Simply Money

Episode Transcript

Speaker 1 (00:07):
You're listening to Simply Money, presented by Allworth Financial. I'm
Bob Sponseller, joined tonight by our chief investment officer, Andy Stout,
who manages a little over twenty seven billion dollars of
assets here for our clients at Allworth. Andy, a lot
of progress, I guess on the trade front on Friday
and maybe over the weekend, right.

Speaker 2 (00:28):
Yeah, when you looked at what was going on over
the weekend, it was a pretty fluid situation. There was
some encouraging news heading into it, with President Trump talking
about how the US and China's trade negotiators we're gonna
get together. We're going to talk about what's going on
in Geneva and maybe have a what Trump called a reset,

(00:49):
if you will. In a reset is definitely what we got.
I mean, if you look at where we were just
last week, I mean, the US had imposed one hundred
and forty five percent tariffs on all of China's goods,
than China's retaliated with one hundred and twenty five percent
tariffs on US goods, And what we saw was basically
a humongous reduction down to now thirty percent on China

(01:15):
goods and ten percent that China is imposing on the US.

Speaker 1 (01:20):
Andy you told us months ago. You know, I remember
you listing three or four potential reasons why the President
was putting these tariff trade policies into effect, and one
of the big ones you mentioned was just for negotiating purposes.
Is that what you're seeing at this point in the game.

Speaker 2 (01:37):
That's a big part of it with China. So when
you look at some of the language that has come
out of the administration, you're hearing them talk about, you know, fentanyl.
You're hearing them talk about purchase agreements with China to
level the trade deficet. So it's really more about that
bigger picture of what President Trump is trying to accomplish
with his trade policies, and that's you know, leveling the

(02:00):
trade deficit, which we just talked about there. It's also
maybe getting a little bit of revenue, and you know
that's part of it as well. And then it's also
those negotiations, so you've fitten all tighter border restrictions or
purchase agreements. These are all things that President Trump has
his eye on.

Speaker 1 (02:17):
We have a bit more details about this agreement with
the United Kingdom that was announced late last week it
looks like the auto tariff right is coming down from
twenty seven and a half percent down to ten percent,
and the impacts about one hundred thousand imported vehicles into
the US per year. I guess the UK also agreed

(02:38):
to buy ten billion dollars worth of Boeing jets and
also increase access to US agricultural products. Are there any
other details that you've become aware of, you know, as
it relates to this recent deal with the UK.

Speaker 2 (02:53):
So the deal with the UK, it's really being thought
of as a framework deal for our other trading partners.
And when you look at who we trade with, you know,
UK is certainly a big trading partner, but China, Mexico, Canada,
they're much larger. I mean China, we bought from them
last year four hundred and thirty nine billion. From Mexico,

(03:15):
we bought five hundred and six billion, from Canada four
hundred and thirteen billion. These are just ginormous numbers. And
when you think about the UK, it's not nearly in
that same ballpark. And then you look at the European Union.
So European Union, by the way, it's like six hundred
billion of imports. So when you put it all together

(03:35):
and what the UK and US has come up with,
and essentially this agreement to you know, open it up
for US agricultural products, buying some Boeing jets, which again
is another way to strength that deficit, but also access
to markets in general. And in return, you know, the
UK is getting lower terrors at that ten percent rate.

(03:56):
It appears that the administration is looking to make it
more ten percent maybe across the board with some deals
in place. I mean, even Treasury Secretary Scott Pscent this
morning was talking about the deal with China and how
he said he sees it as implausible that it ever
gets below that ten percent, and that ten percent could

(04:18):
be not guaranteed, but could be a sticking point for
the administration when they think about the trade deals in general.

Speaker 1 (04:25):
Well, obviously this proposed deal with China really moved markets today.

Speaker 3 (04:31):
Do you expect this.

Speaker 1 (04:32):
To be one of the major dominoes here that causes
all these other trade deals to really fall into place
rather quickly or is it still we're gonna wait and
see you place with countries like let's say South Korea, Japan,
you know, larger trading countries like.

