August 22, 2025 • 38 mins
Life is full of trade-offs—and nowhere is that more true than in financial planning. On today’s episode of Simply Money presented by Allworth Financial, Bob and Brian put a fun twist on tough money questions with a special “Would You Rather?” edition. Should you sell highly appreciated stock now and pay taxes, or hold and pass it to heirs with a step-up in basis? Is a bucket strategy better than a total-return approach? Would you move to a no-tax state or stay in Cincinnati for family ties? From direct indexing to Roth conversions, these choices could shape your wealth, your legacy, and your peace of mind.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:07):
Tonight some financial planning conundrums you should probably get tackled
here before it's too late. You're listening to Simply Money,
presented by all Worth Financial on Bob Sponseller along with
Brian James. Let's face it, life is about trade offs,
especially when it comes to your money. So instead of
pretending the answers are always black and white.
Speaker 2 (00:27):
Brian, this leads to our favorite answer. It depends we
need to eagle style.
Speaker 3 (00:32):
We need to start harmonizing.
Speaker 1 (00:34):
We're gonna turn this into a little game we like
to play. We'll walk through the scenarios, debate the options,
and show you what the pros and cons might mean
for your financial plan, your taxes, and your peace of mind.
And we're talking about the would you rather game financial version?
Speaker 2 (00:50):
All right?
Speaker 1 (00:50):
Question one, Brian, would you rather create a quote unquote
bucket strategy that segments your portfolio by time horizon or
use it's a total return strategy and just draw down
proportionally across all investments in your portfolio?
Speaker 2 (01:06):
What would you rather have? So?
Speaker 4 (01:08):
I'm total return and the reason I say that is
because I like the concept conceptually thinking about assets in
terms of a bucket, which which basically makes you feel
better about here's my short term money. We've here's my
goals that I have over the next two, three, four years.
We got to pay off the mortgage, we got to
do this to the house or whatever. So here's the
piles of money to do it. Then here's my midterm money,
here's my long term money. That makes sense conceptually, but
(01:31):
I think it's a lot harder to logistically put your
dollars together that way because you've gotten usually, you know,
especially the case of a married couple, you've got misproportions
in between the two spouses. One usually has more than
another because of just different career paths and that kind
of thing. Most importantly, tax treatment. You know, if I've
got pre tax, after tax and WROTH in the mix,
that makes it hard to literally divide up into buckets,
(01:52):
saying this account number is for the early bucket, this
account number is for the later bucket. So I like
to use that total return strategy, use the entire pile
of money. Then I can make tax planning decisions on
it at a game time, you know, point when during
the year that I actually need to do things.
Speaker 3 (02:06):
Oh what do you think?
Speaker 2 (02:06):
You do?
Speaker 3 (02:07):
You think of that differently.
Speaker 2 (02:08):
No, I agree with what you're saying.
Speaker 1 (02:10):
I would just bring up, you know, a couple of
maybe exceptions to that rule one.
Speaker 2 (02:14):
And I run across this once.
Speaker 1 (02:15):
In a while people that are about to retire, and
justifiably so, they're afraid of a of a market pulled
down or pull back right after they retire, and they
want to put that money in there for the long
term and draw it down like you're talking about, but
they are just afraid to pull the trigger on that.
And if it's going to cause people to put their
(02:37):
entire portfolio in a lower risk situation than they really
need to be or should be, that's where we'll pull
out maybe one, two, three years worth of cash flow
and put that in a shorter term strategy. And that
sometimes can give people the peace of mind of saying, hey,
even if the market goes down in the short term
for a period of time, I know we've got that.
(03:00):
We've got that nut.
Speaker 2 (03:01):
Covered here, you know, for the interim term.
Speaker 1 (03:04):
So it's it depends on the client, depends on the
risk profile, and you've already pointed out it depends on
how the portfolio is constructed, what type of assets and
tax ramifications we're dealing with, So it really is a
customized approach for each client. All right, Brian, would you
rather sell highly appreciated stock.
Speaker 2 (03:25):
And pay capital gains taxes now?
