Simply Money

Episode Transcript

(00:05):
Tonight, What is it with investors? Why do so many feel the insatiable
desire to do something with your portfolio? You're listening to Simply Money, presented
by all Worth Financial and Memi Wagneralong with Steve Ruby. You know,
when it comes to your money,even those of you who have a rock
solid financial plan still struggle to justkind of set it and forget it.

(00:27):
I think many just falsely believe thatif your money is really going to grow,
you got to have your fingers init all the time, you got
to be doing something with it.And you know, Steve, we recently
talked about passive investments versus active investmentsand the fact that passive investments have usually
far lower fees and also they tendto do better over time. Yet there's

(00:49):
something really attractive about someone actively managedthose investments and buying and selling based on
market conditions and the economy and thehot stocks. And the fact is it
really doesn't end up working out,No, it doesn't. It's it's challenging
because a diversified portfolio of passively managedexchange traded funds is kind of boring.

(01:12):
It is not sexy at all.Yeah, there's no if Sam's or buds
about it. You know, evenwhen you're diversified too, you have your
your large cap, your small cap, your mid cap, you're domestic,
you're international, your stocks, yourbonds, sometimes some of those investments are
going to be doing worse than others. So you see it and you think,
man, I should really act onthat. I should do something with

(01:34):
that information. And that's where peoplecome in, and I've been talking about
advisors will come in and say,well, you know what, we believe
in active management because there are shortterm trading opportunities that we need to capitalize
on by by swing trading and thentaking advantage of different aspects of the market
that have momentum. And it soundsall good and fancy, but the reality

(01:56):
of the situation is it just doesn'twork most of the time. I'm you're
passive investing. While it is boring, it is tried and true and tested
in a way that does create morewealth over the long term rather than potentially
shooting yourself in the foot and goingall in an active management. You know,
he was recently having a conversation withAndy Stout, our chief investment officer,

(02:17):
and he is so smart. Rightfor those who wasn't on Mondays,
He's always on our show. Andwe were talking about there are just so
many options available to investors, right, it's hard to make heads or tails
of them. There are covered callsand puts and options in different ways to
try to manage the downside, andall different kinds of products that you can
buy, and there are just endless, endless options. And I finally we

(02:40):
ended the conversation and I said,but what do you believe, Like,
what do you if Andy Stout isinvesting? What is Andy Stout invested in?
And he said, pure index funds, passively managed. Here is someone
who could literally run his own Activelymanaged passive investments is where he believes you're
really going to make you know,the most money over the long run.

(03:05):
There's nothing sexy about it. It'snot going to happen overnight. And to
your point, Steve, there hasbeen so much research. We're not just
saying this because we believe it.This is tried and true, and it's
not just going back two years,it's going back twenty twenty five years.
Right. There are so many peopleout there that have tried to just outsmart
the market, to do better,to do more research, to have,
you know, more insight into whatto could be coming down the pike and

(03:29):
buy and sell based on that,and it just doesn't work out, No,
it doesn't. I mean, andyou did bring up some types of
strategies that maybe could be deployed evenif we have most of our assets and
passively managed funds. For example,you brought up options. There are legitimate
reasons to hedge against large stock positions, you know, maybe selling calls to

(03:53):
generate income or or buying a putto hedge against losses. And this is
a situation that I come across locally. Lot of folks that we work with,
and a lot of folks in town, for example, they have large
positions of Procter and Gamble right,and they don't want to walk away from
it. They you know, it'screated family wealth. You know, parents
work there, they work there.There's just situations where where a lot of

(04:14):
the times people end up with toomuch of one individual stock. And yeah,
there are some some different strategies thatwe can deploy to help manage the
volatility of that to mitigate right,yeah, that exposure using some of these
outside the box ideas. But butwhen we're talking about just buying actively managed
mutual funds versus passively managed mutual fundsand exchange traded funds. That's where the

(04:36):
real difference lies, because the passivelymanaged funds will will will outperform over the
long run. You're listening to SimplyMoney presented by all Worth Financial. I
Meani Wagner along with ste Ruby aswe talk about this need for so many
investors to just have your hands inyour investments all the time. You know,
I think there's one you know thingday traders right that are constantly buying

