Simply Money

Episode Transcript

Speaker 1 (00:06):
Tonight, some new inflation numbers are in an apparent trade
deal with China, and there's some missing money.

Speaker 2 (00:13):
Out there that could be yours.

Speaker 1 (00:15):
You're listening to Simply Money, presented by all Worth Financial
on Bob Sponseller along with Brian James. All Right, Brian,
a few updated things to talk about this morning. We've
got some new inflation numbers out, and you know, early
this morning we got a at least a handshake deal
between the United States and China on trade policy. But

(00:36):
phillis in walk us through some of these CPI numbers
and inflation.

Speaker 2 (00:39):
Numbers that came out at eight thirty this morning.

Speaker 3 (00:41):
Yeah, so our inflation numbers that came out this morning
were kind of the lack of inflation, or the lack
of significant inflation, I should say. So overall price of
goods and services up about just a tenth of a
percent month over month, year over year, about two point
four percent more than we'd paid in May of last year.
That's if I'm you know, correct me if I'm wrong, Bob,
But I think that's about the first time that this

(01:03):
number has started with a two since before this crisis began.
And that's generally speaking, where where the where the Federal
Reserve wants inflation to be is that that does that
ring true with you?

Speaker 1 (01:13):
Well, they always say they want it exactly at two
and what year, year over year, we're paying two point
four percent, So we're getting closer. And I think this
number was a beat by point one percent. That's what
economists were expecting, you know, zero point one percent higher
than what we got. So yep, we'll take it. It's
good news.

Speaker 3 (01:32):
Yeah, And this is coming from and it's coming from
places that that we all feel, right, this is coming
from gas prices and food prices. Just a gas price
is actually down a little bit, which we've talked about
this before, but that's just weird because we are in
vacation season. This is normally the time where we all
complain about the summer mix, and you know, gas prices
having gone through the roof and all that kind of stuff.
Food price is up only a little bit, so you know,

(01:53):
maybe we're not going to talk about the price of
eggs here for a little while. Now, Remember every everybody
might have in their minds that well, this is bad.
Inflation is evil. It has to go away, it has
to go back to the way it was in twenty nineteen.
That is not going to happen, and that would not
be a good thing. The things need to be growing
at some rate. But like we said, the Federal Reserve
prefers it to be somewhere in the neighborhood of two percent,
and we are as close as we have ever been

(02:14):
to that number since this crisis began.

Speaker 1 (02:17):
Yeah, looking at what drove the numbers, it looks like
shelter was the biggest driver of inflation, and this can
sometime be a lagging indicator, but that index did rise
zero point three percent year over year, and again that's
a bit of a lagging indicator, and it really tracks
rental income more than the price of housing.

Speaker 2 (02:36):
So that's something to keep an eye out, out, eye
out on going forward.

Speaker 1 (02:42):
I think I think all these numbers it's just interesting,
you know. I don't think this is going to factor
into anything that the Fed does when they meet next
week to talk about interest rate moves, because there's still
a lot of unknown And I guess that leads us
into this whole China thing that came out early this morning.
We got news of a handshake agreement between China and

(03:05):
the United States on some trade policy and I think
the reviews are a little mixed initially on that.

Speaker 2 (03:11):
I mean, it.

Speaker 1 (03:11):
Looks like the US has secured a deal to still
get those rare earth minerals from China that we desperately need,
and in return for that, China is saying, we'll give
you that as long as you let our students continue
to attend university in the United States.

Speaker 2 (03:29):
So that's all good.

Speaker 1 (03:30):
But it looks like the initial numbers are that the
tariffs that we're going to impose on Chinese goods are
going to be still at about fifty to fifty five percent.

Speaker 2 (03:41):
That's obviously down from that.

Speaker 1 (03:43):
Initial one hundred and forty five percent that President Trump
threw out there when this whole saga began. But Brian,
fifty to fifty five percent is up a little bit
from where we've been sitting as recently as yesterday when
the President took them down temporarily to thirty percent. So
it remains to be seen how all that news filters

(04:04):
its way through the supply chain and potential inflation coming
down the road.

Speaker 2 (04:09):
But I guess, you know, the market likes certainty.

Speaker 1 (04:12):
Companies like Certainty, and it's it apparently looks like we're
going to get some certainty at least for the foreseeable
future on trade polity with China.

Speaker 2 (04:22):
Yeah.

Speaker 3 (04:22):
Now that said, the market is reacting, of course, positively
to this. It's not bad news at all. This is
good news that we're making some progress. But it's not
This is not a huge explosion. We're looking at It
kind of looks like every other day has. This week,
we're up about, you know, about maybe a quarter point
across most of the indicies. And with regard to futures,
market's not open yet, of course.

