Episode Transcript
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Speaker 1 (00:06):
Tonight, could it be do we have answers a solution
to solve this country's.
Speaker 2 (00:13):
Social security problems?
Speaker 1 (00:15):
You're listening to some point money presented by all Worth Financial.
I'm Amy Wagner along with Bob sponseller.
Speaker 3 (00:20):
Bob.
Speaker 1 (00:20):
I think when it comes to Social Security, there's a
few things that everyone can agree on. Number One, it
is an incredibly popular program.
Speaker 2 (00:29):
It does not matter how much money you have.
Speaker 1 (00:32):
Everyone really appreciates the fact that when you get to
retirement right there is a check coming in every month
in the form of your Social Security And I think
the second thing we can all agree on is the
program is currently a mess. It needs to be fixed,
and there are lots of ideas about what that looks like,
and nobody wants to even take control of that. It's
(00:56):
like a hot potato everyone keeps throwing all over the place.
Speaker 4 (01:00):
And I think a third thing we can all agree
on is politicians of both political parties are scared to
death to touch this thing because no matter what you
do or propose to do, you're going to really get
people upset, you know, depending on how people feel about this.
So the Social Security Administration's Office of the Chief Actuary
(01:23):
maintains a record of various proposals, listing over twenty significant
reform plans just since two thousand and one. What has
happened to all these proposals? Nothing can has been getting
kicked down the road. So, you know, we talk about
this all the time. You know, the trust fund is
supposed to be depleted by the mid twenty thirties with
(01:44):
no changes, at which point only payroll taxes will fund benefits,
and the benefits might need to reduce with no changes,
down to only about seventy seven percent of promise benefits.
In other words, it will truly be pay as you
go program at that point. The problem and the challenge
is that the number of workers paying into Social Security
(02:07):
per retiree has dropped from five to one back in
nineteen sixty to about two point eight per one today,
and it's expected to decline further. People are living longer,
which means they collect benefits for more years, and that
means increasing the problem's cost. So it's an actuarial problem,
(02:29):
you know, amy as people have lived longer and there's
more benefits being paid out than this program was ever
designed to pay out.
Speaker 5 (02:36):
We got to address it at some.
Speaker 1 (02:38):
Point here yeah, Well, there's a couple of things at
play here, right. You mentioned that we are living longer.
That's a great thing. We've had so many advances in
medical care and healthcare. When this program was set up
in the nineteen thirties, full retirement age sixty five, how
many people were living to sixty five?
Speaker 2 (02:55):
Not very many, So you had.
Speaker 1 (02:57):
People paying it to the system and very few people
claiming benefits. On the other side, Let's fast forward to today.
Baby boomers are retiring in droves, right.
Speaker 2 (03:08):
I think of my mom's.
Speaker 1 (03:10):
Family, Catholic family from Saint Bernard, eight kids. How many
families do you know nowadays that have eight kids in them?
Speaker 5 (03:18):
Right?
Speaker 1 (03:18):
I mean, my mom could tell me about all the
kids on their block growing up. Every single one of
them had enormous families. That's the thing of the past.
So now we've got all of these large families, right,
all of these people retiring. And let's look at the
amount of workers now paying into the system. Younger workers
coming online and paying in the form.
Speaker 2 (03:38):
Of their payroll taxes. Fewer and fewer.
Speaker 1 (03:41):
Families have two kids, maybe three kids, not eight, and
so we've got fewer and fewer workers supporting retirees who
are claiming benefits, and it is a system that no
longer works.
Speaker 4 (03:53):
Yeah, and the reason we're talking about this today and
amy this I we might see something positive come out
of this. And again I'm sharing an opinion here. I
know nothing about what's going to happen, but a latest proposal,
and this is coming from Maryland Democrat Representative Stenny Hoyer, who,
as you know, is not some you know, whack job
(04:14):
left wing you know, he's a very responsible, well respected
representatives in Congress. He has asked for some estimates of
what would happen if we, you know, trim some things
and adjust things around the edges with this program in
a variety of ways. And I you know, we talk
about President Trump being the negotiator in chief and a
(04:38):
great negotiator. I actually think this is a situation where
President Trump and somebody like Representative Hoarrier could get in
a room together and actually get something done. Maybe that's
wishful thinking on my part, but what a tremendous contribution
to the country if we could actually finally get some
(04:59):
bipartisan agreement in working out some adjustments to fix this program.
So let's get into some of the things that Representative
Warrier is talking about at least studying here.
Speaker 1 (05:10):
Okay, so right now, we are currently paying a payroll
tax of twelve point four percent. In one of the
potential fixes would be that we increase.
Speaker 2 (05:20):
That over a span of years closer to fifteen percent
to fourteen point eight percent.
Speaker 5 (05:25):
Right.
Speaker 1 (05:26):
Okay, let's talk about that and dollars and cents, right,
what would be the good and the bad? Well, obviously
that would bring more money into the system, but at
the same time, it's less money that we would have
to spend out of our paychecks. And then is there
a ripple effect throughout the economy of well, I've got
less that I'm bringing home so that I have less
to spend, and then all of a sudden, the American
(05:48):
economy starts to slow down, you know, And I think
that's what you have to realize. So many of us
get frustrated. Why don't they just fix the problem? Well,
there's pros and cons to all of the options.
Speaker 2 (05:59):
And keep in mind, these are politicians that.
Speaker 1 (06:02):
Are very, very aware that they only have their jobs
because you voted for them, and so they are really
going to be careful about which percentage or which part
of the voting population.
Speaker 2 (06:13):
They're going to anger by making.
Speaker 1 (06:16):
These decisions because of course people have really strong opinions
about it. So yeah, you can gradually enroll or gradually
increase the payroll tax. Another thing could be an adjustment
to the cost of living calculations that they use.
Speaker 2 (06:27):
That's another opportunity or option there.
Speaker 4 (06:31):
Other people are in favor of just the benefit benefit
formula modifications, in other words, skewing this thing so high earners,
higher net worth people get a little bit lower benefit
and it excuse me, increasing benefits for lower income retirees
that maybe haven't been able to keep up with inflation.
(06:53):
Another thing being talked about is just increasing the taxable
earnings cap. Right now, the cap on having to pay
Social Security taxes is one hundred and sixty eight six
hundred dollars in twenty twenty four, meaning once your wages
go over that amount, you do not pay.
Speaker 5 (07:10):
Social Security taxes on those on those wages.
Speaker 4 (07:13):
Some people hate that, thinking that high income people aren't
paying their fair share. Flip side of the table, people
don't realize that even if you raise that wage gap,
you know, high income earners, social Security benefits are not
going to go up. Proportionally, So that's why people don't
like that idea as well. Another thought is just increase
(07:34):
the full retirement age age because people are living longer.
You know, right now we're at sixty seven. You know
what happens if you move that to sixty eight seventy.
You know, folks that are very close to retiring and
claiming Social Security, well, obviously they're going to think the
goalposts are getting moved on them again. I think, you know,
(07:54):
and maybe wishful thinking on my part. You have Representative
Hoyer who's in a safe district, he's been there forever,
he's not going anywhere. And you've got President Trump, who
you know, let's face it, he's not running for reelection again.
So I think you've got you know, when you've got
people that are safe in terms of being able to
actually make some plans and negotiate things without fear of
(08:19):
retribution from voters, you might have a good opportunity to
get something done.
Speaker 5 (08:24):
At least that's my thought.
Speaker 1 (08:26):
Yeah, you're listening to simply when you're presented by all
Worth Financial and Mimi Wagner along with Bob Sponseller talking
through the options, right, what could be on the table,
if someone in Washington were to put together some sort
of bipartisan effort to save Social Security so that when
we get to twenty thirty three, twenty thirty four, we're
not looking at a diminished benefit for all of us, right,
(08:50):
We're projecting seventy seven percent of your promised benefit. Yes,
there are options on the table, Bob. I was just
talking to Mike McConnell on our sister station WLW, you know, earlier,
and he was mentioning like, hey, they can just increase
full retirement age.
Speaker 2 (09:07):
You know it'll affect you, it won't affect me.
Speaker 1 (09:09):
And I was thinking, that's exactly the rub, right, the
people who are closer to retirement that won't be impacted
by that, they're like, go ahead, right, they moved the
goalpost on us once before. We're having to work longer
before we can claim full retirement age. They can do
the same thing for you guys. On the flip side,
younger voters are going to be like, hey, wait, we
(09:29):
want full retirement age at sixty seven.
Speaker 2 (09:32):
So you know, there's two sides to the coin.
Speaker 1 (09:34):
With every solution, then there's a group of people who
are going to be super happy about it.
Speaker 4 (09:40):
Yeah, and this is why we all have to be
adults here. You know, the politicians need to be adults,
and average American citizens need to be adults. And this
is what I mean by that. You know, every time
somebody talks about getting together and making some necessary adjustments
to the program, folks will immediately say, well, that's not
a bowld enough fix, that's not doing enough, and so
(10:03):
they kick the can down and do nothing.
Speaker 5 (10:05):
Well, doing nothing is not an option.
