Simply Money

Episode Transcript

Speaker 1 (00:05):
Tonight. So much noise, so much noise out there right now?

Speaker 2 (00:10):
How do you stay quiet as an investor?

Speaker 1 (00:13):
Plus what the data really says about stock market crashes
and a whole lot more. You're listening to Simply Money
presented by all Worth Financial Immi Wagner along with Bob's
spawon seller. You know, when the stock market is on
a run, you feel really good about checking those statements,
You feel really smart as an investor.

Speaker 2 (00:30):
But right now, I think it can be easy to.

Speaker 1 (00:31):
Just try to look the other way because what the
heck is going on joining us tonight?

Speaker 3 (00:38):
March madness, Amy, a.

Speaker 1 (00:40):
Lot of madness, this March fantastic point. We've got all
Worth chief investment Officer Andy Stout. I'm not saying he's
an expert on college basketball, but he keeps a close
eye on the economy and the markets. You can start
with basketball, Andy, but you might just want to get
straight to for investors, lots of volatility right now, what's

(01:00):
going on?

Speaker 4 (01:02):
I think Bob just hit the nail on the head
with the March madness, So that was definitely a way
to character it's been going Wait, yeah, what's been going
on with the markets here? Not only this past month,
but you know a lot of the volatility that kind
of started around mid February, and when you look at
just the past week, we've seen really that volatility, that

(01:26):
turbulence picked back up because we had been in a
period where we had like four straight weeks of declines
on major stock market indexes. Then we finally got a
reprieve and then you know, last week saw a pretty
sizable sell off to close the week out on Friday. Now,
when you look at where we're at today, you know,
the question around this March madness is is going to

(01:47):
continue to April? And then we got the Final Four
next weekend. But we also have some pretty big events
this week when it comes to the drivers of the
markt volatility, and that is tariffs. I mean, when you
think about just what's going on, it's a moving it's
it's a moving picture. Things change pretty quickly. It's very fluid,

(02:08):
very dynamic. And when you look at what happened last
week with President Trump announcing essentially a twenty five percent
tariff on all cars and parts that are not made
in the US, that has a big impact on you know,
different automakers, and he did exempt parts in cars that
are part of the USMCA, which is the United States

(02:31):
Mexico Canada Agreement. However, that still leaves a lot out
there in terms of what could be tariffed, if you will. So,
for instance, even cars that are assembled here in the
United States, about thirty five percent of the parts come
from areas that aren't going to be covered under that UMCA,

(02:53):
so those would be subject to the tariffs. And if
you look at it by a brand, well, I mean
Volvo just as one one hundred percent of their sales
for the US are going to be impacted by that tariff. Now,
clearly the domestic manufacturers Ford and Stalanis are going to
be better off with about twenty twenty five percent tariff
exposure GM though they actually have about forty five percent exposure.

(03:16):
Now I don't want to keep listening numbers because that's
boring for everyone except for me, probably, But the takeaway
is that there's a lot of unknowns. We got that
announcement last week and this week we get Liberation Day,
so we're going to be liberated from these trade imbalances,
which is, you know, just a way that the President

(03:38):
is trying to label things as a you know, put
a nice positive spin on it. We don't know what
those tariff announcements will be. We don't know the scope
and magnitude. The one thing we do know is that
Treasury Secretary Scott Descent said that they would target countries
with the biggest trade surpluses. And when you look at

(03:59):
those countries out there, first thing that comes to mind
is China. The most recent annual data we have is
from twenty three. We don't have the twenty twenty four data,
but it was about a two hundred and sixty billion
dollar deficit. Mexico was two hundred billion. The whole euro
Zone or the European Union area, you know, it was

(04:20):
almost two hundred million as well. So expect some targeted
measures in those areas. So expect the madness to continue.

Speaker 3 (04:30):
Andy, I have a question about reciprocal tariffs. And you know,
as you and your other economist colleagues around the country
and really around the world, look at this whole topic
of reciprocal tariffs, meaning, hey, you tear if us a
certain percentage, We're going to tear if you back the
same percentage. And ideally, let's just get rid of all

(04:51):
of them. Let's get to zero the concept might sound great,
what are economists thinking about this whole topic of reciproc
tariffs as it might impact the global economy?