Speaker 1 (04:41):
Well I want to comment on the futures and then
and then not to interrupt, but I was watching the
tape when all this news came out, and it was
interesting when the when the trade news came out very
early this morning, futures actually dropped on that news. And
I think it might be because of what I talked
about before. You know, this fifty to fifty five percent
tariff that's inflationary potentially, and then the futures bounced up

(05:05):
when we got.

Speaker 2 (05:06):
That favorable inflation report.

Speaker 1 (05:08):
So to be determined, stay tuned on how the markets
actually interpret this trade deal when we get more details
of it.

Speaker 2 (05:17):
So that's my.

Speaker 3 (05:18):
I think the good Yeah, that's my take on that.
That's that's a great point, Bob. I think the conclusion
to draw from that is the market cares more about
about the inflationary figures that touch the entire economy rather
than the tariffs, which of course have a major impact
on the economy, but aren't necessarily in every last little
corner of it. So the market's more excited when we

(05:39):
get more positive inflationary figures than on the tariffs. And again,
like you mentioned, the tariffs are still there's still tariffs.
We're not This hasn't gone away. They're just not It's
not one hundred and forty five percent anymore, whatever the
peak number was, So it's progress. And I would say
also probably the terminology that was used, we have a
framework of a deal. There's been a handshake whatever. A
lot of people are just like, oh cool, they're talking
and probably have stopped to at least that's happening, you know,

(06:02):
at least we're not giving each other the cold shoulder anymore.
So perhaps there is a light at the end of
the tunnel of all this.

Speaker 1 (06:07):
You're listening to simply money presented by all Worth Financial
on Bob sponseller along with Brian James. Brian, let's talk
about how the consumer is feeling. We got some new
consumer sentiment numbers out there about what consumers are expecting.
Inflation is going to be heading into the future, and
let's face it, consumer spending makes up a you know,
over seventy percent of GDPs, so how consumers are feeling

(06:31):
out there really does matter. Give us an update on
some of those numbers, Brian.

Speaker 3 (06:36):
So, over the next next year or so, consumers are
expecting prices to go out by about three point two percent,
So this is a This is consumers are expecting inflation. However,
what we're looking at is that the consumers used to
expect it to be closer to four percent, So consumers
now have an improving outlook on the prices they're going

(06:57):
to be paying over time. Here this is very important
because this the word sentiment is what we always talk about.
Consumer sentiment. What do people think, what do they feel?
What is their sentiment on this whole topic, because that's
going to drive the decisions that they make, and in
a lot of cases that can cause recessions, it can
cause growth. It just depends on what mood is. The
largest body that spends money. What mood are they in?

(07:18):
Are they happy? Are they say at all? Right now
they're feeling a little bit more positive. So looking a
little further ahead, consumers expect over the next three years,
inflation expectations have dropped to about three percent. That was
three point two, and then over the five year expectations
have dropped to two point six from two point seven.
Those are relatively small drops, but they're drops. That's the
important thing. The sentiment right now is that consumers are

(07:41):
concluding that inflation is going to be less of a
problem in the future than it currently is. That is
a good outcome at the moment.

Speaker 2 (07:48):
No, I agree.

Speaker 1 (07:49):
I mean that five year expectation number of two point
six or two point seven percent inflation, I think that's
pretty solid expectation number. And actually there's actually numbers that
we pretty close to what we factor into the financial
plans that we build for our clients. You know, sometimes
Brian I put in three just to put a little
more buffer on that. But more importantly, our chief investment officer,

(08:11):
Andy Stout here, you know, for months, has revised that
expected inflation number, you know, down into that two point
five to two point eight range, and I think that's
pretty much in alignment with how consumers are feeling. I
think this is a good time to point out that,
you know, predicting the rate of inflation or the rate
of interest rates in the short term is an almost

(08:33):
impossible thing to do. And case in point, we looked
at the Bloomberg survey of economists for what they were
expecting with this recent CPI number that came out this morning.
Not one of the seventy three forecasters in Bloomberg survey
penciled in a point one percent core CPI increase, not one.

(08:54):
They all expected a little bit higher number, which proves that,
you know, I think the tariff a settlement on this
tariff thing has kind of been baked into the market
now for a few weeks. And that's why I don't
think we saw futures move that much, you know today.

Speaker 2 (09:10):
What what do you think about all that?

