Simply Money

Episode Transcript

Speaker 1 (00:06):
Tonight, the value of money, the perfect portfolio for you,
and more. You're listening to Simply Money, presented by all
Worth Financial. I'm Bob Sponseller along with Steve Ruby. Tonight,
we're not talking about the stock market, tax codes, interest rates,
tariff headlines. We're going deeper into something more fundamental, something

(00:28):
that shapes how you invest, how you spend, and even
how you sleep at night. We're talking about the value
of money and the value of money to you, not
just how much you have, but what it's really worth
to you. Because when you strip away all the noise,
all the headlines, and all the market chatter, that's all

(00:49):
that really matters.

Speaker 2 (00:51):
Yeah.

Speaker 3 (00:52):
I mean, at the end of the day, whether you've
got a million bucks, five million, twenty million dollars, money
means something different to each every one of us. For
some people it's security, for others it's status. Maybe for
some it's just financial freedom. But at the end of
the day, unfortunately oftentimes there's still anxiety tied to money,

(01:14):
no matter how much we have.

Speaker 1 (01:15):
Yeah, Stephen, we see this all the time when we
work with clients in our office. We see it firsthand.
People with more money than they ever dreamed of we
find are still worrying about running out of money.

Speaker 3 (01:27):
It really is remarkable because I will stress tech test
the heck out of plans. I will say that you
are going to live till you're one hundred and ten
years old. You're going to spend more money than you
ever thought you could. We're going to assume the markets
have terrible timing and they're still worried about running out,
still afraid to retire.

Speaker 1 (01:44):
Yeah, and I have some meetings like that as well,
And so I mean, it really all comes down to
we can run spreadsheets till we're blue in the face,
we can stress stress test the you know what out
of all these portfolios. But the emotional side of wealth
is critically important. And we're kidding ourselves if we don't
admit that it drives a lot of the decisions we make.

Speaker 3 (02:06):
Oh sure, I mean, part of our job is just
to make sure that people don't make mistakes that they
can't undo. People's selling low and buying high after a
market correction, for example, hoarding cash when they should be
investing because maybe their wealth is more tied to security
than anything else. But there's a massive opportunity cost of

(02:28):
not letting those dollars work, Inflation will eat those dollars alive.
Too much risk based on greed, perhaps not enough risk
based on fear. Money isn't necessarily a logical thing. It's
an emotional thing.

Speaker 1 (02:43):
Yeah, and it really sometimes comes down to not what
you actually have, it's what you believe you have. Again,
based on how money ties into your values and your identity.
And there are reasons for this. Maybe your parents grew
up in the depression and pass that fear onto you.
Maybe you're someone who built your wealth from scratch and

(03:03):
you feel guilty about spending it.

Speaker 3 (03:05):
I've certainly seen that before. Somebody that comes from nothing
and then they start a small business that becomes very successful,
and then they sell it and they're like, oh, I
have fifteen million dollars, Now what do I do? Yeah?

Speaker 1 (03:16):
Or maybe you didn't build it from scratch. Maybe you
did it the old fashioned way, you just inherited.

Speaker 3 (03:21):
Oh wouldn't that be great?

Speaker 1 (03:23):
Yeah?

Speaker 3 (03:24):
Well, when you inherit, though, a lot of times people
are afraid of blowing it, messing up, doing something outside
of the wishes of those that they inherited the money from.
So there's always emotions tied to the relationship that we
have with our money.

Speaker 1 (03:40):
And the point we really want to drive home here, Steve,
is what money actually buys is choices, choices, the ability
to choose how you spend your time. It also buys margin,
breathing room when life throws us a curveball. For some,
it buys dignity, you know, not having to rely on

(04:00):
anyone else for your financial support in the later years
of life. And it also buys your time paying to
free paying someone else to free yourself from some things
that you hate doing exactly. And then and then for others,
access you know, access to better health care, better education,

(04:21):
or better opportunities for your family. Yeah.