Speaker 4 (05:04):
Well, in terms of reciprocal tariffs and what that means,
it can be a little fuzzy because not everyone finds
a tariff in the same way, So you could have
just a normal tariffs how we think about them. But
then when you go look at Europe, they also have
these value added taxes, which is essentially a you could
make an argument, and that's what the Trump administration is doing.

(05:24):
They're going to treat those like teriffs because essentially it's
an extra cost applied to you know, some of the
US produced goods. So when you look at it from
that perspective, there are certainly a lot of very specific
levees that aren't considered terroriffts but kind of act in
the same way as tariffs. So when you think about

(05:47):
it that from that perspective, there's a lot of unknowns
out there, and as far as like who has like
the most teriff rates? Ye, when you look at just
the US, the average rate applied to products is around
two point seven percent, so relatively low, and when you
look at the rest, when you look at the other

(06:08):
developed areas like Europe and Japan, they're also right around
two and three percent. But again that doesn't necessarily include
you know, vats for the value added taxes and things
like that. When you put it all together, we want
to be surprised to see a little bit more of
an increase coming out of the Trump administration. And what
that means for the economy is from a global perspective,

(06:28):
is that tariffs are a drag pretty much across the
board and have a negative impact. Now I understand what
President Trump is trying to do in terms of balancing
the trade flows between the countries where the US has
a large deficit and you know there are plenty of
them out there where we're paying I'll call it more
than our fair share, if you will, when you want

(06:50):
to look at it like a tip for tax sort
of comparison, And it does and can and probably will
have a negative economic impact, and that could either be
stunting growth and or increasing inflation. Now I realized inflation
wasn't a problem during this first trade war. However, the
global dynamics have changed tremendously and when you look at

(07:12):
the just the money supply, for instance, it's really flooded
into the economy and that's making inflation harder to control.

Speaker 1 (07:19):
You're listening to Simply Money, presented by all Worth Financial
Imami Wagner along with Bob Sponseller. We are joined by
Andy Stout, all Worth Chief Investment Officer, as we.

Speaker 2 (07:27):
Are every Monday.

Speaker 1 (07:28):
You know, any as you are talking about these tariffs,
you kind of led us to the next point that
I want to make, which is these could potentially be
inflationary and also at the same time, right timing is everything.
Inflation has been a bit stickier than the Federal Reserve,
our nation central Bank was hoping that it would be.

(07:50):
We've got some new inflation numbers out there. I'd love
to hear your perspective on, first of all, where we
are with inflation now, and then also keeping an eye
on these tariffs potentially coming down the pike.

Speaker 3 (08:03):
Amy.

Speaker 4 (08:03):
So, there are many different ways that one can think
about inflation, and most people think about it with CPI
or consumer inflation. But what the Fed looks at is
their target is a two percent core PCEE. Now we
don't need to get into the specifics on the differences,
but let's just talk about core PCEE and their two
percent target. Now, what the Fed wants to do is

(08:24):
get that to a year over year change at two percent.
The data we got last week shows an annual rate
of two point eight percent after a pretty hot February
of zero point four percent. That's so it's a four
tenths of a percent increase just in one month. Now,
two point eight may not sound so bad on the
year or year number, however, and this is kind of
the problem. The trend that we've seen in the recent

(08:47):
data is really more of a shift upward. So what
I mean by that we can look at like the
last three months of data and then we can annualize that.
So that's at three point six percent, which is a
heck of a lot higher than that two percent targets
at the fat as if you look at the last
six months and analyze that we're at three point one percent.
What the shows is that the trend is moving upward

(09:09):
on core inflation. And you know that's a problem, especially
right now when you have these impending tariffs, and when
you look at the data that's out there and how
people are spending and what the the global flow of
trade is, it suggests that inflation, and we're all, let's say,
disinflation because we had seen inflation slowing, it's stalling out.

