Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:05):
Tonight, we've got the signs that show that you'll probably.
Speaker 2 (00:09):
Be just fine in retirement when it comes to money.
Speaker 1 (00:12):
A deep dive into dividends and you ask the advisor
burning questions.
Speaker 2 (00:17):
About your money.
Speaker 1 (00:18):
You're listening to Simply Money, presented by all Worth Financial
Immi Wagner along with Steve Ruby. You know, Steve, I
think one of the things, maybe this is an American thing.
I'm not sure where it comes from. We like to compare.
Speaker 2 (00:28):
Ourselves to others. We like to know how we stack
up to other people.
Speaker 1 (00:33):
And so if you are between the ages of fifty
five and sixty four and you are saving for retirement,
that median number, so of all the people that we
know that are saving above and below, that very middle
number is one hundred and thirty five thousand dollars save
for retirement. Again, if you are between the ages of
(00:53):
fifty five and sixty.
Speaker 3 (00:54):
Four, correct, Yeah, so that number one hundred and thirty
five thousand dollars save. That's the median. Unfortunately, oftentimes that's
not enough, not enough unless we plan accordingly. And we're
going to talk about some of the ways that you
can stretch your dollars in retirement and how you can
close gaps between where you are and where you need
(01:16):
to be when you have a little bit of time
left on your side. But there really is no magic
number that you need to be wealthy, because it's contingent
on your own financial situation, needs and goals.
Speaker 1 (01:29):
You can look at one hundred and thirty five thousand
and say, oh great, I have that right, feeling good
about myself.
Speaker 2 (01:34):
But yeah, to your point, it may not be enough.
And it's kind of surprised me.
Speaker 1 (01:38):
Over the years how much people want a magic number,
a formula that they can plug in numbers, and I
wish it was that easy, But I don't think retirement is.
Speaker 2 (01:48):
It's very different.
Speaker 1 (01:49):
I know some people specifically who live on the West
side of Cincinnati, who barely go through their Social Security
every month. I mean, they eat meals at home, they
don't travel, they just are able to live a very
sort of modest lifestyle.
Speaker 2 (02:07):
And then on the flip side, some people who have huge.
Speaker 1 (02:10):
Amounts of money save that you think would be fine,
that actually blow through that money. So it really it's
a very individual thing based on your lifestyle. But there's
a few things that we would say, hey, if you
have this box checked.
Speaker 2 (02:24):
Or you're working toward it, then you're probably in pretty
good shape.
Speaker 3 (02:29):
Yeah. So the first one is you have no debt.
You've said it before, debt is money saved is what
did you say, Amy?
Speaker 1 (02:37):
I said, money not going out? Is this same is
money coming in.
Speaker 2 (02:42):
It's such a simple thing. But when you think.
Speaker 1 (02:44):
About it, you're like, Oh, essentially, if you were to
pay off your mortgage right by the time that you retire,
you're giving yourself a raise because however much you were
paying on the mortgage, and for most of us, that's
our biggest monthly bill that's gone. So now suddenly you
have that extra money to spend on something else. So
paying off your debt is essentially giving yourself a raise.
Speaker 2 (03:05):
Yeah.
Speaker 3 (03:05):
It's a great point because if you have ten million
dollars but you owe twenty million dollars, are you really wealthy?
That's that's the key here, because I have plenty of
folks I work with that have modest savings. They've they've
worked hard for many years, they rolled over a four
to oh one K, and they don't need to tap
into their four oh one k because maybe they have
a pension, maybe they're living below their means. And they
(03:26):
have Social Security and they don't have debt that's taking
that away from them. So when you have no debt,
your money can last a lot longer. Again, this is
why it's important not to compare yourself to others, because
we don't always have an opportunity to pull back the
curtain when we're making those comparisons to really understand what's
happening behind the scenes. You can be living a very
luxurious lifestyle, but maybe it's because you're taking on a
(03:49):
ton of debt to fuel that. That's not wealth. Wealth
is being able to have financial freedom, and having no
debt is a major step towards that financial freedom.
Speaker 1 (04:01):
One of the things too about debt, because we talk
a lot on the show about paying off your mortgage
or huge proponents of just the flexibility that that can
give you if that's an option. But I've also seen
lots of research that shows that the largest sort of
population growth in student loan actually people who have student
loans is sort of this older demographic two fifty and older.
(04:22):
Either you're helping your kids, right, there's those parent plus.
Speaker 2 (04:25):
Loans that I know a lot of parents. If you
have taken out or maybe you went.
Speaker 1 (04:28):
Back to school mid life, did a career change, and
so we're starting to see an increasing number of people
getting closer and closer to retirement and also carrying student
loan debt.
Speaker 2 (04:39):
And I would say that's a trend that's moving in
the wrong direction.
