Episode Transcript
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Speaker 1 (00:00):
This is why I feel you and I we have
a special relationship.
Speaker 2 (00:03):
I don't deal well with Washington.
Speaker 3 (00:05):
I don't deal well with cliques.
Speaker 2 (00:06):
Just being honest with you.
Speaker 4 (00:07):
Tonight did ten oh six on fifty five KRC, the
talk station.
Speaker 2 (00:20):
Tonight.
Speaker 5 (00:20):
Four hidden forces that shape every financial decision you're listening
to simply money, because not about all words financial on
Bob Sponseller along with Brian James. All Right, you've done
the modeling, the plan checks out, the spreadsheets say you
can retire early, make that gift, or finally buy that
vacation home. And yet you pause, you hesitate, you freeze.
(00:43):
This isn't because you're bad with money. It's because financial
decisions aren't made in a vacuum. Let's explore four hidden
forces that often guide high stakes, high dollar financial decisions,
especially for those with significant wealth, and how to bring
some of these decisions into alignment. Brian, let's get into
these four major and let's just call it what it is.
(01:05):
It's emotions. Yeah, these are obstacles, Bob. So the first one,
first big one here is emotional, right, the gut reaction.
So anytime we talk about money, you can't do that,
You really can't do that without some kind of emotion
setting in somewhere, usually between fear and greed.
Speaker 6 (01:20):
And even this happens even for people who really manage
these things. Well, we're all human beings. If somebody has
a lot of money, then often we get really wound
up about the fear of loss. This is the kind
of thing when our clients will will tell us that
you call us and sab I really can't afford to
lose any of this at all. I can't handle a
market downturn, and so therefore I want to protect, protect, protect,
And that's fine, except what that brings into is the
(01:41):
risk of inflation over time? Will market downturn fall apart?
Will I live longer than expected? What happens if you know,
if I give a generous gift today that I really
want to do, and that screws up my future independence,
how do I know when I'm going to be okay?
And sometimes it's not fear, but the emotion is guilt.
So some investors struggle with just that idea of I
have way too much, I'm too fortunate. Others have too little,
(02:01):
and that causes them to freeze and not really make
any decisions at all because they simply can't get over
the notion that they that they've been too blessed in others,
you know, are suffering out there, and sometimes there's anxiety
about whether they've earned it or it was given it
to them, and how will those choices be perceived by family.
All of this stuff, Bob gets in the way of good,
intelligent decision making that we all have to do at
(02:21):
some point.
Speaker 5 (02:23):
Yeah, I see this come into play, you know, this
fear part, you know when folks first retire. And I
think what happens is when people are building their wealth,
they're at work every day, they're working very hard, focused
on a business or a high end executive.
Speaker 3 (02:37):
Or what have you.
Speaker 5 (02:39):
They're buried in their work for eight to twelve, sometimes fourteen,
sixteen hours a day working at their job. They don't
have time to look at the markets, and they don't
have the emotional capacity to worry about the markets. Yet,
when all that stops and all they have left to
do is think about and worry about their pile of money.
(02:59):
Even two to three percent pullback in the market, you know,
translated into into dollars and cents, which could be big
at times, that really freaks people out and that's something
that we got to talk with folks about, especially in
those early stages of retirement.
Speaker 1 (03:15):
Yeah, I think of an example there that I'm sure
you'll relate to too.
Speaker 6 (03:19):
But for our Procter and Gamble friends out there, everybody
remembers the Dirk Yager years twenty some years ago, and
we always talk about how that you know that the
market basically did not like the CEO that was put
in place and his plan, and it took about half
the value of the company away in approximately six weeks.
That does happen to Procter and Gamble, as wonderful as
it is, it's a stock like any other. But I
always tell people, remember you you remember that, but at
(03:41):
the time you didn't. It wasn't a big deal because
you were working, you were raising kids, you were building
your career. It wasn't that scary, and you knew, hey,
I got a long time frame ahead of me. It'll recover,
it'll move on, always has and that's you know, still
pretty much been the case. However, the next time that
kind of thing happens to any stock out there that
you might own, you'll be paying a lot more attention
to it because you've got the time, and it's.
Speaker 1 (04:00):
Hurt a little more.
Speaker 6 (04:01):
So let's let's move on here to the social side
of things, Bob. You know that keeping up with the Joneses.
Speaker 5 (04:07):
Yeah, the pro the quiet pressure to keep up. Brian,
Here's what I think about this one. I think we're all,
you know, in some way, shape or form. We all
start to make decisions based on the people we surround
ourselves with. That becomes our normal. And I can remember,
you know, just my college days and this is a
good thing, you know, being in the business school at
(04:28):
Miami and being in a fraternity, the people that I
spent four years with and you know, process life with
and kind of set some initial.
Speaker 3 (04:39):
Career goals with.
Speaker 5 (04:40):
You know. You you all kind of get in alignment
and you get a sense of what's normal. And I
think sometimes that translates later in life. You start to
look at well, how's this guy doing, how's that guy doing?
Does he have two homes? Or what kind of car
does he drive? Or what kind of vacations do they take,
And the quiet social pressure can creep in like, well, hey,
(05:03):
I work really hard too, I deserve to have this.
Speaker 3 (05:06):
I deserve to have that.
Speaker 5 (05:08):
And it can lead to making decisions based on that
quiet pressure or that social pressure, rather than making decisions
based on deeply held values that you have.
Speaker 6 (05:20):
Yeah, fomo is a nasty thing, fear of missing out,
and we all tend to focus on, you know, those
questions that you just asked, What are the visible things
that I can see about this this person, whether I know,
maybe I don't even know them, but maybe I'm just
vaguely aware of their existence or whatever.
Speaker 1 (05:32):
It's just something to compare myself against.
Speaker 6 (05:34):
So I think one way to deal with that is
to whenever you find yourself going down that path, always
ask yourself, I wonder what the conversations at their dinner
table is like. Is everything going okay in that household?
Speaker 1 (05:43):
Is it not? And it may very well be.
Speaker 6 (05:45):
But my point is, somebody makes a sacrifice somewhere. We
all cannot have it all except in extreme, extremely rare
rare cases. But in a lot of cases where somebody
appears to be very very successful in the outside, that
comes with a massive, massive investment of time. So I
can think of clients who I know who have very
successful businesses and they rarely make it to their kids
(06:07):
baseball games, and you know, the family just isn't quite
as tight versus other people who wish they had a
little bit more. But sure enough, they're the ones out there,
you know, coaching the little league games and just being
more involved in their families. Both of them are. They're
both just different lifestyle choices. Nothing right or wrong with
either one of them. But neither one of those examples
in what I gave there, is truly happy. They all
feel like they're missing something. So just make sure if
(06:29):
you feel like you're missing out on something, that you
understand what that other person has sacrificed to get where
they are, because it may be something that you've taken
for granted. How about generational issues. You inherited some kind
of mindset, didn't you.
Speaker 3 (06:40):
Yeah.
Speaker 5 (06:41):
I think this is a big one, Brian. I mean,
we all have parents, we all grow up in families.
And then the challenging part is for those of us
that get married all of a sudden, now you inherit
a spouse and their upbringing and their values and the
way their families handle money, and that can just become
a big conundrum of values. You know how families operate,
(07:05):
So you know, one way of thinking is you can
never have enough. You know, folks that are coming from
a holdover mindset from the depression where scarcity was the.
Speaker 3 (07:14):
Thing, you know, just getting by.
Speaker 5 (07:16):
You know, you can never have enough, And those kind
of people tend to be afraid to spend any money
whatso whatsoever? Other families never talked about money at all, ever, ever, ever,
And the lack of being willing to have conversations about
money with your kids and grandkids and spouses and other
(07:36):
family members that can shut down important planning conversations that
really need to happen. And then a third one that
we run into from time to time, Brian, is you
know that you know unspoken quote that you know we
help family no matter what, meaning if anybody needs anything
at any time, we must must must pull the check
(07:58):
book out and write a check for that. And sometimes
that is warranted and sometimes it isn't because it can
enable unhealthy behavior and some habits that need to change
quite frankly for family members.
Speaker 6 (08:12):
Yeah, and it's not only you know, it's not only
changing how we think about supporting people too much. It
can also be supporting yourself not enough. So you mentioned
a few bullets ago, you mentioned that can never have
enough Depression era thinking I'll never forget this story from
my youth. So I used to work in Northgate Park
retirement home over in Colorin Township, and I worked in
(08:33):
the kitchen.
Speaker 1 (08:33):
I was a waiter, and.
Speaker 6 (08:34):
One of us always had to be on duty to
guard the salad bar because these folks who grew up
in the depression would go get their salad. They'd sit down,
you a little bit of it, and you, by god,
you weren't going to throw any of that away, right
if you didn't want it, They weren't by their refrigerator,
so they would go back to the salad bar and
put the lettuce back in the lettuce thing and the
cottage cheese back in the cottage cheese thing. If that happened,
the health department, of course, would require that we break
down the whole salad bar. So one of us had
(08:55):
to play goalie at the salad bar to make sure
it didn't happen. And God forbid, if they got away
with it, the whole place would erupt watching.
Speaker 1 (09:01):
Us throw all this food away. But that's the rules
we had to follow.
Speaker 6 (09:04):
That mindset is good in terms of not overspending, but
it can also work extremely against you in terms of
always worrying that the world is gonna end and I
have to I have to be paranoid. I'd always be
looking over my shoulder. That causes family conflicts too, so
you don't know what you can get away with. And
that's what financial planning does well.
Speaker 3 (09:22):
And I'll share mine.
Speaker 5 (09:23):
I mean, I can remember being sat down at the
dinner table at the age of nine and they said, hey,
My parents said, hey, Bobby, the allowance is over. You
want money, you want to buy a candy bar, you
want to go to a movie or whatever.
Speaker 3 (09:36):
You need to go get a job. And this is
at age nine.
Speaker 5 (09:39):
So I mean I went out and got two paper
routes and it was just a mindset drilled into me.
The only person that's going to take care of you
is you. And you know, it led to a great
work ethic obviously and all that, but there are some
things that that are not so good that come from
that as well. So it's very interesting how those early,
(10:02):
those early experiences kind of hardwire our brain and.
Speaker 3 (10:07):
Cause us to make financial decisions.
Speaker 1 (10:10):
Bob.
Speaker 6 (10:11):
My paper out was on Jessup Road. There were four
candy stores. I didn't make a dime, but I walked
a lot.
Speaker 5 (10:18):
All right, well, let's get into the fourth hidden one here,
and that's just the logical, the analysis paralysis. I know
you're really good at this. The spreadsheets, the projections, the
tax model, they're all crucial, but they can often just
confirm rather than drive decisions, because, let's face it, at
the end of the day, decisions people want to make
(10:39):
decisions based on emotion.
