Simply Money

Episode Transcript

Speaker 1 (00:06):
Tonight. This volatility we've been experiencing lately, is it a
rough patch? We're looking under the hood. You're listening to
Simply Money presented by All Financial Immy Wagner along with
Bob Sponseller. Okay, I think we've seen a little bit
of volatility lately, but we also need a little perspective here,
and that's why we're bringing in All Words Chief investment
Officer Andy Stout. You know, he's managing more than twenty

(00:27):
five billion dollars worth three from right here in Cincinnati,
so he's keeping a close eye on these things. Andy. Obviously,
if you're managing that much money, a lot of volatility
in a down market is going to have you a
little bit concerned. Give us your perspective here.

Speaker 2 (00:43):
I mean, I might be a little bit concerned, but
I wouldn't really call this much of a down market.
I mean, what we've seen so far, amy is really
just normal volatility. If you look at what's been going
on in the market this year, first of all, the
S and P five hundred, which is your five hundred
largest US equ it's actually as of last Friday higher
than one point four percent for the year. So it's

(01:06):
hard to really call this much of a down market.
We just had a record high a couple of weeks
ago on February nineteenth, and in reality we're only like
four percent off of that record high. So yeah, it's
pulled back a little, but I would hardly call this
a down market, at least when looking at large US stocks.
Now small cap US stocks they have struggled a bit more,

(01:26):
and the Nasdaq has struggled also. The NASDAC is about
two percent lower over the year, and that's you know,
it is seven percent off of its February nineteenth high,
and a lot of that has to do with some
concerns around AI, which we've talked about a lot lately,
especially in regards to Navidia and the threat from some
Chinese AI startups. Now, you know, with all of that

(01:49):
said and done, you know, from for some perspective, let's
just go back and look at US large caps, were
we saw a four point six percent pullback. I mean,
that's really nothing. If you go back to ninety maybe
the average intra year drop it's right around fourteen percent,
So swings from a high price in any calendar year

(02:09):
to a lower price, it's about fourteen percent we're talking
four point six right now. I mean it's this is
not anything currently now. Obviously anything can happened in the future.
Nothing is ever guaranteed. But you know, it's normal turbulence
right now. This and granted there're sent more months left
in the year, so it's a little bit early to
call it, you know, say this is all the volatility
we're going to get for the year. But with all

(02:31):
that said, this is well within what I would call
normal balance. And to answer or address, I should say
one of the things you mentioned the very beginning. Now,
I'm not losing any sleep over this.

Speaker 3 (02:42):
And you talk about bonds and international equities. I mean,
those are two much maligned sectors of the market here
over the last couple of years. Everybody's kind of gone
to sleep on these and even complained a little about them.
They're actually up nicely, you know, year to date so
far in twenty twenty five.

Speaker 4 (02:59):
Correct.

Speaker 2 (03:00):
Yeah, So a lot of investors might have what's called
your sixty forty portfolio, and some people might be wondering, well,
what is the sixty and what is the forty. Well,
typically at sixty percent stocks forty percent bonds, and that's
just something that's thrown out there. You know, in the
financial world, a lot of people have a general allocation
and when you look at the bond side of the world,

(03:23):
you have seen that over the past couple of years,
as you noted, you know, it hasn't really been too
beneficial to have them because we've seen a big increase
in interest rates. Now, remember interest rates and bond prices
move in opposite directions. It's like a teeter totter. One
goes up, the other goes down. Recently, though, we've seen
interest rates pull back pretty substantially, and what you have

(03:45):
is that the bond market is actually higher for the year,
almost three percent, and so that's you know, has outpaced
US large caps small caps certainly as well as the NASDAC.
And it's really the argument that you want to have
a diversified portfolio and not just be all in on
one or two companies or one or two areas. And

(04:06):
you also mentioned international stocks. Yeah, they've been doing great
this year. The international developed markets, which consists of Europe, Japan,
Australia primarily, they're up about seven percent for the year.
Merging markets, which is India, China, Mexico, they're up about

(04:27):
two point three percent in that general range. So when
you look at it from that perspective, you know, having
a well diversified portfolio with that, what we think it'll
continue to do is, you know, smooth out returns, allowing
you to have financial, you know, peace of mind, sleeping
at night and really focusing on other things other than

(04:49):
you know, what the investment account might be doing on
any given day.