Speaker 3 (04:42):
Yeah, sure is. And that's a whole topic in and
of itself, because my god, is it expensive to go
to college right now? Yes, and interest rates where they are,
it can really make that debt pile up quickly. So
you know, again, when you're comparing yourself to others, having
your own situation under control, your own debt situation is
going put you one step ahead of the pack. Another
(05:03):
area that we like to talk about is making sure
that your savings is working for you now. Now this
is specific to maybe when we're in a high interest
rate environment like we have been. When I talk about
savings here, I'm talking about your cash, taking advantage of
having CDs, money markets, maybe some treasuries for our short
term and intermediate term goals. I'm not talking about putting
(05:25):
your entire portfolio to work in a cash position. I'm
talking about capitalizing on some of the opportunities that we
have right now to get cash working.
Speaker 1 (05:33):
You're listening is Simply Money, presented by all Worth Financial
Immi Wagner along with Steve Ruby, as we talk about
the things that you need to be doing now, maybe
in order to get yourself in a place where you
can retire comfortably if you plan hope to be wealthy
in retirement. Right, what are the things that you can
be doing. Recently you sat down with an investor who said, I've.
Speaker 2 (05:54):
Never retired before.
Speaker 1 (05:55):
I've been doing all of these things with my money,
but I'm not sure if it's enough. Well, yes, that's
the plan. Most of us retire. We retire once. It's
hard to figure out if we're doing all the right things.
And so one of those things is, hey, if you
can pay off debt, you're going to be in pretty
good shape. To your point, if you've got an emergency
fund money sitting in the sidelines, are you getting as
much in high interest, high yield accounts as you possibly can?
(06:18):
And then we're huge proponents of having a diversified portfolio.
In years when the stock market is down, well, maybe
your bonds.
Speaker 2 (06:25):
Are the shock absorbers.
Speaker 1 (06:27):
In years where the Magnificent seven, those huge tech stocks
that seem to be moving the markets these days aren't
doing so great. Well, then maybe you've got some smaller companies,
some emerging markets, things like that. Having a truly diversified
portfolio means that when one sector isn't doing so great,
you're probably going to be Okay.
Speaker 3 (06:46):
Yeah, I've sat in meetings with folks before, and you know,
they'll look at all the different investments that they're in
and let's say, well, how come we haven't sold this one,
this one, and this one and those are the ones
that are down. Yeah, having a diversified portfolio isn't always
completely glamorous because when you have exposure to all different
sectors and types of investments, sometimes some are going to
(07:09):
be doing really well, some are going to be doing poorly.
In that situation, what you really want to do is
sell the ones that have done well and buy the
ones that have done poorly. That way, we're always selling
high and buying low. It's a tenet of diversification. And
when you have your longer term investments working for you
to not only keep up with inflation, but turn into
more money over the long term, then that's going to
put you in a better position. So it's important to
(07:30):
make sure that we capitalize on putting our cash to
work in the high interest rate environment that we've been in,
but maintain a long term investment strategy for our investments.
Speaker 1 (07:41):
I'll tell you one thing that makes a huge difference
between being able to retire well and not is that
by the time you retire, you have officially closed.
Speaker 2 (07:50):
The bank of mom and dad.
Speaker 1 (07:52):
Yeah, if you have adult children who are still living
off of you, on your payroll, you are funding their insurance,
their health insurance, are so phone bill, maybe you're even paying.
Speaker 2 (08:03):
Some of their actual bills, their rent, or whatever it is.
Speaker 1 (08:09):
It is really hard to retire well when you have
children that are still living off of you. And adult
children in the statistics are insane, but it's anywhere between
the ages of eighteen and in forty two, I've seen
there's like a half of adult children who are still
getting money from their parents in some way, shape or form.
Speaker 2 (08:30):
This is not a good thing.
Speaker 3 (08:33):
No, no, it's not. At some point, it's almost a
disservice to your children when you think about it, because
you need to let them fly at some point. Yeah,
and you know, I will say that when it comes
to building out your own financial plan, it's important to
realize that it's probably more of a burden on your
kids for you not to have a long term plan
(08:53):
for between the ages of I don't know, seventy five
and ninety five years old, because if if they can
borrow for college or other expenses for example, remember you
can't borrow for retirement, so you may become their responsibility
eventually as well.
Speaker 1 (09:10):
And I think that's the perspective that you have to
have and the conversation that you have with those adult
children that are coming to you with palm outstretched asking
for money. I think if you say, simply, I can
give you this money now, but the deal is the
trade off is I will be living on your couch
at some point in the future when you have your
own family, or maybe don't have your own family, but
(09:32):
mom and dad will be living on your couch. I
bet they're going to come up with some other ways
to get that money other than.
