Simply Money

Episode Transcript

Speaker 1 (00:08):
Tonight, President Trump announces tariffs on steel and aluminum, Why
the Magnificent seven stocks might be losing their luster and more.
You're listening to Simply Money, presented by all Worth Financial.
I'm Bob Sponseller along with Steve Ruby, who's in for
Amy tonight.

Speaker 2 (00:25):
Steve, did you ever think in.

Speaker 1 (00:27):
A million years that Amy would trust you and I?
You know, are us two knuckleheads to run this show today?
What is she thinking, Bob, Well, it's not what she's thinking.
It's what she said she said as she walked out
of the office last night. Bob, don't screw this up
or there will be hell to pay when I.

Speaker 2 (00:46):
Get back tomorrow. But I think we'll be fine. We'll
have some fun and we'll surprise her. How's that sound.

Speaker 1 (00:52):
We could surprise her, but not too much. Sure, all right,
let's get into this. You know, President Trump's been in
office for less than a month, I mean, just three weeks,
and I think this has already been the most active
presidency in the history of the country. So much going on,
you know, day after day, and now we've got a
whole new tear of threat to talk about.

Speaker 2 (01:15):
Yeah. So, Trump, regarding aluminium, steel, he says he's going
to impose a twenty five percent tariff on all US
imports of steel and aluminum. Now, we rely on aluminum
imports from countries like Canada, UAE, Mexico to meet a
lot of the demand I'm talking about. Net imports add

(01:35):
up to more than more than eighty percent in twenty
twenty three. According to Morgan Stanley. Steel imports account for
a smaller portion of that overall consumption, but the obviously
vital for sectors leaning on kind of specialty grade steels,
Like we're talking aerospace going into outer space, but we're
talking about auto manufacturing energy from from wind developers to

(01:57):
oil drillers. You know this. I was in Cleveland this
weekend for long time listeners who know a little bit
about me. I'm from since why in the world would
you go there? It was a great weekend. I had
a blast. I had a friend's birthday party. My daughter
does American Ninja Warrior. She got first place in her competition,
which was so much fun.

Speaker 1 (02:17):
Hold America Ninja Warriors, America competition Ninja Warrior. Yeah and
your daughter wanted Yeah. She got first place and out
of for the boys, she was fifth overall. So she
beat most of the boys in all of the girls,
so I'm very proud of her. It was a great trip.
So that's why I went to Cleveland. Plus I'm from there,
so I visited some some friends now being from Cleveland.

(02:40):
When when I was when I was young, there was
this area of Cleveland called the Steelyards. Have you spent
any time in Cleveland, No, I.

Speaker 2 (02:45):
Try to avoid that place. You should check it out.
It's not too bad that some of the best barbecue
outside of Texas is a restaurant called Buddy. I'm not
kidding them all. Yes, I'm pretty hyped about Cleveland. I
haven't lived there since I went to college, so when
I go back to visit, it surprises me a little
bit every time. And one of the big surprises for
this trip was when I was a child, there was
this area of Cleveland called the Steelyards. Now, there was

(03:06):
a main road you could take through the steel yards
where you would actually you would be like driving through
the steel factories almost. I drove past this area this
time and it was a Walmart and a home depot.
I did not like that, Bob. It was it was very,
very surprising. We drove down into it and there was
this little, tiny museum that said here's where steel used.

Speaker 1 (03:27):
To be made. All right, Well, that leads us into
a good question, Steve, why do you think the president
is imposing terrace on steel and aluminum specifically?

Speaker 2 (03:38):
Well, what's Andy been telling us? Right? Andy Stout, chief
investment officer of all Worth Financial. You guys interview him
on Mondays, and you know there's some reasons why he's
been talking about it. The thing that I'm a little
skeptical about, and that's why I bring it up, is
the idea of completely bringing that manufacturing back. I'm just
not sure the infrastructure exists now. Now keep in mind

(03:58):
this is just little total because it was one little
area of Cleveland, but that is a city that was
built on steel manufacturing.

Speaker 1 (04:05):
No, I mean that's all joking aside, that's a significant
observation on your part. I mean, this is a place
that used to, you know, produce a ton of steel
and aluminum and now it's filled with retail stores.

