July 13, 2026 • 29 mins
Money Monday has arrived, and Don kicks off a new weekly series based on his book Financial Fysics. The first “law” may surprise you: according to Don, every dollar ever earned comes from just three sources—luck, theft, or work. He and Tom debate where investing belongs, why entrepreneurship remains one of the best paths to wealth, and how much luck really contributes to financial success.
Then they answer a listener’s retirement planning question about whether to finance a Florida townhouse or withdraw money from a Roth IRA. Along the way they discuss Roth conversion strategy, Florida HOA reserve funds, special assessments, and why building a retirement plan should always come before deciding where the money comes from.
00:00 Welcome to Money Monday
00:12 A new weekly Financial Fysics series begins
01:35 Why anonymous two-star book reviews are so frustrating
02:40 Free Financial Fysics book giveaway
03:50 Rule #1: There are only three ways to make money
04:45 Luck—including investing, lotteries, and inheritance
06:35 Theft, fraud, and unethical financial products
07:55 Why successful investing combines work and luck
10:30 How most great fortunes are actually built
12:10 Entrepreneurship, risk, and creating wealth
13:35 Understanding just how large a trillion dollars really is
15:50 The biggest takeaway from Rule #1
17:15 Preview of next week’s rule: Supply and Demand
18:15 Why listener questions slow down during the summer
19:15 Listener Question: Should a retiree finance a Florida townhouse or withdraw money from a Roth IRA?
21:10 Florida HOA reserves and avoiding expensive surprises
24:30 Why retirement planning comes before choosing an account
26:00 Why the Roth IRA is probably the last account to tap
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
SPEAKER_03 (00:05):
We're gone to a really great financial future.
Tom and Don are talking realmoney.
SPEAKER_00 (00:12):
Today is the most special of all days in the
Talking Real Money calendar.
It's Money Monday.
Only important because it's sortof alliterative.
Money and Monday sort of gotogether, making it feel kind of
special.
So, in honor of the specialnature of a money Monday here on
Talking Real Money, from thisdate until nearly the Christmas
(00:37):
holiday season, every moneyMonday will feature one of the
rules, laws, corollaries,theories, and hypotheses of the
book.
The book itself.
Yes, financial physics.
SPEAKER_01 (00:58):
Oh, that's a disappointment.
I thought it was the lineuncrossed.
I was already annotated a bunchof stuff here and comments from
other Civil War historians andNo, no.
Okay.
SPEAKER_00 (01:08):
You know, it's funny.
Uh I I've gotten you know like acouple of dozen reviews.
No, a little over a dozenreviews for um The Line
Uncrossed.
And for some reason, I don'tunderstand it.
There are two unwritten nobodywrote a review to go with it.
They just rated the book twostars.
Two people did that.
Now can't know anything.
(01:29):
Can they give me two stars?
Please at least tell me why.
I don't understand why you don'tsay why.
Are you mad at me or something?
I gave it five and it deserveseveryone's two stars.
Yeah, I know, but yours, you youwould do that even if it sucked,
I think.
SPEAKER_01 (01:45):
I think it may be true, but in this case, as a guy
who reads a lot of history, it'sa damn fine book.
It really is, so worth reading.
SPEAKER_00 (01:53):
Anyway, uh, we're gonna read a little bit book
from a different book.
My my first book.
No, I first booked my secondbook.
It was the first one.
Ladies and gentlemen, from thefirst book of Don't the first
book of Don was MutualFundamentals.
SPEAKER_01 (02:06):
That's true.
SPEAKER_00 (02:07):
Which is I have that hasn't been printed in eons.
Uh this is from the thirdprinting of the third edition,
the third update of uh FinancialPhysics.
SPEAKER_01 (02:18):
Is it the third or the second?
I didn't know there was a third.
2022, right?
SPEAKER_00 (02:22):
2010, 2018, and 2022.
Ah, I guess I forgot the 18 one.
Okay.
Yeah.
So it's been updated threetimes.
Anyway, the uh we're gonna juststart at the very beginning
because it's a very fine placeto start, according to a song
made by the case.
SPEAKER_01 (02:36):
By the way, can you write us and I'll send you a
free copy?
Is that okay?
unknown (02:41):
Really?
SPEAKER_00 (02:42):
I'm trying to sell the damn things.
SPEAKER_01 (02:43):
I know, but yeah, that let's help people.
They're 299 Kindle on on Amazon.
SPEAKER_00 (02:48):
Oh, let's do it this way.
SPEAKER_01 (02:49):
I don't know when this airs because these we were
putting.
SPEAKER_00 (02:52):
It airs in July after you just got you are just
returning from vacation as wespeak.
SPEAKER_01 (02:57):
Let's do this in the it will give people a week.
After it airs, you have a week.
SPEAKER_00 (03:02):
Which is like the 19th or 20th or something like
that.
I don't know.
See, I was counting my weeks.
Let's see.
This one is gonna this is gonnaair.
Oh my gosh, really?
This is gonna air like the 14thof July, so you have until like
the 21st of July.
SPEAKER_01 (03:23):
We'll give you one week.
If you write and you just go totalkingrealmoney.com, click on
Ask a Question.
If you send me a note, I'll sendyou a book, but you have a week
to do it.
It's a very good book, so Okay.
SPEAKER_00 (03:34):
You're gonna actually send you have Sure.
SPEAKER_01 (03:36):
Yeah, we got books around here.
SPEAKER_00 (03:37):
Otherwise, you can buy them cheap on Amazon,$2.99.
Anyway.
SPEAKER_01 (03:42):
Yeah, but it's a lot cooler with me sending it to
you.
Oh, yeah.
SPEAKER_00 (03:44):
So much cooler.
Wow.
So let us read from the veryfirst chapter of financial
physics.
SPEAKER_01 (03:52):
This is this is just I can't take it.
This is rule one.
SPEAKER_00 (03:55):
Ladies and gentlemen, now basically I'm not
gonna read you the chapter.
I'm just gonna tell you what therule is.
Rule one, I think.
Because the guy with holding upthe number The Law of Wealth
Acquisition.
SPEAKER_01 (04:06):
Yes.
SPEAKER_00 (04:07):
And the gist of it is, ladies and gentlemen, this
is a law, by the way, offinancial physics.
There are only three ways tomake money.
And you know, I promised uhrewards over the years to people
who could come up with a fourthway to make money.
That something that doesn't fitunder these three.
(04:27):
And the trick is finding onethat doesn't fit under these
three because everything I cancome up with, every possible
variation on the theme, will fitunder one or two, or all three
of these three ways to makemoney.
All right, let me tell you thefirst one.
Ready?
First one.
Moneymaking rule number one.
(04:49):
Or means number one.
Moneymaking means number one.
Luck.
SPEAKER_01 (04:54):
And so does investing fall under luck then?
SPEAKER_00 (04:57):
Part of it.
See, it can be under ah, yousee?
Investing is a combination.
Investing is a combination ofluck and one other one.
SPEAKER_01 (05:08):
Okay.
So luck, you're talking aboutthings like um lucky sperm.
SPEAKER_00 (05:14):
I mean, okay, yes.
Right.
The lucky parentage club whereyou are born into wealth.
That that is not something youconsciously did or strove to
achieve.
You just got lucky.
Your dad is Elon Musk, andyou're one of 437,000 children
(05:38):
who are getting to share thetrillion dollars that Elon is
worth.
I I don't know when this airs.
It could be 447,000 by the timeit airs.
I don't know.
SPEAKER_01 (05:47):
Uh what other things when it comes to money fall
under?
You could pick the right stock,right?
You could have made a lot ofright.
SPEAKER_00 (05:53):
Just accidentally picking the right stock,
thinking you're brilliant.
Um well uh uh obviously going toVegas, winning on the slots or
roulette or blackjack.
Prediction markets?