Speaker 4 (10:08):
You know, if we don't get something negotiated and done,
you know, you want to talk about pulling the rug
out from somebody wake up one day and have one
third of the benefits to everybody just go away. That
doesn't sound like a very good result for the American
citizens either.
Speaker 5 (10:25):
So you know, we are going to need to talk
about this.
Speaker 4 (10:28):
It's the elephant in the room that I guess nobody
wants to talk about, mainly for political reasons, but I
think the American people would be open to a bipartisan,
well fought out approach where people don't get everything they want.
Everybody's got to give a little bit, and we do
something for the long term good of the country that
(10:49):
keeps this very important retirement system Solvent.
Speaker 2 (10:53):
You know, Bob.
Speaker 1 (10:54):
Through the years, we have been really lucky on the
show to get some major players.
Speaker 2 (10:58):
In Washington to come on and talk to us.
Speaker 1 (11:00):
And I'm thinking about you know, retired Congressman Bob Portman
right to Republican.
Speaker 2 (11:06):
We've also had Sharon Brown on this, you know, Democrat.
Speaker 1 (11:09):
Both of them have talked about, you know, policies that
they're really passionate about.
Speaker 2 (11:14):
With both of them and others we've had on the
show through.
Speaker 1 (11:17):
The years, I brought up Social Security and said, hey,
what about this right, most popular, without question, most popular
program in that the federal government gives out, yet so
many questions about.
Speaker 2 (11:29):
The future of it.
Speaker 1 (11:31):
Silence silence, right because it's like, oh, you know, and
they'll kind of generally talk through options and then I'll say, okay, well,
what are you leaning for? What do you think makes
the most sense in you know, these politicians And I'm
not pointing a finger at anyone, because I really do
understand the situation that they're in, but no one wants
to talk in specifics about what they think will save
(11:52):
this program because nobody wants to anger any voters.
Speaker 2 (11:55):
I agree, it's going to take someone likely who's.
Speaker 1 (11:57):
Bold, but also, Bob, I think you're point of who
has nothing to lose politically, who might finally bring this
to the table. Of course, stay tuned, we'll certainly see
how this all plays out.
Speaker 2 (12:08):
Here's all Worth advice I.
Speaker 4 (12:09):
Mean Amy Wagner for Amy Wagner twenty twenty eight. If
you've heard it here first, Amy, do it. You are
the bold leader American needs. I will be your campaign manager.
Get it done.
Speaker 5 (12:20):
Amy.
Speaker 1 (12:21):
I have one vote and it is from Bob sponseller.
I appreciate your vote of confidence.
Speaker 2 (12:25):
Bob. Here's the all Worth advice.
Speaker 1 (12:26):
You really can't control what happens with social security. Focus
on what you can control, a well diversified portfolio that
has social security as just one part of it.
Speaker 2 (12:36):
And yes, I would appreciate your vote.
Speaker 1 (12:37):
Coming up next, we're tackling taxes, luxury items at Costco
and what to do with an IRA that's left behind.
You're listening to Simply Money presented by all Worth Financial
here in fifty five krs the talk station. You're listening
to Simply Money presented by all Worth Financial. I mean
(12:58):
Me Wagner along with Bob's sponseller. If you miss something
in our show, if you miss our show one night,
or maybe here's something and you want to share.
Speaker 2 (13:04):
It with someone else.
Speaker 1 (13:05):
You want them to hear it for themselves.
Speaker 2 (13:07):
We've got a daily podcast for you. Just search Simply Money.
Speaker 1 (13:11):
It's on the iHeart app or wherever you find your
podcast for you to download, listen and share it with
your friends. Coming up at six forty three, testing your
knowledge of stocks in bonds in Everybody's favorite fact or fiction. Okay,
if you are in the middle of preparing your tax return,
there might be something that you are forgetting to include.
Speaker 2 (13:31):
Well, I'm seeing this more and more often.
Speaker 1 (13:33):
I actually had someone in my office recently whose wife
had a pretty good business going on Etsy, Like built
it from nothing and it's now making a sizeable income
every year. Obviously this is not your typical kind of
W two income, but you gotta claim it.
Speaker 4 (13:52):
Yeah, the IRS is paying closer attention to these kinds
of transactions, you know, through online retailers, you know, self
created businesses. Like you said last year, if you received
over five thousand dollars in gross income from sales of
online platforms like Etsy, eBay, Poshmark, you would have received
a Form ten ninety nine K from that online vendor
(14:15):
and that that information does get passed along to the irs.
That threshold is going to decrease to twenty five hundred
dollars in twenty twenty five and only six hundred dollars
in twenty twenty six. So here's here's the additional catch.
Even if you don't receive a ten ninety nine K,
you are still technically required and responsible to report any
(14:38):
income from these sales on your tax return, so you know,
you know, whether it's audit or what have it. People
just need to be aware that the threshold's coming down.
And I think another thing to remember amy is anytime
anybody has any kind of self employment business, it's not
only it's not only important to keep your revenue seats,
(15:00):
but also your expenses because a lot of people are
not well informed on what they can deduct in the
way of business expenses. So bottom line here is, if
you're running a business like this, you do need to
start getting well versed in how to report you know,
tax taxable activity from a business to make sure you're
(15:21):
doing it number one and doing it correctly number two.
Speaker 2 (15:25):
Yeah, excellent point. Okay.
Speaker 1 (15:27):
I also want to talk about a somewhat surprising revelation.
This is from Costco's chairman, and he said, listen, you
come into Costco because you are buying I don't know
whatever it is in bulk, and it's going to be cheaper.
But also we sell some luxury items here at Costco,
and those items are currently like flying off the shelves.
Speaker 4 (15:47):
Yeah, he shared, like things like Rolex, watches, don Perion, champagne,
ten caret diamonds. Amy, I have to ask, is this
why you were not here with us on Monday? Were
you at cost loading up on ten carrot diamonds?
Speaker 5 (16:03):
Please?
Speaker 2 (16:03):
I took a Costco day. Yeah, I got a Rolex
for you. I got a ten carrot diamond for me.
I gotta tell you.
Speaker 1 (16:10):
I mean, I know they've got like big, nice TVs
there in electronics. I had no idea that they're selling
things along these lines.
Speaker 2 (16:18):
But apparently others are.
Speaker 1 (16:20):
And the interesting thing is, yes, of course it's attracting
affluent shoppers who would be in the market for these
things anyway, but I also think it's exposing more average
shoppers who wouldn't necessarily be strolling by a ten carrot.
Speaker 2 (16:33):
Diamond to these things.
Speaker 1 (16:35):
And I think they're kind of maybe having a treat
myself moment indulging in these kind of high end items.
Speaker 2 (16:42):
I think, you know, once again everybody loves the deal.
Speaker 4 (16:45):
All right, Well help me out here, Amy, because I
try to stay out of all of these places.
Speaker 5 (16:49):
I don't like to go into stores period.
Speaker 4 (16:52):
Thankfully I have a wife who does most, if not all,
of our shopping. But hey, I have to ask, in
all seriousness as somebody who who knows a lot about,
you know, behavioral finance. Is it just if people walk
into a Costco and see anything, even a Rolex watch,
their their thoughts immediately think well, if it's at Costco,
(17:13):
I can have one too, and it's affordable because Costco
is for quote unquote average middle you know, Middle America.
Is that some of the psychology behind why this stuff's
flying off the shelves?
Speaker 2 (17:26):
I think it is.
Speaker 1 (17:27):
I think when you walk into a place like a Costco,
you have a different level of expectation of cost, and
so when you're coming across things that you hadn't even
thought about, that weren't even on your radar, like a
Rolex watch, I think maybe if you're not doing your research,
you're going to assume that it's cheaper there and so
you know, I would say, hey, if you are a
(17:47):
costco shopper, do your research before you buy any big
ticket item, regardless of the fact that you got it
from Costco. Interesting though, research along these lines, or maybe
this is just anecdotal. There was a Porsche dealership that
put cars into a store in Seattle. They sold out
of inventory in a week. Porsches in a Costco. It's
(18:09):
like these two things don't belong together, but somehow they
do and people are lapping them up. So go into
Costco with your guard up right. You don't want to
come out with a twenty thousand dollars purchase that you
were not planning on making and it's nowhere in your budget.
Every Sunday you're going to find our all Worth and
Vice miss and Studdy inquire. Here's a preview. This is
from Dr and Green Township. I lost my husband last year.
(18:32):
We're really sorry to hear about that, but he had
an IRA that I received. Haven't wanted to deal with
it until now. Can you help?
Speaker 3 (18:39):
Well?
Speaker 4 (18:39):
Yeah, first of all, sorry for your loss, ma'am. A
couple thoughts is if your husband was at require a
minimum distribution age, you know over seventy three years old.
There was a require minimum distribution that should have been
taken out last year.
Speaker 5 (18:56):
Hopefully it was.
Speaker 4 (18:58):
If it wasn't, you might need to get with your
CPA and make sure you.
Speaker 5 (19:02):
Rectify that situation.