Speaker 3 (10:40):
And we have this happen often. Brian.
Speaker 5 (10:43):
People come in and I can tell they've already made
the decision. They already know what they're going to do.
They want me to run the numbers to rationalize how
this is all going to work out in the spreadsheets.
Say see, honey, Bob told us we can do this,
and whether I told them they can or can't, they're
already gonna do it.
Speaker 3 (11:01):
Do you have any meetings like that?
Speaker 6 (11:03):
Oh yeah, And this this comes up for whatever reason,
This comes up with people who who are going to
help their kids, you know, to become hell or high water.
That's the first thing that they're gonna do. And there's
of course nothing wrong with that. It's just the reality
today that that needs to happen a little more than
it used to.
Speaker 3 (11:17):
Uh.
Speaker 1 (11:18):
But but there are a lot.
Speaker 6 (11:19):
Of times people will come in with one goal, this
is gonna happen no matter what, and it will. It
will dictate all the other things. But here's my number
one priority. And and that's perfectly fine. I mean this
at least it's happening in the in the in the
guise of a planning conversation, where they're at least asking
is this gonna work? Ors are gonna totally sink our ship,
And that's our job. So I don't mind that at all.
And I know and you don't. We enjoy it. That's
really that's kind of how how we put the puzzle
(11:40):
pieces together.
Speaker 1 (11:41):
Uh, you know.
Speaker 6 (11:42):
So it doesn't mean that it's a bad idea at all.
But again it does mean step back and look at
all the trees. Don't stare at one of them.
Speaker 3 (11:48):
Yeah.
Speaker 5 (11:48):
So there's just a few questions we'll run through here quickly,
you know, in terms of aligning your forces before you
make a decision, a large dollar decision. Number one, What
am I feeling? Is this decision rooted in fear, excitement, anxiety,
or relief. Get your arms around what you're feeling.
Speaker 3 (12:05):
Number two?
Speaker 5 (12:06):
Who might I be trying to impress or match by
making this decision?
Speaker 1 (12:11):
Three, and you know what, I'll add one there? And
does this person think about me at all? In turn?
Speaker 3 (12:16):
Exactly because the answers usually know.
Speaker 5 (12:19):
Three what money stories did I inherit that's driving this decision?
Speaker 2 (12:24):
Four?
Speaker 3 (12:25):
What do the numbers actually say? You know? Does the
plan actually work? Five? Have I discussed this with an
objective third party?
Speaker 5 (12:33):
Oftentimes an objective third party whether it's us, other family
members or trusted friends, that can be worth its weight
in goal getting a non emotional second or third opinion?
Speaker 3 (12:45):
Six?
Speaker 5 (12:45):
Does this align this decision aligned with my broader goals
and values? And then seven? Am I rushing? Or am
I giving this the time and the thought.
Speaker 3 (12:54):
That it deserves?
Speaker 5 (12:56):
Big decisions benefit from a brief pause in deeper reflection.
Speaker 3 (13:01):
Here's the Allworth advice.
Speaker 5 (13:02):
The most effective plans are built not just on spreadsheets,
but on self awareness, meaningful conversations, in a clear understanding
of what matters most to you. Coming up next, what
to learn from financial mistakes that successful.
Speaker 3 (13:18):
Investors admit behind closed doors.
Speaker 5 (13:22):
You're listening to Simply Money, presented by all Worth Financial
and fifty five KRC the talk station.
Speaker 4 (13:28):
A wind streak, One big beautiful Bill never before.
Speaker 7 (13:33):
Witness the United States will not allowed around to obtain
under your weapons.
Speaker 2 (13:38):
Fifty five KRC the talk station.
Speaker 8 (13:41):
All Worth Financial a registered investment advisory firm. Any ideas
presented during this program are not intended to provide specific
financial advice. You should consult your own financial advisor, tax consultant,
or a state planning attorney to conduct your own due diligence.
Speaker 5 (14:01):
You're listening to Simply Money, presented by all Worth Financial
on Bob Sponseller along with Brian James. If you can't
listen to Simply Money every night, subscribe to get our
daily podcasts.
Speaker 3 (14:11):
You can listen the following morning during your commute or
at the gym.
Speaker 5 (14:15):
Just search Simply Money on the iHeart app or wherever
you find your podcast. Straight Ahead at six forty three,
we're going to tackle the real life questions and decision
making that you're facing in your real life, the questions
that you've submitted to us in today's.
Speaker 3 (14:31):
Ask the Advisor segment.
Speaker 5 (14:33):
Have you ever set around the dinner table with friends
people like you, successful people who built something, professionals, entrepreneurs,
maybe a partner in your firm, and after that second
or third drink, the conversation shifts, an opinion on the markets,
a quick comment about real estate prices, or maybe that
new advisor or attorney someone just hired. Then come the
(14:56):
financial confessions. Brian, let's get into some of these, but
often come up and it's just signals maybe we need
to dust off our financial plan and get some things updated.
Speaker 1 (15:08):
Yeah. I think these are great opportunities.
Speaker 6 (15:10):
If you find yourself in this situation where that what
the blank question comes up from somebody else, jot it
down because it's probably gonna affect you at some point
at some point too. So one big one that happens
all the time is somebody has an estate plan that
was put together when the kids were in diapers, and
now their kids have kids in diapers. So you know,
we did our state plan way back in the kids
are little. I think it's fine, right, should be fine, right,
nothing changes, Well, of course things change. You have documents,
(15:33):
which is better. That means it's not the state that's
going to dictate what happens to your kids and your
assets after you're gone. But that structure, you know, usually
doesn't reflect their family's reality anymore, or or the stuff
you own your balance sheet probably has changed tax laws
for sure have changed and always will, and probably your
priorities have changed. You may be thinking, you know, maybe
you only worried about I want to get my stuff
(15:53):
to my kids. Well maybe now you've always had the
or you've more recently had a thought of I want
to let this charity, this group, I want to support
somebody else. That's fine, you got to get it on paper,
or it doesn't really matter. So make sure that you're
thinking about all these kinds of things. And there are
structures out there. There's grant or retained annuity trust, spous
a lifetime access trust. There are a lot of more
(16:13):
complicated things that may not have been appropriate or applicable
when you were first discussing this, but might now. This
is where lawyers bring a lot of value in terms
of putting structures in place that can accomplish the things
that you want. Now about this one, bob, What about
too much in one basket?
Speaker 3 (16:29):
Yeah?
Speaker 5 (16:29):
Yeah, you'll hear people sit around and say, well, I've
always done really, really well with real estate, that's where
most of my net worth is, and I guess I
never thought about risk or you know, what have you?
Speaker 3 (16:41):
You know?
Speaker 5 (16:42):
Or too much money in one single company or maybe
a business. And let's face it, most people that build
some real wealth do it because they've worked extremely hard,
They've taken some risk, and they like control, Brian. They
like to control the outcome, and they have the ability
and the reces and the intellect to control the outcome.
(17:03):
What I see happen is if when people get older
and they start to think about retirement, they might be
able to still be engaged, and but they don't want
to have that much control. They want to be able
to do some other things with their time and energy.
And that's a good time to sit down and take
a look at the whole package here and say, what
are some things that we can do to diversify a
(17:26):
little bit and still have you know, still have my
fingers in it, but maybe not.
Speaker 3 (17:31):
Be have this whole world, the whole.
Speaker 5 (17:35):
Orbit focused on what I get done every day, because
that wears people out when they get into their late
fifties or sixties.
Speaker 6 (17:43):
Yeah, And another topic that I think comes up all
the time every year. Of course it comes up every
year on accounter is taxes. So a lot of people
tend to only think of taxes as a thing I
worry about in the first quarter, and I really worry
about it in April and then I forget about it
until the next year. That's not really the case, and
this is this. I think some of this comes from
the people that we use for tax prep. Tax prep
(18:03):
firms are extremely busy.
Speaker 1 (18:05):
They get more and more work every year.
Speaker 6 (18:07):
I swear when we partner with a local firm and
we make referrals to them, eventually it almost feels like
sometimes we shut them down because we give them too
much business.
Speaker 1 (18:14):
But so I kind of understand.
Speaker 6 (18:15):
But the point of all this is to say that
tax planning is very different from tax prep. Tax planning
means how do I think about what I should be
doing two, three, four, five years from now? Maybe should
I be doing Roth conversions? Should I plan on doing those?
Speaker 1 (18:26):
Over time?
Speaker 6 (18:27):
But my tax preparer can really only focus on getting
my tax return done by the tax deadline because he
or she has a bunch more to do right behind mind,
So the time doesn't get put in there and we
don't come back after that tax return is filed. This
could be a summer or early fall thing, maybe to
kind of have that discussion. Tax preparers like to do
tax planning in the summer but anyway, the point is
(18:48):
do it also another another concern, Bob, I'm going to
ask you about this here. So what about somebody who says, well,
we've been fortunate. We got plenty of money. You know,
that's that's enough to fund retirement, so we really haven't
put any much else thought into things.
Speaker 1 (19:00):
Is that a good idea?
Speaker 5 (19:01):
Well, that that having plenty of money, thinking about just
the total dollar value of the pile, and you know,
using a simple formula like well, if I take four
percent out of this you know pile, I'm gonna have enough.
So I'm good, I'm ready to go. I'm not going
to think about it anymore. And it goes back to
your last point. There is a huge difference between tax
(19:22):
preparation and tax planning.
Speaker 3 (19:25):
And there are so many.
Speaker 5 (19:27):
Strategies out there. You know, the saying holds it's not
what you make, it's what you keep. And there are
so many opportunities out there to craft an actual income
strategy that's very tax efficient. You know, think about things
like roth conversions, how to handle your required minimum distributions,
where to take your monthly income from. There's a lot
(19:47):
of things you can factor in that really put dollars
back in your pocket and your family's pocket rather than
the IRS's pocket. And then the fifth one we want
to touch on, Brian, is insurance planning. That policy, that
insurance policy that might be sitting in the dress drawer
that hasn't been looked at for twenty thirty forty years.
Speaker 1 (20:07):
Yeah.
Speaker 6 (20:07):
So there's a lot of cases where we bought a
life insurance policy because the kids are little. We need
to make sure they have what they need. But then
all of a sudden we realize, you know what, we've
kind of made it. They're up on their own, they
don't really need the death benefit anymore, and then we
just ignore the policy.
Speaker 1 (20:19):
There are other things you can do.
Speaker 6 (20:21):
You might be able to pivot that to cover long
term care, for example, So look into other opportunities.