Speaker 3 (09:12):
Yeah, And I think, you know, we're always looking to
these experts and there, and they're not They're not silly
people by any stretch. These are some of the smartest
people in the face of the earth. But that's how
little control, uh and and a little ability we have
to actually see through the fog. So and I always
tell people if you're if you're gonna latch onto one
person's comment or one headline or something like that, go
back and find what did that person say in prior

(09:33):
years about anything, and just see if there was anybody
out there who truly had the crystal ball, then we
wouldn't be listening to anybody else. All the information is
available out there on the internet, so if there was
somebody that had their thumb on the button at all times,
we would we would be listening to them constantly. So
I think, Bob, we should turn this to you know,
what does this actually mean to me and my financial plan? Right,
because a lot of times we focus on these headlines. Uh,

(09:54):
And I think I think sometimes people can get concerned that, oh,
there must be something I need to rush out and
go do I should change my four and hey I
should do this, I should do that. Well, the only
thing you really should have done is have a financial
plan in the first place, so that you know the
course you're on, and then as news arises, good, bad,
or indifferent, you can see the impact to your baseline. So,
in other words, if you know what you where you're

(10:15):
expected to be when you retire or whenever your future
goals are, then you can take this new information. Let's
pretend inflation does become a bigger issue. Well, let's run
your plan again, and let's pretend that instead of three percent,
let's use a five percent inflationary figure. That would be
enormous and that would have a huge impact over time.
It's not very likely. But at the same time, a
lot of people's plans, as we do these kinds of

(10:36):
stress tests, we find that they can actually take it.
They won't be happy about it. Prices going up is
not a fun thing, but it doesn't mean your ship
is going to sink either. The important thing is to
get an idea of what's my baseline and then run
against it a some kind of a stress test and
change something. Maybe it's inflation, maybe it's a long term
care stay for one of you, whatever, something like that.
But just change something and then see what the impact is,

(10:57):
and then you can understand whether you really truly have
to be worried about these headlines or if it's just noise.

Speaker 2 (11:02):
I think those are great points. Brian stress test everything.

Speaker 1 (11:05):
Stress tests your plan for inflation, varied investment rates of return,
spending all the above good points.

Speaker 2 (11:12):
All right?

Speaker 1 (11:12):
Coming up next, there's a staggering amount of money, believe
it or not, in forgotten four oh one k's and iras?
Could some of it be your money? How to find
that out? Next, you're listening to Simply Money, presented by
all Worth Financial on fifty five KRC the talk station.

(11:35):
You're listening to Simply Money presented by all Worth Financial
on Bob's fonseller along with Brian James. How do you
move the needle if you have a good nest egg
but you feel like you need more. We're going to
answer that question and others straight ahead at six forty three.
Here's a stat that might make you sit up and
take notice. Americans have left behind a whopping one point

(11:58):
six y five trillion dollars in forgotten four oh one
k and IRA accounts. That's a trillion with a T. Brian,
think about it. Old jobs, forgotten accounts, and the hustle
of daily life can easily lead to misplaced retirement savings.
But gosh, Brian, one point six five trillion dollars, that

(12:20):
is a whole boatload of money sitting out there that
no one's thinking about, or it sounds like doesn't even
know exists.

Speaker 3 (12:27):
Yeah, and there's a there's Frankly, that's job security for
you and me and the rest of the financial advice industry,
because people just in a lot of cases just do
not want to deal with it. For some people, dealing
with money is like going to the dentists. They're going
to avoid it at every stretch, and if they can
pawn it off on somebody is something. If you could
think of this, if you could send somebody else to
the dentist for you, would you? Of course you would.
There's a lot of people out there think that way.

(12:48):
So where's it? Where are these numbers coming from? Bob? Well,
this is a study by a firm called Capitalize. It's
a financial services firm. They mostly focus on retirement account rollovers,
so they wouldn't know, but about twenty nine million, four
h one K accounts left behind by people who change
their jobs, that's where the one point sixty five trillion
is sitting. That's about a quarter, Bob, a quarter of

(13:08):
all four to oh one K assets in the United States.
And so I sort of get where this comes from
because when people change jobs, obviously the focus is the job.
I just changed my life I got to get used
to this new role, got to find my play, so
on and so forth and going. But dealing with money
is like going to the dentist. So I'm just going
to ignore it. But that is an enormous amount of
money that people don't have their eyes on.

Speaker 1 (13:28):
Yeah, let's put that one point sixty five trillion dollars
in perspective. One point sixty five trillion dollars is more
than the entire GDP of countries like say Australia or
South Korea.

Speaker 3 (13:41):
And those are little countries either. Pardon me, those are
not little countries either.

Speaker 2 (13:45):
No, not at all.

Speaker 1 (13:46):
And the average balance of these forgotten accounts was estimated
to be at almost fifty seven thousand dollars. Multiply that
per on a per account basis by a few old
jobs and a couple decades of compounded growth. If those
accounts haven't been managed, or god forbid, they've been just
sitting there in cash this whole time, you could be

(14:08):
missing out on hundreds of thousands of dollars by the
time you retire, just by not paying attention to those
old accounts.

