June 26, 2026 • 25 mins
This week’s Friday Q&A is packed with six listener questions covering some of the biggest financial decisions people face before and during retirement. Topics include whether actively managed bond funds are worth the extra cost, how the new senior tax deduction may affect Roth conversions, whether a 24-year-old should keep a whole life insurance policy, financial planning before marriage, the role of mid-cap funds, and whether it’s worth abandoning a target-date fund before retirement. If you’ve ever wondered whether you’re making your portfolio more complicated than it needs to be, this episode is for you.
00:00 Welcome and Fourth of July schedule update
02:21 Active vs. passive bond funds: Avantis, Dimensional, or BND?
05:00 Using the new senior deduction to reduce Roth conversion taxes
08:01 Does a 24-year-old need whole life insurance?
10:35 Money conversations every engaged couple should have
15:53 Are mid-cap funds worth owning?
17:52 Should you leave a target-date fund before retirement?
23:37 How to submit your own questions
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
SPEAKER_07 (00:05):
You're gone to a really great financial future.
Tom and Don are talking realmoney.
SPEAKER_04 (00:11):
Well, given it's a Friday, it's mainly just me.
Okay, it's totally me.
Well, me and you, because it'sFriday.
And that means it's the QA show,which means you ask questions
and I try to provide answers.
And we do this pretty much everyFriday, except this summer there
are actually a couple ofpreemptions on Fridays because
(00:34):
of Friday holidays, the holidaysthat fall on a Friday.
Uh so uh we have an unusuallylarge number of questions for
this episode and for the oneright after the 4th of July.
By the way, happy 250thbirthday, America.
Glad to be here, glad to be bornhere.
I want to thank all my ancestorsfor moving to America way back
(00:59):
when.
Some of you, way back when.
Some of you, like before therewas a country.
I've got relatives who had aplantation in Virginia prior to
uh the Revolutionary War, quitea bit prior to.
So thank you all so much, andthank you all for listening, and
thank you all for all of yourquestions, because there were
(01:21):
lots and lots and lots of them.
So today, get this.
This is a six question episode.
I don't remember the last timewe had one of those.
So I'm very excited.
And how do you send in thosequestions?
Glad you asked.
Go to talkingrealmoney dot com.
And in the lower right handcorner, you'll see a microphone.
(01:43):
The microphone implies speaking.
So click it, speak, yourquestion, and then listen to it.
If you don't like it, re-recordit.
And also remember that even ifyour equipment is not of the
best quality, I will take theextra time needed, along with
the assistance of artificialintelligence, and turn you into
pretty darn close to you'resitting in front of a thousand
(02:07):
dollar mic like this onespeaking.
Maybe not that good, but close.
So do it.
Go to talkingrealmoney.com, askthose questions, and let's well,
let's take the first one.
SPEAKER_01 (02:21):
Hi, Don.
I'm 62 years old and approachingretirement.
And I need to work on my fixedincome strategy in my portfolio.
Currently, for my equities, Iuse Avantis and Dimensional
Funds per year education on yourpodcasts, and I'm well
diversified in that area.
My question is about beingdiversified in my fixed income
(02:47):
strategy.
On your podcast, you talk aboutthe Vanguard B and D fund, uh,
but there's not a lot of talkabout Advantises or dimensionals
uh fixed income ETFs, such asAdvantage's uh short-term fixed
income or their core fixedincome.
And I was just kind of wantingto know your take about having a
(03:08):
bond fund or fixed income thatis managed versus a passive
index fund like the Vanguard BD.
I appreciate your thoughts andthank you very much for your
time.
SPEAKER_04 (03:21):
Well, there's there's a trade-off.
And when it comes to Avantus andDimensional Funds equity
portfolios, there is thepotential for a huge advantage,
at least history has shown us abig advantage in those tilts,
those factor tilts, that provideor that should provide more than
enough increase in, well, it'sboth risk and return to make up
(03:46):
for the slightly higher expenseratio.
And really, we're we're nottalking about dramatic.
When it comes to the differencebetween B and D, which is the
Vanguard Total Bond Index Fund,and Dimensionals or Avantis's
bond funds, the expense ratiodifferences are a little more
dramatic.
And I don't know that you'regetting a lot more for the
(04:09):
money.
You might get more.
And the history that we have ofthe actual performance shows a
slide out performance for theAvantis and the dimensional
portfolios because they'rethey're applying rules that
eliminate some of the bonds thathave been less attractive in the
past.
So there should be an advantage.
However, you see that in reallythe the risk too.
(04:34):
Uh in the one bad year we had,dimensional's core fixed income
ETF underperformed the indexpretty dramatically to the tune
of, well, a couple of percentagepoints.
So uh I would just stick withBND.
I think it's just so muchsimpler.
(04:55):
But if you wanted to go with theVontus, again, we're not talking
about a big enough difference toreally quibble.
Thanks so much for the question.
And now here's our next one.
SPEAKER_00 (05:04):
Hi, and this is Joe from Kansas.
I have a question about the$6,000 senior tax deduction
being used for Roth conversionpurpose.