Prediction markets, lotteries,uh trading the market, being a
market timer.
That's the right.
And thinking you're reallysmart.
(06:14):
Even active picking the rightactive stock manager.
Managers will claim that's skilland work, that that's the right.
SPEAKER_01 (06:23):
But you've got to pick the right one, too.
SPEAKER_00 (06:24):
So But the the the evidence says it's mostly luck.
The data says it's mostly luck.
Now the second one, moneymakingmeans number two.
Is stealing.
SPEAKER_01 (06:37):
Yeah, but how many people wake up in the morning
and say, Well, I'm gonna I'mgonna have money, so I'll just
go take it from other people.
SPEAKER_00 (06:43):
Not very much.
What about okay?
Well, recently there was the guyuh who had the cattle Ponzi
scheme.
SPEAKER_01 (06:52):
Yes, it was very well written up where they where
where he claimed to have 80,000head of cattle and had like a
lot of people.
SPEAKER_00 (06:58):
Yeah.
SPEAKER_01 (06:59):
Okay, a few more than eight, but not not what he
said.
But yeah.
SPEAKER_00 (07:02):
But a but this is I don't think anybody wakes up and
says I'm gonna do it.
They just suddenly discover thatthis is an easy way to make
money, at least until they getcaught.
But there's a lot of illegal andand I and you see, stealing.
Ah, this I'm gonna get to thetrading fits under this.
Yeah.
SPEAKER_01 (07:22):
And what about people selling a product to
somebody they know that's notthe right product for that
person?
Is that stealing?
SPEAKER_00 (07:27):
Partially.
Yeah.
There may be a little workinvolved in that they had to
make the cold call and that theytry to sell you something, but
if they know in their heart thatthis product is not appropriate
for you, that it is bad for you,and that they are selling it for
the purpose of generating acommission for themselves, it
falls under stealing, and thenthe third one, which is work.
(07:49):
Number three is work.
So you pretty much see So luckstealing or work.
Luck stealing or work.
There's not a form.
And so where is investing fallthen?
Work and luck.
I see.
It's a combo.
It's a combo.
So if you do it right, if youbuild a proper portfolio and you
rebalance it and you don'tpanic.
(08:11):
You see, it's work to maintainyour emotional equilibrium.
That is hard to do.
We have to train ourselves notto react to bad markets.
That's part of the work of beinga successful investor.
You build, you have a plan, youbuild the right portfolio, you
rebalance it, and you controlyour emotions.
That is all work.
(08:31):
Now, there is surely a modicumof luck involved in that,
because the the economy has tocooperate with you.
So we're counting on that.
We're counting on something thathas at least been happening for
a few thousand years, and wehope it will continue to.
If it doesn't, then you knowyou're out of it.
Your luck ran out.
SPEAKER_01 (08:52):
Okay, but but okay, so back to yours and maybe our
situation.
Would you say um our investingfor the last 30 plus years has
been luck or has it been work?
SPEAKER_00 (09:06):
Um, early on, at least I'm gonna use my career as
an example.
When I was suggesting funds andstocks to people back in the 80s
and the early 90s, uh that wasthat was pure luck.
I mean, I worked a little bit,but it was more the weight was
toward the luck side.
I was just lucky that some ofthese funds did really well for
a period of time, uh, that someof these stocks did well for a
(09:28):
period of time.
But the more I learned, ah,learning is also effort, it's
work.
So studying the data, learningabout how the financial markets
actually work, learning what theacademics have the work they
have done, and they, you know,they they work can be acquired
(09:48):
by proxy.
Touche.
You know, Paul Merriman did alot of the work before I ever
did the work on this, and theFama and French and the like did
the work before Paul did thework.
So it's work by association,it's work by acquisition, it's
work by proxy.
Fascinating.
I mean, there's so much morethan a lot of things.
(10:09):
But it's always, it's always,always, always, I don't care
what it is, I don't care whatyou think up.
If you if you boil it down toits essence, you're gonna find
that it is one, two, or three ofthose things all combined.
SPEAKER_01 (10:30):
And how does it break down um across the world
in terms of wealth?
How much how much has been madefrom the world?
SPEAKER_00 (10:35):
I would I would have to say the the vast majority,
the vast majority is is numberthree.
It is work.
Yeah.
Because when you think about it,the biggest fortunes of all time
were created by the accumulatedeffort of a person or persons
building a business.
(10:56):
That's where most money has comefrom in the world.
But vast wealth, vast sums ofmoney.
I mean, you want to use ahistorical reference.
Let's talk about about Spain inthe 1500s.
Spain basically pillaged the NewWorld to make itself at the time
(11:17):
one of the wealthiest countrieson the planet.
Uh so there was there was masstheft happening in the world.
I mean Nazi Germany stole artand gold and and the the the
output of a lot of people,natural resources.
So there yeah, we uh uh Americadid it in the West.
(11:39):
Yep.
Uh so you know that yeah, it'sall it really is all of them.
It really is.
The the the fact that the U.S.
did so well and became such awealthy country had in had
something to do with hard work,had something to do with luck,
and had something to do withtheft.
SPEAKER_01 (11:56):
It's a little bit of all of those.
And going back to work andwealth, because you raised a
point that I had highlightedhere.
It's fascinating.
If I woke up today and I was 25again, God, I hope I don't make
the same mistakes.
SPEAKER_00 (12:10):
Um, but if you knew if you get to know what you know
now, that would be great.
SPEAKER_01 (12:15):
Yeah, that would be really good.
But the one thing I think we canfairly unequivocally say, you
raised it when it comes to work.
If you really have, if you aredetermined to be wealthy, if you
say, I this is this is a focusof my life, it's not everybody's
focus, by the way, which isfine.
There's nothing wrong with that.
But if it is the focus, I trulybelieve in today's world, the
(12:37):
one way you can do it, and youmay it may work out, maybe you
may be lucky or unlucky, wouldbe to start your own business.
That's where a wealth you canmake greater wealth than just
going and working for somebodyelse nine to five.
SPEAKER_00 (12:50):
And yet that's also an area where no matter how hard
you work, if luck's not withyou, sometimes you're gonna
fail.
SPEAKER_01 (12:59):
Or you just make a bad decision by radio stations.
Right.
SPEAKER_00 (13:01):
You do it, you do something stupid.
Yeah, right.
You decide to antique maps are agreat way to make money.
SPEAKER_01 (13:06):
It's a surefire winner.
Idiot.
Yeah.
So yeah, I mean, because we'vemade mistakes over the years.
We just our last hit was a goodone.
That's all.
And the timing was great.
SPEAKER_00 (13:15):
Yeah.
Little luck, little work.
That's a good point.
SPEAKER_01 (13:17):
Little lucky little work.
You think about it, by the way,starting the company basically
in 2010, after the market wasdown, the market's gone up
basically since then, so that'shelped as well.
SPEAKER_00 (13:27):
There's been some luck in there.
Yeah.
There's been some luck.
Um and you know, it's funny.
Speaking of wealthy, if you wantto get wealthy, I mean,
recently, just you know, a fewweeks ago, uh SpaceX went
public.
Oh, yeah.
And made Elon Musk atrillionaire on paper.
SPEAKER_01 (13:43):
That's crazy.
How many how many millions isthat?
How many millions are you?
SPEAKER_00 (13:47):
Now here's this is what I wanted to do.
There was an article in the WallStreet Journal a few weeks back
that said we can't even fathom atrillion.
We we can't fathom it.
And what they did is they put achart on the page.
Uh it was this was on the onlineedition, and at one end was a
million dollars, and at theother end was a trillion, and
the line started moving, and itsaid, stop the line when you
(14:08):
think it's a billion dollars.
Now I trillion.
A billion.
When you thought it was abillion dollars on a one million
to one trillion scale.
Yeah.
I stopped it about oh, about atenth of the way along the way.
And I was w I was offdramatically.