Speaker 2 (04:50):
That, Well, when we're thinking about just general time frames.
We have until July ninth with most of the rest
of the world, we have until August eleven with China
to come up with some additional deals or else we're
going to see a reversion back to these much higher
rates pretty much for all of our trading partners that
we don't have a deal, whether or not this is
the domino that you know, starts to process that remains.

Speaker 3 (05:13):
To be seen.

Speaker 2 (05:14):
I mean, the thing to keep in mind, Bob, is
that this is a pause. It is another ninety day pause.
This is not a permanent solution. This is something that
doesn't remove the uncertainty.

Speaker 1 (05:27):
Uh.

Speaker 2 (05:27):
This is not something that will remove the volatility. I mean,
you're going to probably get some more days of you
know volatility really dependent on those headlines and whatever those uh,
you know, headlines are suggesting the outcome maybe and you're
going to see a knee jerk reaction. So is this
the domino that you know makes everything you know all
punky dory? Probably not. Is this the domino that could

(05:52):
open the door? Possibly?

Speaker 1 (05:55):
You're listening to simply money presented by all Worth Financial.
I'm Bob sponseller along with all its Chief Investment Officer
Andy Stout, and pivoting here to Federal Reserve policy and
interest rate discussions. You know, we haven't had a chance
to talk to you since Chair Pal came out in
the middle of last week with the recent Fed announcement.

(06:16):
Give us an update on what you're seeing on that
front at this point.

Speaker 2 (06:19):
So when you're looking at the press conference with Chair
Pal and you're looking at the official statement from the
Federal Reserve, they left everything alone in terms of rates, right,
they're still around. It's still in a range of four
point twenty five to four point five percent. But there
were a few interesting notes like in the statement, for example,
buff the committee talked about seeing higher risks of rising

(06:43):
unemployment and rising inflation. So that's what you would call
a stagflationary environment if you have high inflation and high unemployment,
because high unemployment will typically coincide with slower economic growth.

Speaker 3 (06:55):
And what was.

Speaker 2 (06:56):
Really interesting is that Chair Powell said, if and this
is an if too, if we do get some sort
of stagflationary environment, the Federal Reserve would prioritize fighting inflation
over fighting the rising unemployment. And the reason being that
if you have higher inflation you're never going to get

(07:18):
to a stable labor market. So that's their view. So
what that tells us is, don't expect the Federal Reserve
to really come in and save the day. Should inflation,
you know, start to spiral higher and get even more
out of control. And it's not really out of control.
It's come down a lot, but we don't really expect
too much improvement and inflation in the not too distant future.

(07:41):
But so, but putting it all together, don't expect the
Fed to really impose a lot of rate cuts. I mean,
if you just go back to like right when this
whole tariff trade war started around April second, I mean,
the market was pricing in about one percentage points of
rate cuts this year. Right now it's down to about

(08:02):
half a percent. So essentially rate two quarter priced out
of the market altogether. And when we look ahead in general,
it's going to be kind of the same story. Unless
we see a meaningful slowdown in the economy, don't expect
the Federal Reserve to cut rates. We think they will
probably keep rates closer to where they are if the

(08:25):
economy keeps growing and if we get some sort of
trade war resolution, if this truce sticks, well, then you
could see the pal keeping rates where they're at all year.

Speaker 1 (08:35):
We've got a pretty packed economic calendar this week, you know,
including small business sentiment, retail sales, weekly jobless claims, industrial production,
housing starts, building permits, consumer sentiment, producer inflation, and most
importantly the latest CPI number. Andy. That's a lot of
data coming out this week in the midst of potential

(08:59):
resolution on some of these trade deals. Is this kind
of old news already when it comes out, Yes.

