Money Monday with Brian James

Episode Transcript

Speaker 1 (00:00):
Brought least a little less haunting than Join us at

(00:03):
fifty five KRC dot com eight oh five on a Monday.
It is that time every Monday. This time we need
to talk with Brian James from all Worth Financial East
Financial Planning. He knows about Monday money, so that's why
we call this money Monday with Brian James. Welcome back, Brian.
I hope you had a good weekend.

Speaker 2 (00:20):
Good morning, happy fall and cold weather to you. Brian Thomason.

Speaker 1 (00:23):
Hey, look, the federal government's still shut down. Brian like that.

Speaker 3 (00:27):
I think they figured out that the weather was not
gonna be warm today, so we're just not gonna get
out of bed.

Speaker 2 (00:31):
Yeah.

Speaker 1 (00:32):
Well they got no kings out of their system over
the weekend. Not quite sure what that was all about
or what they hope to accomplish, but the government's still
shut down. I think one of the reasons it was
still shut down is because they knew that event was coming.
I want to show how angry and upset American people are,
generally speaking. It was top of the our article or
a news report about all the different reasons people might
have shown up, and they're disparate and diverse reasons for

(00:52):
showing up, but the government still remains shut down, and
there doesn't seem to be any any end in sight,
I think, at least from a political standpoint. It's been
noted in the Wall Street Channel reporting on this about
running out of time to figure out how to solve
this problem. If they have enough time. So many people
got on Obamacare when the premiums were waived and was

(01:14):
considered free, and a lot of Republicans in Republican states also.
They also suggest there's pulling out there showing strong support
for continuing these so called enhanced subsidies, notwithstanding the fact
that it's going to set us into the whole even
what three hundred and fifty plus billion dollars over the
next ten years these were set to expire. Brian, I
don't understand what the problem is. The Democrats wrote in

(01:37):
the original language the subsidies were are the cap on
premiums was waived because of COVID nineteen, and they put
an end date that's this year. This had to come
at some point, Brian. So I don't understand. It doesn't
make any sense to me to continue to keep the
government shut down.

Speaker 2 (01:56):
Yeah, I think that's where we are.

Speaker 3 (01:57):
We set up a program that was very popular and
made it easy to be a part of it, and
didn't really set up the funding mechanism.

Speaker 2 (02:04):
Well, we did that.

Speaker 3 (02:04):
We did have the funding mechanism set up, but that
was the first thing that the Republicans we were able
to unwind years ago, but they were not able to
unwind the program itself.

Speaker 2 (02:13):
So we have the.

Speaker 3 (02:14):
Expense without the ability to cover that expense the way
it was originally designed.

Speaker 1 (02:20):
So yeah, the thing that they got rid of was, well,
the Supreme Court said you can't force someone to buy
something they don't want to buy. So the whole funding mechanism,
which is every American must buy a health insurance policy,
welcome to Obamacare and the market plans that was supposed
to support all of the pre existing people that were
going to jump on and obviously create a tremendous claims demand,

(02:41):
you know, actuarily, it was a nightmare as the outset.
But once you were once you were legally told that
you can't use the commerce clause to force someone to
do something, then all the people that weren't forced to
buy it didn't buy it. So the rest were a
bunch of people with high claims exposure that's a rescue
disaster we got.

Speaker 3 (02:58):
And there's a fancy insurance word called adverse selection, which
basically means if you make it this easy for everybody
to get but it's not required, then essentially what you're
going to get is the people who need the insurance
most and are the most expensive risks, and you're not
going to get the funding from the people who would
have just been writing the checks but otherwise would be
healthy and not funding the system. So ironically, like you said,

(03:18):
we can't force anybody to buy something they don't want
to buy, but we can force the government to.

Speaker 2 (03:22):
Buy a lot of stuff that it doesn't want to buy.
We didn't really talk about that.

Speaker 1 (03:26):
No, we didn't, all right, So there's the genesis behind
the shutdown. We are, regardless of the reasons why, still
in a shutdown. The question is is it impacting the
American people generally speaking? So in my experience in my circles, no,
because I'm not friends with or acquainted with, or close
to anybody at least that's working for the federal government.