Speaker 4 (19:05):
The good news it's very easy to transfer that IRA
from your husband's name and now have it be an
IRA in your name. So you know, with a death
certificate and a little bit of administration work from from
a good advisor, you can get that buttoned up here
very quickly and easily, and you.
Speaker 5 (19:25):
Should be good to go.
Speaker 4 (19:26):
So those those will be the first two things I
would advise. Make sure the require minimum distribution, if there
was one for twenty twenty four was taken. If not,
get that cleaned up, and then get that IRA into
your name and have it well managed for you moving forward.
Speaker 1 (19:42):
Coming up next investment solutions for those who are maybe
scared the death of the markets, you do have options.
You're listening to Simply Money and presented by all Worth Financial.
You're in fifty five KRC the talk station. You're listening
to Simple Money presented by all Worth Financial. I mean
you wagneralone with Bob Sponseller. We often talk about the
(20:04):
price of admission into the markets, meaning you get to
take advantage of the upside of when these companies are
doing really well. But also there's gonna be a few
times when you're checking that four oh one k and
that balance is going to be down. But from time
to time I come across some investors who just struggle
so much with the law. I cannot sleep bitnight if
(20:26):
they think they're going to lose any money from their investments.
Speaker 2 (20:30):
Of course, no one wants to do that.
Speaker 1 (20:32):
But these bob are conversations we're having all the time.
Andy Stalder, chief investment Officer, coming back tonight, as we
talk about kind of investment solutions. Right if this is
something that sounds familiar to you, maybe you lose sleep
over this.
Speaker 2 (20:46):
I want you to listen up.
Speaker 1 (20:47):
We have maybe some potential suggestions for you.
Speaker 6 (20:50):
Andy, several several years ago.
Speaker 1 (20:53):
We weren't necessarily talking about these things as options, but
we have some. We do have some options for investors
right now.
Speaker 3 (21:01):
Yeah, there's quite a few.
Speaker 7 (21:03):
When you think about what's out there in terms of
investment solutions, it's there's a schmorgesport now when you think
about client needs and client concerns certainly the concerns of.
Speaker 3 (21:21):
I know I need to be invested.
Speaker 7 (21:22):
I know I want to be invested, but I know
the market's out to get me, so as soon as
I go in, the market's.
Speaker 3 (21:27):
Going to go down.
Speaker 7 (21:28):
And I'm sol right. I mean, I think that's just
a typical mindset that a lot of people have. And
you know it could happen, market could go down, but
obviously for the longer run, you're better off staying invested
regardless of those short term pullbacks.
Speaker 3 (21:42):
Now, if you have some real.
Speaker 7 (21:44):
Concern and like you're losing sleep at night, but you
know you need to have it, so you still want
that stock market upside without the full risk of the downside.
You know a couple of solutions that come to mind.
One is what we call structured notes and another buffered ETFs,
and they both behave very similarly. They both give you
(22:05):
that upside market participation participation, but amize that downside risk.
So you may not get all of the market upside.
If the market goes up fifty thirty percent in a year,
you may not get all of it. Conversely, the market
goes down ten twenty percent, you won't get all of
that as well. So Essentially you're getting a floor on
the downside and a bit of a ceiling on the upside,
and ideally this would help, you know, reduce your daily stress, right,
(22:29):
so you don't have to worry about those market swings.
You don't have to really worry about, oh, what are
our futures doing today or what's going on with the economy.
It's a little bit more of a set it and
forget it approach. So on the structured note side of
things and the buffered ETFs they behave similarly from that
perspective where.
Speaker 3 (22:46):
You have a cap and a floor.
Speaker 7 (22:49):
Now the big difference is i'll call liquidity and maybe
also knowing what you're going to get. So structure notes
those are really more than anything else or like a
note issued by a bank, I think like JP Morgan
as an example.
Speaker 3 (23:06):
Then they're essentially.
Speaker 7 (23:07):
Guaranteeing you that you'll get the floor and the ceiling
based on whatever underlying stock market. That structure noticed ted too,
So it could be like the S and P five hundred, right,
so if that S and P five hundred goes up
ten percent, maybe you get all ten percent. If it
goes up twenty percent, maybe some only get ten percent,
But if it goes down ten percent, maybe you only
lose two percent.
Speaker 3 (23:27):
So there's going to be like a.
Speaker 7 (23:28):
Floor in the ceiling and it's going to you'll get
that payout, you know, assuming JP Morgan doesn't go wonder
because nothing's ever guaranteed. But uh, when you look at
it from that perspective, it's pretty safe and you know
what you're going to get, and it has a set
start date and a set end date.
Speaker 3 (23:42):
Now, the difference with.
Speaker 7 (23:43):
A buffer ETF is that it's you get daily liquidity,
meaning you can go trade it on a stock exchange
and get in and out and don't have similar terms.
Speaker 3 (23:53):
However, to really enjoy that buffer of the floor.
Speaker 7 (23:58):
And the ceiling, you need a whole for You need
to look at i should say over one year time
horizons and you'll see a little bit more wiggle room,
but you.
Speaker 3 (24:08):
Should be getting pretty close to what you're expecting.
Speaker 4 (24:11):
So Andy, when you talk about you know the fact
that the buffer ETFs do have daily liquidity, but you
strongly suggest and especially with the strategy that you and
your team developed here at all Worth, when you get
into that strategy holding it for at least one year,
talk about the why behind that. You know, usually when
people have the option for daily liquidity, the next question is,
(24:34):
well why should I hold that for a year?
Speaker 5 (24:36):
Talk about the benefits of that.
Speaker 7 (24:38):
Well, when you think about the holding it for a
one year periods, you have to understand what the ETF
is actually invested in. And it's invested in stock options,
which can be very complex. But they're going to have
time frames depending on the ETF, but they're going to
have time frames that roll for every year. Could be
(24:58):
March to March, A to April, May to May. So
the point of these ETFs is to capture that floor
and ceiling over.
Speaker 3 (25:08):
That one year interval.
Speaker 7 (25:10):
Now you know one of the things that you know
can add some value.
Speaker 3 (25:12):
I think is really interesting.
Speaker 7 (25:14):
One way that when we look at it from like
a i'll call it a tactical rebalancing position, is that
we look to essentially optimize upside potential while keeping that
downside protection in place. So you know, for example, as
the market rises in value, you know what you could
do is reallocate those ETFs so you can have like
(25:35):
a May s and P five hundred series, and two
you might move it to a July series. So what
you're trying to do. Because we do this here internally
just you know, it's an algorithmic uh smart trading process
that we have built in. We can reallocate the ETFs
to essentially reset that downside buffer and lock in gains
(25:57):
and allow us to maintain whatever downside buffer we were
looking at, maybe it's ten percent, maybe it's fifteen percent,
while at the same time taking advantage of market growth.
So as the market rises, we're going to reallocate the
ETFs to reset the buffer and lock and gate.
Speaker 3 (26:13):
Now, if the market declines.
Speaker 7 (26:15):
What we would do is we would stay invested for
a bit to exhaust the majority of that buffer and
then reallocate the ETFs to increase participation.
Speaker 3 (26:24):
In the upside.
Speaker 7 (26:24):
Now, I know that can sound somewhat complicated and complex because.
Speaker 4 (26:28):
Well and as you explained it, you know, the thought
that comes to my mind is the old kids don't
try this at home exactly. You know, this is what
it's great to have you and a team you know,
that are monitoring this all day, every day, and you
know when to make the adjustments, and you do it
for these strategies that we have in place, and so
(26:49):
the client doesn't have to think about it.
Speaker 5 (26:51):
It's being done for them and I love that.
Speaker 7 (26:54):
Yeah, and it's a it can be really powerful and
provide that peace of mind and key. So with these
buffer ETFs, I mean that's where when I mentioned the liquidity,
So you can if you want, if you choose like, hey,
I don't want these buffer ets anymore for whatever reason,
maybe you need to go, you know, buy a house
or whatever it is, you can sell them that day
(27:16):
and the trade just like a stock. So it's very
easy to get in and out with a structured note.
Speaker 3 (27:21):
You know.
Speaker 7 (27:22):
I think the advantage of a structure note is it's
more certain what you're going to get at the end
of the day because you're not going to see the
inter day volatility. With that being said, they do have
maturity dates because technically they're a note or a bond
if you will, issued by a bank, So you can
sell them, but it might you might not be able
to sell them as quickly as you could the ETF.
Speaker 3 (27:45):
So if you if you value.
Speaker 7 (27:47):
Liquidity, that's where the buffer.
Speaker 3 (27:49):
ETFs come into play. If you value.
Speaker 7 (27:52):
Significantly significant certainty, I should say, uh, that's where the
structured notes come to play. But they do the same
thing It's just kind of depends whether or not you
to have that certainty a little bit higher or that
liquidity a little bit better.
Speaker 1 (28:03):
Yeah, I don't think you have to be a sophisticated
investor right for this to make sense for you. But
I will go back to the point of don't try
this at home.
Speaker 2 (28:11):
Either.
Speaker 1 (28:12):
One of these could be fantastic options. And this is
a look yourself in the mirror kind of proposition. If
you do lose sleep when there's volatility in the markets,
there are options. I would suggest finding a financial advisor
that you can trust, a.