It was I would have had to touchit and stop it immediately.
Like a million boom, in it rightthere.
(14:30):
A million to a billion isnothing.
And and they they used a greatexample.
A million dollars of pennies, ifyou stack them one on top of the
other, flat, would stretch upabout a mile.
Million pennies.
Yep.
Laid flat.
If you stretched a millionpennies, you laid them flat to
get to a billion, that's athousand miles.
(14:53):
That is the distance from NewYork to Orlando, basically.
Yeah.
Laid sideways.
If you stack them one at a timefor a trillion.
How high?
All the way to the moon.
unknown (15:10):
Wait.
SPEAKER_00 (15:10):
That's 250,000 miles.
All the way to the moon and backto Earth.
Half a million miles.
And all the way back to themoon.
SPEAKER_01 (15:18):
750,000 miles.
And back to Earth.
That's a million miles.
SPEAKER_00 (15:21):
That's a lot.
Wow.
That's how big a trillion is.
It's hard to fathom.
Yeah, it really is.
So and it's hard to imagineanyone, anyone having that kind
of wealth.
Yeah, it's it's a whole lot ofmoney.
SPEAKER_01 (15:36):
Okay, before we move on from this, and I And by the
way, you're never gonna getthere.
SPEAKER_00 (15:40):
Just don't even try.
SPEAKER_01 (15:41):
I run into people that want to take huge risks and
I say, you're you're not gonnabe the richest.
And for sure, never not gonna bethe richest man in the world
now.
No one's gonna challenge atrillion, at least for a while.
That's gonna take Okay, but whenyou look at this and and luck,
stealing, and work, what what'syour big takeaway as the author
of Financial Physics?
I mean, what's your when youthink about those are the only
(16:02):
three ways to you get to choose.
SPEAKER_00 (16:05):
My takeaway is you get to choose.
You can't choose luck.
You can choose people do chooseluck, though, Tom.
SPEAKER_01 (16:13):
I'm saying like by picking a stock or being in a
sector saying this is gonna goto the moon.
SPEAKER_00 (16:17):
A lot of people say I'm gonna base my future, my
future on lottery tickets.
I see.
That's a lot of people do that.
A lot of people say I'm gonnabase my future on on horse
racing.
Yeah, I'm gonna bait base myfuture on playing poker.
Now, interesting thing aboutpoker, poker is one and three.
Yeah, because it is work.
(16:37):
No question.
And, you know, in some pokergames, there's a little bit of
two thrown in.
Yeah, turns out.
So ask old Bill Hilcock, he'lltell you.
The thought is it helps putthings in perspective.
Because people say, well, thereare a lot of ways to make money.
No, no, if you really boil itdown to its essence, there are
(16:58):
only three.
And that makes it a whole loteasier to pigeonhole your ideas,
what the things that you thinkyou should do, to put them in
the right little hole.
And uh and and and it usuallyends up being, usually ends up
being a combination thereof.
SPEAKER_01 (17:18):
Okay.
Those are the laws, theimmutable laws of wealth
acquisition next week.
Rule two of supply and demand.
SPEAKER_00 (17:27):
Another basic thing, but people that people don't
fully understand.
People they don't reallyunderstand that.
So we're gonna talk about thatin detail on uh on our next
money Monday.
We we have 18 of these coming.
Get well excited.
17 more.
SPEAKER_01 (17:40):
Okay.
SPEAKER_00 (17:40):
All right.
SPEAKER_01 (17:41):
That's great.
Thank you.
SPEAKER_00 (17:42):
Anyway, uh we also want to help you with the things
that you think are important.
And our question count has hasstill we're we I hate to
complain, but it has been a goodthing.
No, we're not complaining.
It's waned a little over thesummer.
Yes, it has waned.
Yeah.
Probably because people think ifhe can go on vacation, I can go
(18:03):
on vacation.
I'm taking how many how long areyou going to be on vacation in
July?
I guess it's past Yeah, twoweeks.
Two weeks.
Uh mine in June was four days.
So there you go.
How did you think?
SPEAKER_01 (18:14):
Well, I didn't take any in June.
So we're even thinking.
SPEAKER_00 (18:16):
Okay, I good point.
SPEAKER_01 (18:18):
Now I of course I at least.
Yeah, you did.
SPEAKER_00 (18:20):
You actually left in June.
Where'd I go?
Where'd I go?
Well, you left at the the likethe twenty fifth or twenty-sixth
or Oh, I see.
SPEAKER_01 (18:27):
But that's two weeks, okay.
But then I am going to LakeShallan later, but I'll be
available the whole time there.
In the middle of the lake with abeer in my hand, but I'll be
available.
SPEAKER_00 (18:35):
Yeah, on his on his phone because the cell coverage
is pretty darn good.
It's good.
Anyway, so you can send thosequestions in at
talkingrealmoney.com, just clickask a question.
You can type them up, then theygo to Tom, and he either gets on
the phone with you sometimes,not very often lately, or he uh
asks them on the program becausewe don't have a lot.
Is today a one or a twoquestion?
SPEAKER_01 (18:56):
Today's one.
One question.
One question show, is that it?
One dog night, yeah.
SPEAKER_00 (19:00):
Kind of sad.
Okay, so send those in attalkingrualmoney.com, click on
ask a question, or click on themic button in the lower right
hand corner and speak yourquestion.
That will go to the Friday QApodcast.
Now, without further ado, it'sTom with the question.
SPEAKER_01 (19:16):
Yeah, from St.
Peter's Petersburg.
It's easy for you to say.
I know.
St.
Petersburg?
St.
Petersburg.
Which I'm trying to still try toget through the book on
Rasputin.
I'm having a really hard time.
Anthony Beaver, one of myfavorite.
SPEAKER_00 (19:29):
That was Russia.
This is America.
SPEAKER_01 (19:31):
Oh, okay.
Different St.
Petersburg.
Okay, good.
Because a lot of wacky thingshappen there.
Uh hi, Tom and Don.
What would you guys do in mysituation?
He's a Florida resident, as wejust mentioned.
Just turned 62, 67, single,retired, waiting until 70 for
Social Security.
No pension.
1.9 in traditional IRA, okay.
(19:52):
400,000 in Roth, 80,000 in HSAand 55 left in his brokerage.
I didn't total that.
So that's one point.
About two and a half.
SPEAKER_00 (20:03):
I mean 2.4, 2.5.
SPEAKER_01 (20:05):
Using his brokerage account in traditional IRA
distributions to live on, andalong with some Roth conversions
up to the Irma limit.
Very good.
He's uh renting a temporarycondo in St.
Pete, but he wants to buy atownhouse nearby for$275,000.
Should I try to finance a goodportion of this or should I pull
(20:26):
$275,000 out of the Roth IRA andbuy it outright?
Wait, where are the accountswe've got?
$1.9 in traditional,$400,000.
Yeah,$400,000 in uh Roth.
Roth.
Yeah.
SPEAKER_00 (20:41):
And only$55 in brokerage.
Oh wow, that is a because they'dcome from the brokerage first
for me, but huh.
Because I love letting the Rothride.
Yeah, me too.
I love letting the Roth ride.
SPEAKER_01 (20:54):
I I it's a tough one because you're going to borrow
money at six and a half, right?
SPEAKER_00 (20:59):
I mean, yeah, and the fact of the matter, it's
really is going to depend a loton how that that is that is
invested, what his risktolerance is, and all those
important questions.
Um the other thing, by the way,I wouldn't I want to add this is
as an unrelated aspect of thisquestion of the townhouse,
particularly a townhouse inFlorida.
(21:20):
One, if it's a$275,000townhouse, it's probably not
beachfront.
Not at that price.
That's inland somewhere.
But do me a favor, before youeven consider placing an offer,
do a deep dive into the HOA'sfinancials.
Make sure they have a veryrobust reserve fund.