(03:46):
Although i do have a niece that's currently unemployed to Washington, DC,
so there's one. But is this a large and looming problem,
and I suppose ultimately it is going to impact services
that more and more people do rely on. So where
is this taking us?

Speaker 3 (04:01):
Brian James, Well, it's ad It already is impacting services
that people rely on, as evidence by the fact that
Washington is actually recalling staff just to print the CPI
number because that's how many dominoes came out of this
one report. So social Security, costs of living adjustments, inflation
link bond, next year's four to one K caps are
all things that are impacted by inflation, and somebody has

(04:22):
to make these decisions. So yeah, they actually are bringing
people back off of furlough to make these decisions so
that we can move forward.

Speaker 2 (04:30):
I don't know that.

Speaker 3 (04:31):
Maybe maybe we didn't think this one was going to
last very long. We're on day thirty. By the end
of this week we will be I believe this will
be the longest shutdown in history. If I recall correctly,
I think it was thirty four days. So end of
Friday we will be looking at the longest shutdown. Since
they're not even in the same room, I feel pretty
confident we're going to break that record.

Speaker 1 (04:50):
So the further workers that do the consumer Price Index
are being brought back, so I guess they're essential and
critical to the extent they need to be there to
figure out security checks, bonds and four one K issues.

Speaker 2 (05:02):
Yeah, that's exactly right.

Speaker 3 (05:03):
I mean there are some things we just cannot get
away with just not doing so in some of those
things are the Bureau Labor Statistics is going to publish
the September CPI eight thirty am on Thursday the twenty fourth,
that's this Thursday, doing that anyway, despite the shutdown.

Speaker 2 (05:16):
That's why they recalled the staff.

Speaker 3 (05:18):
No other reports though until the service is resumed back
to normal, So that's going to keep statutory deadlines for
programs that depend on CPI. In other words, we have
things codified in the law that say we have to
do this, so there really is no choicescept to bring
these people back. So that does mean the FED and
the markets overall are kind of flying a flying blind,
flying by wire, if you will, during this shutdown that

(05:39):
raises policy uncertainty heading it and there's a FED meeting
October twenty eighth and twenty ninth, Well, they're going to
be struggling a little bit to get the complete picture.
And of course social Security COLA timing as mentioned, that
is supposed to be October twenty fourth, that'll come quickly
after CPI.

Speaker 2 (05:54):
That's the plan right now. We'll see how this works out.

Speaker 1 (05:56):
Which I'm guessing has the effect of taking some of
the sting out of the government being shut downs. If
those you know, like for example, the coal of the
cost of living adjustment for Social Security, if our seniors
get that, then they're not going to be feeling the
sting of the government shut down.

Speaker 3 (06:12):
Right And I would I would assume that the depending
on the side of the aisle you're on, as always,
actually probably both sides are hoping for this, that people
would feel some pain, so they would push for resolution
one way or another. Well, this is a reason for
a large chunk of the population to go, eh, this
doesn't affect me.

Speaker 1 (06:27):
Right well, in that pain, I suppose going back to
the issue that's really keeping the government shut down, these
supplements for Obamacare. Twenty million or so folks getting that
right now. I mean that's big, big number, absolutely for sure.

Speaker 3 (06:41):
And so we're hung up on these the subsidies out there,
and because there are a normal enormous amount of people
who are going to go without health insurance under the
current path, and I would find it hard to believe
that there aren't some people that, no matter what happens,
aren't going to lose it, because this is going to
have to come down to some kind of begrudging compromise
which some people are going to sacrifice the health insurance.

(07:02):
Those people are going to get very loud, very soon,
and I suspect many of them were out marching over
this past weekend.

Speaker 1 (07:06):
Well, it's kind of funny in a certain way. If
it's four hundred percent of poverty level, which is the
cap that's going to go back into effect, this fault
the people who are getting supplements that make more than that,
Basically they're probably paying federal income tax.

Speaker 3 (07:21):
You would think so, right, So they've got enough income
coming in it's the issue.

Speaker 1 (07:25):
Yeah, And so ultimately they're getting a taxpayer supported supplement
to make it look like they don't have a premium,
but they're ultimately paying the costs of that because they
pay federal income tax, because all of this is coming
out of the federal income tax revenue.