Speaker 6 (28:25):
Fiduciary to partner with. But certainly if.
Speaker 1 (28:28):
You're working with someone, bring up these options if you
are someone who really really cannot.
Speaker 6 (28:34):
Just ride the waves of when the markets are down.
Speaker 1 (28:36):
Great perspective, as always from our Chief investment Officer, Andy Stout.
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.
Speaker 2 (28:51):
I'm Amy Wagner along with Bobs Bond tell or. If
you've got a financial question you can't.
Speaker 1 (28:55):
Figure out, we can help you out. There's a red
button you can click on while you're listening to the show.
It's right there on the iHeart Apple cord. Your question
it's coming straight to us. And along those lines of
getting to your questions, it's time to play fact or fiction.
Maybe we can answer some of them. Now we're testing
your knowledge of stocks and bonds. Let's get to it,
mister sponseller, fact or fiction. The majority of stock market
(29:19):
gains over time come from a small percentage of companies.
Speaker 4 (29:23):
That's actually a fact, and I was curious, so I
actually did some research on this just to come up
with more specifics if you look. And a lot of
this depends on the timeframe with which you want to
look at it. But let's just pick ten years. So
over the last ten years, the top ten to twenty
percent of performing stocks contributed eighty to ninety percent of
(29:45):
the total return of the S and P five hundred.
The flip side, the bottom fifty percent of stocks in
the index contributed only twenty to forty percent of the
total return. So yes, a small, a relatively small number
grow stocks tends to contribute a large percentage of the
gains over a reasonable period of times.
Speaker 6 (30:06):
Another perspective, I just want to throw in here.
Speaker 1 (30:08):
This is why we've been talking about the Magnificent seven
right so much over the past couple of years. They
have been driving those magnificent returns we've all seen in
our four one case over the past year. So at
the same time, there's lots of research that shows that
by the time that a company like Nvidia becomes a
household name, the major growth that it's seen has.
Speaker 6 (30:29):
Already been exhausted.
Speaker 1 (30:31):
I don't know if that's the case with that particular company,
but the reason why you want to be diversified is
because tomorrow's Nvidia's tomorrow's companies that could be fuelling major
growth will hopefully be somewhere in your portfolio, maybe something
that you're not paying attention to today, but man, tomorrow,
you're going to be really glad that you got it
in there. All right, here's another one fact or fiction.
(30:53):
If a stock has a low price to earnings ratio,
it's automatically a good value investments.
Speaker 5 (31:00):
That's fiction.
Speaker 4 (31:01):
And uh, you know the reason it has a low
price to earnings ratio is it's it's it has a
low price and you know, we talk about this all
the time. What matters and is earnings earnings earnings, And
I will say what matters more than anything is earnings growth.
I like to look at price divided by earnings growth,
(31:23):
because if a stock's not growing it's earnings, it's probably
not going to go anywhere in a hurry. And I
know a lot of these low pees stocks have high dividends,
and that's attractive to people. And you know, people like
the idea of buying things on a discount. But a
company that is growing at three times the rate of
(31:44):
a company that's not growing, it's going to warrant a
higher price, and most of the time for a very
good reason, as long as that growth continues.
Speaker 1 (31:54):
You brought up dividends, So I'm going to throw this
one at you. Factor fiction. Stocks with high dividend yields
all always the best investments, that's fiction.
Speaker 4 (32:04):
One thing you got to watch with high dividend yielding
stocks is the movement of movement of interest rates. So
you know we've noticed this in recent years. When you
see interest rates start to spike, the price of a
lot of these high dividend paying stocks will fall because
now all of a sudden, government bonds or less risky
investments are worthy competition for these high dividend stocks that
(32:29):
because of the earnings component, they can be more volatile,
So you got to be careful there making making a
broad based assumption.
Speaker 2 (32:38):
I had some people in my office recently.
Speaker 1 (32:41):
Who had built, over the course of several years, a
dividend strategy to replace all of their income. And when
it works, it works great. But you know, my concern
for them as investors is you know something, you know
fundamentally changing that and all of a sudden, it's a
(33:04):
house of cards. And so I like dividend stocks is
a portion right of maybe potentially your portfolio, especially for
those who are retired and unfixed incomes, that these can
make sense, But I don't.
Speaker 2 (33:17):
I don't.
Speaker 1 (33:18):
Dividend producing companies are not the ones that we typically
see a lot of growth from.
Speaker 4 (33:22):
That's right, and you know that's a longer conversation, but
you know, I think we've made our point here.
Speaker 2 (33:28):
Factor fiction.
Speaker 1 (33:29):
Government bonds generally considered to be safer than corporate bonds.
Speaker 4 (33:33):
That would be a fact generally, and it's because with
government bonds there is no credit risk. If you believe
that the United States government is going to remain in
existence and not default on their bonds. Whereas when you
when you loan your money to a company, you are
taking on the credit risk of that company. So that's why,
(33:55):
generally speaking, government bonds are going to be safer than
corporate bonds, and that's why they generally yield a little
less or sometimes a lot less than a corporate bond.
Speaker 1 (34:04):
Coming up next, we are taking you inside.
Speaker 6 (34:07):
Bob's World of Wealth.
Speaker 1 (34:09):
You're listening to Simply Money presented by all Worth Financial.
Here in fifty five KRC the talk station listening to
Simply Money presenting my all Worth Financial. I'm Emmy Wagner
along with Bob's sponsller Money, Money Money. We can only
be talking about one thing. This is Bob's World of Wealth.
Speaker 2 (34:32):
Bob, lay it on us.
Speaker 6 (34:33):
What do you got for us?
Speaker 4 (34:35):
Well, this isn't a very exciting topic to cover, but
I think it's a very important topic to cover, and
one that I just see coming up far too often
in meetings with clients that I've worked with for years
and years and years, and also with prospective new clients.
And that's the whole idea of dovetailing beneficiary designations with
(34:57):
your legal documents. We'll start at the top, the one
you know, I think misunderstanding that's out there frequently is
that your will is going to or your trust, well
especially your will is going to have anything to do
with how your iras in your four oh one k's
passed down to your beneficiaries. So the big reminder here
(35:20):
is that iras and retirement plans do not go through probate. Therefore,
they do not pass through your will. And even if
you've taken the time to do a great will and
a great trust, all that matters is what's listed on
that beneficiary form, both primary and contingent beneficiaries. That's number one,
(35:40):
and I find people remain very confused about that, and
that's something that you have to be checking often. You know,
whether you do this yourself or work with an advisor,
you know you've got to be looking at those beneficiary
designations and make sure those are current and up to
date with what you're wishes are.
Speaker 1 (36:01):
Let me give you an example of where this can
really go a right right. So, say you were married
for ten fifteen years. You had a couple of jobs
during that time, so a couple of old four to
one k's and you just whatever, didn't pay a lot
of attention to them. But they're you know, significant assets
growing through the years, got divorced, got remarried, never changed
(36:22):
the beneficiaries on the old four to one k's because hey,
you now have an updated estate plan with your new spouse,
right your new husband or wife, and you've got a
will or a trust, and so that's you know, I
think in a lot of people's thinking, that will supersede
anything that I filled out one hundred years ago.
Speaker 6 (36:39):
When I had this old job, in this old.
Speaker 2 (36:41):
Four to oh one K.
Speaker 1 (36:42):
And then something happens to you, and the bad news
for your loved ones and your new spouse is that
that old four to one K with that beneficiary that
never got updated, does matter. What's in your will, does
not matter what's in your trust. It is going to them.
Speaker 3 (37:00):
Yep.
Speaker 4 (37:02):
And I want to touch on one other thing. You know,
when you do name beneficiaries, and now we're mainly talking
about contingent beneficiaries, because I think most people, especially those
that are married, you know, we all know enough to
name our spouse, our surviving spouse is the one hundred
percent primary beneficiary. What can get a little tricky and
(37:22):
confusing for people is the contingent beneficiaries.
Speaker 5 (37:25):
And I want to bring up a Latin term called
per sturpees, and what that means in the Latin is
by branch.
Speaker 4 (37:33):
Here's what I mean. You know, for example, my wife
and I have three sons. I've named my wife as
primary beneficiary, my three sons equally as contingent beneficiaries per sturpees.
So what that means is, at the time that my
wife and I pass away, let's just say one of
our three kids is no longer living, that that child's portion,
(37:57):
if you will, is going to go to his children.
If you don't have that per stirpies named the child
that passed away, his family is completely disinherited from that account.
You know, it's just going to go. Whoever's left gets
the money split fifty to fifty instead of thirds. So
(38:18):
again it all comes down to personal preference. But make
sure you've talked about this and reviewed it so that
your beneficiary form actually reflects what you want to happen.
Speaker 1 (38:28):
It's state planning, incredibly important to make sure that your
wishes are carried out after you're no longer here.
Speaker 2 (38:33):
Thanks for listening.
Speaker 1 (38:34):
You've been listening to simply money presented by all Worth
Financial here in fifty five KRC.