Speaker 1 (03:27):
Or hold it until death and pass it along with
a completely stepped up basis to your heirs where those
capital gains just vanish?
Speaker 4 (03:37):
Oh this is a big, big It depends because you know,
my first question is this all I have?
Speaker 3 (03:41):
Is it just this one stock?
Speaker 5 (03:42):
You know?
Speaker 4 (03:42):
Do I need to maybe I inherited some big pile
of money from accompany my parents sold or something like that.
Speaker 3 (03:49):
Well, I guess, in which case it wouldn't have any stock.
Speaker 4 (03:50):
But regardless, if this is the major asset of my
then then I'm not worried about capital gains taxes. I'm
worried about how I'm going to use this, you know,
for now. And it depends on the company too, because
if I'm sixty years old, I'm looking at twenty twenty
five years. I have no idea what that company is
going to look like. Remember the original Internet companies, For example,
we had Yahoo millionaires way back when.
Speaker 3 (04:11):
Yahoo isn't a thing anymore.
Speaker 4 (04:13):
Now it has morphed onto Google and Facebook and all
the other companies that we know now, so there's no
way to say this company's going to exist, So maybe
it's not.
Speaker 3 (04:20):
It's not necessarily a good idea to hang on to
it that long.
Speaker 4 (04:23):
I would say, if you're in a case like that,
a situation like that, figure out, you know, ideally we
want to get it down to you know, ten, maybe
fifteen percent of a portfolio, so that you're just not
overly exposed in anyone area. If this is indeed going
to be something that's going to support you, and so
you know, maybe maybe you work your way down by
selling off in chunks over time to get down to
some agreed upon asset levels.
Speaker 3 (04:43):
So what do you think?
Speaker 1 (04:45):
No, I agree as I looked at that question, you know,
I was going to say what you just said in
the last couple sentences. You got to get this thing
worked down responsibly over a reasonable period of time so
it's not taking up a disproportionately high percentage of your
overall portfolio.
Speaker 2 (05:00):
And then you can let some of that ride longer term.
Speaker 4 (05:03):
So I my turn to throw one at you. So
let's move on to the next one to do it
all right, Bob, would you rather have your entire portfolio
in a direct indexing structure with personalized tax loss harvesting,
or in.
Speaker 3 (05:15):
Real estate that cash flows. Which of those sounds better
to you?
Speaker 1 (05:19):
Well, I mean the first question I have is what
do you mean by real estate? Is this in a
professionally managed portfolio or rental properties or a couple houses
where I'm the landlord. I mean, you and I've talked
about this several times. I do not want to fix
broken toilets. I do not want to collect rent I
don't want to deal with all that stuff. So my answer,
without having more details around it, is give me that
(05:42):
direct indexing portfolio. Because I'm diversified, I can look at
the companies that I own, I'm spread across different industries,
different companies, and I've got that tax loss harvesting working
for me.
Speaker 2 (05:54):
I will take that all day, every day. Yeah.
Speaker 3 (05:57):
The happiest clients that I've known with real estate there.
Speaker 4 (06:00):
If you own real estate, you're one of two people
you figured out the game and you own a lot
of different properties and the mortgage is relatively down and
you're actually making money off it, or you own one
or two that you cannot wait to get rid of.
Speaker 3 (06:10):
Nobody is in the middle.
Speaker 4 (06:11):
There so yes, I personally, I'm currently involved in it
with in an organization that I'm helping.
Speaker 3 (06:16):
Part of my job is to kind of be a landlord.
I don't have plumb toilets, but I got to go
find the people who do.
Speaker 4 (06:20):
And uh, I love the organization, but I've got some
regrets some days about that.
Speaker 3 (06:25):
So yeah, going direct indexing, all right.
Speaker 4 (06:27):
Throwing you another one, Bob, how about would you rather
move to a no income tax state like Florida to
lower your tax bills or would you prefer to stay
in Cincinnati because of family?
Speaker 3 (06:36):
You know, because we're all kind of provincial around here.
Speaker 4 (06:38):
It's a pretty cool place to live, even if it
costs more to live here tax wise.
Speaker 2 (06:42):
Well here's my answer, and my answer has evolved, Brian.
