we are the talk station