Speaker 2 (04:18):
But go on, yeah, I mean it was sad. I
did not like it because these drives. When I was
a kid, it was just fascinating to see what that
looked like. Now, why steel and aluminum specifically for these tariffs.
You know, they're meant to protect US steel and aluminum
producers by making importing those metals more expensive, which can

(04:39):
boost production here locally and create or preserve some of
those jobs. But again, when I look at that, there's
still one steel factory there. There used to be two
massive ones and it's one small one now. And you
know they would have to tear down a Walmart and
home depot and some little grocery store. I don't remember
what it was exactly. I was pretty sad going through

(05:00):
in order to actually establish those factories.

Speaker 1 (05:02):
Again, you're listening to simply money presented by all Worth Financial.
I'm Bob Sponseller along with Steve Ruby. Let's let's go
back and just do a little reminder about what President
Trump is trying to accomplish, you know, with tariffs in general.
And we've had our chief investment Officer Andy Stout on
here a couple times here in the last couple of weeks,

(05:25):
including earlier you know, on Monday, and we like to
boil it down as follows. There's basically three reasons for
these tariffs. One to act as a highly levered negotiating tool,
with foreign governments, and we've already seen that come to play.
Two to offset you know, what the President would say,
are unfair trade practices, and then three to increase revenue.

(05:51):
I listened to the Super Bowl halftime interview with President
Trump that Brett Bair did on Sunday. I listened to
it last night in its entirety, sure, because I just
wanted to hear with with my own ears what the
President actually said. And this gets to the point of inflation,
and uh, I believe the President was rather evasive to

(06:13):
be to be real honest and talking about the potential
inflationary impacts on these tariffs, assuming they actually go into uh,
you know, go into effect and stay for any meaningful
period of time. What are you seeing on that?

Speaker 2 (06:30):
Maybe he doesn't actually want them to come to fruition
because it is simply a negotiating tool. I mean, ideally
that's the situation because the Fed has fought inflation for
such a long time now and they actually eventually got
it trending in the right direction to the point where
we're able to cut interest rates, and then the curveball
comes at him of you know, maybe these these you know,

(06:51):
tariffs coming in the new long term play here which
could increase inflation that that would not be good, uh
for the economy at this point. So you know, ideally
it is just a threat or a negotiating tool to
help get these countries do what he wants them to do. So,
you know, for speculating, maybe that's why he's dodging the

(07:13):
questions about inflation as it pertains to tariffs.

Speaker 1 (07:18):
Yeah, I think he's dodging the question because he knows
that if these terroists go into effect and stay in
effect for any meaningful period of time, they will be inflationary.
They will be and that's not in dispute. That's just
basic economics. I think the President is trying to balance
a few things all at once. He wants to get
these Trump tax cuts from twenty seventeen that expire by

(07:40):
the way, at the end of this year. He wants
to get those passed and made permanent. And that's a
campaign promise. I mean, I think he's going to negotiate,
you know, to the nth degree to make sure that happens.
But you got to pay for him. So we could
talk about DOGE and some of the expense cutting and
getting rid of fraud wasts and abuse. However, people look

(08:00):
at that as a way to save spending. But it's
all got to be a balancing act because if inflation
gets out of control here and the Fed can't lower
interest rates and inflation starts to go back up or
stay up, people are going to be unhappy about that
because that's one of the reasons why the country elected

(08:21):
President Trump to come in here.

Speaker 2 (08:22):
Yeah, to bring down costs of everything. And now we're
having these talks about what tariffs might do. I mean, automakers,
home appliance manufacturers, they use a lot of metal. There's
no ips answer butts about it. Those are very important
parts of the overall comomy, and it's things obviously that
we spend money on as consumers. What happens when these

(08:43):
tariffs go into play. If metal, if the cost of
metal goes up via tariffs, then those costs are going
to flow through to the consumers. So prices are going
to go up for you and I. If we're buying
a car, for buying appliances, whatever that might be, that
uses metal, so obviously a bigger concern there now steel workers,
they could benefit industries that rely on steel and aluminum.

(09:05):
I'm talking construction, manufacturing, auto industries themselves. They may suffer
from you know, we as consumers may suffer from higher costs,
but there could be some you know, opportunities there to
put some of those people to work potentially. Yep.

Speaker 1 (09:21):
Talk about what you're saying to your clients when they
come into the office every day to meet with you.
What are they asking you? What are you telling them
about how to deal with the uncertainty around tariffs in
their overall financial point.