Speaker 1 (06:46):
As I have aged and my kids have now become,
you know, all college educated and out out on their own.
Two of the three of them are married, one of
them has a baby, our third one just got engaged,
and they've taken jobs and they move all over the country.
And you know, I used to think, yep, go to Florida,
go somewhere, you know, Tennessee and and and not pay taxes.
(07:10):
Here's my bottom line answer, do not let the tax
tail wag the dog, meaning your your happiness, your proximity
to family, doctors, relationships, friends, things you like to do
it outweighs considerably.
Speaker 5 (07:28):
Uh.
Speaker 1 (07:28):
Saving a little money on income taxes. And we've talked
about this before. Even if you pay nothing in income taxes,
some of these states have way they do have ways
of getting tax dollars out of your pocket for things
like the increased cost of vehicle registrations or sales taxes.
So again my answer is, don't let the tax tail
(07:49):
wag the dog.
Speaker 2 (07:49):
Here. Do what's gonna give you.
Speaker 1 (07:52):
And your family the most meaning the most you know,
happiness and enjoy your retirement years.
Speaker 3 (07:59):
Yep.
Speaker 4 (07:59):
So on that topic, I'm with you. I mean to
figure out what you like and whatever. A lot of
conversations I've had with people who were the original plan
maybe was to buy a condo or a house down
in Florida, and so that obviously has ballooned. Anyway, the
cost of that is somewhat prohibitive anyhow. But what we'll
do is sometimes we'll model out. Okay, if this was
your plan to begin with and you can afford it,
here's what it would look like if you owned it
forever versus if we just carved out that same amount
(08:21):
of money, you know, several hundred thousand dollars for a
down payment and then whatever dollar amount for the mortgage payment.
Speaker 3 (08:26):
As well as the HOA fees. Don't forget this stuff.
Speaker 4 (08:28):
And insurance right, every time we have a hurricane, they
move that water line back and more, more and more
facilities wind up with higher insurance bremiums. Let's figure out
what that pile is and use it to go get
nicer airbnbs. Just create a sinking fund for vacations.
Speaker 1 (08:41):
You're listening to simply money presented by All with Financial
on Bob Sponseller along with Brian James. All right, Brian,
your turn. Would you rather fund a trust for your
grandkid's college tuition or give them seed money to start
a business?
Speaker 2 (08:55):
Someday?
Speaker 4 (08:56):
Man, this is ay. I'll tell you what my favorite
thing to do for How old are my grandkids?
Speaker 2 (09:01):
Are? There?
Speaker 3 (09:02):
You talking babies? Little ones?
Speaker 4 (09:03):
You know, super young ones. I don't know if they're
going to start a business. My favorite thing in the
world to do, Bob is five twenty nine. And there's
pros and cons to this, but the rules changed in
twenty twenty four, so that basically, if they don't use
it for college, then they they can use it then
for a roth Ira contribution. There are moving parts of this.
There are rules and hoops and limits and stuff you
(09:25):
got to jump through. But I could put twelve thousand
dollars away in a lump and it will become about
thirty five thousand dollars by the time they're eighteen, and
then I can stote now they've got earned income, I
can start using those dollars to fund a roth Ira
for them. At the end of the day, all of
these things are about how can I help my kids
build wealth? Five twenty nine are a fantastic vehicle to
do that tax free.
Speaker 2 (09:44):
I agree, Brian. Whether it's a kid, a grandkid, or whatever.
Speaker 1 (09:48):
These these individuals are going to have to show me
a few things work, ethic, financial acumen, a good business plan,
all those things before I just start tossing money, you know,
towards some seed you know, startup company.
Speaker 4 (10:03):
Six month old has a he's got CEO all over him.
Speaker 1 (10:07):
All right, would you rather convert a large chunk of
your traditional ira to roth now? While taxes are known,
even if they're high or wait and see what Congress
does with future tax rates.
Speaker 4 (10:19):
What say you, Brian, Well, I'm kind of a round
about way. I'm doing this because I'm part of the
and there's a lot of people out there. This is
going to ring true. For my four oh one K
is mostly pre tax because that's all that existed. I
started working as a grown up about nineteen ninety seven.