Speaker 2 (09:38):
Coming to you. So this is something I would say,
you just have to cut it off.
Speaker 1 (09:42):
And to your point too, you give your children roots
and wings. In those roots, you hopefully establish those first
eighteen years so that they can fly, you know, later,
And I'm not saying at eighteen they're cut off because, yeah,
college is incredibly expensive. They might need a little help
during that time. I mean, once they get out of college,
I think the expectation needs to be with that first job,
(10:04):
that whatever the lifestyle is, that they're able to support themselves.
And so thinking through what kind of major even before
they get to college.
Speaker 2 (10:12):
Can help them do that.
Speaker 1 (10:14):
Maybe you don't get to be a philosophy major, you know,
maybe that's your hobby on the side, but you know,
you have to actually think about how much you're going
to make that first year out of college in order
to figure out what makes sense as far as taking
out student loans. So there's a whole conversation. I think
that starts, and with my kids, it started in middle school.
But they understand that the expectation about college is that
(10:37):
they're able to make a living and kind of be
on their own later in life, and so that has
to be a part of the conversation and a part
of the expectations.
Speaker 3 (10:47):
Yeah, I think we've had entire segments on that topic
in and of itself, which it really just boils down
to communication and setting proper expectation with your children. One
more I wanted to touch on because building a financial
plan is so important. When you're able to live off
of your retirement based on an expected lifestyle, what that
means is living below your means, planning for different financial goals,
(11:08):
planning for what expenses you know are going to be
on the horizon, and building a portfolio and a distribution
strategy alongside it to make sure that you're able to
fund those goals. And that just boils down to sitting
down and working with a fiduciary financial planner that can
help you map out those goals.
Speaker 1 (11:24):
You never want to get the call from your financial
advisor that, hey, I'm worried about you running out of money,
or that you are worried about running out of money,
and so maybe your big plans for retirement, we're traveling,
spending time with the grandchildren, and all of a sudden,
the financial situation makes it where.
Speaker 2 (11:40):
That's no longer possible.
Speaker 1 (11:42):
So I think the key is planning ahead so that
you truly can enjoy that retirement. Here's the all Worth
advice right down, a list of the habits that make
people wealthy or at least live well in retirement. Then
work that list and start checking off your boxes.
Speaker 2 (11:56):
You're going to be much better if you do.
Speaker 1 (11:58):
Coming up, should you take advantage of come companies that
offer dividends? Could this be a windfall? We're going to
get into this next. 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 mean Me Wagner along with Steve Ruby.
(12:18):
If you can't listen to our show every night, you
do not have to miss a thing.
Speaker 2 (12:22):
We've got a daily podcast for you. Just search Simply Money.
It's right there on the iHeart app or wherever you
get your podcasts.
Speaker 1 (12:28):
Coming up four one ks rmds iras A lot of numbers,
a lot of letters there.
Speaker 2 (12:34):
We're asking the advisor about all of that. That's straight
ahead at six forty three.
Speaker 1 (12:40):
So when we talk about diversified portfolios and sort of
what stocks that you should own, one option for you
is stocks that pay dividends.
Speaker 2 (12:50):
Some people sort of build a strategy.
Speaker 1 (12:53):
Around this, but I want to spend some time tonight
talking about what diffdends are, how they make sense.
Speaker 2 (13:00):
Can you get rich off of dividends?
Speaker 3 (13:02):
I mean dividends, It's a payment made by company to
the shareholders that hold stocks based on profit or out
of the company's reserves. It kind of serves as a
reward for being a shareholder. And it's more or less
a way to create an income stream than it is
to build wealth. The assumption here is that you already
have the wealth, you have dividend stocks, and then it
(13:24):
pays you that income stream via the dividends.
Speaker 2 (13:27):
And I know a lot of.
Speaker 1 (13:28):
People who invest in dividend stocks and then as they're
still in their working years sort of reinvest in those
dividends right into more and more sort of building their portfolio.
One talk about the kind of companies that pay dividends.
We talk a lot in the show about the magnificence
of it. Right, these big tech companies, your Navidia, your Tesla,
your Alphabet, your Facebook, these are not companies that pay
(13:50):
dividends because the choice of the company is what are
we going to do with profits? And most of those
larger companies they invested into the growth. They're doing research, right,
they're growing, they're doing more with that company, so that
money is completely reinvested into the growth of the company.
But maybe there's some more established companies that are trying
(14:12):
to attract investors, and one of the ways they do
this is to pay dividends. Procter and Gamble pays a dividend.
General Electric pays the dividend, and the goal is, and
you mentioned the concept of rewarding investors, is that as
the company grows over time, maybe that dividend goes up
a little bit. Most of the time it doesn't go down.