(21:47):
Because townhouses and condosare often filled with terrible,
disastrous surprises.
HOAs are notorious, and and Ispeak as a president of an HOA.
(22:07):
HOAs are notorious for notwanting to fund reserves to the
levels necessary because thecurrent owners say, Well, I
don't want to pay for it.
I might not own this anymore.
Why should I pay for it now?
We'll let the new owners pay forit when they come in.
Well, sir, you'll be one of thenew owners.
SPEAKER_01 (22:25):
Yeah, but just to just so everybody understands.
So reserves are for unexpectedthings that come along that have
to be taken care of by thegroup.
Oh no, or expected things.
SPEAKER_00 (22:33):
Okay.
Reserves are also, for example,you know in Florida, 15 to 25
years, time for a roof.
Yeah, it's a little bit of aremote here.
SPEAKER_01 (22:44):
Wouldn't surprise you the most important.
SPEAKER_00 (22:45):
If it's a stucco building, you know it's gonna
crack and leak.
You gotta rest re patch, yougotta patch and repaint the
outside of that.
You know that concrete is gonnacrack and erode.
That and if you you know ifyou're near a beach, that salt
gets inside the concrete andeats away the rebar.
(23:05):
And that can cause massivereproach in somewhere in Florida
where the whole thing collapses.
So um you need to make sure thatthe the reserves are well funded
for all of these things.
And you need to actually the thea good reserve fund actually
shows you what is set aside forwhat projects.
SPEAKER_01 (23:25):
Okay, but my question there would be, and you
know I I used to own part of acondo, which I absolutely
hundred percent hated.
Yeah.
Um but they just issued specialassessments.
They said we got a new sewer,blah, blah, blah.
Now everybody writes a check forblank.
Right, but the specialassessments can be debilitating.
SPEAKER_00 (23:43):
Yeah, no, I agree.
You know, to somebody whodoesn't have a lot of money
sitting around, and and it and Ithink it's patently unfair to
new residents, which is why, forexample, my HOA, the one that I
am president of, has millions ofdollars in reserve funding for
projects going out 20 years.
SPEAKER_01 (24:02):
I see it right behind you there, yeah.
SPEAKER_00 (24:04):
So, you know, we're well funded.
We have a very and and Floridadoes have stricter laws on
reserve studies, but pleasecheck that out.
You don't want to get hit with amassive surprise special
assessment.
SPEAKER_01 (24:17):
Okay.
Let but let's get to the now.
We return to our regularscheduled question.
Out of the two and a half mil,he wants two hundred and
seventy-five or finance it.
I don't know if that's binaryeither, by the way.
No, it's not.
SPEAKER_00 (24:31):
I would I would I would take some money out of the
brokerage for some of that.
SPEAKER_01 (24:39):
Yeah, I here's the thing.
I okay, but let's we're stillgetting ahead of us.
Actually, I'd rent.
No, he wants to buy this.
Let's assume he wants to buy it.
I don't get it.
We're getting ahead ofourselves.
If you wrote a plan that saysgonna take 275 out of my two and
a half million, does it work forme for the next 25 years?
That would be the startingplace.
SPEAKER_00 (24:59):
You do need a plan.
SPEAKER_01 (25:00):
Once you've done that, then you can decide where
it comes from.
That becomes a whole differenttopic.
SPEAKER_00 (25:04):
Yeah.
SPEAKER_01 (25:05):
And it will work with because if if my guess is
he's he didn't give us hisliving expenses, but you know,
Social Security is gonna beforty eight hundred a month.
He said, I mean, my guess ishe's probably living on that
when it gets to 70.
Yeah.
So I mean, my take is, and herehere's my general rule on and
you've we've said this before,borrowing.
If you got to borrow above fivepercent, it gets a little dicey.
SPEAKER_00 (25:29):
But there again, it depends on his portfolio.
If he is if he is a comfortable,moderately aggressive investor,
and his portfolio has seven oreight percent true earnings
potential, then you know, withthe tax hit.
See, when you throw the tax hit.
Exactly.
Yeah, and the Irma.
Yeah.
Yeah, and Irma, it's starting tolook more attractive to to go
(25:50):
with the note if you can get agood rate on the note.
And uh that's another trick,too.
Financing townhouses and condoscan be tricky sometimes.
SPEAKER_01 (26:01):
Is it hard?
Yeah, I didn't know that part ofit.
SPEAKER_00 (26:04):
We have condominium complexes here in celebration
for which you cannot get amortgage.
Because of uh of of a lot ofpeople, a lot of vacancies, uh,
you know, uh an inability tofund reserves and that kind of
thing.
SPEAKER_01 (26:20):
So and and in the in the great state of Washington,
we've had the case where peoplehave owned more than half of the
whole condo thing and they won'tlet somebody else borrow that
has less than that.
Mm-hmm.
Yeah, so that happened.
So yeah, I mean this is this istricky.
But for me, again, if if youwrote a retirement income plan,
financial plan that said, putall these things in and does it
(26:40):
work?
Yeah, then you could go back andfigure out where to take the
money from that's most taxefficient.
SPEAKER_00 (26:44):
As you say, again, that would be the horror call.
Had you consulted me on thisone, I would have said, Tom,
this one requires a call.
SPEAKER_01 (26:49):
Ah, I I think I did.
No, you didn't.
Okay.
unknown (26:53):
All right.
SPEAKER_00 (26:54):
Because there's too many moving parts in this has a
lot of moving parts.
It does.
It does.
But the Roth is not the Roth isthe last place.
SPEAKER_01 (27:02):
Yeah, that would be the one I'd like to leave.
SPEAKER_00 (27:04):
Yeah.
So because that tax-free growthis a is a huge deal.
And and the funny thing is, ishe earlier on he talked about
Roth conversions.
So if you're gonna take moneyout of the Roth and then you're
doing Roth conversions, well,you might as well take it out of
the IRA and skip the Rothconversion.
Makes no sense.
Yeah.
Makes no sense.
unknown (27:20):
Yeah, I agree.
SPEAKER_00 (27:20):
Thanks for your question, though.
And thank you all for questionsthat you've sent and that you
will be sending.
We want to thank you in advancefor going to
talkingrealmoney.com andclicking on ask a question.
And uh, you know, if you have asituation like this that
requires maybe talking about theplan a little and you just want
help with that, you're saying, Idon't need to hire an advisor.
(27:42):
Okay, that's fine.
Do you want some help?
We will give you that help andwe will do that for free without
any obligation.
And you're not even gonna get ahigh pressure sales pitch out of
it.
It's not gonna be, oh, you mustbecome a client.
No.
We're not gonna tell youanything until you become a
client.
No, we're gonna tell you lots ofstuff, even if you don't.
So uh go totalkingrealmoney.com, click on
(28:03):
meet an advisor.
I think that covers it.
That does.
Do you have anything else?
SPEAKER_01 (28:06):
Well done, sir.
No, I love the book, and uh solet us know about that too.
SPEAKER_00 (28:11):
All right, thanks for listening.
I'm Don.
That's Tom, Talking Real Money.
SPEAKER_03 (28:15):
The opinions and views expressed in 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 aresubject to change without
notice, including anyforward-looking estimates or
statements which are based oncertain expectations and
assumptions.
SPEAKER_02 (28:28):
Although information and opinions given have been
obtained from or based onsources believed to be reliable,
no warranty or representation ismade as to their correctness,
completeness, or accuracy.
SPEAKER_03 (28:37):
Information presented on the podcast is not
personalized investment advicefrom Oppello Wealth.
The views and strategiesdescribed may not be suitable
for everyone.
This podcast does not identifyall the risks, direct or
indirect or other considerationswhich might be material to you
when entering any financialtransaction.
Past performance does notguarantee feature results, and
profitable results cannot beguaranteed.
