Episode Transcript
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Speaker 1 (00:05):
Night.
Speaker 2 (00:05):
The stock market is on fire. You are continuing to
spend money, and companies are reporting profits and they look good.
Is it all too good to be true? You're listening
to Simply Money present of my all Worth Financial Immi
Wagner along with Steve Ruby. It is Monday, which means
Andy Stout, our chief investment officer, is joining us with
some perspective on the fact that as an investor it
(00:28):
might feel like you can do no wrong right now,
not necessarily because you're the most brilliant investor of all times,
just because a lot of the markets have been on
a tear for what two years now.
Speaker 1 (00:41):
Yeah, when you look at markets overall, we've definitely seen
a pretty good trend. We had. Obviously COVID was a
bit of a struggle, but even twenty twenty ended up
being a nice year, and then good years and then
twenty twenty one, twenty twenty two not as much. Twenty
twenty three is pretty good as was twenty four. But
(01:03):
when you look at it, we're again at record highs
and it does certainly has some people wondering can the
run continue?
Speaker 3 (01:12):
Can it continue?
Speaker 2 (01:15):
Set him up for ages.
Speaker 1 (01:16):
Steve is one of those people wondering if he sure
is let's hear your perspective.
Speaker 3 (01:22):
Oh yeah, it.
Speaker 1 (01:22):
Can't get I mean, you get record highs, and those
aren't as uncommon as people think. When you look at
it by year by decade, it certainly comes in spurts.
I mean, we just had our on Friday, our forty
seventh record high for the year. So that's pretty good.
(01:43):
And you might think, wow, that's the lot, and it's
it's in the US, it's near the top. I mean,
if you go back to nineteen fifty, there have been
six times where we've seen fifty record highs or more
in the year. So we're looking at really seventy five years,
so you know, six out of seventy five some simple metology,
that's a little bit under ten percent there. Now when
(02:05):
you look at the other just the breakdowns more than
forty so forty and above. I mean you've had thirteen
record high thirteen years of those recordized. So seeing periods
and years like we are this year, it's not uncommon.
In fact, it's quite you know, it's quite within the
realm of normality. I mean, if you go back to
twenty one, it's seventy record highs that year, which was
(02:28):
you know, just crazy, and then you know, had the
little pullback in twenty two. Not saying there's going to
be a pullback in twenty twenty five. There could be,
but trying to time records is pretty you know, crazy,
I mean just to think about that. Yeah, twenty twenty
two there was like virtually no record high because of
the pullback after the really strong year. But if you
go back to, for instance, twenty seventeen, you had sixty
(02:50):
two recordized and there was nineteen the next year. So
trying to time the next year, you know, based on
a strong prior year, I wouldn't even think about doing that.
So can it continue? Yes, What it depends on is
earnings and the Federal Reserve and what they're going to do.
Speaker 2 (03:07):
I think it also any can depend on the consumer.
How are consumers feeling right now? I mean, when you
look at gross domestic product in our nation's economy, a
huge portion of that is how we're feeling, how we're spending.
And my understanding is we're still spending right now.
Speaker 1 (03:22):
Yeah. Absolutely, I mean it can depend on the consumer
and the consumers impact it goes flows through to a
corporate profits and also what the Federal Reserve does. And
when we look at the consumer, we got some retail
sales data last week and it came in pretty strong
across the board. So we saw monthly sales increase in
September by zero point four percent. That was more a
(03:44):
little bit more than what a comments we're looking for.
But when you exclude auto and gas spending gas station spending,
it was one point seven percent increase. That's a really
big number. And what it shows you is that consumer
spending is not going away. I mean, basically every there's
twelve major industries, and ten of those twelve saw some
(04:05):
pretty strong gains last month, and it certainly suggests that
the consumer is alive and well, at least for the
time being. Now, when you think about it and when
you look out under the hood a little bit, what
does it mean for a future spending. Well, that's where
we can look at some more discretionary items, like what's
the our consumers still going out to restaurants and bars,
(04:27):
because that's one of the most purely you know, I'll
call it discretionary consumer spending. If you're still going out
to the restaurant bars, which apparently Amy is.
Speaker 2 (04:37):
Yes, I was out yesterday, and I was like, okay,
my husband I actually went somewhere to watch the game,
and then we went somewhere else for dinner afterwards. And
at first we got to dinner early, and I was like, oh, no,
one's coming out by the I mean within fifteen minutes.
It was like a swarm had just come to this restaurant.
I was like, yes, people are eating out still in
pretty big numbers.
Speaker 4 (04:55):
Yeah, same thing Friday night, restaurant packed. I was, you know,
inflation has certainly hit us, but you look at restaurants
around town and and they're thriving.
Speaker 1 (05:04):
Well, it's good to hear that. While you two were
out and about.
Speaker 3 (05:08):
You were working on spreadsheets.
Speaker 2 (05:09):
Andy, of course.
Speaker 1 (05:11):
Sadly, yes, That's how I knew what those record highs
were by year, basically doing some Excel stuff. Anyways, glad
to see you guys out there supporting the local economy. Maybe, uh,
you know, doing your part, enjoying Blink and all the
festivities there while I'm working hard uh at home.
Speaker 2 (05:34):
Anyway, you're listening to simply money present of my own
words financial I Memi Wagner along way to Steve Ruby
and Andy Stout. Don't feel too sorry for Andy, even
though the rest of us were at Blink and eating
out and watching the game and all the fun stuff
this we can and he was maybe, uh, you know,
crunching all the numbers. Uh, He's still probably going to
(05:55):
be okay when it comes to his flour one K
because as we're talking about, can zoomers are still spending,
and also we're in earning season and corporate profits are
looking pretty good.
Speaker 1 (06:06):
Yeah, we are off to a decent start. I mean
it's still pretty early. We've seen seventy one large cap
companies report profits and right now, roughly three quarters of
them have reported better than expected earnings. And that's about normal.
It's close to the ten year average, so nothing too
shocking there. And when you look at the growth rate,
so comparing third quarter earnings of earnings of this year
(06:29):
to third quarter earnings of last year, they're about three
point six percent higher. And while that's less than the
four point two percent that Wall Street's expected for the
entire earning season, you got to remember we haven't seen
any of the really the heavyweights come in and report yet.
None of the Magnificent seven have reported yet. And when
(06:50):
you or at least you know six of the seven
Magnificent seven haven't reported yet. Technically one did report last week,
but the ones that really drive earnings, we haven't seen it.
And when you look at earnings growth excluding the Magnificent seven,
by the way, that's Apple, Amazon Alphabet, which is the
(07:11):
you know, Google, parent Na, Vidia, Netflix, you know they're
the ones who reported last week. When you see those
companies actually report, what you're seeing from the other four
hundred and ninety three is that, you know, USTs are
only expecting a one percent in growth rate. So when
(07:32):
you look at the three point six percent we've had
so far, you know, it's actually, you know, pretty good. Now,
I'm also realizing I only gave you five of the
magnificent seven a second ago. Apple, Amazon, Meta Alphabet, Microsoft, Davidia,
Tesla Meta, I think sent them all twice now, and
(07:53):
I Netflix is not one of the Magnificent seven, by
the way. So anyways, digressing here, earning is pretty good,
even gable.
Speaker 3 (08:00):
Last week.
Speaker 1 (08:01):
They did beat I know, you know Cincinnati favor here.
You know, they beat on the earning side, came in
a little bit light on the total revenue side. There's
some I don't I want to say issues with you know,
foreign currencies, but that certainly had an impact. But when
you look at the big picture, overall, Procter and Gamble
(08:22):
beat earnings, and we're going to see more and more
of these companies be earnings and that's going to be
good for your four oh one K because that's really
what drives stocks over the longer run. Anything can happen
in the new Yar term, but as long as companies
keep making money, uh, you know, you're going to do
all right.
Speaker 4 (08:37):
So companies are making money, people are spending. Obviously, inflation
is something we've experienced quite a bit over the last
several years, but the FED has effectively reduced it. We're
not quite to target yet, but have we reached a
point here where you know, we can say that we
hit the soft landing. As far as risk is concerned
for a recession.
Speaker 1 (09:01):
I would say maybe. I don't really see any sort
of you know, economic pullback in the next six months.
I mean, that's highly unlikely currently, especially with the data
that we've been seeing lately. I mean, if you look
at where the data that's coming for the third quarter,
that's tracking at a three point four percent growth rate,
(09:21):
So that's you know, pretty solid. We'll actually get the
the GDP, the first estimate of GDP next week, not
this week, but the week thereafter.
Speaker 5 (09:29):
Uh.