I'm a 70-year-old with about$1.5million in IRA.
My Social Security check amountis about$4,000 a month.
My home mortgage is paid off andI have no debt.
(05:27):
I have around$200,000 inhigh-rate savings accounts with
no other income.
I have no problems living off mySocial Security income since I'm
not a big spender.
Would this$6,000 tax deductiondo me any good for some Roth
conversions?
And how much would I be able toconvert?
(05:49):
I guess this would only be forthree years remaining since it's
already past the first year ofthe$6,000 tax deduction.
I really enjoy your podcast.
Thanks, Joe.
SPEAKER_04 (06:02):
Thanks so much for your uh your question.
Taxes! I hate taxes, I do.
I hate thinking about them,talking about them, dealing with
them, and the government justmakes them more confusing every
time they add a new deduction orlittle thing to the code to make
us more confused.
So let's look at your scenario.
All right, so let's say youdon't do any Roth conversions.
(06:25):
You're gonna you're in the areawhere your social security is
taxable, but not the full 85%.
You you don't have a lot oftaxes, you're in really good
shape.
Now, if you did a Rothconversion of, let's say,
$25,000, pretty much all of yourSocial Security is gonna be
(06:45):
taxable.
Uh that 85% taxable gets uh getskicked in there.
So um really if you want toconvert to avoid the RMDs on
some of that money, you can doprobably about$25,000 a year in
(07:07):
Roth conversions because of thatto so you don't you don't lose
that six thousand dollardeduction.
So maybe thirty, you know.
I'm just kind of roughing thisup.
So uh and it and it will helpyou with the RMDs down the road.
It will help you with the RMDs.
(07:27):
Um and that senior deductionsunsets, I believe, in 2028.
And the next year is when youstart your RMDs.
So yeah, I think I I I wouldprobably tend toward it because
it's gonna save you on RMDs uhon on the on taxes on uh on
(07:48):
those required minimumdistributions come 2029, I
believe, is when you have tostart taking them.
So yeah, 25,000, 30,000 shouldbe a pretty safe amount.
Thanks so much for the question.
Now here's another that came infrom the little mic button on
talkingrealmoney.com.
SPEAKER_05 (08:06):
Hi, Don.
My name's Sarah, and I wanted toget your opinion on whole life
insurance.
I'm 24 years old, and I don'tcurrently have any children or a
partner who is dependent on me.
Uh my plan costs$28 a month andprovides$25,000 worth of
coverage.
(08:27):
I look forward to hearing yourresponse.
Thank you.
SPEAKER_04 (08:30):
Well, you don't have any reason to have any kind of
life insurance.
Apparently, somebody sold thisto you.
That's okay.
I mean, it's not a big amount.
But uh, you know, basicallyyou're just saying, hey, 20 28
bucks a month in death lotterytickets.
So that somebody wins$25,000should you die an untimely
(08:52):
death, which you know, you're$24, odds are good you're not
dying.
Uh and while it's only$28 amonth in your 20s, that's real
money for most people.
And that$28 a month investedover, I don't know, let's see,
you're$24, so let's say 45 yearsat, well, let's say 10% a year
(09:21):
in, say, a Roth where there's notaxes, which you could certainly
do, which you ought to be doing.
That's at 10%, that's almost ahalf a million dollars when you
were um 74 years old, when youknow you probably are gonna want
to have some money to live on.
It's kind of like a bonus.
And I'm confident that the wholelife policy will not be anywhere
(09:46):
near that number.
I mean, it's probably oh, let'ssee.
Let me run it at 3% and see whatthat would be, assuming they're
gonna get 3%.
I don't think you'll get thatmuch, but let's see.
Let me just run that calculationreal quick.
Uh at 3%, it would be$40,000after 50 years.
(10:08):
At 10%, it could be$485,000.
And, you know, the the averageannual return for U.S.
stocks over the past 100, almost100 years has been about 10% per
year.
So, you know, be aggressive inyour 20s, do a Roth IRA, stop
the life insurance, and um, Ithink probably be better off.
(10:32):
Thanks for listening and thanksfor the question.
Here's another.
SPEAKER_06 (10:36):
Hi, Tom and Don.
Thank you so much for joiningthe podcast.
I actually heard of talkingabout money through the Stacking
Benjamin show.
I believe Don made anappearance, and I've been
listening to you guys eversince.
My name is Anna.
I'm from Maine.
I am 36 years old.
(10:59):
And a fun little fact aboutmyself, I'm going to be marrying
uh the love of my life um in acouple of months.
So, talking about talking realmoney, I'm curious from two
wiser gentlemen, if you guyshave any advice.
Uh we are both 36, and becausewe are getting married later in
(11:24):
life, we have different levelsof wealth accumulated.
Um, I started really early andhave been investing since I got
my corporate.
SPEAKER_04 (11:33):
Job, I'm sure I I think that's what she was going
to say.
It cut off because she wasmaking the call from a car.
You should have heard it beforewe ran it through the uh through
the regen, the I AI.