Speaker 2 (09:34):
I mean, a campaign promise doesn't necessarily come to fruition. Yep.
Trump made a lot of campaign promises. That happens every
single presidential election. We have campaign promises to get votes
that don't necessarily come true. At the same time, what
happens in the short term doesn't always matter as well.
I mean, that's that's why we start a plan review

(09:55):
meeting with reviewing the financial plan. What in your situation
has changed, How have your financial how is your financial
situation needs or goals changed that would lead you to
need to make a change in how we're handling investments,
for example, because looking at the plan, it's just about
making sure that money lasts longer than you do, and
that your family longer than you and your family. So

(10:17):
making sure that we're still focusing on the long term
because we're not investing in presidents he We're investing in capitalism.
And you know, corporate greed isn't going anywhere, and that's
what drives the markets. So making sure that we stay invested.
No matter what kind of policy agenda is on the horizon,
this stuff it's not going to matter the way that

(10:37):
we think it might. You know, five ten years from now,
the markets are going to continue to go up. It's
like a drunk guy walking up the stairs playing with
the yo yo.

Speaker 1 (10:45):
That's well said. All right, here's the all Worth advice.
Don't let short term tariff talk derail you from your
long term financial plan. Stay diversified, focus on fundamentals, and
avoid emotional investment decisions based solely on political headlines. Neck
If your portfolio is filled with magnificent seven stocks, you'll

(11:05):
want to pay attention to what we're going to be
talking about next. You're listening to Simply Money presented by
all Worth Financial on fifty five KRC the talk station.
You're listening to Simply Money presented by all Worth Financial.
I'm Bob Sponseller, along with Steve Ruby. Hey, if you
can't listen to Simply Money every night, subscribe to our

(11:28):
daily podcast. You can listen the following morning during your
commute at the gym. Give it to friends if they
need some financial advice, tell them about it as well.
Simply Money. Look for Simply Money on the iHeart app
or wherever you find your podcast straight Ahead at six
forty three. How to ensure you get the most out

(11:49):
of tax deductions and credits? All right, Steve seven companies
have driven significant percentage of the stock market gains over
the past couple of years. The good news is that
if you own the S and P five hundred index
or the Nasdaq Index, you have exposure to all of
them already without even thinking about it. But this segment

(12:12):
we're going to talk about now is dedicated to those
who might own a ton of stock in any of
these specific mag seven companies or are overweighted to the
tech sector in general.

Speaker 2 (12:24):
You know, there's an article that came out in MarketWatch
that pulled back the curtain a little bit and looked
at some of Goldman's Stacks research, finding an oddity. While
while kind of peeking under the hood of the current
earning seasons for major tech companies. What they pointed out
is that this marks the first quarter with no positive
sales surprises for the Magnificent seven since the year twenty

(12:45):
twenty two. So over the past few years, major tech companies,
they've been the pillar of the s and P five
hundred sales and earnings and growth. We've been talking about
that for a long time, you know, these companies being
the major driving force behind the huge perform that we've
seen over the last couple of years. But the expanse
of those surprises it's been waning. And that's part of

(13:06):
the issue here that this surprised some of these people
doing the research behind the scenes.

Speaker 1 (13:12):
Well, and you bring up a good point, and we
hear all the time from folks that get on the
media and talk about, you know, individual stocks, and we
all hear the term price to perfection right from time
to time. I think this is what Goldman Sachs is
pointing out here. And a good example of this is
the Google earnings report from last week. They beat on earnings,

(13:32):
but they had a minuscule miss on the sales side,
and the stock drops seven percent like that. I mean,
it was a good earnings report. And I think the
thing to keep in mind is that for all of
these high growth stocks, the reason the pe ratio and
the price of these stocks continue to climb is that

(13:53):
investors are expecting quarter after quarter outsize earnings growth and
sales growth, and if there's any blip in either of
those categories, things can get a bit volatile in a hurry. Yeah,
it's a challenge for people that are sitting just in
let's say an SMP five hundred index fund, because when
a significant portion of the price of what you hold

(14:18):
is impacted just by seven stocks and we get a
little curveball like that, then that has a major impact.