Speaker 1 (09:30):
And when we think about the fourth quarter, right now,
we're looking at growth probably around two two and a
half percent. We'll see how the data comes in, but
it's certainly not seeing any sort of weakness. Now. One
of the things that had concerned earlier on was the
declining savings from consumers. I mean, we saw the consumer,
we saw the savings rate get down to like two
point nine percent, which was the lowest level, and quite
(09:51):
some time we saw that earliers here. But then you
know what happened. The government decided to go and revise
all of that data. So essentially that two point nine
percent never happened because as they got more data that
came in, it showed that the consumer was actually in
a better position than what they originally estimated based on
that preliminary data. As they got more data came in,
they adjusted that savings rate. So instead of like a
(10:13):
two point nine percent, where we're at right now is
a four point eight percent, and that suggests consumers do
have more runway, and whether or not that means we
get that soft landing, Steve, like you're talking about where
we avoid recession, that certainly increases the probability. I mean,
we'll have a recession eventually. I don't know how long
we can keep saying did they avoid a soft landing?
Did they avoid a soft landing? We're talking about it,
(10:33):
you know, ten years later or whatever. Nonetheless, when you
think about, you know, the soft landing, the economic picture,
we're seeing growth. I'm not yet one hundred percent sure
that we've beaten inflation. So that's something the Fed needs
to keep in mind as well. So when you look at,
you know, some of the underlying trends, we're not there yet.
(10:54):
The Fed knows that, So don't really expect them to
do any more half point rate cuts, you know, like
they did at their last meeting. If you look ahead
to their next meeting, which is November seventh, here's roughly
a ninety percent chance they do a core point cut.
There's a ten percent chance they do nothing. So there's
still the possibility the Fed will hold pat What will
probably drive what the Fed does is the October Jobs report,
(11:20):
which will come out on November first, so next week,
if you see some strong you know, some strength there,
you know that will impact what the FED does.
Speaker 2 (11:31):
A lot to keep an eye on Andy. We're grateful
for you to keep an eye on it for us
so that we can know what we need to know.
But I think the major point here is it's good
to understand what's going on in the economy and with
the stock market, but don't make any changes to your
financial plan based on any of this. Here's the all
Worth advice, say invested when times are good and when
they're also tough. If you stayed invested starting in October
(11:53):
of twenty twenty two, right, you would have had two
years of pretty good returns. Coming up next, how to
keep the stock market roller coaster ride from wrecking your mood.
You're listening to Simply Money, presented by all Worth Financial
here on fifty five KRC, the talk station. You're listening
(12:15):
to Simply Money presented by all Worth Financial. I mean
you Wagner along with Steve Ruby. If you can't listen
to our show every night, you don't have to miss
a thing we talk about. We have a daily podcast
for you. Just search Simply Money. It's right there on
the iHeart app or wherever you find your podcast. Coming
up at six forty three Retirement fact or Fiction the
tax edition. The segment is dedicated to tax all things.
(12:39):
Taxes rite so much fun and also so much to
learn there. Okay, for those of you who have ever
been tempted or even jumped into cryptocurrency, I think we
have another warning story for you. You know, it amazes me, Steve,
how many people will have, you know, like a financial plan.
(13:01):
They'll have like, you know, a little bit of money
that they've started to save for retirement, and then almost
an equal amount in cryptocurrency, which just kind of makes
me a nervous wreck.
Speaker 3 (13:14):
Yeah.
Speaker 4 (13:14):
I mean, crypto it's not going anywhere at this point,
and you know, some of these have been around longer
than others. We can start at crypto if we want it. Yeah,
we can start a cryptocurrency. And you know, there's some
pretty wild stories coming to the forefront on crypto itself,
and one here has to do with six people facing
(13:35):
federal charges accused of actually committing one of the largest
person to person crypto thefts in US history. It was
a cyber heist that swindled a person that lives in Washington,
d c. Out of two hundred and thirty million dollars
in cryptocurrency. Cryptocurrency, this guy had two hundred and thirty
million dollars.
Speaker 3 (13:54):
First of all, that's wild.
Speaker 4 (13:55):
Second of all, people are are are becoming targeted because
of it.
Speaker 2 (14:01):
It's like a TV show, right, I mean, this whole plot.
There's a kidnapping that's potentially involved in this, by the way,
a kidnapping of a couple who was just like out
for an afternoon looking at houses. Maybe their sun could
have been involved according to these allegations, right. And then
there's a couple of other people involved in this who
were spending hundreds of thousands of dollars at nightclubs and
(14:23):
on expensive cars and all different kinds of things. I'm
not saying if you invest in cryptocurrency, this is going
to happen to you, But we have always said several things.
First of all, it is still the wild wild West.
There is just not a lot of regulation around it.
In Second of all, I mean there are stories like this,
(14:44):
other ones about people losing their pass key or their
online wallet and then they've got money there that they
can't access. There's just a lot going on with cryptocurrency
that makes it still feel to me like more of
a gamble than investments.
Speaker 4 (15:00):
Somebody threw away the memory stick or the hard drive
or whatever it was, and it went to a dump
and the guy is trying to sue the dump oh
my gosh, because they're keeping his cryptocurrency. You know, it's
just like you said, it's a wild wild West. Sure,
if you have some play money on the side and
you want to do a wallet and throw some money
in a coin here or there, you're fine. But you know,
(15:20):
if if if you're gambling I would say with your
retirement assets, then that's that's that's a sticky situation. And
then and then there's individuals that hit it big. It's
almost like winning the lottery. You hit the lottery and
flips over on its head. And this is this is
actually what happened here. I mean, this isn't very common
that you're going to get kidnapped because of cryptocurrency here.
Speaker 3 (15:40):
I mean, we're but but it.
Speaker 4 (15:42):
Is, and it has happened to a handful of individuals,
and it's it's certainly an interesting.
Speaker 2 (15:49):
So have you ever checked your portfolio, right, checked your
four O one K and all of a sudden felt
like maybe you needed a xanax or dramamine some kind
of medication because you definitely had physical and emotional response
to the amount that you saw on that account. Well,
it turns out there's actually a legitimate connection between your
(16:09):
investments and how you're feeling.
Speaker 3 (16:12):
Yeah, so I don't think that this is too much
of a surprise.
Speaker 4 (16:15):
There's two researchers, including one from Ball State's Business School,
that found that when stock prices fall, the number of
antidepressant prescriptions actually rise, and they actually did like age
group comparisons. They found that those ages of forty six
to fifty five, they were most likely to get on
meds during periods of extreme volatility. You know, I think
(16:37):
that this is not a surprise because these are the
people that are there on that runway where they're getting
close to retirement. They're thinking about their retirement. They're thinking,
am I too risky? Am I too conservative? And maybe
they feel they're too risky and then the markets get
kicked in the teeth and then the depression sets in.
Speaker 2 (16:53):
Yeah, I get this right. They're on deck for retirement.
I mean, if you're in your twenties or thirties, it's
probably this like abstract concept that you think about and
you definitely want it someday, But by the time you're
in your elite forties your fifties, it is real, right,
You're probably thought about it. You probably thought about what
that feeling would be like to not have to get
out of bed on Monday morning sometime, and you know,
(17:15):
to tell the boss to kind of take this job
and shove it. If that's how you're feeling about it, right,
and then all of a sudden you check your four
one K and right that feeling of wait a second,
is this going to work out? I would say, first
of all, this is common. But second of all, if
you are truly educated and understand market cycles and also
(17:37):
have a financial plan that should be accounting for time
when for times when markets are down, you'll probably be okay.
Speaker 4 (17:45):
Yeah, I mean, that's one of the benefits of having
a financial plan. You know, you sit down, you work
with anybody that manages money, ideally they're going through a
risk tolerance questionnaire pretty early in that relationship to establish
your comfort with investing, but financial planning, having a full
understanding of your financial needs, your goals, the assets you have,
the taxes that you pay, the strategies that you're deploying
(18:06):
to perhaps pay lesson taxes later on in life insurance
and state planning. When you put it all together for
a statement for financial planning, it puts you in a
place where you understand the risk that you need to
take to meet your goals and that you can afford
to take base in your financial situation.
Speaker 3 (18:20):
So you tie that all together.
Speaker 4 (18:22):
Every time you know, we have an annual review meeting,
for example, we're updating the financial plan first. That's what
we go to, not the investment conversation. Even though the
markets have been in a tear for a couple of
years here, that's not what I'm leading with. I'm looking
at the financial plan. How have things change? Do we
need to make updates to how you're handling your money
or how we're handling your money. From there, it creates
that sense of security if you know that your financial
(18:44):
plan works even if the markets get kicked in the teeth,
then this is a good way to combat needing anti depressants.
When the markets slide and slide.