(14:33):
But we did see a local example of this General Electric, right,
this company that looked like it just couldn't lose. It
was in the dial Dones industrial average for years.
Speaker 2 (14:43):
Decades and decades and decades.
Speaker 1 (14:45):
And I remember in the not too distance past, GE
took their dividend down to a penny.
Speaker 3 (14:53):
One cent one cent.
Speaker 2 (14:55):
Yeah.
Speaker 3 (14:56):
Yeah, that's paid out on a quarterly basis, so you know,
four cent a year per share. It's it's there are
risks involved with owning individual securities. I think we've said
that a few times in the Yeah, so that one
hits close to home for me because once upon a
time I worked in a four to one K customer
(15:16):
service role for the company that actually held G's four
to one K plan, and I saw so many people
get absolutely rocked in their retirement accounts because they were
oversaturated in a single company stock. Yes, dividends are a
great way to grow the portfolio for a company that
(15:39):
is no longer focused only on growth. These are big,
well established companies value stocks that they paid dividends to
the investors rather than reinvesting back into the company, like
you said, to attract investors. But it's important to remember
that when you have a dividend paying stock, it's still
there's still something that could happen to that company that
(16:00):
affects your bottom line, that affects not only the cash
that you receive from the dividends, but also the value
of the underlying stock.
Speaker 1 (16:07):
And I think that's an important point to make because
you can think, oh, this is a stream of income
and most of the time right the goal of those
companies is that that stream continues, but anything can go wrong,
and one of the things they're going to do before
they completely fold up that company is pull back on
the dividends and say, Okay, now maybe we need to
focus that money elsewhere in order to keep this company viable.
(16:29):
And again General Electric and example of a company that
that happened to, and I think for retirees, when you
flipped that switch from pulling in the paycheck to no
longer bringing in money but having to pay down the money.
I think things like dividend stocks sounds really, really attractive
because you know it's money that's going to be coming in.
(16:51):
But to your point, Steve, we would say, hey, the
rule is no more than ten percent of your entire
portfolio is an individual stock. If you want those individual
stocks to be dividend stocks, that's fine, but it's not
going to make a I don't think it's going to
move the needle in an amazing way when it comes
to supporting you in retirement.
Speaker 3 (17:12):
I mean, there's another advisor here that was telling a
story to me about his mother actually, and she is
part of an inheritance from his father, had a large
position in a single company stock, and he was trying
to coach her and guide her in the decisions that
she was making. He said, no, this has treated us
well for many, many years, and I plan on living
(17:35):
off of the dividend income that that's going to pay
me now that I'm retired and need that cash flow.
And then the company turned around and said, hey, we're
actually not going to pay dividends right now.
Speaker 1 (17:46):
So when you plan on it, right, when that's your strategy,
How does that work out for you?
Speaker 3 (17:50):
Yeah, it doesn't. That's the scary thing. So having one
individual stock and counting on it as risky. Yes, you
can build that. There are investment companies out there that
build entire portfolio of dividend paying stocks to create cash
flow based on that assumed income stream. In that situation, yes,
you're more diversified against the risk of one company not
paying dividends any longer or even going under completely. So
(18:12):
there are ways to be diversified within a dividend paying portfolio.
In a situation where you're just counting on one individual,
one individual stock, there are still tons of risk involved
with that, and I.
Speaker 1 (18:25):
Think for many people when you when you invest in
those dividend stocks, it's often a company that you know,
you feel very strongly about, your passionate about, so often
you work there, so you know, so you're just completely
lagging in diversification in the fact that your current paycheck
is coming from that company, and then you're counting on
not only the future of that company's stock, but also
(18:47):
it to pay dividends when yes to your at any
point that can change, and so I just think understanding
how dividends work, why companies pay them out, it can
be part of a larger stra But I think is
it going to be a major.
Speaker 2 (19:03):
Windfall for anyone? No? Probably not.
Speaker 3 (19:06):
There are also some tax benefits. Dividends are taxed at
a lower rate than your ordinary income taxes, so it
can be attractive for investors to explore building an income
stream from dividends. But I think sitting down with a
fiduciary financial planner to map out your goals, your needs,
and to explore the different types of assets that you
have before deciding, Hey, I'm just going to park it
(19:28):
all in this one dividend paying stock because it's where
I worked for thirty years. There's still tons of risk
involved with that. You need to sit down and build
a plan and explore the best way to achieve that.
Speaker 2 (19:39):
Here's the all Worth advice.
Speaker 1 (19:40):
Dividends are a great byproduct of owning stock, Just remember
that portfolio needs to be diversified by owning indexes of stocks.
Coming up next a great lesson on how to overcome FOMO.
You're listening to Simply Money, presented by all Worth Financial
here in fifty five KRZ the talk station
Tonight, we've got the signs that show that you'll probably.