It was pretty bad, but it's goodnow.
And and I just it's fascinating.
The last two questions were frompeople in their twenties and
thirties.
(11:54):
Thanks for listening, andcongrats on marrying the love of
your love of your life.
Easier for me to say.
And uh you phrased that verynicely with the wiser, you
didn't say old.
Thank you for that.
Uh you sort of recorded it twiceand there were bits and pieces,
but what I gleaned from this isyou you're kind of looking for
(12:16):
some getting started advice, andthat's really a good idea.
Starting off on the samefinancial footing, uh, at least
with an understanding.
And that's something that youreally should do before the uh
vows and the license is signed,and then you are now legally
(12:38):
attached.
And you well, your assets remainyour assets technically, but
once they get commingled, thenit gets messier.
And as time goes by, it can getmessier.
And so if you have a situationwhere one party has more assets
than the other, it certainlyneeds a conversation.
(13:01):
Maybe a difficult conversation,it's probably a conversation you
want to have in a comfortableplace, on a date or something,
you know, glass of wine, not toomany, just one.
Um, but you need to maybe even,and again, I don't know what you
have, what the asset disparityis, but you might want to
(13:22):
consider some sort of aprenuptial agreement that spells
out the expectations.
Who's gonna, who owns what, whowill own what in the future, and
for how long?
Uh, how will assets becommingled in the future?
Uh, who will own what?
Who will be responsible for whatpart of life?
(13:44):
Some of the biggest fights comeabout because there wasn't a
very clear understanding of whowould pay for what, who was
responsible for what aspects ofmarried life.
And those really ought to getdiscussed in advance.
And it would probably be wise,these these actually exist now.
(14:06):
Financial advisors who are alsomarriage counsel counselors or
therapists, uh, or financialadvisors who specialize in
premarital counseling.
They they exist.
Uh, you might want to lookaround online to see if you can
(14:26):
find any in your area.
I would look for a fiduciaryadvisor who would be willing to
sit down with you for a fee, anhourly fee, to discuss this
premarital counseling kind ofthing.
Uh it's it's not about gettingthe right portfolio or any of
that.
It's making sure that you guysalign on money.
(14:47):
Because you can marry the loveof your life and you can end up
not loving them as much aftersome really heated money fights.
And money is, well, it's one ofthe two biggest things couples
fight about.
So the more you hash out inadvance, the better off you're
likely to be.
And I know it doesn't feelromantic, but the romance fades,
(15:13):
and you don't want this todestroy a good relationship that
could last forever.
And they can last forever if wego into it with a clear
understanding of what'sinvolved.
So I think a counselor wouldmake a lot of sense.
Certainly you want to some sortof a prenup, and you definitely
want to have a a conversation,even if you don't get a
(15:34):
therapist between the two ofyou, about expectations and
ownership and assets and all ofthat and you know earnings in
the future.
Thanks so much.
Good luck with the uh themarriage.
I wish you all the best, andlet's grab our next question.
SPEAKER_02 (15:48):
Hey, Tom and Don.
Love the show and appreciate allyour good advice.
My question is on mid-cap funds.
I often hear you talk aboutsmall cap funds and large cap
funds, growth, value, et cetera,but I haven't heard you discuss
mid-cap funds.
I have a portfolio primarily ofindex funds of small cap,
(16:10):
mid-cap, large cap, value,growth, et cetera.
And I'm wondering if havingmid-caps are just a waste of
time and I should reallocate tojust small and large cap funds,
or am I getting something byhaving the mid-caps as well?
Thanks very much.
SPEAKER_04 (16:26):
Aaron Powell I would argue for an even simpler
approach.
Um, because there's no we thereason we don't say grab
mid-caps is because most totalmarket funds that we suggest
have the proper allocation ofmid-caps.
There's no need to grab midcaps, and there's really no need
to build a large, mid, smallportfolio when none of the
(16:47):
evidence points to any advantageuh worth overweighting mid-cap.
So I I just that's why we don'ttalk about it.
That we just don't find any needfor it.
And I'm a huge fan of thesimplest approach being the
best.
And I I practice what I preach.
The number one holding in my401k at work is the dimensional
(17:09):
target date fund.
So, you know, uh and andprobably the biggest holding in
my brokerage account is AVGE.
I'm pretty sure it is.
I haven't looked in a while, butsimple is good.
Go simple.
And and again, no big advantageto mid-caps.
So if you just went large andsmall, great.
(17:30):
As a matter of fact, one of PaulMerriman's plans is you you buy
a target date fund for yourdiversification, and then you
throw a small value fund in forthe for the uh added potential
growth that comes from thoseasset classes.
Thanks for the question.
Thanks for all the nicecomments, thanks for listening.
And here's the last one fortoday's episode.
SPEAKER_03 (17:50):
Hello, Don and Tom.
Uh this is Steve fromMassachusetts, and here's my
situation.
Um I have uh about one and ahalf million dollars in Roth um
Roth IRA stuff that uh that I'mthinking of reallocating.
