Simply Money

Episode Transcript

Speaker 1 (00:05):
Tonight, the Fed stays put. Our recession scorecard is in.
So what does that mean? And you are asking the
advisor a lot of great questions. You're listening to simply
money presented by all Worth Financial Ammi Wagner along with
Bob Spondseller for the first time since President Trump failed
to fire Federal Reserve Chair Drome Palll and then of

(00:26):
course walked back on that. The Fed mets and have
announced what they are going to.

Speaker 2 (00:31):
Do with interest rates this time.

Speaker 1 (00:32):
Around, and what they are doing is nothing. Bob, I
cannot even begin to recall how many times I have
said over the past few years, this is.

Speaker 2 (00:41):
Not a job I would want.

Speaker 1 (00:43):
This is a tight rope walking over flames with like
lions jumping at you kind of a job, right, getting
it right, with political pressure, with outside pressure, with.

Speaker 2 (00:55):
A whole lot going on. And essentially what.

Speaker 1 (00:58):
The Federal Reserve decided today is based on all the
information that we have right now. We're just going to
keep interest rates where they are. We're not going to
lower things yet. And I think, you know, there's a
lot of information they're taking in to make that decision.

Speaker 3 (01:15):
I think that's a very prudent decision by the FED,
and it's been widely telegraphed that they were probably going
to do nothing, and I think for good reason. And
we've talked about this a lot on this show. There's
a lot of things out there we just don't know yet.
I mean, we have a lot of unresolved issues with
regard to trade policy. And I know the fact, you know,
the President has gone on social media and gone on

(01:36):
publicly and made comments and you know, walk them back,
and it's just all the way the President likes to communicate.
I think again, we try to stick with facts and
data on this show, and I think the data suggests
that it's a prudent decision to just sit back and
wait a little bit longer.

Speaker 1 (01:52):
Yeah, And you also have to keep in mind, is
going back to the post pandemic, right inflationary environment that
we had. The FED very outwardly said, hey, we think.

Speaker 2 (02:05):
This is transitory. We think this is a very short
term thing. It's going to play itself out.

Speaker 1 (02:09):
There's supply chain issues, people are returning to work. And
then that came to really kind of bite them later on,
and that that inflation was nothing but transitory, and there
was widespread criticism from economists from really kind of across
the board that they waited too long to start to

(02:30):
hike interest rates in order to try to bring inflation down. So,
you know, another piece of this decision making process is, Okay,
we waited too long before to hike things. And again
they're relying on a lot of data, but tariffs are
potentially inflationary. You drop interest rates and then we have inflation,

(02:51):
and you've got a.

Speaker 2 (02:52):
Whole other problem.

Speaker 3 (02:54):
Yeah, And I think part of what is perhaps making
President Trump go public with some of his comments is
we need we need to remember the European Central Bank
has already cut interest rates seven times already in twenty
twenty five. That's been a nice little jolt to their
economy and their stock market. You know, we've talked about
how you know stocks in Europe are up for the year. Well,

(03:16):
you drop interest rates seven times, that's going to juice
your stock market a little bit. And I'm sure the
President would like to see the same thing happen in
the United States. Hence, you know some of his comments
on hey, let's go, let's cut, let's cut. Yeah, and
we'll see what happens here. I think our Chief investment
Officer Andy Stout has talked about, you know, as recently

(03:38):
as Monday on this show, Amy, I think the odds
right now are probably sixty to seventy percent, you know,
in odds of a rate cut in June, possibly three
or four rate cuts throughout the balance of this year.
Andy said he'd probably be a little surprised if we
do get four rate cuts that ter this year. But again,

(04:01):
we got text policy that needs to be figured out.
We've got trade policy that needs to be resolved. I
can totally understand why the Fed just decided to just
sit on this this month and wait and see how
the data shakes out.

Speaker 1 (04:14):
Yeah, but to your point, where the European Central Bank
has cut rates seven times already this year, this move
today or I guess lack thereof kind of extended the
pause that started in January after we had kind of
that series of rate cuts over the past couple of years.
So right now, interest rates kind of remained the same
at four and a quarter to four and a half percent.

(04:35):
Let's talk about where the benefits are for that. For
you as an investor, we are in a period of
time where you can actually make a little bit of
money on money that's in the sidelines, and it's for
as long as this period continues where we're not cutting
interest rates. As an investor, you can still take advantage

(04:56):
of that.