Speaker 2 (00:09):
Be just fine in retirement when it comes to money.
Speaker 1 (00:12):
A deep dive into dividends and you ask the advisor
burning questions.
Speaker 2 (00:17):
About your money.
Speaker 1 (00:18):
You're listening to Simply Money, presented by all Worth Financial
Immi Wagner along with Steve Ruby. You know, Steve, I
think one of the things, maybe this is an American thing.
I'm not sure where it comes from. We like to compare.
Speaker 2 (00:28):
Ourselves to others. We like to know how we stack
up to other people.
Speaker 1 (00:33):
And so if you are between the ages of fifty
five and sixty four and you are saving for retirement,
that median number, so of all the people that we
know that are saving above and below, that very middle
number is one hundred and thirty five thousand dollars save
for retirement. Again, if you are between the ages of
(00:53):
fifty five and sixty.
Speaker 3 (00:54):
Four, correct, Yeah, so that number one hundred and thirty
five thousand dollars save. That's the median. Unfortunately, oftentimes that's
not enough, not enough unless we plan accordingly. And we're
going to talk about some of the ways that you
can stretch your dollars in retirement and how you can
close gaps between where you are and where you need
(01:16):
to be when you have a little bit of time
left on your side. But there really is no magic
number that you need to be wealthy, because it's contingent
on your own financial situation, needs and goals.
Speaker 1 (01:29):
You can look at one hundred and thirty five thousand
and say, oh great, I have that right, feeling good
about myself.
Speaker 2 (01:34):
But yeah, to your point, it may not be enough.
And it's kind of surprised me.
Speaker 1 (01:38):
Over the years how much people want a magic number,
a formula that they can plug in numbers, and I
wish it was that easy, But I don't think retirement is.
Speaker 2 (01:48):
It's very different.
Speaker 1 (01:49):
I know some people specifically who live on the West
side of Cincinnati, who barely go through their Social Security
every month. I mean, they eat meals at home, they
don't travel, they just are able to live a very
sort of modest lifestyle.
Speaker 2 (02:07):
And then on the flip side, some people who have huge.
Speaker 1 (02:10):
Amounts of money save that you think would be fine,
that actually blow through that money. So it really it's
a very individual thing based on your lifestyle. But there's
a few things that we would say, hey, if you
have this box checked.
Speaker 2 (02:24):
Or you're working toward it, then you're probably in pretty
good shape.
Speaker 3 (02:29):
Yeah. So the first one is you have no debt.
You've said it before, debt is money saved is what
did you say, Amy?
Speaker 1 (02:37):
I said, money not going out? Is this same is
money coming in.
Speaker 2 (02:42):
It's such a simple thing. But when you think.
Speaker 1 (02:44):
About it, you're like, Oh, essentially, if you were to
pay off your mortgage right by the time that you retire,
you're giving yourself a raise because however much you were
paying on the mortgage, and for most of us, that's
our biggest monthly bill that's gone. So now suddenly you
have that extra money to spend on something else. So
paying off your debt is essentially giving yourself a raise.
Speaker 2 (03:05):
Yeah.
Speaker 3 (03:05):
It's a great point because if you have ten million
dollars but you owe twenty million dollars, are you really wealthy?
That's that's the key here, because I have plenty of
folks I work with that have modest savings. They've they've
worked hard for many years, they rolled over a four
to oh one K, and they don't need to tap
into their four oh one k because maybe they have
a pension, maybe they're living below their means. And they
(03:26):
have Social Security and they don't have debt that's taking
that away from them. So when you have no debt,
your money can last a lot longer. Again, this is
why it's important not to compare yourself to others, because
we don't always have an opportunity to pull back the
curtain when we're making those comparisons to really understand what's
happening behind the scenes. You can be living a very
luxurious lifestyle, but maybe it's because you're taking on a
(03:49):
ton of debt to fuel that. That's not wealth. Wealth
is being able to have financial freedom, and having no
debt is a major step towards that financial freedom.
Speaker 1 (04:01):
One of the things too about debt, because we talk
a lot on the show about paying off your mortgage
or huge proponents of just the flexibility that that can
give you if that's an option. But I've also seen
lots of research that shows that the largest sort of
population growth in student loan actually people who have student
loans is sort of this older demographic two fifty and older.
(04:22):
Either you're helping your kids, right, there's those parent plus.
Speaker 2 (04:25):
Loans that I know a lot of parents. If you
have taken out or maybe you went.
Speaker 1 (04:28):
Back to school mid life, did a career change, and
so we're starting to see an increasing number of people
getting closer and closer to retirement and also carrying student
loan debt.
Speaker 2 (04:39):
And I would say that's a trend that's moving in
the wrong direction.
