Episode Transcript
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Speaker 1 (00:06):
Tonight we are talking about policy power and your pocket change.
You're listening to Simply Money, presented by all Worth Financial
Immy Wagner along with Bob Sponteller. So much to get to,
all centering around fed Shared, Jerome Powell, President Trump, and pennies.
But first we have to get what's been driving a
(00:28):
bit of market volatility here today, and that is inflation
numbers coming out a bit hotter than anyone had predicted.
Speaker 2 (00:39):
Yeah, this was a bit of a surprise this morning.
Amy prices for all goods and services were up three
percent compared to last January, and that was a bit
higher than estimated. The month to month increase zero point
five percent, which is the biggest increase month over months
since August of twenty twenty three.
Speaker 3 (00:57):
When you think about it, that's a big difference.
Speaker 1 (00:59):
When you think about the that you're paying half a
percent more one month later right than you were just
the month before, that's a big increase. And you know
three percent, you're essentially paying three percent more for everything
that you were buying a year ago.
Speaker 3 (01:14):
And you know, interestingly, Bob, I was thinking about that.
Speaker 1 (01:16):
You know, when we build financial plans for our clients,
we kind of put three percent in there, knowing that
that's what basic living expenses are currently going up.
Speaker 3 (01:25):
It's a moving target.
Speaker 1 (01:26):
Our chief investment officer Andy stout Right tells us every year,
here's how much we think we should inflate our plans for.
But I want to I just want to say for
anyone who's thinking about retirement, these numbers are important because
you better be accounting for inflation when you're thinking about
how much you're going to need.
Speaker 3 (01:43):
Over the course of a retirement.
Speaker 1 (01:45):
I mean, in three percent, this number was far higher
than any economist that was pulled came up with.
Speaker 3 (01:52):
So this number was pretty surprising.
Speaker 2 (01:56):
Yeah, only five of the seventy three forecasters in bloomber
you know, inflation survey economists survey had the core inflation
rate rising as high as it did. You know, it's
not a monumental jump, but it's higher than estimated, and
it's going to get the attention of the Fed.
Speaker 4 (02:14):
I think it's going to.
Speaker 2 (02:15):
Get the attention of President Trump as he continues to
talk about and negotiate tariffs. You know, I go back
to Amy, remember when we were told that inflation was transitory.
Speaker 3 (02:28):
It's such a disturber y.
Speaker 1 (02:30):
Yes, I do, I do, was not going to stick
around for long. And then what's interesting is then the
Fed kind of jumped into the fray by tackling inflation
by raising interest rates.
Speaker 3 (02:43):
And then, you know, a year and.
Speaker 1 (02:45):
A half after they mentioned it was transitory, they said, hey,
this is going to stick around for longer, even after
we have done our work. It's going to take more
work potentially for this to come down. And I think
this is, you know, just another example of that this.
Speaker 3 (03:00):
Inflation is incredibly sticky.
Speaker 1 (03:03):
And when you put on top of that the potential
inflationary pressure of you know, President Trump talking about tariffs.
Speaker 3 (03:11):
I've said this so many times on the show.
Speaker 1 (03:13):
You could not pay me enough to do Jerome Pal's job.
Speaker 2 (03:20):
Yeah, And if we look under the hood here and
to your point about Chairman Pal, he actually has to
go before Congress today and just sit there at a
desk while give congressional folks from both sides of the
aisle just engage in their litany of you know, political theater,
and just lecture the poor guy. You know, like you said,
(03:41):
I wouldn't want that job, you know, for millions and
millions of dollars a year.
Speaker 4 (03:44):
But anyway back to fundamental you know numbers.
Speaker 2 (03:47):
If we look under the hood here, what was interesting
is the shelter index rose point four percent, and that
that accounted for about thirty percent of the monthly increase inflation.
Speaker 4 (03:58):
That was a bit of a surprise, as.
Speaker 2 (04:00):
Energy rose one point one percent and the gasoline index
rose one point eight percent. So and along with shelter
and energy, there's also some stickiness in motor vehicle insurance, airfares,
and education costs. So this inflation is pretty broadly distributed
throughout the economy.
Speaker 4 (04:20):
And then, Amy, your favorite topic, the price of eggs.
Speaker 2 (04:25):
The egg index rose by fifteen point two percent, the
most since twenty fifteen. We need more chickens.
Speaker 1 (04:32):
Amy, We need more chickens that don't have bird fluw
right or whatever. Whatever this is, it's that's causing that's
driving off egg prices, you know, but I think that's
it's it's good to mention what's driving this increase because
we know what's happening with egg prices. We know that
there is an illness that's you know, cause it you know,
that's caused egg prices to go up. It's not I'm
(04:54):
going to it's probably a transitory thing. You know, it's
not a long term we're going to be paid this
much for egg prices. We've dealt with this before with
citrus crops and different kinds of produce, so I do
think this egg portion of inflation will be more short term.
Speaker 5 (05:11):
You know.
Speaker 1 (05:12):
And I also think it's interesting that, you know, the
cost of housing right is a large driver of this,
because that had been driving inflation, and that was the
stickiest thing if you looked under the hood of what
had happened with inflation, and then a month ago, that's
the part where it looked like we were going to
have relief, and it just seems like maybe that was
(05:33):
a little more temporary than maybe they had been hoping for.
Speaker 2 (05:38):
Yeah, and just as a reminder, these are month over
month numbers, and we constantly get revisions up and down,
so there's no reason to panic. We're just giving you,
you know, the information, which is what we pledged to
all of you to give you, you know, real numbers.
One bright spot in the report there was a one
point four percent dip in apparel prices. Amy, and I
(06:00):
I know your son Trey has been closely watching apparel
prices because he's worried about the price of his Nike
basketball shoes, right, So that's some good news for Trey.
Speaker 1 (06:09):
Yes, although he's also getting ready to turn sixteen in
a car, so we're going to have to deal with
that and the insurance on top of it, which might
actually outweigh the savings we might have on the basketball shoes.
You're listening to Simply Money presented by all Worth Financial
I Memi Wagner along with Bob Sponseller. If you are
wondering why you are dealing with some volatility today and
(06:32):
your four O one K, well, it is new inflation
numbers came out hotter than expected and this is something
that Fed Chair Jerome Palell is going to have to
account for when he goes before Congress today. He didn't
this was not planned because these inflation numbers came out.
It's just the beautiful timing of it for Powell that
these numbers will be here and he will answer to this.
Speaker 3 (06:55):
Now. I think you know.
Speaker 1 (06:56):
There are already some some articles, some talk online of
does this mean the FED starts to go back down
this path of raising interest rates? We do not think
we are there yet, you know, I mean, certainly if
there's a long trend of this over several months.
Speaker 3 (07:13):
Maybe maybe that's where they go.
Speaker 1 (07:15):
But this is, to your point, Bob, one number one
number that will likely be adjusted one way or another.
And I don't see any major moves in the economy
as the result of it.
Speaker 4 (07:28):
Yeah.
Speaker 2 (07:29):
And you know our chief investment officer, Andy Stout, who
was on our show Monday. You know, one among the
many key points that he, you know, brought to us
which were very helpful, one thing that I listened to
intently was he said, hey, guys, at this point, I
would not I would assume that the FED will not
move rates until September or October.
Speaker 4 (07:49):
Yeah, and you know these he's getting pushed back later,
and he's getting pushedback.
Speaker 2 (07:55):
You know, he might come back next Monday and say
they're not going to move rates until twenty thirty two.
I'm joking, but it does keep getting pushed back. And
I'm telling you, Amy, after today's inflation print, the FED
is not going to drop rates anytime soon. You can,
well you can, I'll say it. You can take that
to the bank the bank.
Speaker 4 (08:16):
Yeah. Yeah.
Speaker 1 (08:17):
One thing you can't take to the bank potentially soon,
your pennies.
Speaker 3 (08:23):
This is I think from a nostalgias standpoint. I'm struggling
with this one a little bit.
Speaker 1 (08:28):
I was thinking about when I was a little girl,
like with my grandparents, and we would go to like
Lake sor any where where there was a fountain. My
Grandpa Hubert Wagner would always give me pennies to throw
into the fountain to make a wish.
Speaker 3 (08:41):
Well, I guess, speaking of inflation, if you're going to.
Speaker 1 (08:44):
Make a wish, it will soon need to be with
a nickel, because pennies are apparently going to be a
thing of the past.
Speaker 2 (08:51):
Amy the price of wishes, just like the price of eggs,
just keeps going up exponentially.
Speaker 3 (08:58):
No kidding, No, this isn't so.
Speaker 1 (09:00):
This is you know, President Trump has directed the Treasury
Department to stop minting new pennies. He's like, hey, listen,
here's the deal. This doesn't make sense financially. A one
cent coin h literally cost us more than two cents
to make, which is wasteful, and so he has instructed
(09:21):
the Secretary of the US Treasury to stop making them. Now,
how does this all shake out right or is this
going to be a larger cost for everyone? Well, I
think when you account for rounding up and rounding down.
What economists are saying is it's basically not going to
have any major impact.
Speaker 3 (09:39):
This is not going to.
Speaker 1 (09:40):
Be a huge inflationary impact that the FED is going
to have to deal with long term.