Speaker 2 (07:38):
Yeah, that's that's absolutely right. So that's why we are
doing so much about it.

Speaker 3 (07:42):
It's going to move the needle for a lot of folks,
for sure, and both sides are going to use that
to their advantage.

Speaker 1 (07:46):
All right, So I understand the COLA and so security
with the CPI, I guess I get the bond component.
But what of the four how does this impact the
CPI index? How does it impact four one K?

Speaker 2 (07:55):
Yeah, so four O one K and I and IRA
limits too.

Speaker 3 (07:58):
So the IRS uses Q three CPI in their fall
announcements to decide what the four h one K limits
are gonna be. Now, I can't say this is gonna
Nobody is protesting because they can't put enough into their
four oh one ks. And I think that's a pretty tiny
swath of the population.

Speaker 2 (08:12):
But so so the the.

Speaker 3 (08:14):
Early actuarial calls are looking at a deferral amount of
twenty four thousand, five hundred for twenty six Now, that
would be up one thousand dollars.

Speaker 2 (08:21):
That's the amount that everybody under the sun can put in.

Speaker 3 (08:24):
If you're fifty plus, you could put in another eight
thousand dollars, so that would total thirty two and a
half for those over fifty. And then the don't forget
the Secure Act two point zero put a super.

Speaker 2 (08:37):
Ketchup in for those aged sixty to sixty three.

Speaker 3 (08:39):
And that would likely if you're in that window, you're
likely around thirty five thousand, seven hundred and fifty. So again,
those numbers are going to depend on September CPI. I
don't imagine there's gonna be a whole lot of protesting
over that particular.

Speaker 1 (08:52):
No, no, And I suppose you're an mbuable position if
you can afford to do that super contribution right basically
hand over thirty four thousand dollars right exactly.

Speaker 3 (09:01):
And that's the concessions that we're given. We for a
long time have been making decisions to allow people to
make it more attractive for people to fund their own retirements,
and that's what this is all about. This goes back
to when I first started in for a bank in
the late nineties. The big hue and cry was that
they were eliminating the original pension that had cost the

(09:22):
head inflation and all that stuff built into it, and
I didn't know what it meant. I was young, I
was twenty three and stupid. Now I kind of get it,
but the whole point of that frustration was that was
just a well, we're going to take the pension away,
but we're going to make it better for you. We're
going to increase the match on the four oh one
K and all those kinds of things to make it
more attractive for you to fund your own retirement as opposed.

Speaker 2 (09:41):
To relying on your employer or the government.

Speaker 3 (09:43):
That works great as long as people have the money
to do it and know how and understand how important
it is, and that keeps me employed.

Speaker 1 (09:50):
Well, and maybe we're not doing so well. We'll probably
go out of order and just use this opportunity as
a segue to the report card Americans get when it
comes to saving for retirement. Of the topic we'll talk
about Brian James coming up. Four to one k's are
directly tied to the stock market more than ever? Or
is that your financial planner's problem is at the right
place to be. We'll continue with Brian James Money Monday.
It's eight sixteen right now. I I five KC the

(10:11):
Talk station speaking of money matters for.

Speaker 2 (10:14):
The talk station.

Speaker 1 (10:17):
Hey twenty on a Monday, We're doing Money Monday with
Brian James from all Worth Financial. All right, Brian, I said,
I want to take a little bit out of order
since you mentioned about financial are about preparing for retirement.
And we have the CPI that's coming out in important
I guess necessary government work. So no worries about your
coal adjustment for Social Security. But what of our own grade,

(10:41):
the report card grade when it comes to Americans preparing
for retirement, generally speaking, it does not look good.

Speaker 2 (10:46):
Brian, Well, yeah.

Speaker 3 (10:48):
And a lot of this is because it's just hard
to do this with prices being where they are.

Speaker 2 (10:53):
There's only so much money left over.

Speaker 3 (10:54):
And we've made the as I was saying a little
bit a little bit ago, as a country, as a society,
we've made a pivot toward pull yourself up by your
own bootstraps.

Speaker 2 (11:01):
So you need to save your own money.