Speaker 3 (04:23):
I mean, it's a great point that that's that's kind
of what I talk about when we build financial plans
and and somebody works well and I have trouble blowing
it up in the face of all the stress testing.
What I explain to them is that now they have options,
and I'm talking about things like you know, people will
come to me with simple questions like, hey, should I
should I pay off my mortgage entirely I want to

(04:44):
be debt free? Or should I keep the money invested?
Because I am one of the fortunate people that locked
in at a low mortgage rate. Should I collect Social
Security now or should I wait? You know, I'm uncomfortable
taking from my accounts, so I feel like I should
collect it now, and and honestly, at the end of
the day, those co when people have options are are
quite nice because I'll be very honest and paint a

(05:05):
picture of all right, well, let's say that you do
do a distribution to pay off your home at the
end of the day. You know, and this is a
real world example. Somebody at the end of their plan,
they live below their means, they have incredible fixed income,
they have some wealth that they build on their own,
they inherited some assets, so they have a nice chunk
of change. But it's going to keep growing because they're
not going to take it out as fast as they
need to or as fast as they could be, I

(05:27):
should say, So their wealth is going to balloon to
you know, future value money about twenty five million dollars
by the end of their plan, and the difference between
paying off their home and keeping the mortgage it was
about a million bucks at the end of the plan.
And they said, okay, well, I don't care about that,
so I'm going to pay off my home. So this
is an example of how money gave them options. Same

(05:49):
thing with social Security. You know, meeting with somebody just
the other day, and you know the plan that we
built was you're going to defer social Security to full
retirement age, and they collected to years earlier. And they're like, Steve,
are you gonna be mad at me for this? And
I said, now, we talked about it ahead of time.
Your plan affords you options. Yes, better outcomes will happen
if you live for a long time and you would
have deferred your Social Security. But the end of the day,

(06:12):
who cares. So I really like when there's a robust
plan and people have those options.

Speaker 1 (06:17):
You're listening to simply money presented by all Worth Financial.
I'm Bob sponseller along with Steve Ruby. Steve, here's a
trade off that so many people miss and it's something
we tell clients all the time. You can always earn
more money, but you can't earn more time. And yet
people often protect their money way more fiercely then they

(06:39):
protect their time. Yeah.

Speaker 3 (06:41):
An example that would be staying in a job that
they don't like. That's another thing that I'll explain is
you know, if your plan is robust and you have
a really bad day at work, you don't have to
go back think about that. It buys you the option
of not needing to go back to work. Somebody the
other day was telling me that I explained to that.
I explained that to them about a year ago. And
he's planning and continuing to work because he's earning more
money than he's ever earned. But every morning he wakes

(07:03):
up and he just kind of sits at the side
of the bed and he looks at the floor and
he's like, should I just not go into work today?
He's actually thinking that, But it's you know, sometimes people
will put off vacations, for example, and unfortunately, maybe something
happens to their health when they retire and they don't
get to take those vacations. They worry about spending money

(07:24):
on their grandkids, you know, as if they'll get a
second shot at those moments that they might miss spending
with them instead of earning more, you know, it's important
to make sure that you're not making sacrifices that you
don't need to make.

Speaker 1 (07:37):
I had a lady in my office yesterday, a widow
who has nine grandchildren, and it was a wonderful meeting
because she's been very responsible with her planning. We get
together every year, we review everything, and she came in
yesterday and said, Hey, Bob, I want to be able
to take a grandparent trip every year with just one

(07:59):
on one me and each grandkid. Can I afford to.

Speaker 3 (08:03):
Do that, as in nine vacations in a year?

Speaker 2 (08:05):
Yeah?

Speaker 1 (08:06):
I love that question, and I happened to be. I
was very close to her late husband. He was one
of my best friends. And what a wonderful discussion that
we had about that. She was fortunately in a position
to be able to do it financially, but I'm like,
not only can you afford to do it, you need
to do that because that's time you can't get back.

(08:28):
And she was relieved to have that option available to her.
And she's going to be out booking some of those.
And they're not major extravagant trips. It's just spending three
or four days with your grandkid and you know you're
never going to get that time back. She's not taking
each of them the Disney World now, one at a time. No. No.

Speaker 3 (08:46):
So we mentioned something earlier about you know, tying your
money to your identity as well. That there's risk in
that because you know, in the days of you know
where we are with social media, you know, you might
feel wealthy until your friend or somebody you know through
social media buys a bigger house, joins a private club,
starts talking about a new investment that you weren't invited into,
and suddenly your three million dollar portfolio feels, I don't know, small.