Speaker 2 (09:46):
Yeah, I'll quote a couple of you know, respected economists,
Robert Waples from Wake Forest University.
Speaker 4 (09:51):
He said, the bottom.
Speaker 2 (09:52):
Line, as I see it, it basically isn't going to
have any impact.
Speaker 4 (09:56):
You know.
Speaker 2 (09:56):
He talked about, you know, prices getting rounded up for
canny bars and things like that a non event. And
the same thing, you know, Oz Shy, a senior policy
advisor and economist at the Federal Reserve Bank of Atlantas, said,
you know, rounding prices to the nearest nicol would not
have quote any significant inflationary consequences.
Speaker 4 (10:17):
So I see this.
Speaker 2 (10:18):
As a non event, you know, kind of like the
President's signing. I think it was actually an executive order
he signed yesterday saying we're getting rid of paper straws, Amy,
we're going back to plastic, and he talked about paper
straws exploding in his mouth, which I still don't understand
how that happens.
Speaker 4 (10:37):
But yeah, pennies and paper straws are gone. For the
time being.
Speaker 1 (10:43):
The mom and me just keeps thinking about when I
was teaching my kids, like how to count money in pennies.
Speaker 3 (10:48):
We're part of it.
Speaker 1 (10:50):
But I do think like from a logical standpoint, I
mean it makes sense. Actually Canada this continued making pennies
in twenty thirteen. There's been a handful of European countries
they kind of do the same.
Speaker 3 (11:01):
They now have rounding.
Speaker 1 (11:02):
Rules to avoid using the euroscent. So I mean there
is precedent here. It's not going to be a major upheaval.
I just think it's a It's like just a piece
of Americana.
Speaker 3 (11:13):
It's just going by the wayside.
Speaker 4 (11:15):
Amy.
Speaker 2 (11:16):
The president is just trying to make things easier for everybody.
I mean, after all, if Canada is going to be
our fifty first state and they've already gotten rid of
the penny up there, let's just make things easier for everybody, right.
Speaker 3 (11:29):
Oh boy, all right? Well, coming up next, one great.
Speaker 1 (11:32):
Way to take advantage of the power of compounding. You
may have never thought about this, but it makes a difference.
You're listening to Simply Money presented by all Worth Financial
here on fifty five KRC, the talk station you're listening
to Simply Money, presented by all Worth Financial. I Me
Me Wagner along with Bob Sponseller. If you can't listen
(11:52):
to our show every night, you don't have to miss
a thing we talk about. We've got a daily podcast
where you just search Simply Money. It's right there on
the iHeart app or wherever you get your podcasts. And
coming up at six forty three, You've got a lot
of calls and some good ones about Umbrella insurance bonds
in your portfolio, and a lot more.
Speaker 3 (12:11):
We'll get to those in just a few minutes. But first,
some news on one of our.
Speaker 1 (12:15):
Hometown teams, the Cincinnati Business Courier. Right, we're huge fans
of the business career. They often come on the show
and update us. They do some great reporting. Well, they
are announcing that Kroger is actually laying people off. You know,
this is a tough, tough business running grocery stores. The
profit margin is like fractions of pennies on a lot
(12:38):
of the things that you're buying.
Speaker 3 (12:41):
And I really am a fan of how well run
Kroger is. No one wants to hear about layoffs. But
let's get into what's going on.
Speaker 2 (12:49):
Here well to your point, Amy Kroger spokesperson said quote,
as we continue delivering fresh, affordable food to our customers,
we are focusing on key priority areas that support our
go to market strategy. And as part of this prioritization work,
we announced team restructures and a small number of eliminated
(13:10):
roles to improve efficiency. So, yes, the profit margins are
small to begin with, and you know, nobody likes inflation
and nobody likes their food costs going up. So we
do need to rely on companies like Kroger to be
well run. I mean, they still need to make a profit.
And you know, just a reminder, this Albertson's merger, you know,
(13:31):
did not come to fruition, So I think a lot
of this was expected if that, if that merger didn't happen,
and it did not, it was going to result in
you know, some consultants and other data analysis type folks,
you know, probably not having a job.
Speaker 4 (13:45):
And that's that's really what happened here.
Speaker 1 (13:47):
Yeah, and just for some perspective here, we're talking about
a couple hundred jobs.
Speaker 3 (13:51):
Kroger had about fifty.
Speaker 1 (13:53):
Eight hundred employees here in Greater Cincinnati, spread between its
headquarters eighty four fifty one, right, the data and marketing
and then the technic, technology and digital group that was
kind of as of a year ago. So you know
and listen if you were one of those people. I
do not want to downplay the impact on you, and
just kind of a reminder, whether you work for Kroger
(14:14):
or anywhere, that next paycheck is never ever guaranteed, Which
is why I think a financial plan is so important,
because you know, if your path forward has a major
detour like this one in it, at least you had
a map in the first place to help you figure
out what that what that route is in a lot
of the decisions that come along with it.
Speaker 3 (14:34):
So we'll keep an eye on what's happening at Kroger here.
Speaker 1 (14:37):
I don't think this is any major ripple or you know,
anything like that for the company.
Speaker 3 (14:42):
You know, a couple of layoffs.
Speaker 1 (14:43):
Is they sort of prune some jobs based on which
projects are doing well.
Speaker 3 (14:48):
And which or not.
Speaker 1 (14:50):
Are you taking advantage of tax law when it comes
to how much money you're keeping in your pockets? You know,
we talk about tax efficiency, we talk about compound and
I think there's a way that you can marry these
two things together.
Speaker 3 (15:04):
That has to do with timing.
Speaker 2 (15:07):
And what we're talking about here Amy in particular, is
when you make those contributions to your IRA or roth IRA,
do you wait till the end or do you get
it in there at the beginning. And so let's talk
about that. You know, and there's been a study that
Vanguard put out.
Speaker 4 (15:27):
You know, well, let me back up.
Speaker 2 (15:29):
You know, hopefully most people know and this is maybe
a tax planning tip for twenty twenty four. You've got
till April fifteenth of this year, or until you file
your taxes to make your IRA contributions for the twenty
twenty four tax year. There's still time. Same thing with
HSA accounts. Yeah, So the study that Vanguard in this
(15:49):
case looked at is is there a big difference in
what is that difference between contributing that money to those
accounts early in the year like now for twenty twenty five,
are waiting until late March or early April of twenty
twenty six to make twenty twenty five tax your contributions,
and you know, the compounding effect can be sizeable over time.
Speaker 1 (16:12):
Yeah, I mean, we're talking about the difference in sixteen
months here, right, And I've never seen dollars and cents
put to this, but I think this.
Speaker 3 (16:18):
Is really eye opening.
Speaker 1 (16:20):
If you did, right, go ahead and contribute the maximount, right,
a lump sum contribution of seven thousand dollars, it's eight
thousand dollars if you're fifty year older, that catch up contribution,
and you got a six percent return, and you did
this over twenty years, right, the first till you could
possibly put that IRA money in, you would have earned
one hundred and thirty eight thousand, two hundred dollars if
(16:43):
you waited until April, right, so just a year and
a half liter same thing, put the same money in
every year, got that six percent return.
Speaker 3 (16:51):
You did it over twenty years. The difference twenty thousand dollars.
I mean, we talk about compounding, and we often talk.
Speaker 1 (17:00):
About a bob over the course of years in decades,
but this is the difference of just backing up those
contributions about a year, putting it in as soon as
you possibly can, and loving that money.
Speaker 3 (17:11):
Right, the difference being twenty thousand dollars. That's huge.
Speaker 2 (17:14):
Well, it goes back to a point that you make
you know often on the show and it's good that
you pointed out control what you could control. Yeah, you know,
so we are all in control of the timing and
when these make when we make these contributions. Now, granted,
this study, you know, assumed a six percent linear rate
of return. There's no guarantee that the market's going to
(17:35):
go up rather than down in those intervening sixteen years.
But most years the market goes up. And you know,
the point here is take advantage of that compound growth
and compound interest by controlling the timing of when you
deposit your money.
Speaker 4 (17:49):
It makes a huge difference over time.
Speaker 1 (17:51):
Yeah, I mean compounding your money makes money, and the
money your money makes makes more money. And I think
this is just a fantastic example of how this works.
And I think you know, it's also important to point
out here to the rule of seventy two. So this
is just a very simplified formula that calculates how long
is it going to take for an investment to double
(18:14):
in value based on its rate of return? Right, you
get an eight percent rate of return on something eight
into seventy two means whatever that initial money that you
put in in nine years should double.
Speaker 3 (18:26):
And you know, so I think It's a really good way.
Speaker 1 (18:28):
To understand how compounding works in the dollars and cents
of it.
Speaker 2 (18:32):
So simple even a cave man can do it. Amy
takes seventy two divided by your assumed rate of return,
and that's how many years it takes to double.
Speaker 4 (18:41):
I think even I can understand what you just said.
Speaker 1 (18:43):
Well, it's interesting too, because I recently had a client
in my office who was like, shouldn't this money have
doubled by now?
Speaker 3 (18:50):
And it wasn't.
Speaker 1 (18:50):
It wasn't any money that she had invested with us.
It was money that had come from somewhere else outside.