(09:32):
We might even be on the cusp of a reversal.
And that's especially true when you look at consumer behavior.
So we got last week the update to the University
of Michigan's Consumer Sentiment Survey, and the one year and
five to ten year inflation outlook rose to five percent
for the one year and four point one percent on

(09:54):
the longer term outlook. Those are those are elevated levels,
to say the least, and that does run the risk
of essentially people pulling forward their purchases and that would
lift prices now. So essentially, if people think inflation's coming,
they'll make it a self fulfilling prophecy by spending more
now before some of these tariffs go into effect, Like

(10:17):
you know, car tariff's coming. In fact, should you buy
a car now? Right? So, those are all things that
people are starting to think about, and that, in turn,
we'll just make the car prices rise even quicker.

Speaker 3 (10:28):
Well, andy, as it relates to the stock and bond market,
you know, everybody's looking at what the Fed's going to
do next with regard to interest rate. I'm seeing the
most recent numbers show a twenty one percent chance of
a rate reduction at the fed's next meeting on May seventh,
but that probability rises significantly to eighty six percent probability

(10:50):
at the June eighteenth meeting. Andy, as you look at
this and some of this sticky inflation you know linked
to tariffs as you talked about, is that is that
eighty six percent number that's kind of priced into the
market right now? Is that a little bit too high
of an assumption in your mind right now?

Speaker 4 (11:09):
A short answer is no, because I think it really
balances the risk that inflation sticks around and the risk
that the economy starts us slow and that forces the
FED to cut. So when you see the chance of
the rate cuts, it's not that the FED is less
worried about inflation. It's just that the Fed is more
might be getting more worried about the economy slowing down.

Speaker 1 (11:30):
I hear you say worry, and that's the FED. And
I think the important thing to remember is that as
an investor, it is really incumbent upon you to understand
what's going on with the economy right now, but not
necessarily to do anything with your investments right as part
of a smart long term plan. Great perspective as always
from our chief investment Officer, Andy Stout.

Speaker 2 (11:50):
Coming up next, a.

Speaker 1 (11:51):
New study suggests half of those surveyed believe a stock
market crash is imminent. Right, it's on the horizon. Could
this be good news for the market. We'll explain next.
You're listening to Simply Money presented by all Worth Financial
here in fifty five KRC the talk station. You're listening
to Simply Money presented by all Worth Financial. I mean

(12:13):
you Wagner along with Bob sponseller. If you can't listen
to our show every night, you don't have to miss
the thing we talk about. Or maybe you heard something
you want to share with someone else who needs to
hear it. We have a daily podcast that you can
share or listen to yourself. It's right there on the
iheartapp or wherever you find your podcast. Just search Simply Money.
Should you make a charitable remainder trust part of your portfolio.

(12:36):
We're going to look into that question and others when
we do fact or Fiction at six forty three. Okay,
so some good news for you personally may not be
the best news for the economy. But I got to
tell you, Bob, this is something that does make me
feel really good. We're talking about the US savings rates
moving in the right direction.

Speaker 3 (12:58):
The savings rate rose to four point six percent last month,
that being in February, and that's up from four point
three percent in January and just three point three percent
in December. Amy, I think I'm even smart enough to
know that that three point three percent number might have
something to do with Christmas.

Speaker 2 (13:17):
I think you're probably right.

Speaker 1 (13:19):
But if you want to give some more perspective on this,
during the pandemic, when we actually couldn't really spend, we
couldn't go on trips, we couldn't really leave our houses,
actually the US savings rate rose to north of thirty
percent during that time. Of course, we were always like,
well this is going back down. I have seen it
as low as a little north of two percent. So

(13:41):
four point four percent, four point three percent is movement
in the right direction. This is what percentage of what
you're bringing home you're actually saving. If you have no
idea what this is, I suggest you figure it out right.
This is a good exercise to figure out for your
own home, your own household.

Speaker 3 (14:02):
Yeah, these numbers to me look just they look and
feel very seasonal, seasonal, and obviously I'm not an economist,
but yeah, people spend money for Christmas in the holidays,
and they get that credit card bill and say, well, okay,
we're gonna pump the brakes here for a couple of months,
get things back down to normal, get our savings account
back where it needs to be. That that's how this

(14:23):
looks and feels to me.

Speaker 1 (14:24):
Amy, Yeah, I agree, And you know, just keeping in mind, right,
you build your boat not during the storm, but you
give yourself a savings cushion, an emergency fund so that
wins something. Not if something wins, something inevitably does happen.