Speaker 3 (04:57):
You could still take advantage of it. But I you know,
regardless of what interest rates are amy and I'm not
telling you anything you don't know. I mean, there's really
usually a very little spread when you net it out
for taxes between what you can get in short term
instruments like CDs, treasuries, high yield money market accounts, and

(05:19):
on an after tax basis, comparing that to inflation, you know,
you get a little bit of a positive spread, but
not much. And I think that's still where we are today.
You can get you know, roughly four percent, no risk,
pretty liquid money today, and that's attractive to people emotionally,
but we got to remember that with inflation hovering in

(05:39):
the high twos to three percent, you know, when you
net that four percent out for taxes, you're really not
gaining any purchasing power. You're just treading water, so to speak. Yeah,
and the only way, yeah, the only way to really
grow net worth and grow purchasing power is to be
investing in something that is going to grow. But yeah,

(06:00):
while we're waiting for all this to shake out to
your point. For emergency funds and short term liquidity needs,
four percent is still a nice place to hang out
for a while, and folks should be taking advantage of
that if they're sitting with money in bank accounts where
the banks are only giving you one to one and
a half, still a good time to shop around and

(06:22):
make sure you're getting treated fairly with your short term cash.

Speaker 1 (06:25):
Yeah, for money that belongs on the sidelines, right, that
is in your emergency find you're going to make more
than historically you were able to win just a few
years ago.

Speaker 2 (06:35):
And I remember this, you are making.

Speaker 1 (06:37):
Point zero zero zero zero six percent or whatever it
was by having your money parked in a savings account.
Now you can make a little more on the money
again that belongs on the sidelines. You're listening to Simply
Money presented by all Worth Financial Immi Wagner.

Speaker 2 (06:51):
Along with Bob Sponseller.

Speaker 1 (06:52):
No major changes from the Federal Reserve are nation Central
Bank today. And we also have new research looking at
money managers and how they are feeling and maybe their
outlook on the markets and where they'll be moving in
the future.

Speaker 3 (07:09):
Yeah, and I'll just say this right up front. The
information we're going to share right now, I would say
is borderline useless, but we're going to share it with
you just to give you a heads up of what
you're hearing on the evening news or when you're driving
around in your car. Thirty percent thirty over thirty percent
of all respondents on a recent survey of where the

(07:31):
market's going over the next twelve months a predictive survey
is saying they're bearish on the market for the remainder
of twenty twenty five or the next twelve months. That
is the highest percentage of bearishness since nineteen ninety seven. Amy,
I'll tell you somebody who's been in this business for
a long time, When you get this much bearishness among

(07:54):
so called money professionals, that's usually a good time to buy,
because you know these people are usually wrong well.

Speaker 1 (08:02):
And on the flip side, right, the money managers who
are bullish are at their historically low levels.

Speaker 2 (08:09):
The question I think.

Speaker 1 (08:10):
You have to ask yourself as a long term investor
who's looking at this research or hearing about it, is
what does this mean to me? And Bob has already
answered that, like take it with a grain of salt.
These people make predictions all the time, whether it's in
research and a questionnaire that's solicited of them, or whether

(08:31):
they're putting opinions out there in headlines.

Speaker 2 (08:34):
And we have seen so much.

Speaker 1 (08:35):
Right when you're paying really close attention, when it's your
job to pay really close attention to these financial headlines,
you start to see a pattern. And that pattern is craziness.
It is chaos. It is you know, last year, when
we had a banner year in the stock market, there
were still money managers going into twenty twenty four and

(08:56):
through twenty twenty four that were calling for the largest
session we've seen in years. The sky is falling all
these things. This one tiny thing that we're seeing in
the market right now is pointing toward under failure of
the American economy. All of those things have been said
in the headlines by people just like the ones who

(09:17):
were participating in the poll, and they were all wrong.

Speaker 3 (09:21):
Well, Amy, you've you've you had a very long career,
you know, in the media industry, so you know how
this game works. If somebody, if somebody is willing to
come on television or the radio with some outlandist prediction.
You know, if you're in the media business, you're like, hey,
put them on. You know it's going to cause some excitement.
People will listen to them, and even if they're wrong,

(09:41):
which they are most of the time, it makes for
great headlines and makes for an interesting story. When you
look at this recent survey, you got pessimists, you got optimists,
and the range. If you look at the survey, you know,
some are saying a four to seven percent increase from
recent levels, some are seeing a seven to ten percent

(10:02):
decline from here, and a little over forty percent of
all respondents of money managers to this recent survey describe
themselves as neutral, meaning they're they're not willing to make
any bets either way. And honestly, I think that's the
responsible way to play this.