But we had the talk and I was like, let's
let's apply the rule of seventy two to this and
look at realistically, and once we plug the numbers in,
she was like, oh, okay. She had some unrealistic expectations
for really, you know, that's going to double in two years.
And I'm like, okay, well, let's look at the rate
(19:12):
of return that you would need to get an order
for that to happen. So this is kind of a
great rule of thumb to have in your back pocket
when you're trying to make some assumptions about where your
money's going to go in the future.
Speaker 3 (19:22):
Here's the all Worth advice.
Speaker 1 (19:23):
Consider making your full contribution to your traditional IRA or
roth IRA for twenty twenty five as soon as you
possibly can. Your future self will thank you because obviously
it does make a difference. Next, we're firing up this
simply Money scam tracker.
Speaker 3 (19:38):
This time it's.
Speaker 1 (19:39):
All about romance, but not the kind you want to
fall for. You're listening to Simply Money presented by all
Worth Financial here on fifty five KRC.
Speaker 3 (19:48):
The talk station.
Speaker 1 (19:53):
You're listening to Simply Money presented by all Worth Financial.
I Memi Wagner along with Bob spaon Seller. It is February,
the season for love. Valentine's Day is this week. I
also think it's an important time to focus not only
on romance but romance scams, because it is insane how
(20:14):
many people fall for these and the financial impact can
be devastating. Joining us tonight our own Cupid Joeial earlier
from the Cincinnati Better Business Bureau.
Speaker 3 (20:26):
Not to shoot some arrows through some romance, but.
Speaker 1 (20:29):
I think this is some really good perspective on what
we need to keep an eye out for. And I
think Joe Sials also really easy to say, I would
never I would never fall for that. But people are
falling for these scams.
Speaker 5 (20:43):
They are falling for this scam. And as you mentioned,
February is the month of love. It's a good time
to talk about this scam. But remember this scam happens
all year round. And you might think of this as
being directed toward older people who are lonely and maybe
locked in the homes for whatever reason, but the victims
of these scams really are trending younger. In fact, last year,
(21:06):
nearly six out of ten romance scams involve people under
thirty five. Remember, anybody can be a target, absolutely anybody, men, women, gay, straight,
any ethnicity, any financial status. It could be your parent,
your neighbor, your child, your best friend. If you hear
this tonight, please share this information with everybody you know. Now,
(21:29):
there are several versions of the scam, but they all
follow the same em and I want to go over
that with you so that you're familiar with how this
scam works. So first, romance scammers use dating websites or
apps or social media to lure you into a relationship.
They use stolen credit cards to join dating sites, and
they pace post fake profiles, using pictures and bios of
(21:54):
very attractive people and oftentimes well to do people that
they have copied off of other dating apps. Now, once
you match, they'll start to build a relationship with you,
but they'll never agree to meet you. They'll claim to
be in the military, or they work overseas, there's some
reason why you can never meet them in person. They'll
also try to get you to move to a different
(22:15):
form of communication like email or texting. Very early on.
That way, if the dating site identifies the scammer as
bogus and shuts them down, they've already established another way
to communicate with you. Another way they lure you in
are those odd text messages that appear to be from
a friend that we've all gotten, you know, say hi,
(22:36):
are we still meeting for dinner or some strange question
like that, and when you respond back that they texted
the wrong person, the game begins. Next phase is the grooming.
This is when the scammer learns about you, what you
like to do, your hobbies, your favorite music, anything that
will help them build a connection with you. They might
(22:56):
get this information from your social media posts or just
by having cons or text exchanges with you, and not surprisingly,
all your favorite things are their favorite things. The goal
is to build your trust, and the more things you
allegedly have in common, the easier it'll be for you
to trust them. These scammers will often create fake Facebook
(23:17):
accounts for their aliases to add to their believability factor.
They'll incorporate what they've learned about you into their pages.
You like to cook, their Facebook page will reference their
love of cooking. You like the symphony, their page will
reference their last concert. This relationship building stage can go
on for quite a while, maybe even months. You might
(23:37):
get daily messages from these people. Some even send flowers
or small gifts occasionally. This is also when they might
start asking for small favors, like lend them a little
money because they need to pay a bill, or they
want to send a present to their mother. Whatever they do,
pay that back. That's all setting the stage for the
(23:57):
big ask that's going to come later.
Speaker 2 (24:00):
This is one of the times where I, for among
other reasons, I'm so glad I've been happily married now
for over thirty four years.
Speaker 4 (24:07):
Because I've never been on these sites. I'm obviously not
the target market.
Speaker 3 (24:12):
It's a jungle out there.
Speaker 4 (24:14):
Yeah.
Speaker 2 (24:15):
Yeah, it's a jungle that I have not had to
venture into, and I'm thankful for that.
Speaker 1 (24:20):
But Juzille, you're talking about the build up, and I
think the interesting thing about the scam is these scammers
are patients.
Speaker 3 (24:26):
They spend a lot of time crafting, to your point, stories,
posting pictures, gaining your trust. And then you mentioned the
big ask. Tell us about that.
Speaker 5 (24:39):
Well, the scammers finally going to ask for the big money,
usually for an emergency. Maybe they or their friend needs
medical help, or they have a business problem and they
need quick cash. Remember I said earlier that a lot
of these profiles define these people as well to do
so you're asking, well, why do they need money? They
are very good at, excuse me, crafting a story that's well,
(25:04):
I can't take money out of my business right now,
it's all tied up, blah blah blah. They're excellent storytellers.
They're excellent at getting you to believe what they have
to say.
Speaker 2 (25:17):
Fine, yea, and I have to be you know, we've
talked about various scams in the past, but I have
to believe when it involves a romance situation where a
potential relationship is.
Speaker 4 (25:27):
On the Mott.
Speaker 2 (25:28):
You know a potential relationship is out there, Defenses go
down quickly, right because everybody wants to believe what they
want to believe.
Speaker 4 (25:37):
Am I someone on the right track there?
Speaker 5 (25:39):
Joe Sial, You're absolutely right. And the people that are targeted,
if you will, are generally looking for friendship, looking for
a relationship. Maybe they're isolated for some reason or another.
Young people are different than when I was a young person.
(26:00):
We used to go out and socialize. A lot of
socialization for younger people is done over the internet, so
there is a sense of maybe being isolated.
Speaker 3 (26:12):
Now.
Speaker 5 (26:12):
I talked about sending the money to them. If you
don't send the money, and this gets to your point,
the scammers are going to become hostile, maybe even threaten you,
or they're going to stop that communication altogether. And the
last people that the last thing that the victim might
want is to be alone again. So that's another way
to force them to send the money. Even if you
(26:35):
realize you've been scammed, the fraud may continue with a
new scam called the recovery scam, where a bogus government
official is going to reach out to say the scammer's
been caught and you can now get your money back
if you spend several thousand dollars in seed. Yeah, or
the original scammer may reach out again, professing that the
(26:57):
relationships started as a scam, but they really did fall
in love with you and the cycle continues.
Speaker 1 (27:05):
Great perspective, Josio, and I think this is such an
important thing to talk about. You think your loved ones,
your parents, whoever it is, would not fall for it.
But I'm telling you I've seen it happen, and I've
seen it happen to the tunes of some devastating financial hits.
So please pay attention to these things. Have these conversations.
Great insight as always from Josille Erlik from the Better
(27:27):
Business Bureau. You're listening to Simply Money presented by all
Worth Financial here in fifty five krs the talk station.
You're listening to Simply Money presented by all Worth Financial.
I mean Me Wagner along with Bob spaondseller. Do you
have a financial question you need some help figuring out? Well,
there's a red button you can click on while you're.
Speaker 3 (27:46):
Listening to the show.
Speaker 1 (27:47):
It's right there on the iHeart appercord. Your question, It's
coming straight to us will help you figure it out.
And we've got some good questions for you. Right now,
let's get straight to John and Sycamore Township.
Speaker 2 (27:58):
What benchmarks should I use to a value wait, my
investment performance? Well, this question, Amy, this reminds me of
what you just talked about with your client in the
last segment. It comes down to having realistic expectations. So
a lot of people say, I want to beat the market.
I want to beat the market. Well, what is the market?
Speaker 4 (28:17):
Most people?
Speaker 2 (28:18):
Most people would agree that the market is the biggest
measure of the market is the S and P five hundred. However,
a lot of people don't invest their money or have
the same risk tolerance for their portfolio as the S
and P five hundred or one hundred percent in stocks.
So I think the important benchmark to use is to
look at the allocation that you have selected based on
(28:42):
your own personal risk tolerance and factor that in you know,
and I'm talking about the allocation of bonds, cash and stocks,
and then use an appropriate benchmark that measures the performance,
so you're truly looking at things from an apples to
apples basis.
Speaker 1 (28:59):
I have heard this many many times, right the S
and P was up twenty plus percent. But what about
my investments. Well, let's look at how you're invested. Maybe
it's fifty fifty or sixty forty, meaning you know, ontlyst
sixty percent of that has the stock market exposure. Obviously,
at that point you're not going to get the same
(29:19):
lift from the upside as you would have when you're
one hundred percent invested in the market.
Speaker 3 (29:25):
So, you know, I think it's important to.