Roth iras did not come into existence until about two thousand.
Roth Floral one k's much later than that, because that
is a plan by plan Acme Inc. Has to decide
(10:41):
at once to offer roth fol one k versus when
the IRS just said everybody can do it. So anyway,
I have a big pile of pre tax dollars. I
have learned that my happiest clients gave themselves flexibility from
a tax planning standpoint.
Speaker 2 (10:53):
Because they've got a pile of both.
Speaker 4 (10:54):
So what I'm doing now to catch up is Michelle
and I are putting all of our stuff on the
ROTH side. And yeah, I'm paying higher taxes now, but
I have decided it's important, It will be important to
me in fifteen twenty years to have two piles to
choose from. And the only way to get that roth
is to is to bite the bullet. Pay the taxes.
Speaker 1 (11:08):
Now, all right, let's do one more, Brian. Would you
rather spend retirement dollars on frequent, shorter trips like extended weekends,
road trips or cruises, or save for fewer but bigger
bucket list adventures like a trip to Antarctica or an
African sofari.
Speaker 2 (11:26):
This is all. This is pure preference.
Speaker 4 (11:28):
I'm gonn answer quickly and then because I want to
hear your side too, so I'm the opposite. I want,
I want, I want little check the box types of trips.
Speaker 3 (11:34):
I get bored going to the same place.
Speaker 4 (11:36):
I may go to a beach resort, fall in love
with it, and then I'll never want to see it
again because I've been there, I've seen it.
Speaker 3 (11:39):
I want to go find something else. That's just my preference.
Speaker 4 (11:42):
I like the parachute in somewhere I've never been and
go read all the signs of all the historical stuff
that ever happened there, and then never see it again.
Speaker 2 (11:48):
How about you, I'm going to put myself in the
both category.
Speaker 1 (11:51):
Here's what I mean. I do not like airports. I
don't like, you know, being around the general public. I
don't like people having control over overwhere and when I move.
That being said, I've been to a couple of these
places before and experienced some amazing things, and uh, there's
some there's some things I still want to see and
(12:13):
I'm worth I'm willing to bite the bullet and some
of the inconvenience to do it. So I put me
in the both category. Here's the all Worth advice. Retirement
is about trade offs. The right choice is the one
that fits your life, not just the spreadsheet or the math. Tonight,
how do you ensure your portfolio is actually working together
(12:35):
and is not just a pile of investments. You're listening
to Simply Money presented by all Worth Financial here on
fifty five KRC the talk station. You're listening to Simply
Money presented by all Worth Financial on Bob Sponseller along
with Brian James. How do you move the needle if
(12:56):
you have a good nest egg but you feel like
you need a little bit more. We'll answer that question
and others straight ahead at six forty three.
Speaker 2 (13:04):
But first, who day, Who day? Who?
Speaker 3 (13:08):
They think they're worth more than them? Bengals, everybody.
Speaker 4 (13:11):
So what we're talking about is Sportico came out with
their annual NFL valuations report. The bad news is that
Bengals are dead last in the NFL, thirty two out
of thirty two teams. Even the Browns are worth more
the Bengals. Franchi is worth five and a half billion dollars,
up seventeen percent from last year, and again the Browns
are ahead of them, which means that having seventeen quarterbacks
on your roster somehow creates a lot more value there.
(13:33):
So where's this coming from? Well, the growth here, it's
up seventeen percent.
Speaker 2 (13:37):
That's good.
Speaker 4 (13:37):
Joe Burrow, of course, plays a role in that he's
the single greatest appreciating assets that we have here. Five
and a half billion dollars still more than what Mike
Brown paid for this team because he got it from
his father. As long as they keep winning or giving
us heart attacks in January, of course, and keeping it interesting,
then that value is going to keep going up.
Speaker 3 (13:54):
But we'll see if they can get out of the basement.
Speaker 2 (13:56):
All right.