Speaker 2 (10:19):
Well, they don't have a crystal ball. I mean, you
might as well flip.

Speaker 3 (10:22):
Them good, admit it, that's good exactly.

Speaker 1 (10:25):
I don't know where things are going to go in
the future, but I'm going to stand strong on fundamentals,
right and I think that's a really smart place to
be as an investor. You know, and keep in mind
this research changes. I mean, you could ask the same
question of the same people a month from now, and
it could be drastically different.

Speaker 2 (10:40):
What doesn't change.

Speaker 1 (10:42):
Is research that shows, hey, these people are trying to
manage funds in a way that's going to beat the market, right,
the underlying index that they're trying to beat.

Speaker 2 (10:52):
And here's the deal.

Speaker 1 (10:53):
Seventy three percent of active managers underperform their benchmarks in
any given year. Three out of four of them can
even hit the benchmark, whether it's the S and P
five hundred, whatever it is. After five years ninety five,
almost ninety six percent of active managers missed the market
after fifteen years. Nobody's doing it.

Speaker 3 (11:11):
And you just drove home the main point that we
want to get across to folks today, Amy, seventy three
percent over one year, ninety five and a half percent
over five years, and nobody over a fifteen year time
period at you know, professional money managers outperform the Index's
the that's the message right there, Amy, you nailed it.

Speaker 1 (11:31):
Yeah, they don't have a teara card that's telling them
the right thing.

Speaker 2 (11:34):
They don't have a magic eight ball.

Speaker 1 (11:36):
There's nothing that's giving them the answers, because if there was,
they'd be beating these markets. Year after year after year,
and they are not. Here's the all Worth advice. Please
ignore predictions, don't try and time the market. Stick with
your diversified long term plan that doesn't rely on someone
picking winners. It's as a longtime Kentucky resident, it's like

(11:57):
trying to pick the winner of the Kentucky Derby. Be
done consistently year over year. Coming up next, how we
determine recession risk and maybe how you should be thinking
about it. You're listening to Simply Money, presented by all
Worth Financial here on fifty five KRC, the talk station.

(12:18):
You're listening to Simply Money presented by all Worth Financial.
I Meani Wagner along with Bob spon Seller. If you
cannot listen to our show every night, you do not
have to miss anything we're talking about because we cover
a lot here. We've got a daily podcast where you.

Speaker 2 (12:30):
Just search Simply Money.

Speaker 1 (12:32):
It's right there on the iHeart app or wherever you
get your podcasts.

Speaker 2 (12:35):
Coming up at six forty three.

Speaker 1 (12:36):
You've got a lot of questions right now about taxes,
how to really be diversified, and a lot more.

Speaker 2 (12:42):
We're going to get to those in just a few minutes.

Speaker 1 (12:45):
There is a lot of chatter right now, and honestly
a lot of the time in headlines about the possibility
of a recession. And right now, Bob more people are
of course talking about it because we have the US
economy contracting. We got this this data in the past
few days and said, hey, the US economy contracted in
the first quarter of this year. Oftentimes kind of in

(13:07):
the headlines, it's thrown around. The recession is defined as
two consecutive quarters of negative gross domestic products. So if
we've got one, are we heading in this direction? And
so you know, I think when need to throw out
that word recession, we do not throw it out lightly
because this is something that scares a lot of investors.

Speaker 3 (13:27):
Well in that our word, that recession word will be
talked about and has been talked about in the media.
So you know, people you know, sit up in their
chair and take notice of that. I mean, recessions are
generally not good. But you know, we had Andy Stout,
our chief investment officer, on the show on Monday, and
he dug a little deeper on how we might have
some revisions to those numbers and then really what those

(13:49):
numbers need with you know, imports being brought forward for
the last quarter. But more importantly, Andy Stout, our chief
investment officer, and I know other well known responsible economists,
they look at a lot of things other than just
GDP numbers, And I know with Andy, he has a
little scorecard he uses that is populated with all kinds

(14:12):
of indicators, and there are ten different indicators. And the
thing that I like is he boils this down to red, yellow,
and green. You know, he dumbs it down for so
people like me can even understand it, and it does
a great job. And right now, only four of his
ten recession indicators are blinking red. So that shows us

(14:35):
that we've got a mild risk of a recession, but
nothing to panic about right now.