Speaker 1 (20:25):
Don't let it die on the vine.
Speaker 3 (20:26):
Here's the all Worth advice.
Speaker 5 (20:27):
So if you've ever left a dinner party thinking maybe
it's time we looked at that, you've just uncovered the
moment many people miss. That's where real planning can start. Next,
the costly mistakes divorcing couples often make, and how you
could protect your long term wealth, especially if you've built
a healthy nest egg. You're listening to Simply Money, presented
(20:48):
about all Worth Financial on fifty five KRC, the talk station.
Speaker 2 (20:52):
Fifty five KRC. Men, the summer is here. This is
fifty five KRC and iHeartRadio station.
Speaker 5 (21:04):
You're listening to Simple Money said by all Worth Financial
Bob Sponseller along with Brian James. Divorce obviously is a
legal proceeding, but it's a highly emotional process, as we
all know. But it's also at its core a massive
financial transaction, and for couples that have established a healthy
nest egg, the stakes can be very, very high. Brian,
(21:27):
We're going to get into some of the mistakes that
people don't often or sometimes don't think about in the
midst of this high stake, highly emotional process. Mistake number
one not understanding the full financial picture.
Speaker 6 (21:43):
Yeah, so I'm actually taking a client through this right now,
so you and yeah, okay, well then I'll be sure
to leave you some time too. But so, even the
happiest married couples don't often sit down and have the
same clear picture because it's usually one spouse takes over
the finances and provide an update, and then that usually
morphs into the other spouse never knows anything that's going on.
(22:04):
That's even the happiest couples in that situation. Somebody who
has gotten divorced probably hasn't been talking about anything in
a long time. So if you are going to or
somebody who's on the path the divorce rather hasn't been
talking to each other for a long time. So when
you actually get to the point where you're doing the
discovery of assets and all that, one spouse usually just
has no idea. So make sure you know how and
where to look for things. Get used to the idea
(22:26):
of pulling that tax return from a couple of years ago.
Speaker 1 (22:28):
Look for fifty four to ninety eights off of iras.
Speaker 6 (22:30):
These are the things that show up in your mailbox
that will confirm the existence of an account.
Speaker 1 (22:34):
What have you seen out there, Bob.
Speaker 5 (22:35):
Well, the main thing in the situation I'm dealing with,
I'm acting kind of as the forensic accountant here. I
know what questions to ask and therefore I'm asking them
of the attorney, and in this case, the attorney she
is going out and getting this information. So oftentimes for
that spouse that is not financially involved and has no
(22:56):
clue what's going on.
Speaker 3 (22:57):
It's knowing the questions to ask.
Speaker 5 (23:00):
Mistake number two, keeping the house for emotional reasons, Brian,
this has reared its head in a big way for
this situation. I'm dealing with one spouse just left. The
other spouse is home with three kids. Two of them
are out of high school and they're in college. There's
one still in high school and this is where all
the family memories are. And the one spouse still living
(23:23):
in the home deeply wants to stay there.
Speaker 3 (23:25):
There's huge emotional ties.
Speaker 5 (23:27):
Wants that sun to finish high school at their current
high school. But when you start to look at the bills,
you know, the mortgage, the property taxes, the insurance, the upkeep,
the maintenance, the numbers just don't add up.
Speaker 3 (23:40):
It's just not going to work.
Speaker 5 (23:42):
And you know, so the sad news here is eventually
this house is going to have to be sold and
the equity is going to have to be divided up.
You just got to pick with all the other stuff
going on here. You got to help guide people on
when the right time to pull the trick on this
is and it can be very difficult.
Speaker 6 (24:02):
Yeah, one of the thought I'd throw out there if
you're gonna do something with the house. One of the
factors that probably needs to play a role is making
sure or being aware that if they've been in that
house that long, that interest rate, if there is a mortgage,
is probably really low and they're not gonna get that
treatment again. So that will offset some of the negative numbers.
All the outcomes are a little bit scary, but that
can be a thing that comes up as well. So taxes, right,
(24:24):
so overlooking tax implications, meaning a five hundred thousand dollars
IRA or roth IRA is not the same as a
five hundred thou thousand dollars broker it's regular taxable account.
One is tax sheltered. The other is post tax completely
meaning it receives a ten nine to nine gets taxed,
you know, every single year. Both of these have both
of these pros and cons. There isn't one better than
(24:44):
the other, but they have different impacts. So a lot
of times clients will say, you know, we're gonna split
things fifty to fifty in this account, this IRA is
roughly this size, so I'll take that, and this taxable
account is roughly the same size, so you can have that.
Only to realize that they've basically not spread the tax
tree out. Maybe the dollars are read equally, but not
the tax treatment. A five hundred thousand dollars IRA is
(25:04):
more like a three hundred and fifty four hundred thousand
dollars assets.
Speaker 1 (25:07):
Once you take taxes into account, you're.
Speaker 5 (25:09):
Listening to simple money presented by all Worth Financial on
Bob Sponseller along with Brian James. Let's move into mistake
number four and Brian Unfortunately, we see this way too often,
failing to update estate planning documents and beneficiaries on retirement accounts.
After that divorce is done, your ex could still inherit everything,
you know, because let's face it, most of the times
(25:31):
the spouse is named as one hundred percent primary beneficiary
and then the kids are contingent beneficiaries if you've named them.
Speaker 3 (25:38):
You gotta get that stuff fixed. Otherwise, this spouse.
Speaker 5 (25:42):
That you no longer you know are going to be
married to could unintentionally inherit everything, and what a mess
that would be. So you gotta make sure you update
those beneficiary forms and estate planning documents where appropriate.
Speaker 6 (25:56):
Yeah, we log into people's four oh one ks. We're
in the situation and we look at that, and then
the new spouse will be sitting there looking at the
x spouse's name on the screen as the beneficiary.
Speaker 1 (26:06):
The eyeballs get real big when that happens.
Speaker 6 (26:08):
Quick fixed though, So one last one here ignoring the
long term impact on your retirement. So divorce will really
cut that nest egg in half, right. There's lots of
jokes about that, but obviously serious situations. If you're in
your fifties or sixties, there's really not a lot of
time to rebuild that. So make sure if this is
a step you have got to take, and there's more
to this than money, for sure, but don't underestimate the
(26:28):
impact of your assets that's gonna have and then therefore
your retirement viability.
Speaker 3 (26:33):
Here's the all Worth advice.
Speaker 5 (26:34):
When love ends, your financial life does not have to
completely unravel. Slow down, get good advice and be sure
to protect your future self. What's on your mind when
it comes to investing, retirement or passing wealth to the
next generation. We're gonna dive into your questions in our
Ask the Advisors segment coming up next. You're listening to
(26:56):
Simple Money presented by all Worth Financial on fifty five
KRCV talkstation. I count on traffic reports to get me
home to my family and dinner in no time.
Speaker 2 (27:05):
Local weather is crucial for me for every day. I
coach my daughter's softball team.
Speaker 1 (27:10):
I always tune.
Speaker 5 (27:11):
In to stay updated for everyone, and we need to
know if we're playing or not.
Speaker 2 (27:15):
I don't watch much TV. I'm always driving.
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Listen.
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The radio is my news source for free. I love
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Hey, Brian, welcome to you.
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Why do we keep letting thousands of people come over
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Speaker 2 (27:36):
Fifty five KRC, the talk station.
Speaker 5 (27:43):
You're listening to. Simply money for sent up. I all
with Financial on Bobs fund Seller along with Brian James.
Do you have a financial question you'd like for.
Speaker 3 (27:50):
Us to answer.
Speaker 5 (27:51):
There's a red button you can click while you're listening
to the show right there on the iHeart app. Simply
record your question and it will come straight to us.
Speaker 3 (28:00):
All right.
Speaker 5 (28:00):
Mark from West Palm Beach, Florida, leads us off tonight,
and he says, Brian, I'm a Cincinnati and now living
in Florida. He loves listening to the show, But can
you please explain what a wash sale is and when
it makes sense to do one.
Speaker 6 (28:16):
God bless the internet. That is so cool that people
all over the all over the world really now can
hear the show, which is which is great. So anyway, yeah,
so a wash sale. Wash sale basically means that you
sold an asset and you took a loss on it,
and then you buy it back right away.
Speaker 1 (28:34):
So the whole the.
Speaker 6 (28:35):
Reason this might come up is because somebody might want
to do what's called a loss harvest, meaning maybe you
bought a stock you know, maybe you have put ten
thousand dollars into it, it is now worth eight thousand and
if you don't know this, you can actually take a
deductible loss off of that if you sold it at
eight thousand dollars. So when people get into this, sometimes
what they'll do is they'll say, well, I still want
to own the stock.
Speaker 1 (28:53):
I want to, but I want to take that tax benefit.
Speaker 6 (28:55):
So I'm going to sell it today on Tuesday, and
then I'll buy it back on Wednesday. That's a wash
sale because you were not out of the position for
longer than thirty days. The irs will disallow that that deduction,
so you need to if you're gonna do that, you
need to stay out of the stock for thirty days.
Then you can buy it back in. There isn't really
when it makes sense to do one. But really, I say,
(29:16):
as part of an overall tax loss harvesting plan. And
you know, if you were at absolutely love with the
stock and you just don't want to be out of
it for any moment in time because it could go
any day now.
Speaker 1 (29:26):
And that's why you bought it.
Speaker 6 (29:27):
Well, hopefully that's not a big party of portfolio anyway,
but then you might not want to do a washtale
because again, you got to stay out of that thirty days,
and it doesn't it makes no sense to do that
within the thirty day plan. So let's move on to
a Jack and Madeira. Jack was wondering about annuities in
his portfolio. Do I need annuities if I already have
a big.
Speaker 1 (29:43):
Pile of money? What do you think of that, Bob Well?
Speaker 4 (29:45):
Jack?
Speaker 5 (29:46):
In general, I look at annuities. You know, they basically
do two things, two reasons to own.
Speaker 3 (29:51):
One.
Speaker 5 (29:51):
One is people like it in non qualified accounts for
tax deferred growth.
Speaker 3 (29:57):
That's one reason to own them.
Speaker 5 (30:00):
Uh. The other is when you want some guaranteed income
out of a piece of your portfolio. I think with
how this industry has evolved over the years with tax
loss harvesting and other tax strategies in taxable non qualified accounts,
most of the time, my opinion is these annuities can
cause more harm than good because once you started to
(30:22):
grow money in an annuity, when you pull it out,
it is all taxed at ordinary income rates, and that stinks.
So there's there's usually always a better way to skin
the cat from a tax standpoint other than annuities.
