Simply Money

Episode Transcript

Speaker 1 (00:06):
Tonight.

Speaker 2 (00:07):
It's kind of like, take two pills and call us
in the morning. We've got a remedy for your worries
when major economic events take place, as they inevitably do
and certainly are right now you're listening to simply when
he presented by all Worth Financial, I Meani Wagner along
with Bob Sponseller. I do wish there was like a
one size fits all like this, this is a solution.

Speaker 1 (00:28):
To the problem.

Speaker 2 (00:30):
And I guess I would say Bob, if we did
say there was one solution to every problem, it might
just be perspective. The four most dangerous words in investing
are this time is different. It can feel different, but
if you look back in history, we can oftentimes say, well,
this happened and it's kind of similar. Here's how the

(00:51):
markets responded, Here's how the economy responded.

Speaker 3 (00:55):
Great point in one of my favorite charts that I
like to look at personally and review with clients is
that wall of Worry chart going back to nineteen twenty six.
And thankfully we have our wonderful Andy Stout, our chief
investment officer, that updates this thing all the time for
us and keeps it in front of us just to
remind us that, you know, at any point in time,

(01:16):
going back to nineteen twenty six, we can all sit
there and think, Wow, this time is different. The world's
coming to an end. This is not a great time
to be in the market. You know, on and on
and on and lo and behold, Americans and human beings
always find a way. We always recover, we always innovate,
we always grow, and the market eventually goes back to

(01:37):
new and new highs. It has always happened that way.

Speaker 2 (01:41):
So if with all of this tariff talk and markets
all over the place right now, you are starting to
get nervous, First of all, you're in good company. I
think there's a lot of investors who are nervous right now.

Speaker 1 (01:52):
This show is for you.

Speaker 2 (01:53):
These topics are to give you the historical perspective to
remind yourself maybe doing something in changing your financial plan.
Pulling out of the markets is not the answer. Let's
go back to nineteen.

Speaker 1 (02:05):
Eighty seven, a day that has been a day that
lives in infamy because it was Black Friday.

Speaker 2 (02:12):
The Dow dropped twenty two percent in a single day.
I mean I wasn't invested at that time, Bob, Maybe
I can imagine. I cannot imagine as an investor the
free fall and that feeling in your gut during that time.

Speaker 1 (02:27):
One day down twenty two percent. But let's talk about
the recovery here.

Speaker 3 (02:31):
Within two years the market had fully recovered. And this
speaks to the point that you and I talk about
it seems like almost every day, ninety percent of the time,
over every three year holding period, the stock market is
up ninety percent of the time over every three year period.
Go back to two thousand and eight, the financial crisis.
This was a biggie SMP lost nearly fifty seven percent

(02:55):
from peak to trough, but recovered to new highs within
five years time. It took five years, but you know,
that's a huge recovery from a fifty seven percent drop.

Speaker 1 (03:05):
Well, and I think it's important to talk about too,
what happened after.

Speaker 2 (03:07):
Those five years of recovery, which was several several great years.

Speaker 1 (03:13):
In the markets.

Speaker 2 (03:14):
And you know, Bob, thinking back to two thousand and eight,
I have come across more than a handful of investors
over the years who have said, you know what, I
lost x percent in two thousand and eight, and I
just got out and I've never gotten back in because
I can't do that again.

Speaker 1 (03:29):
They're telling it to me as if they're winning.

Speaker 2 (03:33):
They made a great decision, right, because they just they
don't have to deal without volatility anymore.

Speaker 1 (03:38):
I actually am.

Speaker 2 (03:39):
Sad for them, because what they missed out is an
amazing recovery and the ability to build a heck of
a lot more growth than they ever had going into
two thousand and eight.

Speaker 3 (03:50):
You bring up a great point, and I know you've
done a lot of studying and you're an expert on
behavioral analysis. I mean, correct me if I'm wrong here, Amy,
But I think one of the big things that we
got to watch out for is we all have our
presuppositions and we all like to be right. So, you know,
by permanently going out of the market because it's too scary,

(04:12):
we can feel like we're right, and then we ignore
all of the conflicting actual data and history that we
don't want to admit it. Yeah, but it proves that
we were wrong. No one likes to No one likes
to experience that or feel that, so we just dismiss
it and shove it back in the corner.

Speaker 2 (04:32):
Yeah, the confirmation bias, Right, You look for information that
shows this was a great decision, even though.