Speaker 3 (14:16):
Brian, Yeah, and so let's do a little some war stories, right,
So sitting at a table with a client going through
these kinds of things. How does this look and feel? Well?
People will come in and they'll bring all their statements.
We've done a financial plan, it's time to consolidate the assets.
And this is you know, maybe an hour sometimes more
than that of phone calls and jumping through hoops and
getting signatures and all this other stuff. It is a

(14:37):
pain in the rear end, for sure. But I think
what the interesting part that comes out of this is
people have no idea what their net worth is, and
it's almost always a lot more than they thought. Because
they've got this stuff scattered all over the place. They've
never stepped back and look at the and looked at
the entire forest instead of just worrying about all the
little trees in their lives. So that it is it's
a great process to go through to understand what is

(14:57):
all this stuff? More importantly, whose eyes are on it?
If I've got twelve four to oh one k's, who's
actually paying attention to what's happening inside them? The answer
is nobody, because nobody can keep track of all that.
So that's why we do a lot of consolidation of
those things. To have a plan in place to help
us make those decisions.

Speaker 1 (15:13):
You're listening to Simple Money, presented by all Worth Financial.
I'm Bob sponseller along with Brian James. One other thing
that caught my attention on this is that study, you know,
suggested that on average, individuals change jobs about twelve times
over the course.

Speaker 2 (15:30):
Of their career. And Brian with twelve job changes.

Speaker 1 (15:34):
That makes it awfully easy to lose track of some
of this stuff if you really aren't keeping you know,
keeping in touch with everything, or just really don't like
to manage money, which a lot of people don't like
to think about. You know, twelve job changes, twelve different
retirement accounts, it is a lot to keep track of,
and that's why it might make sense to sit down
with a good fiduciary advisor and help you pull all

(15:56):
that together and put a strategy together.

Speaker 3 (15:58):
Yeah, and this doesn't happen with job changers right there.
There are organizations here in town that the organization itself
has moved its retirement plan options around so many times
that people are stuck with things. And I'm thinking of
my poor friends over at Try Health who we've all
been through this. Everybody knows what it's like when you
have a Try Health retiree come in. Try Health is
a fantastic medical organization, don't get me wrong, but if

(16:19):
you spend thirty years there, then you literally probably have
six or seven retirement plans that all have to get
pulled together. I know you're thinking, we're all thinking of
individual people that we've worked with, So yeah, that happens,
and it's nobody's fault. It's just the reality of things.
But this is all part of, you know, getting your
stuff together and understanding what it is, understanding the resources
that you have to pull together, and how can it

(16:39):
support you in retirement. And I swear, Bob, I don't
think I've ever had a situation where we ended up
where somebody ended up not being able to do what
they wanted. It's it's usually the opposite where people assume
they can't get things done because we've all had this
notion of scarcity beaten into our heads for decades. That's
not a bad thing. It keeps us responsible. But if
you don't tamp that voice down until it to shut

(17:00):
up and look at your big picture, you'll wind up
working too long or sacrificing too much. Along the way.
So a big part of this is take an inventory
of your financial life, where are your resources, what does
it all add up to, and then more importantly, what
do you need to get out of it. That's the
whole planning process.

Speaker 1 (17:14):
Yeah, speaking of that, let's talk about what we can
do about it. For folks that don't know how to
find those old statements or old accounts, there.

Speaker 2 (17:22):
Is some help on the way.

Speaker 1 (17:23):
Is part of the Secure two point zero Act that
mandated the creation of a retirement savings Lost and Found database,
and it's being managed by the Department of Labors Employee
Benefits Survey Administration or EBSA for short.

Speaker 2 (17:41):
This is an online tool that aims to help.

Speaker 1 (17:44):
People locate their lost or forgotten retirement accounts.

Speaker 2 (17:47):
That's the first step, find them if you don't know
where they are.

Speaker 1 (17:50):
That database began collecting information from planing Administrator's last November. So, Brian,
I think that's probably a pretty good and accurate data base,
because you know, ARISA already has a lot of reports
out there that requires employers to report data. I think
that EBSA online tool will will probably uncover some good

(18:14):
information and help folks out there that need some help
locating these old accounts.

Speaker 3 (18:19):
Yeah, and there's other tools out there too. There's another
one the National Registry of Unclaimed Retirement Benefits, and there's
a Department of Labor has an Abandoned Plan database. This
would be for companies where the company maybe went away,
went bankrupt or whatever years ago, but there's still money
sitting in accounts that the that the participants, the employees
never claim. So one thing that some people might run

(18:39):
across here is if you walk away from an old
four O one K doesn't have a whole lot of
money in it, anything under five thousand dollars, well, the
employer does have the right because because it does cost
them to maintain these accounts, they have the right to
force that out into an IRA anything below five thousand dollars.
So if you've got a little IRA from some weird
bank you've never heard of, and it's worth less than

(19:00):
five thousand, and you're wondering where it came from, there
is a good chance that came from a job that
you left and didn't bring your small four one k
with you. But don't lose sight of those little ones either.
They do add up over time, and I guarantee you
they're invested in nothing. Those banks exist to sit on
those assets and loan them out.