Speaker 1 (30:38):
Please, I want to please if I could share one
one thought.
Speaker 6 (30:41):
So I'm you're right, But people do look at annuities
and they realize that, hey, this is a way.
Speaker 1 (30:45):
It's not an IRA.
Speaker 6 (30:46):
You know, maybe I've got a pile of money I
inherited or I sold a business or some asset or something,
and I want to tax defer that so I can
stick it in my IRA.
Speaker 1 (30:53):
Right.
Speaker 6 (30:53):
Well, no, of course, not that you can only put
a very limited amount every year. You can't do a
couple hundred thousand. So the next thing people discover is
I can use an annuity and invest in things that
look like stock market type growth and I will and
it's all tax sheltered.
Speaker 1 (31:06):
And that is kind of true.
Speaker 6 (31:06):
But what you've done in that case, as Bob just mentioned,
you have changed relatively favorable capital gains taxation to ordinary
income taxation on the on the back end, ordinary income
taxation is marginal. The more you have, the more you make,
the more you pay in taxes. And that can just
really set up a negative situation years down the road
when it's far too late to do any about it.
Annuities are wonderful during life, they're terrible to die with.
(31:28):
If your kids inherit it, they're really going to be
unhappy when they hear how much of a yeah, because.
Speaker 5 (31:31):
You don't get you don't get that stepped up cost
basis at death, you limit your charitable giving opportunities. You
can probably tell I'm not a big fan. All right,
let's move on here, Betsy and Indian Hill. Is there
a point where I should stop trying to grow my
portfolio and just protect it?
Speaker 8 (31:49):
Yeah?
Speaker 1 (31:50):
I think a great question, Betsy.
Speaker 6 (31:51):
There's a lot of people get to this point where
they realize, you know what I've grown, I've worked my
rear end off. I have a big pile of money,
and I've gotten pretty stable. Should I just not have
to worry anymore? I always tell people that that that
is a personal decision. First of all, this assumes that
you've sat down with a fiduciary advisor and done a
full financial plan, which is to say, here my resources,
here's what I'm trying to do with it, and then
here's what comes out the back end. Then you need
(32:12):
to stress test it if there is risk, you know,
because you have some kind of unexpected major expense or
investment rub poor investment results, something like that. If all
of that looks good, then then you're looking at a
decision of okay. On one end of the spectrum, I
don't have to take any risk. Maybe I shouldn't, And
I think this is what Betsy is thinking. I could
park all this stuff in super safe investments. I know
I've got enough to make it, and therefore I wouldn't
(32:35):
have to read the headlines anymore. The flip side of
that is, and I've seen people do this, Eventually you'll
conclude that, my gosh, most of this money is gonna
sit here for the remaining thirty years of my life.
Am I taking it out of my kid's mouths if
I don't allow it to grow since I'm not gonna
need it. So that's where people usually land somewhere in
the middle. I don't need the go go growth that
I needed when I was twenty and thirty years old,
just trying to get the thing off the ground. But
(32:56):
at the same time, it's a lost opportunity if I
lock it all down make it perfectly secure. So very
personal decision your thought there is on is reasonable, But
at the same time, there's a flip side. Let's move
on to Charles in Deerfield Township, who desperately wants to
know Bob's opinion on on diversification. Bob says, Charles says,
I'm already diversity of stocks and bonds. When does private
(33:18):
credit actually make sense to kind of complement a portfolio?
Speaker 5 (33:22):
Well, i'd say, Charles, I mean private credit, private equity.
Those are sexy terms. It makes us all feel like
we're cutting edge and we're out there doing something you know,
exotic that other people don't know about or don't have
access to. And sometimes that's true. But look, private credit,
you're basically loaning money to companies that want to go
(33:42):
to the private credit markets in most cases because they
can't get loans from traditional banks because the things that
they're borrowing money for and to do come with higher risk,
higher interest rates, higher yield for the investors. So that's
the reason why as an investor you like to get
involved with private credit. You could potentially earning a earn
(34:05):
a higher yield, higher return on your money, but you
got to understand that comes with more credit risk and
more risk of default. So I'd say, if you're going
to venture into that space, make sure that you're in
a diversified, well managed portfolio with some professionals that know
how to do the actual credit evaluation to make sure
(34:25):
you're not putting all your eggs in one basket here
to chase yield and really get burned in the process.
That'd be by that'd be my answer. All right, let's
end here with Bill and Fort Thomas. Brian Bill asked,
what's the number one mistake you see people with a
few million dollars making today?
Speaker 6 (34:42):
You know when when I when I saw Bill's question,
my first reaction was, well, you know, obviously it's taking
your eye off the ball, just kind of checking the
box and and you know going, I got enough and
I don't have to think anymore.
Speaker 1 (34:51):
That that does happen.
Speaker 6 (34:52):
But sometimes, especially in a case like this, it can
be keeping your eye on the ball too much. And
what I mean by that is, and I'm thinking of
a client who also lives for Thomas, who did this
to themselves, tagging some number out there. Let's say you're
worth one point eight million dollars and it's got to
get to two before you retire, and had I had
a client that had some health problems and lots of
things going on, but by god, he was going to
(35:13):
get to that two million dollars before he pulled the
trigger and retired. He wound up listening to me and
his spouse and finally realized that it really doesn't matter.
It's just a number, and I've got bigger things to
worry about. So don't don't take your eye off the ball,
but don't have your eye on the ball too much either.
Speaker 5 (35:28):
All right, Next, I've got my two cents just to
add to how we started the show tonight, how to
make some of these key decisions where emotion and feelings
come into play. Here, you're listening to simply Money presented
by all Worth Financial on fifty five KRC, the talk station.
Speaker 2 (35:45):
Who wants to be rich? We call them every day
millionaire every day listen to Dave Ramsey.
Speaker 7 (35:51):
They typically say one of the things that turned their
life around was when they started looking at purchasing something rich.
People ask how much? Broke people and I've been both
brother okay broke. People ask how much? Sit down and
how much a month?
Speaker 2 (36:08):
Tonight at seven oh six asking how much.
Speaker 1 (36:11):
I'm fifty five.
Speaker 2 (36:12):
KRZ the talk station at the Thompson Hall. I am
so worried that next month I have to choose between
groceries for my kids or gas for my car. Talk
about it here fifty five KRZ the talk station.
Speaker 5 (36:28):
You're listening to Simply Money, presented by all Worth Financial.
I'm Bob sponseller.
Speaker 3 (36:32):
Along with Jack, Brian James.
Speaker 5 (36:34):
All right, I want to go back and revisit something Brian,
we talk about all the time, and that's all the factors,
whether it's emotional, financial, family dynamics, all that that come
into making major decisions. And I just want to share
a story that I had the privilege of being a
part of here with a family here recently, and you
(36:55):
know this. This is a couple, married, couple in their
mid fifties, and they're dealing with how to handle in
this case, the wife's mother, who really they needed to
move her down to Cincinnati. She needed to get into
a long term care situation, and money is tight, money
is scarce. There's some emotional ties that are keeping her
from wanting to move down to Cincinnati, but it needs
(37:17):
to be done. This family didn't have a lot of
extra money to throw at it, and the mother in
this case was being a bit irrational, and I just
I guess it just comes down to, you know, you
can run spreadsheets to your blue in the face, you
can talk about all the emotional things, and at some
point in time you got to look at your family's values.
(37:40):
And I don't want to get too inappropriate or off
the rails here, but the nice thing in this case
is this family has a deeply held Christian faith. I
happened to be in the same boat and we were
able to talk about that. And my point in bringing
this topic up is, you know, you run these spreadsheets
(38:01):
all day long, but you got to look at the
end of the day on what are your core values,
what's your true north what's guiding these decisions, and believe
it or not, some people might not be aware of this.
The Bible has more to say about money than any
other topic. And we were able to talk about that
as a as a family, as a team here and
(38:22):
actually spend some time praying about the situation because we
didn't have a lot of easy answers. And I'm happy
to report that I got a text from this client.
I got a message about a week ago because I
had no idea how this whole situation was going to
work out, and he said, you know what, Bob, I
just wanted to let you know that mom decided to
(38:45):
come down and move five minutes from us in this
exact nursing home that you mentioned.
Speaker 3 (38:50):
We look at, looked at She's happy about it.
Speaker 5 (38:53):
We're happy about it, and thanks for talking through this
with us. And it was one of the best out
comes that I've had in a meeting so far in
twenty twenty five. And it had nothing to do with
buffer ETF's loss, harvesting any of these techniques we talked about.
It was just getting the family in a room and
(39:14):
realigning decision making with what I knew was the family's
deeply health values, and then sometime good old prayer asking
God to intervene and give us a little guidance. Here
ended up winning the day and it was a good outcome.
Speaker 1 (39:30):
Those are those yeah, those are those outcomes.
Speaker 6 (39:32):
There those moments where you go, you know, I really
am still a little mad that Major League Baseball did
not recognize my talents at the age of ten, But
I'm kind of glad for where I landed and what
we get to do in this job. But yeah, you're right,
A lot of people tend to we tend to hide
behind the numbers. It's a lot easier to talk about
the numbers than it is to talk about the emotional
stuff and the making sure I'm on the same page
with my loved ones.
Speaker 1 (39:52):
So people will go down a lot of rabbit.
Speaker 6 (39:54):
Holes over money and dollar amounts and accounts and investments
and all that kind of stuff. Meanwhile, there's somebody staring
themse right in the face that has something else on
their mind that they're not bringing up. Because we can't
take our eyeballs off the money. That happens very very frequently,
So I think the easiest thing to do is get
it out of the way. The numbers are black and white.
Here's some spreadsheets. Now, let's quit talking about spreadsheets and
talk about what's really.
Speaker 1 (40:13):
In your minds that you're not bringing up right now.
Speaker 5 (40:16):
Yeah, And that's where trusted friends and families and just
running these things by people, whether it's a professional advisor
or just trusted close friends. Oftentimes they can give you
the answers that you know deep down are the answers
in the course of action you need to take. Something's
(40:36):
just holding you back from pulling the trigger. And that's
the value of having close family, close friends, close advisors
to help you out here. And prayer comes in all
the time too. Thanks for listening. You've been listening to
Simply Money and presented by all Worth Financial on fifty
five KRC, the talk station.
Speaker 2 (40:56):
News when it happens, breaking news tonight. We are coming
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Have you never quite seen anything like this, keeping you
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This is going to be quite in the event today
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Early locally, nationally, everywhere in between. I don't know what
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A couple of years ago, I was in the
This is why I feel you and I we have
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Tonight did ten oh six on fifty five KRC, the
talk station.
Speaker 2 (00:20):
Tonight.