Speaker 1 (04:37):
The preponderance of evidence is actually to the contrary of that. Right,
you know you made a bad decision if you pulled
out and never got back in.

Speaker 2 (04:45):
I think COVID nineteen twenty twenty is a fantastic example
of craziness.

Speaker 1 (04:51):
In the markets.

Speaker 4 (04:52):
Right.

Speaker 2 (04:53):
If you wanted to say this time is different, that
I'm sure was. We had not had a global pandemic
where the American economy had shut down in over one
hundred years, and obviously the economy has changed so much
over that time. And here we were watching this pandemic
move closer and closer to the US, and markets were
in a free fall. I mean, I remember it like

(05:13):
it was yesterday, Right February.

Speaker 1 (05:15):
Of twenty twenty.

Speaker 2 (05:17):
We couldn't go to the restroom without clients blowing up
our phones.

Speaker 1 (05:21):
We need to get out, We need to get out,
We need to get out. And in the message from US.

Speaker 2 (05:25):
Was stay the course, stay the course. Okay, So let's
fast forward just a month and a half, right mid
to late March, markets had already started to rebound, global
economy still shut down, people still working from home.

Speaker 1 (05:38):
I probably hadn't even really figured out how to use
zoom by this point in the year, right, And yet.

Speaker 2 (05:44):
The markets had started to recover and continued to recover
and continued a great stretch there thirty.

Speaker 3 (05:51):
Four percent decline in twenty twenty in just over a month,
but yet within the same year the market had recovered
all time highs. It's crazy, it's counterintuitive. No one is
smart enough to predict that type of an outcome in advance,
So you know, it's real easy to sit here and say,
the market's always come back. The markets always come back,

(06:13):
blah blah blah, and then they always do. The way
to get through periods like this is to have a
plan in advance to cushion the emotional and economic pain
so that you're not making emotional decisions based on short
term economic needs or feelings. And that's what we needed,
a diversified financial planning strategy with different asset classes in

(06:37):
there that move counter to the stock market.

Speaker 2 (06:41):
You're listening to Simply Money presented by all Worth Financial
i Memi Wagner along with Bob Spawonseller tonight, as you
head into the weekend, some perspective for those of you
who are nervous about the markets and volatility. We hope
we give you some historical perspective there that you might
just talk into your back pockets, as this volatility will
likely continue for some time. I have come across people

(07:01):
who have been panicked, certainly over the past few years
about inflation. Right not as bad right now, but a
few years ago we were talking nine close to ten percent.
That you were paying more than just the same time
the year before for all the stuff you were buying,
and inflation is a real concern.

Speaker 3 (07:21):
Yeah, when you get nine to ten percent inflation, the
Federal Reserve is always going to raise interest rates, and
they did seven times and that's why we had such
a rough year in twenty twenty two. We're hearing kind
of the same inflation concerns about these tariff announcements. I'm amy,
I'm listening to economists today saying these tariffs could actually

(07:42):
result in a recession rather than inflation. So I you know,
I don't want to get on here and predict what's
going to happen, but I think these that I think
the President has to get. They got to get these
tax cuts made permanent, because if you if you have
all these tariffs without some pro growth tax policies, we

(08:04):
will be in a recession. But anyway, the point is,
inflation can spike, we usually always and we always do
bring it back down. It's short term thinking versus long
term thinking.

Speaker 1 (08:16):
You know, it's funny, it is an all perspective.

Speaker 2 (08:19):
I had never and my adult life right paying bills
and stuff, really dealt with or been concerned about inflation
until a couple of years ago, a few years ago,
and when I would then share with my parents or
you know, anyone who was adults in the late seventies
or early eighties, and we're like, this is nothing. Our

(08:41):
first house, the mortgage was eighteen percent. You guys are
all freaking out about eight percent or nine percent. And
you know, I think it is that perspective of hey,
it was terrible at the time, we lived through it.
The economy after that was incredibly strong. There were some
great years for the markets in everyone lived to invest

(09:03):
and spend and consume another day.

Speaker 3 (09:06):
Human beings are remarkably resilient people and creative people, and yes,
we all pull together, we get through it, and we
live to fight another day. And the market's always at
some point will be back to all time highs.