(04:57):
and selling, and I think mostof us would say, well, yeah,
we we know, reps on agood idea. Yet maybe you have
considered getting in around of the marketbased on politics, based on this election,
based on something that you heard ata cookout over the fourth of July,
where someone was invested in this coolnew thing that you'd never heard of,
and they're claiming they're getting twenty percentwith no downside, you know,

(05:19):
whatever it is. I think it'shuman nature for us to feel like,
oh, you know, like moneyis so important to me. It's such
a tool for me to live mylife the way that I want to the
best way for me to grow itis to be constantly doing things with it,
touching it, moving it around,and we would say, hey,

(05:39):
just based on decades of research,actively managed versus passively managed funds, passively
managed funds are going to come outahead every time. But there's lots of
example, Steve of options for youif you are looking to get in and
move things around. And we're nothuge proponents of that. Yeah, there's
an article in MarketWatch that just cameout. It says the title is crash

(06:02):
proof your portfolio with these ten stocksand three ETFs. That's the actual title
of the article. I had noidea you could crash proof your portfolio.
Yeah, sign me after that,right, No downside that doesn't exist.
Yeah. And you know it's funnybecause you think that this sounds too good
to be true, and it kindof is. Now technically, there are

(06:23):
strategies out there that can get morecomplex where you can use options to minimize
the downside of the portfolio, butyou're also capping the upside of the portfolio.
Those are legitimate strategies for those thatare absolutely terrified of of the markets
but want to dip a tow andexplore actually capitalizing on some of those gains.

(06:46):
Without needing to lock into an annuity. So that there are some strategies
that exist, but as far asyou know, just just buy these ten
stocks, these three tfs and setit and forget it. That that is
not a legitimate strategy. The interestingthing too, I think about this article
is you know, the headline iscrash proof your portfolio, but then below
it in smaller print, it's like, but it's not so simple. And

(07:09):
then when it gets into these strategies, it's like, Okay, use treasuries
plus call options, use put options. That's fine. And I think to
your point, Steve, if youare really really risk averse, some of
these things might make sense for youto be able to just be able to
dip your toe in the market andsleep at night. But I'm going to
always take you back to Warren Buffettbecause I think he's just such a smart
long term investor, and he said, was never invest in something that you

(07:31):
don't a thousand percent fully comprehend andcan stand in front of a group of
people and explain it to them whyyou're doing it. And when you look
at some of these strategies here,I think it's really difficult for the average
investor to completely understand what's going on. And I also think, you know,
a lot of these strategies you're notgoing to come out ahead in the
long term. You know. It'sjust a way to kind of manage your

(07:54):
own feelings as an investor, youknow, during during down periods. And
I'm telling you, one of thesmartest investors that I have worked with face
to face, who has accrued alot a lot of money, what was
the answer for him? None ofthis. He put the money in the
market. He was aggressively invested becausehe understood that market cycles were going to

(08:15):
come and they were going to go. And he has amassed millions and millions
of dollars over the years. Yes, he makes a great salary, but
there's really nothing complicated about what hedid. He just understood the market.
He had a great risk tolerance,and he was able to write it out
and he didn't react emotionally when themarkets had downturned. He didn't touch it
ever. He just let it ride. That's part of the key, because

(08:39):
the whole point of what we're talkingabout today here is the need to do
something. And one of the mostwealthy investors that you know personally didn't stick
his fingers in the pot and messythings up and try all these different strategies
to get ahead. He just savedand let the markets do what they were
going to do. And that's right. A lot of the folks that I
work with that are positioned very well, they live below their means. They

(09:03):
invested aggressively when they were younger.Maybe they pulled back the risk a little
bit when they entered into retirement anddidn't react emotionally when the markets were not
going in our favor. Now here'ssomething else that we came across that was
pretty interesting from the perspective of needingto do something. And these are these
are new exchanges that allow people tobet an unknown future events as a way

(09:28):
to hedge your investments. I didsay bet. You said interesting also,
and I say, like, downright'sstupid. This is down right stupid,
and I actually hate that it's beingpositioned along with your investments because to your
point, this is a gamble.You are making a bet on whether a
future event is going to happen ornot. And it can be what unemployment