Speaker 1 (29:27):
Understand how you're invested, how they're doing from a performance standpoint,
But you really have to understand. It cannot be an
apples to oranges kind of comparison. It needs to be
an apples to apples, and you got to know how
your apples are invested in order to be able to
make that comparison.
Speaker 3 (29:46):
Let's get to Max and Fort Thomas.
Speaker 4 (29:47):
Now I have a two million dollar net worth. How
much umbrella insurance do I need?
Speaker 1 (29:52):
I love that we're talking about umbrella insurance because I
think it's really important to have this. Having umbrella insurance
is essentially having an attorney on retainer in case something
catastrophic happens. Right, if you have two million dollars in
net worth, I think a two million dollar policy makes
a lot of sense to cover that essentially. And there's
(30:15):
so my kids joke, they're like, Mom, you're such a
fun sponge.
Speaker 3 (30:18):
I look out my back window and there's one of.
Speaker 1 (30:21):
Those huge, ginormous climbing gyms in the backyard for the
toddlers behind us, and I'm thinking, all these neighborhood kids
come over.
Speaker 3 (30:28):
If someone gets hurt on that.
Speaker 1 (30:29):
I'm like, I hope they have an umbrella policy. The
people next door to us have this huge trampoline. There's
always seventy five boys piled onto it. I'm like, I
hope they have an umbrella insurance. If you are someone
who coaches a sport literally whatever it is, there's just
so many reasons why having an umbrella insurance policy makes sense.
I think you need one to cover your net worth,
(30:51):
to protect your family. And another thing I want to make.
Another point I want to make about umbrella insurance is.
Speaker 3 (30:57):
It's relatively affordable.
Speaker 1 (30:59):
Just a few dollars a year for a million dollars
worth of coverage. So definitely something to look into. All right,
So let's get to Tony in Madeira.
Speaker 2 (31:08):
Should I continue to treat the bond portion of my
portfolio strictly as fixed income once I retire, or should
I take a more dynamic approach. This is a rather
loaded question, and you know there's no one size fits
all answer to this, but I think where Tony's going.
Speaker 4 (31:25):
With this question.
Speaker 2 (31:27):
I think it correlates to something Andy Stout talked about
on Monday when he was on the show. And we're
talking about structuring your portfolio to have perhaps lower volatility
assets in a position to deliver the next, say, one
to three years worth of cash flow needs in retirement.
Speaker 4 (31:47):
And so some.
Speaker 2 (31:48):
People will use cash or you know, short maturity bond,
something with lower volatility to pay for the next one
to three years of needed expenses, and that allows your
allocation in stocks more time to grow and take on
the volatility that stocks can sometimes have, and that's often
(32:10):
a very good strategy to carry into retirement.
Speaker 1 (32:14):
What I really like about this question is for many
of us, when we are we spend decades in that
accumulation phase, right the money is just going into those accounts,
and the closer we get to retirement, the more strategic
we need to be about how we're going to take
distributions when we get to retirement. And there's the point
of you know, does this need stock market exposure if
(32:36):
I'm going to need it to live.
Speaker 3 (32:37):
Off of next year? And also a tax.
Speaker 1 (32:39):
Efficiency part of this that I think needs to be
taken into consideration.
Speaker 3 (32:42):
So I like that this.
Speaker 1 (32:43):
Question is looking at Okay, what strategy should I employ
when I get to retirement because things are different when
you're taking those distributions.
Speaker 3 (32:52):
Let's get to Sandy and Villa Hills quickly.
Speaker 4 (32:55):
How do I know whether I have enough money to
buy long term care insurance? Great question, Sandy. I'm gonna
spend this question on its head a little bit.
Speaker 2 (33:04):
To me, It's not whether you have enough money to
buy long term insurance, it's whether you have enough money
to even need long term care insurance.
Speaker 4 (33:13):
And this is what I mean.
Speaker 2 (33:14):
I mean a lot of people can buy it, but
you know, sometimes depending on your individual situation, and this
is why you need a customized financial plan working with
a fiduciary advisor. A lot of people have enough assets
and income sources, you know, to be able to self
ensure that need. So you're potentially throwing money down an
(33:34):
insurance rat hole that you don't need to buy. On
the other hand, when you model out the potential exposure
of a long term care event. You know, if not
planned for, that can really submarine your whole long term
retirement plan. So again, it's not whether you have enough
money to pay the premiums. It's evaluating whether you need
(33:57):
coverage at all, and then what kind of coverage you need.
Speaker 4 (34:00):
I think that's the direction that we got to go here.
Speaker 1 (34:02):
Yeah, I think insurance makes sense for some people. But
the key here is to look at what would I
do if there was a long term care event, and
to do the analysis on that to figure out what
makes the most sense for you. Coming up next, red
flags for when your vice might also be a financial problem.
Speaker 3 (34:18):
You're listening to Simply Money presented by all Worth Financial
here on fifty five KRC the talk station.
Speaker 1 (34:28):
You're listening to Simply Money presented by all Worth Financial.
I mean you Wagnero along with Bob's spawn seller.
Speaker 6 (34:33):
You know, we all have that thing that maybe we
do that we wish we wouldn't. Maybe yours is okay,
like mine wine on the weekends, right, that's my vice.
You know, I have friends who love sports betting and
spend some money on that.
Speaker 3 (34:51):
It can run the spectrum.
Speaker 1 (34:53):
But if you ever looked at that vice through the
lens of what's really costing me in dollars and cents.
Speaker 2 (35:01):
Oh boy, you're gonna take all You're gonna remove all
the fun from my life.
Speaker 4 (35:05):
Here, Amy, I.
Speaker 3 (35:06):
Told you my kids call me a fun sponge.
Speaker 4 (35:08):
Here we are, all right, fun sponge? All right.
Speaker 2 (35:11):
Well, a new bank rate survey shows that more than
four and five Americans that's eighty four percent, spend money
on alcohol, lottery tickets, casino games, tobacco, sports, betting, or marijuana.
Have we checked all the boxes on what you do
on the weekends?
Speaker 3 (35:28):
Amy, Oh right, right, that would be a crazy weekend
for me. But here's the deal. When you dig deeper
into those.
Speaker 1 (35:35):
Numbers, nearly one in three who are spending money on
these substances or gambling say, I'm taking on debt to
pay for it. I think it's just really important to
know how much am I spending on things? Once or
twice a year. I like to sit down in this.
I know sounds super fun. Maybe I do this on
the weekend with a glass of wine. But to look
at what we're really spending our money and and to say, oh,
(35:57):
like gosh, we're spending x dollars on eating out. It
is eating out that important to us, you know, And
so I think it's important to say, oh, I'm spending
this on gambling or this on alcohol.
Speaker 3 (36:10):
Is it that important to me?
Speaker 1 (36:12):
And if it's to the detriment of other things like
experiences with our family, like saving for retirement, then at
least having the.
Speaker 3 (36:21):
Numbers in front.
Speaker 1 (36:22):
Of you give you the choice to say, do I
want to continue to spend this much on whatever this is? Yeah?
Speaker 2 (36:29):
And all joking aside, I think that's the key point
and a great point. You do have to take a
look at what you are spending on these things. And
I'll give you a personal example. I've shared this, you know,
on the show a couple of times. You know, I
completely stopped drinking alcohol last November and I was shocked
amy how much money I was spending on bourbon.
Speaker 4 (36:50):
Yeah, and you know.
Speaker 2 (36:51):
When I pulled out the credit card statements and all that,
and I looked at it and then looked at you know,
the changes post bourbon, I was pretty surp and that
that that's an aside, that's just money, you know, to
say nothing of the health benefits and the time, you know,
the more quality time spent with family and my wife
that she's happy about. So, yeah, you got to count
(37:13):
the costs on all these things. And if you're and
we joke about FanDuel accounts and all that, I mean,
if you're betting on FanDuel and you've got a credit
card balance sitting there at twenty six point eight percent
that needs to be fixed, you know, you're just you're
just digging yourself a huge hole that you need to
dig yourself out of here. And unfortunately about you know,
(37:34):
eighty four percent of Americans are land somewhere on that spectrum.
Speaker 1 (37:39):
And if you have not had this conversation with your
maybe younger adult children, I think it's a good time
to share this perspective with them. You know, I have
an eighteen year old who, for whatever reason, is addicted
to all the coffee drinks, right, and so we have
talked about Listen, you have to pay for these certain
things when it comes to college, and you have to
(37:59):
figure out what whither you can afford.
Speaker 3 (38:01):
The coffee and those things.
Speaker 1 (38:03):
And if something has to go, it's your fancy coffee drink, sorry, kiddo,
you know, And I think.
Speaker 3 (38:07):
That's how we all have to make decisions.
Speaker 1 (38:10):
As adults, you know certainly have your vices, but if
they are costing you to the detriment of being able
to save and do things that are really in line
with what's important to you.
Speaker 3 (38:20):
You got to make some important decisions at that point.
Speaker 1 (38:22):
Thanks for listening. Tomorrow we're breaking down dollar cost average.
So how does this work?
Speaker 3 (38:27):
Is this a good strategy for you?
Speaker 1 (38:29):
You've been listening to Simply Money, presented by all Worth
Financial here on fifty five KRC, the talk station
Tonight we are talking about policy power and your pocket change.