Speaker 2 (09:22):
We've seen it too with interest rates, right, people have
concerns over interest rates, right, what you're paying. We've got
the nineteen ninety four rate hike cycle. And this is
when the Fed was just rapidly increasing rates. What happened there?
The bond market lost out, the economy kept growing, you know,
And I think what you have to remember, and this
is the conversation I'm having with a lot of people

(09:42):
in my office right now. You are not invested in policies.
You're not invested in any single person who is in Washington.
You are invested in these large companies that are the
absolute backbone of.

Speaker 1 (09:58):
The American economy.

Speaker 2 (09:59):
In what are those companies focused on growing and making money?

Speaker 1 (10:06):
In short term? With tariffs, there might be supply chain issues.

Speaker 2 (10:09):
They might have to, you know, figure out how to
move a plant from outside of the country here, and
it may take some time, but I guarantee you and
I can't use that word very often on the show,
these companies will figure out a way to continue to
make money.

Speaker 3 (10:27):
It reminds me of one of my favorite quotes when
it comes to investing, Amy be fearful. Others are greedy,
and greedy when others are fearful hard to do, hard
to implement. But at some point here we're going to
need to put our greed caps on when everyone else
is thinking about heading for the exits, because there's going

(10:48):
to be some great long term buying opportunities here at
some point in the relatively near future.

Speaker 2 (10:53):
Yeah, opportunities. I think you just have to see them
for what they are. Here's another anxiety. I hear about
a lot recession certain people that I work with it,
and every time they come into my office, I have
sall this in the headlines.

Speaker 1 (11:03):
A recession is coming. A recession is coming.

Speaker 2 (11:04):
Well, first of all, in the headlines, a recession is
always coming every day because there's always a headline about
a recession. But honestly, you're right, a recession is always coming.
It's actually a normal and healthy part of the economic cycle.

Speaker 1 (11:19):
Do we enjoy them, absolutely?

Speaker 4 (11:21):
Know.

Speaker 2 (11:22):
The reality when we're in a recession is people are
worried about losing their jobs.

Speaker 1 (11:26):
People are cutting back on spending. It's not a fun
place to be, but it is a very normal part
of the cycle.

Speaker 2 (11:33):
What happens after that part of the cycle, the economy rebounds,
people start spending again. The job loss is not as
much of a concern, right, and we tend to come
out of it while we do one hundred percent of
the time. So you can look back to two thousand
and one, the dot com bubble, you can look back
to two thousand and eight, right, the Great Recession. Yes,
we have experienced these things before.

Speaker 3 (11:56):
Yeah, you bring up the word recession, and I think
this is where we got to leave our politics at
the door, because I remember, you know, when President Biden
was in office, we heard recession all the time, you know,
back when interest rates are going up. It depends on
how you define recession. We did not end up having
a severe recession at all. Yeah, you go to the

(12:18):
other side of the aisle, people that can't stand President
Trump and the tariffs. We're starting to hear that our
word come out again. A lot of this is headline driven,
politically motivated. And again the reminder that your money is
not red or blue is green. So again, hopefully this
is giving our listeners some longer term perspective based on

(12:39):
actual data, not just opinions. And you know, just hang
in there. Things are going to be fine.

Speaker 2 (12:45):
Here's the all Worth advice. The key to successful investing.
It's not trying to predict the next downturn. It is
staying invested, being diversified, and focusing on the long term. Next,
some interesting new research on whether you're better off buying
long term or short term CD. 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

(13:10):
by all Worth Financial. I mean Me Wagner along with
Bob Spondseller coming up at six forty three, taking your
questions about vacation homes, dividend stocks and bonds, and a
whole lot more CDs certificates of a deposit. I feel
like this has been a major conversation over the.

Speaker 1 (13:29):
Past few years because.

Speaker 2 (13:31):
You can get some money, there's some you know, safety
and CDs, and also with interest rates having been higher,
you can take advantage of this. But I think now
with all the uncertainty in the markets, what's.

Speaker 1 (13:42):
The better option?

Speaker 2 (13:43):
Do you take a shorter term CD, do you take
a longer term CD. Well, there's some research behind this,
and Bob I think it's pretty interesting.

Speaker 3 (13:51):
It is interesting and I have some thoughts on this,
but the study shows, you know that to investors would
be better off choosing a longer term CD, even if
they need the money, you know, before the CD matures,
and going ahead and paying the early withdrawal penalty because
the difference in rates make more sense to do that

(14:14):
interesting information, I think. I will say that one of
the hardest things to do for anyone is to predict
the movement of short term interest rates. It's very difficult
to do so, I mean, my stance has always been
to stay flexible and stay liquid. I like treasuries rather
than CDs because we can sell them, you know, intra

(14:36):
day and you sell them at the market price. But
I don't like having a bank dictate to me, you know,
the terms of my CD. And I'm not against making
profits or anything, but anytime you buy or sell something,
especially through a bank or another commission based salesperson, there's
a price to get in and a price to come out.