Speaker 1 (13:56):
The only way the Browns could be worth more than
the Bengals is because the Browns just got Ohio taxpayers
to pay for a beautiful new domed stadium that's gonna
house all kinds of events. And this is something I
think we should have done in Cincinnati decades ago. We
missed the boat by having an open air stadium and
(14:17):
not that dome. But that's the only reason I could
I could even imagine anything in Cleveland is worth more
than what we have here in Cincinnati. All right, did
you or something?
Speaker 2 (14:30):
I don't care? Did you or someone you know?
Speaker 1 (14:32):
Wats the latest podcast that you see Grads Travis and
Jason Kelsey put out, you know, in case you missed it,
they had a little special guest on, someone named Taylor Swift.
She's Travis's girlfriend, and she announced her upcoming new album, Brian,
I know you.
Speaker 2 (14:52):
Love this topic, so take it away. Yeah.
Speaker 4 (14:55):
So I've got all the songs memorized and I am
in my I am in my t era. So she's
a juggernaut for sure. So she doesn't just drop albums.
She they plugg directly into the economy's bloodstream. She was
here not that long ago and injected an enormous amount
of money into the Cincinnati economy, as she does everywhere
she goes. So, so now that the aerostour is over with,
(15:16):
we can kind of look back and see exactly what
the impact was. According to market Watch, she injected five
billion dollars into the US economy, and that's enough to
outpace the GDP of fifty countries. This is one talented
songwriter and singer who has created more economic value than
fifty countries on the planet. So I'm not a huge
song a fan of her music, but I'm a fan
(15:38):
of the concept that somebody can even do this and
have this much of an impact. I can't stand the
fact that she comes along packages up with the Kansas
City Chiefs, but I really am impressed with her ability
to do what she's done.
Speaker 2 (15:48):
I do think it's a cool story.
Speaker 1 (15:49):
Yeah, I mean she's, you know, all joking aside. She's
not just a great songwriter and performer. I mean, what
a wonderful, brilliant business owner. I mean, this lady is brilliant.
You know, billion dollars injected into the US economy, over
two billion in ticket sales across her one hundred and
forty nine shows on that last tour. I mean, the
(16:10):
Fed's Beige Book even cited her new eras tour is
a factor in broader tourism and hospitality trends. There are
not many people moving the needle like that.
Speaker 2 (16:22):
All right.
Speaker 4 (16:23):
We've never talked about anybody making the cover of the
Beige Book, but here we are.
Speaker 2 (16:27):
Yep, all right, parents, brace yourself.
Speaker 1 (16:29):
The tooth fairy long, the MVP of childhood rewards, is
suddenly cutting back. According to Delta Dentals twenty twenty five,
original tooth Fairy pole. I didn't even know there was
such a thing. The tooth fairy is trimming her budget.
The average payout per tooth has dropped from five dollars
(16:49):
and eighty four cents to just five dollars and one
cents of fourteen percent? Dive Brian, who answers these poles?
Where do the even gather this data?
Speaker 4 (17:02):
This is this is market moving data here. You heard
it here first, folks, A fourteen percent drop in the
amount of money being generated by baby teeth under pillows.
So this is of course coming from in this survey.
This is coming from just where you would expect and inflation. Uh,
people just paying more attention to where they're going, or
just a demand for you know, just overall smarter economics. Now, hey, Bob,
(17:22):
I want to tell you that even this is an
area where you have to watch out for fraud. For
my now, actually it's her twenty first to day, so
happy birthday. Second kid, when she was three, she put
up my little pony shoes under her pillow and tried
to convince us they were baby teeth to make a
little bit of cash. Financial fraud is everywhere, Bob. We
have to be vigilant.
Speaker 1 (17:41):
Well, and I'm just waiting for the next market drop
market Watch story to pop somehow blaming the fourteen percent
dive in tooth fairy outflows to Trump tariffs. I'm waiting
for that that article to come out. All right, Every
Sunday you'll find our all Worth Advice in the Cincinnati
and Wire. Here is a preview Corey and Cincinnati asks,
(18:03):
how do I know if my portfolio is actually working
together or just sitting there as a pile of investments.
Speaker 2 (18:10):
How would you answer that one, Brian.