Speaker 3 (04:42):
Yeah, sure is. And that's a whole topic in and
of itself, because my god, is it expensive to go
to college right now? Yes, and interest rates where they are,
it can really make that debt pile up quickly. So
you know, again, when you're comparing yourself to others, having
your own situation under control, your own debt situation is
going put you one step ahead of the pack. Another
(05:03):
area that we like to talk about is making sure
that your savings is working for you now. Now this
is specific to maybe when we're in a high interest
rate environment like we have been. When I talk about
savings here, I'm talking about your cash, taking advantage of
having CDs, money markets, maybe some treasuries for our short
term and intermediate term goals. I'm not talking about putting
(05:25):
your entire portfolio to work in a cash position. I'm
talking about capitalizing on some of the opportunities that we
have right now to get cash working.
Speaker 1 (05:33):
You're listening is Simply Money, presented by all Worth Financial
Immi Wagner along with Steve Ruby, as we talk about
the things that you need to be doing now, maybe
in order to get yourself in a place where you
can retire comfortably if you plan hope to be wealthy
in retirement. Right, what are the things that you can
be doing. Recently you sat down with an investor who said, I've.
Speaker 2 (05:54):
Never retired before.
Speaker 1 (05:55):
I've been doing all of these things with my money,
but I'm not sure if it's enough. Well, yes, that's
the plan. Most of us retire. We retire once. It's
hard to figure out if we're doing all the right things.
And so one of those things is, hey, if you
can pay off debt, you're going to be in pretty
good shape. To your point, if you've got an emergency
fund money sitting in the sidelines, are you getting as
much in high interest, high yield accounts as you possibly can?
(06:18):
And then we're huge proponents of having a diversified portfolio.
In years when the stock market is down, well, maybe
your bonds.
Speaker 2 (06:25):
Are the shock absorbers.
Speaker 1 (06:27):
In years where the Magnificent seven, those huge tech stocks
that seem to be moving the markets these days aren't
doing so great. Well, then maybe you've got some smaller companies,
some emerging markets, things like that. Having a truly diversified
portfolio means that when one sector isn't doing so great,
you're probably going to be Okay.
Speaker 3 (06:46):
Yeah, I've sat in meetings with folks before, and you know,
they'll look at all the different investments that they're in
and let's say, well, how come we haven't sold this one,
this one, and this one and those are the ones
that are down. Yeah, having a diversified portfolio isn't always
completely glamorous because when you have exposure to all different
sectors and types of investments, sometimes some are going to
(07:09):
be doing really well, some are going to be doing poorly.
In that situation, what you really want to do is
sell the ones that have done well and buy the
ones that have done poorly. That way, we're always selling
high and buying low. It's a tenet of diversification. And
when you have your longer term investments working for you
to not only keep up with inflation, but turn into
more money over the long term, then that's going to
put you in a better position. So it's important to
(07:30):
make sure that we capitalize on putting our cash to
work in the high interest rate environment that we've been in,
but maintain a long term investment strategy for our investments.
Speaker 1 (07:41):
I'll tell you one thing that makes a huge difference
between being able to retire well and not is that
by the time you retire, you have officially closed.
Speaker 2 (07:50):
The bank of mom and dad.
Speaker 1 (07:52):
Yeah, if you have adult children who are still living
off of you, on your payroll, you are funding their insurance,
their health insurance, are so phone bill, maybe you're even paying.
Speaker 2 (08:03):
Some of their actual bills, their rent, or whatever it is.
Speaker 1 (08:09):
It is really hard to retire well when you have
children that are still living off of you. And adult
children in the statistics are insane, but it's anywhere between
the ages of eighteen and in forty two, I've seen
there's like a half of adult children who are still
getting money from their parents in some way, shape or form.
Speaker 2 (08:30):
This is not a good thing.
Speaker 3 (08:33):
No, no, it's not. At some point, it's almost a
disservice to your children when you think about it, because
you need to let them fly at some point. Yeah,
and you know, I will say that when it comes
to building out your own financial plan, it's important to
realize that it's probably more of a burden on your
kids for you not to have a long term plan
(08:53):
for between the ages of I don't know, seventy five
and ninety five years old, because if if they can
borrow for college or other expenses for example, remember you
can't borrow for retirement, so you may become their responsibility
eventually as well.
Speaker 1 (09:10):
And I think that's the perspective that you have to
have and the conversation that you have with those adult
children that are coming to you with palm outstretched asking
for money. I think if you say, simply, I can
give you this money now, but the deal is the
trade off is I will be living on your couch
at some point in the future when you have your
own family, or maybe don't have your own family, but
(09:32):
mom and dad will be living on your couch. I
bet they're going to come up with some other ways
to get that money other than.