(14:57):
And aiming a lot of the benefit of what we
do for our we don't charge anybody any markups, any
trading costs. We're able to move into these short term
safe interest bearing instruments with no markups and it's been
working well going back to twenty twenty two when it
became very attractive to put some cash in some of

(15:19):
these in some of these instruments when rates were starting
to spike.

Speaker 2 (15:24):
Yeah to this research, right, And here's kind of what
the example that they're using. If you wanted to invest
ten thousand dollars right for a year, and the bank
offered a one percent rate for a one year CD.

Speaker 1 (15:35):
However, they offered a four percent rate for a two
year CD.

Speaker 2 (15:39):
So with a one year CD, obviously you're getting ten thousand,
one hundred after the year, right, So if you held
it for two years, ten thousand, four hundred. But what
if you pull it out, say after one year, Well,
then you're going to lose two hundred dollars, but you're
still going to come out one hundred dollars ahead.

Speaker 1 (15:57):
It's interesting research.

Speaker 2 (15:58):
I don't know that I would try to build a
port folio on any of this, but I think it's
really good to understand. Hey, listen, if I'm looking at CDs,
it's probably smart to kind of keep this in the
back of my mind that maybe going with that longer
duration instrument might be smart, even if I need to
pull my money out, look at the rates for both,

(16:19):
and run the numbers. Every Sunday, you're going to find
our all Worth Advice in the Cincinnati enquire Fridays.

Speaker 1 (16:25):
Though we like to give you a preview.

Speaker 2 (16:27):
First question comes from Jason in Mount Lookout. I recently retired, where,
of course, now going through all this market volatility, I
get it, Jason feels like bad timing. How concerned should
I be about the impact on my retirement plan?

Speaker 3 (16:43):
Well, Jason, my answer would be, it depends on what
your retirement plan looks like, how is it constructed, what
are the assumptions that are embedded in it. There might
be reasons for you to be very concerned, and there
might be reasons for you to not need to be concerned.
So I think it just comes down to what kind
of plan do you have? And to get more specific,

(17:06):
you know, and we talk about amy. I feel like
we talk about this every day. You have to have
built into your plan some short term, non volatile money
to get you through periods like this, And we talk
about for people that are getting ready to retire or
recently retired, have one to three years worth of living expenses,

(17:28):
or those home repair budget moneies or car replacement. Have
that stuff out of the market and have it in
an eighth investment. So you don't have to worry about
short term volatility. I would say to Jason, have a
good fiduciary advisor, sit down and review your retirement plan.
Maybe you're already on track, maybe you're not. Maybe there's

(17:48):
some good adjustments that can be made well.

Speaker 2 (17:50):
And one concern for those who do retire at a
time when markets are down as something called a sequence
of return risk, right, and that is, if you are
planning on pulling money immediately out of those accounts, and
your accounts are down, now, you're locking and losses in
the early years of your retirement. Right, assuming that you

(18:10):
live twenty thirty years in retirement, if you do the numbers,
and those early years of your retirement, you're locking and
losses when when markets are down, there is the concern
of running out of money later on the flip that.

Speaker 3 (18:26):
Assumes that you that assumes that you have to sell
assets to fund your retirement when the market's down.

Speaker 1 (18:31):
One hundred percent. That is that assumption on the flip side.

Speaker 2 (18:35):
Right, if markets are good when you first retire, then
that money even if you get down years later on
even the same percent down for the same duration of time.
You know, numbers show that you're better off right retiring
when markets are up. You have no control over that,
of course, so our messages always control what you can control,

(18:57):
and that is that you go into retirement regardless of
what the markets are going to do with a plan,
and that is having those cash reserves flush with money
so that you're not locking in losses.

Speaker 3 (19:09):
And any great Super Bowl winning football team knows how
to simultaneously play offense and defense. And the teams that
can only play one and not the other never make
it to the Super Bowl. They don't even make the playoffs.

Speaker 2 (19:23):
Well, and it's a great point, but you know, if
you have not I know lots of people who are
working and accumulating and they're not even thinking about this.

Speaker 1 (19:30):
They're going to retire next year or whatever.