Speaker 2 (18:53):
We say that all too often we see people making
decisions based on two emotions, right, fear ingreed. And now
we're talking about the fear portion of this, and it's
our job to make sure that you aren't making a
mistake with your money that you cannot recover from. If
you're working with us, right, that's any financial advisor, that's
the number one thing that we should be able to do.
(19:14):
And then that's why we have these conversations to your points, Steve,
That's why that financial plan is the foundation of all
of those conversations. It shouldn't matter geopolitical, it shouldn't matter
the presidential election and market volatility. All of those things
you cannot control. But what you can control is first
of all, your plan and your response to market cycles.
(19:36):
And that's why I say it is so incredibly important
to be educated so that you understand, oh, markets are down, Okay,
well what have we seen? One hundred percent of the time,
we've seen markets rebound to new highs. So I'm going
to stay invested. Here's the all Worth advice. Get to
the bottom of what triggers your stress so you can
identify it, tackle it head on, and then when the
(19:57):
things hit the plan, you're going to be okay. Here next,
some tricks of the trade to get yourself noticed on
LinkedIn with our career expert Julie on the job, you're
listening to Simply Money presented by all Worth Financial. Here
in fifty five KRC the talk station. You're listening to
Simply Money presented by all Worth Financial. I Meani Wagner
(20:18):
along with Steve Ruby. Do you have a LinkedIn account?
And if you were looking for a new job, how
do you maximize that account to get a little bit
of help. Julie Balki, Julie on the Job, is joining
us tonight with her insights on this. Julie, I've been
at all Worth for a decade now. I think I
(20:38):
don't know. Maybe I had a LinkedIn account before. I
don't even know. I wouldn't even know how one would
use it if you were looking around in One thing
I noticed is sometimes someone will put up with their
LinkedIn profile available for work or looking for work? Is
that helpful?
Speaker 3 (20:56):
You know?
Speaker 5 (20:57):
There's a couple of schools of thought there, But for
the most part, I'm going to come down and say, yes,
there's a the thought. The no side of that is,
oh my gosh, you know you're gonna look desperate. You
know you're gonna look like and I don't think so.
I think it. I think for the most part, I
(21:18):
think it says, you know, take a look at me,
and I mean, you know, I'm let's talk. It's a
way LinkedIn put it this way. Think about LinkedIn is
a way to be found at all times. So let's
say you. Let's say that you are because this this
(21:39):
goes along with what I always say, you always have
to be ready to stay and have to be ready
to go. You always should be. You always should be
in the market, frankly, because as I always say, your
company will do without you if they can. It's I mean,
it's just life. And so you should always have one
(22:00):
toe in the market. And if that toe is simply
an updated LinkedIn profile, don't do it halfway. You have
to have a LinkedIn profile that showcases it's different from
your resume. So think about it as the cliff notes
of your resume and so that people can find you
and then learn about you and kind of a spark
(22:22):
notes or cliff notes fashion and potentially reach out for
opportunities projects, consulting, work jobs, networking, et cetera. So it's
a way too Before technology, we never had that if
you want to apply for a job, you had to
take a bunch of paper resumes to the mailbox, and
this is a way to stay in, to stay in
(22:45):
the game. But if you have a crappy LinkedIn profile
and it doesn't and a reader can't tell who you
are professionally and what you might be looking to do next,
then then you're probably wasting space.
Speaker 4 (22:59):
So I haven't I'm in the job market for quite
some time. But you know, I always made sure that
when I applied for something with a resume and a
cover letter, I tailored it to that particular job. Now
you know, when we're on LinkedIn and if we have
ready and willing to work or whatever it is, you're not.
Speaker 3 (23:17):
Really able to tailor your profile or tweak it for
a particular job. And you should that a big deal.
Speaker 5 (23:26):
No, because you shouldn't be tweaking your resume for every job. Okay,
you know you are you are who you are? Who
you are. If I took a polaroid snapshot of you
today and instead of your face, it had in uh,
you know it had in it. What are my skills,
(23:47):
my values, my what am I good at? What do
I want next? You shouldn't twist yourself into a pretzel
to match what a job is looking for. What you
should do is make sure that you are using the
key words that that organizations are looking for and that
are also true about you. Now the only so if
(24:09):
you see that, you know, if you see the word,
the danger is. And this is where AI is just
like a head slapper for me when it comes to
job search, because if I've got the word collaborate in
my resume, because I have a real strong history of
collaborating on teams to deliver these great results for all
these companies I've worked for, but the job, but the
(24:31):
job posting says team player, you might not get picked up.
And so that's the danger of that's the danger of
all of this. So I am not a fan of
job boards for a variety of reasons, that just being
one of them. But the other is there's so much
scam on them and so your your resumes should be you.
(24:51):
You shouldn't put things on there that you aren't. And
this is this is where people fall apart in the
job search is they're trying to be everything to everybody
that's not attractive. That's not what you want, and we
get so wrapped up around the axle with I'm going
to have twenty five resume versions that kind of lose
track of who you are or who you are in
(25:12):
the job market, and companies don't know how to They
just don't know how to utilize you or what to
contact you for. And so if you if you instead
start from a self centered who am I? You know?
Who am I? And what do I want next? If
you start from that approach, you will catch many more
(25:33):
flies than you did if you were putting a big
net out there.
Speaker 2 (25:35):
Frankly, so, Julie, you're saying, up to a certain extent,
LinkedIn can be helpful, right. You always want it to
be updated and ready in case you've got to go
and if you're looking, yeah, at what point does it
take you? Only so far? And then what do you
need to do from there?
Speaker 5 (25:54):
So LinkedIn is also there's a lot of jobs listed
and let's say that you see a job that you're
interested in, you can also see how many people applied
for it. So LinkedIn I think is a good resource.
It's as when you look at all the job boards
out there, I think LinkedIn is I think LinkedIn is
the best. It still has limitations because you're still out
(26:19):
there vying with all these other people who've applied, but
it's a way to learn about a company. It's a
way to see if you're connected and anybody at that company,
and it's a way to potentially connect with people who
used to work there to find out is this a
good place to work? So it's like a job board
which doesn't have the connection part of it. You're just
sitting there spitting in the wind. A thousand times. LinkedIn
(26:42):
at least allows you to learn more about the company
and the people who work there. But again, two thirds
of more of people, even in these days, get their
jobs through other people that they meet or that they know.
So networking is still the Networking is still the number
one way to get a job and people unfortunately, when
then when you look at when you look at younger generations,
(27:07):
they they are really almost exclusively using exclusively using online
technology tools and then they're really frustrated. So one of
the things that gen Z is doing, I just saw
an article about this, and you talk about cringe and
hard there you'll see that open to work ring. There
(27:31):
are some people, some gen Z people. Someone has a
graphic designer created a peak one that says desperate and yeah,
and I look at that like if you wouldn't put
it on your Hinge profile the hind profile because it's
the same, it's the same vibe, and you know that
(27:52):
is that's really you know, that's really what you don't
want to do. But people are hoping young people who
aren't smart about this kind of stuff. They think that
that's a way to get themselves to the topic pile,
but they don't understand that it's that it actually is
a turnoff because companies don't want to hire people who
(28:15):
are desperate. It's not attractive.
Speaker 2 (28:17):
Yeah, not a great connotation with that.
Speaker 4 (28:20):
Yeah, it's easier to get a job when you're already
employed than it is to show desperation with some flare
on your LinkedIn profile.
Speaker 2 (28:28):
Great perspective from Julie Vaalki. Julie on the job of
how to maximize LinkedIn write, what to do and what
not to do when you're looking for a job. You're
listening to Simply Money presented by all Worth Financial here
in fifty five KRC the talk station. You're listening serious
(28:48):
Imply Money presented by all Worth Financial. I mean you
byner along with Steve Rue. But you have a financial
question you need a little help with. There's a red
button you can click on while you're listening to the show.
It's right there on the iHeart app. Record your question,
it's coming straight to us. We'll help you figure it out.
Speaking of questions, it is time to play retirement fact
or fiction? Do you have the facts? When it comes
(29:09):
to money? And tonight we are focusing on taxes. First
one to you, Steve Ruby. Fact or fiction, Capital gains
taxes apply to all retirement account withdrawals.
Speaker 4 (29:22):
Uh well, fiction, This one is a big fat fiction
when it comes to capital gains. First of all, there's
a difference between capital gains and ordinary income taxes.
Speaker 3 (29:30):
Capital gains is typically.
Speaker 4 (29:32):
What you see in an after tax Brokeridge account or
a trading account, whereas ordinary income is what you're paying
off of IRA distributions, for example, with the exception of
roth iras, when you have a roth ira, there's simply
no taxes when you take any distributions from that account
as long as you're fifty nine and a half in
the account's been open for five years.