Speaker 5 (00:20):
Four hidden forces that shape every financial decision you're listening
to simply money, because not about all words financial on
Bob Sponseller along with Brian James. All Right, you've done
the modeling, the plan checks out, the spreadsheets say you
can retire early, make that gift, or finally buy that
vacation home. And yet you pause, you hesitate, you freeze.
(00:43):
This isn't because you're bad with money. It's because financial
decisions aren't made in a vacuum. Let's explore four hidden
forces that often guide high stakes, high dollar financial decisions,
especially for those with significant wealth, and how to bring
some of these decisions into alignment. Brian, let's get into
these four major and let's just call it what it is.
(01:05):
It's emotions. Yeah, these are obstacles, Bob. So the first one,
first big one here is emotional, right, the gut reaction.
So anytime we talk about money, you can't do that,
You really can't do that without some kind of emotion
setting in somewhere, usually between fear and greed.
Speaker 6 (01:20):
And even this happens even for people who really manage
these things. Well, we're all human beings. If somebody has
a lot of money, then often we get really wound
up about the fear of loss. This is the kind
of thing when our clients will will tell us that
you call us and sab I really can't afford to
lose any of this at all. I can't handle a
market downturn, and so therefore I want to protect, protect, protect,
And that's fine, except what that brings into is the
(01:41):
risk of inflation over time? Will market downturn fall apart?
Will I live longer than expected? What happens if you know,
if I give a generous gift today that I really
want to do, and that screws up my future independence,
how do I know when I'm going to be okay?
And sometimes it's not fear, but the emotion is guilt.
So some investors struggle with just that idea of I
have way too much, I'm too fortunate. Others have too little,
(02:01):
and that causes them to freeze and not really make
any decisions at all because they simply can't get over
the notion that they that they've been too blessed in others,
you know, are suffering out there, and sometimes there's anxiety
about whether they've earned it or it was given it
to them, and how will those choices be perceived by family.
All of this stuff, Bob gets in the way of good,
intelligent decision making that we all have to do at
(02:21):
some point.
Speaker 5 (02:23):
Yeah, I see this come into play, you know, this
fear part, you know when folks first retire. And I
think what happens is when people are building their wealth,
they're at work every day, they're working very hard, focused
on a business or a high end executive.
Speaker 3 (02:37):
Or what have you.
Speaker 5 (02:39):
They're buried in their work for eight to twelve, sometimes fourteen,
sixteen hours a day working at their job. They don't
have time to look at the markets, and they don't
have the emotional capacity to worry about the markets. Yet,
when all that stops and all they have left to
do is think about and worry about their pile of money.
(02:59):
Even two to three percent pullback in the market, you know,
translated into into dollars and cents, which could be big
at times, that really freaks people out and that's something
that we got to talk with folks about, especially in
those early stages of retirement.
Speaker 1 (03:15):
Yeah, I think of an example there that I'm sure
you'll relate to too.
Speaker 6 (03:19):
But for our Procter and Gamble friends out there, everybody
remembers the Dirk Yager years twenty some years ago, and
we always talk about how that you know that the
market basically did not like the CEO that was put
in place and his plan, and it took about half
the value of the company away in approximately six weeks.
That does happen to Procter and Gamble, as wonderful as
it is, it's a stock like any other. But I
always tell people, remember you you remember that, but at
(03:41):
the time you didn't. It wasn't a big deal because
you were working, you were raising kids, you were building
your career. It wasn't that scary, and you knew, hey,
I got a long time frame ahead of me. It'll recover,
it'll move on, always has and that's you know, still
pretty much been the case. However, the next time that
kind of thing happens to any stock out there that
you might own, you'll be paying a lot more attention
to it because you've got the time, and it's.
Speaker 1 (04:00):
Hurt a little more.
Speaker 6 (04:01):
So let's let's move on here to the social side
of things, Bob. You know that keeping up with the Joneses.
Speaker 5 (04:07):
Yeah, the pro the quiet pressure to keep up. Brian,
Here's what I think about this one. I think we're all,
you know, in some way, shape or form. We all
start to make decisions based on the people we surround
ourselves with. That becomes our normal. And I can remember,
you know, just my college days and this is a
good thing, you know, being in the business school at
(04:28):
Miami and being in a fraternity, the people that I
spent four years with and you know, process life with
and kind of set some initial.
Speaker 3 (04:39):
Career goals with.
Speaker 5 (04:40):
You know. You you all kind of get in alignment
and you get a sense of what's normal. And I
think sometimes that translates later in life. You start to
look at well, how's this guy doing, how's that guy doing?
Does he have two homes? Or what kind of car
does he drive? Or what kind of vacations do they take,
And the quiet social pressure can creep in like, well, hey,
(05:03):
I work really hard too, I deserve to have this.
Speaker 3 (05:06):
I deserve to have that.
Speaker 5 (05:08):
And it can lead to making decisions based on that
quiet pressure or that social pressure, rather than making decisions
based on deeply held values that you have.
Speaker 6 (05:20):
Yeah, fomo is a nasty thing, fear of missing out,
and we all tend to focus on, you know, those
questions that you just asked, What are the visible things
that I can see about this this person, whether I know,
maybe I don't even know them, but maybe I'm just
vaguely aware of their existence or whatever.
Speaker 1 (05:32):
It's just something to compare myself against.
Speaker 6 (05:34):
So I think one way to deal with that is
to whenever you find yourself going down that path, always
ask yourself, I wonder what the conversations at their dinner
table is like. Is everything going okay in that household?
Speaker 1 (05:43):
Is it not? And it may very well be.
Speaker 6 (05:45):
But my point is, somebody makes a sacrifice somewhere. We
all cannot have it all except in extreme, extremely rare
rare cases. But in a lot of cases where somebody
appears to be very very successful in the outside, that
comes with a massive, massive investment of time. So I
can think of clients who I know who have very
successful businesses and they rarely make it to their kids
(06:07):
baseball games, and you know, the family just isn't quite
as tight versus other people who wish they had a
little bit more. But sure enough, they're the ones out there,
you know, coaching the little league games and just being
more involved in their families. Both of them are. They're
both just different lifestyle choices. Nothing right or wrong with
either one of them. But neither one of those examples
in what I gave there, is truly happy. They all
feel like they're missing something. So just make sure if
(06:29):
you feel like you're missing out on something, that you
understand what that other person has sacrificed to get where
they are, because it may be something that you've taken
for granted. How about generational issues. You inherited some kind
of mindset, didn't you.
Speaker 3 (06:40):
Yeah.
Speaker 5 (06:41):
I think this is a big one, Brian. I mean,
we all have parents, we all grow up in families.
And then the challenging part is for those of us
that get married all of a sudden, now you inherit
a spouse and their upbringing and their values and the
way their families handle money, and that can just become
a big conundrum of values. You know how families operate,
(07:05):
So you know, one way of thinking is you can
never have enough. You know, folks that are coming from
a holdover mindset from the depression where scarcity was the.
Speaker 3 (07:14):
Thing, you know, just getting by.
Speaker 5 (07:16):
You know, you can never have enough, And those kind
of people tend to be afraid to spend any money
whatso whatsoever? Other families never talked about money at all, ever, ever, ever,
And the lack of being willing to have conversations about
money with your kids and grandkids and spouses and other
(07:36):
family members that can shut down important planning conversations that
really need to happen. And then a third one that
we run into from time to time, Brian, is you
know that you know unspoken quote that you know we
help family no matter what, meaning if anybody needs anything
at any time, we must must must pull the check
(07:58):
book out and write a check for that. And sometimes
that is warranted and sometimes it isn't because it can
enable unhealthy behavior and some habits that need to change
quite frankly for family members.
Speaker 6 (08:12):
Yeah, and it's not only you know, it's not only
changing how we think about supporting people too much. It
can also be supporting yourself not enough. So you mentioned
a few bullets ago, you mentioned that can never have
enough Depression era thinking I'll never forget this story from
my youth. So I used to work in Northgate Park
retirement home over in Colorin Township, and I worked in
(08:33):
the kitchen.
Speaker 1 (08:33):
I was a waiter, and.
Speaker 6 (08:34):
One of us always had to be on duty to
guard the salad bar because these folks who grew up
in the depression would go get their salad. They'd sit down,
you a little bit of it, and you, by god,
you weren't going to throw any of that away, right
if you didn't want it, They weren't by their refrigerator,
so they would go back to the salad bar and
put the lettuce back in the lettuce thing and the
cottage cheese back in the cottage cheese thing. If that happened,
the health department, of course, would require that we break
down the whole salad bar. So one of us had
(08:55):
to play goalie at the salad bar to make sure
it didn't happen. And God forbid, if they got away
with it, the whole place would erupt watching.
Speaker 1 (09:01):
Us throw all this food away. But that's the rules
we had to follow.
Speaker 6 (09:04):
That mindset is good in terms of not overspending, but
it can also work extremely against you in terms of
always worrying that the world is gonna end and I
have to I have to be paranoid. I'd always be
looking over my shoulder. That causes family conflicts too, so
you don't know what you can get away with. And
that's what financial planning does well.
Speaker 3 (09:22):
And I'll share mine.
Speaker 5 (09:23):
I mean, I can remember being sat down at the
dinner table at the age of nine and they said, hey,
My parents said, hey, Bobby, the allowance is over. You
want money, you want to buy a candy bar, you
want to go to a movie or whatever.
Speaker 3 (09:36):
You need to go get a job. And this is
at age nine.
Speaker 5 (09:39):
So I mean I went out and got two paper
routes and it was just a mindset drilled into me.
The only person that's going to take care of you
is you. And you know, it led to a great
work ethic obviously and all that, but there are some
things that that are not so good that come from
that as well. So it's very interesting how those early,
(10:02):
those early experiences kind of hardwire our brain and.
Speaker 3 (10:07):
Cause us to make financial decisions.
Speaker 1 (10:10):
Bob.
Speaker 6 (10:11):
My paper out was on Jessup Road. There were four
candy stores. I didn't make a dime, but I walked
a lot.
Speaker 5 (10:18):
All right, well, let's get into the fourth hidden one here,
and that's just the logical, the analysis paralysis. I know
you're really good at this. The spreadsheets, the projections, the
tax model, they're all crucial, but they can often just
confirm rather than drive decisions, because, let's face it, at
the end of the day, decisions people want to make
(10:39):
decisions based on emotion.
Speaker 3 (10:40):
And we have this happen often. Brian.
Speaker 5 (10:43):
People come in and I can tell they've already made
the decision. They already know what they're going to do.
They want me to run the numbers to rationalize how
this is all going to work out in the spreadsheets.