Speaker 1 (04:54):
You're listening to Simply Money and presented by all Worth
Financially and me and Me Wagner along with Bob Sponseller,
and we are joined by our Chief investment Officer, Andy Stout.
If you feel like you have or maybe need a
dramamine right now from a little bit of market volatility, Andy,
I love your perspective. Hey, this is normal and actually
it's not even that bad. Do you think that investors
just kind of forget what this feels like when we've

(05:16):
come out of a period where we've had very little volatility.
And also, Andy, I'm wondering what's your advice? Is it
as always stay the course well.

Speaker 2 (05:27):
In terms of you know, dramamine, certainly hopeful hope that
you know, this interview doesn't cause people to get that
nausea and have to take hopefully we can hopefully we
can you know, help alleviate that, right. So yeah, I
mean if you just look at history, you know, if
you go back and look at the normal volatility in

(05:51):
the market, you know, you see markets go down on
a pretty regular basis and then markets recover and roughly
you know, since nineteen eighty eighty percent of the counter
years are positive and you know, obviously again no guarantee
that continues in the future, but it suggests that you know,
the time is on your side, and whether you're not

(06:12):
your time horizon is you know, five years or fifteen years,
you know, making sure you have that right investment mix
for your personal long term time horizon. Everybody has a
different long term I mean, we're not all pension funds
with one hundred year time horizons. I mean, that's just
absolutely ridiculous. Instead, having that investment mix and that financial
plan built for you know, your goals, whether that's a one,

(06:34):
three or five or ten year goal, whatever it might be,
twenty year goal, that's what's really imperative. So would I
suggest that you will run for the hills or change
everything up, No, I thank you. If you have questions.
Obviously you want to probably talk to somebody and make
sure you have a good plan in place. I mean,
that's really what it comes down to, because I mean, ultimately, uh,
staying disciplined is really the key to long term success

(06:58):
because if you look at turns from investors who make
emotional decisions, they tend to underperform the investors that don't
make emotional decisions.

Speaker 3 (07:12):
Andy, I love the information that you update us and
our clients on all the time, and I want to
touch on a couple points that you always do a
great job of reminding us about. You know, you mentioned
the average intra year drop going back to the year
two thousand, somewhere in the fourteen to sixteen percent range
intra year, But during that same twenty four year time period,

(07:35):
the average return was actually up nine percent for the market, right.
And then you know you talked about short term versus
long term markets have been higher ninety percent of the
time over every three year period since nineteen fifty.

Speaker 4 (07:51):
That's a pretty good historical.

Speaker 3 (07:53):
Reference point to remind ourselves on when we see this
headline risk in short term volatility.

Speaker 2 (08:01):
Yeah, that's a great point, Bob. I mean, one thing
you hear a lot is the Wall Street casino, and
it sounds really scary and ominous, right, And there's a
reason for that. If you look at the returns on
just B S and P five hundred index on any
given single day, the chance the chance that you see
a positive return is pretty close to a coin flip.

(08:22):
It's fifty five percent. The chance that you see a
negative return is forty five percent. That's not really odds
that are stacked too much in anyone's favor, and that's
why market timing can be really really tricky. But when
you look out over a one year time horizon or
three year time horizon, those odds significantly improve in your favor.

(08:43):
So you know, you mentioned that for every three year
period going back to nineteen fifty, you see positive returns
ninety percent of the time. That's impressive. Even shorten that up.
If you go back look at every one year period,
it's seventy nine percent of the time you see positive
return so almost a eighty percent. That's still a really
really good number. And if you look at you know,

(09:05):
a five year or a ten year I mean, then
you're getting into and the ten year especially, you're getting
to almost like at ninety seven percent of the time
positive returns. I mean, it's just ridiculous how much you
know you can benefit from staying disciplined and not trying
to time that market and really using time to work
on your side.

Speaker 1 (09:23):
Andy, I like your point about being well diversified, having
a financial plan, knowing your time horizon, right. I think
fundamentally that's how you survive things like crazy headlines all
over the place and in short term volatility. But we
also are huge proponents of our listeners being well educated

(09:44):
on what's going on. Some of this is just noise,
and some of this could have a larger impact. What
do you say, Hey, here's the noise you can not
pay attention to. Here's what I might focus on right now,
because this might actually have maybe a larger impact on
either the broader economy or the market's long term anything
like that that's on your radar right now.