Speaker 2 (19:32):
And they might come in my office and say, I
just want to get another set of eyes on my plan,
and I'm like, oh boy, we need to get some
cash reserves built up immediately. Coming up next the list
of apps that are the most invasive. How to protect
yourself and your money.

Speaker 1 (19:45):
That's straight ahead.

Speaker 2 (19:46):
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. I me
Me Wagner along with Bob sponseller. Do you ever give
any thought to what's on your phone? And specifically, I
mean which apps are on your phone, because some of

(20:08):
them are larger offenders than others when it comes to
breaching your privacy joining us tonight of course. Our tech
expert from intrust It, Dave Hatter, Dave, of course, this
is something I never thought about before, and now you've
got it on my radar. You're telling me some apps
maybe not even worth having.

Speaker 4 (20:28):
Yeah, I mean, that's exactly what I'm telling in I'm
sure that comes as no surprise to you. You know
me pretty well. I'm super tinfoil hat guys that people
need to take this into consideration. But there was a
recent report put out by a cybersecurity experts who went
and looked at various apps, and I encourage people, you know,
find me online. I've shared this multiple times so you

(20:49):
can get to the specific detail. But they came up
with a list of the top twenty most invasive apps
and they hit five different categories they used to determine this,
and it was things like you know, how much of
your data is shared with third parties. How much of
your data is used for other uses where you don't
really know what it's used for. So you've got these
different categories they rated it on, and it's important to
understand what those are becau Again, the third party thing,

(21:11):
in my mind, is one of the most significant consequences.
Even if you trust app maker X, if they're selling
your data to a third party, you trust that company,
well maybe, but you don't even know who they are.
So and of course the offenders on this list are
all the typical offenders you and I've talked about many
times over the years, the metas of the world. You know,
the people that are on Facebook, Instagram, et cetera, alphabet

(21:34):
the parent company of Google. It's all the same people,
because again, you are their product, not their customer.

Speaker 2 (21:39):
Yeah, and I think this is an excellent point, and
I think you know the baseline I think that we
need to start with here in this conversation. In in Dave,
I know it's something you've talked about before, is you
download these apps they're free.

Speaker 1 (21:54):
Nothing is free.

Speaker 2 (21:55):
So if the app is free in the app store,
likely the company is making money off of getting data
from you and selling it to other people. So I
think you've got to start by understanding that and then
take a critical look right at the apps on your phone.
How many of them are you using? How many do
you actually need? Because if you're not using them, you

(22:17):
may not think about it, but it might be smart
just to delete them.

Speaker 4 (22:21):
Well, that's exactly right, Amy, And people have to understand.
And you can't see my air quotes here over the air,
but they're not free. The infrastructure required to run these things,
the software developers required to build these things. You know,
they have mortgages. They like to eat too. You know,
you are the product, not the customer. They're monetizing your data.
Now I'm not telling that's necessarily nefarious, but that's the

(22:42):
trade off you're making when you're using something that's free.
And again Google, Facebook, think about it. What can you
even really buy from those companies as a consumer. It's
almost nothing, And it's you know, they're making all these tools,
many of which are really handy and convenient and useful,
free to you because they're monetizing your data. And if
you go check out their profit and laws statements, they're
making gigantic amounts of money off of this data, so

(23:05):
you know the data is valuable. The less apps you have,
the better, The less invasive they are, the better because
the downstream effected is when your data gets sold to
a third party and then that company gets breached or
sells it to a fourth party and they get breached
or whatever. Well, you're the one that's on the hook
for that, right, You're the one that has your identity store.
You're the one that has people using data that you

(23:27):
might think that only a legitimate organization would know to
social engineer you into some sort of fraud or whatever.
So there are consequences of all this data. And yeah,
the less apps you have, the better. I always encourage
people before you download an app, look at the Apple
privacy label. Apple requires vendors to disclose the information they're
going to collect. It's a label kind of looks like

(23:48):
a nutrition label on a can of beans or whatever.
You can go to the Apple App Store and look
up something like TikTok and see all the data collects.
Why does the fly flight app need to know your location?
Why does the game need to read your texts? Right? So,
if you look at those privacy labels, it will give
you some real detailed insight into the kind of information

(24:10):
they're collecting, at which point then at least you can
have some informed consent, because you know, the privacy policy
is usually confuse opperly you can't understand it, but when
you look at that privacy label, you can say, well, huh,
maybe I don't really need this app after.