Speaker 1 (14:40):
I think it's important to understand as an investor. Again,
we kind of joke around it, but nobody has a
crystal ball.

Speaker 2 (14:47):
So if anyone's trying to make.

Speaker 1 (14:48):
A prediction of what's going to happen in twenty twenty
six or twenty twenty seven in the stock market, you
just it's it's craziness. But there is something called a
leading economic indicator, and this is something where, hey, if
you start to see a trend in these numbers, in
a particular direction, it might signal something bigger over the

(15:10):
course of the next six months. Right, So Andy has
compiled a list of those ten of them that, hey,
if they were all pointing in the same direction at
the same time, you might want to raise the flag
a little bit and say, Okay, we could be heading
into a recession now. Now, I would say, also, kind
of a disclaimer that I'll put out there at the
same time is just because even if we thought there

(15:32):
might be a recession coming, as a long term investor,
I would say, you don't need to change anything about
your plan. Your financial plan should count for times like that.
But by to your point, four out of ten are
signaling maybe some potential issues. That's pretty normal territory.

Speaker 2 (15:49):
For what we see.

Speaker 3 (15:51):
That's what I was just gonna say. I mean, there, there,
we rarely get a ten out of ten. Yeah, all
the lights are green. Back cup the truck and pile
up the stocks because we're going up fifty percent in
the next twelve months. There's always things out there on
the horizon. But you know, Andy looks at things like
the broad economy, interest rates, housing costs, employment numbers, consumer sentiment.

(16:16):
You know, I mentioned on the show yesterday, my little
Bob indicator for whatever it's worth. You know, I look
at interest rates, employment, inflation, and earnings. You know, there
are things that you if you have access to the data,
you know, like Andy and his team have, you can
you know, look under the hood in very detailed ways
and look at trends on how various parts of this

(16:38):
economy are moving. And I think to the point you
just made amy, by the time the media catches up
and gives us this official declaration of a recession, nine
times out of ten, the recessions already over and we're recovering.

Speaker 1 (16:54):
Yeah, you know, And it's like, kind of what should
you do with this information?

Speaker 2 (16:57):
Right?

Speaker 1 (16:58):
Sometimes if I get a nervous investor in my office,
I will bring up Andy's scorecard and I will say, listen,
these are all the things that we are keeping a
really close eye here on at all worth, you know.
And I think another thing you have to keep in
mind too is, you know, if one of these particular
indicators is triggered right, it moves to red. What you

(17:19):
also have to keep in mind is is there a
pattern of this over time? Because some months and certain
data will be flagged and then it kind of moves
on and goes back to normal. So I think this
is a way of saying, hey, this is one way
that you can maybe maybe look at that.

Speaker 2 (17:34):
But I don't even know.

Speaker 3 (17:35):
You just made an excellent point, really excellent point, because
we what do we hear about all the time in
the financial media? Revisions? GDP numbers get revised, employment numbers
get revised, There are revisions all the time. Those revisions
don't make the headlines. What makes the headlines is that
GDP and national number that you know, that inflation number,

(17:58):
that employment report, and then what gets lost in the
shuffle are the revisions. And that's why, you know, to
the point I think you're making, you can't just react
or shouldn't just react to the headline numbers. Excellent point.

Speaker 1 (18:13):
But if you have concerns about maybe where the stock
market or the economy might be heading, there are things
you can be doing. And I would say, hey, these
actually apply to you one hundred percent of the time, right,
and that is making sure that you're you know, you're
properly diversified. And I think in a year like we're
having in twenty twenty five, where we are seeing some
market volatility, you are really bearing out the fruits of

(18:37):
being really diversified. You know, you mentioned earlier in the show,
Bob that European markets are doing really well right now.
You know, for those who are concentrated only in the US,
you're seeing a lot more volatility than maybe you were
if you were truly diversified. We have a global economy,
so diversification is also a key piece of this, and
an acid allocation. Right maybe when you were in your thirties,

(18:59):
you were one hundred percent in the stock market, but
if you are in your sixties or seventies now, it
might make sense to have that stock market exposure dialed
back a bit, especially if you are living off of
those investments at this point. Right, So kind of putting
your finger on your pulse right now as an investor
and saying, is this the right way for me to

(19:19):
be invested? These are not only good things to keep
in mind if all ten leading economic indicators were pointing
toward red, but any point in time, as a long
term investor, you've got a long term financial plan, but
it's good to kind of reassess where you are as
an investor and.