Speaker 2 (10:06):
Well, the one thing that I'm always watching is the
Federal Reserve and their actions, because that has an impact
on whether or not they end up supporting the economy
or trying to slow down the economy. And obviously they're
trying to slow down the economy to a degree to
essentially keep inflation rained in. So that's you know, something

(10:27):
to definitely watch. And if you just looked over the
past week, there was some changes in terms of what
the market was pricing in in terms of Federal Reserve
rate reductions this year. So essentially there are now roughly
three quarter point rate cuts priced in this year and
because of that, that means the market expects the rates

(10:49):
short term rates to go down, and that's why you
see bonds having done well here recently. So watching the
Federal Reserve and making sure that you know, we have
a deep understanding of what they're doing and why they're
doing it, because it's a very nuanced approach that one
has to take when trying to analyze this, because the

(11:10):
Federal Reserve could be cutting for a myriad of reasons.
One of the scariest is they believe there's a recession
and that would hurt corporate profits and that would in turn,
you know, hurt equities. Now at the same time, if
they believe that they're or if we believe they're cutting
interest rates ultimately, because they're getting inflation under control and

(11:30):
they've had a stance that's been what we'll call a
tight monastery monetary or restrictive monetary policy, pulling that back
a little bit just to get more balanced. Well, that's
certainly not a bad thing. That's actually a good thing.
So having an understanding of you know, that is really critical.
So you know, we're paying attention to quite a few
things and watching it really close. The Federal reserve is

(11:52):
absolutely one of them. There are some things going on
in the market as well. I mean, if you look
at some of the recent data, it could have been
a little bit scary incident. Last week we got some
trade data that showed trade net trade, so imports and exports.
We saw that essentially, you know, come down a lot
the net imports. So when you look at that, that
would suggest that oh, maybe people, you know, we're people

(12:16):
are buying less of US products and we're buying more
importing more, and that's not necessarily a good thing. Although
if you look at the underlying data, and this is
why you got to take it really to the next level,
maybe it's because you look at the underlying data, what
it shows is that most of that imports came from
industrial medicals and more specifically gold, and a lot of
that has to do with European banks specifically, Uh, you

(12:42):
know London as an example, the Bank of England and
buying less gold and creating less demands, so that has
a big impact on that. So there's this net trade
going on. So if you just look at it face value,
you know, that's something you got to take into consideration.
And speaking of trade, obviously we're watching the tariff situation.
I mean there's a lot going on right now with Mexico, Canada,

(13:05):
Canada and China and that's going to continue to evolve.
Now we'll keep an eye on that.

Speaker 1 (13:12):
For sure, Andy, I mean appreciate that. We know you
will as well. Here's the all Worth advice your market turbulence.
It's normal, so a short term drops. Remember markets have
been higher ninety percent of the time over every three
year period and it always hits record highs over the
long term. Next arise and four okay, millionaires, What can
that teach us about achieving financial freedom? And Groger's CEO

(13:34):
checking out for good. You're listening to Simply Money presented
by all Worth Financial here on fifty five KRC the
talk station. You're listening to Simply Money presented by all
Worth Financial. A Memi Wagner along with Bob's spondsellers straight ahead,
testing your knowledge about tax strategies, estate planning, and a

(13:55):
whole lot more. We've got our fact or fiction segment.
One of the things I think we do a really
good job about here on the show, not to pat
ourselves in the back, but is to keep a close
eye on what's going on on our hometown teams, right
your Procter and Gambles, your General Electric Aviation, and your
Kroger in Today, there are major headlines coming out of Kroger,

(14:18):
their longtime CEO, Rodney McMullen stepping down. Not a lot
of details here yet, but what we do know is
that there has been a bored investigation into his personal conduct,
and all Kroger is saying is what they found of
McMullen was inconsistent with Kroger's policy on business ethics. I

(14:40):
Am sure more information will come out about this over time,
but this is a major shift in leadership. He has
been there for a long time, and I think the
perspective that I'm going to have as we watch this
all unfold is this is a well run company. It
always has.