Speaker 2 (14:23):
I mean, I've had people coming to my office like,
why shouldn't I just own the S and P five
hundred And it may not seem like it, but the
answer is a lack of diversification. Yes, you're holding five
hundred company shares when you have an SMP five hundred fund,
but it's also not equal weighted. It's market cap weighted.
So the biggest companies that make up that SMP five

(14:44):
hundred pull the price of the S and P five
hundred the most. So when you have a little miss
in sales for Microsoft that can throw off the index
very very quickly.

Speaker 1 (14:55):
Yeah, and the good news is there are ways to
manage around this, and interested in your th on this steed.
But for example, you can go out and buy an
equal weight Nasdaq Index fund or S and P five hundred,
so instead of cap weighting the stocks, everything's equal weight
that you own five hundred stocks equally. And we've seen,

(15:15):
for example, I looked at it the other day, a
couple of these equal weight ETFs have been much much
less volatile in recent days and weeks than the cap
weighted ETFs that are so highly concentrated in the magnificent
seven stocks.

Speaker 2 (15:30):
And when we're looking at it from a growth perspective
over the long term, you're talking about smoothing out the
volatility by having an equal weighted SMP five hundred fund.
When you're looking at it from a growth perspective as well.
That the giants, they're not always going to be the giants,
But we'll talk about that in a little bit. When
it comes to one of the smaller companies inside of
the S and P five hundred, I mean, they're all
big companies, but one of the smaller ones, it's a

(15:51):
lot easier for that company the double in value than
it is for already the biggest company the double in value.
So it's an interesting perspective that you bring up. But
the other way to combat that is just through diversification,
having a lot of different ETFs of you know, passively
managed index funds as opposed to just an S and
P five hundred.

Speaker 1 (16:09):
You're listening to simply money presented by all Worth Financial.
I'm Bob sponseller along with Steve Ruby. Just a reminder
we should probably just remind listeners of what these magnificent
seven stocks even are, and I'm just going to read
them off real quick. Alphabet, Amazon, Apple, Meta or you know,
Facebook based, book, Microsoft, Navidia, and Tesla. Those are the

(16:29):
seven stocks. And as you just pointed out, Steve, while
these companies are strong, they are not immune to economic
cycles or shocks. Talk a little bit about that.

Speaker 2 (16:39):
I mean any kind of slowed down in consumer spending, advertising,
cloud computing demand that obviously those types of things could
impact revenue. You know, we've had segments in the past
that covered the fact that no group of stocks, say
dominant forever. So think of Cisco in the two thousands
or ge in the nineteen nineties, time market leadership shifts

(17:01):
and today's winners probably aren't going to be tomorrow's winners
at some point.

Speaker 1 (17:07):
Yeah, and I look back to the late nineties and
early two thousands. I was actually, you know, an advisor
back then, and that was the first real bear market
I experienced as an advisor. So, wow, what a lesson
learned during that period. But I do I'm not gonna
say it's different this time because a lot of those
dot com companies I'm not talking about Cisco, but a

(17:30):
lot of the dot com stocks that just got ridiculously
overpriced in the late two thousands, they had no earnings.
So when we talk about you know, Meta and Google
and Amazon, these these are really solid companies, well run
companies that have earnings and sales growth. What we're talking
about is things can get a little ahead of themselves

(17:52):
instead in terms of the price and the valuation of
these companies, and you can experience more volid utility then
you might have bargained for if you allow yourself to
get overweighted in this sector.

Speaker 2 (18:05):
Oh yeah, it's a prime example of why we don't
want to have too much stock in one single company.
Most advisors you talk to are going to say no
more than five or ten percent of your overall net
worth should be in one individual stock. One of the
challenges in today's day and age with the Magnificent seven
is they hold so much weight in an index fund,

(18:27):
for example, that you may own more than you think,
especially if you're a DIY investor doing it yourself, and
you know, maybe you have some individual stocks, maybe s,
some ETFs. Now you maybe you don't realize it, but
you could be very oversaturated in one of these Magnificent seven.
So that when we have some kind of a miss
that is a surprise, like what with what happened to Microsoft,

(18:49):
then our portfolio is getting kicked in the teeth a
little bit harder than we anticipated even possible.

Speaker 1 (18:55):
Yeah, and even just owning the index as we talked about,
I mean the valuation, the percentage cap weighting of the
S and P five hundred approached thirty three percent in
these mag seven stocks.