Speaker 1 (19:16):
Yeah, and if you do need if all this information
is a little overwhelming and you just don't even know
where to start, or kind of have that deer in
the headlights, look sit down with your advisor or find
a good fiduciary advisor that can walk you through this process.
We've already talked about how much money is laying around
out there. Make sure you know that you get yours.
Here's the all Worth advice. Don't let your retirement money

(19:38):
just go missing. Track it down, consolidate it and put
it back to work for your future. Next, we tackle
a nuanced part of the home selling process that could
end up getting you less than you might think when
you go to sell your house. You're listening to Simply Money,
presented by all Worth Financial on.

Speaker 2 (19:57):
Fifty five KRC, the talk station.

Speaker 1 (20:04):
You're listening to Simply Money presented by all Worth Financial.
I'm Bob sponsor along with Brian James, joined tonight by
our real estate expert, Michelle Sloan, owner of Remax Time. Michelle,
thanks for making time for us tonight, and I know
you want to talk about an important topic right now,
how to handle this whole situation we run into when
buying a home, and that's the appraisal. How to handle

(20:27):
the whole appraisal situation.

Speaker 4 (20:29):
Absolutely, I'm going to start with the sellers first, because
the seller always wants the absolute highest price for their home.
They want a million dollars for their home, right, But
that's not often reality. So when you're pricing homes, you
want to price it to evaluation that an appraiser will
value the home at that price.

Speaker 2 (20:51):
And if you're.

Speaker 4 (20:53):
Willing to pay more, and this is the question that
I have to have with my buyers, is if you're
willing to pay more, you may have to come out
of pocket if an appraisal is short of the actual
contract price that you agreed to. So, I mean, that's
kind of a lot to soak in, but you have

(21:15):
to understand that if you are getting a loan, the
bank wants to make sure that the appraisal of that
property is the same price or higher than your contract price.
If it's not, you either have to renegotiate or the
buyer has to bring that extra to closing. And we

(21:37):
are seeing a lot of buyers that have some of
that extra cash, bringing an extra ten thousand dollars twenty
thousand dollars, that's over and above the valuation that an
appraiser has given you for the home. Does that make sense?

Speaker 3 (21:51):
Yeah, it does, Michelle, Thanks for that. So the thing
that's occurring to me is, Okay, what you're saying is
if somebody finds themselves in the situation where the appraisal
didn't come in at the right amount, they need to
throw more cash in ostensibly to make sure that their
down payment is at the right level. Are you aiming
for what's happening nowadays?

Speaker 4 (22:09):
Right?

Speaker 3 (22:10):
Because what I'm getting at is the twenty percent. If
I make a twenty percent down payment, I get to
avoid you know, I get to avoid the extra insurance
payments PMI. Yeah. Are people normally when you're doing these transactions,
are they coming with twenty or are you seeing a
lot it? But in five and between five and twenty,
what does it look like? Nowadays?

Speaker 4 (22:25):
It's a mixed bag? It absolutely is, Brian. You know
the interesting thing is that you know we still have
we have buyers all over the board. So I'll give
you a quick example. I had a listing. We had
eight offers of those eight offers, we had one cash
one that was willing to pay an exorbitant price over

(22:49):
list price, but they weren't willing to give any appraisal
gap coverage is what we call it, if they're willing
to put down a little extra. We have people that
are just putting five percent down, ten percent down, and
then the twenty percent down. So your down payment is
not going to change unless you want to, you know,

(23:11):
mess around with that with your lender. The down payment's
not necessarily going to change, but it's the amount of
cash that you're going to bring to closing could change.
So as a listing agent, I'm always looking for buyers
who have the cash to be able to make up
the difference if needed during the appraisal process.

Speaker 2 (23:34):
Michelle, as I listen to this whole topic, I mean
to me, this just screams of make sure you are
working with a skilled, experienced real estate professional like yourself,
because there's a lot of variables at play.

Speaker 1 (23:47):
You know right now based on what you're talking about,
and what I mean by that is if the banks
are coming in and appraising these properties at a little
bit less than the quote unquote sale price or offer price,
I know they're trying to protect themselves. You got a
buyer that's really emotional and wants to get involved in
the home. You got a seller sitting there saying, Wow,
I've got eight offers come in, and I can just

(24:09):
keep jacking up this price. At some point, you know,
somebody needs to run the numbers and give good advice
on how to play this game. Here what I can imagine,
it's just a box of chocolates for you trying to
balance buyers and sellers and actually go in with an
actual strategy on how to make sure you get the
home you want. But you're not overpaying or doing something irresponsible.

Speaker 4 (24:34):
Absolutely, I mean there there are some duds in your
box of Chocolate's tell you some of those nasty cream
filled ones. Don't know that.