Speaker 3 (14:59):
Been, and I think that's exactly the right perspective to
have amy. And this is why Kroger has been such
a great company for decades and eons. Is none of
these well run companies are bigger than any one person.

Speaker 4 (15:13):
Yes, so it's.

Speaker 3 (15:14):
Important to have great governance in places. It's great to
have accountability in place. And without even speculating about what's
gone on, it appears that governance has been in place
and things are being handled and that's a good thing.

Speaker 1 (15:29):
Yeah, people who've been in the company for a long
time have have stepped dips, stepped up. So there will
be a continuation in how this company is run. Well,
we we'll wait to see how this all plays out.
But again, well something will keep a close eye on.
It's a great time to talk about a large financial
milestone right now. And this is you know, sometimes we say, hey,

(15:51):
investors are heading in the wrong direction. This is where
investors are heading in the right direction. We're talking about
the rise of for and K millionaires.

Speaker 2 (15:59):
Yeah.

Speaker 3 (15:59):
According to a recent Fidelity study, data shows that the
number of four oh one K millionaires folks with you know,
in excess of a million dollars in their four to
one K retirement plan has jumped by twenty seven percent.
That's right, despite all the bumps in the markets over
the last few years, many workers are still putting money
away year after year, month after month. They're taking advantage

(16:23):
of the company match and it's paying off in a
big way.

Speaker 1 (16:27):
Why why is this happening, Well, surveys say. The survey
says the number one response is because people are listening
to the show. That's what I is. No, it's consistency,
you know, which is also what we preach on the show,
by the way, but it is understanding that you've got
to pay your future self every month right in that
auto uh you know, auto contribution. For a lot of people,

(16:50):
it just works. You never see the money hit your account.
It's going straight into that four oh one k. And
that consistency over time is building people more and more
people in a four one k millionaires. A couple of
those caveats I want to throw out here is I've
come across several of these four h one k millionaires

(17:10):
and all of that money is tax deferred, And well,
it is fantastic to have a million dollars anywhere. You
don't actually have a million dollars if it's all tax deferred,
because Uncle Sam, right, depending on your tax bracket is
probably going to get own a pretty big piece of
that pie.

Speaker 4 (17:29):
Yeah.

Speaker 3 (17:30):
Again, it's not how much money you have, it's how
much you keeped, your point, amy, and at some point
this million dollar four when k balance has to be
converted into income to spend during retirement the point I
wanted to throw out and I don't want to put
a wet blanket on any of these numbers. This is
fantastic that folks are saving, but a million dollars today

(17:50):
isn't what a million dollars used to be twenty years ago.
You know, we hear all the time about this four
percent withdrawal rate, three and a half five, whatever you
want to say. You know, at four percent of a
million dollars, that's forty thousand dollars a year.

Speaker 1 (18:03):
Is that enough to live on?

Speaker 4 (18:04):
Exactly?

Speaker 5 (18:05):
Yeah, exactly so I think at least based on the
people we see every day, you know, most of the
time they're hoping and planning on having more than forty
thousand dollars a year of to your point, pre tax income.

Speaker 3 (18:20):
So I'll start to get more excited when this number
jumps to maybe two million or two and a half million.
But hey, we're off to a great start and.

Speaker 1 (18:29):
Keep going trending in the right direction, right, without a doubt.
Another thing to keep in mind here, though, is if
you have any inkling that you want to retire early
before you get to your sixties, having all of that
money built up into a four to one K is
not going to give you a lot of options because
for you to touch that money before you're fifteen and
a half means you're also going to pay not only taxes,

(18:51):
what a ten percent penalty, which is why we would say, hey,
that's great, have a million dollars in your four one K.
Also have some good funding in a taxable brokerage account.
I love WROTH dollars as well. Right, that's where you've
already paid taxes and that money is just growing and
invested in compounding tax free.

Speaker 4 (19:09):
And don't forget HSA's amy. I'm surprised you haven't already
brought it up.

Speaker 3 (19:13):
That.

Speaker 1 (19:14):
Yeah, health savings account is also a great option, right,
triple tax advantage, kind of a tax shelter there. You
do have options. And again, this is a great trend.
We're not poopooing this whatsoever. This is moving in the
right direction. You know, we have a retirement crisis in
this country. People having a million dollars in their four
oh one ks is definitely progressed in the right direction.