Speaker 6 (38:38):
The toxation
Tonight, could it be do we have answers a solution
to solve this country's.
Speaker 2 (00:13):
Social security problems?
Speaker 1 (00:15):
You're listening to some point money presented by all Worth Financial.
I'm Amy Wagner along with Bob sponseller.
Speaker 3 (00:20):
Bob.
Speaker 1 (00:20):
I think when it comes to Social Security, there's a
few things that everyone can agree on. Number One, it
is an incredibly popular program.
Speaker 2 (00:29):
It does not matter how much money you have.
Speaker 1 (00:32):
Everyone really appreciates the fact that when you get to
retirement right there is a check coming in every month
in the form of your Social Security And I think
the second thing we can all agree on is the
program is currently a mess. It needs to be fixed,
and there are lots of ideas about what that looks like,
and nobody wants to even take control of that. It's
(00:56):
like a hot potato everyone keeps throwing all over the place.
Speaker 4 (01:00):
And I think a third thing we can all agree
on is politicians of both political parties are scared to
death to touch this thing because no matter what you
do or propose to do, you're going to really get
people upset, you know, depending on how people feel about this.
So the Social Security Administration's Office of the Chief Actuary
(01:23):
maintains a record of various proposals, listing over twenty significant
reform plans just since two thousand and one. What has
happened to all these proposals? Nothing can has been getting
kicked down the road. So, you know, we talk about
this all the time. You know, the trust fund is
supposed to be depleted by the mid twenty thirties with
(01:44):
no changes, at which point only payroll taxes will fund benefits,
and the benefits might need to reduce with no changes,
down to only about seventy seven percent of promise benefits.
In other words, it will truly be pay as you
go program at that point. The problem and the challenge
is that the number of workers paying into Social Security
(02:07):
per retiree has dropped from five to one back in
nineteen sixty to about two point eight per one today,
and it's expected to decline further. People are living longer,
which means they collect benefits for more years, and that
means increasing the problem's cost. So it's an actuarial problem,
(02:29):
you know, amy as people have lived longer and there's
more benefits being paid out than this program was ever
designed to pay out.
Speaker 5 (02:36):
We got to address it at some.
Speaker 1 (02:38):
Point here yeah, Well, there's a couple of things at
play here, right. You mentioned that we are living longer.
That's a great thing. We've had so many advances in
medical care and healthcare. When this program was set up
in the nineteen thirties, full retirement age sixty five, how
many people were living to sixty five?
Speaker 2 (02:55):
Not very many, So you had.
Speaker 1 (02:57):
People paying it to the system and very few people
claiming benefits. On the other side, Let's fast forward to today.
Baby boomers are retiring in droves, right.
Speaker 2 (03:08):
I think of my mom's.
Speaker 1 (03:10):
Family, Catholic family from Saint Bernard, eight kids. How many
families do you know nowadays that have eight kids in them?
Speaker 5 (03:18):
Right?
Speaker 1 (03:18):
I mean, my mom could tell me about all the
kids on their block growing up. Every single one of
them had enormous families. That's the thing of the past.
So now we've got all of these large families, right,
all of these people retiring. And let's look at the
amount of workers now paying into the system. Younger workers
coming online and paying in the form.
Speaker 2 (03:38):
Of their payroll taxes. Fewer and fewer.
Speaker 1 (03:41):
Families have two kids, maybe three kids, not eight, and
so we've got fewer and fewer workers supporting retirees who
are claiming benefits, and it is a system that no
longer works.
Speaker 4 (03:53):
Yeah, and the reason we're talking about this today and
amy this I we might see something positive come out
of this. And again I'm sharing an opinion here. I
know nothing about what's going to happen, but a latest proposal,
and this is coming from Maryland Democrat Representative Stenny Hoyer, who,
as you know, is not some you know, whack job
(04:14):
left wing you know, he's a very responsible, well respected
representatives in Congress. He has asked for some estimates of
what would happen if we, you know, trim some things
and adjust things around the edges with this program in
a variety of ways. And I you know, we talk
about President Trump being the negotiator in chief and a
(04:38):
great negotiator. I actually think this is a situation where
President Trump and somebody like Representative Hoarrier could get in
a room together and actually get something done. Maybe that's
wishful thinking on my part, but what a tremendous contribution
to the country if we could actually finally get some
(04:59):
bipartisan agreement in working out some adjustments to fix this program.
So let's get into some of the things that Representative
Warrier is talking about at least studying here.
Speaker 1 (05:10):
Okay, so right now, we are currently paying a payroll
tax of twelve point four percent. In one of the
potential fixes would be that we increase.
Speaker 2 (05:20):
That over a span of years closer to fifteen percent
to fourteen point eight percent.
Speaker 5 (05:25):
Right.
Speaker 1 (05:26):
Okay, let's talk about that and dollars and cents, right,
what would be the good and the bad? Well, obviously
that would bring more money into the system, but at
the same time, it's less money that we would have
to spend out of our paychecks. And then is there
a ripple effect throughout the economy of well, I've got
less that I'm bringing home so that I have less
to spend, and then all of a sudden, the American
(05:48):
economy starts to slow down, you know, And I think
that's what you have to realize. So many of us
get frustrated. Why don't they just fix the problem? Well,
there's pros and cons to all of the options.
Speaker 2 (05:59):
And keep in mind, these are politicians that.
Speaker 1 (06:02):
Are very, very aware that they only have their jobs
because you voted for them, and so they are really
going to be careful about which percentage or which part
of the voting population.
Speaker 2 (06:13):
They're going to anger by making.
Speaker 1 (06:16):
These decisions because of course people have really strong opinions
about it. So yeah, you can gradually enroll or gradually
increase the payroll tax. Another thing could be an adjustment
to the cost of living calculations that they use.
Speaker 2 (06:27):
That's another opportunity or option there.
Speaker 4 (06:31):
Other people are in favor of just the benefit benefit
formula modifications, in other words, skewing this thing so high earners,
higher net worth people get a little bit lower benefit
and it excuse me, increasing benefits for lower income retirees
that maybe haven't been able to keep up with inflation.
(06:53):
Another thing being talked about is just increasing the taxable
earnings cap. Right now, the cap on having to pay
Social Security taxes is one hundred and sixty eight six
hundred dollars in twenty twenty four, meaning once your wages
go over that amount, you do not pay.
Speaker 5 (07:10):
Social Security taxes on those on those wages.
Speaker 4 (07:13):
Some people hate that, thinking that high income people aren't
paying their fair share. Flip side of the table, people
don't realize that even if you raise that wage gap,
you know, high income earners, social Security benefits are not
going to go up. Proportionally, So that's why people don't
like that idea as well. Another thought is just increase
(07:34):
the full retirement age age because people are living longer.
You know, right now we're at sixty seven. You know
what happens if you move that to sixty eight seventy.
You know, folks that are very close to retiring and
claiming Social Security, well, obviously they're going to think the
goalposts are getting moved on them again. I think, you know,
(07:54):
and maybe wishful thinking on my part. You have Representative
Hoyer who's in a safe district, he's been there forever,
he's not going anywhere. And you've got President Trump, who
you know, let's face it, he's not running for reelection again.
So I think you've got you know, when you've got
people that are safe in terms of being able to
actually make some plans and negotiate things without fear of
(08:19):
retribution from voters, you might have a good opportunity to
get something done.
Speaker 5 (08:24):
At least that's my thought.
Speaker 1 (08:26):
Yeah, you're listening to simply when you're presented by all
Worth Financial and Mimi Wagner along with Bob Sponseller talking
through the options, right, what could be on the table,
if someone in Washington were to put together some sort
of bipartisan effort to save Social Security so that when
we get to twenty thirty three, twenty thirty four, we're
not looking at a diminished benefit for all of us, right,
(08:50):
We're projecting seventy seven percent of your promised benefit. Yes,
there are options on the table, Bob. I was just
talking to Mike McConnell on our sister station WLW, you know, earlier,
and he was mentioning like, hey, they can just increase
full retirement age.
Speaker 2 (09:07):
You know it'll affect you, it won't affect me.
Speaker 1 (09:09):
And I was thinking, that's exactly the rub, right, the
people who are closer to retirement that won't be impacted
by that, they're like, go ahead, right, they moved the
goalpost on us once before. We're having to work longer
before we can claim full retirement age. They can do
the same thing for you guys. On the flip side,
younger voters are going to be like, hey, wait, we
(09:29):
want full retirement age at sixty seven.
Speaker 2 (09:32):
So you know, there's two sides to the coin.
Speaker 1 (09:34):
With every solution, then there's a group of people who
are going to be super happy about it.
Speaker 4 (09:40):
Yeah, and this is why we all have to be
adults here. You know, the politicians need to be adults,
and average American citizens need to be adults. And this
is what I mean by that. You know, every time
somebody talks about getting together and making some necessary adjustments
to the program, folks will immediately say, well, that's not
a bowld enough fix, that's not doing enough, and so
(10:03):
they kick the can down and do nothing.
Speaker 5 (10:05):
Well, doing nothing is not an option.