Speaker 1 (24:44):
Say that char There's very few things I would not
eat that that are wrapped in chocolate.

Speaker 2 (24:49):
But we won't go you know, but go ahead, okay.

Speaker 4 (24:54):
Good, Well we're yeah, we're really going off on a tangent.
I like the chocolate talk though, I really do.

Speaker 3 (25:00):
Yeah, I do it, So I do a question. You
were talking about cash before. Are we still in a
situation where UH sellers are more willing to accept a
lower cash office offer instead of the highest one that
still needs to be underwritten, or people are people willing
to be patient, or they just want it done at
this point.

Speaker 2 (25:15):
Okay.

Speaker 4 (25:15):
So that's also, honestly a really good question, and it
brings up a conversation that we have to have because
you hear the old saying cash is king.

Speaker 2 (25:26):
But let's just go.

Speaker 4 (25:27):
Let's just say the house you have a sales price
of three hundred thousand dollars, and the cash offer is
three hundred thousand dollars, but we have a financed offer
with let's say a guaranteed appraisal gap right of three
twenty Are you going to wait an extra two or
three weeks for an extra twenty grand. Heck, yes you are,

(25:51):
because if there's if we know and they can prove
that they have the money to pay that appraisal gap,
then that's the offer I'm going to wreck amend that
the seller take. And so it really does come down
to you have to look at all of the minute
details because in that same scenario, if someone offered four

(26:12):
hundred thousand dollars and that's the highest price and you
get you look at that with dollar signs in your eyes.
But you know what, that's not a real number, because
when the appraisal comes in at three hundred or maybe
three ten, guess what, that's what you're gonna end up with,
not the four hundred.

Speaker 3 (26:30):
You're not.

Speaker 4 (26:30):
That's that pie in the sky, that's the rainbow, that's
the that's the chocolate whatever your favorite chocolate candy is
that you can to gorge yourself with, because you know what,
that four hundred is not realistic. And I have agents
who get really angry with me because they're like, but
my offer was the highest, and you know, you have
to think about that, And that's where I think you

(26:53):
do have to work with an experienced agent because your
offer may have on paper been the highest.

Speaker 2 (26:59):
But is it really No, it really wasn't.

Speaker 1 (27:03):
Well, there's a lot of sorry, bri this this comes
down to very similar things that we deal with. And
what I'm talking about here is dealing with emotion and patience,
and those two words are things that certain people don't
want to hear. And that's why that's really where at
the end of the day, a good advisor, you know, more.

Speaker 2 (27:22):
Than pays for themselves.

Speaker 1 (27:23):
I don't care whether it's on the investment side of things,
or the real estate side of things. You really do
need to have a seasoned pro that can that can
help balance out the emotion and inject a little patience
into the situation.

Speaker 2 (27:35):
Situation, right, Michelle, absolutely, all.

Speaker 1 (27:39):
Right, Well, hey, great stuff as always, Michelle, thanks for
making time for us tonight, and thanks also for being
the only adult in the room tonight. You need some
chocolate now, all right, bring it, I'll eat whatever you got.
You're listening Simply Money presented by all Worth Financial on
fifty five KRC, the talk station. You're listening to Simply

(28:05):
Money because I by all Worth Financial on Bob Sponseller
along with Brian James.

Speaker 2 (28:10):
You have a financial question you'd like for us to answer.

Speaker 1 (28:12):
There's a red button sitting right there while you're listening
to the show on the iHeart app. Just click that
red button, record your question and it'll come straight to us.
Speaking of questions, Dan and Madeira has one. Let's kick
it off with Dan. I've done well saving and investing,
but I feel stuck at this level.

Speaker 3 (28:32):
How do I move from one million to five million?

Speaker 2 (28:34):
In network? Well?

Speaker 1 (28:37):
Dan, there's the answers that come to mine are two.
There's really kind of only two things you can control.
Save more money, save and invest more. And along with that,
examine your investment strategy and see if you've got some
dormant money that might be sitting in cash or low
growth type investments, get it into something more diversified, it

(29:00):
has the opportunity to grow and compound more over time.
Those are the two things that you control. Is how
much risk you're taking and growth potential you've got with
your portfolio, and then how much you're saving and investing
into your portfolio. And a good advisor could sit down
and help you go through some of that.

Speaker 3 (29:18):
Bob. I'd have another quick question for Dan, which is
when you hit five million, is it going to be
how do I get to ten million? Then how do
I get to fifteen? Where does it all end? And
what are you really trying to accomplish? I would start there,
not a bad instinct, but at the same time, start
at the end. What do you want at the end
of all this?

Speaker 2 (29:32):
All right, let's hear from John in fort Wright.

Speaker 1 (29:34):
What's your take on direct indexing versus traditional ets?

Speaker 2 (29:39):
Yeah?