You're listening to Simply Money, presented by all Worth Financial
Immy Wagner along with Bob Sponteller. So much to get to,
all centering around fed Shared, Jerome Powell, President Trump, and pennies.
But first we have to get what's been driving a
(00:28):
bit of market volatility here today, and that is inflation
numbers coming out a bit hotter than anyone had predicted.
Speaker 2 (00:39):
Yeah, this was a bit of a surprise this morning.
Amy prices for all goods and services were up three
percent compared to last January, and that was a bit
higher than estimated. The month to month increase zero point
five percent, which is the biggest increase month over months
since August of twenty twenty three.
Speaker 3 (00:57):
When you think about it, that's a big difference.
Speaker 1 (00:59):
When you think about the that you're paying half a
percent more one month later right than you were just
the month before, that's a big increase. And you know
three percent, you're essentially paying three percent more for everything
that you were buying a year ago.
Speaker 3 (01:14):
And you know, interestingly, Bob, I was thinking about that.
Speaker 1 (01:16):
You know, when we build financial plans for our clients,
we kind of put three percent in there, knowing that
that's what basic living expenses are currently going up.
Speaker 3 (01:25):
It's a moving target.
Speaker 1 (01:26):
Our chief investment officer Andy stout Right tells us every year,
here's how much we think we should inflate our plans for.
But I want to I just want to say for
anyone who's thinking about retirement, these numbers are important because
you better be accounting for inflation when you're thinking about
how much you're going to need.
Speaker 3 (01:43):
Over the course of a retirement.
Speaker 1 (01:45):
I mean, in three percent, this number was far higher
than any economist that was pulled came up with.
Speaker 3 (01:52):
So this number was pretty surprising.
Speaker 2 (01:56):
Yeah, only five of the seventy three forecasters in bloomber
you know, inflation survey economists survey had the core inflation
rate rising as high as it did. You know, it's
not a monumental jump, but it's higher than estimated, and
it's going to get the attention of the Fed.
Speaker 4 (02:14):
I think it's going to.
Speaker 2 (02:15):
Get the attention of President Trump as he continues to
talk about and negotiate tariffs. You know, I go back
to Amy, remember when we were told that inflation was transitory.
Speaker 3 (02:28):
It's such a disturber y.
Speaker 1 (02:30):
Yes, I do, I do, was not going to stick
around for long. And then what's interesting is then the
Fed kind of jumped into the fray by tackling inflation
by raising interest rates.
Speaker 3 (02:43):
And then, you know, a year and.
Speaker 1 (02:45):
A half after they mentioned it was transitory, they said, hey,
this is going to stick around for longer, even after
we have done our work. It's going to take more
work potentially for this to come down. And I think
this is, you know, just another example of that this.
Speaker 3 (03:00):
Inflation is incredibly sticky.
Speaker 1 (03:03):
And when you put on top of that the potential
inflationary pressure of you know, President Trump talking about tariffs.
Speaker 3 (03:11):
I've said this so many times on the show.
Speaker 1 (03:13):
You could not pay me enough to do Jerome Pal's job.
Speaker 2 (03:20):
Yeah, And if we look under the hood here and
to your point about Chairman Pal, he actually has to
go before Congress today and just sit there at a
desk while give congressional folks from both sides of the
aisle just engage in their litany of you know, political theater,
and just lecture the poor guy. You know, like you said,
(03:41):
I wouldn't want that job, you know, for millions and
millions of dollars a year.
Speaker 4 (03:44):
But anyway back to fundamental you know numbers.
Speaker 2 (03:47):
If we look under the hood here, what was interesting
is the shelter index rose point four percent, and that
that accounted for about thirty percent of the monthly increase inflation.
Speaker 4 (03:58):
That was a bit of a surprise, as.
Speaker 2 (04:00):
Energy rose one point one percent and the gasoline index
rose one point eight percent. So and along with shelter
and energy, there's also some stickiness in motor vehicle insurance, airfares,
and education costs. So this inflation is pretty broadly distributed
throughout the economy.
Speaker 4 (04:20):
And then, Amy, your favorite topic, the price of eggs.
Speaker 2 (04:25):
The egg index rose by fifteen point two percent, the
most since twenty fifteen. We need more chickens.
Speaker 1 (04:32):
Amy, We need more chickens that don't have bird fluw
right or whatever. Whatever this is, it's that's causing that's
driving off egg prices, you know, but I think that's
it's it's good to mention what's driving this increase because
we know what's happening with egg prices. We know that
there is an illness that's you know, cause it you know,
that's caused egg prices to go up. It's not I'm
(04:54):
going to it's probably a transitory thing. You know, it's
not a long term we're going to be paid this
much for egg prices. We've dealt with this before with
citrus crops and different kinds of produce, so I do
think this egg portion of inflation will be more short term.
Speaker 5 (05:11):
You know.
Speaker 1 (05:12):
And I also think it's interesting that, you know, the
cost of housing right is a large driver of this,
because that had been driving inflation, and that was the
stickiest thing if you looked under the hood of what
had happened with inflation, and then a month ago, that's
the part where it looked like we were going to
have relief, and it just seems like maybe that was
(05:33):
a little more temporary than maybe they had been hoping for.
Speaker 2 (05:38):
Yeah, and just as a reminder, these are month over
month numbers, and we constantly get revisions up and down,
so there's no reason to panic. We're just giving you,
you know, the information, which is what we pledged to
all of you to give you, you know, real numbers.
One bright spot in the report there was a one
point four percent dip in apparel prices. Amy, and I
(06:00):
I know your son Trey has been closely watching apparel
prices because he's worried about the price of his Nike
basketball shoes, right, So that's some good news for Trey.
Speaker 1 (06:09):
Yes, although he's also getting ready to turn sixteen in
a car, so we're going to have to deal with
that and the insurance on top of it, which might
actually outweigh the savings we might have on the basketball shoes.
You're listening to Simply Money presented by all Worth Financial
I Memi Wagner along with Bob Sponseller. If you are
wondering why you are dealing with some volatility today and
(06:32):
your four O one K, well, it is new inflation
numbers came out hotter than expected and this is something
that Fed Chair Jerome Palell is going to have to
account for when he goes before Congress today. He didn't
this was not planned because these inflation numbers came out.
It's just the beautiful timing of it for Powell that
these numbers will be here and he will answer to this.
Speaker 3 (06:55):
Now. I think you know.
Speaker 1 (06:56):
There are already some some articles, some talk online of
does this mean the FED starts to go back down
this path of raising interest rates? We do not think
we are there yet, you know, I mean, certainly if
there's a long trend of this over several months.
Speaker 3 (07:13):
Maybe maybe that's where they go.
Speaker 1 (07:15):
But this is, to your point, Bob, one number one
number that will likely be adjusted one way or another.
And I don't see any major moves in the economy
as the result of it.
Speaker 4 (07:28):
Yeah.
Speaker 2 (07:29):
And you know our chief investment officer, Andy Stout, who
was on our show Monday. You know, one among the
many key points that he, you know, brought to us
which were very helpful, one thing that I listened to
intently was he said, hey, guys, at this point, I
would not I would assume that the FED will not
move rates until September or October.
Speaker 4 (07:49):
Yeah, and you know these he's getting pushed back later,
and he's getting pushedback.
Speaker 2 (07:55):
You know, he might come back next Monday and say
they're not going to move rates until twenty thirty two.
I'm joking, but it does keep getting pushed back. And
I'm telling you, Amy, after today's inflation print, the FED
is not going to drop rates anytime soon. You can,
well you can, I'll say it. You can take that
to the bank the bank.
Speaker 4 (08:16):
Yeah. Yeah.
Speaker 1 (08:17):
One thing you can't take to the bank potentially soon,
your pennies.
Speaker 3 (08:23):
This is I think from a nostalgias standpoint. I'm struggling
with this one a little bit.
Speaker 1 (08:28):
I was thinking about when I was a little girl,
like with my grandparents, and we would go to like
Lake sor any where where there was a fountain. My
Grandpa Hubert Wagner would always give me pennies to throw
into the fountain to make a wish.
Speaker 3 (08:41):
Well, I guess, speaking of inflation, if you're going to.
Speaker 1 (08:44):
Make a wish, it will soon need to be with
a nickel, because pennies are apparently going to be a
thing of the past.
Speaker 2 (08:51):
Amy the price of wishes, just like the price of eggs,
just keeps going up exponentially.
Speaker 3 (08:58):
No kidding, No, this isn't so.
Speaker 1 (09:00):
This is you know, President Trump has directed the Treasury
Department to stop minting new pennies. He's like, hey, listen,
here's the deal. This doesn't make sense financially. A one
cent coin h literally cost us more than two cents
to make, which is wasteful, and so he has instructed
(09:21):
the Secretary of the US Treasury to stop making them. Now,
how does this all shake out right or is this
going to be a larger cost for everyone? Well, I
think when you account for rounding up and rounding down.
What economists are saying is it's basically not going to
have any major impact.
Speaker 3 (09:39):
This is not going to.
Speaker 1 (09:40):
Be a huge inflationary impact that the FED is going
to have to deal with long term.
Speaker 2 (09:46):
Yeah, I'll quote a couple of you know, respected economists,
Robert Waples from Wake Forest University.