Speaker 2 (24:22):
All, Dave, I want you to be really clear about
where we can find the privacy label, because I didn't
even know it existed. And as I'm listening to you,
I'm like, Okay, when I download an app, I can
absolutely look at that and decide if it's worth it.

Speaker 1 (24:37):
I don't even know where to find it.

Speaker 4 (24:39):
So here's the easiest thing to do. Go to the
Apple App Store. If you don't know how to do that,
just you know, don't Google it because don't use Google
searchces and use the privacy research in rave or do
dot go. Yes, you know, go to the Apple App Store,
and then you can search on any app that's available
through the app store. First off, you should never install
or download any app that is not available a legitimate

(25:00):
app store. That's just a recipe for being hacked. But
if you're to the Apple App Store, then you can
just search on like TikTok or Facebook or Instagram or whatever,
at which point, you know, you can go to a
page where they'll show you this privacy label and you
can see for yourself the kind of information they're collecting. Now,
the other thing you can do amy like Facebook, right.
Facebook started out as a web application. It did not

(25:21):
have an app to install on your phone. If you're
using Facebook on the web, with a privacy friendly web
browser like Brave, Safari, Tour, Firefox, something like that, you
can significantly reduce the information that can collect. So if
you really really really want to use something and it
has a web based interface, it's always better because they're
going to be less data they'll be able to collect

(25:42):
about you. So that's that's a third tip is to
you know, like I have a Facebook account. I use
it to do things like promote this show, right, but
I don't use any apps for meta. There are zero
meta apps installed on my phone because they are some
of the most invasive and intrusive apps out there.

Speaker 2 (25:58):
I'm looking at this list right of twenty of the
most invasive apps, seven of them I have on my phone.
So I'm going to go back and take a much
closer look at these, Dave. I'm just wondering on your phone,
do you even have apps? How many do you have?
And how do you determine whether it's worth it for

(26:18):
you to download them or not?

Speaker 4 (26:21):
Yeah? Good question for me. I have an Apple phone.
They tend to be more privacy and family security, because friendly,
because they're a business model. Other than the apps that
ship on the phone, I have virtually no apps that
aren't work related. You know what interust we use things
like Microsoft and sixty five, So I have Outlooks, I
have Teens. I do have the LinkedIn app because I

(26:42):
use LinkedIn a lot for business purposes. That provides a
lot of value. And Microsoft already has all my data.
Microsoft owns LinkedIn, by the way, which is why I
bring that up. So I do have a few apps,
but I have very few other than what came and
stole on the phone and by desault, because I understand
how this works and I want to choke off the
flow of my data to these companies. I use Facebook Amy,
but I use it to a web browser, so there

(27:04):
are always to limit the amount of data that's being collected.
And I think the first step really is look at
that privacy. Well, that's going to give you some real
insight into what's going on.

Speaker 2 (27:14):
What else do we need to keep in mind when
it comes to these apps? I know, even when I
get on a website now and it's talking about cookies,
I always go through and do only strictly necessary something
I learned from you. What else can we learn about
what we have on our phones?

Speaker 4 (27:31):
Yeah, that's the right thing to do. Less cookies is better,
less data collection is better. Again, avoid apps if you
can use the web based interface, Get a privacy friendly
browser like Firefox and brave toward Safari, Avoid Google search engine,
use a privacy friendly search engine, and you know, just
be cognizant that. Again, if you're not paying for something,
they're collecting your data. That's the trade off, and again

(27:53):
not necessarily nefarious, but not ideal because there's no telling
where that data will end up or how it could
tends to be used in ways that they're not beneficial
to you.

Speaker 2 (28:03):
Parents and grandparents, if you have pre teens teenagers who
have phones, this is a conversation you need to be
having with them, right. They're more apps, more apps, more apps,
playing all these games with friends, oblivious to the fact
that anyone is collecting information on them. So make sure
you understand what apps are on your kid's phone, what
that's tracking, and just know what's on their phone.

Speaker 4 (28:26):
Right.

Speaker 2 (28:26):
That's a general good practice, So it's not just taking
a critical look at your own phone, but the people
you love around you have this conversation with them, make
sure they understand their privacy could be impacted in a
major way just by downloading the apps. It's great information
to know, of course, from our tech expert Dave Hatter
from Interest I you're listening to Simply Money presented by

(28:47):
all Worth Financial here on fifty five KRC, the talk station.
You're listening to Simply Money presented by all Worth Financial.
I meanwag you're along with Bob Spaon's already have a
financial question you need a little help with. There's a
red button you can click them while you're listening to
the show.