Speaker 3 (29:39):
John, great question. So the direct indexing is something that's
becoming more and more popular. Most people know what an
index is right, it's a big pile of stocks that
we all kind of look at and go, yep, that's
the stock market. The most common one we hear of
is the S and P five hundred, which is nothing
more than the five hundred largest companies in the United States,
whether they're good or bad. It is two different things.
The other one is the Dow Jones, which is thirty

(30:00):
stocks that somebody liked one hundred years ago. But in
any case, direct indexing, well, a lot of people own
mutual funds that replicate these indexes. Right, there's plenty of
S and P five hundred indexes. You've got one in
your four oh and K, four oh three B, so
on and so forth. Direct indexing takes it to another
level where you don't own one thing that owns the
five hundred stocks in the S and P five hundred.

(30:21):
You own literally all five hundred stocks. There are ways now,
with technology and the efficiencies that it brings, to set
somebody up with a portfolio that literally has those five
hundred different stocks. And you might go, oh, my gosh,
how fat is that statement? And you're right, it's a
fat statement because you literally have all the activity, all
the dividends are all the ups and downs of these
individual stocks, So why does anybody bother doing this? The
main goal there is tax loss harvesting. If I own

(30:44):
an index mutual fund and one of the stocks in
the S and P five hundred has a bad year,
as many of them do, that's how the market works,
good years, bad years, then I cannot take If it's
inside the fund, I cannot take that loss. I can't
incur it and deduct it. However, if I own five
hundred individual stocks and one of them trips over itself,
well I can take a loss, and I can use

(31:04):
that loss if I go ahead and sell that individual stock,
I can offset it against any gains I might have,
And if I have more losses than gains, I can
deduct up to three thousand dollars right off my income.
So I like direct indexing for that point. But that's said,
if you have nothing but iras in the four to
one case, direct indexing will not help you. There's no
such thing as tax loss harvesting in those types of accounts.
Let's move on to Bart and Milford, who's got a

(31:25):
question about taxes.

Speaker 2 (31:26):
Go ahead, Bart, how do I know if I'm paying
too much in taxes for my investments. Well, pretty loaded question, Bart.

Speaker 1 (31:33):
It depends on you know, a multitude of things that
we don't know just from that question. One, where are
you taking your income from? If you are taking an
income stream from your portfolio, we need to look at that.

Speaker 2 (31:45):
You know, are you taking it from.

Speaker 1 (31:46):
Iras, non iras, roth ira accounts and newity's pensions. Where
are you taking your income from? Another thing might look
at the composition of your investment portfolio, kind of the
to Brian's point on the last question. If you're sitting
there with a bunch of mutual funds that you've owned
for years in a taxable account, those are paying you

(32:09):
distributions on capital gains every year in the fourth quarter
of the year, whether you take.

Speaker 2 (32:14):
Anything out or not. That's just the way mutual funds work.

Speaker 1 (32:18):
So there might be an opportunity to make your portfolio
more efficient through those two things, looking at how you
are taking your income stream from your portfolio, and then
looking at what's the composition of your current portfolio. And
that ignores the whole topic of roth conversions and other
things which can help potentially save you some taxes.

Speaker 2 (32:40):
Down the road. Let's hear from Laura in Newport.

Speaker 3 (32:43):
If I already have a diversified portfolio, how often should
I read balance and who should be doing it? Yeah, Laura,
so this is this question. Let's start with the second question,
who should be doing it? Well, if you've got a
fiduciary based financial advisor who's doing done a financial plan
and all those things for you that you should be
looking to them, You're already paying them money, so any

(33:04):
questions that come up, you should be routing through them
anyway to get to get the best bang for your buck. Now,
as far as how often, I'd say it depends on
the type of portfolio that you own. But most people
have piles of mutual funds or exchange traded funds where
there isn't really a whole lot of risk in any
single company. That's how most people have investments. That's not everybody,
but I would say once a year it's worth looking at.

(33:26):
And the reason I say that is because most people
just tend to let it roll and kind of forget
about it. And what will happen is whatever's doing well
will will be the kind of place to be for
a few years, and things will get out of whack. So,
for example, if you've let your portfolio go, as many
have for ten fifteen years, there's a good bet that
you have way too much on the large cap side,
and probably a heck of a lot too much on
the technology side. These aren't bad things, but this is

(33:47):
why you want to kind of harvest some of the
gains and spread it out across things. If you have
a four to oh one k and that's your primary
asset and you are putting money into it every week,
every two weeks, or however often you get paid, that
will tend to stay so somewhat in balance. So don't
be surprised if you don't see because of the money
flowing into it regularly, that will keep it somewhat balanced.
Let's move on for one more quick one from Maria

(34:08):
and Hyde Park.