(09:10):
So tying your money to your identity is a little
risky because there's always going to be somebody that has
more or.

Speaker 1 (09:20):
Trying to demonstrate the perception that they have more. Social
media is wonderful at doing that.

Speaker 3 (09:26):
Oh, it really is, because it only shows the best
parts of your life. You're not showing the miserable parts
of your life. On social media, everyone can quickly make
themselves look like they're living the life of the rich
and famous, you know, on Instagram.

Speaker 1 (09:40):
Here's the real world. Questions to ask yourself, what do
I want my money to do, not just for me,
but for others? What am I afraid of when it
comes to spending, investing, or giving? And if I had
ten years left to live, what would I stop doing now?
And what would I doing now?

Speaker 3 (10:00):
I like that question a lot because it kind of
ties the perception back to what does this money mean
for me? What should I be doing with it? While
I still have time?

Speaker 1 (10:10):
Here's the all Worth advice. What's great financial planning really about?
Not just growing your net worth but aligning your wealth
with your Why? Coming up next, is there such a
thing as a perfect portfolio? We're going to get into that.
You're listening to Simply Money presented by all Worth Financial
on fifty five KRC, the talk station. You're listening to

(10:37):
Simply Money presented by all Worth Financial. I'm Bob sponseller
along with Steve Ruby. Hey, if you can't listen to
Simply Money live every night, subscribe to get our daily podcast.
Simply search Simply Money on the iHeartRadio app or wherever
you find your podcasts. Coming up straight ahead at six
forty three, how can you prepare for a financial crisis

(10:59):
with that being too conservative? That's one of the questions
we'll dive into here in a few minutes. So if
you're listening to us and you have a nice nest
egg in place, chances are you've already done a ton
of things right. You've saved, you've invested, maybe you've sold
a business or inherited wisely. But here's the million dollar question.

(11:21):
Is there such a thing as a perfect portfolio? Steve?

Speaker 3 (11:26):
I mean, it's a good question, but there's the myth
of perfection here. We get questions like this all the time.
You know, should I own more private equity? Is the
sixty forty portfolio dead? You know, there's an article going
around saying that some time ago, what are the ultra
wealthy doing that?

Speaker 1 (11:43):
I'm not?

Speaker 3 (11:44):
You know, the big reveal here, I think shouldn't come
as a surprise, as there really is no perfect portfolio,
But there is the portfolio that's perfect for you. And
this is built around your goals, your time, you know,
your timeline, your tax that you and yeah, your emotions
they're tied to that as well, and that's what we're
going to delve into.

Speaker 1 (12:05):
At the risk of overly simplifying this, Steve, it really
comes down to what we call a triangle, the triangle
of risk, return, and liquidity. So imagine a triangle. On
one corner you've got risk, on another return and on
the third corner liquidity. How easily can you access your money?
Most people want all three? Do you want low risk

(12:28):
and full liquidity. Hello cash and CDs, but don't expect
real returns after inflation and taxes. Do you want high
returns and full liquidity? Well, that's stock market territory, but
you better be ready for some serious short term volatility.
Do you want high returns and low risk? Yeah, that's

(12:49):
the one.

Speaker 3 (12:50):
I think. That sounds great. What's the solution?

Speaker 1 (12:53):
You're probably being sold something that's too good to be true.

Speaker 3 (12:56):
Oh bummer, Yeah, that's the unicorn investment doesn't exist. It's
I've had that question before. What's the thing that has
the highest risk or the highest return and the lowest risk.
And it's kind of it's kind of remarkable because you know,
that triangle just doesn't work out that way. You know,
Asset allocation is something we talk about all the time.
It's the foundation of your investments, but not necessarily the

(13:18):
finish line. You know, when I talk about that, that
means a combination of stocks, bonds, maybe some alternative investments
like real estate or private credit, maybe some cash positions,
a diversified mix.

Speaker 1 (13:31):
Well, and what we're really talking about here is balancing
all three of those things on the triangle. And people,
you know might be asking, well, how do the experts,
how do the financial gurus arrive at a proper asset allocation?
It really does come down to years and years of
study of historical returns and volatility to help derive a

(13:52):
portfolio that does give you the highest rate of return
per unit of risk.