Speaker 2 (19:07):
Yeah.

Speaker 1 (19:08):
Most investors, I think are unaware of that, and if
they were aware of that, would not have signed up
for that amount of concentration in what they hoped was
a diversified portfolio. Here's the all worth advice. Having exposure
to the Magnificent seven makes sense, but over concentration is risky.
A balanced portfolio spreads risk across sectors, asset classes, and

(19:31):
geographies to avoid potential pitfalls. Coming up next, we talk
about negotiating your worth with your employer. You're listening to
Simply Money presented by all Worth Financial on fifty five KRC,
the talk station.

Speaker 3 (19:50):
You're listening to Simply Money presented by all Worth Financial.
I mean you Wagner along with Bob'spondseller New Year, and
maybe you're hoping to get some new out of your
boss in the form of a raise in this kind
of post pandemic world. And it sounds crazy to be
saying that because we're several years removed from it. But
I don't feel like the job market has really quite

(20:11):
normalized yet, and so you might just kind of feel
like you don't even know what kind of ground you're
standing on. Can you ask for one? How much would
you ask for?

Speaker 1 (20:20):
What?

Speaker 3 (20:20):
Should you say? I don't have the answers, but Julie
Balki does.

Speaker 2 (20:23):
Julie on the job.

Speaker 3 (20:24):
She's our expert in all things having to do with
your career. You know, Juli I think there's a lot
of people, and we've been talking on the show for
several years now about inflation. It's harder and harder to
make ends meet. And maybe you've just been working really
hard and haven't been getting the raises that you think
maybe you deserve. So if you're thinking twenty twenty five
is the year for that, how do you go about it?

Speaker 4 (20:45):
First thing I think it's really really important to remember
is that asking for a raise it is a business conversation.
It is a business decision on the part of your organization,
whether to give you more money or give you what
you ask for, whether that's more time off, whatever it is.
So it's a business decision, and so it therefore it

(21:08):
will and should be run through the lens of what
you've contributed as one lens. Okay, so back up, what
do I mean by a business decision? What I mean
is you will not get traction by saying things like
my rent went up, I need a raise, or gosh,

(21:29):
you know, inflation is so high, I need a raise,
or I'm not making men's ends meet. I need a raise.
You've then made it personal, and I get that it's
personal to you, but that's not a compelling Argument's let's
break it down. When you are hired, it's to provide
a service of value, and organizations decide to pay you

(21:49):
based on the value your value plus other things obviously,
but so you've got this all goes down to what
value are you bringing? Now, if you're a strong performer,
if you are consistently being praised and what would we
do without you and blah blah blah, then you have
a little bit of leverage. But if you are someone

(22:11):
who's been like barely phoning it in, you've been talked
to about, look, you need to step it up asking
for a raise. It's just a really bad idea. A
little tell you that, right, it does. And so you
have to start with understanding your value. What is it
you bring to the workplace. How have your accomplishments, your actions,

(22:33):
the things that you've done, the things you've taken on,
how have those contributed to the success of the organization.
That's really what it is. Because if someone comes to
me and says my rent went up, I need a raise, well,
everybody's rents going up, and you can't make a business
case to that. So you have to start with what
is your value and So this is something where we

(22:54):
really struggle, you know, I think humans really struggle with this,
and I think women especially struggle with this. Which is
what is my value? I show up every day and
work hard is lovely, really, But what is it? What
have you taken on, what have you done, what have
your accomplishments been? What is it? What can you point
to that says I need to be making more money

(23:16):
than I'm making now. And part of that can also
be what is the market paying? You know, so if
the market is paying twenty thousand dollars more for the
exact same job, that's also a part of your case
because your employer may not even know that. And so
I think that's a part of the case. Market is
part of the case because then then there starts to
be a risk of losing people. But you have to

(23:37):
deliver all of this in a very business like, non
emotional way and lay out the facts or you won't
get anywhere.

Speaker 1 (23:45):
So, Julie, if I'm hearing and understanding you correctly, what
this involves is you got to do a little homework.
You got to do a little research, and meaning start
with what were the goals of the organization you work for?
For the last year, did we meet those goals? And
then what part of that, what role in that did
you play where you can demonstrate your value in helping

(24:07):
the organization win. Is that somewhat on track?