Speaker 2 (19:35):
See if anything has changed.

Speaker 1 (19:37):
Here's the all Worth advice the next time you get bombarded,
right you hear that word, our word recession. Remember you've
got a financial plan and you stick with that plan
as a long term investor. Coming up next, well, warmer
weather mean it's time to buy or sell your home.
Our real estate expert is the next with some answers
for you. You're listening to Simply Money presented by all

(19:57):
Worth Financial. Here on fifty five KRC the talk station.

Speaker 3 (20:06):
You're listening to Simply Money presented by all Worth Financial.
I'm Bob Sponseller, flying solo today with our real estate expert,
Michelle Sloan, owner of Remax Time. Michelle Spring is in
the air and that can only mean one thing. A
lot of things going on in the real estate market.
Bring us up to speed with what you're seeing out there. Michelle.

Speaker 4 (20:27):
You know what, Bob it is.

Speaker 5 (20:29):
It's I don't want to use the word crazy because
I think that is overused, but it has been extremely busy.

Speaker 4 (20:36):
Let's put it that way.

Speaker 5 (20:37):
You know, in the world of real estate, I think
when May first hit this year, I really had the
sense that the people who were ready to put their
home on the market and sell, that was the date
that they all targeted in their calendar. They had it
circled with big, bold letters. And over the course of

(20:59):
the last seven days, we've had seven hundred and ten
new listings on the market in the Cincinnati Multiple Listing service,
and we've had quite a number of those just in
the last seven days already go pending. So we are
seeing a lot of activity, a lot of buyers are
getting involved. It's it's exciting for me because you know,

(21:21):
we wait for this time of year, this is our
super Bowl. We wait for this time of year all
year long for us to be so busy that we
have no time to eat. And it's a good thing.
We're really blessed.

Speaker 3 (21:37):
So does this mean you're missing out on a big
real estate sale, because you're talking to me right now,
I might.

Speaker 4 (21:43):
No, absolutely not.

Speaker 3 (21:44):
No.

Speaker 4 (21:45):
I think we got a couple of minutes. That's not
going to be a big deal. You know.

Speaker 5 (21:48):
One of the things that's it is really spurring all
of this activity is we have a pent up demand
for sellers. Sellers have been sitting in their homes since
COVID thinking, Okay, we've done all of the updates, this
home just doesn't fit our needs anymore, and so with that,
it's time to sell.

Speaker 4 (22:08):
But where do we go?

Speaker 5 (22:10):
A lot of new home sellers have decided to build
a home maybe or move out of the area, downsize.
Since there are more and more homes going on the market,
people are just they're ready to go, and that is
it's a very very exciting time. It's also a very
nervous time for people because everything that's happening politically has

(22:35):
everybody just a little bit of caution in the air.
But at the same time, everybody's ready to make a
move this year. So twenty twenty five is the year
of the move in my opinion.

Speaker 3 (22:47):
Got it, well, interest rates really haven't moved much at all. Michelle,
And I know, you know, being someone who's lived in
Cincinnati my whole life. To your point, you know, spring
is just that seasonal time. It seems like in greater
Cincinnati anywhere, everybody knows that spring is kind of real
estate season. Is the reason you're everybody's so busy right

(23:07):
now and listings are up and all that. Is it
just because of that pent up demand. People have just
been waiting and waiting and waiting and fixing up their
home and at some point people just need to make
a move based on what they've wanted to do for
four or five years. Now, Is that really? Is that
really what's going on?

Speaker 5 (23:25):
I think so, Bob, I think that that is it's
just people are they're sick and tired of staying in
the same home. You know, it used to be twenty
years ago when I got into this business, people would
move every five to seven years.

Speaker 4 (23:38):
Now there are so many people.

Speaker 5 (23:40):
Who have lived in their home for ten, twelve, fifteen,
twenty years. And of course in Cincinnati, if you live
on the West Side, you've probably been in your home
since you were a baby, and so we're still not
seeing a lot of activity on the West Side.

Speaker 4 (23:56):
But that's just normal. But it's fun, it is it is.
It's fun.

Speaker 5 (24:00):
We're seeing the mortgage rates. The thirty year fixed on
average right now is around six point eight two, six
point eight one, six point seventy nine something like that.
In the high sixes, fifteen year rate mortgage just a
normal convention alone right around six point oh three something
like that. Again, it all depends on your credit score

(24:22):
and your financials. But the one thing that is good
news about those it's not a big change over the
last couple of months. But if we go back a
year ago, last year's rates were at seven point two
to two, so they were over seven percent. And again
I think that over seven percent is a threshold for

(24:43):
a lot of buyers that they really buyers are concerned
that I can't get what I want in that price
range if I'm looking at the rates. So if we
stay under six for the foreseeable future, I think we're
in really good shape.