(19:35):
But if that's the only place you're saving, I just
want to caution you to think through it. It's not
going to give you as many options in retirement. Here's
the all Worth advice the Rise of four oh one
k Millionaires. It's a reminder sticking to your financial plan
and saving consistently. Staying discipline can set you up for
a successful retirement. Next, diving into investment solutions designed for

(19:56):
those who want your portfolio to align with your values
made be your faith. You're listening to Simply Money, presented
by all Worth Financial here in fifty five KRC the
talk station. You're listening to your simply Money, I mean
you Wagner along with Bob's spond seller. Several times throughout
the years, I've ended up across the table from someone

(20:19):
or talking to an investor who is like, listen, I
fully understand that I want to be in the markets.
I see that that's the best way to outpace inflation
over time. But and this is a big butt for them,
there are certain companies or certain sectors that I don't
believe in. Maybe it's because of their faith whatever. That

(20:40):
looks like they don't want to be invested in those companies.
How do you navigate those waters as an investor? Joining
us is our chief investment officer, Andy Stout. Andy, Interestingly,
we do have conversations with investors about these things, and
also we have some options for them.

Speaker 4 (20:58):
Yeah, if you.

Speaker 2 (20:59):
Think about your investment needs and maybe the typical investor
who might say, I just go go invest me in
a manner that you think is going to help me
meet my financial goals. Okay, we can any any advisor
you know can absolutely do that. But having options that
are specific to someone's needs are really important. So, you know,

(21:20):
it might be something as simple as I want more income.
How can I have a diversified approach when I can
generate more income because I'm getting ready to retire, right,
It could be something along the lines up you know,
I only want passive investing, or I only want active
and passive, or you know, as you just alluded to,
maybe it's something along the lines of faith based. Maybe

(21:44):
someone is uh really wants to invest alongside their maybe
their Christian values as an example, you know, having strategies
built around that, so you can essentially set yourself up
for retirement or if you are retired, you know, stay
retired uh and still be able to generate positive returns

(22:04):
while investing alongside your value. So having an option like
religious based investing that you know matches how you feel
about the world, it's going to help you, you know,
sleep better at night. Doesn't mean you'll get better or
worse returns. I mean, you know, anything can happen, but
you know, over a full market cycle, you know, we
do believe that most strategies will do relatively similarly. And

(22:28):
being able to have that peace of mind amy where
you can really focus on your investments and knowing and
knowing in your heart that this is how you see
the world can make a world a difference.

Speaker 6 (22:44):
Andy, I've got a question about that because I've got many,
you know, Christian clients that feel very strongly about certain things,
and some of them asked to have their portfolio screened
for things that are important, you know, to them.

Speaker 4 (22:58):
And to their faith.

Speaker 3 (22:58):
And Andy, as somebody who actually runs the portfolio, I'm
always interested to know how to what extent can you
actually screen out these companies to align with someone's Christian faith.
Is it just what industry the company's in, what products
they make, or does it go down to things like
the behavior and character of the CEO and board of directors.

(23:21):
To what extent can you actually feel good that you
screen these companies out so that we can actually fulfill
what our client is asking for in the way of screening.

Speaker 2 (23:34):
So you know, it's not really just about avoiding investments
that may not align like you know, your sin stocks
or whatever. It's really about also seeking opportunities that reflect
the values of whether it be Christian values and there's
other value besides Christian I mean, there's a lot of
people who you know seek what's called ESG. I know

(23:58):
that's kind of gotten a bad rap lately, and that's fine,
no judge one way or another, but just having options
for you know, whether it be Christian values or ESG,
really focusing.

Speaker 1 (24:09):
On any quickly what ESG is when you're talking about that.

Speaker 2 (24:13):
Yes, sure, environmental, social, uh and governance policy, So thinking
about the risk factors associated with the companies that don't
have good environmental, social or governance policy controls. If you
ol governess is like you know, Kroger, for instance, their

(24:33):
CEO left for personal reasons that would be a poor
that's an example of poor governance.

Speaker 4 (24:38):
Right.