Speaker 3 (29:50):
So it is.
Speaker 4 (29:50):
Indeed fiction that capital gains tax applied all retirement account withdrawals.
Speaker 3 (29:55):
One for you, Amy.
Speaker 2 (29:56):
Facts say there's three different, three different kinds of accounts, right, Wroth,
tax deferred and taxable accounts. Each of them have different
tax treatments. It's clear as mud this is all done
by the government. It is what it is. So it
is important to understand the differences so that you know
how to take advantage and maximize how tax efficient you are.
Speaker 4 (30:18):
Yeah, it's a little tricky not to use jargon when
you're dealing with a tax factor fiction segment.
Speaker 3 (30:22):
Yeah, but here we are so factor fiction.
Speaker 4 (30:25):
Selling your home and retirement can result in capital gains taxes,
even if you reinvest the proceeds.
Speaker 2 (30:31):
So this depends. This can be a fact depending on
how much your home is worth. So if you're an
individual and you make two hundred and fifty thousand dollars
beyond that, you can pay taxes. If you're a couple
and the proceeds of that home come to five hundred
thousand dollars or less, should be no taxes above, then
you could pay taxes. So this is a question of
(30:51):
how much are you making. Also how much time were
you living in that house. But assuming that this is
your main place of residence, it really depends on how
much you're getting for that home, whether or not you're
going to have to pay taxes.
Speaker 4 (31:04):
You would have had to have lived in the House
for two of the last five years, yes, in order
to qualify for that exemption.
Speaker 2 (31:10):
All right, one for you, Steve. Fact or fiction. You
can be taxed on your pension income regardless of where
you live.
Speaker 3 (31:18):
Fact.
Speaker 4 (31:19):
Yeah, I mean some states have no state taxes, but
for the most part, our pensions are are taxable's pre
tax money. Now, there's certain situations military combat pace, stuff
like that, where a portion of your pension can actually
be non taxable. But for the majority of pension assets,
you are going to be taxed federally, even if you
live in for example of Florida when there's no state taxes.
(31:43):
Fact or fiction. All distributions from a traditional IRA are
taxed as ordinary income.
Speaker 2 (31:50):
Well, I got lucky on this. Looks we already went
over it, although I would know the answer as well.
All distributions from a traditional IRA are taxed as ordinary come.
This is a fact.
Speaker 3 (32:01):
This one is tricky. This is a trick question. Amy.
Speaker 4 (32:04):
You know this one is is This is a curveball
because technically you can have after tax money inside of
a traditional IRA non deductible contributions or what you make
if your income is above the limit for the deductible contribution.
Speaker 3 (32:19):
So there are situations for folkus.
Speaker 2 (32:21):
This is a rare situation. Yeah, good point, rare situation,
but some people can take advantage of this and do.
Speaker 4 (32:28):
I prefer avoided if we can and explore other options.
But this is one where if you're not tracking it
yourself or with the help of the CPA, then you
can find yourself in a situation where you're double tax
on non deductible traditional IRA contributions.
Speaker 2 (32:43):
For most of us, right, if you have money in
a tax deferred account, you haven't paid taxes on it,
a traditional IRA, a traditional four one. Kay. When you
get to retirement and you take distributions on that money,
you will have to pay taxes.
Speaker 1 (32:56):
You know.
Speaker 2 (32:56):
So it's like the whole story of someone who has
a million dollars and therefore and kay, they're feeling really
good about it. Well, no, actually you're going to have
to pay taxes on that. If you're in the twenty
two percent tax bracket, you're going to two hundred and
twenty thousand dollars to Uncle Sam of that million dollars.
So understanding how this works is incredibly important. Okay, fact
or fiction for you, Steve, you don't have to pay
(33:17):
taxes on Social Security benefits if your total income is
below a certain threshold.
Speaker 4 (33:22):
Yeah, the income has to be relatively low. Remember that
once you hit certain income thresholds, up to eighty five
percent of your Social Security benefits are taxable. Now, that
doesn't mean you're paying eighty five percent taxes on your
Social Security You're not just turning around and giving that
right back to Uncle Sam. It means that you're paying
your effective tax rate on a portion of your Social
(33:43):
Security income. Now, if you're living primarily off of Social Security,
you don't have a lot of other money coming in,
then you're certainly saving money on taxes in this situation,
not paying on Social Security Again, and I.
Speaker 2 (33:54):
Think this one can catch people off guard because you
feel like, wait a second, I've been paying into the
Social Security all these years, and now you're telling me
I'm getting this benefit and I can be taxed on it. Yes, yes, yes,
there is there's a formula that you know that we'll
need to plug in the numbers for and that can
determine how much you will have to pay in taxes.
But yeah, this is a like a not fun kind
(34:17):
of an awareness that a lot of people have when
they get to retirement.
Speaker 4 (34:20):
Yeah, it's an unfortunate little surprise for many. Factor fiction,
required minimum distributions from retirement accounts are subject to income tax.
Speaker 2 (34:29):
This is the fact, and this is why you know,
again when you get to retirement, of all of your
money is in these kind of traditional qualified buckets of
you know, a four to oh one k, a regular
four to one k, and a traditional IRA. You are
going to owe taxes and if you don't need that
money for whatever reason, right, you've got a lot of
money in taxable brokerage accounts and a lot of money
(34:51):
in cash, and whatever reason you don't need to take distributions,
you'll still have to take them because Uncle Sam is
going to say it is time to pay the piper now.
So that's why sometimes roth conversions can make sense, or
putting money into wroth accounts where you've paid the taxes
and then that money can go grow tax free. Coming
up next, some important wisdom for me, Wagner wisdom. You're
(35:14):
listening to Simply Money presented by all Worth Financial here
on fifty five KRC the talk station. You're listening to
Simply Money presented by all worth financial I Meani Wagner
along with Steve Ruby. This music means it is time
for some Wagner wisdom. I had an interesting conversation over
(35:37):
the weekend. Was talking to a good friend of mine.
So when I'm close to and you know, somehow the
topic of credit utilization came up.
Speaker 3 (35:47):
Somehow. I wonder who brought it up.
Speaker 2 (35:49):
It's such a fun conversation that I have. But what
was interesting is this person is in their late forties
and their take was that the percentage of the credit
available to on your credit card didn't matter. It was
that you paid it off every month and that was
reported to the credit card company, which just got me thinking, A,
(36:12):
I'm right. I actually very much enjoy being right for gratulation,
but more importantly that very smart people who have done really,
really well for themselves still don't fully understand the fundamentals
of how your credit score is calculated. Understand, first of all,
you need to pay your bills on time and in
(36:32):
full every month, right, That's a huge part of this,
your credit history, how long you've had open accounts. But
also credit utilization is simply of all the available credit
that is available to you, how much of it are
you using.
Speaker 4 (36:45):
Yeah, And this is an easy one too, because I
do my best to put everything that I possibly can
onto a credit card each month, and then I pay
it off at the end of the month. This way,
I can capitalize on the benefits that the card provides
without ever paying a diamond interest. I made a call
to my bank and I said, Hey, can I increase
my credit limit? I said, sure, you know, I'm stretching
(37:07):
a little bit. I called and it was through the app.
I clicked a button and all of a sudden, my
credit limit doubles. Now I'm not going to use all that,
but it's also going to create a situation where my
utilization ratio has changed for the better, so that my
credit score went up just by having a higher limit
that I'm not tapping into each month.
Speaker 2 (37:25):
Make sure your kids understand this too. I remember I
think my first credit card, the maximum that I could
charge was like one thousand dollars. Right in for your children,
it's not like, okay, Well, as long as I'm not
putting more than nine hundred and ninety nine dollars on
that account, I'm okay, no, no, no, to keep that credit utilization. Honestly,
where experts day you should keep it should be like
(37:45):
thirty to forty percent of what's available to you. So
steve to your point when you're calling or clicking on
a button and asking for more credit available to you.
If you're not spending anymore, right, that's going to increase
your credit score. So knowing how these things work and
how you can maximize them to your benefit. And the
difference in having a good or excellent credit score versus
(38:07):
having an average or below average one can be thousands,
tens of thousands of dollars in interest that you will
owe for loans over the course of your lifetime. So
this is a really big deal.
Speaker 4 (38:19):
And even if you don't have debt or don't plan
on taking on debt, and you're at a point in
your life where that's just not something on the agenda
for you, we've seen studies that even show that your
insurance premiums can be affected by your credit score.
Speaker 2 (38:33):
Absolutely something to understand and pay attention to. Thanks for listening.
Tune in tomorrow. We're talking about a move you may
want to consider during this bull market. You've been listening
to Simply Money presented by all Worth Financial here in
fifty five KRC, the talk station
Night.