Speaker 2 (09:06):
So when you're looking at the when you're looking at
the economic calendar, it's it's kind of busy. The inflation
is really the big ones. So right now inflation is
not old news, especially because it relates to the Federal
Reserve and what they might do with interest rates. But
they're not going to do anything with interest rates for
some time because what we'll probably see, at least what

(09:26):
economists expect, is that they'll see a point three percent
increase on a monthly basis on consumer prices, and what
that's going to do, that's going to put the total
inflation if that happens down to two point four percent
in core inflation, which excludes food and energy, prices at
two point eight percent, and that's still above where the
Federal Reserve wants it to be. Now, speaking of the

(09:47):
Federal Reserve, Bob, you also have fetchair Pal talking this week,
and so he is along with a few other policy makers,
and what we could see is that they might adjust
their views or try to massage how the market is
interpreting the Federal Reserves meeting from last week. So it'll
be really interesting to watch that and how that develops.

(10:09):
And one the last thing for this week, we also
have some corporate profits. We have Walmart is probably the
big company reporting earnings, and that's going to be something
to really watch because that's going to tell us about
the consumer strength. And it'd be really interesting with Walmart,
especially given the China truth that just played out, so
that could provide an interesting an interesting angle to really

(10:33):
decipher that information.

Speaker 1 (10:35):
Great stuff, as always from all Worth Chief Investment Officer
Andy Stout. You're listening to Simply Money presented by all
Worth Financial on fifty five KRC the Talk station. If
you're listening to Simply Money presented by Allworth Financial, I'm
Bob Sponsller along with Steve Ruby, who's in for Amy tonight. Remember,

(10:59):
if you can't listen to Simply Money every night, that's okay,
just subscribe to our daily podcast. Just search Simply Money
on the iHeartRadio app or wherever you find your podcasts.
Straight ahead at six forty three, we've got a pop
quiz for you, and we're going to play some retirement
factor fiction. All right, Steve, We preach all the time

(11:21):
that the stock market is the best place to invest
for the long term, But do most people agree with that?

Speaker 3 (11:29):
No, unfortunately not, which blows my mind. So what we're
talking about here is a recent Bank Great survey. They
released data that showed that just three in ten prefer
the stock market as the way to invest money that
they didn't need for a decade anymore. That's three in
ten people. The second most preferred way real estate, followed

(11:51):
by cash investments like savings accounts, CDs.

Speaker 1 (11:54):
You know.

Speaker 3 (11:54):
All three over a great long period of time had
just a few percentage points in difference. But over the
long term that can make a major impact on the
value of your money.

Speaker 1 (12:05):
So this Bank Right survey bottom line show that it
people are split into thirds as far as where they
think the best place to put long term money. Is
right about a third think socks, a third real estate,
third cash. Let's let's get into each category. Then why
the stock market? Why is the stock market the best
place to be long term?

Speaker 3 (12:26):
Well, the stock market over it over performs bonds, cash,
real estate. I mean, that's that's the short answer. The
S and P five hundred, for example, it's average around
nine to ten percent annualized returns over the past hundred years,
which far exceeds inflation and and and provides the opportunity
for some real wealth growth. You know, I have a

(12:46):
little chart that I have in my back pocket that
I pull up on the screen that I show to
folks sometimes when they're sitting in my office. Usually this
this pertains to, you know, why why they should or
shouldn't invest in gold, for example, with the majority of
their assets as opposed to just like a piece of it.
And it's it's it paints a really interesting picture of
what the dollar has done over the past two hundred

(13:08):
years versus gold, versus you know, bonds and treasuries versus stock.
Stock blows everything out side of the water over the
long term, and that is the best way to keep
up with inflation. It just sometimes doesn't feel like it
because they can be volatile in the short term.

Speaker 1 (13:24):
Yeah, and you've brought up what to me is the
key point here, keeping up with inflation, keeping up with
purchasing power. It's not about beating the market or always
having your market, your your money go up in value.
It's about maintaining and growing your purchasing power over the
long term decades, and that's where stocks historically have just

(13:47):
there's been no comparison. Let's get into some of the
other benefits about you know, things like daily liquidity for
the stock. You can access your money when you need it,
you know it. Not only the returns are great, but
the flexibility in the liquidity of being in stocks is
great as well as opposed to some other asset classes.