Speaker 2 (24:39):
Uh so uh, societal and environment kind of speak for themselves.
But so when you look at those frameworks, having value
investing strategies or investment strategies out align with those values
is really critical. And we can do that, you know, Bob,
in a couple of ways. One, we can proactively screen

(25:00):
on individual stocks that essentially highlight that, or also equities
that avoid certain industries. So we want to maybe stay
away from certain industries that maybe not align with whether
it be Christian values or ESG or whatever it is.
And what we can do is we can do that
at a fund level. There's lots of what's called exchange

(25:21):
trade of funds or mutual funds that focus specifically on that.
So you know, we have our own internal portfolios that
we've built around those, you know, exchange traded funds and
mutual funds to really highlight, you know, Christian values as
an example, or highlight you know, whatever value you might have.
Want Now, we can also go the direction of individual equities.

(25:44):
So there are investment options called what's called it's called
direct indexing. So essentially where you would be owning a
bunch of different individual stocks, and then we would actually
screen out for certain things that are known to not
align with whatever value set you want to look at
or want to make sure that you know you're able

(26:06):
to sleep at night. So whether or not it's the
fund route or whether or not it's the individual stock route,
you know, that's how we would go about doing to
make sure that investing alongside your values is something that
is attainable.

Speaker 1 (26:19):
Andy, I wonder if there's anyone listening who might say, oh, actually,
I never thought about this, right, I just put money
into my four O one K every month, and you know,
I don't even think about necessarily how these companies are
run or what they produce. But now that I think
about it, I am a Christian and this is something
that's important to me. You know, as we throw around

(26:41):
maybe the kinds of companies that they may not be
comfortable with, Like give us some examples. For instance, I've
had clients in the past that don't want to invest
in tobacco companies or companies that produce alcohol. What are
some other examples, right of people who are saying, listen,
I want to best according to my faith and this

(27:02):
is counter to that.

Speaker 2 (27:06):
Well, there's you know a lot of different ways. And
when we look at that, you know, it is about
screening out alcohol, it's it could be about screening out
you know some companies that are you know, taking advantage.
I think it's going to be a lot of your
sin companies, right, Tobacco, probably some other you know, gambling,
as you mentioned there, it's I mean, and on it's

(27:29):
the aim. You kind of hit the nail on the head.
I don't really have too much more to add on
that one, so, you know, without getting into the you know,
the individual equities. And I don't really want to go
down and say this.

Speaker 1 (27:40):
Is no, we don't want to particular company.

Speaker 2 (27:43):
Yeah, yeah, because I think it's really just making sure
they align the right way. Because even companies that you
know might be considered a sin company, you know, they
have still historically produced positive returns. So it's really just
a matter of you know, whether or not you want
to try to get those positive returns in any manner necessary,
or do you want to focus alongside your values. And

(28:04):
there's no right or wrong answers, that's just an answer
that you have to come up with, Right, what do
you feel good about and making sure that you work
with someone that can provide you with whether something alongside
I mean Christian values, or maybe it's something allowing you
to increase your income, or maybe it's ESG or you know,
maybe it's focusing on just passive or active or whatever.

(28:28):
Passive means are trying to just meet a benchmark and
active means are trying to outperform it. By the way,
So just having these different investment options is really important
because if you're not invested what you're comfortable investing with,
you're not going to have a long relationship with that advisor.
Yeah right, you got to make sure you're doing what's right.

Speaker 1 (28:49):
I think the key is to know as an investor
to have this conversation if it is something that's important
to you, bring it up to.

Speaker 4 (28:55):
Your advisors to know you have options.

Speaker 1 (28:57):
Yes, yeah, you do have an option, and so to say, hey,
I want to be invested, but I also need to
be invested in a way that actually mirrors what I believe.
You do have that option. It's a conversation you should
be having with your advisor if this is something that's
important to you. Great, great perspective, Andy, Andy Stealder, Chief
investment officer. Here at all Worth you're listening to Simply Money,
presented by all Worth Financial. Here in fifty five kre

(29:19):
see the talk station. You're listening to Simply Money and
presented by all Worth Financial. I mean you wag, you're
along with Bob Sponsor already have a financial question you
need us to answer. It's keeping you up at night.
You and your spouse aren't speaking to each other right
now because you can't get on the same page when
it comes to money, whatever it is. There's a red

(29:40):
button you can click on while you're listening to the show.
It's right there on the iHeart app. Record your question
and it'll come straight to us. We'll help you figure
it out. And straight ahead. How to take full advantage
of what social security has to offer. We're talking about
getting more than five thousand a month in social Security benefits?
How can you pull that off? All right? Time now

(30:00):
to play retirement fact or fiction? Uh factor fiction for you,
mister spond seller. Tax strategies like tax loss harvesting only
benefit people with modest investment portfolios.