Speaker 4 (09:51):
He said, the bottom.
Speaker 2 (09:52):
Line, as I see it, it basically isn't going to
have any impact.
Speaker 4 (09:56):
You know.
Speaker 2 (09:56):
He talked about, you know, prices getting rounded up for
canny bars and things like that a non event. And
the same thing, you know, Oz Shy, a senior policy
advisor and economist at the Federal Reserve Bank of Atlantas, said,
you know, rounding prices to the nearest nicol would not
have quote any significant inflationary consequences.
Speaker 4 (10:17):
So I see this.
Speaker 2 (10:18):
As a non event, you know, kind of like the
President's signing. I think it was actually an executive order
he signed yesterday saying we're getting rid of paper straws, Amy,
we're going back to plastic, and he talked about paper
straws exploding in his mouth, which I still don't understand
how that happens.
Speaker 4 (10:37):
But yeah, pennies and paper straws are gone. For the
time being.
Speaker 1 (10:43):
The mom and me just keeps thinking about when I
was teaching my kids, like how to count money in pennies.
Speaker 3 (10:48):
We're part of it.
Speaker 1 (10:50):
But I do think like from a logical standpoint, I
mean it makes sense. Actually Canada this continued making pennies
in twenty thirteen. There's been a handful of European countries
they kind of do the same.
Speaker 3 (11:01):
They now have rounding.
Speaker 1 (11:02):
Rules to avoid using the euroscent. So I mean there
is precedent here. It's not going to be a major upheaval.
I just think it's a It's like just a piece
of Americana.
Speaker 3 (11:13):
It's just going by the wayside.
Speaker 4 (11:15):
Amy.
Speaker 2 (11:16):
The president is just trying to make things easier for everybody.
I mean, after all, if Canada is going to be
our fifty first state and they've already gotten rid of
the penny up there, let's just make things easier for everybody, right.
Speaker 3 (11:29):
Oh boy, all right? Well, coming up next, one great.
Speaker 1 (11:32):
Way to take advantage of the power of compounding. You
may have never thought about this, but it makes a difference.
You're listening to Simply Money presented by all Worth Financial
here on fifty five KRC, the talk station you're listening
to Simply Money, presented by all Worth Financial. I Me
Me Wagner along with Bob Sponseller. If you can't listen
(11:52):
to our show every night, you don't have to miss
a thing we talk about. We've got a daily podcast
where you just search Simply Money. It's right there on
the iHeart app or wherever you get your podcasts. And
coming up at six forty three, You've got a lot
of calls and some good ones about Umbrella insurance bonds
in your portfolio, and a lot more.
Speaker 3 (12:11):
We'll get to those in just a few minutes. But first,
some news on one of our.
Speaker 1 (12:15):
Hometown teams, the Cincinnati Business Courier. Right, we're huge fans
of the business career. They often come on the show
and update us. They do some great reporting. Well, they
are announcing that Kroger is actually laying people off. You know,
this is a tough, tough business running grocery stores. The
profit margin is like fractions of pennies on a lot
(12:38):
of the things that you're buying.
Speaker 3 (12:41):
And I really am a fan of how well run
Kroger is. No one wants to hear about layoffs. But
let's get into what's going on.
Speaker 2 (12:49):
Here well to your point, Amy Kroger spokesperson said quote,
as we continue delivering fresh, affordable food to our customers,
we are focusing on key priority areas that support our
go to market strategy. And as part of this prioritization work,
we announced team restructures and a small number of eliminated
(13:10):
roles to improve efficiency. So, yes, the profit margins are
small to begin with, and you know, nobody likes inflation
and nobody likes their food costs going up. So we
do need to rely on companies like Kroger to be
well run. I mean, they still need to make a profit.
And you know, just a reminder, this Albertson's merger, you know,
(13:31):
did not come to fruition, So I think a lot
of this was expected if that, if that merger didn't happen,
and it did not, it was going to result in
you know, some consultants and other data analysis type folks,
you know, probably not having a job.
Speaker 4 (13:45):
And that's that's really what happened here.
Speaker 1 (13:47):
Yeah, and just for some perspective here, we're talking about
a couple hundred jobs.
Speaker 3 (13:51):
Kroger had about fifty.
Speaker 1 (13:53):
Eight hundred employees here in Greater Cincinnati, spread between its
headquarters eighty four fifty one, right, the data and marketing
and then the technic, technology and digital group that was
kind of as of a year ago. So you know
and listen if you were one of those people. I
do not want to downplay the impact on you, and
just kind of a reminder, whether you work for Kroger
(14:14):
or anywhere, that next paycheck is never ever guaranteed, Which
is why I think a financial plan is so important,
because you know, if your path forward has a major
detour like this one in it, at least you had
a map in the first place to help you figure
out what that what that route is in a lot
of the decisions that come along with it.
Speaker 3 (14:34):
So we'll keep an eye on what's happening at Kroger here.
Speaker 1 (14:37):
I don't think this is any major ripple or you know,
anything like that for the company.
Speaker 3 (14:42):
You know, a couple of layoffs.
Speaker 1 (14:43):
Is they sort of prune some jobs based on which
projects are doing well.
Speaker 3 (14:48):
And which or not.
Speaker 1 (14:50):
Are you taking advantage of tax law when it comes
to how much money you're keeping in your pockets? You know,
we talk about tax efficiency, we talk about compound and
I think there's a way that you can marry these
two things together.
Speaker 3 (15:04):
That has to do with timing.
Speaker 2 (15:07):
And what we're talking about here Amy in particular, is
when you make those contributions to your IRA or roth IRA,
do you wait till the end or do you get
it in there at the beginning. And so let's talk
about that. You know, and there's been a study that
Vanguard put out.
Speaker 4 (15:27):
You know, well, let me back up.
Speaker 2 (15:29):
You know, hopefully most people know and this is maybe
a tax planning tip for twenty twenty four. You've got
till April fifteenth of this year, or until you file
your taxes to make your IRA contributions for the twenty
twenty four tax year. There's still time. Same thing with
HSA accounts. Yeah, So the study that Vanguard in this
(15:49):
case looked at is is there a big difference in
what is that difference between contributing that money to those
accounts early in the year like now for twenty twenty five,
are waiting until late March or early April of twenty
twenty six to make twenty twenty five tax your contributions,
and you know, the compounding effect can be sizeable over time.
Speaker 1 (16:12):
Yeah, I mean, we're talking about the difference in sixteen
months here, right, And I've never seen dollars and cents
put to this, but I think this.
Speaker 3 (16:18):
Is really eye opening.
Speaker 1 (16:20):
If you did, right, go ahead and contribute the maximount, right,
a lump sum contribution of seven thousand dollars, it's eight
thousand dollars if you're fifty year older, that catch up contribution,
and you got a six percent return, and you did
this over twenty years, right, the first till you could
possibly put that IRA money in, you would have earned
one hundred and thirty eight thousand, two hundred dollars if
(16:43):
you waited until April, right, so just a year and
a half liter same thing, put the same money in
every year, got that six percent return.
Speaker 3 (16:51):
You did it over twenty years. The difference twenty thousand dollars.
I mean, we talk about compounding, and we often talk.
Speaker 1 (17:00):
About a bob over the course of years in decades,
but this is the difference of just backing up those
contributions about a year, putting it in as soon as
you possibly can, and loving that money.
Speaker 3 (17:11):
Right, the difference being twenty thousand dollars. That's huge.
Speaker 2 (17:14):
Well, it goes back to a point that you make
you know often on the show and it's good that
you pointed out control what you could control. Yeah, you know,
so we are all in control of the timing and
when these make when we make these contributions. Now, granted,
this study, you know, assumed a six percent linear rate
of return. There's no guarantee that the market's going to
(17:35):
go up rather than down in those intervening sixteen years.
But most years the market goes up. And you know,
the point here is take advantage of that compound growth
and compound interest by controlling the timing of when you
deposit your money.
Speaker 4 (17:49):
It makes a huge difference over time.
Speaker 1 (17:51):
Yeah, I mean compounding your money makes money, and the
money your money makes makes more money. And I think
this is just a fantastic example of how this works.
And I think you know, it's also important to point
out here to the rule of seventy two. So this
is just a very simplified formula that calculates how long
is it going to take for an investment to double
(18:14):
in value based on its rate of return? Right, you
get an eight percent rate of return on something eight
into seventy two means whatever that initial money that you
put in in nine years should double.
Speaker 3 (18:26):
And you know, so I think It's a really good way.
Speaker 1 (18:28):
To understand how compounding works in the dollars and cents
of it.
Speaker 2 (18:32):
So simple even a cave man can do it. Amy
takes seventy two divided by your assumed rate of return,
and that's how many years it takes to double.
Speaker 4 (18:41):
I think even I can understand what you just said.
Speaker 1 (18:43):
Well, it's interesting too, because I recently had a client
in my office who was like, shouldn't this money have
doubled by now?
Speaker 3 (18:50):
And it wasn't.
Speaker 1 (18:50):
It wasn't any money that she had invested with us.
It was money that had come from somewhere else outside.
But we had the talk and I was like, let's
let's apply the rule of seventy two to this and
look at realistically, and once we plug the numbers in,
she was like, oh, okay. She had some unrealistic expectations
for really, you know, that's going to double in two years.