(09:50):
numbers are going to look like whenthey come out, it can be the
next FED announcement, it can evenbe the weather. You know what,
this reminds me of My brother Danthrows the best Super Bowl parties and he
has this huge projector in his officewith this whole screen of vanity bets up
on the wall. And when yougo in for the party, you know,

(10:11):
you can go in there and youcan place your bets on are they
going to put blue or yellow gatoradeon the head of the winning coach?
Is this plague and all of thesecrazy bets that you're literally putting in and
you can put all kinds of moneyinto it, and you know, but
you're betting, and you're gambling,and this, to me is the same

(10:33):
thing in a different realm. Youmay not be betting on the Super Bowl
game, but you're betting on what'sgoing to happen in the future. If
you don't have a crystal ball,why would you want to do this silly
bets at a super Bowl party?That sounds like a lot of fun.
Yes, it's fun. Yeah,silly bets with your retirement is not.
That is terrifying because you're literally buyingyes or no contracts at a particular price

(10:56):
point and either the thing happens orit does and happen. Now, I
will say that there's one little tidbitargument that that was interesting that that proponents
of this these exchanges brought up,and that's that's. For example, let's
say that somebody buys a home onthe coast and and it's in an area
that is, you know, supposedlyat risk of sea level rise due to

(11:20):
climate change, and insurance aren't goingto come in and actually offer homeowners insurance.
Proponents say you could buy one ofthese contracts which essentially behaves as your
homeowner's insurance by saying nothing will happen, or something will happen. If it
does, he get some money outof it. That's one little tidbit that
I'm like, okay, well thatthat's an interesting use for this type of

(11:43):
exchange, and a very specific it'svery it's extremely specific. But as far
as as as you know, usingit to grow your retirement, no,
thank you, no way. Here'sthe all Worth advice. We cannot say
this enough. Have a our financialplan that includes a long term investment approach,

(12:03):
be boring, don't touch it,and then go on and enjoy your
life. Coming up next to newstudy shows and some people believe they can
retire comfortably with one hundred thousand dollars. We're gonna do the math on that.
Next, you're listening to Simply Money, presented by all Worth Financial.
Here on fifty five KRC, thetalk station. You're listening to Simply Money

(12:26):
presented by all Worth Financial. Imean you Wagner along with Steve Ruby.
If you can't catch our show everynight, you do not have to miss
the thing. We have a dailypodcast for you. Just search Simply Money.
It's on the iHeart app or whereveryou get your podcasts. Coming up
at six forty three, we aretaking your questions and you have some great
ones about social Security, iras,HSA's and much more. Stay tuned for

(12:46):
that. Okay, so right now, for many of you who are tennis
lovers, you already know this.All eyes are glued on the Wimbledon Tennis
Championship. And of course you knowat the middle of this you can't talk
about tennis without talking about Serena Williams. I mean, she's just an icon
in tennis. She was recently doinga really funny interview. I don't know
if you've ever seen these segments.It's like where they're eating hot wings.
And they're just being like bombarded withquestions and they get hotter and hotter as

(13:09):
the interview goes. Yes, sothey're literally like sweating and answering these questions
and trying to like keep these hotwings down. And she started talking about
something to do with her money thatwe thought was a little bit interesting and
kind of funny. Yeah, yeah, it is. You know, it's
certainly an interesting problem to have becauseshe came across a need for a big

(13:30):
deposit. Specifically, this was acheck for one million dollars as part of
tournament winnings, and she took itto the ATM like outside of the bank,
the drive through, and the guywas like, you're going to need
to come inside to deposit this.She tried to use like that little tube.
I guess that pulls your million dollarcheck into the bank. Which it's

(13:54):
very funny to me. Yeah,well, I mean one hundred bucks,
that's one thing. A million dollarsyou want a whole on to that.
But you know, I guess it'sdifferent for her. A million dollars isn't
probably to her what it is tous. I will say, just a
couple of takeaways, right, thisis a funny story a little you know
insight and how really rich people live, and think, only two hundred and

(14:16):
fifty thousand dollars of your money inany given checking or savings account is covered
by FDICA insurance. So if somethingwere to happen and that bank were to
go out under, say Serena Williamsput that full million dollars into one account,
she's actually only got two hundred andfifty thousand dollars of that covered.
We actually, you know, havesomething and I'm sure there's other options out
there. Many of us aren't goingto win a million dollars from tennis.