We hope you realize that theinformation provided on Talking
Real Money is for informational,educational, and hopefully
(29:00):
enjoyable purposes only.
The podcast is not trying to getyou to buy or sell any financial
products or securities.
Instead, the program is providedas a public service by Apello
Wealth, a fee-only registeredinvestment advisor.
Apellate Capital, LLC DBAAppello Wealth, is an investment
advisory firm registered withthe Securities and Exchange
(29:21):
Commission.
The firm only transacts businessin the states where it is
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requirements.
Registration with the SEC or anystate securities authority does
not imply a certain level ofskill of training.
Apello does not provide tax orlegal advice, and nothing either
stated or implied here should beinferred as providing such
advice.
Thanks for listening, and pleasevisit talkingrealmoney.com for
more information and importantdisclosure related to
(29:42):
performance of any specificindex or fund quoted in this
podcast.
We're gone to a really great financial future.
Tom and Don are talking realmoney.
SPEAKER_00 (00:12):
Today is the most special of all days in the
Talking Real Money calendar.
It's Money Monday.
Only important because it's sortof alliterative.
Money and Monday sort of gotogether, making it feel kind of
special.
So, in honor of the specialnature of a money Monday here on
Talking Real Money, from thisdate until nearly the Christmas
(00:37):
holiday season, every moneyMonday will feature one of the
rules, laws, corollaries,theories, and hypotheses of the
book.
The book itself.
Yes, financial physics.
SPEAKER_01 (00:58):
Oh, that's a disappointment.
I thought it was the lineuncrossed.
I was already annotated a bunchof stuff here and comments from
other Civil War historians andNo, no.
Okay.
SPEAKER_00 (01:08):
You know, it's funny.
Uh I I've gotten you know like acouple of dozen reviews.
No, a little over a dozenreviews for um The Line
Uncrossed.
And for some reason, I don'tunderstand it.
There are two unwritten nobodywrote a review to go with it.
They just rated the book twostars.
Two people did that.
Now can't know anything.
(01:29):
Can they give me two stars?
Please at least tell me why.
I don't understand why you don'tsay why.
Are you mad at me or something?
I gave it five and it deserveseveryone's two stars.
Yeah, I know, but yours, you youwould do that even if it sucked,
I think.
SPEAKER_01 (01:45):
I think it may be true, but in this case, as a guy
who reads a lot of history, it'sa damn fine book.
It really is, so worth reading.
SPEAKER_00 (01:53):
Anyway, uh, we're gonna read a little bit book
from a different book.
My my first book.
No, I first booked my secondbook.
It was the first one.
Ladies and gentlemen, from thefirst book of Don't the first
book of Don was MutualFundamentals.
SPEAKER_01 (02:06):
That's true.
SPEAKER_00 (02:07):
Which is I have that hasn't been printed in eons.
Uh this is from the thirdprinting of the third edition,
the third update of uh FinancialPhysics.
SPEAKER_01 (02:18):
Is it the third or the second?
I didn't know there was a third.
2022, right?
SPEAKER_00 (02:22):
2010, 2018, and 2022.
Ah, I guess I forgot the 18 one.
Okay.
Yeah.
So it's been updated threetimes.
Anyway, the uh we're gonna juststart at the very beginning
because it's a very fine placeto start, according to a song
made by the case.
SPEAKER_01 (02:36):
By the way, can you write us and I'll send you a
free copy?
Is that okay?
unknown (02:41):
Really?
SPEAKER_00 (02:42):
I'm trying to sell the damn things.
SPEAKER_01 (02:43):
I know, but yeah, that let's help people.
They're 299 Kindle on on Amazon.
SPEAKER_00 (02:48):
Oh, let's do it this way.
SPEAKER_01 (02:49):
I don't know when this airs because these we were
putting.
SPEAKER_00 (02:52):
It airs in July after you just got you are just
returning from vacation as wespeak.
SPEAKER_01 (02:57):
Let's do this in the it will give people a week.
After it airs, you have a week.
SPEAKER_00 (03:02):
Which is like the 19th or 20th or something like
that.
I don't know.
See, I was counting my weeks.
Let's see.
This one is gonna this is gonnaair.
Oh my gosh, really?
This is gonna air like the 14thof July, so you have until like
the 21st of July.
SPEAKER_01 (03:23):
We'll give you one week.
If you write and you just go totalkingrealmoney.com, click on
Ask a Question.
If you send me a note, I'll sendyou a book, but you have a week
to do it.
It's a very good book, so Okay.
SPEAKER_00 (03:34):
You're gonna actually send you have Sure.
SPEAKER_01 (03:36):
Yeah, we got books around here.
SPEAKER_00 (03:37):
Otherwise, you can buy them cheap on Amazon,$2.99.
Anyway.
SPEAKER_01 (03:42):
Yeah, but it's a lot cooler with me sending it to
you.
Oh, yeah.
SPEAKER_00 (03:44):
So much cooler.
Wow.
So let us read from the veryfirst chapter of financial
physics.
SPEAKER_01 (03:52):
This is this is just I can't take it.
This is rule one.
SPEAKER_00 (03:55):
Ladies and gentlemen, now basically I'm not
gonna read you the chapter.
I'm just gonna tell you what therule is.
Rule one, I think.
Because the guy with holding upthe number The Law of Wealth
Acquisition.
SPEAKER_01 (04:06):
Yes.
SPEAKER_00 (04:07):
And the gist of it is, ladies and gentlemen, this
is a law, by the way, offinancial physics.
There are only three ways tomake money.
And you know, I promised uhrewards over the years to people
who could come up with a fourthway to make money.
That something that doesn't fitunder these three.
(04:27):
And the trick is finding onethat doesn't fit under these
three because everything I cancome up with, every possible
variation on the theme, will fitunder one or two, or all three
of these three ways to makemoney.
All right, let me tell you thefirst one.
Ready?
First one.
Moneymaking rule number one.
(04:49):
Or means number one.
Moneymaking means number one.
Luck.
SPEAKER_01 (04:54):
And so does investing fall under luck then?
SPEAKER_00 (04:57):
Part of it.
See, it can be under ah, yousee?
Investing is a combination.
Investing is a combination ofluck and one other one.
SPEAKER_01 (05:08):
Okay.
So luck, you're talking aboutthings like um lucky sperm.
SPEAKER_00 (05:14):
I mean, okay, yes.
Right.
The lucky parentage club whereyou are born into wealth.
That that is not something youconsciously did or strove to
achieve.
You just got lucky.
Your dad is Elon Musk, andyou're one of 437,000 children
(05:38):
who are getting to share thetrillion dollars that Elon is
worth.
I I don't know when this airs.
It could be 447,000 by the timeit airs.
I don't know.
SPEAKER_01 (05:47):
Uh what other things when it comes to money fall
under?
You could pick the right stock,right?
You could have made a lot ofright.
SPEAKER_00 (05:53):
Just accidentally picking the right stock,
thinking you're brilliant.
Um well uh uh obviously going toVegas, winning on the slots or
roulette or blackjack.
Prediction markets?
Prediction markets, lotteries,uh trading the market, being a
market timer.
That's the right.
And thinking you're reallysmart.
(06:14):
Even active picking the rightactive stock manager.
Managers will claim that's skilland work, that that's the right.
SPEAKER_01 (06:23):
But you've got to pick the right one, too.
SPEAKER_00 (06:24):
So But the the the evidence says it's mostly luck.
The data says it's mostly luck.
Now the second one, moneymakingmeans number two.
Is stealing.
SPEAKER_01 (06:37):
Yeah, but how many people wake up in the morning
and say, Well, I'm gonna I'mgonna have money, so I'll just
go take it from other people.
SPEAKER_00 (06:43):
Not very much.
What about okay?
Well, recently there was the guyuh who had the cattle Ponzi
scheme.
SPEAKER_01 (06:52):
Yes, it was very well written up where they where
where he claimed to have 80,000head of cattle and had like a
lot of people.