Speaker 4 (30:13):
That's fiction.

Speaker 3 (30:13):
Yeah, and you know, last time I checked, nobody likes
to pay more taxes than they're you know, required to
do by laws. So I don't care how big your
portfolio is. It's not what you make, it's what you keep.
And these tax loss you know, harvesting strategies and tax
alpha strategies work great for everybody.

Speaker 1 (30:33):
Yeah, across the board. If you have twenty thousand dollars
in that portfolio or twenty million, right in anywhere in between, Uh,
it makes sense to take advantage of tax loss harvesting
because essentially what you're doing right, you're selling positions at
a loss and you can carry those forward and then
when you start to take distributions out of that account,

(30:53):
you can be super super tax efficient. And how you're
taking those out. This is a great strategy for anyone
who has a taxable brokerage account. I'm having this conversation
with them, well.

Speaker 3 (31:04):
And just some facts to back that up. I mean,
over the last couple of years, we've seen you know,
very good markets, so growth or even moderate growth investors
have experienced sixteen, seventeen, eighteen percent returns, you know, over
the last two years. And when I look at their
ten ninety nine report that are coming out this month,
I'm seeing taxable activity of darn near zero.

Speaker 4 (31:26):
Yeah, so it's working. It's great.

Speaker 1 (31:29):
I was actually just talking to a client recently who
has this on their account.

Speaker 3 (31:33):
Right.

Speaker 1 (31:34):
We call it tax smart trading here, And you said
he was talking to my neighbor who's a financial advisor
about this, and he was like, Wow, that sounds really cool.
It was like, Oh, he doesn't know.

Speaker 4 (31:43):
He doesn't know Amy, he needs to meet Amy.

Speaker 1 (31:46):
This makes me really nervous. All right, factor fiction, estate
taxes will always be a concern for people with a
million dollars or more in assets.

Speaker 4 (31:56):
Well, under current tax law, that's fiction. You know.

Speaker 3 (31:59):
Just as a reminder, in the state of Ohio there
is no inheritance tax. And now you know, federally you
could shelter you know, a whole bunch of money, you know,
up to fourteen million dollars. Now we'll see if the
tax you know, current tax laws are made permanent here
sometime during twenty twenty five.

Speaker 4 (32:17):
But with a million or.

Speaker 3 (32:18):
More assets, any anywhere between a million and just say
ten or something like that, you really don't need to
worry about federal estate taxes.

Speaker 4 (32:26):
What you do need to worry about, and we.

Speaker 3 (32:28):
Talk about this all the time, is have a good
estate plan in place, have your powers of attorney in place,
have your beneficiary designations in place. Those are the things
that we all need to be focusing right now on,
not a state taxes.

Speaker 1 (32:42):
Yeah, for mere mortals that have you know, less than
ten million dollars, you're probably going to be okay. I
want to get your take on this one factor. Fiction
tax defert accounts like iras are less valuable for high
net worth individuals compared to maybe roth iras.

Speaker 4 (33:00):
You always all right, well, this is a tough this
is a it.

Speaker 1 (33:03):
Depends and I and I'm okay with that, all right,
thank you.

Speaker 4 (33:07):
I thought you were going to chastise me like I won.

Speaker 3 (33:10):
I think this is where you got to have some
money in all different buckets, and you need to sit
down with a fiduciary financial advisor and actually run numbers
on based on what you have when you plan to retire,
what your income sources are going to be. And then
that's where we can custom tailor a plan to have
money coming out of the right place at the right

(33:31):
time to make your retirement portfolio as a whole as
tax efficient as possible.

Speaker 1 (33:39):
Factor fiction trusts are always a way to avoid taxes completely.
This is fiction.

Speaker 3 (33:45):
Right.

Speaker 1 (33:46):
Trusts are good for a number of things, one of
them just to make sure that your wishes right are
absolutely taken care of when it comes to being gone.
And your assets can flow through a trust and avoid probate.
But it's does not mean that those assets are going
to avoid tax completely.