(14:39):
But maybe you sell a small business, maybe you get an inheritance, and
you need a little time to figureout what the tax ramifications are of that.
And right now you don't want themoney sitting under your mattress because it
could be making four or five percentin a high ye old account. There
is a way to put that money, and we've got a way that we
can do that at all worth intoseveral different banks, So you're spreading that

(15:00):
money around and it's definitely I seeinsurance on a larger pool of money than
just two hundred and fifty yees.So that money is fully covered and at
the same time you are making interest. Has Threena Williams come to us,
she would have known this. Idon't know. Yes, if you have
a fiduciary financial planner, then theyprobably have some kind of a solution that
exists like that so that you're notputting your money at a risk that you

(15:22):
don't need to, such as cappingFDIC insurance at your local bank or credit.
Her fiduciary financial advisor was pie likeyou did? What? Not a
good day for them? I mean, well, you know, if you
listen to our show, you knowthat so many are looking for the magic
number. What do I need toretire? And you want a formula,

(15:43):
you want a one size fits allnumber, and it's just not that easy.
We recently came across some new researchthat said Americans feel like you can
really live comfortably off of one hundredthousand dollars in savings. Wow. Yeah,
I mean that's that's certainly a stretch, depending on your expenses. I

(16:06):
think that's the key here, becauseI do have folks and I know people
that don't have that when they gointo retirement. But if they have no
debt and they're getting social Security ora pension or a combination of the two.
Then it's not impossible, but it'scertainly a big difference between a recent
study that we talked about from NorthwestMutual that said, you know, you
typically need about one point four tosix million dollars to live comfortably. Yeah,

(16:30):
huge discrepancy there. And if you'rewondering where you fall, it depends
on you what are your expenses?Like you know you just mentioned Steve,
people can live comfortably off of SocialSecurity. Well maybe, but social Security
the program was only ever designed toreplace forty percent of what you were bringing
home when you were working. You'reright. I know a lot of people
who live very conservatively. They don'tnecessarily want to travel. You know,

(16:55):
they're not big shoppers, they're notbig spenders. They like to eat at
home, and they can do somethinglike this. But keep in mind,
you know, a general rule ofthumb is you don't retire necessarily off of
the money that you put in thebank. It's the lump sum that comes
off of it, or not notoff the lump sum, but it's the
stream of income that that generates.If we're talking about a four percent draw

(17:15):
down every year, that's four thousanddollars that you're going to have to live
off of. It's four thousand dollarsa year plus your Social Security enough.
If you're thinking yes, great,I'm going to guess that many of you
are thinking there is no way thatwould be enough money. And I think
the interesting thing Steve about this isfor those of you who are concerned whether

(17:37):
one hundred thousand dollars is enough,that number is actually in line with most
Americans what they have saved for retirement. Yeah. I mean, that's that's
why it's important to not just waituntil you're transitioning to retirement to sit down
and meet with an advisor. It'sa good idea to do so when you
got several years of runway, becauseif you build that financial plan with the

(18:00):
help of a fiduciary financial advisor thathelps you map out what types of financial
goals you have and how much moneyyou're going to need to fund them,
and takes a look at how taxesand inflation will impact your future cash flow,
you know you can plan accordingly insuch a way that sometimes the results

(18:22):
of that activity will be a littlebit eye opening, to the point where
it lights a fire up underneath youto make some changes, which is not
necessarily a bad thing. That's whatyou're paying for in that situation. You're
paying to get help closing gaps betweenwhere you are now and where you need
to be to actually retire, withtangible ideas and handholding and holding you accountable
to the recommendations that are made bythe person that you're paying to help you

(18:45):
for this type of these types ofstrategies. And to your point, if
you are behind, yes there arethings you can do, but you have
to figure out how far behind youare. I mean talk about needing a
number. You've got to figure outyour individual number. And that's where financial
plan comes into place. Right,what are you spending now? I mean
I think if you ask most people, do you want to change your lifestyle

(19:07):
from when you were working into thetime when you retire, most people would
say no. In fact, alot end up spending more in retirement.
You've got more free time, youmight want to travel more, or your
hobbies are likely more expensive than yourcommute to and from work, and as
a result, you've got a planfor that. You know, Steve Sprovak
retired and he was, you know, co host of the show. He
was back in our office yesterday livinghis best life. He really is.