Speaker 3 (11:04):
But if people don't have the ability to have a
little surplus at the end of every month, and there's
not much that's going to be able to go in.
But so investors are and savers are banking up for
that by being really really aggressive in their four oh
one k. So this is a study coming from Vanguarden
Morning Star, coming through the Wall Street Journal. So workers
in their late thirties now hold about eighty eight percent

(11:24):
of their four roh one k assets in stocks or
stock fund equivalents, and that's up from about eighty two
percent a decade ago.

Speaker 2 (11:31):
That makes logical sense to me. I'm not concerned about that.

Speaker 3 (11:34):
I don't think you can be too aggressive if you're
in your late thirties when.

Speaker 2 (11:37):
You're talking about a four oh one K.

Speaker 3 (11:39):
And what we're really talking about here, Brian, is is
these people who have eighty eight percent of their four
to one K assets and they're in their late thirties.

Speaker 2 (11:45):
That means they got twelve percent on the bond side.
On the fixed income side.

Speaker 3 (11:48):
There's only so much you can do with a four
oh one case, so there aren't exotic holdings out there.
I personally believe if you're in your thirties, you shouldn't
have any bonds. What point, what difference does it make?
You're looking at a thirty plus year time frame to
touch these assets, and if you're handling things the right way,
then you shouldn't be panicking when the market wobbles anyway. So, frankly,
I think if you're in your thirties, b one hundred

(12:09):
percent stocks. I'm fifty one, Brian, and I myself am
one hundred percent stocks.

Speaker 2 (12:13):
I don't care the market's.

Speaker 3 (12:14):
Going to kick me around two or three more times
before I actually retire in the next ten to fifteen years.
And I'm not going to panic because I know how
the market works. I know my market history. So I
think people are simply looking at what do I need
to do to make this ship float for me, because
they don't have a pension anymore.

Speaker 2 (12:27):
If I'm in my late thirties, then social Security.

Speaker 3 (12:30):
The best way to plan for that is probably that
it's going to be reduced by about twenty five to
thirty percent, because that's unless we actually fix that funding
mechanism and tax people more somehow. So if I have
to grow my own assets, I may as well do
it the best way possible, and that is stocks, not bond.

Speaker 2 (12:44):
So I'm not concerned about that particular point.

Speaker 1 (12:47):
Okay, Now when it comes to the folks that are
looking at a very small amount left over after the
necessary bills are concerned. Is there a recommendation you can
give to those folks in order to at least start
the process. I mean, if you have just a little bit,
it's better than doing nothing in further in so of
your retirement. I mean, I I fortunately was really not

(13:07):
placed in that position too much. Most notably because I
married out of my element. Both of us had a
salary that we could afford to put there collectively some
portion of our total pile of money toward retirement. So
not everybody has the benefit of that.

Speaker 3 (13:20):
Yeah, that's absolutely true, and those are the people. Unfortunately,
they're going to be struggling because our our retirement system
we have chosen as a society by the leaders we've
put in office. We have chosen to build it all
based off of the success of publicly traded companies. That's
and investors are simply reacting to what is put in
front of them. There just isn't much else out there
that you can do when when prices are rising as

(13:41):
fast as they are, when it's as expensive to live
as it currently is, you just need something that's going
to keep up with it, and stock market is just
about the only thing out there to do that.

Speaker 1 (13:51):
And go ahead, I was going to say, wasn't it
designed for that purpose to boast in bolster capitalism and
hopefully to encourage investment in my American companies because we
started this process. You know, the best place to invest
in the world in terms of return on investment is
going to be American companies.

Speaker 3 (14:08):
Yeah, and it still is and it will be for
a long time to come because just because of what
we have spent hundreds of years building. But what that does,
that's what this is why I always refer to us
as the we're the United States a profit margin. That
means every decision that we make, it has an eye
toward making sure that our publicly traded companies that feel
like they can make a profit to keep them here.

Speaker 2 (14:27):
Frankly, because there's nothing stopping a company.

Speaker 3 (14:29):
And that this could happen, right for those who are
worried about you know, the United States is going to
need to tax itself to death and so forth.

Speaker 2 (14:35):
So I don't want to be in the US stock market.