Speaker 2 (34:05):
Right.

Speaker 1 (34:05):
If you have ira assets that your loved ones are
going to inherit, they're going to have to spend that
down over ten years, and just that money flowing through
a trust isn't going to make a difference.

Speaker 3 (34:16):
All right, I've got one for you, Amy, Okay, Amy
wants to retire in Alaska fact or fiction?

Speaker 4 (34:24):
Fiction?

Speaker 1 (34:24):
You know, it's funny that you say that my son
had to do a Spanish presentation and it was describing me,
and one of the facts was my mom hates to
be cold. So I am not retiring to Alaska, not
anytime soon. Coming up next, how to get the absolute
maximum benefit that social security has to offer. You're going
to want to stick around for this one. Listening to

(34:46):
Simply Money presented by all Worth Financial here on fifty
five KRC the talk station. You're listening to Simply Money
presented by all Worth Financial and Amy Wagner along with
Bob Spawnseller. More often than not on the show, if
we are talking about a specific article, it's because we're
ripping it apart. It's because the headline is clickbait. We

(35:09):
think it's terrible, we think it's meant to spook you
as an investor.

Speaker 4 (35:13):
And they're just plain stupid.

Speaker 1 (35:15):
Yes, they're just plain stupid. However, however, this is going
to be one of the rare circumstances where we came
across something and we said, hey, this is good stuff.
Shout out to the Motley Full. We found an article
written by them that we think is super interesting, and
this is there explaining how you could get the absolute
maximum Social Security paycheck in twenty twenty five. That paycheck,

(35:39):
by the way, fifty one hundred dollars a month. That
is a pretty nice Social Security benefit. How do you
do this? Well, here's a little bit of a clue.
It's not going to happen overnight, right.

Speaker 3 (35:51):
Yes, Step number one is work for at least thirty
five years. Yeah, a lot of people don't want to
do that, you know, it's not worth the extra money,
but some people do. The Social Security Administration formula takes
your highest thirty five years of earnings into account when
calculating your benefit. So if you work for fewer than
thirty five zero thirty five years, zeros are going to

(36:14):
be used in the calculation for those missing years quote unquote,
and therefore it's mathematically impossible to get that maximum Social
Security benefit if you don't work thirty five years.

Speaker 1 (36:26):
Here's why understanding that is so important, right. This is
an example from my own life. When my daughter Grace
was born, I decided to work part time right those
years when my kids were younger. I worked part time
for several years. Obviously I'm not going to make as much, right,
So then that gives me the opportunity understanding this to say,
maybe I work a few more years later in life

(36:48):
to push out those lower earning years and be able
to take advantage of the full thirty five high earning years.

Speaker 4 (36:56):
Yeah, and this leads to the next point.

Speaker 3 (36:58):
Social Security looks at the what is their maximum amount
for those thirty five years. In other words, there is
a benefit base or earnings base that gets indexed for
inflation every year. So for example, in twenty twenty five,
that's one hundred and seventy six one hundred dollars. That's
the amount of earnings that you pay Social Security taxes on.

(37:20):
Going back to twenty fifteen, it was one hundred and
eighteen five hundred dollars, and so on and so on.
So in order to get that maximum benefit, you have
to have earned for thirty five years right at the
maximum of whatever that base is on which you pay
Social Security taxes. That's hard to do, and that's very
hard to do for folks like in your situation. You

(37:44):
did all the right things, you stayed home, you raise
your kids, and you didn't have the opportunity to earn
that maximum income during those years.

Speaker 1 (37:54):
Well, this is essentially saying, either right when you get
out of college or not lot long after, you are
earning the maximum amount in Social Security that you possibly can.
If you've been able to do that, call me. I
actually want to know what your career is, because that's
pretty good earnings right out of college. And then the
other way to earn this maximum benefit is you're going

(38:14):
to wait until seventy to start collecting that benefit. Bob,
I don't know about you. We obviously run these projections
all the time for our clients. Many clients, of course,
they're going to come out ahead by waiting until seventy.
It's a guaranteed eight percent every year above that full
retirement age more that you're going to make in this benefit.
Very few people actually wait until seventy. Thanks for listening.

(38:38):
You've been listening to Simply Money, presented by all Worth
Financial here in fifty five K see the talk station