Speaker 2 (00:05):
The stock market is on fire. You are continuing to
spend money, and companies are reporting profits and they look good.
Is it all too good to be true? You're listening
to Simply Money present of my all Worth Financial Immi
Wagner along with Steve Ruby. It is Monday, which means
Andy Stout, our chief investment officer, is joining us with
some perspective on the fact that as an investor it
(00:28):
might feel like you can do no wrong right now,
not necessarily because you're the most brilliant investor of all times,
just because a lot of the markets have been on
a tear for what two years now.
Speaker 1 (00:41):
Yeah, when you look at markets overall, we've definitely seen
a pretty good trend. We had. Obviously COVID was a
bit of a struggle, but even twenty twenty ended up
being a nice year, and then good years and then
twenty twenty one, twenty twenty two not as much. Twenty
twenty three is pretty good as was twenty four. But
(01:03):
when you look at it, we're again at record highs
and it does certainly has some people wondering can the
run continue?
Speaker 3 (01:12):
Can it continue?
Speaker 2 (01:15):
Set him up for ages.
Speaker 1 (01:16):
Steve is one of those people wondering if he sure
is let's hear your perspective.
Speaker 3 (01:22):
Oh yeah, it.
Speaker 1 (01:22):
Can't get I mean, you get record highs, and those
aren't as uncommon as people think. When you look at
it by year by decade, it certainly comes in spurts.
I mean, we just had our on Friday, our forty
seventh record high for the year. So that's pretty good.
(01:43):
And you might think, wow, that's the lot, and it's
it's in the US, it's near the top. I mean,
if you go back to nineteen fifty, there have been
six times where we've seen fifty record highs or more
in the year. So we're looking at really seventy five years,
so you know, six out of seventy five some simple metology,
that's a little bit under ten percent there. Now when
(02:05):
you look at the other just the breakdowns more than
forty so forty and above. I mean you've had thirteen
record high thirteen years of those recordized. So seeing periods
and years like we are this year, it's not uncommon.
In fact, it's quite you know, it's quite within the
realm of normality. I mean, if you go back to
twenty one, it's seventy record highs that year, which was
(02:28):
you know, just crazy, and then you know, had the
little pullback in twenty two. Not saying there's going to
be a pullback in twenty twenty five. There could be,
but trying to time records is pretty you know, crazy,
I mean just to think about that. Yeah, twenty twenty
two there was like virtually no record high because of
the pullback after the really strong year. But if you
go back to, for instance, twenty seventeen, you had sixty
(02:50):
two recordized and there was nineteen the next year. So
trying to time the next year, you know, based on
a strong prior year, I wouldn't even think about doing that.
So can it continue? Yes, What it depends on is
earnings and the Federal Reserve and what they're going to do.
Speaker 2 (03:07):
I think it also any can depend on the consumer.
How are consumers feeling right now? I mean, when you
look at gross domestic product in our nation's economy, a
huge portion of that is how we're feeling, how we're spending.
And my understanding is we're still spending right now.
Speaker 1 (03:22):
Yeah. Absolutely, I mean it can depend on the consumer
and the consumers impact it goes flows through to a
corporate profits and also what the Federal Reserve does. And
when we look at the consumer, we got some retail
sales data last week and it came in pretty strong
across the board. So we saw monthly sales increase in
September by zero point four percent. That was more a
(03:44):
little bit more than what a comments we're looking for.
But when you exclude auto and gas spending gas station spending,
it was one point seven percent increase. That's a really
big number. And what it shows you is that consumer
spending is not going away. I mean, basically every there's
twelve major industries, and ten of those twelve saw some
(04:05):
pretty strong gains last month, and it certainly suggests that
the consumer is alive and well, at least for the
time being. Now, when you think about it and when
you look out under the hood a little bit, what
does it mean for a future spending. Well, that's where
we can look at some more discretionary items, like what's
the our consumers still going out to restaurants and bars,
(04:27):
because that's one of the most purely you know, I'll
call it discretionary consumer spending. If you're still going out
to the restaurant bars, which apparently Amy is.
Speaker 2 (04:37):
Yes, I was out yesterday, and I was like, okay,
my husband I actually went somewhere to watch the game,
and then we went somewhere else for dinner afterwards. And
at first we got to dinner early, and I was like, oh, no,
one's coming out by the I mean within fifteen minutes.
It was like a swarm had just come to this restaurant.
I was like, yes, people are eating out still in
pretty big numbers.
Speaker 4 (04:55):
Yeah, same thing Friday night, restaurant packed. I was, you know,
inflation has certainly hit us, but you look at restaurants
around town and and they're thriving.
Speaker 1 (05:04):
Well, it's good to hear that. While you two were
out and about.
Speaker 3 (05:08):
You were working on spreadsheets.
Speaker 2 (05:09):
Andy, of course.
Speaker 1 (05:11):
Sadly, yes, That's how I knew what those record highs
were by year, basically doing some Excel stuff. Anyways, glad
to see you guys out there supporting the local economy. Maybe, uh,
you know, doing your part, enjoying Blink and all the
festivities there while I'm working hard uh at home.
Speaker 2 (05:34):
Anyway, you're listening to simply money present of my own
words financial I Memi Wagner along way to Steve Ruby
and Andy Stout. Don't feel too sorry for Andy, even
though the rest of us were at Blink and eating
out and watching the game and all the fun stuff
this we can and he was maybe, uh, you know,
crunching all the numbers. Uh, He's still probably going to
(05:55):
be okay when it comes to his flour one K
because as we're talking about, can zoomers are still spending,
and also we're in earning season and corporate profits are
looking pretty good.
Speaker 1 (06:06):
Yeah, we are off to a decent start. I mean
it's still pretty early. We've seen seventy one large cap
companies report profits and right now, roughly three quarters of
them have reported better than expected earnings. And that's about normal.
It's close to the ten year average, so nothing too
shocking there. And when you look at the growth rate,
so comparing third quarter earnings of earnings of this year
(06:29):
to third quarter earnings of last year, they're about three
point six percent higher. And while that's less than the
four point two percent that Wall Street's expected for the
entire earning season, you got to remember we haven't seen
any of the really the heavyweights come in and report yet.
None of the Magnificent seven have reported yet. And when
(06:50):
you or at least you know six of the seven
Magnificent seven haven't reported yet. Technically one did report last week,
but the ones that really drive earnings, we haven't seen it.
And when you look at earnings growth excluding the Magnificent seven,
by the way, that's Apple, Amazon Alphabet, which is the
(07:11):
you know, Google, parent Na, Vidia, Netflix, you know they're
the ones who reported last week. When you see those
companies actually report, what you're seeing from the other four
hundred and ninety three is that, you know, USTs are
only expecting a one percent in growth rate. So when
(07:32):
you look at the three point six percent we've had
so far, you know, it's actually, you know, pretty good. Now,
I'm also realizing I only gave you five of the
magnificent seven a second ago. Apple, Amazon, Meta Alphabet, Microsoft, Davidia,
Tesla Meta, I think sent them all twice now, and
(07:53):
I Netflix is not one of the Magnificent seven, by
the way. So anyways, digressing here, earning is pretty good,
even gable.
Speaker 3 (08:00):
Last week.
Speaker 1 (08:01):
They did beat I know, you know Cincinnati favor here.
You know, they beat on the earning side, came in
a little bit light on the total revenue side. There's
some I don't I want to say issues with you know,
foreign currencies, but that certainly had an impact. But when
you look at the big picture, overall, Procter and Gamble
(08:22):
beat earnings, and we're going to see more and more
of these companies be earnings and that's going to be
good for your four oh one K because that's really
what drives stocks over the longer run. Anything can happen
in the new Yar term, but as long as companies
keep making money, uh, you know, you're going to do
all right.
Speaker 4 (08:37):
So companies are making money, people are spending. Obviously, inflation
is something we've experienced quite a bit over the last
several years, but the FED has effectively reduced it. We're
not quite to target yet, but have we reached a
point here where you know, we can say that we
hit the soft landing. As far as risk is concerned
for a recession.
Speaker 1 (09:01):
I would say maybe. I don't really see any sort
of you know, economic pullback in the next six months.
I mean, that's highly unlikely currently, especially with the data
that we've been seeing lately. I mean, if you look
at where the data that's coming for the third quarter,
that's tracking at a three point four percent growth rate,
(09:21):
So that's you know, pretty solid. We'll actually get the
the GDP, the first estimate of GDP next week, not
this week, but the week thereafter.
Speaker 5 (09:29):
Uh.