Speaker 2 (14:38):
Right hvac goes out.

Speaker 1 (14:40):
Your car quit's working. Suddenly you get an unexpected medical bill.
You're not turning to your four oh one K to
rate it or putting too much on your credit card.
You have emergency cash stash there, and that's exactly what
it's for.

Speaker 2 (14:56):
Speaking of building your boat.

Speaker 1 (14:59):
You maybe doing that right now because you have this
feeling that the markets are just really heading for something
not good, right heading south. I would say, okay, let's
check that feeling and say, is there any factual evidence
to support that.

Speaker 3 (15:17):
And we just came across a study recently done by
a major global life insurance company. They sampled a little
over one thousand respondents ages eighteen plus, and according to
their twenty twenty five first quarter Market Perceptions study, more
than half fifty one percent worry that another big stock

(15:39):
market crash is on the horizon.

Speaker 1 (15:42):
And I think if you look under the hood right here,
like that anxiety you know happens. I think when we
could come from anywhere right you're driving home and you're
looking at how much gas has gone up, or how
the price of eggs, and you immediately go to the
economist here of all the stock market is going to crash.

(16:02):
And the specific question that's asked to get to the
bottom of it is, what do you think is the
probability of a catastrophic stock market crash right here in
the US like that of October twenty eighth, nineteen twenty nine,
or October nineteenth, nineteen eighty seven. What do you think
the odds of that happening are in the next six months?

(16:24):
And you know, you've got a number of people then
saying yep, I feel like that is absolutely coming and
I would just remind you often feelings aren't based on facts.

Speaker 3 (16:34):
Yeah, And just to take a contrarian approach here, amy
usually the time when those kind of fear gauges or
prediction numbers start to spike, that's usually at least a
signal of at least a short term bottom in the market.
A lot of times, and we talk all the time
about missing the best eight to ten days of the

(16:54):
year in the stock market. When people start feeling like
everything's about to crash, Yes, that's usually about the time
things can pop a little bit. And for the folks
that went to cash and got out of the market
and trying to time everything, they're usually you know, a
little disappointed.

Speaker 2 (17:12):
Yeah, So let's talk about the reality here, right.

Speaker 1 (17:15):
There's a finance professor at Harvard who actually ran numbers.
Of course, he's got a model for this, and what
he found is what is actually the likelihood right now
based on what we're seeing economic data that's coming in
of an actual event like we saw black you know,
Black Monday in October of nineteen eighty seven, about a

(17:37):
third of one percent of a one day plunge like that. Now,
a more perspective, Bob, like this does not mean that
we're not going to have down days.

Speaker 2 (17:48):
Absolutely we will. But a single day where you have
markets in a free fall, the likelihood of that less
than a third of a percent.

Speaker 3 (17:58):
Yeah, and just trying to kind of die sect some
of this data and make sense of it. I'm assuming
this Harvard University professor just looked at what has actually
happened in the past, which is a good place to start,
And yeah, they're the probability of having a October nineteen
eighty seven style crash, you know, a twenty two point
six percent decline in one day. Yeah, that is pretty minuscule.

(18:22):
On the other hand, you go back to that major
life insurance company survey and people just say, well, we
expect a crash is on the horizon. I'd love to
hear how those people define what a quote unquote crash is.
I bet the numbers are all over the board there.

Speaker 2 (18:39):
Yeah, I mean, you know some more perspective here.

Speaker 1 (18:41):
Right March of two thousand, right the Internet bubble burst.
Everyone remembers where their returns headed from there, But during
that time, the S and P five hundred's worst one
day return during that entire downhill slide was a loss
of just but south of six percent, so not that

(19:04):
one day slides I think, to your point, Bob, are
very rare, and I think it's important to keep that
in mind because if you have the facts, I think
you're less likely to make a knee jerk decision with
your money that you cannot recover from. If you have
negative feelings right now about where you think the economy
in the stock market is heading, and you have this
in the back of your mind, right what if there's

(19:26):
a one day crash like this?

Speaker 2 (19:27):
What should I do with my money? Please?