(19:30):
He's traveling all over the place,he's visiting grandkids. He actually has admitted,
and I love how transparent he's beenabout this. He was way behind
and he did catch up. Thereare things you can do, but you
got to know what those are.Here's the all Worth advice, how much
do you need to retire? Don'tanswer that question until you've come up with
a financial plan that meets your futureneeds, goals and desires. Next,

(19:52):
we're looking at something you might beforgetting to put in your will. A
little thing, but it could behelpful. You're listening to Simply Money,
presented by all Wors Financial here infifty five KRC, the talk station.
You're listening to Simply when you presentof my own Ways Financial Ammi Wagner along
with Steve Ruby, so many ofus, when we think about our credit

(20:12):
cards, think about how do wemaximize our frequent flyer miles? How do
we maximize these hotel points? Andfor many you spend years amassing them,
waiting on a big trip or figuringout how to use them. Well,
what happens if something happens to youdo, those miles die with you.

(20:32):
This is something I have no ideaabout. But thankfully our estate planning expert
from the law Farm of Wood andLamping, Mark Grekman, has the answers.
I never even thought of this one. Mark. Well, it came
across my windshield recently because I wasplanning some trips this summer and I'm going
to visit grandchildren and so forth.I think I'm going to be on twelve

(20:53):
airplanes in the next six weeks.So this was personal and it's certainly dawned
on me that, you know,there have got to be a lot of
airplane miles out there that are leftover when people pass away. And it
turns out I did a little research, and it turns out that Americans rack
up three trillion frequent flyer miles inan average year. And I don't know

(21:15):
if you've seen this projection, guys, but this year is projected to be
the highest travel some year, mosttraveled year in history, at least for
Americans. You know, the pandemicis over. Everybody's hitting the airways.
Yeah, people are out there.Every airline has their own program, and
so what you got to do isto find out which program offers transfers in

(21:40):
which does not many airlines will allowyou to give your miles to your airs
and by the way, the samething is true for some hotel reward points.
They will frequently charge a fee.It might be fifty, might be
as much as one hundred dollars.It's a need idea, but by the
way, it's a pain in theneck, as with so many neat ideas
worthwhile. But you've got a lotof paperwork to do, and that's my

(22:03):
question you have to start. What'sthat? That's my question for you,
Mark, is like, you know, first of all, the idea of
unwinding someone's estate is a major undertakinganyway. You know, we talk a
lot in the show about these creditcard rewards and they're pennies on the dollar,
and I know we love them,and you know they have funded many

(22:26):
a trip for me. But it'sgetting harder and harder, I think,
even to stretch them the way thatyou could have right to go on trips.
So, when you're looking at thetotality of someone's estate and it comes
down to say their delta sky miles, walk us through the steps that someone
would have to actually go through inorder to make this transfer from my dad

(22:49):
to me or whatever that looks like. And what's your opinion? Is it
even worth it? You know,I think it is worth it, But
it depends, of course, onhow many miles you're talking about. If
you've got a parent or a familymember who wants to get rid of miles
because they're late in life, mysuggestion is that you do it before you
pass away. You can buy ticketswith your miles for other people. So

(23:11):
your father, your mother, youraunt, your grandmother can buy airline tickets
for you or for your kids,or they can transfer. Some airlines will
allow an outright transfer of those milesto another account. If not, you
could buy a ticket in grandma's account, but for their grandchild. So step
number one is that if you've gotairline miles from somebody who's alive who wants

(23:33):
to get rid of them, dothat while they're alive. But of course
not everybody gets thinks that far ahead. So if there is another way,
you can put a bequest in yourwill that says I leave my airline miles
to my children. Equally, frankly, guys, I've never seen that.
I've never seen a will with that, and in forty years, I've never

(23:56):
seen an estate where they list frequentflyer miles in the inventory. I've never
seen an estate where they listed onthe estate tax return. But it's doable,
but no one does it. Noone does it, And so it
occurs to me, you know why, what's happened to all these wasted airline
miles. Well, so when Idug into it, what I found out