Speaker 3 (14:08):
Yeah, real state not particularly liquid. Obviously cash is, but
it doesn't keep up with inflation. When we're talking about stocks,
reinvesting dividends and allowing capital gains to compound. That can
lead to exponential growth. You know, the longer you stay invested,
the more compounding works in your favor. When you have
those assets and tax efficient accounts either like a roth
IRA growing tax free or a tax managed brokerage account.

(14:32):
When I say tax managed. That means that you are
actively making decisions about tax loss harvesting. For example, there
are some opportunities to fild tax alpha into the overall
return of what stocks will provide for you over the
long term. What about real estate, why that might be
the wrong answer in your opinion?

Speaker 1 (14:51):
Well, I think people love real estate because they can
touch it, look at it, feel it, you know, walk
around it, look at it all those things. Real estate
is going to appreciate at three to five percent per year,
which is roughly equal to the long term inflation rate
or slightly higher than that. And obviously you can add
rental income to the equation, which can enhance your returns.

(15:15):
But with that rental income, and I've learned that personally,
you know, positively and negative with different things over the years,
the rental income can come with the challenges of property
management fees, vacancies, and maintenance fees. So the rental income
is nice, but you got to look at the costs
that come with that rental income as well. None of

(15:36):
that kind of stuff you know, exists with owning stocks.

Speaker 3 (15:40):
Yeah, and you know, real estate, it does offer some
potential tax advantages like depreciation ten thirty one exchanges. When
you're moving from one one investment property to another, you know,
it comes with capital gain taxes and property tax increases
from time to time. I know that when when we
see property tax increases in our own homes, it can
be a little bit jar. Imagine if you have a

(16:01):
portfolio of real estate and all of a sudden you
get property tax increases for every single one of them.
That type of surprise can eat away it returns that
that your real estate offers.

Speaker 1 (16:13):
Yeah, and you brought up the tax efficiency of real
estate and stocks, and I thought you brought up a
great point. There are just so many ways now that
you can make stock portfolios extremely tax efficient through some
of these tax you know, alpha strategies that we talk
about all the time that to me has become something

(16:34):
that has more and more differentiated the stock market from
real estate over the last five to ten years. Wouldn't
you agree, Steve?

Speaker 3 (16:42):
Oh, Yeah, there's some fantastic opportunities for systems that tax
sasce harvests from you know, direct indexing. For example, the
Russell three thousand represents the overall US market, and you know,
you buy six hundred to those individual stocks and in
any given week, probably have half of them are going
to be down to some capacity, so you can swap

(17:03):
in and swap out and essentially tax loss harvest nearly
daily in some instances, and that's just not the same
opportunity that that you would get for real estate tax alpha.

Speaker 1 (17:15):
Yeah, and lastly we need to touch on cash, and
that's the asset class that makes everybody feel good, feel safe,
but it actually loses value and a lot of value
over time in the terms of purchasing power due to inflation.
For an example, if inflation averages three percent a year,

(17:35):
a one million dollar cash holding today would only have
the purchase purchasing power of about seven hundred and thirty
seven thousand dollars in ten years. So even a high
interest rate, you know, safety account is going to lose
purchasing power after taxes and inflation. And while it might
feel real good to not have a volatile asset class

(17:59):
for your long term holdings, you're just eroding away the
value of your money.

Speaker 3 (18:04):
There's very few guarantees you can make when you're talking
about investing, but when you're just sitting on a pile
of cash, I can guarantee that you're slowly, going, slowly,
going to lose. That's exactly what happens, because as purchasing
power erodes due to inflation, if we kick that out
to twenty years, your million bucks turns into five hundred
thousand worth of purchasing power twenty years down the road.
That's why we need to invest, whether it's stock of

(18:26):
real estate, but stock is typically what's going to win,
even though that's not necessarily what the everyday investor feels
based on this bank rate survey.

Speaker 1 (18:33):
Yeah, and don't get us wrong, it is important to
hold some cash, particularly for short term needs, liquidity needs,
maybe even living expenses of one to three years. You know,
cash is the best thing going. What we're talking about
here is where to position your long term holdings. Here's
the all Worth advice. The stock market is to one

(18:54):
place that has beaten the rate of inflation over the
long term. And beating inflation and maintaining and growing your
purchasing power is the name of the game. Are you
using the right approach when helping others financially? We're gonna
explore that next. You're listening to Simply Money, presented by
all Worth Financial on fifty five KRC. The talk station.