Speaker 1 (19:29):
Please get some historical perspective on what's likely to happen
before you make any moves based on that. Here's your
all Worth advice the moment you hear that word right, crash,
just remember, any solid long term financial plan is actually
designed to weather any kind of storm coming up next.
All Worth Chief Investment Officer Andy Stout here to help
those who want to maximize what you've got in your

(19:51):
children's or maybe grandchildren's five twenty nine plans. 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 Imami Wagner along with
Bob Sponseller. I remember, I think my oldest was probably

(20:13):
three years old when I sat down in this online
calculation about how much college might cost for us or
for her to go, and I was like, Oh, that's crazy.
They're making a mistake. And now we are there and
no mistake was made. It is insanely expensive. If you
are a parent or grandparent trying to help your children
or grandchildren pay for college or.

Speaker 2 (20:34):
Help cover the cost for it, how do you even begin?
Where do you begin?

Speaker 1 (20:38):
Joining us tonight, our chief investment Officer, Andy Stout, Andy,
you also have college aged children, So.

Speaker 2 (20:44):
I am preaching to the choir here.

Speaker 1 (20:47):
Let's talk about five twenty nine's as an investment solution
for those trying to help their kids out with college.

Speaker 4 (20:55):
Yeah, it's a really great tool. Before we jump into that, Amy,
I know your daughter goes to the University of Kentucky.
My daughter goes to the University of Tennessee. And they
happened to play a basketball game over the weekend.

Speaker 3 (21:10):
Here we go, this is why I showed up this morning.

Speaker 4 (21:16):
Yes, and Bob comes in, Thank you, Bob. So when
we look at the basketball game, turned out really good
for Tennessee. Now, of course that did not continue through
the remainder of the weekend unfortunately once they played Houston.
But nonetheless, I digress. It was fun while it lasted.

(21:38):
And moving on to five twenty nine plans, So it's
a it's a good way because college is really expensive.
I mean, I have a daughter at the University Tennessee.
I have a son who is a junior, and he's
going to be figuring out where he's going. Fingers crossed

(21:59):
he stayed in state, would be a little bit nicer.
But when we're thinking about that, I mean, you get
the same thing that I did, Amy, I was thinking
about thinking ahead, setting aside money early on, and essentially
a tax advantaged investment account, so we can essentially defer

(22:20):
any sort of taxes being paid on that growth, if
you will, as long as we use them for the
proper expenses. And it is a good way to plan
for college because it's gotten so ridiculously expensive. I mean,
even for even if you're in state, and you really

(22:42):
do need to plan ahead to take advantage of essentially
you know, getting your taxes at least on the state side, right,
getting a deduction on your state income taxes. So that's
really critical in planning for college because it can it
can add up.

Speaker 3 (22:59):
And I'm seeing more and more grandparents open these kind
of accounts up for their grandkids. And I think two
reasons for that. Number One, the five twenty nine plans,
if owned by a grand grandparent, does not have to
go on that kid's fasta you know, application for financial aid.
And then second, I think a lot of grandparents are

(23:20):
sitting back to the point both of you just made
and looking at the obscene amount of money that's required
to send kids now to college versus when they sent
their kids to college, and they're like, gosh, we got
we got to help out here. So I'm seeing I'm
seeing a lot more grandparents asking me about these plans,
you know, cause again tremendous tax benefits, financial aid benefits,

(23:44):
and it's one of the few assets you can quote
unquote give away but still take back if things change
down the road.

Speaker 4 (23:52):
Yeah, I mean, to your point, it does qualify under
that gift task gift tax exemption, so they would be
able to essentially gift up to eighteen thousand, I think
is what it is for an individuals without any sort
of you know, tax effect there, and it's you know,

(24:12):
it's a good way to reduce your overall state tax
bill if you might be subject to that. So it's
definitely ways that you know, we see out there where
grandparents are helping out the grandkids, because when you think
about just the ballooning cost of college, it's become a
point where, you know, you go back fifty years ago,

(24:34):
it was like you graduated high school and that was
what was needed. Now you graduate college, that's what's needed.

Speaker 3 (24:40):
And when you just.

Speaker 4 (24:41):
Look at it's the overall supply and demand of the
jobs that are out there that require a college degree,
even if it might not be something that would have
traditionally required one. If you're comparing two candidates, one with
a degree, one without a degree, even it's for something
that you may never even use your degree for Emplawyer,
I think probably nine times out of ten, it's going

(25:02):
to go with the person with a college degree.