Uh that's been in target datefunds, which have done fine over
(18:12):
the years, but I'm thinking ofretiring.
I'm in my mid-50s, uh.
thinking of retiring in the nextmaybe even year or so.
And uh hopefully if this goeswell, I've got another whole
30-year time investing horizonin front of me, so I'm thinking
I should probably actually getthat stuff out of target date
funds and maybe get it insomething like a like a VT ETF.
(18:37):
Um in order to do that, ofcourse, you know, you can if
you're getting out of a mutualfund and into an ETF, uh you
can't direct transfers.
You're gonna be you're gonna beout of the market, right, for
some period of time in between.
Uh and basically I'm kind ofhung up on this.
You know, I don't like being outof the market.
You hear all these things about,you know, if you if you miss the
(18:57):
largest updates, the damage thatthat can do to your portfolio.
And so I get kind of hung up onthat.
And I'm just wondering what youwould tell me.
You know, does it make sense tosort of do that a little bit at
a time, like 50,000 or 100,000at a time or something, uh, to
kind of limit or, you know, ifyou're going to hit some updays,
you'll also miss some down days,and maybe that evens out sort of
(19:19):
my own funny little version ofdollar cost averaging.
You know, how do you generallyrecommend that people handle
that when you're kind ofrequired to be out of the market
at least for some little periodof time?
Would really appreciate yourperspectives on that.
Thanks so much.
SPEAKER_04 (19:35):
Oh, like so many other smart people, and this
says you're a smart person,you're thinking too much.
You're really, really, really,really overthinking all of this.
Okay?
One, the most glaring thing Isee is that you have no plan.
(19:59):
You're totally winging it.
I'm in my 50s, I might retire.
Maybe next year.
But then I have a 30-year timehorizon for building wealth.
Well, wait, the two arecontradictory.
If you're retiring, you're gonnabe going into well, I mean, I
(20:20):
don't know everything about yoursituation, but most people are
going into a period when theystart drawing down their wealth.
It's not building as much as itis drawing down.
Now I would imagine you had thetarget date fund for a reason.
Probably for the glide path thatit provides, the fact that it
becomes more conservative as youget older.
(20:42):
What changed?
I don't know which target datefund you're in, but I would
assume it was a target date fundgeared to about the time you
retired.
Why are you thinking about achange?
I honestly think it sounds likeyou you have you've saved well.
You need a plan.
(21:04):
Actually, you're probably to thepoint in your life where if
you're thinking about retiringsoon, you at least need a
financial plan, if not a trueadvisor that you pay either with
a fee or hourly, however is it'sbest for you.
But you need not just guidancenow, but you're gonna need
(21:25):
ongoing guidance.
And I think that this thisworrying about being out of the
market for what literally couldbe just minutes.
I mean, if you if you do asimultaneous, if you do a sell
order and you see what you'rewhat you what you got, if you do
a market order, within a fewminutes, you'll know what you
got.
(21:45):
Then you take that amount andyou immediately do a buy order
the same day, you're gonna beout of the market for a few
minutes.
That shouldn't be enough.
But I wouldn't do that untilthere's a reason why you're
doing it.
And I didn't hear anything aboutthe why.
What little I got didn't makesense to me.
(22:06):
So you need to think about thatwhy, and you might want a little
guidance in doing so.
Probably at this point in life,particularly if you're thinking
about retiring, you need a planso that you can make sure you
can afford your retirement andthen it's in the right places to
make the money last for as longas you need it with less
(22:30):
psychological risk.
You know, there's we're notgonna No good advisor is gonna
put you in a portfolio that putsyou at real risk of loss, but
that psychological risk is thebiggest potential downside, and
it's the thing we think about.
Thank you for all the greatquestions and the really nice
(22:51):
comments, which we appreciate.
And if you want to send usquestions, it's so easy to do.
You just go totalkingrealmoney.com and you
either uh click on the buttonthat says ask a question, you
type it up, send it to us, weput it on the other podcasts, or
you click on the mic button andit becomes part of the Friday
(23:12):
podcast if you record yourvoice.
Every Friday we do it this way.
And we have another break forthe Fourth of July, which is on
a Friday, so that's a holiday.
There won't be a QA that day,but there'll be another right
after that.
And uh, so please keep thequestions coming.
I love them.
And uh without you, well, wewould not be talking real money.
SPEAKER_07 (23:36):
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Opinions, estimates, forecasts,and statements of financial
market trends that are based oncurrent market conditions
constitute our judgment and oursubjects change without notice,
including any forward-lookingestimates or statements which
are based on certainexpectations and assumptions.
Although information andopinions given have been
obtained from or based onsources believed to be reliable,
no warranty or representation ismade as to their correctness,
(23:57):
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Information presented on thepodcast is not personalized
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The views and strategiesdescribed may not be suitable
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This podcast does not identifyall the risks, direct or
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Performance does not guaranteefeature results, and profitable
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We hope you realize that theinformation provided on Talking
(24:19):
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The podcast is not trying to getyou to buy yourself any
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Instead, the program is providedas a public service by Apello
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Thanks for listening, and pleasevisit TalkerailMoney.com for
(25:02):
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And the lawyers get richer.