(19:21):
You're listening to Simply Money, presented by all Worth Financial.
I'm Bob's monthseller along with Steve Ruby. Philanthropy can be
one of the most fulfilling aspects of a financial plan.
It allows us to support causes that resonate with our
values while helping us manage our tax liabilities, grow our
charitable impact in the community, and ensure a lasting legacy

(19:45):
for future generations. But are we always using the right
approach to how we implement our philanthropic endeavors.

Speaker 3 (19:55):
Probably not, is a short answer. I mean not A
lot of folks openly commune unicate finances with their family
and obviously they're philothrompic their charitable goals are are part
of that financial conversation. You know, first is setting a mission,
you know, clearly defining what those goals are and what

(20:15):
you hope to achieve with your charitable causes. You know,
the clarity around that helps you decide which vehicle you
would use to be charitably inclined. Which we're going to
get into and talk about some of the differences between
these vehicles.

Speaker 1 (20:32):
And yeah, I want to camp out on this setting
the mission and communication part real quick because I find
that that's a critical part that's often missed. You know,
in dealing with the clients I've dealt with for years,
they simply don't talk about it because sometimes, especially as

(20:54):
it involves dealing with your children and grandchildren, it involves
talking about death or what happens when we're gone, and
that tends to be a topic people you know, like
to avoid. So what do you find works in terms
of talking and communicating with your clients to get them
to articulate how they really want to implement.

Speaker 3 (21:15):
This, Better from a warm heart than a cold hand, said, Really,
it's as simple as that, you know, having these discussions
today enable you to ensure that your charitable giving goals
are met now and in the future when you're gone.

(21:35):
So having these conversations today is a positive choice for
not only you and your money, but for future generations
that will be stewards of your money as well. So
better from a warm heart than a cold hand. And
it's a little crass, but I think it opens people's
eyes and they're like, Okay, that's fair enough, Steve, let's chat.

Speaker 1 (21:56):
Yeah, And I would just add that it's also critical
to have both spouses involved because when you start asking
people about what's important to them beyond their own family.
You get a lot of interesting answers.

Speaker 3 (22:10):
You have two spouses, Bob, you got making sure everybody
is on the same page as Key, and I appreciate that.
So let's let's talk about some of these vehicles. Donor
advise fund. You know, I'm a huge fan of these.
It's a charitable giving account that's administered by a sponsoring organization,
like a financial firm. So you know, Fidelity has one,

(22:30):
Shalab has one, Vanguard has one. These are major companies
that we're all very familiar with. You know, a donor
advice fund, it's it's easy. I mean, this is the
quick and dirty. It's easy to do. The investment initially
upfront can be more modest than some of the other
options we're going to discuss, like a foundation, for example,

(22:50):
record keeping, investment management compliance. It's all handled by the
sponsoring organization, so it takes some of that off your plate.
But from a tax planning perspective, it's very easy because
as let's say you have a high income yere, you
can reduce your tax liabilities by lumping in some larger
donations to fund your donor advice fund. In that year

(23:11):
and then capitalize on that by itemizing your taxes. Furthermore,
if we're funding that donor advice fund with appreciated securities,
think in this area Procter and Gamble. You know a
lot of folks that I've worked with over the years,
they either worked at Proper, Procter and Gamble or a
family member did. So some of them, especially that have

(23:32):
inherited wealth, are sitting on large positions of PNG that
have grown significantly over the years. You can fund your
donor advice fund with highly appreciated shares and not have
to pay the taxes on that donation. Plus you can
do some itemizing with that. So it's an opportunity from
a tax planning perspective to have quite an impact on

(23:56):
your charitable giving causes and keep that going for you
and your children and your spouses.