Speaker 3 (25:06):
Yeah.

Speaker 4 (25:07):
Andy.

Speaker 1 (25:07):
One of the things I also love about five twenty
nine's is they are becoming more.

Speaker 2 (25:11):
And more flexible. You know, it used to be, Hey,
what happens if my kid, you know, and.

Speaker 1 (25:16):
I thought this of mine were first born, Oh, they're
going to get a free ride to college, whether it
be for academics or athletics. I kind of laugh as
I say that. Now, not that my kids are not great,
that just did not happen. But you know, if that
really this show too. Sorry, this is just this is

(25:37):
just me being authentic. Care But you know, there is
flexibility if you're you know, if your if your son
ends up being seven foot tall and is going to
play basketball for the University of Kentucky. Sorry, I can
only uh, you know, I if those.

Speaker 2 (25:50):
Things were to happen, it can go to another child.

Speaker 1 (25:54):
And so let's talk about kind of the flexibility within
these things. I've had one of my kids use a
five twenty nine to buy laptop that they were using
for college. It can cover room and board as well.
So I think Congress has seen the need to become
more and more flexible with these accounts. So maybe some
of the hang ups that people may have once had

(26:15):
no longer exist anymore.

Speaker 4 (26:17):
Yeah. So if my son, who was he says he's
six foot tall, I think maybe five or eleven half.
But whatever, if he happens to grow another foot, which
would be really strange but not unheard of, and he
plays college and gets a scholarship. You know, you know,
we can use those expenses for other things besides that.

(26:39):
And also you can change your uh, you can transfer
the account owners in the beneficiary, so I can go
from one kid to another kid. So then I could
apply you know, the savings for my son and growing
a foot, and can go pay the Tennessee tuition off
a little bit more quickly.

Speaker 2 (26:57):
Yeah.

Speaker 3 (27:00):
Well, and you're going to need it because down there
in Tennessee they like to party down there. Andy, And
don't be surprised if your daughter comes to you in
a year or two and wants to change majors and
lobby for that extra fifth year in Knoxville. I'm warning
you ahead of time it's coming.

Speaker 4 (27:15):
Well, she could lobby all she wants, but you know,
there's a limit to everything, you know.

Speaker 1 (27:24):
And Andy, one of the things too that we're seeing
now is you know, if for whatever reason, that money
is never used for education, I think it was secure
two point zero allows also then for that money down
the road to be transferred into a roth IRA.

Speaker 2 (27:38):
So again these are becoming more and more flexible.

Speaker 4 (27:42):
Yeah, I'm a big proponent of five twenty nine is
for all the reasons you've less said, whether it be
using it on education expenses that you may not typically
think as education expenses, we're being able to transfer it
from one person to one student to another student, or
even if they're not used at all, rolling it into
a different account type overall. So, I mean, when you

(28:03):
just think about it, there are so many benefits to
these five twenty nines where they really outweigh the cost
or the cost of the five twenty nine because when
you think about it, you're obviously kind of giving up
some control that's going to something else, and it may
not necessarily be for you, it's for others. But ultimately,
when you're thinking about you know, financial planning or state

(28:25):
planning or whatever, a lot of that isn't really just
about where you how you will enjoy the money, but
how you plan to help others down the road.

Speaker 2 (28:35):
Yeah, and I talk to.

Speaker 1 (28:36):
More and more people who are saying, listen, it's great
if there's money left at the end of my plan
for my children or my grandchildren, but I would like
to make an impact now. And you know, going back
to what we've talked about time and time again in
this segment is the how.

Speaker 2 (28:49):
Expensive it is to pay for college.

Speaker 1 (28:52):
So this can be an excellent way as a parent
or a grandparent to help if it makes sense in
your financial situation. Great insights as always from our chief's
an Officer, Andy Stout. 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

(29:13):
Worth Financial. I mean you agno along with Bob sponsor
or do you have a financial question you need a
little help figuring it out? Well, there's a red button
you can click them while you're listening to the show.
It's right there on the iHeart opacord your question and
it is coming straight to us. Coming up next, should
you pull the trigger on buying a car in light
of all of this tariff talk, We're going to talk
about what is good timing if you need a car soon?