Speaker 4 (24:11):
Absolutely, yes, very much. So it could be something like,
you know, when Fred left back in March, I took
on Fred's role for six straight months with no additional
compensation or help. I was happy to do that to
help the organization. But you know, I'm still doing a
lot of Fred's work, and you know, and here we are,

(24:31):
and of course the organization is saving money by not
having Fred there anymore. And so you know, you can
talk about but again too, just to know it's a
value to you. For some people it is money. But
what if it's really not for you about the money.
What if it's more about flexibility. What if it's you know,

(24:52):
I'm happy to help out the organization, what I'd really
like to do, what I'd really like to talk about
for the year moving forward, is the ability to work
remotely on Friday. So if that's a value to you.
We always ask for more money, because who doesn't want
more money, But you have to figure out the source
of your discontent and that could be. It could be

(25:14):
it could be something that will not be alleviated by
an increase in your salary. It could be more about
the quality of your life and so getting really clear
on what would make you happier than right that, happier
where you are than than you are right now? What
is that? And just you have to and if you
really do like you said, you really have to dig

(25:36):
deep and understand what it is for you. And we
always call back on salary, which is fine, but again
you've got to show that value and sometimes by saying, look,
I just got contacted by a recruiter who's looking for
someone for the ABC company and the job sounds exactly
like mine, and the starting salary or the low end

(25:59):
of the range is about fifteen thousand dollars more than
I make. Can we talk about how we might address
that in the upcoming year. See that that's a very
emotionless business conversation versus I just got a call them career.
I could go over to the XYZ company tomorrow and
make fifteen thousand dollars more than you cheap cheap guys
or paying me that that's not going to get you anywhere.
And so you have to think, as I say, you

(26:20):
have to think from both sides of the desk when
you're asking for an increase.

Speaker 3 (26:24):
I love that you made that point, Julie, because I
think for many of us two things. First of our
money is very emotional, and second of all our jobs
we feel very emotional. We spend a lot of time
at them. And so understanding this is business, you cannot
go throw up all over your boss's desk all of
your emotions. And I have been overwhelmed, and I think
you're over It's not going to go well. And so

(26:46):
I love that you're saying you have to look at
this from a business standpoint. But I really want to
touch on what you were saying about salary, because you
mentioned this kind of a couple of years ago that
maybe millennials and some of the younger generations do not
value salary as much as maybe my generation. It used
to be the only thing you ever negotiated. Right, give

(27:10):
examples of other things that you have heard.

Speaker 1 (27:13):
I love the.

Speaker 3 (27:13):
Example of maybe Friday is working from home. What are
some other stuff that we can negotiate that maybe we've
never even thought about negotiating before.

Speaker 4 (27:22):
Yes, so certain things are non negotiable, like your healthcare benefits.
It's also generally not negotiable to say I want four
weekstification instead of three, because once the organization gives that
to you, everybody else should get. The organization is going
to get is going to get themselves in trouble if
they start to be, if they start to be more,

(27:45):
if they start to be what's going to be considered
unfair or discriminatory. You can't do that. So, first of all,
can you negotiate? And if there might be or there
might be times when you work for an organization where
they have a strict eight to five the office and
your your hands maybe tied, your leader's hands may be
tied in terms of what they can give you. But

(28:07):
it never hurts to ask. So is it I'd like
to what I'd really like to do now that I've
now that I'm pretty much doing a job and a half,
I'd really like to spend some time on a project
over here. I'd like to learn more about this. I'd
like to maybe head up a company volunteer team. So

(28:27):
figure out what would make your I'd like to make
your work life better or maybe you know, as I
look around, I'd really I think I'd really like to
point my career over here. Can we talk about what
that might look like? And can you help connect me
with some of the people over there so I can
start to broaden my career view so that you know,

(28:48):
I you know, so that I can continue to grow
that might be for me.

Speaker 1 (28:52):
Yeah.

Speaker 3 (28:52):
I think the key here is understanding if this is
the year to negotiate what's important to you and then
go at it from that business perspective. Great perspective as
always from Julie Balki. Julie on the Job. You're listening
to Simply Money presented by all Worth Financial here in
fifty five KRC the talk station.