Speaker 1 (29:05):
It's right there on the iHeart app.

Speaker 2 (29:07):
You can just record your question right, tell us what
it is, it's coming straight to us. Well, answer right
here on the show. Speaking of those questions, let's get
to them.

Speaker 1 (29:15):
The first one is from John in Blue Ash. I'm
thinking about buying a vacation home in Florida. Would setting
up a residency there significantly impact my tax situation?

Speaker 3 (29:25):
Well, it could, but there's a lot of factors that
go into that. A lot of folks try to set
up residency in Florida with the second home because you
avoid state income taxes by being a resident of Florida.
But it comes with some strings attached, and the state
of Florida is very diligent in monitoring to the day

(29:47):
how many days per year you actually spend in the
state of Florida. So you know, you have to change
your voting registration, your vehicle registration, you have to keep
actual receipts they prove you know how long you were there,
so it can benefit you from a tax standpoint, But
be ready to change where you vote, where you register

(30:07):
your car, a lot of things like that. So there
are a lot of things that go into that decision
before you decide to just be a resident of Florida
to save taxes.

Speaker 2 (30:16):
Yeah, a few things here, right. Florida is one of
nine states I think that don't have state income taxes,
so a lot of people find it attractive. Also, there's
sunshine there more than here, you know, so you have
to reside there for at least six months in a day.
So to your point, Bob, you've got to be able
to prove that you're still going to pay federal income taxes.

(30:37):
And oftentimes it's like where one state doesn't.

Speaker 1 (30:40):
Tax, they're going to have to make it up.

Speaker 2 (30:42):
Property taxes in the state of Florida usually a little
bit on the higher side. Now, would you just still
come out ahead. I don't know. Probably, maybe, but I
think it's worth looking into. Don't just say I'm going
to buy the second home and move there because it's
going to be cheaper.

Speaker 1 (30:56):
You got to do your research as well.

Speaker 3 (30:58):
Yes, sales taxes on things like groceries and everyday items
can tend to be a little higher in Florida too,
good point.

Speaker 2 (31:04):
Amy, Yeah, all right, let's get to Sarah and fort Thomas.
What's the best way to fund my grandchildren's education without
giving them direct access to too much wealth.

Speaker 3 (31:14):
Well, I think there's two main ways, Sarah, and I
think it depends on the time horizon, you know, between
now and when your grandchild is going to go to school.
And here's what I mean. The five twenty nine college
Savings Plan is a wonderful way to basically give money away,
but not really even give it away because you maintain
control over the account. It's a wonderful way to fund

(31:37):
for a longer term runway because the money goes into
that account and grows completely tax free and can be
withdrawn completely tax free if the money is used for
higher education costs, and the grandchild can be the beneficiary
of the account, but you continue to be the owner.
So if things change and the grandchild doesn't go to

(31:59):
school or his or her plans change, you still control
the money. In other words, you are not giving that
grandchild direct access to your wealth. Now, if the grandchild
is going to start to go to school next month
or next quarter, you could just pay the tuition bill,
room and board bill directly to the university and your

(32:20):
grandchild never touches the money. So there's two options to
not give your grandchild any access to your wealth and
still help them out with their education.

Speaker 2 (32:30):
I think another great point here is because you're the grandparent,
if you open right the five twenty nine, it actually
isn't going to count on that kid's FAFSA, which is
the kind of information that you have to fill out
on your house right in what your parents make and
in that kind of form. So if your parents have
opened up a five twenty nine, that's going to count.

(32:51):
They're going to take that into consideration when they're looking
at giving you any financial aid. If your grandparents opened
that five twenty nine, so if you were to do it,
it wouldn't have an impact on their FAFS fest So
there could be kind of more opportunity there or more
benefit there, and you opening up even than their parents.
Let's get to Bob now and Mason. I just retired
and I am looking for ways to boost my income.

Speaker 3 (33:13):
Can you explain what dividend paying stocks and bonds are
and whether this is an effective strategy.

Speaker 2 (33:19):
So it can be. I actually recently had someone in
my office who had very carefully researched dividend paying stocks
and their strategy for income and retirement, and they feel
like they can fully replace what both of them were
making in dividend paying stocks. One thing you have to

(33:40):
keep in mind is that those dividends aren't always guaranteed.