Speaker 3 (13:57):
It's a risk adjusted rate of return.

Speaker 1 (13:58):
Yeah, it's that efficient frontier mixing risk and return. But
we still find people People might like the studies and
the math behind that, but they still might not like
that as a solution for their own personal portfolio.

Speaker 3 (14:12):
Well, what else are you gonna do? I mean, That's
that's what it boils down to. It's it's, you know,
building a financial plan. I say it all the time.
It helps understand your your your need to take risk,
your ability to take risk. You know, there's questionnaires and
just getting to know folks that help shine light on
the tolerance. You know, the the higher risk portfolio you have,

(14:33):
the more reward you'll you'll subject your money to over
the long term, as long as it's broadly diversified. When
I'm talking about an individual stock that could be the
highest risk, but in that situation, if something happens with
that one company, you're in trouble. That's why we talk
about these diversified mixes that have exposure to different asset
classes within that you know, sixty forty, seventy, thirty, eighty

(14:56):
twenty for example.

Speaker 1 (14:57):
And you also might be asking yourself, do I just
have too much cash sitting on the sidelines, sitting idle?
You know another question, Should I be using municipal bonds
or tax free bonds instead of corporate bonds? Can I
tolerate some illiquidity in exchange for higher yield? These are
all smart questions, and this is where a portfolio does
become and should become personal.

Speaker 3 (15:19):
Oh yeah, absolutely. I mean there's tons of different avenues
out there for saving you know, when it comes to
making decisions about the actual asset allocation and the investments
used to build that mix, I think taxes need to
be considered. This is a key part of financial planning.
Financial planning isn't just investments. It's taxes, it's insurance, it's

(15:40):
a state planning, it's retirement planning. And taxes are a
big part of it because to investors with the same
investment returns, they can actually end up with wildly different
outcomes after taxes depending on the vehicles that they're using
to build these mixes.

Speaker 1 (15:54):
Yeah, so tax planning and that's a huge part of
what every investor should be doing, and I know it's
a lot of the value that we add here for
our clients here at all Worth Financial. Tax planning isn't
just the cherry on top of portfolio management. It really
does need to be baked into the cake the perfect portfolio.
Without a tax strategy, it's like building a race car

(16:17):
and forgetting to put brakes on the car.

Speaker 3 (16:19):
Yeah, that's a really that's a good example. I mean,
let's say you're holding dividend paying stocks in a taxable account.
You're getting taxed every year whether you need that income
or not, So maybe hold that in a tax deferred account.
Or maybe you're sitting on a huge gain in a
single stock. The idea of selling that can trigger a
massive capital gain bill. So sometimes people freeze and they
end up holding that stock. But there are strategies out

(16:41):
there that can help you unwind a highly appreciated position.

Speaker 1 (16:46):
You know.

Speaker 3 (16:47):
Fiduciary financial advisors offers solutions using covered call strategies, for example,
to generate income off of a single position that they
can then use to offset the tax gains of selling
the stock, and if you lose on call, then you
can use those losses offset the gains of selling the stock.
So there's there's ways to unwind a portfolio. For example,
when we have a highly concentrated position.

Speaker 1 (17:09):
And then a last major factor in portfolio construction, whether
people want to admit it or not, it's our own behavior,
our behavior. The best performing portfolios are often not the
ones chasing the highest return. They're the ones you can
stick with and live with when markets get ugly. Why

(17:30):
because consistency over time beats short term brilliance or market timing.
The quote unquote perfect portfolio is one that keeps you
in your seat when the roller coaster drops.

Speaker 3 (17:43):
Yeah, And I think if we're taking tax planning into
consideration here, you know you should be exploring if you
have assets and a taxable account. This is outside of
your IRA, this is just a regular investment account. Tax
loste harving. Harvesting should be happening when volatility happens, and
so when your investments go down, maybe there's an opportunity
to sell some of them to realize those losses and

(18:04):
offset future gains. That means there's ways to win even
in the face of volatility. So not just sitting on
the sidelines and doing nothing, but actively managing those those
losses to ensure that we're capitalizing on them to offset
future gains is a big win too.