Speaker 2 (34:09):
My adult son has a decent job and some savings,
but he's scared to invest because of market volatility. How
do I help him without just doing it for him?

Speaker 1 (34:17):
Well, Maria, the first war that comes to mind is education,
and oftentimes people just need to get a little historical
perspective on all the landmines that have been out there historically,
you know, throughout the history of the markets going back
to the nineteen twenty six for example. But there's always
a reason to be concerned about investing. I think maybe
your son has a little bit of recency bias. Let's

(34:39):
face it, he lived through COVID, perhaps the housing crisis.
There's been some you know, a lot of volatility here
in recent years. But I think sitting down and just
walking him through, in spite of short term volatility, what
the long term benefits of staying invested in the stock
market had been. Oftentimes that helps people get a little

(35:00):
bit more of a comfort level with putting some of
their money away or most of their money away for
the long term.

Speaker 2 (35:07):
All right, coming up next, Brian's bottom line.

Speaker 1 (35:09):
He's gonna spend a little time on a very important topic,
long term care. You're listening to Simply Money presented by
all Worth Financial on fifty five KRC the talk station.
This moment, you're listening to Simply Money presented by all
Worth Financial on Bob's funt Seller along with Brian James.

Speaker 2 (35:30):
And it's time for Brian's bottom line.

Speaker 1 (35:32):
And today Brian's going to give us his bottom line
on long term care.

Speaker 2 (35:37):
Brian uh laying on us.

Speaker 3 (35:40):
So this comes from Bob. This comes from a meeting
I had yesterday. This question comes up all the time.
We'll go through we have a financial plan in place,
and we figured out the resources and the goals and
everything looks okay, and then the question comes up, well,
what if we have a long term care type of
a situation. We're both sitting here the picture of health,
you know, but this happens to a lot of people.
How do we know what we can afford? And obviously
you know that the most people are coming thinking I'd

(36:01):
probably have to have long term care insurance, and yeah,
that can be an answer, that can be a solution,
but we never start there. And the reason is, I'll
be honest, I'm not super trusting of the insurance industry,
especially the long term care space. It's a good resource
to have, I got if you've got plenty of resources
to be protected, but it's also can be really expensive
if you don't. So you know, if you're somebody who

(36:22):
wants you, maybe you're a married couple, you're probably looking
at twelve to fifteen thousand dollars per year to get
a really solid policy that will pretty much cover everything
and have inflation built into it. But the inflation, of course,
is also attached to those premiums. So I don't think
there are any companies anymore. I remember twenty twenty five
years ago when some of them would tout the fact
that they had never raised their premiums. Well, that's not
a thing anymore. They all do it, and they do

(36:44):
it regularly, and it's understandable that the risk is that
it's an expensive concern.

Speaker 2 (36:49):
You know.

Speaker 3 (36:49):
We always tell people you need to plan on maybe
three hundred and fifty thousand dollars for healthcare beyond your
normal out of pocket expenses for doctors and office visits
and all that kind of thing. But that doesn't mean
you have to rush out and get insurance. First of all,
if you have a financial plan and you can take
a shot at what your cash flow or what your
assets are going to look like at that time, you
may very well be able to self insure. Because of

(37:11):
the way compounding works and the way money grows over time.
If you have an idea what your cash flow is,
and you're honest with yourself about your spending, you'll have
a clear idea of what will be left at the
end of it. And Bob, the other thing, I'll throw
out there is. People kind of forget that, you know,
when we say it's going to cost about one hundred
and fifteen thousand dollars per year for a nice home
in this area those days we're talking end of life,
so about two and a half years. So I need

(37:32):
three hundred and fifty thousand dollars to do this. That
is correct. That's the estimate that we use all the time. However,
it's not on top of all of your other expenses.
You're not going to the grocery store anymore. You might
have sold the house, you're not vacationing anymore, there's no
more mortgage. So yes, is it more than you're spending
at that time before you're going home? Probably a little bit,
But it's not an entire sum layered on top of

(37:52):
your current expenses. Right, you're already getting some of this,
and remember your social Security, your pensions will still be
coming in to cover it. Don't get me wrong, But
it's not as terrifying as it may seem when you
first look at it.

Speaker 2 (38:04):
Yeah, good stuff.

Speaker 1 (38:05):
The only thing I'll add there is I, oftentimes, Brian,
I like to look at a client's existing life insurance,
especially some permanent life insurance because correct me if I'm wrong.
Last time I check, we all have one hundred percent
chance of dying and collecting that death benefit, only about
a fifty percent chance of needing long term care. So
sometimes that life insurance that you've owned for years that

(38:26):
can backfill at the end any money that you drew
down to pay for long term care costs during the
end of life.

Speaker 2 (38:33):
Thanks for listening.

Speaker 1 (38:34):
You've been listening to Simply Money, presented by all Worth
Financial on fifty five KRC, the talk station