Speaker 3 (25:00):
All right, Well, you mentioned inventory is on the rise,
listings are on the rise. Does this mean we're back
into this multiple offer situation where homes are starting to
sell well above listing price. Are we back in that
environment like we were back in the COVID days.

Speaker 5 (25:16):
We are, absolutely so. I had a listing in the
Mason area last week. We had eight offers in the
first forty eight hours. Now, the one thing is I
think that sellers and sellers agents are doing is trying
to put a little bit of I don't know, distance

(25:38):
or time to give people an opportunity to make a decision.
So my seller decided, I want to at least give
forty eight hours, which doesn't sound like a lot of time,
but I want to be able to give buyers the
opportunity to come see my home, and a seller can
do that. The seller does not have to take the

(25:58):
very first offer that comes in the door. The seller
is in control, and if you have a strong real
estate agent, you have to understand that the seller is
in control and that first offer may not be the best.
And so we had on that particular property, we had
eight offers and many all of them, all eight offers

(26:21):
were over list price. And so then we have to
as we're looking through each one of these offers, we
have to determine, well, if it's five thousand or ten
thousand or fifteen thousand dollars over list price, is it
going to appraise.

Speaker 4 (26:39):
That's a question we have to ask.

Speaker 5 (26:42):
Is the buyer willing to pay more than the home
is worth during the appraisal process? And that's the case.
That's what we ended up accepting an offer where the
sales price was higher than the list price and the
buyer was able to waive the appraisal, meaning they're going

(27:03):
to pay any amount up into the sales price that
we agreed upon. So that gives you, if you're a
buyer and you have that kind of financial wherewithal to
be able to afford that, then you're in the driver's
seat as well. So it really depends on where you are.
But you know, you're looking at eight offers. We did

(27:26):
not end up taking the highest offer because we wanted
to guarantee that it was going to actually close at
the price that we agreed to when we when we
negotiated at the very beginning of the process.

Speaker 3 (27:39):
So does that mean, Michelle, you're kind of sitting back
with those eight offers in hand, and you're you're kind
of playing the role a little bit of a financial underwriter.
You're trying to figure out, you know, depending on whether
this this purchase is going to require a loan or
whether it's a cash offer. You're sitting back saying, what's
the probability these people even be able to be able

(28:00):
to follow through and actually complete this purchase? Is am?
I correct?

Speaker 4 (28:04):
Absolutely? Absolutely?

Speaker 3 (28:05):
So.

Speaker 5 (28:06):
There are so many factors. It's not just the price.
If I get a price fifty thousand dollars higher than
list price, you know, that doesn't necessarily mean that you're
going to get And some agents and some buyers are like, well,
why didn't you pick mine? Wasn't mine the highest price? Well,
on paper, it may be the highest price, but is

(28:26):
it really? Are we going to have to renegotiate and
how are we going to have to fight you tooth
and nail throughout the whole process. And the other factor
that we have to look at is inspections. And you know,
I would never tell one of my clients don't get
an inspection. I think ninety nine percent or ninety percent

(28:48):
maybe of the buyers out there today will do inspections
for information only. And if something absolutely serious structural mechanical
is wrong with that home, then you have the opportunity
to either get out of the contract or renegotiate at
that point. But you know, you have to be savvy

(29:09):
and understand as a buyer, you need to be ready
with all your barrels blazon all.

Speaker 3 (29:16):
Great reasons to work with a seasoned real estate professional
like our good friend Michelle Sloan, owner of Remax Time
Great Stuff. Michelle is always thanks for making time for us.
You've been listening to Simply Money presented by all Worth
Financial on fifty five KRC, the talk station.

Speaker 1 (29:37):
You're listening to Simply Money presented my own Worth Financial.
I mean, you wag you're along with Bob Spahseeller, Do
you have a financial question you and your spouse do
not agree on or just kind of keeping you up
at night? What should I do about this? Well, there's
a red button you can click on while you're listening
to the show. It's right there on the iHeart op
record your question. It's coming straight to us. Let's get
straight to your questions now. First one comes from and

(30:00):
and kN of what how do I make sure my
portfolio is tax optimized in retirement if tax rates increase
in the future.