SPEAKER_00 (06:58):
Yeah.
SPEAKER_01 (06:59):
Okay, a few more than eight, but not not what he
said.
But yeah.
SPEAKER_00 (07:02):
But a but this is I don't think anybody wakes up and
says I'm gonna do it.
They just suddenly discover thatthis is an easy way to make
money, at least until they getcaught.
But there's a lot of illegal andand I and you see, stealing.
Ah, this I'm gonna get to thetrading fits under this.
Yeah.
SPEAKER_01 (07:22):
And what about people selling a product to
somebody they know that's notthe right product for that
person?
Is that stealing?
SPEAKER_00 (07:27):
Partially.
Yeah.
There may be a little workinvolved in that they had to
make the cold call and that theytry to sell you something, but
if they know in their heart thatthis product is not appropriate
for you, that it is bad for you,and that they are selling it for
the purpose of generating acommission for themselves, it
falls under stealing, and thenthe third one, which is work.
(07:49):
Number three is work.
So you pretty much see So luckstealing or work.
Luck stealing or work.
There's not a form.
And so where is investing fallthen?
Work and luck.
I see.
It's a combo.
It's a combo.
So if you do it right, if youbuild a proper portfolio and you
rebalance it and you don'tpanic.
(08:11):
You see, it's work to maintainyour emotional equilibrium.
That is hard to do.
We have to train ourselves notto react to bad markets.
That's part of the work of beinga successful investor.
You build, you have a plan, youbuild the right portfolio, you
rebalance it, and you controlyour emotions.
That is all work.
(08:31):
Now, there is surely a modicumof luck involved in that,
because the the economy has tocooperate with you.
So we're counting on that.
We're counting on something thathas at least been happening for
a few thousand years, and wehope it will continue to.
If it doesn't, then you knowyou're out of it.
Your luck ran out.
SPEAKER_01 (08:52):
Okay, but but okay, so back to yours and maybe our
situation.
Would you say um our investingfor the last 30 plus years has
been luck or has it been work?
SPEAKER_00 (09:06):
Um, early on, at least I'm gonna use my career as
an example.
When I was suggesting funds andstocks to people back in the 80s
and the early 90s, uh that wasthat was pure luck.
I mean, I worked a little bit,but it was more the weight was
toward the luck side.
I was just lucky that some ofthese funds did really well for
a period of time, uh, that someof these stocks did well for a
(09:28):
period of time.
But the more I learned, ah,learning is also effort, it's
work.
So studying the data, learningabout how the financial markets
actually work, learning what theacademics have the work they
have done, and they, you know,they they work can be acquired
(09:48):
by proxy.
Touche.
You know, Paul Merriman did alot of the work before I ever
did the work on this, and theFama and French and the like did
the work before Paul did thework.
So it's work by association,it's work by acquisition, it's
work by proxy.
Fascinating.
I mean, there's so much morethan a lot of things.
(10:09):
But it's always, it's always,always, always, I don't care
what it is, I don't care whatyou think up.
If you if you boil it down toits essence, you're gonna find
that it is one, two, or three ofthose things all combined.
SPEAKER_01 (10:30):
And how does it break down um across the world
in terms of wealth?
How much how much has been madefrom the world?
SPEAKER_00 (10:35):
I would I would have to say the the vast majority,
the vast majority is is numberthree.
It is work.
Yeah.
Because when you think about it,the biggest fortunes of all time
were created by the accumulatedeffort of a person or persons
building a business.
(10:56):
That's where most money has comefrom in the world.
But vast wealth, vast sums ofmoney.
I mean, you want to use ahistorical reference.
Let's talk about about Spain inthe 1500s.
Spain basically pillaged the NewWorld to make itself at the time
(11:17):
one of the wealthiest countrieson the planet.
Uh so there was there was masstheft happening in the world.
I mean Nazi Germany stole artand gold and and the the the
output of a lot of people,natural resources.
So there yeah, we uh uh Americadid it in the West.
(11:39):
Yep.
Uh so you know that yeah, it'sall it really is all of them.
It really is.
The the the fact that the U.S.
did so well and became such awealthy country had in had
something to do with hard work,had something to do with luck,
and had something to do withtheft.
SPEAKER_01 (11:56):
It's a little bit of all of those.
And going back to work andwealth, because you raised a
point that I had highlightedhere.
It's fascinating.
If I woke up today and I was 25again, God, I hope I don't make
the same mistakes.
SPEAKER_00 (12:10):
Um, but if you knew if you get to know what you know
now, that would be great.
SPEAKER_01 (12:15):
Yeah, that would be really good.
But the one thing I think we canfairly unequivocally say, you
raised it when it comes to work.
If you really have, if you aredetermined to be wealthy, if you
say, I this is this is a focusof my life, it's not everybody's
focus, by the way, which isfine.
There's nothing wrong with that.
But if it is the focus, I trulybelieve in today's world, the
(12:37):
one way you can do it, and youmay it may work out, maybe you
may be lucky or unlucky, wouldbe to start your own business.
That's where a wealth you canmake greater wealth than just
going and working for somebodyelse nine to five.
SPEAKER_00 (12:50):
And yet that's also an area where no matter how hard
you work, if luck's not withyou, sometimes you're gonna
fail.
SPEAKER_01 (12:59):
Or you just make a bad decision by radio stations.
Right.
SPEAKER_00 (13:01):
You do it, you do something stupid.
Yeah, right.
You decide to antique maps are agreat way to make money.
SPEAKER_01 (13:06):
It's a surefire winner.
Idiot.
Yeah.
So yeah, I mean, because we'vemade mistakes over the years.
We just our last hit was a goodone.
That's all.
And the timing was great.
SPEAKER_00 (13:15):
Yeah.
Little luck, little work.
That's a good point.
SPEAKER_01 (13:17):
Little lucky little work.
You think about it, by the way,starting the company basically
in 2010, after the market wasdown, the market's gone up
basically since then, so that'shelped as well.
SPEAKER_00 (13:27):
There's been some luck in there.
Yeah.
There's been some luck.
Um and you know, it's funny.
Speaking of wealthy, if you wantto get wealthy, I mean,
recently, just you know, a fewweeks ago, uh SpaceX went
public.
Oh, yeah.
And made Elon Musk atrillionaire on paper.
SPEAKER_01 (13:43):
That's crazy.
How many how many millions isthat?
How many millions are you?
SPEAKER_00 (13:47):
Now here's this is what I wanted to do.
There was an article in the WallStreet Journal a few weeks back
that said we can't even fathom atrillion.
We we can't fathom it.
And what they did is they put achart on the page.
Uh it was this was on the onlineedition, and at one end was a
million dollars, and at theother end was a trillion, and
the line started moving, and itsaid, stop the line when you
(14:08):
think it's a billion dollars.
Now I trillion.
A billion.
When you thought it was abillion dollars on a one million
to one trillion scale.
Yeah.
I stopped it about oh, about atenth of the way along the way.
And I was w I was offdramatically.
It was I would have had to touchit and stop it immediately.
Like a million boom, in it rightthere.
(14:30):
A million to a billion isnothing.
And and they they used a greatexample.
A million dollars of pennies, ifyou stack them one on top of the
other, flat, would stretch upabout a mile.
Million pennies.
Yep.
Laid flat.
If you stretched a millionpennies, you laid them flat to
get to a billion, that's athousand miles.
(14:53):
That is the distance from NewYork to Orlando, basically.
Yeah.
Laid sideways.
If you stack them one at a timefor a trillion.
How high?
All the way to the moon.
unknown (15:10):
Wait.
SPEAKER_00 (15:10):
That's 250,000 miles.
All the way to the moon and backto Earth.
Half a million miles.
And all the way back to themoon.
SPEAKER_01 (15:18):
750,000 miles.
And back to Earth.