(24:17):
is that you can put a provisionin your will if you wish. You
can be specific and say I wantmy airline miles to go to my children,
or you can say I want allof my assets to go to my
children, and that would include airlinemiles. You can do it in a
trust, and you can do itin a beneficiary designation. That means you
would have a piece of paper thatis formally filled out that says I designate

(24:41):
my children to be my beneficiaries ofmy frequent flyer miles, and it would
be executed in the presence of twowitnesses and a notary. And so you've
got to set up your paperwork aheadof time, or if you do not,
at the very least leave your childrenyour account number and your passwords and
they can go online or on thephone. You know, when you're online,

(25:04):
nobody knows whom you are. Youcan go online and make the transfer
that way in your parent's name,but you've got to have their information and
that helps. Would help to havea statement of some kind. You got
to have if you're going to waituntil after death, and if you're going
to go through the hoops, you'regoing to need one a death certificate.

(25:26):
Number Two, you're going to needto have the regular address and the email
address of the person who held theaccount who's now dead. You got to
have the account number, You gotto have the password, and all of
that stuff you need to write down. So for those of us who are
thinking ahead that may have a lotof miles, I keep a log and

(25:48):
so my children and they just gotto find that log and they'll know all
of that detailed information. It helpsto have the transfer document that would be
the will itself or the trust.And then you got to contact the airline.
Now it used to be that wewould do that by phone. Nowadays
a lot of these are done byyou know, by the internet. Now.

(26:10):
Loyalty points these frequent flyer miles,hotel points, they are part of
your taxable estate, but I've neverseen one on a tax return, so
I'm I don't want to overemphasize that. But the dealing with these airlines is
you got to keep after him.Don't take no for an answer. If
you don't get the answer you want, hang hang up politely and call back

(26:32):
and get another agent. It's it'sinteresting, can you give these miles while
you're alive? Like, if you'reat a place where health wise you can't
travel anymore, is there an avenueto gift them to your heirs? Some
airlines, yes, Delta allows youto give them. Yes, so does
American Airlines. Those are the twobig ones. Southwest, no Way,

(26:53):
So it all depends on the airline. But I guess the best thing I
can suggest to folks is just keepgood records. Keep your frequent flyer accounts
somewhere, keep a list, fillout a transfer form that says when I
die, I leave my frequent Flyermiles an account number, blah blah blah
to my wife or to my children. But as you say, it's best

(27:15):
to transfer those miles or buy ticketswith those miles while you're alive, because
boy, the paperwork after you're gonecan be tricky, but if you're persistent
and you're clever, and you're ona computer, you can do it.
It's legal. If you're gifting thesemiles in life, does that count towards
the animal give tax exclusion of eighteenthousand dollars? Technically yes, but remember

(27:38):
that gift tax exclusion, Steve isis that that is an annual exclusion,
which means that you can give upto eighteen thousand dollars per person per year
without reporting it. And so realisticanswer is technically yes, but I can't
imagine anybody would give away eighteen thousanddollars worth of these points. Yeah.

(28:00):
Good, So if you have thatmany call me. I am your new
best friend, right, Mark,you definitely brought up a topic that we
have never thought about before. Infor many of us, we do.
We've accumulated some of these miles andsome of these points, and I think
you've given us something to think about. So Mark Rerekman are a state planning
expert from the law firm of Woodand Lamping. You're listening to Simply Money,

(28:23):
presented by all Worth Financial here infifty five KRC. The talk station.
You're listening to Simply Money presented byall Worth Financial. I mean Me
Wagner along with Steve Ruby. Doyou have a financial question you need a
little help with. There's a redbutton you can click on while you're listening
to the show. It's right thereon the iHeart app. Record your question

(28:44):
and it's coming straight to us.And that's exactly what we're going to do
right now. Our first question comesfrom Kim, who lives in Fairfield.
I have three kids. Should Iset up a separate five to two nine
plan for each of them or usethe same one. I think you can
really do this either way, butI think probably the easiest way to do
it is to set up a separateone for each one of them. Here's

(29:07):
the thing. Five twenty nine's arecontinually becoming more or more flexible, and
I love that. So say youhave three five twenty nine set up in
each one of your kids' names,and your middle your oldest child uses theirs,
and your middle child is brilliant,or they get a full soccer scholarship
and they don't have to pay forcollege. That money can easily be transferred
either to the youngest child if theyneed some extra money. And let's face