Speaker 2 (09:38):
Coming to you. So this is something I would say,
you just have to cut it off.
Speaker 1 (09:42):
And to your point too, you give your children roots
and wings. In those roots, you hopefully establish those first
eighteen years so that they can fly, you know, later,
And I'm not saying at eighteen they're cut off because, yeah,
college is incredibly expensive. They might need a little help
during that time. I mean, once they get out of college,
I think the expectation needs to be with that first job,
(10:04):
that whatever the lifestyle is, that they're able to support themselves.
And so thinking through what kind of major even before
they get to college.
Speaker 2 (10:12):
Can help them do that.
Speaker 1 (10:14):
Maybe you don't get to be a philosophy major, you know,
maybe that's your hobby on the side, but you know,
you have to actually think about how much you're going
to make that first year out of college in order
to figure out what makes sense as far as taking
out student loans. So there's a whole conversation. I think
that starts, and with my kids, it started in middle school.
But they understand that the expectation about college is that
(10:37):
they're able to make a living and kind of be
on their own later in life, and so that has
to be a part of the conversation and a part
of the expectations.
Speaker 3 (10:47):
Yeah, I think we've had entire segments on that topic
in and of itself, which it really just boils down
to communication and setting proper expectation with your children. One
more I wanted to touch on because building a financial
plan is so important. When you're able to live off
of your retirement based on an expected lifestyle, what that
means is living below your means, planning for different financial goals,
(11:08):
planning for what expenses you know are going to be
on the horizon, and building a portfolio and a distribution
strategy alongside it to make sure that you're able to
fund those goals. And that just boils down to sitting
down and working with a fiduciary financial planner that can
help you map out those goals.
Speaker 1 (11:24):
You never want to get the call from your financial
advisor that, hey, I'm worried about you running out of money,
or that you are worried about running out of money,
and so maybe your big plans for retirement, we're traveling,
spending time with the grandchildren, and all of a sudden,
the financial situation makes it where.
Speaker 2 (11:40):
That's no longer possible.
Speaker 1 (11:42):
So I think the key is planning ahead so that
you truly can enjoy that retirement. Here's the all Worth
advice right down, a list of the habits that make
people wealthy or at least live well in retirement. Then
work that list and start checking off your boxes.
Speaker 2 (11:56):
You're going to be much better if you do.
Speaker 1 (11:58):
Coming up, should you take advantage of come companies that
offer dividends? Could this be a windfall? We're going to
get into this next. 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 mean Me Wagner along with Steve Ruby.
(12:18):
If you can't listen to our show every night, you
do not have to miss a thing.
Speaker 2 (12:22):
We've got a daily podcast for you. Just search Simply Money.
It's right there on the iHeart app or wherever you
get your podcasts.
Speaker 1 (12:28):
Coming up four one ks rmds iras A lot of numbers,
a lot of letters there.
Speaker 2 (12:34):
We're asking the advisor about all of that. That's straight
ahead at six forty three.
Speaker 1 (12:40):
So when we talk about diversified portfolios and sort of
what stocks that you should own, one option for you
is stocks that pay dividends.
Speaker 2 (12:50):
Some people sort of build a strategy.
Speaker 1 (12:53):
Around this, but I want to spend some time tonight
talking about what diffdends are, how they make sense.
Speaker 2 (13:00):
Can you get rich off of dividends?
Speaker 3 (13:02):
I mean dividends, It's a payment made by company to
the shareholders that hold stocks based on profit or out
of the company's reserves. It kind of serves as a
reward for being a shareholder. And it's more or less
a way to create an income stream than it is
to build wealth. The assumption here is that you already
have the wealth, you have dividend stocks, and then it
(13:24):
pays you that income stream via the dividends.
Speaker 2 (13:27):
And I know a lot of.
Speaker 1 (13:28):
People who invest in dividend stocks and then as they're
still in their working years sort of reinvest in those
dividends right into more and more sort of building their portfolio.
One talk about the kind of companies that pay dividends.
We talk a lot in the show about the magnificence
of it. Right, these big tech companies, your Navidia, your Tesla,
your Alphabet, your Facebook, these are not companies that pay
(13:50):
dividends because the choice of the company is what are
we going to do with profits? And most of those
larger companies they invested into the growth. They're doing research, right,
they're growing, they're doing more with that company, so that
money is completely reinvested into the growth of the company.
But maybe there's some more established companies that are trying
(14:12):
to attract investors, and one of the ways they do
this is to pay dividends. Procter and Gamble pays a dividend.
General Electric pays the dividend, and the goal is, and
you mentioned the concept of rewarding investors, is that as
the company grows over time, maybe that dividend goes up
a little bit. Most of the time it doesn't go down.