Speaker 2 (29:36):
That is straight ahead. Time now to play retirement fact
or fiction, Bob, Let's get straight to it. Fact or fiction.

Speaker 1 (29:44):
Investing in private equity guarantees higher returns than investing in
the stock market.

Speaker 3 (29:51):
Well, anytime you hear that word guarantee, Yeah, I think
listeners should know what the answer is and the answer
here is fiction. Private equity can give you higher returns,
it can give you lower returns than public markets. So
the message here is know what you're considering buying and
investing in and why and when you get when you

(30:14):
move into that private equity area. In that space, it
can get a little complex, a little expensive, you know,
lock up periods, all that. That's if you're going to
go into that space, do so with a good fiduciary
advisor who can take you by the hand and walk
you through that process.

Speaker 2 (30:33):
Yeah, I completely agree.

Speaker 1 (30:34):
What I love for investors is that we now have
more options available to us than ever before, right, things like.

Speaker 2 (30:42):
Private equity, private debt. But does it make sense?

Speaker 1 (30:45):
It can sound really sexy, And that's where I think
to your point, Bob, the fiduciary steps in and make sure,
like does this truly make.

Speaker 2 (30:54):
Sense for you?

Speaker 1 (30:54):
Not just is it a cool thing to invest in,
but as part of a well diverse to find portfolio,
is it the best option for you? I think it's
smart to work with someone to help figure that out.
But I do like the fact that you know these
options are available to more and more investors.

Speaker 2 (31:12):
Now here's another one for you, Bob, fact or fiction.

Speaker 1 (31:15):
Charitable remainder trust right see arts can provide tax benefits
while maintaining income for the donor.

Speaker 3 (31:24):
That is a fact, and charitable remainder trust in the
right situation can be wonderful planning vehicles. And let's just
talk briefly about what that is. You're basically taking usually
some highly appreciated stocks, and in most cases these are
stocks that the owner is not going to need or
want to use anymore during their lifetime, and they fully

(31:46):
intend to leave these assets to charity. Well, you can
get a remainder income stream based on the value of
those assets you give away, and you can get complete
capital gains tax avoidance by giving them to the charitable
remainder trust and get a huge tax deduction for doing so.
So it's a way to get paid now for some

(32:09):
of the charitable intent that you have when you pass away.
But again, remember, once you put those stocks or assets
in that charitable remainder trust, they are outside your state.
They are irrevocably going to charity when you pass away,
and they're not going to your family. So make sure
you evaluate all the pros and cons of this planning
technique before you get involved.

Speaker 1 (32:31):
Yeah, I think this is a more complex technique, but
it can be a fantastic way to do a few
things right, have that charitable impact that you want to have,
create some kind of income, and be really tax efficient
at the same time. They essentially kind of annuitize your
donation and it provides that stream of income for you.

Speaker 2 (32:53):
Not all charities do this.

Speaker 1 (32:55):
So that's first step there is to do the research
to determine whether this would even an option where you
would want that money to go. Newer planning technique, but yeah,
this can be a great, great option. Fact or fiction,
mister sponseller, Structured notes can provide downside protection while still
offering equity market exposure. I know you've done this recently

(33:18):
for one of your clients.

Speaker 3 (33:20):
Yes, and this is a fact. These are wonderful vehicles,
again used in the right situation with the right client,
depending on his or her risk profile and the client
you mentioned here a minute ago, these are very risk
averse folks, and these folks were going to it was
either going to be all cash equivalent assets or doing
something like a structured note where they at least have

(33:42):
the opportunity for a little bit of upside. But they
wanted to make sure that downside was protected. So that's
what we did with a part, just a piece of
the portfolio. You usually pick a term of years. In
this case, it was four years, and they've got an
absolute floor under their money and they've got an upside
of as much as seven and a half to eight

(34:04):
percent return. This varies by instrument, and these notes get
priced and offered on a monthly basis, So you know,
you got to take a look at the fine print
and the details to see which one may or may
may not make sense for your situation.