You're gone to a really great financial future.
Tom and Don are talking realmoney.
SPEAKER_04 (00:11):
Well, given it's a Friday, it's mainly just me.
Okay, it's totally me.
Well, me and you, because it'sFriday.
And that means it's the QA show,which means you ask questions
and I try to provide answers.
And we do this pretty much everyFriday, except this summer there
are actually a couple ofpreemptions on Fridays because
(00:34):
of Friday holidays, the holidaysthat fall on a Friday.
Uh so uh we have an unusuallylarge number of questions for
this episode and for the oneright after the 4th of July.
By the way, happy 250thbirthday, America.
Glad to be here, glad to be bornhere.
I want to thank all my ancestorsfor moving to America way back
(00:59):
when.
Some of you, way back when.
Some of you, like before therewas a country.
I've got relatives who had aplantation in Virginia prior to
uh the Revolutionary War, quitea bit prior to.
So thank you all so much, andthank you all for listening, and
thank you all for all of yourquestions, because there were
(01:21):
lots and lots and lots of them.
So today, get this.
This is a six question episode.
I don't remember the last timewe had one of those.
So I'm very excited.
And how do you send in thosequestions?
Glad you asked.
Go to talkingrealmoney dot com.
And in the lower right handcorner, you'll see a microphone.
(01:43):
The microphone implies speaking.
So click it, speak, yourquestion, and then listen to it.
If you don't like it, re-recordit.
And also remember that even ifyour equipment is not of the
best quality, I will take theextra time needed, along with
the assistance of artificialintelligence, and turn you into
pretty darn close to you'resitting in front of a thousand
(02:07):
dollar mic like this onespeaking.
Maybe not that good, but close.
So do it.
Go to talkingrealmoney.com, askthose questions, and let's well,
let's take the first one.
SPEAKER_01 (02:21):
Hi, Don.
I'm 62 years old and approachingretirement.
And I need to work on my fixedincome strategy in my portfolio.
Currently, for my equities, Iuse Avantis and Dimensional
Funds per year education on yourpodcasts, and I'm well
diversified in that area.
My question is about beingdiversified in my fixed income
(02:47):
strategy.
On your podcast, you talk aboutthe Vanguard B and D fund, uh,
but there's not a lot of talkabout Advantises or dimensionals
uh fixed income ETFs, such asAdvantage's uh short-term fixed
income or their core fixedincome.
And I was just kind of wantingto know your take about having a
(03:08):
bond fund or fixed income thatis managed versus a passive
index fund like the Vanguard BD.
I appreciate your thoughts andthank you very much for your
time.
SPEAKER_04 (03:21):
Well, there's there's a trade-off.
And when it comes to Avantus andDimensional Funds equity
portfolios, there is thepotential for a huge advantage,
at least history has shown us abig advantage in those tilts,
those factor tilts, that provideor that should provide more than
enough increase in, well, it'sboth risk and return to make up
(03:46):
for the slightly higher expenseratio.
And really, we're we're nottalking about dramatic.
When it comes to the differencebetween B and D, which is the
Vanguard Total Bond Index Fund,and Dimensionals or Avantis's
bond funds, the expense ratiodifferences are a little more
dramatic.
And I don't know that you'regetting a lot more for the
(04:09):
money.
You might get more.
And the history that we have ofthe actual performance shows a
slide out performance for theAvantis and the dimensional
portfolios because they'rethey're applying rules that
eliminate some of the bonds thathave been less attractive in the
past.
So there should be an advantage.
However, you see that in reallythe the risk too.
(04:34):
Uh in the one bad year we had,dimensional's core fixed income
ETF underperformed the indexpretty dramatically to the tune
of, well, a couple of percentagepoints.
So uh I would just stick withBND.
I think it's just so muchsimpler.
(04:55):
But if you wanted to go with theVontus, again, we're not talking
about a big enough difference toreally quibble.
Thanks so much for the question.
And now here's our next one.
SPEAKER_00 (05:04):
Hi, and this is Joe from Kansas.
I have a question about the$6,000 senior tax deduction
being used for Roth conversionpurpose.
I'm a 70-year-old with about$1.5million in IRA.
My Social Security check amountis about$4,000 a month.
My home mortgage is paid off andI have no debt.
(05:27):
I have around$200,000 inhigh-rate savings accounts with
no other income.
I have no problems living off mySocial Security income since I'm
not a big spender.
Would this$6,000 tax deductiondo me any good for some Roth
conversions?
And how much would I be able toconvert?
(05:49):
I guess this would only be forthree years remaining since it's
already past the first year ofthe$6,000 tax deduction.
I really enjoy your podcast.
Thanks, Joe.
SPEAKER_04 (06:02):
Thanks so much for your uh your question.
Taxes! I hate taxes, I do.
I hate thinking about them,talking about them, dealing with
them, and the government justmakes them more confusing every
time they add a new deduction orlittle thing to the code to make
us more confused.
So let's look at your scenario.