Speaker 1 (09:30):
And when we think about the fourth quarter, right now,
we're looking at growth probably around two two and a
half percent. We'll see how the data comes in, but
it's certainly not seeing any sort of weakness. Now. One
of the things that had concerned earlier on was the
declining savings from consumers. I mean, we saw the consumer,
we saw the savings rate get down to like two
point nine percent, which was the lowest level, and quite
(09:51):
some time we saw that earliers here. But then you
know what happened. The government decided to go and revise
all of that data. So essentially that two point nine
percent never happened because as they got more data that
came in, it showed that the consumer was actually in
a better position than what they originally estimated based on
that preliminary data. As they got more data came in,
they adjusted that savings rate. So instead of like a
(10:13):
two point nine percent, where we're at right now is
a four point eight percent, and that suggests consumers do
have more runway, and whether or not that means we
get that soft landing, Steve, like you're talking about where
we avoid recession, that certainly increases the probability. I mean,
we'll have a recession eventually. I don't know how long
we can keep saying did they avoid a soft landing?
Did they avoid a soft landing? We're talking about it,
(10:33):
you know, ten years later or whatever. Nonetheless, when you
think about, you know, the soft landing, the economic picture,
we're seeing growth. I'm not yet one hundred percent sure
that we've beaten inflation. So that's something the Fed needs
to keep in mind as well. So when you look at,
you know, some of the underlying trends, we're not there yet.
(10:54):
The Fed knows that, So don't really expect them to
do any more half point rate cuts, you know, like
they did at their last meeting. If you look ahead
to their next meeting, which is November seventh, here's roughly
a ninety percent chance they do a core point cut.
There's a ten percent chance they do nothing. So there's
still the possibility the Fed will hold pat What will
probably drive what the Fed does is the October Jobs report,
(11:20):
which will come out on November first, so next week,
if you see some strong you know, some strength there,
you know that will impact what the FED does.
Speaker 2 (11:31):
A lot to keep an eye on Andy. We're grateful
for you to keep an eye on it for us
so that we can know what we need to know.
But I think the major point here is it's good
to understand what's going on in the economy and with
the stock market, but don't make any changes to your
financial plan based on any of this. Here's the all
Worth advice, say invested when times are good and when
they're also tough. If you stayed invested starting in October
(11:53):
of twenty twenty two, right, you would have had two
years of pretty good returns. Coming up next, how to
keep the stock market roller coaster ride from wrecking your mood.
You're listening to Simply Money, presented by all Worth Financial
here on fifty five KRC, the talk station. You're listening
(12:15):
to Simply Money presented by all Worth Financial. I mean
you Wagner along with Steve Ruby. If you can't listen
to our show every night, you don't have to miss
a thing we talk about. We have a daily podcast
for you. Just search Simply Money. It's right there on
the iHeart app or wherever you find your podcast. Coming
up at six forty three Retirement fact or Fiction the
tax edition. The segment is dedicated to tax all things.
(12:39):
Taxes rite so much fun and also so much to
learn there. Okay, for those of you who have ever
been tempted or even jumped into cryptocurrency, I think we
have another warning story for you. You know, it amazes me, Steve,
how many people will have, you know, like a financial plan.
(13:01):
They'll have like, you know, a little bit of money
that they've started to save for retirement, and then almost
an equal amount in cryptocurrency, which just kind of makes
me a nervous wreck.
Speaker 3 (13:14):
Yeah.
Speaker 4 (13:14):
I mean, crypto it's not going anywhere at this point,
and you know, some of these have been around longer
than others. We can start at crypto if we want it. Yeah,
we can start a cryptocurrency. And you know, there's some
pretty wild stories coming to the forefront on crypto itself,
and one here has to do with six people facing
(13:35):
federal charges accused of actually committing one of the largest
person to person crypto thefts in US history. It was
a cyber heist that swindled a person that lives in Washington,
d c. Out of two hundred and thirty million dollars
in cryptocurrency. Cryptocurrency, this guy had two hundred and thirty
million dollars.
Speaker 3 (13:54):
First of all, that's wild.
Speaker 4 (13:55):
Second of all, people are are are becoming targeted because
of it.
Speaker 2 (14:01):
It's like a TV show, right, I mean, this whole plot.
There's a kidnapping that's potentially involved in this, by the way,
a kidnapping of a couple who was just like out
for an afternoon looking at houses. Maybe their sun could
have been involved according to these allegations, right. And then
there's a couple of other people involved in this who
were spending hundreds of thousands of dollars at nightclubs and
(14:23):
on expensive cars and all different kinds of things. I'm
not saying if you invest in cryptocurrency, this is going
to happen to you, But we have always said several things.
First of all, it is still the wild wild West.
There is just not a lot of regulation around it.
In Second of all, I mean there are stories like this,
(14:44):
other ones about people losing their pass key or their
online wallet and then they've got money there that they
can't access. There's just a lot going on with cryptocurrency
that makes it still feel to me like more of
a gamble than investments.
Speaker 4 (15:00):
Somebody threw away the memory stick or the hard drive
or whatever it was, and it went to a dump
and the guy is trying to sue the dump oh
my gosh, because they're keeping his cryptocurrency. You know, it's
just like you said, it's a wild wild West. Sure,
if you have some play money on the side and
you want to do a wallet and throw some money
in a coin here or there, you're fine. But you know,
(15:20):
if if if you're gambling I would say with your
retirement assets, then that's that's that's a sticky situation. And
then and then there's individuals that hit it big. It's
almost like winning the lottery. You hit the lottery and
flips over on its head. And this is this is
actually what happened here. I mean, this isn't very common
that you're going to get kidnapped because of cryptocurrency here.
Speaker 3 (15:40):
I mean, we're but but it.
Speaker 4 (15:42):
Is, and it has happened to a handful of individuals,
and it's it's certainly an interesting.
Speaker 2 (15:49):
So have you ever checked your portfolio, right, checked your
four O one K and all of a sudden felt
like maybe you needed a xanax or dramamine some kind
of medication because you definitely had physical and emotional response
to the amount that you saw on that account. Well,
it turns out there's actually a legitimate connection between your
(16:09):
investments and how you're feeling.
Speaker 3 (16:12):
Yeah, so I don't think that this is too much
of a surprise.
Speaker 4 (16:15):
There's two researchers, including one from Ball State's Business School,
that found that when stock prices fall, the number of
antidepressant prescriptions actually rise, and they actually did like age
group comparisons. They found that those ages of forty six
to fifty five, they were most likely to get on
meds during periods of extreme volatility. You know, I think
(16:37):
that this is not a surprise because these are the
people that are there on that runway where they're getting
close to retirement. They're thinking about their retirement. They're thinking,
am I too risky? Am I too conservative? And maybe
they feel they're too risky and then the markets get
kicked in the teeth and then the depression sets in.
Speaker 2 (16:53):
Yeah, I get this right. They're on deck for retirement.
I mean, if you're in your twenties or thirties, it's
probably this like abstract concept that you think about and
you definitely want it someday, But by the time you're
in your elite forties your fifties, it is real, right,
You're probably thought about it. You probably thought about what
that feeling would be like to not have to get
out of bed on Monday morning sometime, and you know,
(17:15):
to tell the boss to kind of take this job
and shove it. If that's how you're feeling about it, right,
and then all of a sudden you check your four
one K and right that feeling of wait a second,
is this going to work out? I would say, first
of all, this is common. But second of all, if
you are truly educated and understand market cycles and also
(17:37):
have a financial plan that should be accounting for time
when for times when markets are down, you'll probably be okay.
Speaker 4 (17:45):
Yeah, I mean, that's one of the benefits of having
a financial plan. You know, you sit down, you work
with anybody that manages money, ideally they're going through a
risk tolerance questionnaire pretty early in that relationship to establish
your comfort with investing, but financial planning, having a full
understanding of your financial needs, your goals, the assets you have,
the taxes that you pay, the strategies that you're deploying
(18:06):
to perhaps pay lesson taxes later on in life insurance
and state planning. When you put it all together for
a statement for financial planning, it puts you in a
place where you understand the risk that you need to
take to meet your goals and that you can afford
to take base in your financial situation.
Speaker 3 (18:20):
So you tie that all together.
Speaker 4 (18:22):
Every time you know, we have an annual review meeting,
for example, we're updating the financial plan first. That's what
we go to, not the investment conversation. Even though the
markets have been in a tear for a couple of
years here, that's not what I'm leading with. I'm looking
at the financial plan. How have things change? Do we
need to make updates to how you're handling your money
or how we're handling your money. From there, it creates
that sense of security if you know that your financial
(18:44):
plan works even if the markets get kicked in the teeth,
then this is a good way to combat needing anti depressants.
When the markets slide and slide.