Speaker 4 (18:12):
Well, I would say you got to understand how what
what does it consist of? And first of all, maybe
it always was a pile of investments. Is anyone looking
at it? You know, maybe you've if it's your four
oh and k we're talking about perhaps you've signed up
for a service where they're gonna, you know, they're going
to rebalance it inside your four oh and k or
perhaps you are doing yourself. The fact that you're asking
a question tells me that at least you are not
doing yourself. There there is a decent chance that it's
(18:33):
a pile of investments that's not necessarily a terrible thing.
If you have again, if it's a four to oh
one k H, then you're putting money into it every
two weeks, every month, or however often you get paid,
and that by itself will keep a portfolio relatively diversified,
be a bit relatively balanced, because there's always new money
flowing into it, which means the thing in there that's
not doing so good you buy more shares of the
(18:55):
thing that is doing well and therefore slightly more expensive.
You're buying less shares of spread that out over time,
and you wind up with a fairly diversified portfolio. So
it's not necessarily a bad thing if nobody's looking at it.
But if nobody has ever made a decision of I
should own X, and I should I should not own why,
then therefore there probably is just a pile. And I
do see every now and then where I can clearly
tell somebody looked at what the what what the funds
(19:16):
in there for? And K did you know last year?
And that was what the decision was based on. And
we get somebody that's got a big pile of small
cap stocks or something like that, and I can tell
that it was only looked at one time.
Speaker 3 (19:26):
So just think about how you made that decision.
Speaker 2 (19:28):
Sounds good.
Speaker 1 (19:29):
Coming up next, we tackle a nuanced part of the
home selling process that could end up fetching you less
than you think when you sell your home. You're listening
to Simply Money presented by all Worth Financial on.
Speaker 2 (19:39):
Fifty five KR. See the talk station.
Speaker 1 (19:48):
You're listening to Simply Money presented by all Worth Financial.
I'm Bob Sponsor along with Brian James, joined tonight by
our real estate expert Michelle Sloan, owner of Remax Time. Michelle,
thanks for making time for us tonight, and I know
you want to talk about an important topic right now.
How to handle this whole situation we run into when
(20:08):
buying a home, and that's the appraisal. How to handle
the whole appraisal situation.
Speaker 5 (20:13):
Absolutely, I'm going to start with the sellers first, because
the seller always wants the absolute highest price for their home.
They want a million dollars for their home, right, But
that's not often reality. So when you're pricing homes, you
want to price it to evaluation that an appraiser will
value the home at that price, and if you're willing
(20:38):
to pay more, And this is the question that I
have to have with my buyers, is if you're willing
to pay more, you may have to come out of
pocket if an appraisal is short of the actual contract
price that you agreed to. So, I mean, that's kind
of a lot to soak in, but you have to
(21:00):
understand that if you are getting a loan, the bank
wants to make sure that the appraisal of that property
is the same price or higher than your contract price.
If it's not, you either have to renegotiate or the
buyer has to bring that extra to closing. And we
(21:22):
are seeing a lot of buyers that have some of
that extra cash, bringing an extra ten thousand dollars, twenty
thousand dollars that's over and above the valuation that an
appraiser has given you for the home.
Speaker 3 (21:35):
Does that make sense?
Speaker 4 (21:36):
It does, Michelle, Thanks for that. So the thing that's
occurring to me is okay. What you're saying is if
somebody finds themselves in the situation where the appraisal didn't
come in at the right amount, they need to throw
more cash in ostensibly to make sure that their down
payment is at the right level. Are you aiming for
what's happening nowadays?
Speaker 2 (21:54):
Right?
Speaker 4 (21:55):
Because what I'm getting at is the twenty percent. If
I make a twenty percent down payment, I get to
avoid you know, I get to avoid the extra insurance
payments PMI.
Speaker 2 (22:02):
Yeah.
Speaker 4 (22:03):
Are people normally when you're doing these transactions, are they
coming with twenty or are you seeing a lot it'll
be in five and between five and twenty. What does
it look like nowadays?