All right, so let's say youdon't do any Roth conversions.
(06:25):
You're gonna you're in the areawhere your social security is
taxable, but not the full 85%.
You you don't have a lot oftaxes, you're in really good
shape.
Now, if you did a Rothconversion of, let's say,
$25,000, pretty much all of yourSocial Security is gonna be
(06:45):
taxable.
Uh that 85% taxable gets uh getskicked in there.
So um really if you want toconvert to avoid the RMDs on
some of that money, you can doprobably about$25,000 a year in
(07:07):
Roth conversions because of thatto so you don't you don't lose
that six thousand dollardeduction.
So maybe thirty, you know.
I'm just kind of roughing thisup.
So uh and it and it will helpyou with the RMDs down the road.
It will help you with the RMDs.
(07:27):
Um and that senior deductionsunsets, I believe, in 2028.
And the next year is when youstart your RMDs.
So yeah, I think I I I wouldprobably tend toward it because
it's gonna save you on RMDs uhon on the on taxes on uh on
(07:48):
those required minimumdistributions come 2029, I
believe, is when you have tostart taking them.
So yeah, 25,000, 30,000 shouldbe a pretty safe amount.
Thanks so much for the question.
Now here's another that came infrom the little mic button on
talkingrealmoney.com.
SPEAKER_05 (08:06):
Hi, Don.
My name's Sarah, and I wanted toget your opinion on whole life
insurance.
I'm 24 years old, and I don'tcurrently have any children or a
partner who is dependent on me.
Uh my plan costs$28 a month andprovides$25,000 worth of
coverage.
(08:27):
I look forward to hearing yourresponse.
Thank you.
SPEAKER_04 (08:30):
Well, you don't have any reason to have any kind of
life insurance.
Apparently, somebody sold thisto you.
That's okay.
I mean, it's not a big amount.
But uh, you know, basicallyyou're just saying, hey, 20 28
bucks a month in death lotterytickets.
So that somebody wins$25,000should you die an untimely
(08:52):
death, which you know, you're$24, odds are good you're not
dying.
Uh and while it's only$28 amonth in your 20s, that's real
money for most people.
And that$28 a month investedover, I don't know, let's see,
you're$24, so let's say 45 yearsat, well, let's say 10% a year
(09:21):
in, say, a Roth where there's notaxes, which you could certainly
do, which you ought to be doing.
That's at 10%, that's almost ahalf a million dollars when you
were um 74 years old, when youknow you probably are gonna want
to have some money to live on.
It's kind of like a bonus.
And I'm confident that the wholelife policy will not be anywhere
(09:46):
near that number.
I mean, it's probably oh, let'ssee.
Let me run it at 3% and see whatthat would be, assuming they're
gonna get 3%.
I don't think you'll get thatmuch, but let's see.
Let me just run that calculationreal quick.
Uh at 3%, it would be$40,000after 50 years.
(10:08):
At 10%, it could be$485,000.
And, you know, the the averageannual return for U.S.
stocks over the past 100, almost100 years has been about 10% per
year.
So, you know, be aggressive inyour 20s, do a Roth IRA, stop
the life insurance, and um, Ithink probably be better off.
(10:32):
Thanks for listening and thanksfor the question.
Here's another.
SPEAKER_06 (10:36):
Hi, Tom and Don.
Thank you so much for joiningthe podcast.
I actually heard of talkingabout money through the Stacking
Benjamin show.
I believe Don made anappearance, and I've been
listening to you guys eversince.
My name is Anna.
I'm from Maine.
I am 36 years old.
(10:59):
And a fun little fact aboutmyself, I'm going to be marrying
uh the love of my life um in acouple of months.
So, talking about talking realmoney, I'm curious from two
wiser gentlemen, if you guyshave any advice.
Uh we are both 36, and becausewe are getting married later in
(11:24):
life, we have different levelsof wealth accumulated.
Um, I started really early andhave been investing since I got
my corporate.
SPEAKER_04 (11:33):
Job, I'm sure I I think that's what she was going
to say.
It cut off because she wasmaking the call from a car.
You should have heard it beforewe ran it through the uh through
the regen, the I AI.
It was pretty bad, but it's goodnow.
And and I just it's fascinating.
The last two questions were frompeople in their twenties and
thirties.
(11:54):
Thanks for listening, andcongrats on marrying the love of
your love of your life.
Easier for me to say.
And uh you phrased that verynicely with the wiser, you
didn't say old.
Thank you for that.
Uh you sort of recorded it twiceand there were bits and pieces,
but what I gleaned from this isyou you're kind of looking for
(12:16):
some getting started advice, andthat's really a good idea.
Starting off on the samefinancial footing, uh, at least
with an understanding.
And that's something that youreally should do before the uh
vows and the license is signed,and then you are now legally
(12:38):
attached.
And you well, your assets remainyour assets technically, but
once they get commingled, thenit gets messier.
And as time goes by, it can getmessier.
And so if you have a situationwhere one party has more assets
than the other, it certainlyneeds a conversation.