Speaker 3 (14:36):
Well why wouldn't you, Because there's no entity more able
to pick up and move than the richest ones on
the face of the earth. So if our tax policies
become such that it's unattractive to do business here, then
they simply won't. They'll pick up and move to another company,
keep or to another country, keep selling the same products
and services that they do in a more taxable or
a more tax efficient manner. So I would still say

(14:56):
the US stock market is the safest growth oriented type
of market to be in. Because of that flexibility, those
companies won't they don't have to stay us. And I'm
not saying this is going to happen anytime soon. I'm
just saying that I don't think they're sweating it too
much that they'd be painted into a corner and simply
have to pay more taxes without some kind of a reaction.

Speaker 1 (15:13):
All right, Brian James, I'll hold you over for one
more segment, and I want to address something else that
I know people can invest in relative comparative or compared
to the stock market, but I'm scratching my head over
whether or not people might already be invested in it.
Stick around more with Brian James from Allworth Financial. It's
eight twenty five right now, fifty five KR CD talk station,
fifty five Station Hey, twenty nine, fifty five care CD

(15:34):
talk station. Brian Thomas and Brian James, Money Monday. Getting
that one more segment in Brian James, we don't talk
about very often, and I think when we have talked
about it as an investment vehicle, I think you've kind
of and I don't want to put words in your
mouth that's what you're there for to correct me if
I'm wrong, But considering it probably not a good idea,
but one of the things I'm looking at. Since January
twenty twenty three, the price of gold has gone through

(15:58):
the roof. I mean, it was trading at eighteen hundred
dollars in January twenty three and it's at right now
forty three hundred dollars an ounce. So people who've been
in that investment for the last couple of years have
obviously seen a pretty significant return, at least in so
far as a component of a four oh one k
or retirement investment vehicle. Is that something you can you
should consider. I mean, the idea of sitting on physical

(16:21):
gold always looked stupid to me because you can't eat it.
In a bad situation, the fiat currency goes belly up.
It may be worth something, but you can't eat it.
You can't slice off a piece of it to buy something.
I wouldn't accept it as payment for anything. I'd be
looking for food and ammunition and whatever else hell else
it is. I'd find myself needed in a desperate situation.

(16:41):
But in terms of an investment vehicle, Brian, where are
you on gold and why has it gone up so much?

Speaker 3 (16:46):
Well, gold gold, yeah, is gaining a lot of attention.
As you mentioned, it's over four thousand bucks per troy
ounce for the first time, and this is about the
strongest year since the late seventies.

Speaker 2 (16:56):
Because of that rise, and of.

Speaker 3 (16:58):
Course there are other there are new ways to get
a hold of it as well, so that's driving demand.
It used to be you can only buy gold bullion
and stick it in the safe for the safety deposit
box forever, but now you can use exchange traded funds.
Gold backed exchange traded funds saw their largest semi annual inflow.

Speaker 2 (17:12):
In several years this year. Of course, not too surprised
to hear that.

Speaker 3 (17:15):
With everything, So the reason this is happening is all
of of course, all when gold runs whenever there's instability
in the win so geopolitical macroeconomic uncertainty. These are the
weakening dollar, inflation concerns, central bank diversification, and just sort
of the general chaos that our current.

Speaker 2 (17:31):
Government is in for a lot of reasons.

Speaker 3 (17:34):
So gold can be appealing as a headge You're kind
of a safe haven when when interest rates are low,
when confidence the major currencies kind of falls apart a
little bit. But to your point, it's not an entity.
It's not a vehicle that you can use. You can't
expect it to come out with a new product. It's
not going to generate dividends. It's not going to find
a new market. It's simply something. It's a commodity. It's

(17:56):
it's worth what people think it's worth. So those are
the most dangerous kind of investments to invest in after
the run has happened, meaning that since it's only worth
what people think it's worth, the herd is eventually gonna
peter out.

Speaker 2 (18:10):
There's going to be fewer people rushing into it.

Speaker 1 (18:12):
Well, let me ask you this. There is I mean
ignoring the demand for jewelry, gold and jewelry whatever. That's
that's a luxury item that people can do with that.
I guess what do we know? What like some idea
of what the global demand is for industrial use in
other words, the stuff that we really need to use
gold for. If we knew that number, we could kind
of separate the wheat from the chaff and remove some

(18:33):
of that flexibility out in there.