Speaker 4 (10:08):
You know, if we don't get something negotiated and done,
you know, you want to talk about pulling the rug
out from somebody wake up one day and have one
third of the benefits to everybody just go away. That
doesn't sound like a very good result for the American
citizens either.
Speaker 5 (10:25):
So you know, we are going to need to talk
about this.
Speaker 4 (10:28):
It's the elephant in the room that I guess nobody
wants to talk about, mainly for political reasons, but I
think the American people would be open to a bipartisan,
well fought out approach where people don't get everything they want.
Everybody's got to give a little bit, and we do
something for the long term good of the country that
(10:49):
keeps this very important retirement system Solvent.
Speaker 2 (10:53):
You know, Bob.
Speaker 1 (10:54):
Through the years, we have been really lucky on the
show to get some major players.
Speaker 2 (10:58):
In Washington to come on and talk to us.
Speaker 1 (11:00):
And I'm thinking about you know, retired Congressman Bob Portman
right to Republican.
Speaker 2 (11:06):
We've also had Sharon Brown on this, you know, Democrat.
Speaker 1 (11:09):
Both of them have talked about, you know, policies that
they're really passionate about.
Speaker 2 (11:14):
With both of them and others we've had on the
show through.
Speaker 1 (11:17):
The years, I brought up Social Security and said, hey,
what about this right, most popular, without question, most popular
program in that the federal government gives out, yet so
many questions about.
Speaker 2 (11:29):
The future of it.
Speaker 1 (11:31):
Silence silence, right because it's like, oh, you know, and
they'll kind of generally talk through options and then I'll say, okay, well,
what are you leaning for? What do you think makes
the most sense in you know, these politicians And I'm
not pointing a finger at anyone, because I really do
understand the situation that they're in, but no one wants
to talk in specifics about what they think will save
(11:52):
this program because nobody wants to anger any voters.
Speaker 2 (11:55):
I agree, it's going to take someone likely who's.
Speaker 1 (11:57):
Bold, but also, Bob, I think you're point of who
has nothing to lose politically, who might finally bring this
to the table. Of course, stay tuned, we'll certainly see
how this all plays out.
Speaker 2 (12:08):
Here's all Worth advice I.
Speaker 4 (12:09):
Mean Amy Wagner for Amy Wagner twenty twenty eight. If
you've heard it here first, Amy, do it. You are
the bold leader American needs. I will be your campaign manager.
Get it done.
Speaker 5 (12:20):
Amy.
Speaker 1 (12:21):
I have one vote and it is from Bob sponseller.
I appreciate your vote of confidence.
Speaker 2 (12:25):
Bob. Here's the all Worth advice.
Speaker 1 (12:26):
You really can't control what happens with social security. Focus
on what you can control, a well diversified portfolio that
has social security as just one part of it.
Speaker 2 (12:36):
And yes, I would appreciate your vote.
Speaker 1 (12:37):
Coming up next, we're tackling taxes, luxury items at Costco
and what to do with an IRA that's left behind.
You're listening to Simply Money presented by all Worth Financial
here in fifty five krs the talk station. You're listening
to Simply Money presented by all Worth Financial. I mean
(12:58):
Me Wagner along with Bob's sponseller. If you miss something
in our show, if you miss our show one night,
or maybe here's something and you want to share.
Speaker 2 (13:04):
It with someone else.
Speaker 1 (13:05):
You want them to hear it for themselves.
Speaker 2 (13:07):
We've got a daily podcast for you. Just search Simply Money.
Speaker 1 (13:11):
It's on the iHeart app or wherever you find your
podcast for you to download, listen and share it with
your friends. Coming up at six forty three, testing your
knowledge of stocks in bonds in Everybody's favorite fact or fiction. Okay,
if you are in the middle of preparing your tax return,
there might be something that you are forgetting to include.
Speaker 2 (13:31):
Well, I'm seeing this more and more often.
Speaker 1 (13:33):
I actually had someone in my office recently whose wife
had a pretty good business going on Etsy, Like built
it from nothing and it's now making a sizeable income
every year. Obviously this is not your typical kind of
W two income, but you gotta claim it.
Speaker 4 (13:52):
Yeah, the IRS is paying closer attention to these kinds
of transactions, you know, through online retailers, you know, self
created businesses. Like you said last year, if you received
over five thousand dollars in gross income from sales of
online platforms like Etsy, eBay, Poshmark, you would have received
a Form ten ninety nine K from that online vendor
(14:15):
and that that information does get passed along to the irs.
That threshold is going to decrease to twenty five hundred
dollars in twenty twenty five and only six hundred dollars
in twenty twenty six. So here's here's the additional catch.
Even if you don't receive a ten ninety nine K,
you are still technically required and responsible to report any
(14:38):
income from these sales on your tax return, so you know,
you know, whether it's audit or what have it. People
just need to be aware that the threshold's coming down.
And I think another thing to remember amy is anytime
anybody has any kind of self employment business, it's not
only it's not only important to keep your revenue seats,
(15:00):
but also your expenses because a lot of people are
not well informed on what they can deduct in the
way of business expenses. So bottom line here is, if
you're running a business like this, you do need to
start getting well versed in how to report you know,
tax taxable activity from a business to make sure you're
(15:21):
doing it number one and doing it correctly number two.
Speaker 2 (15:25):
Yeah, excellent point. Okay.
Speaker 1 (15:27):
I also want to talk about a somewhat surprising revelation.
This is from Costco's chairman, and he said, listen, you
come into Costco because you are buying I don't know
whatever it is in bulk, and it's going to be cheaper.
But also we sell some luxury items here at Costco,
and those items are currently like flying off the shelves.
Speaker 4 (15:47):
Yeah, he shared, like things like Rolex, watches, don Perion, champagne,
ten caret diamonds. Amy, I have to ask, is this
why you were not here with us on Monday? Were
you at cost loading up on ten carrot diamonds?
Speaker 5 (16:03):
Please?
Speaker 2 (16:03):
I took a Costco day. Yeah, I got a Rolex
for you. I got a ten carrot diamond for me.
I gotta tell you.
Speaker 1 (16:10):
I mean, I know they've got like big, nice TVs
there in electronics. I had no idea that they're selling
things along these lines.
Speaker 2 (16:18):
But apparently others are.
Speaker 1 (16:20):
And the interesting thing is, yes, of course it's attracting
affluent shoppers who would be in the market for these
things anyway, but I also think it's exposing more average
shoppers who wouldn't necessarily be strolling by a ten carrot.
Speaker 2 (16:33):
Diamond to these things.
Speaker 1 (16:35):
And I think they're kind of maybe having a treat
myself moment indulging in these kind of high end items.
Speaker 2 (16:42):
I think, you know, once again everybody loves the deal.
Speaker 4 (16:45):
All right, Well help me out here, Amy, because I
try to stay out of all of these places.
Speaker 5 (16:49):
I don't like to go into stores period.
Speaker 4 (16:52):
Thankfully I have a wife who does most, if not all,
of our shopping. But hey, I have to ask, in
all seriousness as somebody who who knows a lot about,
you know, behavioral finance. Is it just if people walk
into a Costco and see anything, even a Rolex watch,
their their thoughts immediately think well, if it's at Costco,
(17:13):
I can have one too, and it's affordable because Costco
is for quote unquote average middle you know, Middle America.
Is that some of the psychology behind why this stuff's
flying off the shelves?
Speaker 2 (17:26):
I think it is.
Speaker 1 (17:27):
I think when you walk into a place like a Costco,
you have a different level of expectation of cost, and
so when you're coming across things that you hadn't even
thought about, that weren't even on your radar, like a
Rolex watch, I think maybe if you're not doing your research,
you're going to assume that it's cheaper there and so
you know, I would say, hey, if you are a
(17:47):
costco shopper, do your research before you buy any big
ticket item, regardless of the fact that you got it
from Costco. Interesting though, research along these lines, or maybe
this is just anecdotal. There was a Porsche dealership that
put cars into a store in Seattle. They sold out
of inventory in a week. Porsches in a Costco. It's
(18:09):
like these two things don't belong together, but somehow they
do and people are lapping them up. So go into
Costco with your guard up right. You don't want to
come out with a twenty thousand dollars purchase that you
were not planning on making and it's nowhere in your budget.
Every Sunday you're going to find our all Worth and
Vice miss and Studdy inquire. Here's a preview. This is
from Dr and Green Township. I lost my husband last year.
(18:32):
We're really sorry to hear about that, but he had
an IRA that I received. Haven't wanted to deal with
it until now. Can you help?
Speaker 3 (18:39):
Well?
Speaker 4 (18:39):
Yeah, first of all, sorry for your loss, ma'am. A
couple thoughts is if your husband was at require a
minimum distribution age, you know over seventy three years old.
There was a require minimum distribution that should have been
taken out last year.
Speaker 5 (18:56):
Hopefully it was.
Speaker 4 (18:58):
If it wasn't, you might need to get with your
CPA and make sure you.
Speaker 5 (19:02):
Rectify that situation.