Say see, honey, Bob told us we can do this,
and whether I told them they can or can't, they're
already gonna do it.
Speaker 3 (11:01):
Do you have any meetings like that?
Speaker 6 (11:03):
Oh yeah, And this this comes up for whatever reason,
This comes up with people who who are going to
help their kids, you know, to become hell or high water.
That's the first thing that they're gonna do. And there's
of course nothing wrong with that. It's just the reality
today that that needs to happen a little more than
it used to.
Speaker 3 (11:17):
Uh.
Speaker 1 (11:18):
But but there are a lot.
Speaker 6 (11:19):
Of times people will come in with one goal, this
is gonna happen no matter what, and it will. It
will dictate all the other things. But here's my number
one priority. And and that's perfectly fine. I mean this
at least it's happening in the in the in the
guise of a planning conversation, where they're at least asking
is this gonna work? Ors are gonna totally sink our ship,
And that's our job. So I don't mind that at all.
And I know and you don't. We enjoy it. That's
really that's kind of how how we put the puzzle
(11:40):
pieces together.
Speaker 1 (11:41):
Uh, you know.
Speaker 6 (11:42):
So it doesn't mean that it's a bad idea at all.
But again it does mean step back and look at
all the trees. Don't stare at one of them.
Speaker 3 (11:48):
Yeah.
Speaker 5 (11:48):
So there's just a few questions we'll run through here quickly,
you know, in terms of aligning your forces before you
make a decision, a large dollar decision. Number one, What
am I feeling? Is this decision rooted in fear, excitement, anxiety,
or relief. Get your arms around what you're feeling.
Speaker 3 (12:05):
Number two?
Speaker 5 (12:06):
Who might I be trying to impress or match by
making this decision?
Speaker 1 (12:11):
Three, and you know what, I'll add one there? And
does this person think about me at all? In turn?
Speaker 3 (12:16):
Exactly because the answers usually know.
Speaker 5 (12:19):
Three what money stories did I inherit that's driving this decision?
Speaker 2 (12:24):
Four?
Speaker 3 (12:25):
What do the numbers actually say? You know? Does the
plan actually work? Five? Have I discussed this with an
objective third party?
Speaker 5 (12:33):
Oftentimes an objective third party whether it's us, other family
members or trusted friends, that can be worth its weight
in goal getting a non emotional second or third opinion?
Speaker 3 (12:45):
Six?
Speaker 5 (12:45):
Does this align this decision aligned with my broader goals
and values? And then seven? Am I rushing? Or am
I giving this the time and the thought.
Speaker 3 (12:54):
That it deserves?
Speaker 5 (12:56):
Big decisions benefit from a brief pause in deeper reflection.
Speaker 3 (13:01):
Here's the Allworth advice.
Speaker 5 (13:02):
The most effective plans are built not just on spreadsheets,
but on self awareness, meaningful conversations, in a clear understanding
of what matters most to you. Coming up next, what
to learn from financial mistakes that successful.
Speaker 3 (13:18):
Investors admit behind closed doors.
Speaker 5 (13:22):
You're listening to Simply Money, presented by all Worth Financial
and fifty five KRC the talk station.
Speaker 4 (13:28):
A wind streak, One big beautiful Bill never before.
Speaker 7 (13:33):
Witness the United States will not allowed around to obtain
under your weapons.
Speaker 2 (13:38):
Fifty five KRC the talk station.
Speaker 8 (13:41):
All Worth Financial a registered investment advisory firm. Any ideas
presented during this program are not intended to provide specific
financial advice. You should consult your own financial advisor, tax consultant,
or a state planning attorney to conduct your own due diligence.
Speaker 5 (14:01):
You're listening to Simply Money, presented by all Worth Financial
on Bob Sponseller along with Brian James. If you can't
listen to Simply Money every night, subscribe to get our
daily podcasts.
Speaker 3 (14:11):
You can listen the following morning during your commute or
at the gym.
Speaker 5 (14:15):
Just search Simply Money on the iHeart app or wherever
you find your podcast. Straight Ahead at six forty three,
we're going to tackle the real life questions and decision
making that you're facing in your real life, the questions
that you've submitted to us in today's.
Speaker 3 (14:31):
Ask the Advisor segment.
Speaker 5 (14:33):
Have you ever set around the dinner table with friends
people like you, successful people who built something, professionals, entrepreneurs,
maybe a partner in your firm, and after that second
or third drink, the conversation shifts, an opinion on the markets,
a quick comment about real estate prices, or maybe that
new advisor or attorney someone just hired. Then come the
(14:56):
financial confessions. Brian, let's get into some of these, but
often come up and it's just signals maybe we need
to dust off our financial plan and get some things updated.
Speaker 1 (15:08):
Yeah. I think these are great opportunities.
Speaker 6 (15:10):
If you find yourself in this situation where that what
the blank question comes up from somebody else, jot it
down because it's probably gonna affect you at some point
at some point too. So one big one that happens
all the time is somebody has an estate plan that
was put together when the kids were in diapers, and
now their kids have kids in diapers. So you know,
we did our state plan way back in the kids
are little. I think it's fine, right, should be fine, right,
nothing changes, Well, of course things change. You have documents,
(15:33):
which is better. That means it's not the state that's
going to dictate what happens to your kids and your
assets after you're gone. But that structure, you know, usually
doesn't reflect their family's reality anymore, or or the stuff
you own your balance sheet probably has changed tax laws
for sure have changed and always will, and probably your
priorities have changed. You may be thinking, you know, maybe
you only worried about I want to get my stuff
(15:53):
to my kids. Well maybe now you've always had the
or you've more recently had a thought of I want
to let this charity, this group, I want to support
somebody else. That's fine, you got to get it on paper,
or it doesn't really matter. So make sure that you're
thinking about all these kinds of things. And there are
structures out there. There's grant or retained annuity trust, spous
a lifetime access trust. There are a lot of more
(16:13):
complicated things that may not have been appropriate or applicable
when you were first discussing this, but might now. This
is where lawyers bring a lot of value in terms
of putting structures in place that can accomplish the things
that you want. Now about this one, bob, What about
too much in one basket?
Speaker 3 (16:29):
Yeah?
Speaker 5 (16:29):
Yeah, you'll hear people sit around and say, well, I've
always done really, really well with real estate, that's where
most of my net worth is, and I guess I
never thought about risk or you know, what have you?
Speaker 3 (16:41):
You know?
Speaker 5 (16:42):
Or too much money in one single company or maybe
a business. And let's face it, most people that build
some real wealth do it because they've worked extremely hard,
They've taken some risk, and they like control, Brian. They
like to control the outcome, and they have the ability
and the reces and the intellect to control the outcome.
(17:03):
What I see happen is if when people get older
and they start to think about retirement, they might be
able to still be engaged, and but they don't want
to have that much control. They want to be able
to do some other things with their time and energy.
And that's a good time to sit down and take
a look at the whole package here and say, what
are some things that we can do to diversify a
(17:26):
little bit and still have you know, still have my
fingers in it, but maybe not.
Speaker 3 (17:31):
Be have this whole world, the whole.
Speaker 5 (17:35):
Orbit focused on what I get done every day, because
that wears people out when they get into their late
fifties or sixties.
Speaker 6 (17:43):
Yeah, And another topic that I think comes up all
the time every year. Of course it comes up every
year on accounter is taxes. So a lot of people
tend to only think of taxes as a thing I
worry about in the first quarter, and I really worry
about it in April and then I forget about it
until the next year. That's not really the case, and
this is this. I think some of this comes from
the people that we use for tax prep. Tax prep
(18:03):
firms are extremely busy.
Speaker 1 (18:05):
They get more and more work every year.
Speaker 6 (18:07):
I swear when we partner with a local firm and
we make referrals to them, eventually it almost feels like
sometimes we shut them down because we give them too
much business.
Speaker 1 (18:14):
But so I kind of understand.
Speaker 6 (18:15):
But the point of all this is to say that
tax planning is very different from tax prep. Tax planning
means how do I think about what I should be
doing two, three, four, five years from now? Maybe should
I be doing Roth conversions? Should I plan on doing those?
Speaker 1 (18:26):
Over time?
Speaker 6 (18:27):
But my tax preparer can really only focus on getting
my tax return done by the tax deadline because he
or she has a bunch more to do right behind mind,
So the time doesn't get put in there and we
don't come back after that tax return is filed. This
could be a summer or early fall thing, maybe to
kind of have that discussion. Tax preparers like to do
tax planning in the summer but anyway, the point is
(18:48):
do it also another another concern, Bob, I'm going to
ask you about this here. So what about somebody who says, well,
we've been fortunate. We got plenty of money. You know,
that's that's enough to fund retirement, so we really haven't
put any much else thought into things.
Speaker 1 (19:00):
Is that a good idea?
Speaker 5 (19:01):
Well, that that having plenty of money, thinking about just
the total dollar value of the pile, and you know,
using a simple formula like well, if I take four
percent out of this you know pile, I'm gonna have enough.
So I'm good, I'm ready to go. I'm not going
to think about it anymore. And it goes back to
your last point. There is a huge difference between tax
(19:22):
preparation and tax planning.
Speaker 3 (19:25):
And there are so many.
Speaker 5 (19:27):
Strategies out there. You know, the saying holds it's not
what you make, it's what you keep. And there are
so many opportunities out there to craft an actual income
strategy that's very tax efficient. You know, think about things
like roth conversions, how to handle your required minimum distributions,
where to take your monthly income from. There's a lot
(19:47):
of things you can factor in that really put dollars
back in your pocket and your family's pocket rather than
the IRS's pocket. And then the fifth one we want
to touch on, Brian, is insurance planning. That policy, that
insurance policy that might be sitting in the dress drawer
that hasn't been looked at for twenty thirty forty years.
Speaker 1 (20:07):
Yeah.
Speaker 6 (20:07):
So there's a lot of cases where we bought a
life insurance policy because the kids are little. We need
to make sure they have what they need. But then
all of a sudden we realize, you know what, we've
kind of made it. They're up on their own, they
don't really need the death benefit anymore, and then we
just ignore the policy.
Speaker 1 (20:19):
There are other things you can do.
Speaker 6 (20:21):
You might be able to pivot that to cover long
term care, for example, So look into other opportunities.
Speaker 1 (20:25):
Don't let it die on the vine.
Speaker 3 (20:26):
Here's the all Worth advice.
Speaker 5 (20:27):
So if you've ever left a dinner party thinking maybe
it's time we looked at that, you've just uncovered the
moment many people miss. That's where real planning can start. Next,
the costly mistakes divorcing couples often make, and how you
could protect your long term wealth, especially if you've built
a healthy nest egg. You're listening to Simply Money, presented
(20:48):
about all Worth Financial on fifty five KRC, the talk station.