Speaker 2 (18:35):
Yeah, and it is, of course used.

Speaker 3 (18:37):
When we talk about it, we're usually talking about the
herd stampeding into it because of the because of the
general uncertainty that's out there, right, So, but to give
give some numbers, So in twenty twenty four, for example,
in jewelry, technology and other industrial that there's a lot.
It's used a lot in dentistry and non electronic types
of things exactly. Yeah, so there's plenty of uses out there,

(18:59):
but that was only seven percent of total demand in
twenty twenty four. Oh really, yeah, back those types of
electronics and that kind of thing. The demand largely comes
from people kind of wanting to hoard it. That's not
as much gold as you might think out there too.

Speaker 1 (19:13):
Well, And that's the thing that always bothered me about
as an investmentry, because it is volatile in the sense
that there are the gold bugs out there who do
believe the fiat currency is going to collapse. It's like bitcoin,
though it's always expressed in fiat currency value.

Speaker 3 (19:29):
That's right, And that's one of the reasons if you're
buying gold, you're kind of resistant to fiat currency in general.
You're wanting to go back to, you know, something that
had some kind of standard besides a general agreement of
what something is worth.

Speaker 2 (19:40):
But ironically that's the same thing that gold is. That's
what a commodity is.

Speaker 3 (19:43):
Everybody agrees it's worth this particular amount, and that causes
price wings that will trigger runs in that same asset
as well as you know, runs in and runs out.
And so that would probably be the next step is
when does the herd decide that this demand cycle is
over for it and goes the other way.

Speaker 1 (19:59):
Well, and it's one of a seemingly unlimited multitude of
items that are used, you know, every single day in
manufacturing or otherwise, like platinum, and you know, rare earth
minerals are obviously in high demand now. So there's a
whole bunch of things that could sort of you could
you could choose other than gold is something to invest in,
right if you just paying attention to where the demand is.

Speaker 3 (20:19):
Right negil Like I said that the gold is not
used in that many industrial type uses, such as some
of the other things like that all the devices of
the stuff that goes into cell phones that we always argue.

Speaker 2 (20:30):
About, Right, gold is just not a thing.

Speaker 3 (20:33):
Copper, on the other hand, Copper is everywhere. Copper is
an indicator of economic feast or famine. Based on how
much copper we're consuming. That usually drives the economy, but
gold doesn't show up anywhere except for in the overall
investor sentiment.

Speaker 1 (20:45):
And going back to my let's say my financial planner,
a good you know, fee based financial planner that does
a fuciary obligation to you. Are they including typically one
of these mixed mutual funds that you mentioned that it
contains some of these industrial needed always in demand gold, platinum,
and other minerals and items. Am I invested in that

(21:07):
for example?

Speaker 3 (21:08):
Yeah, probably a small percentage, but it's not going to
be gold, because again, gold is it's just functioning like
a commodity. But for those other types of things, and
there's lots of ways to do it, you don't have
to invest strictly in that asset. You might invest in
a miner of whatever that asset is, some company that
produces it, pulls it out of the ground, and processes it,
makes it ready for industry. That's different than simply buying

(21:28):
gold bullion and sticking it in a box somewhere and
declaring what it's worth on a daily basis.

Speaker 1 (21:33):
All right, well, I'm glad I asked you the question.
Brian James. Always appreciate you coming on the show, and
you want to say good morning to your group of
secret female Money Monday fans.

Speaker 3 (21:42):
Hello ladies, I hope you enjoyed our special edition last week.
Tan of questions from the audience. That kind of came
out of the blue, but that was fun to do
and I hope you found that useful.

Speaker 1 (21:51):
Thanks versus Federal credit unions. Go ahead and check out
the podcast from last week's discussion with Brian James. We'll
get another one next Monday. Buddy Monday, Brian James, thanks
for what you do. Appreciate all worth learning you out
and we will have another discussion again on Monday. Have
a great week.

Speaker 2 (22:03):
Thanks for the microphone. Talk to you next week.

Speaker 1 (22:04):
Looking forward to It's E thirty five right now. I'm
always looking forward to talking about