Speaker 4 (19:05):
The good news it's very easy to transfer that IRA
from your husband's name and now have it be an
IRA in your name. So you know, with a death
certificate and a little bit of administration work from from
a good advisor, you can get that buttoned up here
very quickly and easily, and you.
Speaker 5 (19:25):
Should be good to go.
Speaker 4 (19:26):
So those those will be the first two things I
would advise. Make sure the require minimum distribution, if there
was one for twenty twenty four was taken. If not,
get that cleaned up, and then get that IRA into
your name and have it well managed for you moving forward.
Speaker 1 (19:42):
Coming up next investment solutions for those who are maybe
scared the death of the markets, you do have options.
You're listening to Simply Money and presented by all Worth Financial.
You're in fifty five KRC the talk station. You're listening
to Simple Money presented by all Worth Financial. I mean
you wagneralone with Bob Sponseller. We often talk about the
(20:04):
price of admission into the markets, meaning you get to
take advantage of the upside of when these companies are
doing really well. But also there's gonna be a few
times when you're checking that four oh one k and
that balance is going to be down. But from time
to time I come across some investors who just struggle
so much with the law. I cannot sleep bitnight if
(20:26):
they think they're going to lose any money from their investments.
Speaker 2 (20:30):
Of course, no one wants to do that.
Speaker 1 (20:32):
But these bob are conversations we're having all the time.
Andy Stalder, chief investment Officer, coming back tonight, as we
talk about kind of investment solutions. Right if this is
something that sounds familiar to you, maybe you lose sleep
over this.
Speaker 2 (20:46):
I want you to listen up.
Speaker 1 (20:47):
We have maybe some potential suggestions for you.
Speaker 6 (20:50):
Andy, several several years ago.
Speaker 1 (20:53):
We weren't necessarily talking about these things as options, but
we have some. We do have some options for investors
right now.
Speaker 3 (21:01):
Yeah, there's quite a few.
Speaker 7 (21:03):
When you think about what's out there in terms of
investment solutions, it's there's a schmorgesport now when you think
about client needs and client concerns certainly the concerns of.
Speaker 3 (21:21):
I know I need to be invested.
Speaker 7 (21:22):
I know I want to be invested, but I know
the market's out to get me, so as soon as
I go in, the market's.
Speaker 3 (21:27):
Going to go down.
Speaker 7 (21:28):
And I'm sol right. I mean, I think that's just
a typical mindset that a lot of people have. And
you know it could happen, market could go down, but
obviously for the longer run, you're better off staying invested
regardless of those short term pullbacks.
Speaker 3 (21:42):
Now, if you have some real.
Speaker 7 (21:44):
Concern and like you're losing sleep at night, but you
know you need to have it, so you still want
that stock market upside without the full risk of the downside.
You know a couple of solutions that come to mind.
One is what we call structured notes and another buffered ETFs,
and they both behave very similarly. They both give you
(22:05):
that upside market participation participation, but amize that downside risk.
So you may not get all of the market upside.
If the market goes up fifty thirty percent in a year,
you may not get all of it. Conversely, the market
goes down ten twenty percent, you won't get all of
that as well. So Essentially you're getting a floor on
the downside and a bit of a ceiling on the upside,
and ideally this would help, you know, reduce your daily stress, right,
(22:29):
so you don't have to worry about those market swings.
You don't have to really worry about, oh, what are
our futures doing today or what's going on with the economy.
It's a little bit more of a set it and
forget it approach. So on the structured note side of
things and the buffered ETFs they behave similarly from that
perspective where.
Speaker 3 (22:46):
You have a cap and a floor.
Speaker 7 (22:49):
Now the big difference is i'll call liquidity and maybe
also knowing what you're going to get. So structure notes
those are really more than anything else or like a
note issued by a bank, I think like JP Morgan
as an example.
Speaker 3 (23:06):
Then they're essentially.
Speaker 7 (23:07):
Guaranteeing you that you'll get the floor and the ceiling
based on whatever underlying stock market. That structure noticed ted too,
So it could be like the S and P five hundred, right,
so if that S and P five hundred goes up
ten percent, maybe you get all ten percent. If it
goes up twenty percent, maybe some only get ten percent,
But if it goes down ten percent, maybe you only
lose two percent.
Speaker 3 (23:27):
So there's going to be like a.
Speaker 7 (23:28):
Floor in the ceiling and it's going to you'll get
that payout, you know, assuming JP Morgan doesn't go wonder
because nothing's ever guaranteed. But uh, when you look at
it from that perspective, it's pretty safe and you know
what you're going to get, and it has a set
start date and a set end date.
Speaker 3 (23:42):
Now, the difference with.
Speaker 7 (23:43):
A buffer ETF is that it's you get daily liquidity,
meaning you can go trade it on a stock exchange
and get in and out and don't have similar terms.
Speaker 3 (23:53):
However, to really enjoy that buffer of the floor.
Speaker 7 (23:58):
And the ceiling, you need a whole for You need
to look at i should say over one year time
horizons and you'll see a little bit more wiggle room,
but you.
Speaker 3 (24:08):
Should be getting pretty close to what you're expecting.
Speaker 4 (24:11):
So Andy, when you talk about you know the fact
that the buffer ETFs do have daily liquidity, but you
strongly suggest and especially with the strategy that you and
your team developed here at all Worth, when you get
into that strategy holding it for at least one year,
talk about the why behind that. You know, usually when
people have the option for daily liquidity, the next question is,
(24:34):
well why should I hold that for a year?
Speaker 5 (24:36):
Talk about the benefits of that.
Speaker 7 (24:38):
Well, when you think about the holding it for a
one year periods, you have to understand what the ETF
is actually invested in. And it's invested in stock options,
which can be very complex. But they're going to have
time frames depending on the ETF, but they're going to
have time frames that roll for every year. Could be
(24:58):
March to March, A to April, May to May. So
the point of these ETFs is to capture that floor
and ceiling over.
Speaker 3 (25:08):
That one year interval.
Speaker 7 (25:10):
Now you know one of the things that you know
can add some value.
Speaker 3 (25:12):
I think is really interesting.
Speaker 7 (25:14):
One way that when we look at it from like
a i'll call it a tactical rebalancing position, is that
we look to essentially optimize upside potential while keeping that
downside protection in place. So you know, for example, as
the market rises in value, you know what you could
do is reallocate those ETFs so you can have like
(25:35):
a May s and P five hundred series, and two
you might move it to a July series. So what
you're trying to do. Because we do this here internally
just you know, it's an algorithmic uh smart trading process
that we have built in. We can reallocate the ETFs
to essentially reset that downside buffer and lock in gains
(25:57):
and allow us to maintain whatever downside buffer we were
looking at, maybe it's ten percent, maybe it's fifteen percent,
while at the same time taking advantage of market growth.
So as the market rises, we're going to reallocate the
ETFs to reset the buffer and lock and gate.
Speaker 3 (26:13):
Now, if the market declines.
Speaker 7 (26:15):
What we would do is we would stay invested for
a bit to exhaust the majority of that buffer and
then reallocate the ETFs to increase participation.
Speaker 3 (26:24):
In the upside.
Speaker 7 (26:24):
Now, I know that can sound somewhat complicated and complex because.
Speaker 4 (26:28):
Well and as you explained it, you know, the thought
that comes to my mind is the old kids don't
try this at home exactly. You know, this is what
it's great to have you and a team you know,
that are monitoring this all day, every day, and you
know when to make the adjustments, and you do it
for these strategies that we have in place, and so
(26:49):
the client doesn't have to think about it.
Speaker 5 (26:51):
It's being done for them and I love that.
Speaker 7 (26:54):
Yeah, and it's a it can be really powerful and
provide that peace of mind and key. So with these
buffer ETFs, I mean that's where when I mentioned the liquidity,
So you can if you want, if you choose like, hey,
I don't want these buffer ets anymore for whatever reason,
maybe you need to go, you know, buy a house
or whatever it is, you can sell them that day
(27:16):
and the trade just like a stock. So it's very
easy to get in and out with a structured note.
Speaker 3 (27:21):
You know.
Speaker 7 (27:22):
I think the advantage of a structure note is it's
more certain what you're going to get at the end
of the day because you're not going to see the
inter day volatility. With that being said, they do have
maturity dates because technically they're a note or a bond
if you will, issued by a bank, So you can
sell them, but it might you might not be able
to sell them as quickly as you could the ETF.
Speaker 3 (27:45):
So if you if you value.
Speaker 7 (27:47):
Liquidity, that's where the buffer.
Speaker 3 (27:49):
ETFs come into play. If you value.
Speaker 7 (27:52):
Significantly significant certainty, I should say, uh, that's where the
structured notes come to play. But they do the same
thing It's just kind of depends whether or not you
to have that certainty a little bit higher or that
liquidity a little bit better.
Speaker 1 (28:03):
Yeah, I don't think you have to be a sophisticated
investor right for this to make sense for you. But
I will go back to the point of don't try
this at home.
Speaker 2 (28:11):
Either.
Speaker 1 (28:12):
One of these could be fantastic options. And this is
a look yourself in the mirror kind of proposition. If
you do lose sleep when there's volatility in the markets,
there are options. I would suggest finding a financial advisor
that you can trust, a.