(13:01):
Maybe a difficult conversation,it's probably a conversation you
want to have in a comfortableplace, on a date or something,
you know, glass of wine, not toomany, just one.
Um, but you need to maybe even,and again, I don't know what you
have, what the asset disparityis, but you might want to
(13:22):
consider some sort of aprenuptial agreement that spells
out the expectations.
Who's gonna, who owns what, whowill own what in the future, and
for how long?
Uh, how will assets becommingled in the future?
Uh, who will own what?
Who will be responsible for whatpart of life?
(13:44):
Some of the biggest fights comeabout because there wasn't a
very clear understanding of whowould pay for what, who was
responsible for what aspects ofmarried life.
And those really ought to getdiscussed in advance.
And it would probably be wise,these these actually exist now.
(14:06):
Financial advisors who are alsomarriage counsel counselors or
therapists, uh, or financialadvisors who specialize in
premarital counseling.
They they exist.
Uh, you might want to lookaround online to see if you can
(14:26):
find any in your area.
I would look for a fiduciaryadvisor who would be willing to
sit down with you for a fee, anhourly fee, to discuss this
premarital counseling kind ofthing.
Uh it's it's not about gettingthe right portfolio or any of
that.
It's making sure that you guysalign on money.
(14:47):
Because you can marry the loveof your life and you can end up
not loving them as much aftersome really heated money fights.
And money is, well, it's one ofthe two biggest things couples
fight about.
So the more you hash out inadvance, the better off you're
likely to be.
And I know it doesn't feelromantic, but the romance fades,
(15:13):
and you don't want this todestroy a good relationship that
could last forever.
And they can last forever if wego into it with a clear
understanding of what'sinvolved.
So I think a counselor wouldmake a lot of sense.
Certainly you want to some sortof a prenup, and you definitely
want to have a a conversation,even if you don't get a
(15:34):
therapist between the two ofyou, about expectations and
ownership and assets and all ofthat and you know earnings in
the future.
Thanks so much.
Good luck with the uh themarriage.
I wish you all the best, andlet's grab our next question.
SPEAKER_02 (15:48):
Hey, Tom and Don.
Love the show and appreciate allyour good advice.
My question is on mid-cap funds.
I often hear you talk aboutsmall cap funds and large cap
funds, growth, value, et cetera,but I haven't heard you discuss
mid-cap funds.
I have a portfolio primarily ofindex funds of small cap,
(16:10):
mid-cap, large cap, value,growth, et cetera.
And I'm wondering if havingmid-caps are just a waste of
time and I should reallocate tojust small and large cap funds,
or am I getting something byhaving the mid-caps as well?
Thanks very much.
SPEAKER_04 (16:26):
Aaron Powell I would argue for an even simpler
approach.
Um, because there's no we thereason we don't say grab
mid-caps is because most totalmarket funds that we suggest
have the proper allocation ofmid-caps.
There's no need to grab midcaps, and there's really no need
to build a large, mid, smallportfolio when none of the
(16:47):
evidence points to any advantageuh worth overweighting mid-cap.
So I I just that's why we don'ttalk about it.
That we just don't find any needfor it.
And I'm a huge fan of thesimplest approach being the
best.
And I I practice what I preach.
The number one holding in my401k at work is the dimensional
(17:09):
target date fund.
So, you know, uh and andprobably the biggest holding in
my brokerage account is AVGE.
I'm pretty sure it is.
I haven't looked in a while, butsimple is good.
Go simple.
And and again, no big advantageto mid-caps.
So if you just went large andsmall, great.
(17:30):
As a matter of fact, one of PaulMerriman's plans is you you buy
a target date fund for yourdiversification, and then you
throw a small value fund in forthe for the uh added potential
growth that comes from thoseasset classes.
Thanks for the question.
Thanks for all the nicecomments, thanks for listening.
And here's the last one fortoday's episode.
SPEAKER_03 (17:50):
Hello, Don and Tom.
Uh this is Steve fromMassachusetts, and here's my
situation.
Um I have uh about one and ahalf million dollars in Roth um
Roth IRA stuff that uh that I'mthinking of reallocating.
Uh that's been in target datefunds, which have done fine over
(18:12):
the years, but I'm thinking ofretiring.
I'm in my mid-50s, uh.
thinking of retiring in the nextmaybe even year or so.
And uh hopefully if this goeswell, I've got another whole
30-year time investing horizonin front of me, so I'm thinking
I should probably actually getthat stuff out of target date
funds and maybe get it insomething like a like a VT ETF.
(18:37):
Um in order to do that, ofcourse, you know, you can if
you're getting out of a mutualfund and into an ETF, uh you
can't direct transfers.
You're gonna be you're gonna beout of the market, right, for
some period of time in between.
Uh and basically I'm kind ofhung up on this.
You know, I don't like being outof the market.
You hear all these things about,you know, if you if you miss the
(18:57):
largest updates, the damage thatthat can do to your portfolio.
And so I get kind of hung up onthat.
And I'm just wondering what youwould tell me.