Speaker 1 (18:19):
Here's the all Worth advice. Is there such a thing
as a perfect portfolio? No? But is there a perfectly
aligned portfolio for your goals, your tax situation, and your temperament. Absolutely,
But you've got to do the planning. Coming up next,
what's the most important room to stage when you are
preparing to sell your house? Will reveal that answer and

(18:43):
more Coming up next. You're listening to Simply Money presented
by all Worth Financial on fifty five KARC the talk station.
You're listening to Simply Money present to buy all Worth Financial.
I'm Bob Sponseller. Along with today are real estate expert

(19:06):
and good friend Michelle Sloan, owner of Remax Time. Michelle,
thanks for making time for us today. Let's spend a
few minutes talking about how to properly stage a home
and get it ready to sell.

Speaker 2 (19:21):
You know, I think this is one of my favorite
parts of the job that I talk to a lot
of my clients about when they're getting ready to sell
their home. How important staging is, and staging your home
is very, very different than decorating your home for your
own personal likes and wants and needs. So less is

(19:44):
more always, And so when I tell clients, you have
to take everything off the kitchen counters, and that means
everything your knives, your chotchkes, all the little things that
you have, your spoon rest and all those kinds of
things you want to show off the property, and really

(20:05):
not a lot of the extras that you bring to
the property, because we want our buyers to feel that
they can move their own stuff into the home and
make it their own. So less is more when you're staging.
And there's new Bob, this this is the really, this
is a new study that just came out. What room

(20:26):
do you think is the most important room to stage
in your home?

Speaker 1 (20:34):
Well, you're talking to a meat eating, you know, sports fan,
So I'm going to say the great room, television room,
the place where I would watch sports and eat snacks.

Speaker 2 (20:46):
Actually, you know what you are corrector see you know
what most people would pick the kitchen maybe, or the
bedroom or the bathroom, and that's where you want to
spend your money. But where you spend the most time. Congratulations, Bob,
I'm so proud of you.

Speaker 1 (21:05):
Even a broken clock is correct twice a.

Speaker 2 (21:08):
Day, Bob got the I mean I wanted you to
say kitchen so that you could be wrong.

Speaker 1 (21:15):
Well, talk about why, talk about why and how we
stage that great room, entertainment room, whatever you want to
call it.

Speaker 2 (21:22):
Yeah, absolutely, it's the emotional connection that matters.

Speaker 1 (21:26):
Right.

Speaker 2 (21:27):
Nine out of ten buyers are actually influenced by staging.
And most people spend that time where they PLoP down
at the end of a big day and they just
want to relax. So you want to make sure that
the color in that room is a relaxing, neutral color.

(21:48):
You don't have a bunch of wild things going on.
You want to make sure that that room is neutral.
And if you have the big comfy couch and it
fits and it's not too much furniture in that room,
it will be appealing to a buyer. And it's it's
very very interesting in my mind that according to buyers agents.

(22:12):
This is a new study by the National Association of
Real Tours that thirty seven percent of buyer's agent said
the living room is the most important room to stage,
followed by the primary bedroom, and then the kitchen is
number three. Pretty interesting.

Speaker 1 (22:29):
I think it is interesting because I would think, well,
I'll leave it there. I think the if you're talking
to a married couple buying a home, I would think
different things appeal to different partners, you know, that are
buying a home together. So all right, good stuff. Interesting study.
What are some of the cost effective, you know, touches

(22:50):
or add ons or improvements that folks need to be
considering or making to get the highest price for their home, Michelle,
The very first.

Speaker 2 (22:59):
Thing we want to always consider as the cleanliness of
the home. Again, once we are staged and we have
most of the personal items out of the home, we
have most of the If you decide to paint a room,
do not do not. I'm gonna stress.

Speaker 1 (23:16):
That, do not.