Speaker 2 (18:53):
We say that all too often we see people making
decisions based on two emotions, right, fear ingreed. And now
we're talking about the fear portion of this, and it's
our job to make sure that you aren't making a
mistake with your money that you cannot recover from. If
you're working with us, right, that's any financial advisor, that's
the number one thing that we should be able to do.
(19:14):
And then that's why we have these conversations to your points, Steve,
That's why that financial plan is the foundation of all
of those conversations. It shouldn't matter geopolitical, it shouldn't matter
the presidential election and market volatility. All of those things
you cannot control. But what you can control is first
of all, your plan and your response to market cycles.
(19:36):
And that's why I say it is so incredibly important
to be educated so that you understand, oh, markets are down, Okay,
well what have we seen? One hundred percent of the time,
we've seen markets rebound to new highs. So I'm going
to stay invested. Here's the all Worth advice. Get to
the bottom of what triggers your stress so you can
identify it, tackle it head on, and then when the
(19:57):
things hit the plan, you're going to be okay. Here next,
some tricks of the trade to get yourself noticed on
LinkedIn with our career expert Julie on the job, you're
listening to Simply Money presented by all Worth Financial. Here
in fifty five KRC the talk station. You're listening to
Simply Money presented by all Worth Financial. I Meani Wagner
(20:18):
along with Steve Ruby. Do you have a LinkedIn account?
And if you were looking for a new job, how
do you maximize that account to get a little bit
of help. Julie Balki, Julie on the Job, is joining
us tonight with her insights on this. Julie, I've been
at all Worth for a decade now. I think I
(20:38):
don't know. Maybe I had a LinkedIn account before. I
don't even know. I wouldn't even know how one would
use it if you were looking around in One thing
I noticed is sometimes someone will put up with their
LinkedIn profile available for work or looking for work? Is
that helpful?
Speaker 3 (20:56):
You know?
Speaker 5 (20:57):
There's a couple of schools of thought there, But for
the most part, I'm going to come down and say, yes,
there's a the thought. The no side of that is,
oh my gosh, you know you're gonna look desperate. You
know you're gonna look like and I don't think so.
I think it. I think for the most part, I
(21:18):
think it says, you know, take a look at me,
and I mean, you know, I'm let's talk. It's a
way LinkedIn put it this way. Think about LinkedIn is
a way to be found at all times. So let's
say you. Let's say that you are because this this
(21:39):
goes along with what I always say, you always have
to be ready to stay and have to be ready
to go. You always should be. You always should be
in the market, frankly, because as I always say, your
company will do without you if they can. It's I mean,
it's just life. And so you should always have one
(22:00):
toe in the market. And if that toe is simply
an updated LinkedIn profile, don't do it halfway. You have
to have a LinkedIn profile that showcases it's different from
your resume. So think about it as the cliff notes
of your resume and so that people can find you
and then learn about you and kind of a spark
(22:22):
notes or cliff notes fashion and potentially reach out for
opportunities projects, consulting, work jobs, networking, et cetera. So it's
a way too Before technology, we never had that if
you want to apply for a job, you had to
take a bunch of paper resumes to the mailbox, and
this is a way to stay in, to stay in
(22:45):
the game. But if you have a crappy LinkedIn profile
and it doesn't and a reader can't tell who you
are professionally and what you might be looking to do next,
then then you're probably wasting space.
Speaker 4 (22:59):
So I haven't I'm in the job market for quite
some time. But you know, I always made sure that
when I applied for something with a resume and a
cover letter, I tailored it to that particular job. Now
you know, when we're on LinkedIn and if we have
ready and willing to work or whatever it is, you're not.
Speaker 3 (23:17):
Really able to tailor your profile or tweak it for
a particular job. And you should that a big deal.
Speaker 5 (23:26):
No, because you shouldn't be tweaking your resume for every job. Okay,
you know you are you are who you are? Who
you are. If I took a polaroid snapshot of you
today and instead of your face, it had in uh,
you know it had in it. What are my skills,
(23:47):
my values, my what am I good at? What do
I want next? You shouldn't twist yourself into a pretzel
to match what a job is looking for. What you
should do is make sure that you are using the
key words that that organizations are looking for and that
are also true about you. Now the only so if
(24:09):
you see that, you know, if you see the word,
the danger is. And this is where AI is just
like a head slapper for me when it comes to
job search, because if I've got the word collaborate in
my resume, because I have a real strong history of
collaborating on teams to deliver these great results for all
these companies I've worked for, but the job, but the
(24:31):
job posting says team player, you might not get picked up.
And so that's the danger of that's the danger of
all of this. So I am not a fan of
job boards for a variety of reasons, that just being
one of them. But the other is there's so much
scam on them and so your your resumes should be you.
(24:51):
You shouldn't put things on there that you aren't. And
this is this is where people fall apart in the
job search is they're trying to be everything to everybody
that's not attractive. That's not what you want, and we
get so wrapped up around the axle with I'm going
to have twenty five resume versions that kind of lose
track of who you are or who you are in
(25:12):
the job market, and companies don't know how to They
just don't know how to utilize you or what to
contact you for. And so if you if you instead
start from a self centered who am I? You know?
Who am I? And what do I want next? If
you start from that approach, you will catch many more
(25:33):
flies than you did if you were putting a big
net out there.
Speaker 2 (25:35):
Frankly, so, Julie, you're saying, up to a certain extent,
LinkedIn can be helpful, right. You always want it to
be updated and ready in case you've got to go
and if you're looking, yeah, at what point does it
take you? Only so far? And then what do you
need to do from there?
Speaker 5 (25:54):
So LinkedIn is also there's a lot of jobs listed
and let's say that you see a job that you're
interested in, you can also see how many people applied
for it. So LinkedIn I think is a good resource.
It's as when you look at all the job boards
out there, I think LinkedIn is I think LinkedIn is
the best. It still has limitations because you're still out
(26:19):
there vying with all these other people who've applied, but
it's a way to learn about a company. It's a
way to see if you're connected and anybody at that company,
and it's a way to potentially connect with people who
used to work there to find out is this a
good place to work? So it's like a job board
which doesn't have the connection part of it. You're just
sitting there spitting in the wind. A thousand times. LinkedIn
(26:42):
at least allows you to learn more about the company
and the people who work there. But again, two thirds
of more of people, even in these days, get their
jobs through other people that they meet or that they know.
So networking is still the Networking is still the number
one way to get a job and people unfortunately, when
then when you look at when you look at younger generations,
(27:07):
they they are really almost exclusively using exclusively using online
technology tools and then they're really frustrated. So one of
the things that gen Z is doing, I just saw
an article about this, and you talk about cringe and
hard there you'll see that open to work ring. There
(27:31):
are some people, some gen Z people. Someone has a
graphic designer created a peak one that says desperate and yeah,
and I look at that like if you wouldn't put
it on your Hinge profile the hind profile because it's
the same, it's the same vibe, and you know that
(27:52):
is that's really you know, that's really what you don't
want to do. But people are hoping young people who
aren't smart about this kind of stuff. They think that
that's a way to get themselves to the topic pile,
but they don't understand that it's that it actually is
a turnoff because companies don't want to hire people who
(28:15):
are desperate. It's not attractive.
Speaker 2 (28:17):
Yeah, not a great connotation with that.
Speaker 4 (28:20):
Yeah, it's easier to get a job when you're already
employed than it is to show desperation with some flare
on your LinkedIn profile.
Speaker 2 (28:28):
Great perspective from Julie Vaalki. Julie on the job of
how to maximize LinkedIn write, what to do and what
not to do when you're looking for a job. You're
listening to Simply Money presented by all Worth Financial here
in fifty five KRC the talk station. You're listening serious
(28:48):
Imply Money presented by all Worth Financial. I mean you
byner along with Steve Rue. But you have a financial
question you need a little help with. There's a red
button you can click on while you're listening to the show.
It's right there on the iHeart app. Record your question,
it's coming straight to us. We'll help you figure it out.
Speaking of questions, it is time to play retirement fact
or fiction? Do you have the facts? When it comes
(29:09):
to money? And tonight we are focusing on taxes. First
one to you, Steve Ruby. Fact or fiction, Capital gains
taxes apply to all retirement account withdrawals.
Speaker 4 (29:22):
Uh well, fiction, This one is a big fat fiction
when it comes to capital gains. First of all, there's
a difference between capital gains and ordinary income taxes.
Speaker 3 (29:30):
Capital gains is typically.
Speaker 4 (29:32):
What you see in an after tax Brokeridge account or
a trading account, whereas ordinary income is what you're paying
off of IRA distributions, for example, with the exception of
roth iras, when you have a roth ira, there's simply
no taxes when you take any distributions from that account
as long as you're fifty nine and a half in
the account's been open for five years.