(29:33):
it, college costs are not prettythey I've got my my daughter going off
to college this year, and I'mlooking at the tuition check and thinking,
yikes, this is this is alot grateful that we have that five to
twenty nine. But here's another thing. Because of Secure Act two point zero,
continually looking at ways to make thesemore and more flexible. If that
middle child never needs that money forcollege, right, not for books,

(29:56):
not for not for room and board, not for a laptop, whatever,
never ti that money, and theyoungest child doesn't need it either, you
can also after a certain amount oftime, transfer that money into an IRA
and their name, and that moneygoes from money being earmarked for education to
money being earmarked for retirement for thatparticular person. So specifically, it's a

(30:18):
roth IRA which would maintain tax freegains on behalf of your child. But
they also have to have earned incomeat the time, and the money has
to have been in the account forso long and there's a cap on it.
But that is a huge argument forwhy you would want to have separate
five twenty nines as opposed to onefive twenty nine. Yeah, it just
makes a lot of sense. Here'sour next question. It comes from Kerrie,

(30:40):
who lives in Campbell County. Iwas married to my ex husband for
twenty one years. We got divorcedfive years ago. He's remarried, but
I have not yet. I heardI can get social Security from him.
Is this true? Yeah, aslong as you do not remarry. That's
the catch here, because in thissituation, if you've been married for if
you had been married to your exfor at least ten years, it doesn't

(31:02):
matter what they do. It matterswhat you do. And quite frankly,
they don't even have to know ifyou're collecting social Security based on their benefits.
You would look at what's higher yourown benefit or your ex spouses.
You get the higher of the two. So it is certainly an opportunity to
generate some additional income if your ex'sSocial Security benefits would be higher than yours

(31:23):
and you have not remarried. Myfavorite story about this is a few years
ago, we had a workshop andpeople were coming up to me talking afterwards,
and I could kind of see outof the corner of my eye this
woman that was standing there waiting forme. So after I kind of talked
to the few people who around me, she made her way up to me,
and she asked this very question.I was married to this guy for
a long time. I do notlike him at all. I think he's

(31:45):
a terrible person. I want nothingto do with him. But I wouldn't
mind having a Social Security benefit.And she said, are you serious that
you know I was married to himfor long enough. Are you sure that
I can claim on his benefit?And I said, I am one hundred
percent sure that you can claim onhis benefit. And then she said,
but will he know? And Isaid, he will never know. The

(32:08):
look in her eye she almost cartwheeledout of that room, Uh, you
know what I thought. I thought, I thought you were going to say
that she wanted him to know.No, no, she didn't care if
he knew. But she did knowthat he had made a pretty good living
and that, you know, atleast having access to that Social Security benefit
was going to benefit her in retirement. And I just thought, you know

(32:30):
what, that really is working inher favor in particular right now. Our
next question comes from Frank, wholives in Brookville. My company just informed
us they're suspending our four oh oneK match for the foreseeable future. Should
I keep contributing? Since I'm nolonger getting that free money. Probably,
I mean, it's a real bummerto hear. I'm sorry that that happened.

(32:50):
This is certainly something that companies willdo from time to time, and
the reality of the situation is thatin this day and age, the four
oh one K is is oftentimes oneof our best vehicles to save for retirement.
Now a caveat here would be ifyou're not getting a match and you
do have a health savings account,I would probably put that. In fact,
I would put that in front ofreally putting anything into your four oh

(33:14):
one K because of the triple taxadvantage nature of the HSA. Now,
this is only if you have ahigh deductible health plan and you're enrolled in
the HSA. So there's some ifsand some ads and some butts here,
but it is an opportunity to savefor medical expenses which are still part of
your retirement savings, and get tripletax advantage, meaning a deductible contribution earnings

(33:38):
grow tax free, and then youcan use the money tax free for non
reimburse qualified medical expenses. If you'renot eligible for an HSA, then yes,
the four oh one K is stilla great vehicle, you know,
if there's no wroth in it.For example, though, and depending on
your situation, maybe you could explorea roth ira. But just because you're
not getting matched doesn't mean you shouldn'tcontribute to your four WAE. I love