Speaker 3 (30:05):
Well, there's a few things you could do, Sandra. One thing,
and you know, regardless of what tax rates are for
your non IRA non four oh one K accounts, you
should be tax optimizing that account at all times through
regular tax loss harvesting. And you know we've got a
program that does that here at all worth. I know

(30:26):
other advisory firms have something similar, you know some of
them do. So making sure that non IRA account is
as tax efficient as possible is a good thing to do. Yeah.
The other thing, if tax rates increase, then it's a
time to reevaluate, you know, depending on what your tax
rate or tax bracket is, whether tax free or municipal

(30:47):
bonds makes sense. You know that that whole you know,
calculus changes depending on what tax rates are in the future.
So those are just a couple of things without knowing
your specific situation that you might be looking at. Wroth
conversions might be a third.

Speaker 1 (31:02):
Yeah, I'm glad you brought up roth conversions because Sandra,
what I find of kind of the retirees right the
investors that are retiring now is you got the memo
loud and clear that you have to save, and you
put a lot of money into your.

Speaker 2 (31:17):
Four O one K.

Speaker 1 (31:18):
The problem is many people your age who are retiring
now didn't get the memo about putting money into a wroth.
So you have a lot of assets oftentimes and tax
deferred accounts, and so if you're worried that your tax
rate could go up in the future, right then you'll
be paying more money when you pull the money out
of those accounts. If you are retiring right now, likely

(31:41):
you could find yourself in a lower tax bracket when
your salary is no longer coming in and you can
take advantage of the years between now and the year
when Uncle Sam says, okay, RMD, time you've got to
start pulling money into that account and doing wroth conversions
if they make sense for you. This may not be
a do it yourself proposition. It might be smart to
partner with a financial pro, a tax planner, a tax professional.

(32:04):
But it could make sense to look into this now
if you are someone who finds yourself in a boat,
which is a very large boat.

Speaker 2 (32:09):
I find for people who are retiring around now.

Speaker 3 (32:12):
Well, and Amy, you know, I poke fun at you,
you know, in ingest sometimes about health savings accounts because
I know how passionate you are about them, and for
good reason. But I think you know with Sanders's question here,
if tax rates increase, that's just yet another reason to
take full advantage of that health savings account. That's really

(32:33):
going to help you out down the road. Want to
make sure we throw that in.

Speaker 2 (32:36):
Yeah, No, I'm glad you brought that up.

Speaker 1 (32:37):
I actually had a couple in my office yesterday late forties,
and I was like, next open enrollment, you need to
look into a high deductible healthier plan because it's time
to take advantage.

Speaker 3 (32:49):
And you threatened to show up for the enrollment meeting
if they didn't promise you they'd do it, right, I said, Hey, what.

Speaker 2 (32:54):
Day does hr reach out.

Speaker 1 (32:56):
I might like be hanging out in your office on
that particular date just to make sure we don't.

Speaker 2 (33:00):
Miss this opportunity. All right, let's get to Jin's question
now in White Oak.

Speaker 3 (33:04):
Am I overthinking diversification or is there a point where
adding more investments actually hurts performance?

Speaker 1 (33:10):
I would say there's a sweet spot here, Bob. I
don't know if you agree or not, but we like
to be truly diversified, mentioned earlier in the show. We're
bearing the fruits of that as investors now. If we
are widely diversified, and by that, I mean, you know,
you've got small cap companies, you've got large cap companies,
you've got companies focused on growth, and companies that are

(33:31):
more value and then not only you're invested here in
the US, in your own backyard.

Speaker 2 (33:36):
But globally.

Speaker 1 (33:37):
Right, global markets seem to be doing well. But when
and I had someone in my office who's a very
kind of technical thinker, engineer, and he was like, how
do you be thoroughly diversified across everything? And at some point,
I think you can get too spread outs. But I

(33:57):
think it's it's a it's a sweet spot situation. It's
a balancing act, and it's important sometimes to work with
the fiduciary to figure out what that looks like for you.

Speaker 3 (34:09):
I agree with you totally. You know, sometimes people want
to be diversified by buying, you know, eleven different large
cap growth funds, and they think they're diversified because they
have eleven presitions showing up on their statement. That's not diversification.
Diversification is exactly what you just talked about. I mean,
make sure you've got all your non correlated asset classes

(34:30):
in the portfolio, and you know you've already you already.