Speaker 2 (23:17):
Go ahead and put pictures back up on the wall.
Leave it naked, and it's okay to have naked walls
when you are selling your home. And the other thing
that you can do is get a new welcome, Matt.
You know that curb appeal is so very important buying
a new welcome, Matt. I actually went out. I've got
a new listing that just came on and every once

(23:40):
in a while, I will gift a new welcome mat,
and that's just that everybody's gonna go to your front door.
You don't do that personally very often. So don't forget
to get a new welcome matt. It's new, it's fresh,
and it will set the stage for that. Showing some
other really important things to do is maybe you don't

(24:02):
make your bed on a daily basis. Well, when you
are selling your home, you're going to make your bed
every single day. You're going to make sure all of
the dishes are out of your sink, and go ahead
and get some new bedding, get yourself a couple of
new pillows. You can all take them with you. But
if that primary bedroom is staged with a really nice

(24:22):
blanket and a really nice comforter with great pillows, again,
it's going to look nice and comfy, and that's what
we want our buyers to see.

Speaker 1 (24:31):
I'm surprised you even have to remind people to make
their bed and clean the dishes out of the sink.
I mean you, speaking as a caveman who can live
that way for days on end, even I know to
do that, Michelle, you.

Speaker 2 (24:45):
Know what, you'd be surprised and nine times out of ten.
If a seller doesn't get a showing, maybe for a
day or two, they get a little lax and they say,
nobody's gonna come today. You know what, someone will absolutely come.
So I guess if you want to make sure that
you're going to have a lot of showings, leave your

(25:07):
coffee cup and the sink and your cereal bowl or whatever.

Speaker 1 (25:11):
All right, well, hey, in a couple minutes we have left.
Talk a little bit about the difference between staging your
home versus decorating your home, because there are key differences,
right Michelle.

Speaker 2 (25:22):
There really are. So we want to when we decorate
our home, we decorate for our own personal preferences. Maybe
maybe it's important to you have to have a religious
symbols around your home. You know. That is one of
the more sensitive things that I talk to sellers about.

(25:42):
We want to make sure that our home is staged
in a way that we're not going to offend anyone.
We're not going to really show a lot of your
own personality. We want to keep it as neutral as
possible and taking down all of the personal photos because

(26:04):
I want a buyer to walk into the home and
really see the home and not be worried about oh
I think I went to high school with that person,
or trying to figure out you know, ah, those grandkids
are so cute, and if they're looking at your grandkids,
they're not looking at the home, and they're going to
forget to look at the highlights that you've worked so

(26:26):
hard to get ready.

Speaker 1 (26:29):
So that's that's really the difference. I think that's a
great point. I know, and we have you know, I've
not been through a bunch of homes, we haven't moved
a bunch of times. But I can tell you for
a fact, Michelle, that I've gone into homes, you know,
and as someone who born and raised in Cincinnati and
lived here my whole life. As you well know, Cincinnati

(26:50):
is just a big small town. You know, everybody kind
of knows everybody. I've walked into homes before, and I've
looked at those pictures and I'm like, I know that person,
and I think, to your it takes the focus off
of why you're there in the first place. So yeah, great,
great advice as always from our real estate expert, Michelle Sloan,
owner of Remax Time. Michelle, thanks again for making time

(27:13):
for us today. You've been listening to Simply Money presented
by all Worth Financial on fifty five KRC, the talk station.
You're listening to Simply Money presented by Allworth Financial. I'm
Bob Sponsller along with Steve Ruby. Do you have a
financial question you'd like for us to answer. There's a

(27:34):
red button you can click while you're listening to the
show right there on the iHeart app. Simply record your
question and it'll come straight to us. All right, we've
got a segment here, ask the advisor. Let's roll with it. Steve.

Speaker 3 (27:48):
First, we have when in Madeira almost have another two
thousand and eight?

Speaker 1 (27:52):
How do we plan for that with something too conservative?

Speaker 3 (27:55):
All right, so this question is good. It's planning for
a major financial crit I don't think this question is
unfair by any means, because at some point in the
future we will have some kind of a recession paired
with a bear market. I don't know if it's going
to be a two thousand and eight level crisis, but
we do need to make sure that our money is

(28:16):
working for us so that our dollars keep up with inflation. Now,
without knowing the specifics of Lim's financial plan, you know,
the exact feedback is a little challenging to provide, but
I will say that when you have that financial plan
in order, it will help you understand what you need
to do with your money to not only keep up

(28:36):
with inflation, but meet your financial goals.

Speaker 1 (28:38):
Over the long term.