Speaker 3 (29:50):
So it is.
Speaker 4 (29:50):
Indeed fiction that capital gains tax applied all retirement account withdrawals.
Speaker 3 (29:55):
One for you, Amy.
Speaker 2 (29:56):
Facts say there's three different, three different kinds of accounts, right, Wroth,
tax deferred and taxable accounts. Each of them have different
tax treatments. It's clear as mud this is all done
by the government. It is what it is. So it
is important to understand the differences so that you know
how to take advantage and maximize how tax efficient you are.
Speaker 4 (30:18):
Yeah, it's a little tricky not to use jargon when
you're dealing with a tax factor fiction segment.
Speaker 3 (30:22):
Yeah, but here we are so factor fiction.
Speaker 4 (30:25):
Selling your home and retirement can result in capital gains taxes,
even if you reinvest the proceeds.
Speaker 2 (30:31):
So this depends. This can be a fact depending on
how much your home is worth. So if you're an
individual and you make two hundred and fifty thousand dollars
beyond that, you can pay taxes. If you're a couple
and the proceeds of that home come to five hundred
thousand dollars or less, should be no taxes above, then
you could pay taxes. So this is a question of
(30:51):
how much are you making. Also how much time were
you living in that house. But assuming that this is
your main place of residence, it really depends on how
much you're getting for that home, whether or not you're
going to have to pay taxes.
Speaker 4 (31:04):
You would have had to have lived in the House
for two of the last five years, yes, in order
to qualify for that exemption.
Speaker 2 (31:10):
All right, one for you, Steve. Fact or fiction. You
can be taxed on your pension income regardless of where
you live.
Speaker 3 (31:18):
Fact.
Speaker 4 (31:19):
Yeah, I mean some states have no state taxes, but
for the most part, our pensions are are taxable's pre
tax money. Now, there's certain situations military combat pace, stuff
like that, where a portion of your pension can actually
be non taxable. But for the majority of pension assets,
you are going to be taxed federally, even if you
live in for example of Florida when there's no state taxes.
(31:43):
Fact or fiction. All distributions from a traditional IRA are
taxed as ordinary income.
Speaker 2 (31:50):
Well, I got lucky on this. Looks we already went
over it, although I would know the answer as well.
All distributions from a traditional IRA are taxed as ordinary come.
This is a fact.
Speaker 3 (32:01):
This one is tricky. This is a trick question. Amy.
Speaker 4 (32:04):
You know this one is is This is a curveball
because technically you can have after tax money inside of
a traditional IRA non deductible contributions or what you make
if your income is above the limit for the deductible contribution.
Speaker 3 (32:19):
So there are situations for folkus.
Speaker 2 (32:21):
This is a rare situation. Yeah, good point, rare situation,
but some people can take advantage of this and do.
Speaker 4 (32:28):
I prefer avoided if we can and explore other options.
But this is one where if you're not tracking it
yourself or with the help of the CPA, then you
can find yourself in a situation where you're double tax
on non deductible traditional IRA contributions.
Speaker 2 (32:43):
For most of us, right, if you have money in
a tax deferred account, you haven't paid taxes on it,
a traditional IRA, a traditional four one. Kay. When you
get to retirement and you take distributions on that money,
you will have to pay taxes.
Speaker 1 (32:56):
You know.
Speaker 2 (32:56):
So it's like the whole story of someone who has
a million dollars and therefore and kay, they're feeling really
good about it. Well, no, actually you're going to have
to pay taxes on that. If you're in the twenty
two percent tax bracket, you're going to two hundred and
twenty thousand dollars to Uncle Sam of that million dollars.
So understanding how this works is incredibly important. Okay, fact
or fiction for you, Steve, you don't have to pay
(33:17):
taxes on Social Security benefits if your total income is
below a certain threshold.
Speaker 4 (33:22):
Yeah, the income has to be relatively low. Remember that
once you hit certain income thresholds, up to eighty five
percent of your Social Security benefits are taxable. Now, that
doesn't mean you're paying eighty five percent taxes on your
Social Security You're not just turning around and giving that
right back to Uncle Sam. It means that you're paying
your effective tax rate on a portion of your Social
(33:43):
Security income. Now, if you're living primarily off of Social Security,
you don't have a lot of other money coming in,
then you're certainly saving money on taxes in this situation,
not paying on Social Security Again, and I.
Speaker 2 (33:54):
Think this one can catch people off guard because you
feel like, wait a second, I've been paying into the
Social Security all these years, and now you're telling me
I'm getting this benefit and I can be taxed on it. Yes, yes, yes,
there is there's a formula that you know that we'll
need to plug in the numbers for and that can
determine how much you will have to pay in taxes.
But yeah, this is a like a not fun kind
(34:17):
of an awareness that a lot of people have when
they get to retirement.
Speaker 4 (34:20):
Yeah, it's an unfortunate little surprise for many. Factor fiction,
required minimum distributions from retirement accounts are subject to income tax.
Speaker 2 (34:29):
This is the fact, and this is why you know,
again when you get to retirement, of all of your
money is in these kind of traditional qualified buckets of
you know, a four to oh one k, a regular
four to one k, and a traditional IRA. You are
going to owe taxes and if you don't need that
money for whatever reason, right, you've got a lot of
money in taxable brokerage accounts and a lot of money
(34:51):
in cash, and whatever reason you don't need to take distributions,
you'll still have to take them because Uncle Sam is
going to say it is time to pay the piper now.
So that's why sometimes roth conversions can make sense, or
putting money into wroth accounts where you've paid the taxes
and then that money can go grow tax free. Coming
up next, some important wisdom for me, Wagner wisdom. You're
(35:14):
listening to Simply Money presented by all Worth Financial here
on fifty five KRC the talk station. You're listening to
Simply Money presented by all worth financial I Meani Wagner
along with Steve Ruby. This music means it is time
for some Wagner wisdom. I had an interesting conversation over
(35:37):
the weekend. Was talking to a good friend of mine.
So when I'm close to and you know, somehow the
topic of credit utilization came up.
Speaker 3 (35:47):
Somehow. I wonder who brought it up.
Speaker 2 (35:49):
It's such a fun conversation that I have. But what
was interesting is this person is in their late forties
and their take was that the percentage of the credit
available to on your credit card didn't matter. It was
that you paid it off every month and that was
reported to the credit card company, which just got me thinking, A,
(36:12):
I'm right. I actually very much enjoy being right for gratulation,
but more importantly that very smart people who have done really,
really well for themselves still don't fully understand the fundamentals
of how your credit score is calculated. Understand, first of all,
you need to pay your bills on time and in
(36:32):
full every month, right, That's a huge part of this,
your credit history, how long you've had open accounts. But
also credit utilization is simply of all the available credit
that is available to you, how much of it are
you using.
Speaker 4 (36:45):
Yeah, And this is an easy one too, because I
do my best to put everything that I possibly can
onto a credit card each month, and then I pay
it off at the end of the month. This way,
I can capitalize on the benefits that the card provides
without ever paying a diamond interest. I made a call
to my bank and I said, Hey, can I increase
my credit limit? I said, sure, you know, I'm stretching
(37:07):
a little bit. I called and it was through the app.
I clicked a button and all of a sudden, my
credit limit doubles. Now I'm not going to use all that,
but it's also going to create a situation where my
utilization ratio has changed for the better, so that my
credit score went up just by having a higher limit
that I'm not tapping into each month.
Speaker 2 (37:25):
Make sure your kids understand this too. I remember I
think my first credit card, the maximum that I could
charge was like one thousand dollars. Right in for your children,
it's not like, okay, Well, as long as I'm not
putting more than nine hundred and ninety nine dollars on
that account, I'm okay, no, no, no, to keep that credit utilization. Honestly,
where experts day you should keep it should be like
(37:45):
thirty to forty percent of what's available to you. So
steve to your point when you're calling or clicking on
a button and asking for more credit available to you.
If you're not spending anymore, right, that's going to increase
your credit score. So knowing how these things work and
how you can maximize them to your benefit. And the
difference in having a good or excellent credit score versus
(38:07):
having an average or below average one can be thousands,
tens of thousands of dollars in interest that you will
owe for loans over the course of your lifetime. So
this is a really big deal.
Speaker 4 (38:19):
And even if you don't have debt or don't plan
on taking on debt, and you're at a point in
your life where that's just not something on the agenda
for you, we've seen studies that even show that your
insurance premiums can be affected by your credit score.
Speaker 2 (38:33):
Absolutely something to understand and pay attention to. Thanks for listening.
Tune in tomorrow. We're talking about a move you may
want to consider during this bull market. You've been listening
to Simply Money presented by all Worth Financial here in
fifty five KRC, the talk station
Simply Money News
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