Speaker 1 (24:03):
Bob, Yeah, I love donor advice funds. My wife and
I have one personally, and I've recommended these to many
many clients over the years, and the folks that are
using them actually absolutely love them because to your point, Steve,
it literally is a warehouse where you can, with a

(24:24):
couple of mouse clicks, you know, distribute these funds out
to chosen charities in a very efficient way. And I
will say CPAs are liking these more and more and
as well because with the standard deduction now for a
married finally jointly couple up up to thirty thousand dollars, now,
fewer and fewer people are able to itemize. So you know,

(24:48):
you raise the point, you know in your comments. Sometimes
we will lump two or three years worth of charitable
giving into one year and warehouse that giving in a
donor advice fund in order to be able to get
more tax benefit out of the actual gift. It's a
great strategy.

Speaker 3 (25:04):
I've done five years even and paired that with roth
conversion strategies for people that recently retired but aren't collecting
Social Security yet and have lower income that they've had
in a long time. So it's a great opportunity. And
then you said it yourself, You click a button, you
can give that money right to your church or other
charitable causes and map that out over years.

Speaker 1 (25:23):
Let's touch briefly on a couple of other options, private foundations,
which I don't see used very much at all because
of the fees and complexities involved in setting those up.
But they do give you more control if you want
to go there and open up more of a permanent
family controlled entity. Talk about that a little bit.

Speaker 3 (25:44):
Yeah, I think about a wider variety of causes, like
awarding scholarships, making international grants, fewer restrictions. Last. These foundations,
if properly endowed, can last for generations. The structure can
bring family members together to serve on board that review
grant requests and carry out, you know, a tradition of giving.

(26:06):
You know, there are potential tax seductions when you contribute
to them, but there are certain limitations compared to what
you would see in a donor advice fund. So I
think greater flexibility longer term, but a little bit more
expensive and challenging to administer.

Speaker 1 (26:22):
Yeah. The last strategy that we want to touch on
today is one that I know, Steve, you and I
use all the time with clients, and it's a wonderful
strategy that unfortunately most people don't use or maybe not
have not even heard of, and that's the qualified charitable distribution.
What a great way to use your required minimum distributions

(26:42):
from your iras or IRA assets. Once you reach age
seventy and a half, you talked about dovetailing a couple
strategy with with roth conversions. Take us through maybe an
example or two of how you've used qualified charitable distributions
with your client.

Speaker 3 (27:00):
So qcds are easy because you just send money directly
from your IRA to a charity of your choice, and
in doing so, you're not paying taxes on that distribution,
and since that charity is a tax exempt organization they're
not receiving there's no taxes lost on that. So let's
think about this. If you're giving cash every week to
your church, for example, and in that situation, you're typically

(27:24):
using after tax money dollars that you've already paid taxes on.
Or you could map out your your giving to your
church over the course of the year and give them
one lump sum via your IRA distribution. As long as
you're processing as a qualified charitable distribution, you will not
have to pay taxes on that, so you're still helping
your charitable causes. Technically, you're saving money on taxes that
you could just give you know that away as well,

(27:47):
and you're poking Uncle Sam and the eye with a
stick in the meantime.

Speaker 1 (27:52):
Yeah, the one caveat we do need to throw out
with a strategy is you cannot do a qualified charitable
distribution to a donor fun That money has to go
directly to charities of your choice. That's one thing to
keep in mind. All Right, here's the all Worth advice.
We recommend you work closely with a fiduciary financial advisor,
tax advisor, and a state attorney to design an actual

(28:14):
philanthropic strategy that reflects your values, supports the causes you
care about, and stands the text the test of time. Next,
we are separating fact from fiction. You're listening to Simply
Money presented by all Worth Financial on fifty five KRC,
the talk station. You're listening to Simply Money presented by

(28:41):
all Worth Financial. I'm Bob's funseller along with Steve Ruby.
Do you have a financial question you'd like for us
to answer? There's a red button you could click while
you're listening to the show right on the iHeart app.
Simply record your question and it'll come straight to us.
All right, Steve, Time to play Retirement fact or Fiction.
Are you ready? Steve?

Speaker 3 (29:01):
Oh, I'm always ready. I love this game.