Speaker 2 (20:52):
Fifty five KRC. Men, the summer is here. This is
fifty five KRC and iHeartRadio station.
Speaker 5 (21:04):
You're listening to Simple Money said by all Worth Financial
Bob Sponseller along with Brian James. Divorce obviously is a
legal proceeding, but it's a highly emotional process, as we
all know. But it's also at its core a massive
financial transaction, and for couples that have established a healthy
nest egg, the stakes can be very, very high. Brian,
(21:27):
We're going to get into some of the mistakes that
people don't often or sometimes don't think about in the
midst of this high stake, highly emotional process. Mistake number
one not understanding the full financial picture.
Speaker 6 (21:43):
Yeah, so I'm actually taking a client through this right now,
so you and yeah, okay, well then I'll be sure
to leave you some time too. But so, even the
happiest married couples don't often sit down and have the
same clear picture because it's usually one spouse takes over
the finances and provide an update, and then that usually
morphs into the other spouse never knows anything that's going on.
(22:04):
That's even the happiest couples in that situation. Somebody who
has gotten divorced probably hasn't been talking about anything in
a long time. So if you are going to or
somebody who's on the path the divorce rather hasn't been
talking to each other for a long time. So when
you actually get to the point where you're doing the
discovery of assets and all that, one spouse usually just
has no idea. So make sure you know how and
where to look for things. Get used to the idea
(22:26):
of pulling that tax return from a couple of years ago.
Speaker 1 (22:28):
Look for fifty four to ninety eights off of iras.
Speaker 6 (22:30):
These are the things that show up in your mailbox
that will confirm the existence of an account.
Speaker 1 (22:34):
What have you seen out there, Bob.
Speaker 5 (22:35):
Well, the main thing in the situation I'm dealing with,
I'm acting kind of as the forensic accountant here. I
know what questions to ask and therefore I'm asking them
of the attorney, and in this case, the attorney she
is going out and getting this information. So oftentimes for
that spouse that is not financially involved and has no
(22:56):
clue what's going on.
Speaker 3 (22:57):
It's knowing the questions to ask.
Speaker 5 (23:00):
Mistake number two, keeping the house for emotional reasons, Brian,
this has reared its head in a big way for
this situation. I'm dealing with one spouse just left. The
other spouse is home with three kids. Two of them
are out of high school and they're in college. There's
one still in high school and this is where all
the family memories are. And the one spouse still living
(23:23):
in the home deeply wants to stay there.
Speaker 3 (23:25):
There's huge emotional ties.
Speaker 5 (23:27):
Wants that sun to finish high school at their current
high school. But when you start to look at the bills,
you know, the mortgage, the property taxes, the insurance, the upkeep,
the maintenance, the numbers just don't add up.
Speaker 3 (23:40):
It's just not going to work.
Speaker 5 (23:42):
And you know, so the sad news here is eventually
this house is going to have to be sold and
the equity is going to have to be divided up.
You just got to pick with all the other stuff
going on here. You got to help guide people on
when the right time to pull the trick on this
is and it can be very difficult.
Speaker 6 (24:02):
Yeah, one of the thought I'd throw out there if
you're gonna do something with the house. One of the
factors that probably needs to play a role is making
sure or being aware that if they've been in that
house that long, that interest rate, if there is a mortgage,
is probably really low and they're not gonna get that
treatment again. So that will offset some of the negative numbers.
All the outcomes are a little bit scary, but that
can be a thing that comes up as well. So taxes, right,
(24:24):
so overlooking tax implications, meaning a five hundred thousand dollars
IRA or roth IRA is not the same as a
five hundred thou thousand dollars broker it's regular taxable account.
One is tax sheltered. The other is post tax completely
meaning it receives a ten nine to nine gets taxed,
you know, every single year. Both of these have both
of these pros and cons. There isn't one better than
(24:44):
the other, but they have different impacts. So a lot
of times clients will say, you know, we're gonna split
things fifty to fifty in this account, this IRA is
roughly this size, so I'll take that, and this taxable
account is roughly the same size, so you can have that.
Only to realize that they've basically not spread the tax
tree out. Maybe the dollars are read equally, but not
the tax treatment. A five hundred thousand dollars IRA is
(25:04):
more like a three hundred and fifty four hundred thousand
dollars assets.
Speaker 1 (25:07):
Once you take taxes into account, you're.
Speaker 5 (25:09):
Listening to simple money presented by all Worth Financial on
Bob Sponseller along with Brian James. Let's move into mistake
number four and Brian Unfortunately, we see this way too often,
failing to update estate planning documents and beneficiaries on retirement accounts.
After that divorce is done, your ex could still inherit everything,
you know, because let's face it, most of the times
(25:31):
the spouse is named as one hundred percent primary beneficiary
and then the kids are contingent beneficiaries if you've named them.
Speaker 3 (25:38):
You gotta get that stuff fixed. Otherwise, this spouse.
Speaker 5 (25:42):
That you no longer you know are going to be
married to could unintentionally inherit everything, and what a mess
that would be. So you gotta make sure you update
those beneficiary forms and estate planning documents where appropriate.
Speaker 6 (25:56):
Yeah, we log into people's four oh one ks. We're
in the situation and we look at that, and then
the new spouse will be sitting there looking at the
x spouse's name on the screen as the beneficiary.
Speaker 1 (26:06):
The eyeballs get real big when that happens.
Speaker 6 (26:08):
Quick fixed though, So one last one here ignoring the
long term impact on your retirement. So divorce will really
cut that nest egg in half, right. There's lots of
jokes about that, but obviously serious situations. If you're in
your fifties or sixties, there's really not a lot of
time to rebuild that. So make sure if this is
a step you have got to take, and there's more
to this than money, for sure, but don't underestimate the
(26:28):
impact of your assets that's gonna have and then therefore
your retirement viability.
Speaker 3 (26:33):
Here's the all Worth advice.
Speaker 5 (26:34):
When love ends, your financial life does not have to
completely unravel. Slow down, get good advice and be sure
to protect your future self. What's on your mind when
it comes to investing, retirement or passing wealth to the
next generation. We're gonna dive into your questions in our
Ask the Advisors segment coming up next. You're listening to
(26:56):
Simple Money presented by all Worth Financial on fifty five
KRCV talkstation. I count on traffic reports to get me
home to my family and dinner in no time.
Speaker 2 (27:05):
Local weather is crucial for me for every day. I
coach my daughter's softball team.
Speaker 1 (27:10):
I always tune.
Speaker 5 (27:11):
In to stay updated for everyone, and we need to
know if we're playing or not.
Speaker 2 (27:15):
I don't watch much TV. I'm always driving.
Speaker 5 (27:18):
Listen.
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The radio is my news source for free. I love
talk radio on air and on the iHeartRadio app. Ask
my husband, I love to talk. Fifty five KR the
talk station.
Speaker 3 (27:30):
Hey, Brian, welcome to you.
Speaker 5 (27:31):
Why do we keep letting thousands of people come over
and do nothing about it? My family's safety is at risk.
Speaker 2 (27:36):
Fifty five KRC, the talk station.
Speaker 5 (27:43):
You're listening to. Simply money for sent up. I all
with Financial on Bobs fund Seller along with Brian James.
Do you have a financial question you'd like for.
Speaker 3 (27:50):
Us to answer.
Speaker 5 (27:51):
There's a red button you can click while you're listening
to the show right there on the iHeart app. Simply
record your question and it will come straight to us.
Speaker 3 (28:00):
All right.
Speaker 5 (28:00):
Mark from West Palm Beach, Florida, leads us off tonight,
and he says, Brian, I'm a Cincinnati and now living
in Florida. He loves listening to the show, But can
you please explain what a wash sale is and when
it makes sense to do one.
Speaker 6 (28:16):
God bless the internet. That is so cool that people
all over the all over the world really now can
hear the show, which is which is great. So anyway, yeah,
so a wash sale. Wash sale basically means that you
sold an asset and you took a loss on it,
and then you buy it back right away.
Speaker 1 (28:34):
So the whole the.
Speaker 6 (28:35):
Reason this might come up is because somebody might want
to do what's called a loss harvest, meaning maybe you
bought a stock you know, maybe you have put ten
thousand dollars into it, it is now worth eight thousand and
if you don't know this, you can actually take a
deductible loss off of that if you sold it at
eight thousand dollars. So when people get into this, sometimes
what they'll do is they'll say, well, I still want
to own the stock.
Speaker 1 (28:53):
I want to, but I want to take that tax benefit.
Speaker 6 (28:55):
So I'm going to sell it today on Tuesday, and
then I'll buy it back on Wednesday. That's a wash
sale because you were not out of the position for
longer than thirty days. The irs will disallow that that deduction,
so you need to if you're gonna do that, you
need to stay out of the stock for thirty days.
Then you can buy it back in. There isn't really
when it makes sense to do one. But really, I say,
(29:16):
as part of an overall tax loss harvesting plan. And
you know, if you were at absolutely love with the
stock and you just don't want to be out of
it for any moment in time because it could go
any day now.
Speaker 1 (29:26):
And that's why you bought it.
Speaker 6 (29:27):
Well, hopefully that's not a big party of portfolio anyway,
but then you might not want to do a washtale
because again, you got to stay out of that thirty days,
and it doesn't it makes no sense to do that
within the thirty day plan. So let's move on to
a Jack and Madeira. Jack was wondering about annuities in
his portfolio. Do I need annuities if I already have
a big.
Speaker 1 (29:43):
Pile of money? What do you think of that, Bob Well?
Speaker 4 (29:45):
Jack?
Speaker 5 (29:46):
In general, I look at annuities. You know, they basically
do two things, two reasons to own.
Speaker 3 (29:51):
One.
Speaker 5 (29:51):
One is people like it in non qualified accounts for
tax deferred growth.
Speaker 3 (29:57):
That's one reason to own them.
Speaker 5 (30:00):
Uh. The other is when you want some guaranteed income
out of a piece of your portfolio. I think with
how this industry has evolved over the years with tax
loss harvesting and other tax strategies in taxable non qualified accounts,
most of the time, my opinion is these annuities can
cause more harm than good because once you started to
(30:22):
grow money in an annuity, when you pull it out,
it is all taxed at ordinary income rates, and that stinks.
So there's there's usually always a better way to skin
the cat from a tax standpoint other than annuities.
Speaker 1 (30:38):
Please, I want to please if I could share one
one thought.
Speaker 6 (30:41):
So I'm you're right, But people do look at annuities
and they realize that, hey, this is a way.