Speaker 5 (22:11):
It's a mixed bag. It absolutely is, Brian. You know
the interesting thing is that you know we still have
we have buyers all over the board. So I'll give
you a quick example. I had a listing. We had
eight offers. Of those eight offers, we had one cash
(22:31):
one that was willing to pay an exorbitant price over
list price, but they weren't willing to give any appraisal.
Gap coverage is what we call it. If they're willing
to put down a little extra. We have people that
are just putting five percent down, ten percent down, and
then the twenty percent down. So your down payment is
(22:53):
not going to change unless you want to, you know,
mess around with that with your lender. The down payment's
not necessarily going to change, but it's the amount of
cash that you're going to bring to closing could change.
So as a listing agent, I'm always looking for buyers
who have the cash to be able to make up
(23:15):
the difference if needed during the pay appraisal process.
Speaker 1 (23:21):
Michelle, as I listen to this whole topic, I mean
to me, this just screams of make sure you are
working with a skilled, experienced real estate professional like yourself,
because there's a lot of variables at play. You know
right now based on what you're talking about, And what
I mean by that is if the banks are coming
in and appraising these properties at a little bit less
(23:41):
than the quote unquote sale price or offer price, I
know they're trying to protect themselves. You got a buyer
that's really emotional and wants to get involved in the home.
You got a seller sitting there saying, Wow, I've got
eight offers coming in and I can just keep jacking
up this price at some point, you know, somebody needs
to run the numbers and give good advice on how
(24:03):
to play this game. Here what I can imagine, it's
just a box of chocolates for you trying to balance
buyers and sellers and actually go in with an actual
strategy on how to make sure you get the home
you want. But you're not overpaying or doing something irresponsible.
Speaker 5 (24:20):
Absolutely. I mean, there there are some duds in your
box of chocolate. Let's tell you some of those nasty
cream filled ones.
Speaker 1 (24:28):
Don't know that say that charity. There's very few things
I would not eat that that are wrapped in chocolate.
Speaker 2 (24:36):
But we won't go you know, but go ahead, Okay.
Speaker 5 (24:41):
Good, well we're yeah, we're really going off on a tangent.
I like the chocolate talk, though, I really do.
Speaker 4 (24:46):
Hey, Michelle, I do it, so I do question. You
were talking about cash before. Are we still in a
situation where UH sellers are more willing to accept a
lower cash office offer instead of the highest one that
still needs to be underwritten or people are people willing
to be patient or they just want it done at
this point.
Speaker 5 (25:02):
Okay, So that's that's also honestly a really good question,
and it brings up a conversation that we have to
have because you hear the old saying cash is king.
But let's just go. Let's just say the house you
have a sales price of three hundred thousand dollars, and
the cash offer is three hundred thousand dollars, but we
(25:23):
have a financed offer with let's say a guaranteed appraisal
gap right of three twenty. Are you going to wait
an extra two or three weeks for an extra twenty grand? Heck,
yes you are, because if there's if we know and
they can prove that they have the money to pay
that appraisal gap, then that's the offer I'm going to
(25:47):
recommend that the seller take. And so it really does
come down to you have to look at all of
the minute details because in that same scenario, if someone
offered four four hundred thousand dollars and that's the highest price,
and you get you look at that with dollar signs
in your eyes, but you know what, that's not a
(26:09):
real number because when the appraisal comes in at three
hundred or maybe three ten, guess what, that's what you're
gonna end up with, not the four hundred you're not.
That's that pie in the sky, that's the rainbow, that's
the that's the chocolate whatever your favorite chocolate candy is
that you're going to gorge yourself with, because you know what,
that four hundred is not realistic. And I have agents
(26:31):
who get really angry with me because they're like, but
my offer was the highest, and you know, you have
to think about that. And that's where I think you
do have to work with an experienced agent because your
offer may have on paper been the highest.
Speaker 2 (26:47):
But is it really no, it really wasn't. Well, there's
a lot a lot of no. Sorry, Brent.
Speaker 1 (26:54):
This this comes down to very similar things that we
deal with. And what I'm talking about here is dealing
with emotion and patience, and those two words are things
that certain people don't want to hear. And that's why
that's really where at the end of the day, a
good advisor, you know, more.