Speaker 1 (29:05):
All right, Factor Fiction. The sequence of return risk is
one of the biggest threats to retirement portfolios.

Speaker 3 (29:13):
You know, if we if we say one of the
then yes, fact I would say it's up there with
inflation or purchasing power risk, which is the sinking value
of the dollar over time. Sequence of return risk means
that your investments, even in a diversified portfolio, they're not
going to get the same set rate of return every
single year. Sometimes we're going to get kicked in the teeth.

(29:35):
And during those periods of time, if we are taking
too much out, depending on our asset level and our
goals and our timing need for money, that can have
a major impact on the longevity of your portfolio, which
is why it's so important to have an emergency fund
when you are in retirement. It's not just about setting
enough to a side to cover, you know, expenses in

(29:55):
case you lose your job. It's setting enough aside to
cover expenses in case the markets get kicked in the
teeth and you don't want to have to pull from
portfolio assets when they're.

Speaker 1 (30:03):
Down, all right, fact or fiction. If the stock market crashes,
you should immediately move your portfolio to cash.

Speaker 3 (30:12):
Uh. You know, I was gonna give this one to you,
but it's easy. We'll just say fiction. Move along. You know,
we talk about this all the time. You don't you
don't sell it a loss that is realizing those losses
and putting yourself in a position where you're not going
to be able to get back those gains. Unfortunately, this
happens from time to time. People that uh react emotionally

(30:33):
might make that that mistake. And you know, I've seen
this plenty of times over the course of my career
where I'll sit down and meet with somebody and and
they'll show share a story of regret where they did
that at some point and and unfortunately it's it's just
something that can derail your financial plan if you're not careful.
I'm going to give you one Bob, I want I
want you to play too, okay. Fact factor fiction. A

(30:55):
high income does not necessarily mean high net worth.

Speaker 1 (30:59):
Fact And unfortunately we see this all the time. It's
not how much money you make or earn, it's how
much you keep, and it's how much you save, and
it's how much you plan for when the day is
going to come eventually where you're accumulated savings and your
income sources have to replace that paycheck. So you know,

(31:23):
we run into this all the time. Folks that have
a very high income but unfortunately spend too much of
that income, and the closer and closer they get to retirement,
the more they are surprised that the party is not
going to be able to continue once they stop working.

Speaker 3 (31:41):
Yeah, this is lifestyle creep. That's what happens. You know,
instead of increasing your contributions to retirement accounts or other
savings vehicles, you spend more as your income rises, and
you find yourself in a position where when it comes
time to retire, you're not able to create that same
cash flow with what you've accumulated. It's obviously when the
big benefits of sitting down with a financial advisor five

(32:02):
even ten years out for retirement, especially if you're a
higher earner and have that capacity for savings, is to
identify any gaps that we might need to close to
continue living the life that we want to live to
and through retirement. All right, Bob, I'm hitting you with
another one fact or fiction. Diversification eliminates risk.

Speaker 1 (32:23):
That is fiction. It doesn't eliminate risk, but it certainly
does help risk. How about that? And by risk, we're
talking about volatility. Volatility meaning just the movement of the
balance of your portfolio. So again this comes down to,
especially if you're taking an income stream from your portfolio,
structuring your portfolio properly so you have an opportunity to

(32:45):
maybe take that monthly income or even a lump sum
amount of money out of your portfolio that is not
subject to being whipsawed by short term market volatility. All right,
Steve Factor, fiction, you don't need an a state plan
if you don't have kids.

Speaker 3 (33:03):
I feel like we get great questions sometimes where it's
just I don't know, maybe this way, maybe that way,
but these these are easy today. This is fiction. You
do need an estate plan no matter who you are.
It doesn't matter if you don't have kids. Maybe it's
even more important if you don't have kids, because at
the end of the day, the estate plan isn't just
setting up a trust or will. It's making sure that
you have beneficiaries the way that you want to have

(33:25):
them on your accounts. It's also making sure that you
have financial power, attorney, medical power of attorney, health care directive,
living well. There's lots of moving parts to that estate plan.
The whole goal is to avoid probate at the end
of the day and make sure that your wishes are
met when you are gone. And without an estate plan,
those can be massacred and your money doesn't go to

(33:47):
who you want it to, goes to probate. And it's
expensive in public. It's just getting a state plan. You know,
it's cheap, it's easy. It's just you know, it's like
going to the dentist a little bit sometimes though, like you,
maybe you put it off and you shouldn't. There's just
too much at stake to not.