And I'm like, okay, well, let's look at the rate
(19:12):
of return that you would need to get an order
for that to happen. So this is kind of a
great rule of thumb to have in your back pocket
when you're trying to make some assumptions about where your
money's going to go in the future.
Speaker 3 (19:22):
Here's the all Worth advice.
Speaker 1 (19:23):
Consider making your full contribution to your traditional IRA or
roth IRA for twenty twenty five as soon as you
possibly can. Your future self will thank you because obviously
it does make a difference. Next, we're firing up this
simply Money scam tracker.
Speaker 3 (19:38):
This time it's.
Speaker 1 (19:39):
All about romance, but not the kind you want to
fall for. You're listening to Simply Money presented by all
Worth Financial here on fifty five KRC.
Speaker 3 (19:48):
The talk station.
Speaker 1 (19:53):
You're listening to Simply Money presented by all Worth Financial.
I Memi Wagner along with Bob spaon Seller. It is February,
the season for love. Valentine's Day is this week. I
also think it's an important time to focus not only
on romance but romance scams, because it is insane how
(20:14):
many people fall for these and the financial impact can
be devastating. Joining us tonight our own Cupid Joeial earlier
from the Cincinnati Better Business Bureau.
Speaker 3 (20:26):
Not to shoot some arrows through some romance, but.
Speaker 1 (20:29):
I think this is some really good perspective on what
we need to keep an eye out for. And I
think Joe Sials also really easy to say, I would
never I would never fall for that. But people are
falling for these scams.
Speaker 5 (20:43):
They are falling for this scam. And as you mentioned,
February is the month of love. It's a good time
to talk about this scam. But remember this scam happens
all year round. And you might think of this as
being directed toward older people who are lonely and maybe
locked in the homes for whatever reason, but the victims
of these scams really are trending younger. In fact, last year,
(21:06):
nearly six out of ten romance scams involve people under
thirty five. Remember, anybody can be a target, absolutely anybody, men, women, gay, straight,
any ethnicity, any financial status. It could be your parent,
your neighbor, your child, your best friend. If you hear
this tonight, please share this information with everybody you know. Now,
(21:29):
there are several versions of the scam, but they all
follow the same em and I want to go over
that with you so that you're familiar with how this
scam works. So first, romance scammers use dating websites or
apps or social media to lure you into a relationship.
They use stolen credit cards to join dating sites, and
they pace post fake profiles, using pictures and bios of
(21:54):
very attractive people and oftentimes well to do people that
they have copied off of other dating apps. Now, once
you match, they'll start to build a relationship with you,
but they'll never agree to meet you. They'll claim to
be in the military, or they work overseas, there's some
reason why you can never meet them in person. They'll
also try to get you to move to a different
(22:15):
form of communication like email or texting. Very early on.
That way, if the dating site identifies the scammer as
bogus and shuts them down, they've already established another way
to communicate with you. Another way they lure you in
are those odd text messages that appear to be from
a friend that we've all gotten, you know, say hi,
(22:36):
are we still meeting for dinner or some strange question
like that, and when you respond back that they texted
the wrong person, the game begins. Next phase is the grooming.
This is when the scammer learns about you, what you
like to do, your hobbies, your favorite music, anything that
will help them build a connection with you. They might
(22:56):
get this information from your social media posts or just
by having cons or text exchanges with you, and not surprisingly,
all your favorite things are their favorite things. The goal
is to build your trust, and the more things you
allegedly have in common, the easier it'll be for you
to trust them. These scammers will often create fake Facebook
(23:17):
accounts for their aliases to add to their believability factor.
They'll incorporate what they've learned about you into their pages.
You like to cook, their Facebook page will reference their
love of cooking. You like the symphony, their page will
reference their last concert. This relationship building stage can go
on for quite a while, maybe even months. You might
(23:37):
get daily messages from these people. Some even send flowers
or small gifts occasionally. This is also when they might
start asking for small favors, like lend them a little
money because they need to pay a bill, or they
want to send a present to their mother. Whatever they do,
pay that back. That's all setting the stage for the
(23:57):
big ask that's going to come later.
Speaker 2 (24:00):
This is one of the times where I, for among
other reasons, I'm so glad I've been happily married now
for over thirty four years.
Speaker 4 (24:07):
Because I've never been on these sites. I'm obviously not
the target market.
Speaker 3 (24:12):
It's a jungle out there.
Speaker 4 (24:14):
Yeah.
Speaker 2 (24:15):
Yeah, it's a jungle that I have not had to
venture into, and I'm thankful for that.
Speaker 1 (24:20):
But Juzille, you're talking about the build up, and I
think the interesting thing about the scam is these scammers
are patients.
Speaker 3 (24:26):
They spend a lot of time crafting, to your point, stories,
posting pictures, gaining your trust. And then you mentioned the
big ask. Tell us about that.
Speaker 5 (24:39):
Well, the scammers finally going to ask for the big money,
usually for an emergency. Maybe they or their friend needs
medical help, or they have a business problem and they
need quick cash. Remember I said earlier that a lot
of these profiles define these people as well to do
so you're asking, well, why do they need money? They
are very good at, excuse me, crafting a story that's well,
(25:04):
I can't take money out of my business right now,
it's all tied up, blah blah blah. They're excellent storytellers.
They're excellent at getting you to believe what they have
to say.
Speaker 2 (25:17):
Fine, yea, and I have to be you know, we've
talked about various scams in the past, but I have
to believe when it involves a romance situation where a
potential relationship is.
Speaker 4 (25:27):
On the Mott.
Speaker 2 (25:28):
You know a potential relationship is out there, Defenses go
down quickly, right because everybody wants to believe what they
want to believe.
Speaker 4 (25:37):
Am I someone on the right track there?
Speaker 5 (25:39):
Joe Sial, You're absolutely right. And the people that are targeted,
if you will, are generally looking for friendship, looking for
a relationship. Maybe they're isolated for some reason or another.
Young people are different than when I was a young person.
(26:00):
We used to go out and socialize. A lot of
socialization for younger people is done over the internet, so
there is a sense of maybe being isolated.
Speaker 3 (26:12):
Now.
Speaker 5 (26:12):
I talked about sending the money to them. If you
don't send the money, and this gets to your point,
the scammers are going to become hostile, maybe even threaten you,
or they're going to stop that communication altogether. And the
last people that the last thing that the victim might
want is to be alone again. So that's another way
to force them to send the money. Even if you
(26:35):
realize you've been scammed, the fraud may continue with a
new scam called the recovery scam, where a bogus government
official is going to reach out to say the scammer's
been caught and you can now get your money back
if you spend several thousand dollars in seed. Yeah, or
the original scammer may reach out again, professing that the
(26:57):
relationships started as a scam, but they really did fall
in love with you and the cycle continues.
Speaker 1 (27:05):
Great perspective, Josio, and I think this is such an
important thing to talk about. You think your loved ones,
your parents, whoever it is, would not fall for it.
But I'm telling you I've seen it happen, and I've
seen it happen to the tunes of some devastating financial hits.
So please pay attention to these things. Have these conversations.
Great insight as always from Josille Erlik from the Better
(27:27):
Business Bureau. You're listening to Simply Money presented by all
Worth Financial here in fifty five krs the talk station.
You're listening to Simply Money presented by all Worth Financial.
I mean Me Wagner along with Bob spaondseller. Do you
have a financial question you need some help figuring out? Well,
there's a red button you can click on while you're.
Speaker 3 (27:46):
Listening to the show.
Speaker 1 (27:47):
It's right there on the iHeart appercord. Your question, It's
coming straight to us will help you figure it out.
And we've got some good questions for you. Right now,
let's get straight to John and Sycamore Township.
Speaker 2 (27:58):
What benchmarks should I use to a value wait, my
investment performance? Well, this question, Amy, this reminds me of
what you just talked about with your client in the
last segment. It comes down to having realistic expectations. So
a lot of people say, I want to beat the market.
I want to beat the market. Well, what is the market?
Speaker 4 (28:17):
Most people?
Speaker 2 (28:18):
Most people would agree that the market is the biggest
measure of the market is the S and P five hundred. However,
a lot of people don't invest their money or have
the same risk tolerance for their portfolio as the S
and P five hundred or one hundred percent in stocks.
So I think the important benchmark to use is to
look at the allocation that you have selected based on
(28:42):
your own personal risk tolerance and factor that in you know,
and I'm talking about the allocation of bonds, cash and stocks,
and then use an appropriate benchmark that measures the performance,
so you're truly looking at things from an apples to
apples basis.
Speaker 1 (28:59):
I have heard this many many times, right the S
and P was up twenty plus percent. But what about
my investments. Well, let's look at how you're invested. Maybe
it's fifty fifty or sixty forty, meaning you know, ontlyst
sixty percent of that has the stock market exposure. Obviously,
at that point you're not going to get the same
(29:19):
lift from the upside as you would have when you're
one hundred percent invested in the market.
Speaker 3 (29:25):
So, you know, I think it's important to.
Speaker 1 (29:27):
Understand how you're invested, how they're doing from a performance standpoint,
But you really have to understand. It cannot be an
apples to oranges kind of comparison. It needs to be
an apples to apples, and you got to know how
your apples are invested in order to be able to
make that comparison.