Speaker 3 (28:40):
That's why if fiduciary financial planning firms will create financial plans,
it's to help people understand that they need to stay
the course in the face of a financial crisis. Now
that there are investment strategies that exist out there that
can set ceilings and floors on investments, I'm talking about

(29:00):
like a buffered etf strategy. Something like this is potentially
beneficial for somebody that needs to have their money in
the markets to meet their goals, but they're terrified of
the potential consequences of a downturn. When it comes to
better outcomes over a long period of time, though, capping
those gains can be a risk for the longevity of

(29:20):
your plan. So this is something I deploy only when
people really need it to actually invest their money in
the markets.

Speaker 1 (29:28):
Let's go to Alex in Oakley, how do want to
pass assets to my kids without a huge tax hit. Well, Alex,
I think it depends on who you want to avoid
the tax hit on you or your kids. So there's
different strategies to do that. One thing to remind you
of and remind everybody of, there is a step up
in cost basis for non IRA, non retirement plan assets,

(29:50):
you know, stocks and bonds, things like that. So a
lot of people like to hold those long term and
make sure they pass those pieces of their portfolio on
to their kids because there will be no tax exposure
once you pass away. If you've got a portfolio largely
concentrated in retirement funds, you know, that's where a lot

(30:10):
of people will consider roth conversions for a multiple of reasons,
one of which is your tax rate during your lifetime.
But we've got some clients that want to take care
of that tax hit now during their lifetime so that
they don't leave iras and qualified plans to their kids
and have to have them pay the taxes down the road.

(30:31):
So really it really depends on your own individual situation
and again whether we're trying to avoid taxes for you
or your kids or a combination of both.

Speaker 3 (30:42):
And if you're fortunate enough to be rather wealthy in
this day and age, the death tax that we've all
heard of before is very high. At this point, you
need to have a large estate before that even comes
into play. But then there's more unique strategies using life
insurance policies tied to irrevocable I'm talking about an islet
irrevocable life insurance trust that you can actually use money

(31:05):
to pay for that insurance policy within that trust account
that will then be used to pay estate taxes on
behalf of your state when you're gone. So that this
is for people that I'm talking you have, you know,
tens of millions of dollars. Strategies like that could certainly
be beneficial. John and Fort Thomas.

Speaker 1 (31:22):
What are the trade offs between Roth conversions now versus
later in retirement? Well, John, the trade offs you got
to look at as your tax rate now, because when
you can do a Wroth conversion now, you got to
pay the taxes today at the current tax rate, you know,
based on what your other income is if you're still working,
or you know, the situations vary by client. So you

(31:43):
got to look at your tax situation today, you got
to make some assumptions about what tax rates might be
in the future, and then you also got to take
make some assumptions about the rate of return in the future.
And then you know, that's where some of this great
financial planning and tax software comes in. We can model
different scenarios to weigh those trade offs. And none of

(32:04):
this stuff is perfect, but you know, it's it's kind
of the garbage in, garbage out. If you're making good
assumptions going in with good data, you can make the
best possible decision you can make armed with the information
we have available. That's what I'd recommend, you know, sit
down and have a good fiduciary advisor model out different
scenarios for you, and they're definitely trade offs. And oftentimes, Steve,

(32:30):
I don't know if you agree. And when we actually
sit down and run and model out these different scenarios,
people will come up with a with a with an
ending scenario that they feel comfortable with and feel comfortable
pulling the trigger on. And sometimes that is doing nothing.

Speaker 3 (32:46):
Oh yeah, it is. Sometimes a Roth conversion doesn't make
sense at a certain point in time. That's why they're
very popular when you make that transition into retirement, because
if you're somebody earning a lot of money currently, you
could be putting those dollars tax free, not tax free,
but tax deferred into your four oh one K for example,
and then once your income falls off, there's more of

(33:07):
an opportunity to capitalize on larger ROTH conversions when you
make that transition into retirement.

Speaker 1 (33:13):
All right, speaking of four oh one k's, Sam and
Batavia has a question, Steve.

Speaker 3 (33:18):
I already max out my four oh one K.

Speaker 1 (33:20):
What else can I do to reduce my taxes?