That's a million miles.
SPEAKER_00 (15:21):
That's a lot.
Wow.
That's how big a trillion is.
It's hard to fathom.
Yeah, it really is.
So and it's hard to imagineanyone, anyone having that kind
of wealth.
Yeah, it's it's a whole lot ofmoney.
SPEAKER_01 (15:36):
Okay, before we move on from this, and I And by the
way, you're never gonna getthere.
SPEAKER_00 (15:40):
Just don't even try.
SPEAKER_01 (15:41):
I run into people that want to take huge risks and
I say, you're you're not gonnabe the richest.
And for sure, never not gonna bethe richest man in the world
now.
No one's gonna challenge atrillion, at least for a while.
That's gonna take Okay, but whenyou look at this and and luck,
stealing, and work, what what'syour big takeaway as the author
of Financial Physics?
I mean, what's your when youthink about those are the only
(16:02):
three ways to you get to choose.
SPEAKER_00 (16:05):
My takeaway is you get to choose.
You can't choose luck.
You can choose people do chooseluck, though, Tom.
SPEAKER_01 (16:13):
I'm saying like by picking a stock or being in a
sector saying this is gonna goto the moon.
SPEAKER_00 (16:17):
A lot of people say I'm gonna base my future, my
future on lottery tickets.
I see.
That's a lot of people do that.
A lot of people say I'm gonnabase my future on on horse
racing.
Yeah, I'm gonna bait base myfuture on playing poker.
Now, interesting thing aboutpoker, poker is one and three.
Yeah, because it is work.
(16:37):
No question.
And, you know, in some pokergames, there's a little bit of
two thrown in.
Yeah, turns out.
So ask old Bill Hilcock, he'lltell you.
The thought is it helps putthings in perspective.
Because people say, well, thereare a lot of ways to make money.
No, no, if you really boil itdown to its essence, there are
(16:58):
only three.
And that makes it a whole loteasier to pigeonhole your ideas,
what the things that you thinkyou should do, to put them in
the right little hole.
And uh and and and it usuallyends up being, usually ends up
being a combination thereof.
SPEAKER_01 (17:18):
Okay.
Those are the laws, theimmutable laws of wealth
acquisition next week.
Rule two of supply and demand.
SPEAKER_00 (17:27):
Another basic thing, but people that people don't
fully understand.
People they don't reallyunderstand that.
So we're gonna talk about thatin detail on uh on our next
money Monday.
We we have 18 of these coming.
Get well excited.
17 more.
SPEAKER_01 (17:40):
Okay.
SPEAKER_00 (17:40):
All right.
SPEAKER_01 (17:41):
That's great.
Thank you.
SPEAKER_00 (17:42):
Anyway, uh we also want to help you with the things
that you think are important.
And our question count has hasstill we're we I hate to
complain, but it has been a goodthing.
No, we're not complaining.
It's waned a little over thesummer.
Yes, it has waned.
Yeah.
Probably because people think ifhe can go on vacation, I can go
(18:03):
on vacation.
I'm taking how many how long areyou going to be on vacation in
July?
I guess it's past Yeah, twoweeks.
Two weeks.
Uh mine in June was four days.
So there you go.
How did you think?
SPEAKER_01 (18:14):
Well, I didn't take any in June.
So we're even thinking.
SPEAKER_00 (18:16):
Okay, I good point.
SPEAKER_01 (18:18):
Now I of course I at least.
Yeah, you did.
SPEAKER_00 (18:20):
You actually left in June.
Where'd I go?
Where'd I go?
Well, you left at the the likethe twenty fifth or twenty-sixth
or Oh, I see.
SPEAKER_01 (18:27):
But that's two weeks, okay.
But then I am going to LakeShallan later, but I'll be
available the whole time there.
In the middle of the lake with abeer in my hand, but I'll be
available.
SPEAKER_00 (18:35):
Yeah, on his on his phone because the cell coverage
is pretty darn good.
It's good.
Anyway, so you can send thosequestions in at
talkingrealmoney.com, just clickask a question.
You can type them up, then theygo to Tom, and he either gets on
the phone with you sometimes,not very often lately, or he uh
asks them on the program becausewe don't have a lot.
Is today a one or a twoquestion?
SPEAKER_01 (18:56):
Today's one.
One question.
One question show, is that it?
One dog night, yeah.
SPEAKER_00 (19:00):
Kind of sad.
Okay, so send those in attalkingrualmoney.com, click on
ask a question, or click on themic button in the lower right
hand corner and speak yourquestion.
That will go to the Friday QApodcast.
Now, without further ado, it'sTom with the question.
SPEAKER_01 (19:16):
Yeah, from St.
Peter's Petersburg.
It's easy for you to say.
I know.
St.
Petersburg?
St.
Petersburg.
Which I'm trying to still try toget through the book on
Rasputin.
I'm having a really hard time.
Anthony Beaver, one of myfavorite.
SPEAKER_00 (19:29):
That was Russia.
This is America.
SPEAKER_01 (19:31):
Oh, okay.
Different St.
Petersburg.
Okay, good.
Because a lot of wacky thingshappen there.
Uh hi, Tom and Don.
What would you guys do in mysituation?
He's a Florida resident, as wejust mentioned.
Just turned 62, 67, single,retired, waiting until 70 for
Social Security.
No pension.
1.9 in traditional IRA, okay.
(19:52):
400,000 in Roth, 80,000 in HSAand 55 left in his brokerage.
I didn't total that.
So that's one point.
About two and a half.
SPEAKER_00 (20:03):
I mean 2.4, 2.5.
SPEAKER_01 (20:05):
Using his brokerage account in traditional IRA
distributions to live on, andalong with some Roth conversions
up to the Irma limit.
Very good.
He's uh renting a temporarycondo in St.
Pete, but he wants to buy atownhouse nearby for$275,000.
Should I try to finance a goodportion of this or should I pull
(20:26):
$275,000 out of the Roth IRA andbuy it outright?
Wait, where are the accountswe've got?
$1.9 in traditional,$400,000.
Yeah,$400,000 in uh Roth.
Roth.
Yeah.
SPEAKER_00 (20:41):
And only$55 in brokerage.
Oh wow, that is a because they'dcome from the brokerage first
for me, but huh.
Because I love letting the Rothride.
Yeah, me too.
I love letting the Roth ride.
SPEAKER_01 (20:54):
I I it's a tough one because you're going to borrow
money at six and a half, right?
SPEAKER_00 (20:59):
I mean, yeah, and the fact of the matter, it's
really is going to depend a loton how that that is that is
invested, what his risktolerance is, and all those
important questions.
Um the other thing, by the way,I wouldn't I want to add this is
as an unrelated aspect of thisquestion of the townhouse,
particularly a townhouse inFlorida.
(21:20):
One, if it's a$275,000townhouse, it's probably not
beachfront.
Not at that price.
That's inland somewhere.
But do me a favor, before youeven consider placing an offer,
do a deep dive into the HOA'sfinancials.
Make sure they have a veryrobust reserve fund.
(21:47):
Because townhouses and condosare often filled with terrible,
disastrous surprises.
HOAs are notorious, and and Ispeak as a president of an HOA.
(22:07):
HOAs are notorious for notwanting to fund reserves to the
levels necessary because thecurrent owners say, Well, I
don't want to pay for it.
I might not own this anymore.
Why should I pay for it now?
We'll let the new owners pay forit when they come in.
Well, sir, you'll be one of thenew owners.
SPEAKER_01 (22:25):
Yeah, but just to just so everybody understands.
So reserves are for unexpectedthings that come along that have
to be taken care of by thegroup.
Oh no, or expected things.
SPEAKER_00 (22:33):
Okay.
Reserves are also, for example,you know in Florida, 15 to 25
years, time for a roof.
Yeah, it's a little bit of aremote here.