Speaker 6 (28:25):
Fiduciary to partner with. But certainly if.
Speaker 1 (28:28):
You're working with someone, bring up these options if you
are someone who really really cannot.
Speaker 6 (28:34):
Just ride the waves of when the markets are down.
Speaker 1 (28:36):
Great perspective, as always from our Chief investment Officer, Andy Stout.
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.
Speaker 2 (28:51):
I'm Amy Wagner along with Bobs Bond tell or. If
you've got a financial question you can't.
Speaker 1 (28:55):
Figure out, we can help you out. There's a red
button you can click on while you're listening to the show.
It's right there on the iHeart Apple cord. Your question
it's coming straight to us. And along those lines of
getting to your questions, it's time to play fact or fiction.
Maybe we can answer some of them. Now we're testing
your knowledge of stocks and bonds. Let's get to it,
mister sponseller, fact or fiction. The majority of stock market
(29:19):
gains over time come from a small percentage of companies.
Speaker 4 (29:23):
That's actually a fact, and I was curious, so I
actually did some research on this just to come up
with more specifics if you look. And a lot of
this depends on the timeframe with which you want to
look at it. But let's just pick ten years. So
over the last ten years, the top ten to twenty
percent of performing stocks contributed eighty to ninety percent of
(29:45):
the total return of the S and P five hundred.
The flip side, the bottom fifty percent of stocks in
the index contributed only twenty to forty percent of the
total return. So yes, a small, a relatively small number
grow stocks tends to contribute a large percentage of the
gains over a reasonable period of times.
Speaker 6 (30:06):
Another perspective, I just want to throw in here.
Speaker 1 (30:08):
This is why we've been talking about the Magnificent seven
right so much over the past couple of years. They
have been driving those magnificent returns we've all seen in
our four one case over the past year. So at
the same time, there's lots of research that shows that
by the time that a company like Nvidia becomes a
household name, the major growth that it's seen has.
Speaker 6 (30:29):
Already been exhausted.
Speaker 1 (30:31):
I don't know if that's the case with that particular company,
but the reason why you want to be diversified is
because tomorrow's Nvidia's tomorrow's companies that could be fuelling major
growth will hopefully be somewhere in your portfolio, maybe something
that you're not paying attention to today, but man, tomorrow,
you're going to be really glad that you got it
in there. All right, here's another one fact or fiction.
(30:53):
If a stock has a low price to earnings ratio,
it's automatically a good value investments.
Speaker 5 (31:00):
That's fiction.
Speaker 4 (31:01):
And uh, you know the reason it has a low
price to earnings ratio is it's it's it has a
low price and you know, we talk about this all
the time. What matters and is earnings earnings earnings, And
I will say what matters more than anything is earnings growth.
I like to look at price divided by earnings growth,
(31:23):
because if a stock's not growing it's earnings, it's probably
not going to go anywhere in a hurry. And I
know a lot of these low pees stocks have high dividends,
and that's attractive to people. And you know, people like
the idea of buying things on a discount. But a
company that is growing at three times the rate of
(31:44):
a company that's not growing, it's going to warrant a
higher price, and most of the time for a very
good reason, as long as that growth continues.
Speaker 1 (31:54):
You brought up dividends, So I'm going to throw this
one at you. Factor fiction. Stocks with high dividend yields
all always the best investments, that's fiction.
Speaker 4 (32:04):
One thing you got to watch with high dividend yielding
stocks is the movement of movement of interest rates. So
you know we've noticed this in recent years. When you
see interest rates start to spike, the price of a
lot of these high dividend paying stocks will fall because
now all of a sudden, government bonds or less risky
investments are worthy competition for these high dividend stocks that
(32:29):
because of the earnings component, they can be more volatile,
So you got to be careful there making making a
broad based assumption.
Speaker 2 (32:38):
I had some people in my office recently.
Speaker 1 (32:41):
Who had built, over the course of several years, a
dividend strategy to replace all of their income. And when
it works, it works great. But you know, my concern
for them as investors is you know something, you know
fundamentally changing that and all of a sudden, it's a
(33:04):
house of cards. And so I like dividend stocks is
a portion right of maybe potentially your portfolio, especially for
those who are retired and unfixed incomes, that these can
make sense, But I don't.
Speaker 2 (33:17):
I don't.
Speaker 1 (33:18):
Dividend producing companies are not the ones that we typically
see a lot of growth from.
Speaker 4 (33:22):
That's right, and you know that's a longer conversation, but
you know, I think we've made our point here.
Speaker 2 (33:28):
Factor fiction.
Speaker 1 (33:29):
Government bonds generally considered to be safer than corporate bonds.
Speaker 4 (33:33):
That would be a fact generally, and it's because with
government bonds there is no credit risk. If you believe
that the United States government is going to remain in
existence and not default on their bonds. Whereas when you
when you loan your money to a company, you are
taking on the credit risk of that company. So that's why,
(33:55):
generally speaking, government bonds are going to be safer than
corporate bonds, and that's why they generally yield a little
less or sometimes a lot less than a corporate bond.
Speaker 1 (34:04):
Coming up next, we are taking you inside.
Speaker 6 (34:07):
Bob's World of Wealth.
Speaker 1 (34:09):
You're listening to Simply Money presented by all Worth Financial.
Here in fifty five KRC the talk station listening to
Simply Money presenting my all Worth Financial. I'm Emmy Wagner
along with Bob's sponsller Money, Money Money. We can only
be talking about one thing. This is Bob's World of Wealth.
Speaker 2 (34:32):
Bob, lay it on us.
Speaker 6 (34:33):
What do you got for us?
Speaker 4 (34:35):
Well, this isn't a very exciting topic to cover, but
I think it's a very important topic to cover, and
one that I just see coming up far too often
in meetings with clients that I've worked with for years
and years and years, and also with prospective new clients.
And that's the whole idea of dovetailing beneficiary designations with
(34:57):
your legal documents. We'll start at the top, the one
you know, I think misunderstanding that's out there frequently is
that your will is going to or your trust, well
especially your will is going to have anything to do
with how your iras in your four oh one k's
passed down to your beneficiaries. So the big reminder here
(35:20):
is that iras and retirement plans do not go through probate. Therefore,
they do not pass through your will. And even if
you've taken the time to do a great will and
a great trust, all that matters is what's listed on
that beneficiary form, both primary and contingent beneficiaries. That's number one,
(35:40):
and I find people remain very confused about that, and
that's something that you have to be checking often. You know,
whether you do this yourself or work with an advisor,
you know you've got to be looking at those beneficiary
designations and make sure those are current and up to
date with what you're wishes are.
Speaker 1 (36:01):
Let me give you an example of where this can
really go a right right. So, say you were married
for ten fifteen years. You had a couple of jobs
during that time, so a couple of old four to
one k's and you just whatever, didn't pay a lot
of attention to them. But they're you know, significant assets
growing through the years, got divorced, got remarried, never changed
(36:22):
the beneficiaries on the old four to one k's because hey,
you now have an updated estate plan with your new spouse,
right your new husband or wife, and you've got a
will or a trust, and so that's you know, I
think in a lot of people's thinking, that will supersede
anything that I filled out one hundred years ago.
Speaker 6 (36:39):
When I had this old job, in this old.
Speaker 2 (36:41):
Four to oh one K.
Speaker 1 (36:42):
And then something happens to you, and the bad news
for your loved ones and your new spouse is that
that old four to one K with that beneficiary that
never got updated, does matter. What's in your will, does
not matter what's in your trust. It is going to them.
Speaker 3 (37:00):
Yep.
Speaker 4 (37:02):
And I want to touch on one other thing. You know,
when you do name beneficiaries, and now we're mainly talking
about contingent beneficiaries, because I think most people, especially those
that are married, you know, we all know enough to
name our spouse, our surviving spouse is the one hundred
percent primary beneficiary. What can get a little tricky and
(37:22):
confusing for people is the contingent beneficiaries.
Speaker 5 (37:25):
And I want to bring up a Latin term called
per sturpees, and what that means in the Latin is
by branch.
Speaker 4 (37:33):
Here's what I mean. You know, for example, my wife
and I have three sons. I've named my wife as
primary beneficiary, my three sons equally as contingent beneficiaries per sturpees.
So what that means is, at the time that my
wife and I pass away, let's just say one of
our three kids is no longer living, that that child's portion,
(37:57):
if you will, is going to go to his children.
If you don't have that per stirpies named the child
that passed away, his family is completely disinherited from that account.
You know, it's just going to go. Whoever's left gets
the money split fifty to fifty instead of thirds. So
(38:18):
again it all comes down to personal preference. But make
sure you've talked about this and reviewed it so that
your beneficiary form actually reflects what you want to happen.
Speaker 1 (38:28):
It's state planning, incredibly important to make sure that your
wishes are carried out after you're no longer here.
Speaker 2 (38:33):
Thanks for listening.
Speaker 1 (38:34):
You've been listening to simply money presented by all Worth
Financial here in fifty five KRC.
Speaker 6 (38:38):
The toxation
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