Speaker 3 (29:46):
Let's get to Max and Fort Thomas.
Speaker 4 (29:47):
Now I have a two million dollar net worth. How
much umbrella insurance do I need?
Speaker 1 (29:52):
I love that we're talking about umbrella insurance because I
think it's really important to have this. Having umbrella insurance
is essentially having an attorney on retainer in case something
catastrophic happens. Right, if you have two million dollars in
net worth, I think a two million dollar policy makes
a lot of sense to cover that essentially. And there's
(30:15):
so my kids joke, they're like, Mom, you're such a
fun sponge.
Speaker 3 (30:18):
I look out my back window and there's one of.
Speaker 1 (30:21):
Those huge, ginormous climbing gyms in the backyard for the
toddlers behind us, and I'm thinking, all these neighborhood kids
come over.
Speaker 3 (30:28):
If someone gets hurt on that.
Speaker 1 (30:29):
I'm like, I hope they have an umbrella policy. The
people next door to us have this huge trampoline. There's
always seventy five boys piled onto it. I'm like, I
hope they have an umbrella insurance. If you are someone
who coaches a sport literally whatever it is, there's just
so many reasons why having an umbrella insurance policy makes sense.
I think you need one to cover your net worth,
(30:51):
to protect your family. And another thing I want to make.
Another point I want to make about umbrella insurance is.
Speaker 3 (30:57):
It's relatively affordable.
Speaker 1 (30:59):
Just a few dollars a year for a million dollars
worth of coverage. So definitely something to look into. All right,
So let's get to Tony in Madeira.
Speaker 2 (31:08):
Should I continue to treat the bond portion of my
portfolio strictly as fixed income once I retire, or should
I take a more dynamic approach. This is a rather
loaded question, and you know there's no one size fits
all answer to this, but I think where Tony's going.
Speaker 4 (31:25):
With this question.
Speaker 2 (31:27):
I think it correlates to something Andy Stout talked about
on Monday when he was on the show. And we're
talking about structuring your portfolio to have perhaps lower volatility
assets in a position to deliver the next, say, one
to three years worth of cash flow needs in retirement.
Speaker 4 (31:47):
And so some.
Speaker 2 (31:48):
People will use cash or you know, short maturity bond,
something with lower volatility to pay for the next one
to three years of needed expenses, and that allows your
allocation in stocks more time to grow and take on
the volatility that stocks can sometimes have, and that's often
(32:10):
a very good strategy to carry into retirement.
Speaker 1 (32:14):
What I really like about this question is for many
of us, when we are we spend decades in that
accumulation phase, right the money is just going into those accounts,
and the closer we get to retirement, the more strategic
we need to be about how we're going to take
distributions when we get to retirement. And there's the point
of you know, does this need stock market exposure if
(32:36):
I'm going to need it to live.
Speaker 3 (32:37):
Off of next year? And also a tax.
Speaker 1 (32:39):
Efficiency part of this that I think needs to be
taken into consideration.
Speaker 3 (32:42):
So I like that this.
Speaker 1 (32:43):
Question is looking at Okay, what strategy should I employ
when I get to retirement because things are different when
you're taking those distributions.
Speaker 3 (32:52):
Let's get to Sandy and Villa Hills quickly.
Speaker 4 (32:55):
How do I know whether I have enough money to
buy long term care insurance? Great question, Sandy. I'm gonna
spend this question on its head a little bit.
Speaker 2 (33:04):
To me, It's not whether you have enough money to
buy long term insurance, it's whether you have enough money
to even need long term care insurance.
Speaker 4 (33:13):
And this is what I mean.
Speaker 2 (33:14):
I mean a lot of people can buy it, but
you know, sometimes depending on your individual situation, and this
is why you need a customized financial plan working with
a fiduciary advisor. A lot of people have enough assets
and income sources, you know, to be able to self
ensure that need. So you're potentially throwing money down an
(33:34):
insurance rat hole that you don't need to buy. On
the other hand, when you model out the potential exposure
of a long term care event. You know, if not
planned for, that can really submarine your whole long term
retirement plan. So again, it's not whether you have enough
money to pay the premiums. It's evaluating whether you need
(33:57):
coverage at all, and then what kind of coverage you need.
Speaker 4 (34:00):
I think that's the direction that we got to go here.
Speaker 1 (34:02):
Yeah, I think insurance makes sense for some people. But
the key here is to look at what would I
do if there was a long term care event, and
to do the analysis on that to figure out what
makes the most sense for you. Coming up next, red
flags for when your vice might also be a financial problem.
Speaker 3 (34:18):
You're listening to Simply Money presented by all Worth Financial
here on fifty five KRC the talk station.
Speaker 1 (34:28):
You're listening to Simply Money presented by all Worth Financial.
I mean you Wagnero along with Bob's spawn seller.
Speaker 6 (34:33):
You know, we all have that thing that maybe we
do that we wish we wouldn't. Maybe yours is okay,
like mine wine on the weekends, right, that's my vice.
You know, I have friends who love sports betting and
spend some money on that.
Speaker 3 (34:51):
It can run the spectrum.
Speaker 1 (34:53):
But if you ever looked at that vice through the
lens of what's really costing me in dollars and cents.
Speaker 2 (35:01):
Oh boy, you're gonna take all You're gonna remove all
the fun from my life.
Speaker 4 (35:05):
Here, Amy, I.
Speaker 3 (35:06):
Told you my kids call me a fun sponge.
Speaker 4 (35:08):
Here we are, all right, fun sponge? All right.
Speaker 2 (35:11):
Well, a new bank rate survey shows that more than
four and five Americans that's eighty four percent, spend money
on alcohol, lottery tickets, casino games, tobacco, sports, betting, or marijuana.
Have we checked all the boxes on what you do
on the weekends?
Speaker 3 (35:28):
Amy, Oh right, right, that would be a crazy weekend
for me. But here's the deal. When you dig deeper
into those.
Speaker 1 (35:35):
Numbers, nearly one in three who are spending money on
these substances or gambling say, I'm taking on debt to
pay for it. I think it's just really important to
know how much am I spending on things? Once or
twice a year. I like to sit down in this.
I know sounds super fun. Maybe I do this on
the weekend with a glass of wine. But to look
at what we're really spending our money and and to say, oh,
(35:57):
like gosh, we're spending x dollars on eating out. It
is eating out that important to us, you know, And
so I think it's important to say, oh, I'm spending
this on gambling or this on alcohol.
Speaker 3 (36:10):
Is it that important to me?
Speaker 1 (36:12):
And if it's to the detriment of other things like
experiences with our family, like saving for retirement, then at
least having the.
Speaker 3 (36:21):
Numbers in front.
Speaker 1 (36:22):
Of you give you the choice to say, do I
want to continue to spend this much on whatever this is? Yeah?
Speaker 2 (36:29):
And all joking aside, I think that's the key point
and a great point. You do have to take a
look at what you are spending on these things. And
I'll give you a personal example. I've shared this, you know,
on the show a couple of times. You know, I
completely stopped drinking alcohol last November and I was shocked
amy how much money I was spending on bourbon.
Speaker 4 (36:50):
Yeah, and you know.
Speaker 2 (36:51):
When I pulled out the credit card statements and all that,
and I looked at it and then looked at you know,
the changes post bourbon, I was pretty surp and that
that that's an aside, that's just money, you know, to
say nothing of the health benefits and the time, you know,
the more quality time spent with family and my wife
that she's happy about. So, yeah, you got to count
(37:13):
the costs on all these things. And if you're and
we joke about FanDuel accounts and all that, I mean,
if you're betting on FanDuel and you've got a credit
card balance sitting there at twenty six point eight percent
that needs to be fixed, you know, you're just you're
just digging yourself a huge hole that you need to
dig yourself out of here. And unfortunately about you know,
(37:34):
eighty four percent of Americans are land somewhere on that spectrum.
Speaker 1 (37:39):
And if you have not had this conversation with your
maybe younger adult children, I think it's a good time
to share this perspective with them. You know, I have
an eighteen year old who, for whatever reason, is addicted
to all the coffee drinks, right, and so we have
talked about Listen, you have to pay for these certain
things when it comes to college, and you have to
(37:59):
figure out what whither you can afford.
Speaker 3 (38:01):
The coffee and those things.
Speaker 1 (38:03):
And if something has to go, it's your fancy coffee drink, sorry, kiddo,
you know, And I think.
Speaker 3 (38:07):
That's how we all have to make decisions.
Speaker 1 (38:10):
As adults, you know certainly have your vices, but if
they are costing you to the detriment of being able
to save and do things that are really in line
with what's important to you.
Speaker 3 (38:20):
You got to make some important decisions at that point.
Speaker 1 (38:22):
Thanks for listening. Tomorrow we're breaking down dollar cost average.
So how does this work?
Speaker 3 (38:27):
Is this a good strategy for you?
Speaker 1 (38:29):
You've been listening to Simply Money, presented by all Worth
Financial here on fifty five KRC, the talk station
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Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Special Summer Offer: Exclusively on Apple Podcasts, try our Dateline Premium subscription completely free for one month! With Dateline Premium, you get every episode ad-free plus exclusive bonus content.
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