Speaker 1 (34:20):
I think depending on your risk tolerance right your unique situation,
these can make a lot of sense. In Bob, I
know that with your client you really were able to
personalize that product based on their specific needs. So this
can be a great thing a conversation to have with
your fiduciary financial advisor to figure out if it makes

(34:41):
sense to you.

Speaker 2 (34:42):
We can quickly get to this next fact or fiction.

Speaker 1 (34:45):
Investing in ESG right Environmental, social and governance funds always
leads to lower returns compared to traditional investments. I think
this used to kind of be the case spot, but
not so much maybe anymore.

Speaker 3 (34:59):
Yeah, ESG, you already mentioned environmental social governance. This is
where you can screen out different industries and different companies,
you know, to have a portfolio that more closely reflects
your personal values. And you know, amy some people don't
care about giving up a little bit of return in
you know, in return for having their portfolio align with

(35:23):
their values. Other people want to get you know, have
their cake and eat it too. But you know, to
your point, the prevalence of ESG funds and portfolios is
out there. Sometimes they outperform traditional investments, sometimes they underperform.
I don't think there's any one size fits all answer
to that question.

Speaker 1 (35:43):
Yeah, I think there's just more options now, and so
you're not necessarily saying, hey, I'm going to invest with
my values, and I'm also going to take that a
much bigger risk that I'm you know, my returns are
probably going to be much lower. If this is something
that's sounds like it's in line with what you want
to how you want to invest, definitely look into this

(36:05):
because you've got more options than ever before. Coming up
next to do you buy a car now before it
gets too expensive thanks to tariffs, We've got details for you. Next,
you're listening to Simply Money presented by all Worth Financial here.

Speaker 2 (36:16):
On fifty five KRC, the talk station.

Speaker 1 (36:23):
You're listening to Simply Money presented by all Worth Financial,
I mean Wagner along with Bob Sponseller. Recently in the
state of Kentucky. You can now start driving when you
are sixteen. So my fifteen year old Tray is now
thinking he is in the market for a car, and Bob,
as we're talking about all of this tariff talk right

(36:43):
likely driving up prices on cars both new and used.
You know, I think Trey's point is we should just
get a car. Now, what's your advice here.

Speaker 3 (36:53):
Well, Trey's been in the market for a car long
before anyone even mentioned the word tariff.

Speaker 2 (36:58):
So right and playing with hot wheels, Yes, you're right.

Speaker 3 (37:02):
Yeah, I would take his timing analysis here with a
bit of a grain of salt. But Brian Moody, who's
Auto Traders executive editor, said it's unwise to try to
time the purchase of a car right now because the
tariffs are going to impact each car manufacture different differently.

(37:22):
Andy Stout, our chief Investment you know officer, did a
great job of outlining some of that in a prior
segment today. But I still think, you know, the numbers
we're seeing, whether it's thirty five percent impact or seventy
percent impact. I mean cars are going to go up
in price if and I say if these tariffs go

(37:43):
into a full effect, and that can change on a
daily basis. So I don't know, Amy, I think I
think it's you know, you just always want to be
pricing anything that you're going to buy, whether it's a stock,
a vacation eggs, or a car or gym shoes. Look
at the price, look at the inherent value, and if
you're getting a good deal and a good value, then

(38:05):
go for it.

Speaker 1 (38:07):
Yeah, I think it makes sense to start doing your research,
maybe a little bit earlier than you would have otherwise.

Speaker 2 (38:12):
Also, I'm going to throw in the Wagner whammy here.

Speaker 1 (38:14):
The last set of cars, we had two who turned
sixteen during the pandemic, and we saw how astronomical car
prices were during that time. We had to buy a
car during that time. So this is the Wagner whammy
on the car market. Of course, car prices are going
to go up because now we've got another kid that
needs a car. So that's just what we're going to
be dealing with. But yeah, you know, to your point, Bob,

(38:37):
do the research. Don't jump on something just because of headlines, right,
We are never advocates for that, But start figuring out
what kinds of car might make sense for your situation
and the potential impact of that, and just keep an
eye on how that could all play out. Thank you
for listening. Tune and tomorrow we're talking about.

Speaker 2 (38:54):
Just how specific your will should be.

Speaker 1 (38:56):
You've been listening to Simply Money, presented by Financial Here
on fifty five KRC, the talk station