(14:33):
But we did see a local example of this General Electric, right,
this company that looked like it just couldn't lose. It
was in the dial Dones industrial average for years.
Speaker 2 (14:43):
Decades and decades and decades.
Speaker 1 (14:45):
And I remember in the not too distance past, GE
took their dividend down to a penny.
Speaker 3 (14:53):
One cent one cent.
Speaker 2 (14:55):
Yeah.
Speaker 3 (14:56):
Yeah, that's paid out on a quarterly basis, so you know,
four cent a year per share. It's it's there are
risks involved with owning individual securities. I think we've said
that a few times in the Yeah, so that one
hits close to home for me because once upon a
time I worked in a four to one K customer
(15:16):
service role for the company that actually held G's four
to one K plan, and I saw so many people
get absolutely rocked in their retirement accounts because they were
oversaturated in a single company stock. Yes, dividends are a
great way to grow the portfolio for a company that
(15:39):
is no longer focused only on growth. These are big,
well established companies value stocks that they paid dividends to
the investors rather than reinvesting back into the company, like
you said, to attract investors. But it's important to remember
that when you have a dividend paying stock, it's still
there's still something that could happen to that company that
(16:00):
affects your bottom line, that affects not only the cash
that you receive from the dividends, but also the value
of the underlying stock.
Speaker 1 (16:07):
And I think that's an important point to make because
you can think, oh, this is a stream of income
and most of the time right the goal of those
companies is that that stream continues, but anything can go wrong,
and one of the things they're going to do before
they completely fold up that company is pull back on
the dividends and say, Okay, now maybe we need to
focus that money elsewhere in order to keep this company viable.
(16:29):
And again General Electric and example of a company that
that happened to, and I think for retirees, when you
flipped that switch from pulling in the paycheck to no
longer bringing in money but having to pay down the money.
I think things like dividend stocks sounds really, really attractive
because you know it's money that's going to be coming in.
(16:51):
But to your point, Steve, we would say, hey, the
rule is no more than ten percent of your entire
portfolio is an individual stock. If you want those individual
stocks to be dividend stocks, that's fine, but it's not
going to make a I don't think it's going to
move the needle in an amazing way when it comes
to supporting you in retirement.
Speaker 3 (17:12):
I mean, there's another advisor here that was telling a
story to me about his mother actually, and she is
part of an inheritance from his father, had a large
position in a single company stock, and he was trying
to coach her and guide her in the decisions that
she was making. He said, no, this has treated us
well for many, many years, and I plan on living
(17:35):
off of the dividend income that that's going to pay
me now that I'm retired and need that cash flow.
And then the company turned around and said, hey, we're
actually not going to pay dividends right now.
Speaker 1 (17:46):
So when you plan on it, right, when that's your strategy,
How does that work out for you?
Speaker 3 (17:50):
Yeah, it doesn't. That's the scary thing. So having one
individual stock and counting on it as risky. Yes, you
can build that. There are investment companies out there that
build entire portfolio of dividend paying stocks to create cash
flow based on that assumed income stream. In that situation, yes,
you're more diversified against the risk of one company not
paying dividends any longer or even going under completely. So
(18:12):
there are ways to be diversified within a dividend paying portfolio.
In a situation where you're just counting on one individual,
one individual stock, there are still tons of risk involved
with that, and I.
Speaker 1 (18:25):
Think for many people when you when you invest in
those dividend stocks, it's often a company that you know,
you feel very strongly about, your passionate about, so often
you work there, so you know, so you're just completely
lagging in diversification in the fact that your current paycheck
is coming from that company, and then you're counting on
not only the future of that company's stock, but also
(18:47):
it to pay dividends when yes to your at any
point that can change, and so I just think understanding
how dividends work, why companies pay them out, it can
be part of a larger stra But I think is
it going to be a major.
Speaker 2 (19:03):
Windfall for anyone? No? Probably not.
Speaker 3 (19:06):
There are also some tax benefits. Dividends are taxed at
a lower rate than your ordinary income taxes, so it
can be attractive for investors to explore building an income
stream from dividends. But I think sitting down with a
fiduciary financial planner to map out your goals, your needs,
and to explore the different types of assets that you
have before deciding, Hey, I'm just going to park it
(19:28):
all in this one dividend paying stock because it's where
I worked for thirty years. There's still tons of risk
involved with that. You need to sit down and build
a plan and explore the best way to achieve that.
Speaker 2 (19:39):
Here's the all Worth advice.
Speaker 1 (19:40):
Dividends are a great byproduct of owning stock, Just remember
that portfolio needs to be diversified by owning indexes of stocks.
Coming up next a great lesson on how to overcome FOMO.
You're listening to Simply Money, presented by all Worth Financial
here in fifty five KRZ the talk station
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