Speaker 1 (29:12):
You're listening to Simply Money presented by all Worth Financial.
I'm Bob sponseller along with Steve Ruby. Do you have
a financial question that you'd like for us to answer.
There's a red button you can click right there. Listening
to the show on the iHeart app, Just simply record
your question and it'll go straight to us. Tax season
is here, Steve, and while no one enjoys filing, we

(29:34):
all want to pay less taxes. The key knowing the
deductions and credits that far too many people overlook, let's
walk through tax breaks that might bring more money back
into your pocket. And some of these are hiding in
plain sight, right in front of our faces, and we
don't even realize it.

Speaker 2 (29:53):
Yeah, I mean, these are things you don't want to
miss if they apply to you. And remember the deduction
as if you're itemizing your taxes and not taking the
standard deduction, which is very high in this day and age,
part of the Trump tax cuts, most people are taking
the standard deduction. But if one of these situations impacts you,
then you want to think about maybe itemizing. And then
there's also the credits. This is something that applies whether

(30:15):
or not you're itemizing or taking the standard deduction. First
and foremost, medical expenses over seven and a half percent
of AGI. That's your adjusted gross income. If your out
of pocket medical expenses exceed that number seven point five percent,
you can deduct the excess. This includes and this this
is quite a few things, but it's doctor visits, dental work, prescriptions,

(30:35):
even miles driven to medical appointments. So if you had
a big year with medical expenses, this is something worth
looking into because it may be a reason to itemize
in and of itself.

Speaker 1 (30:47):
Even if you don't think you're going to be able
to itemize based on the standard deduction. The key is
keeping your receipts.

Speaker 2 (30:52):
Right sure, Yeah, which is you know, kind of boring
and a lot of us don't do. So you get
to think about that. Yeah, all right.

Speaker 1 (30:58):
Here's another one to savors credit, and here's one a
lot of people miss. If you counttribute to an IRA
or a workplace retirement plan and your income falls within
certain livid limits, you could qualify for the savers credit
and it's worth up to one thousand dollars for individuals
or two thousand dollars.

Speaker 2 (31:17):
For married couples.

Speaker 1 (31:18):
And if you qualify, it's essentially free money just for
doing the right thing and saving for retirement. Again, this
is a credit, not a deduction.

Speaker 2 (31:28):
Yeah, it's a government incentive to save, but it is
the income limits are a little bit smaller for that
self employed health insurance deduction. Again, this isn't a credit.
This is a deduction against taxes that you know you
might have if you itemize, if you're self employed, you
might be able to deduct up to one hundred percent
of your health insurance premiums, not just for yourself, but

(31:50):
for your spouse for dependence, if you're married, finally jointly
have children, whatever that might be direct reduction, your tax
will income which is better than the stand deduction if
you are above that standard deduction number.

Speaker 1 (32:04):
You're listening to Simply Money presented by all Worth Financial.
I'm Bob Sponseller along with Steve Ruby. We're talking about
tax credits and tax deductions that some people might be
overlooking here as we approached tax season, Steve talked to
us about the home office deduction.

Speaker 2 (32:20):
I used this one once. It was a long time ago.
It's been more than seven years. If you use part
of your home exclusively for business, you might be eligible
for a home office deduction. Is this can include a
portion of your rent, utilities, even internet costs. Now the
irs they do have a simplified option. It's five dollars
per square foot up to three hundred square feet. But

(32:42):
what happened was is at the time I lived in
the shadow of New York City in Jersey City, New Jersey,
and we had a two bedroom apartment because the roommate
moved out and it was just my wife and I
at the time, and an entire bedroom was actually converted
to a home office for me at that time. So
had it been audited, I would have been able to
back up the numbers. So this is one of those
things where one of the most common reasons to be

(33:05):
audited by the I r S is the home office deduction.
So be careful. But in a situation where you can't
justify the use of a part of your home exclusively
for business, uh, this is worth looking into.

Speaker 1 (33:20):
Were you able to write off that eighty eight inch
large screen TV and the Sunday NFL.

Speaker 2 (33:26):
TA, yeah, everything? Were you able to pull that off?
I didn't mess around, did you. Tri It was funny
because the first year I ever got ten ninety nine
and I was like, what is this in all these taxes?
You know? It was it was a learning experience. But
I found a solution and it was the home office deduction.
Very helpful.