You know, does it make sense tosort of do that a little bit at
a time, like 50,000 or 100,000at a time or something, uh, to
kind of limit or, you know, ifyou're going to hit some updays,
you'll also miss some down days,and maybe that evens out sort of
(19:19):
my own funny little version ofdollar cost averaging.
You know, how do you generallyrecommend that people handle
that when you're kind ofrequired to be out of the market
at least for some little periodof time?
Would really appreciate yourperspectives on that.
Thanks so much.
SPEAKER_04 (19:35):
Oh, like so many other smart people, and this
says you're a smart person,you're thinking too much.
You're really, really, really,really overthinking all of this.
Okay?
One, the most glaring thing Isee is that you have no plan.
(19:59):
You're totally winging it.
I'm in my 50s, I might retire.
Maybe next year.
But then I have a 30-year timehorizon for building wealth.
Well, wait, the two arecontradictory.
If you're retiring, you're gonnabe going into well, I mean, I
(20:20):
don't know everything about yoursituation, but most people are
going into a period when theystart drawing down their wealth.
It's not building as much as itis drawing down.
Now I would imagine you had thetarget date fund for a reason.
Probably for the glide path thatit provides, the fact that it
becomes more conservative as youget older.
(20:42):
What changed?
I don't know which target datefund you're in, but I would
assume it was a target date fundgeared to about the time you
retired.
Why are you thinking about achange?
I honestly think it sounds likeyou you have you've saved well.
You need a plan.
(21:04):
Actually, you're probably to thepoint in your life where if
you're thinking about retiringsoon, you at least need a
financial plan, if not a trueadvisor that you pay either with
a fee or hourly, however is it'sbest for you.
But you need not just guidancenow, but you're gonna need
(21:25):
ongoing guidance.
And I think that this thisworrying about being out of the
market for what literally couldbe just minutes.
I mean, if you if you do asimultaneous, if you do a sell
order and you see what you'rewhat you what you got, if you do
a market order, within a fewminutes, you'll know what you
got.
(21:45):
Then you take that amount andyou immediately do a buy order
the same day, you're gonna beout of the market for a few
minutes.
That shouldn't be enough.
But I wouldn't do that untilthere's a reason why you're
doing it.
And I didn't hear anything aboutthe why.
What little I got didn't makesense to me.
(22:06):
So you need to think about thatwhy, and you might want a little
guidance in doing so.
Probably at this point in life,particularly if you're thinking
about retiring, you need a planso that you can make sure you
can afford your retirement andthen it's in the right places to
make the money last for as longas you need it with less
(22:30):
psychological risk.
You know, there's we're notgonna No good advisor is gonna
put you in a portfolio that putsyou at real risk of loss, but
that psychological risk is thebiggest potential downside, and
it's the thing we think about.
Thank you for all the greatquestions and the really nice
(22:51):
comments, which we appreciate.
And if you want to send usquestions, it's so easy to do.
You just go totalkingrealmoney.com and you
either uh click on the buttonthat says ask a question, you
type it up, send it to us, weput it on the other podcasts, or
you click on the mic button andit becomes part of the Friday
(23:12):
podcast if you record yourvoice.
Every Friday we do it this way.
And we have another break forthe Fourth of July, which is on
a Friday, so that's a holiday.
There won't be a QA that day,but there'll be another right
after that.
And uh, so please keep thequestions coming.
I love them.
And uh without you, well, wewould not be talking real money.
SPEAKER_07 (23:36):
The opinions that we've expressed on this podcast
were current on the daterecorded.
Opinions, estimates, forecasts,and statements of financial
market trends that are based oncurrent market conditions
constitute our judgment and oursubjects change without notice,
including any forward-lookingestimates or statements which
are based on certainexpectations and assumptions.
Although information andopinions given have been
obtained from or based onsources believed to be reliable,
no warranty or representation ismade as to their correctness,
(23:57):
completeness, or accuracy.
Information presented on thepodcast is not personalized
investment advice from a fellowwealth.
The views and strategiesdescribed may not be suitable
for everyone.
This podcast does not identifyall the risks, direct or
indirect, or otherconsiderations which might be
material to you when enteringany financial transaction.
Performance does not guaranteefeature results, and profitable
results cannot be guaranteed.
We hope you realize that theinformation provided on Talking
(24:19):
Real Money is for informational,educational, and hopefully
enjoyable purposes only.
The podcast is not trying to getyou to buy yourself any
financial products andsecurities.
Instead, the program is providedas a public service by Apello
Wealth, a C only registeredinvestment advisor.
A public capital of C D B AApello Wealth is an investment
(24:40):
advisory firm registered withthe Securities and Exchange
Commission.
The firm only transduct businessin the states where it's
properly registered or excludedor accepted from registration.
Registration with the SEC or anystate securities authority does
not imply a certain level ofskill attraction.
Apollo does not provide tax orlegal advice, so nothing either
stated or implied here should beinferred as providing such
advice.
Thanks for listening, and pleasevisit TalkerailMoney.com for
(25:02):
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performance of any specificindex or fund voted in this
podcast.
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