Speaker 3 (33:23):
Well, nice job, that's wonderful. I'm glad to hear it.
If you're married or planning with a partner, whoever else
is in that household, perhaps they could be maxing a
workplace retirement plan. If they're not, then maybe they're eligible
for a traditional IRA contribution. Same thing with you. There
are limits on how much you can earn and actually
get a deductible contribution on that IRA, but we could

(33:45):
be looking at things like a health savings account. For example,
if you have a high deductible health plan, you could
be putting money tax deferred into that vehicle. Same thing
with an FSA, but that's something that doesn't roll over
the same way that an HSA does every year. There's
also potential strategies for itemizing taxes. Let's say you have

(34:05):
you know, significant positions in a taxable account, and you're
also charitably inclined. Maybe we could be doing some tax
sce harvesting in the taxable account, or we could be
using some of those assets to fund a donor advice fund.
To itemize your taxes in a particular year. The thought
process there is that you're bunching your your your tax

(34:26):
filing strategies so you can itemize in one year and
take standard deductions and alternating years. So there are strategies
you can deploy. Obviously, sit down and talk to a
CFP or a CPA or both.

Speaker 1 (34:37):
Coming up next, we're going to take a trip inside
my own warped brain, my world of wealth. 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 all Worth Financial. I'm Bob Sponseller along with

(34:59):
Steve rue Be. All right, Steve, I want what I
want to talk about today, and this I think this
is you know it's always important, but in light of
a lot of the recent volatility we've had, I want
to stress the importance and the critical importance of separating
your investment in financial decisions from your own personal politics.

(35:22):
It is critically important. And I'll give you a reason why.
I had a guy come into my office earlier today.
We've had three meetings together within the last ninety days,
and this guy has been and I've worked with this
gentleman for over thirty years. He's a very bright, very
responsible guy. But he's been all over the map here

(35:44):
in the last ninety days, and I think it's because
of his political bias. He wanted to go to all cash,
then he wanted me to recommend, you know, the hottest
tech stocks so he doesn't miss the AI revolution. He
moved a lot of money to cash, and then he
wants to get back in and talk about a long

(36:05):
term investment strategy. All the things that we tell people
not to do. This guy has talked about it, thought
about it, and to some extent, done it all within
the last ninety days. It's been crazy.

Speaker 3 (36:22):
Yeah, it's interesting because no matter what side of the
aisle you're on, you're on you're still driven by fear
and greed, and a lot of people think that the
other political party is going to massacre the markets. No
matter what happens but at the end of the day,
we're not investing in politicians who can't actually move the
markets as much as people think they can. We're investing

(36:43):
in businesses, which drives the stock market, and businesses are
driven by corporate greed, and that's that's a foundation of capitalism,
and capitalism isn't going anywhere. So letting political biases cloud
your own judgment, whether it's on the fierce thinking that
everything is going to go bad or the greed side
because your guy got in and putting all of your

(37:06):
money into one hundred percent stock when you're eighty five
years old, that's that's not necessarily the best approach for
your money.

Speaker 1 (37:12):
Well, and I find you know, when the emotions run hot,
you know, during times like this, oftentimes with highly technical,
highly intelligent people, you know, doctors, engineers, people that are
very very smart, well educated people. They like to think
when it comes to the world of investing, they can

(37:33):
figure out or they want to figure out how the
whole macro economy works, the global economy works in the
short term, and they think they have the absolute answer
on what the way the world should work or will work,
and they make some they come up with some really
I'm not. They come up with some decisions that they

(37:55):
want to make which are completely irrational because you you
cannot anticipate how investors, companies, governments are all going to
adapt and move and change depending on what's going on economically,
with interest rates, with geopolitical concerns. Trying to outthink the

(38:19):
management and behavior of a global economy is a really
dangerous place to go, and we've got to avoid getting
wrapped up in all.

Speaker 3 (38:27):
That, I think, remembering that at the end of the day,
the stock markets, like walking up the stairs, will plane
with yo yo. Things will trudge along forwards no matter
what happens with politics, So don't make big decisions based
on emotions from them.

Speaker 1 (38:40):
Thank you for listening. You've been listening to Simply Money,
presented by all Worth Financial on fifty five KARC, the
talk station