Speaker 1 (33:46):
Great, here's another good one for our educators out there,
you know, and teachers. I know this. You know, my
wife used to be a teacher, and I know how
much money she would pull out of her pocket to
buy school supplies and things that, you know, for certain
students that were just not FURNACEHD to her through the
school system, just as a reminder. For teachers, you can

(34:07):
deduct up to three hundred dollars for classroom supplies that
you paid for out of your own pocket. And if
you're married, you know, Mary filing jointly and you're both educators,
that's up to six hundred dollars.

Speaker 2 (34:19):
You know.

Speaker 1 (34:20):
Again, given how much teachers spend on supplies these days,
that's at least a small way to get something back.

Speaker 2 (34:26):
Yeah, it can help a little bit. Obviously lifetime or actually,
let's talk about the child in the penic care credit.
If you pay for daycare, summer camp, after school care
for a child that is under the age of thirteen,
you may qualify for a tax credit worth up to
thirty five percent of those costs. This isn't just a deduction,
it's a direct credit, meaning it reduces your tax bill

(34:48):
dollar for dollar, whether or not you're itemizing or taking
the standard deduction.

Speaker 1 (34:52):
Did you use this to send your daughter to Ninja
training camp so she could win a national championship?

Speaker 2 (34:58):
You know, maybe we'll look into it. It's a good idea,
but it wasn't national. It's just it was state. But
she's on her way to Nashville. Awesome, all right, here's
the all Worth advice. Take the time to see what
you qualify for a little extra effort can mean more
money in your pocket. Next, Steve is going to have
a gem of advice for us. You're listening to Simply
Money presented by all Worth Financial on fifty five KRC

(35:21):
the talk station back. You're listening to Simply Money presented
by all Worth Financial. I'm Bob sponseller along with Steve Ruby,
and I can't wait. But here, you know, here it
comes Ruby's Gem of Advice. I like that. I kind

(35:42):
of caught you laugh in there a little bit at
the beginning from me. I love your walk up music.
Steve didn't choose it, it was chosen for me. But
here we are now Gem advice. So we we just
we just talked for a little bit about some some
state or some some deductions and some credits. That's just
tax filing. There's the a whole other aspect of financial
planning is tax planning in and of itself. So you know,

(36:05):
I feel like we need to hit that a little
bit today because obviously it is this season now. When
you're working with a fiduciary financial planner, maybe an accountant,
these are conversations that should be front and center throughout
the year because one part of financial planning it's not
just investment management. It's not just you know, risk management,
a state planning, and retirement planning. It's it's tax planning.

(36:26):
So conversations around Let's say you retired, your income went down,
you have a lot of pre tax money and a
four to one K that you just rolled into an IRA.
Your income is lower than it's been in a long time.
You never accumulated a lot of WROTH assets. You know
that when you turn seventy five or seventy three years old,
there's going to be some big rm ds. How do

(36:47):
we solve for that today? We look at WROTH conversions
for example. So this is taking money that you have
in pre tax accounts, a four to one K and
IRA and simply moving it into WROTH. Now, when we're
doing this, we're filling up a tax bracket that that's
the ideal situation, whether or not it's the twenty two
percent or the twenty four percent. But there could be
other strategies that you can deploy at the same time

(37:09):
to bunch your tax filing to Rather than take the
standard deduction, we take we take it and we itemize,
so that list we just went through, combining with strategies
like I don't know, funding a donor advice fund YEP,
for example, that that could be you know, making five
years of donations forwards by taking some highly appreciated stock

(37:30):
putting it into a donor advice fund, capitalizing on some
of these other deductions that we just spoke about, and
now all of a sudden, you're able to do one
hundred extra thousand dollars of rock conversions with no tax impact.
It's a beautiful thing when you have people in your
corner that can step up to the plate and make
sure that they are shining light on some of these
opportunities that you wouldn't think of if you're going at
it alone.

Speaker 1 (37:51):
And all of these things typically involve sitting down proactively
with a trusted fiduciary advisor who can walk you through
some of these tools that we have available to model
out these scenarios so we can actually see the impact
of deploying different strategies, right, Steve, Yeah.

Speaker 2 (38:07):
It's fun kind of justifying the recommendation. Here's why we
recommend this. We'll look at your baseline scenario versus if
we do deploy these strategies, what's the impact on your portfolio?

Speaker 1 (38:20):
Thanks for listening. You've been listening to Simply Money, presented
by all Worth Financial on fifty five karc V talk
station