Speaker 4 (33:43):
Right.

Speaker 2 (33:43):
There's a lot of companies once they start to pay them,
they will continue to pay them. But look no further
than General Electric as the company that was paying a
higher dividend and then scaled wayback. So keep that in mind.
You know, often times when you're still working, you just
reinvest dividing, and so this is an opportunity to generate
I would say some income in retirement. I don't know

(34:06):
that I would recommend everything that you're planning on getting
in retirement and access of social security to come from
dividend paying stocks. I don't know, Bob, what's your take.

Speaker 3 (34:17):
No, it's good. I think to your point, it's a
blend in every situation's different. And you also have to
factor in the tax exposure. I mean, when you go
into bonds, you're basically loaning governments or companies money, and
that bond interest is taxable. So I think it's important
to customize your income strategy based on what your income

(34:40):
needs to be, what some of your other income sources are.
And often times people are surprised at the tax efficiency
that we can drive by using some capital gains to
generate cash flow rather than simply having it all come
from dividends and interest.

Speaker 2 (34:56):
Coming up next, we're taking you into the mind world
of Bob's spawnseller, in his world of wealth, specifically.

Speaker 1 (35:05):
Learning from him.

Speaker 2 (35:06):
Maybe some lessons his kids have learned. You're listening to
Simply Money presented by all Worth Financial. Here in fifty
five KR see the talk station. You're listening to Simply
Money presented by all Worth Financial. I mean me Wagner
along with Bob's sponseller. It is time for Bob's world

(35:27):
of wealth, where there as always a great nugget of
wisdom we can take with us for the night.

Speaker 1 (35:33):
Bob, what do you have for us?

Speaker 3 (35:35):
Well, Amy, we talk often about the importance of instilling
some economic, you know, capabilities and knowledge into our kids,
and I thought i'd talk a few minutes minutes about that.
My wife and I have three adult sons ages roughly thirty,
twenty seven, and twenty four, so we're kind of in
the middle of this right now. They're transitioning and have

(35:58):
transition into young adulthood. So I thought i'd just share
a couple of things, you know, to you know, on
how this kind of has worked for us. I think
the one thing to keep in mind is every kid
is different, and that's been the fascinating thing that we
have learned some you know, We've got one son who's
probably saved the first dime he ever made. I mean,

(36:19):
he doesn't like to spend money. He squirrels it away,
finds ways for other people like mom and dad to
pay for his stuff. You know. Then you got the
other one in the middle, who he just as soon
as it flows in the door, it's going out the
other end, and we've had to have different kind of
talks with him. And then our youngest son is kind
of in the middle. So I think the key thing

(36:41):
when we're talking about money with our kids is, like
everything else that we do when we're coaching and teaching
our kids, I think it's important to use positive reinforcement
rather than just gang up on him and criticize him
and wonder why they don't do everything we did, because
people will respond, and I know this has been this

(37:01):
way with our kid. They respond to positive experiences where
they've actually been able to see some things happen, where
they've made a course correction and change and see the
positive benefits of it.

Speaker 2 (37:15):
You know.

Speaker 3 (37:15):
For example, it took me, I don't know nine months
to get our middle son to actually enroll in his
four to one K plan take a damage to the
company match after he did it, and he actually pulled
out his fidelity app and could actually start to see
that account value grow. It just lit a fire under him.
He was shocked and amazed at how quickly money accumulated,

(37:38):
and now he's all in on the whole thing, whereas
a year year and a half ago he had no interest. So,
you know, those are a couple things.

Speaker 2 (37:47):
I think that's a fantastic point to make great parents' grandparents.
You know, your kids, your grandkids all have vastly, wildly
different personalities, and they're also going to have very different
relationships with money. So you can't have this kind of
one size fits all, like this is what you got
to do with your money, Bob. I like the point
that you're making of the conversation is going to look

(38:09):
different with each of your children depending on their relationship
with money.

Speaker 4 (38:14):
Right.

Speaker 2 (38:14):
There's for one of your kids, it might be, hey,
you can spend a little, you can enjoy life, you know.
For another one, it's going to be you're going to
need to save more. Maybe you're enjoying life a little
too much right now and you're not planning for the future.
You got to know your kids, but also the communication
has to be there, right, You've got to be talking
about these things with them excellent points. Bob, thanks for listening.

(38:36):
You've been listening to Simply Money, presented by all Worth
Financial here in fifty five KRC, the talk station