Speaker 1 (30:45):
It's not an IRA.
Speaker 6 (30:46):
You know, maybe I've got a pile of money I
inherited or I sold a business or some asset or something,
and I want to tax defer that so I can
stick it in my IRA.
Speaker 1 (30:53):
Right.
Speaker 6 (30:53):
Well, no, of course, not that you can only put
a very limited amount every year. You can't do a
couple hundred thousand. So the next thing people discover is
I can use an annuity and invest in things that
look like stock market type growth and I will and
it's all tax sheltered.
Speaker 1 (31:06):
And that is kind of true.
Speaker 6 (31:06):
But what you've done in that case, as Bob just mentioned,
you have changed relatively favorable capital gains taxation to ordinary
income taxation on the on the back end, ordinary income
taxation is marginal. The more you have, the more you make,
the more you pay in taxes. And that can just
really set up a negative situation years down the road
when it's far too late to do any about it.
Annuities are wonderful during life, they're terrible to die with.
(31:28):
If your kids inherit it, they're really going to be
unhappy when they hear how much of a yeah, because.
Speaker 5 (31:31):
You don't get you don't get that stepped up cost
basis at death, you limit your charitable giving opportunities. You
can probably tell I'm not a big fan. All right,
let's move on here, Betsy and Indian Hill. Is there
a point where I should stop trying to grow my
portfolio and just protect it?
Speaker 8 (31:49):
Yeah?
Speaker 1 (31:50):
I think a great question, Betsy.
Speaker 6 (31:51):
There's a lot of people get to this point where
they realize, you know what I've grown, I've worked my
rear end off. I have a big pile of money,
and I've gotten pretty stable. Should I just not have
to worry anymore? I always tell people that that that
is a personal decision. First of all, this assumes that
you've sat down with a fiduciary advisor and done a
full financial plan, which is to say, here my resources,
here's what I'm trying to do with it, and then
here's what comes out the back end. Then you need
(32:12):
to stress test it if there is risk, you know,
because you have some kind of unexpected major expense or
investment rub poor investment results, something like that. If all
of that looks good, then then you're looking at a
decision of okay. On one end of the spectrum, I
don't have to take any risk. Maybe I shouldn't, And
I think this is what Betsy is thinking. I could
park all this stuff in super safe investments. I know
I've got enough to make it, and therefore I wouldn't
(32:35):
have to read the headlines anymore. The flip side of
that is, and I've seen people do this, Eventually you'll
conclude that, my gosh, most of this money is gonna
sit here for the remaining thirty years of my life.
Am I taking it out of my kid's mouths if
I don't allow it to grow since I'm not gonna
need it. So that's where people usually land somewhere in
the middle. I don't need the go go growth that
I needed when I was twenty and thirty years old,
just trying to get the thing off the ground. But
(32:56):
at the same time, it's a lost opportunity if I
lock it all down make it perfectly secure. So very
personal decision your thought there is on is reasonable, But
at the same time, there's a flip side. Let's move
on to Charles in Deerfield Township, who desperately wants to
know Bob's opinion on on diversification. Bob says, Charles says,
I'm already diversity of stocks and bonds. When does private
(33:18):
credit actually make sense to kind of complement a portfolio?
Speaker 5 (33:22):
Well, i'd say, Charles, I mean private credit, private equity.
Those are sexy terms. It makes us all feel like
we're cutting edge and we're out there doing something you know,
exotic that other people don't know about or don't have
access to. And sometimes that's true. But look, private credit,
you're basically loaning money to companies that want to go
(33:42):
to the private credit markets in most cases because they
can't get loans from traditional banks because the things that
they're borrowing money for and to do come with higher risk,
higher interest rates, higher yield for the investors. So that's
the reason why as an investor you like to get
involved with private credit. You could potentially earning a earn
(34:05):
a higher yield, higher return on your money, but you
got to understand that comes with more credit risk and
more risk of default. So I'd say, if you're going
to venture into that space, make sure that you're in
a diversified, well managed portfolio with some professionals that know
how to do the actual credit evaluation to make sure
(34:25):
you're not putting all your eggs in one basket here
to chase yield and really get burned in the process.
That'd be by that'd be my answer. All right, let's
end here with Bill and Fort Thomas. Brian Bill asked,
what's the number one mistake you see people with a
few million dollars making today?
Speaker 6 (34:42):
You know when when I when I saw Bill's question,
my first reaction was, well, you know, obviously it's taking
your eye off the ball, just kind of checking the
box and and you know going, I got enough and
I don't have to think anymore.
Speaker 1 (34:51):
That that does happen.
Speaker 6 (34:52):
But sometimes, especially in a case like this, it can
be keeping your eye on the ball too much. And
what I mean by that is, and I'm thinking of
a client who also lives for Thomas, who did this
to themselves, tagging some number out there. Let's say you're
worth one point eight million dollars and it's got to
get to two before you retire, and had I had
a client that had some health problems and lots of
things going on, but by god, he was going to
(35:13):
get to that two million dollars before he pulled the
trigger and retired. He wound up listening to me and
his spouse and finally realized that it really doesn't matter.
It's just a number, and I've got bigger things to
worry about. So don't don't take your eye off the ball,
but don't have your eye on the ball too much either.
Speaker 5 (35:28):
All right, Next, I've got my two cents just to
add to how we started the show tonight, how to
make some of these key decisions where emotion and feelings
come into play. Here, you're listening to simply Money presented
by all Worth Financial on fifty five KRC, the talk station.
Speaker 2 (35:45):
Who wants to be rich? We call them every day
millionaire every day listen to Dave Ramsey.
Speaker 7 (35:51):
They typically say one of the things that turned their
life around was when they started looking at purchasing something rich.
People ask how much? Broke people and I've been both
brother okay broke. People ask how much? Sit down and
how much a month?
Speaker 2 (36:08):
Tonight at seven oh six asking how much.
Speaker 1 (36:11):
I'm fifty five.
Speaker 2 (36:12):
KRZ the talk station at the Thompson Hall. I am
so worried that next month I have to choose between
groceries for my kids or gas for my car. Talk
about it here fifty five KRZ the talk station.
Speaker 5 (36:28):
You're listening to Simply Money, presented by all Worth Financial.
I'm Bob sponseller.
Speaker 3 (36:32):
Along with Jack, Brian James.
Speaker 5 (36:34):
All right, I want to go back and revisit something Brian,
we talk about all the time, and that's all the factors,
whether it's emotional, financial, family dynamics, all that that come
into making major decisions. And I just want to share
a story that I had the privilege of being a
part of here with a family here recently, and you
(36:55):
know this. This is a couple, married, couple in their
mid fifties, and they're dealing with how to handle in
this case, the wife's mother, who really they needed to
move her down to Cincinnati. She needed to get into
a long term care situation, and money is tight, money
is scarce. There's some emotional ties that are keeping her
from wanting to move down to Cincinnati, but it needs
(37:17):
to be done. This family didn't have a lot of
extra money to throw at it, and the mother in
this case was being a bit irrational, and I just
I guess it just comes down to, you know, you
can run spreadsheets to your blue in the face, you
can talk about all the emotional things, and at some
point in time you got to look at your family's values.
(37:40):
And I don't want to get too inappropriate or off
the rails here, but the nice thing in this case
is this family has a deeply held Christian faith. I
happened to be in the same boat and we were
able to talk about that. And my point in bringing
this topic up is, you know, you run these spreadsheets
(38:01):
all day long, but you got to look at the
end of the day on what are your core values,
what's your true north what's guiding these decisions, and believe
it or not, some people might not be aware of this.
The Bible has more to say about money than any
other topic. And we were able to talk about that
as a as a family, as a team here and
(38:22):
actually spend some time praying about the situation because we
didn't have a lot of easy answers. And I'm happy
to report that I got a text from this client.
I got a message about a week ago because I
had no idea how this whole situation was going to
work out, and he said, you know what, Bob, I
just wanted to let you know that mom decided to
(38:45):
come down and move five minutes from us in this
exact nursing home that you mentioned.
Speaker 3 (38:50):
We look at, looked at She's happy about it.
Speaker 5 (38:53):
We're happy about it, and thanks for talking through this
with us. And it was one of the best out
comes that I've had in a meeting so far in
twenty twenty five. And it had nothing to do with
buffer ETF's loss, harvesting any of these techniques we talked about.
It was just getting the family in a room and
(39:14):
realigning decision making with what I knew was the family's
deeply health values, and then sometime good old prayer asking
God to intervene and give us a little guidance. Here
ended up winning the day and it was a good outcome.
Speaker 1 (39:30):
Those are those yeah, those are those outcomes.
Speaker 6 (39:32):
There those moments where you go, you know, I really
am still a little mad that Major League Baseball did
not recognize my talents at the age of ten, But
I'm kind of glad for where I landed and what
we get to do in this job. But yeah, you're right,
A lot of people tend to we tend to hide
behind the numbers. It's a lot easier to talk about
the numbers than it is to talk about the emotional
stuff and the making sure I'm on the same page
with my loved ones.
Speaker 1 (39:52):
So people will go down a lot of rabbit.
Speaker 6 (39:54):
Holes over money and dollar amounts and accounts and investments
and all that kind of stuff. Meanwhile, there's somebody staring
themse right in the face that has something else on
their mind that they're not bringing up. Because we can't
take our eyeballs off the money. That happens very very frequently,
So I think the easiest thing to do is get
it out of the way. The numbers are black and white.
Here's some spreadsheets. Now, let's quit talking about spreadsheets and
talk about what's really.
Speaker 1 (40:13):
In your minds that you're not bringing up right now.
Speaker 5 (40:16):
Yeah, And that's where trusted friends and families and just
running these things by people, whether it's a professional advisor
or just trusted close friends. Oftentimes they can give you
the answers that you know deep down are the answers
in the course of action you need to take. Something's
(40:36):
just holding you back from pulling the trigger. And that's
the value of having close family, close friends, close advisors
to help you out here. And prayer comes in all
the time too. Thanks for listening. You've been listening to
Simply Money and presented by all Worth Financial on fifty
five KRC, the talk station.
Speaker 2 (40:56):
News when it happens, breaking news tonight. We are coming
to you news when you need it. You're going to
want to listen to this news when you least expected.
Have you never quite seen anything like this, keeping you
up to date on what's happening.
Speaker 6 (41:10):
This is going to be quite in the event today
and you're gonna want to make sure you leave the
house extra.
Speaker 2 (41:13):
Early locally, nationally, everywhere in between. I don't know what
I would do without it. Fifty five KARC the talk station.
Speaker 1 (41:23):
A couple of years ago, I was in the
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