(34:00):
that you brought the HSA up.I mean, I have people a lot
of times ask me, if youwere to rank accounts right by which one
I should put money into first?Where do I start? Well, you
start with the company match or youstart with the four one? Kay?
If you get the company match,because you don't want to walk away from
that free money. If that freemoney is off the table, the tax
benefits of the health savings account becomeimmeasurable. And I say that one then

(34:21):
moves to the top. So Ithink, excellent point about that quickly.
Our next question comes from Tony andMason. My friend was recently furloughed and
he's asked me for some money.I want to be a good friend,
but I don't know if I'll everget that money back. Any advice,
Oh, Tony, gosh, thisis a tough one and it's one that
comes to us very often. Myquestion to you would be, do you

(34:44):
need to see that money again.If you are loaning money to someone that
you actually need, don't do it. Don't do it. I've seen it
end relationships. It often ends poorly. Someone takes that money and it never
comes back to you. If youdon't need that money back, it's not
a lot of money. You're okaywith letting that money go, then I

(35:05):
think it's okay, But you justgot to change the mindset about it and
understand you'll likely never see that moneyagain. Coming up next, how safe
are the financial apps you've got probablyon your phone right now? We're going
to look at that. Next.You're listening to Simply Money, presented by
all Worth Financial. Here in fiftyfive KRC the talk station. You're listening

(35:27):
to Simply Money. You're presented byall Worth Financial. Immi Wagner along with
Steve Ruby. Get out your phone. How many financial apps are on there?
You know it's funny, Steve andI guess I'm dating myself for at
least how long I've been doing theshow. But I remember when I first
started doing the show years ago,financial apps were kind of a novelty.
Whether it was just checking your bankstatement on your phone or whether you had

(35:49):
like an Acorns app or a robinHood app, and now I think many
of us have them multiple financial appson our phone. The problem is those
can be tied to your credit cards, to your bank accounts, to a
lot of personal information, and youneed to be asking yourself how secure,
how safe is that information? Yeah, this stuff scares me, you know,
especially because it's relatively new, It'snot been around for a very long

(36:15):
time, and there's certainly a lotof bad actors out there that are trying
to get our information. Recent researchdone by Credit News looked at a lot
of different financial apps and nearly threeand four of these apps share at least
some information with third parties on average, about six types of data, including
the device you're on, other identifyinginformation, names, email addresses, app

(36:37):
interactions, phone numbers. The mostegregious apps actually shared about three times the
amount of that data. You know, it's been a while since we've talked
about this part of things on theshow, but a scammer is trying to
put together an entire picture of you. There's different puzzle pieces of your information
out there. So if they canget your date of birth, that's one

(36:59):
piece. If they can get youremail address, that's one piece. If
they can get your phone number,that's one piece. Once they've got a
lot of pieces of that of thatpuzzle put together, they can do so
much damage. So you kind ofgot to look at these apps and say,
what's the risk versus reward of mesharing my information with these Yeah,
and you know, the more informationthat's out there, the more of a

(37:20):
footprint they have of your overall financialpicture, and that can lead to more
and more issues for your finances,especially if somebody you know creates profiles for
you or is able to access youraccounts. That type of thing doesn't happen
all that often, but it's stillimportant to be mindful of the fact that
the financial apps that we're using couldbe sharing data that could be leaked to

(37:43):
bad actors. Not only that,but those bad actors know that those apps
have that information and so they aretargeting them, right, And those that
have low thresholds or lower thresholds ofsecurity, you know those are going to
go first. So if you dohave financial apps, look for those that
have been around longer, that aremore well established, that are names,
right, if you've got Schwab accountsor some of those bigger institutions, those

(38:06):
are going to have a lot moreprotection to them. I will say with
one caveat if you are on publicWiFi, never ever, ever ever open
any of these financial apps, becauseif anyone is attached to that Wi Fi
and pulling information from it, theycan pull all that account information that you
have there. So this is justanother one of those situations where you've got
to be aware, you've got totake steps to make sure that you are

(38:30):
secure so that information doesn't get outthere. Thanks for listening tonight. You've
been listening to Simply Money and presentedby all Worth Financial here in fifty five
KRC, the talk station