SPEAKER_01 (22:44):
Wouldn't surprise you the most important.
SPEAKER_00 (22:45):
If it's a stucco building, you know it's gonna
crack and leak.
You gotta rest re patch, yougotta patch and repaint the
outside of that.
You know that concrete is gonnacrack and erode.
That and if you you know ifyou're near a beach, that salt
gets inside the concrete andeats away the rebar.
(23:05):
And that can cause massivereproach in somewhere in Florida
where the whole thing collapses.
So um you need to make sure thatthe the reserves are well funded
for all of these things.
And you need to actually the thea good reserve fund actually
shows you what is set aside forwhat projects.
SPEAKER_01 (23:25):
Okay, but my question there would be, and you
know I I used to own part of acondo, which I absolutely
hundred percent hated.
Yeah.
Um but they just issued specialassessments.
They said we got a new sewer,blah, blah, blah.
Now everybody writes a check forblank.
Right, but the specialassessments can be debilitating.
SPEAKER_00 (23:43):
Yeah, no, I agree.
You know, to somebody whodoesn't have a lot of money
sitting around, and and it and Ithink it's patently unfair to
new residents, which is why, forexample, my HOA, the one that I
am president of, has millions ofdollars in reserve funding for
projects going out 20 years.
SPEAKER_01 (24:02):
I see it right behind you there, yeah.
SPEAKER_00 (24:04):
So, you know, we're well funded.
We have a very and and Floridadoes have stricter laws on
reserve studies, but pleasecheck that out.
You don't want to get hit with amassive surprise special
assessment.
SPEAKER_01 (24:17):
Okay.
Let but let's get to the now.
We return to our regularscheduled question.
Out of the two and a half mil,he wants two hundred and
seventy-five or finance it.
I don't know if that's binaryeither, by the way.
No, it's not.
SPEAKER_00 (24:31):
I would I would I would take some money out of the
brokerage for some of that.
SPEAKER_01 (24:39):
Yeah, I here's the thing.
I okay, but let's we're stillgetting ahead of us.
Actually, I'd rent.
No, he wants to buy this.
Let's assume he wants to buy it.
I don't get it.
We're getting ahead ofourselves.
If you wrote a plan that saysgonna take 275 out of my two and
a half million, does it work forme for the next 25 years?
That would be the startingplace.
SPEAKER_00 (24:59):
You do need a plan.
SPEAKER_01 (25:00):
Once you've done that, then you can decide where
it comes from.
That becomes a whole differenttopic.
SPEAKER_00 (25:04):
Yeah.
SPEAKER_01 (25:05):
And it will work with because if if my guess is
he's he didn't give us hisliving expenses, but you know,
Social Security is gonna beforty eight hundred a month.
He said, I mean, my guess ishe's probably living on that
when it gets to 70.
Yeah.
So I mean, my take is, and herehere's my general rule on and
you've we've said this before,borrowing.
If you got to borrow above fivepercent, it gets a little dicey.
SPEAKER_00 (25:29):
But there again, it depends on his portfolio.
If he is if he is a comfortable,moderately aggressive investor,
and his portfolio has seven oreight percent true earnings
potential, then you know, withthe tax hit.
See, when you throw the tax hit.
Exactly.
Yeah, and the Irma.
Yeah.
Yeah, and Irma, it's starting tolook more attractive to to go
(25:50):
with the note if you can get agood rate on the note.
And uh that's another trick,too.
Financing townhouses and condoscan be tricky sometimes.
SPEAKER_01 (26:01):
Is it hard?
Yeah, I didn't know that part ofit.
SPEAKER_00 (26:04):
We have condominium complexes here in celebration
for which you cannot get amortgage.
Because of uh of of a lot ofpeople, a lot of vacancies, uh,
you know, uh an inability tofund reserves and that kind of
thing.
SPEAKER_01 (26:20):
So and and in the in the great state of Washington,
we've had the case where peoplehave owned more than half of the
whole condo thing and they won'tlet somebody else borrow that
has less than that.
Mm-hmm.
Yeah, so that happened.
So yeah, I mean this is this istricky.
But for me, again, if if youwrote a retirement income plan,
financial plan that said, putall these things in and does it
(26:40):
work?
Yeah, then you could go back andfigure out where to take the
money from that's most taxefficient.
SPEAKER_00 (26:44):
As you say, again, that would be the horror call.
Had you consulted me on thisone, I would have said, Tom,
this one requires a call.
SPEAKER_01 (26:49):
Ah, I I think I did.
No, you didn't.
Okay.
unknown (26:53):
All right.
SPEAKER_00 (26:54):
Because there's too many moving parts in this has a
lot of moving parts.
It does.
It does.
But the Roth is not the Roth isthe last place.
SPEAKER_01 (27:02):
Yeah, that would be the one I'd like to leave.
SPEAKER_00 (27:04):
Yeah.
So because that tax-free growthis a is a huge deal.
And and the funny thing is, ishe earlier on he talked about
Roth conversions.
So if you're gonna take moneyout of the Roth and then you're
doing Roth conversions, well,you might as well take it out of
the IRA and skip the Rothconversion.
Makes no sense.
Yeah.
Makes no sense.
unknown (27:20):
Yeah, I agree.
SPEAKER_00 (27:20):
Thanks for your question, though.
And thank you all for questionsthat you've sent and that you
will be sending.
We want to thank you in advancefor going to
talkingrealmoney.com andclicking on ask a question.
And uh, you know, if you have asituation like this that
requires maybe talking about theplan a little and you just want
help with that, you're saying, Idon't need to hire an advisor.
(27:42):
Okay, that's fine.
Do you want some help?
We will give you that help andwe will do that for free without
any obligation.
And you're not even gonna get ahigh pressure sales pitch out of
it.
It's not gonna be, oh, you mustbecome a client.
No.
We're not gonna tell youanything until you become a
client.
No, we're gonna tell you lots ofstuff, even if you don't.
So uh go totalkingrealmoney.com, click on
(28:03):
meet an advisor.
I think that covers it.
That does.
Do you have anything else?
SPEAKER_01 (28:06):
Well done, sir.
No, I love the book, and uh solet us know about that too.
SPEAKER_00 (28:11):
All right, thanks for listening.
I'm Don.
That's Tom, Talking Real Money.
SPEAKER_03 (28:15):
The opinions and views expressed in 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 aresubject to change without
notice, including anyforward-looking estimates or
statements which are based oncertain expectations and
assumptions.
SPEAKER_02 (28:28):
Although information and opinions given have been
obtained from or based onsources believed to be reliable,
no warranty or representation ismade as to their correctness,
completeness, or accuracy.
SPEAKER_03 (28:37):
Information presented on the podcast is not
personalized investment advicefrom Oppello Wealth.
The views and strategiesdescribed may not be suitable
for everyone.
This podcast does not identifyall the risks, direct or
indirect or other considerationswhich might be material to you
when entering any financialtransaction.
Past performance does notguarantee feature results, and
profitable results cannot beguaranteed.
We hope you realize that theinformation provided on Talking
Real Money is for informational,educational, and hopefully
(29:00):
enjoyable purposes only.
The podcast is not trying to getyou to buy or sell any financial
products or securities.
Instead, the program is providedas a public service by Apello
Wealth, a fee-only registeredinvestment advisor.
Apellate Capital, LLC DBAAppello Wealth, is an investment
advisory firm registered withthe Securities and Exchange
(29:21):
Commission.
The firm only transacts businessin the states where it is
properly registered, or excludedor exempt from registration
requirements.
Registration with the SEC or anystate securities authority does
not imply a certain level ofskill of training.
Apello does not provide tax orlegal advice, and nothing either
stated or implied here should beinferred as providing such
advice.
Thanks for listening, and pleasevisit talkingrealmoney.com for
more information and importantdisclosure related to
(29:42):
performance of any specificindex or fund quoted in this
podcast.
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