Speaker 1 (34:34):
Nailed it all right, Let's get to Bob's question in union,
how do.

Speaker 3 (34:37):
You taylor asset allocation for someone who's comfortable but not
ultra wealthy. Bob, I'd answer your question this way. I
don't think it matters whether you're comfortable or ultra wealthy.
The important thing here is tailoring an asset allocation strategy
for your specific financial plan. When I put together a
plan for clients, I'm looking at basically three things. What

(35:01):
are your ongoing sources of income apart from your portfolio,
what do you plan to spend every month or every year?
And then what is your asset base or you know
investment portfolio look like. And then what is your risk tolerance?
So four things I mentioned three, it's four. You combine
all those four things together and you can usually arrive

(35:21):
at a pretty good asset allocation strategy that can allow
someone to meet all their long term financial goals while
being able to sleep at night because they're not tethered
to cable news worrying about every jot and tittle of
the stock market, you know, six times a day.

Speaker 1 (35:38):
Yeah, the sleep factor is a huge thing, right, how
do you eat well and sleep well in retirement?

Speaker 2 (35:44):
What is that exact mark for you?

Speaker 1 (35:45):
But also if you have a couple of pensions in
your household and social security and you may not even
need those assets, it's a slightly different conversation than Hey,
we're going to retire in a year and a half
and we'll be pulling from those assets to live off of.
So of that has to be taken into consideration, but
not necessarily how much you've saved. Coming up next, a

(36:06):
major money reason why Cincinnati is such a great place
to live. You're listening to Simply Money presented by all
Worth Financial here on.

Speaker 2 (36:12):
Fifty five KRC. The talk station.

Speaker 1 (36:18):
You're listening to Simply Money, presented by all Worth Financial
Mimmi Wagner along with Bob Spawnseller. So many things to
love about living here in Cincinnati, and you know, as
someone who has grown up here, Bob, I know you're
from here too. Cincinnati has almost had this like renaissance
over the past I don't know, decade or so where
you look at any kind of poll across the country

(36:39):
about cool places to visit, places for a long weekend, whatever,
Cincinnati is always at the top of the list.

Speaker 2 (36:45):
Now we've got this thriving.

Speaker 1 (36:47):
Food scene, We've got so much to.

Speaker 2 (36:49):
Do around downtown.

Speaker 1 (36:51):
But also, you know, you could do some of those
things in really big cities like New York or Chicago
or somewhere else, but you're also going to pay more
for that. And one of the beautiful things about living
around here is it's incredibly affordable.

Speaker 3 (37:06):
Yeah. We came across a survey recently done by lending Tree.
That's a company I think a lot of people have
heard of, and they measured, you know, affordability of major
cities across the country, and in twenty five of one
hundred cities, they looked at average monthly spending on basic
expenses exceeds monthly income for a family of three that

(37:27):
is earning one hundred thousand dollars a year. You know,
that was kind of their benchmark household income of one
hundred thousand dollars a year. San Jose, California tops that
list with average monthly expenses of a little over ten thousand,
five hundred dollars. Amy, My first reaction to this report
is only in California and maybe Washington, d C. Can

(37:50):
we pretend to spend more than we have coming in
each month and pretend that that's a sustainable situation for
the long term? Kind of crazy?

Speaker 2 (37:58):
What when you think about too?

Speaker 1 (38:00):
One hundred thousand dollars Like that six figure salary for
many people was like the benchmark, right, Like, if I
can make that much money, I have made it. And
if you are living in a part of the country
where you can't even make ends, meets with one hundred
thousand dollars, like, do not sign me up for living there,
because I have no interest in that. I was born

(38:22):
and raised around here. I am used to Midwest sensibilities,
Midwest spending, Midwest costs.

Speaker 3 (38:28):
Yeah. The only thing I would add is if we
could get a little bit better weather, you know, between
January and April, and maybe a football team and baseball
team could win a few more games. Amy, Cincinnati would
pretty much be heaven on Earth to me.

Speaker 1 (38:44):
Well, we'll get that memo to our local sports teams
to see if they can get on board. But yeah,
that same list that looked at how expensive cities are
also of course, had Cincinnati in the top ten for
relatively affordable you know, household or of one hundred thousand dollars.
You can live really well on that around here. Thanks
for listening. Tune in tomorrow we're talking about how target

(39:06):
dat funds just got riskier. You've been listening to Simply
Money and presented by all Worth Financial here on fifty
five KRC, the talk station