Speaker 1 (34:05):
It's just like the Nike slogan, right, just do it, Steve,
just do it.

Speaker 3 (34:09):
I tell people I'm gonna bug them about it till
they do it or they tell me to shut up,
which everyone comes first.

Speaker 1 (34:14):
I do the same, and that usually gets people to
do something. All right, great, next time to get a
gem of advice from all wors very own, mister Steve Ruby.
You're listening to Simply Money presented by all Worth Financial
on fifty five KRC the talk station Black. You're listening

(34:37):
to Simply Money presented by all Worth Financial. I'm Bob
Sponsller along with Steve Ruby, and that music can only
mean one thing. Ruby's gem of advice.

Speaker 3 (34:47):
I love that every time I'm here these days, I
get my own soundtracked, I get my own floor to
cover whatever I want to cover. And today I want
to go back to what we were talking about with
charitable giving and kind of tie that back to volunteering
our time and how we plan on using our time
and retirement. You know that there's a lot of folks
out there that are working towards retiring but don't know

(35:09):
what it's actually going to look like when they are done.
Steve Sprovak great example of this. This was a guy
who had all kinds of hobbies, his his his baseball,
He's a he's a pilot. He you know, got a
place in in Arizona and your family and still lives
in town and visits family up in Michigan. So making
sure that when when, when you're building a financial plan

(35:30):
and working with an advisor, we will break down your
your your goals into things like your needs, your housing, utilities, groceries, gas,
your mortgage, your medical insurance, your wants, and your wishes.
We want folks to lean on us heavily to help
map out what those wants and wishes are to make
sure that you're living a meaningful retirement so why I said,

(35:52):
bring that back to the charitable giving strategies. What we
shared was just ways to give money. What about sweat equity?
What about getting in with some of these charities, What
about getting out there and doing something to make sure
that you stay busy. I'm sure we've all hear heard
stories over the course of our life of somebody working
all the way up until retirement and then kicking the
bucket right away. We want to make sure that you

(36:14):
are mapping out how you want to spend your time
in retirement or else. What's this all for exactly?

Speaker 1 (36:19):
You bring up some great points, and as you shared,
I thought of my one client, who was a very
high end, high level executive at a well known company
here in Cincinnati that we all know about. This guy
made a ton of money, was leading a lot of
people retired, and he just didn't have enough to do Steve,
and he found great meaning and purpose from just going

(36:44):
it twice a week to read books to special needs children.
And he has shared how much that has meant to him.
And I would have never thought he'd be somebody that
would be doing that. But I'll tell you, Steve, if
he wasn't doing that right, now there'd be a big
hole in his life.

Speaker 3 (37:00):
Yeah, it's a great point. I love that story. That's fantastic,
and that's one that I'm glad you've shared because you know,
there's too many people out there. I think of a
handful of folks that I've helped retire over the years,
and you know, I call them, how you doing what
you've been up to? And a lot of times it's
just nothing. So we actually try to coach and share
ideas about how could you spend your time to make
things a little more meaningful. But that doesn't mean that
if your goal is to do nothing, that's not what

(37:22):
you shouldn't do. But you know, I think about these
charitable giving strategies, and I think about folks retiring, and
I think it's important to make sure that we have
goals for how we spend our time as well, not
just our money.

Speaker 1 (37:34):
Yeah, the answer quote unquote nothing that tends not to
bode well for people's long term emotional health or their
physical health. You know, as many studies after studies show
with retired folks some great points. Tonight, Steve, thank you
for listening. You've been listening to simply Money presented by
all Worth Financial on fifty five KRC. The talk station