Speaker 2 (27:10):
Than pays for themselves.
Speaker 1 (27:11):
I don't care whether it's on the investment side of
things or the real estate side of things. You really
do need to have a seasoned pro that can that
can help balance out the emotion and inject a little
patience into the situation.
Speaker 2 (27:23):
Situation, right, Michelle.
Speaker 1 (27:25):
Absolutely, all right, Well, hey, great stuff as always, Michelle,
thanks for making time for us tonight, and thanks also
for being the only adult in the room tonight.
Speaker 2 (27:36):
You need some chocolate now, all right, bring it. I'll
eat whatever you got.
Speaker 1 (27:41):
You're listening Simply Money presented by all Worth Financial on fifty.
Speaker 2 (27:46):
Five KRC, the talk station.
Speaker 1 (27:53):
You're listening to Simply Money presented by all Worth Financial
on Bob Spondsller along with Brian James.
Speaker 2 (27:58):
You have a financial question you like for us to answer.
Speaker 1 (28:01):
There's a red button sitting right there while you're listening
to the show on the iHeart app. Just click that
red button, record your question and it'll come straight to us.
Speaking of questions, Dan and Madeira has one. Let's kick
it off with Dan.
Speaker 2 (28:16):
I've done well saving and investing, but I feel stuck
at this level. How do I move from one million
to five million in network?
Speaker 1 (28:26):
Well, Dan, there's the answers that come to mine are two.
There's really kind of only two things you could control
save more money, save and invest more. And along with that,
examine your investment strategy and see if you've got some
dormant money that might be sitting in cash or low
growth type investments. Get it into something more diversified that
(28:49):
has the opportunity to grow and compound more over time.
Those are the two things that you can control is
how much risk you're taking and growth potential you've got
with your portfolio, and then how how much you're saving
and investing into your portfolio. And a good advisor could
sit down and help you go through some of that.
Speaker 3 (29:07):
Bob.
Speaker 4 (29:07):
I'd have another quick question for Dan, which is when
you hit five million, is it going to be how
do I get to ten million? Then how do I
get to fifteen? Where does it all end? And what
are you really trying to accomplish? I would start there,
not a bad instinct, but at the same time, start
at the end. What do you want at the end
of all this?
Speaker 2 (29:21):
All right, let's hear from John and fort Wright. What's
your take on direct indexing versus traditional ets? Yeah?
Speaker 3 (29:29):
John, great question.
Speaker 4 (29:29):
So the direct indexing is something that's becoming more and
more popular. Most people know what an index is, right,
It's a big pile of stocks that we all kind
of look at and go yep, that's the stock market.
The most common one that we hear of is the
s and P five hundred, which is nothing more than
the five hundred largest companies in the United States, whether
they're good or bad.
Speaker 3 (29:46):
It's two different things.
Speaker 4 (29:48):
The other one is the dal Jones, which is thirty
stocks that somebody liked one hundred years ago. But in
any case, direct indexing, well, a lot of people own
mutual funds that replicate these indexes. Right, there's plenty of
S and P five hundred in you've got one in
your four oh and K four to H three B,
so on and so forth. Direct indexing takes it to
another level where you don't own one thing that owns
the five hundred stocks in the S and P five hundred.
(30:10):
You own literally all five hundred stocks. There are ways now,
with technology and the efficiencies that it brings, to set
somebody up with a portfolio that literally has those five
hundred different stocks.
Speaker 3 (30:20):
And you might go, oh, my gosh, how fat is
that statement?
Speaker 4 (30:22):
And you're right, it's a fat statement because you literally
have all the activity, all the dividends, are all the
ups and downs of these individual stocks.
Speaker 3 (30:28):
So why does anybody bother doing this?
Speaker 4 (30:30):
The main goal there is tax loss harvesting. If I
own an index mutual fund and one of the stocks
in the S and P five hundred has a bad year,
as many of them do.
Speaker 3 (30:40):
That's how the market works. Good years, bad years.
Speaker 4 (30:42):
Then I cannot take If it's inside the fund, I
cannot take that loss.
Speaker 3 (30:46):
I can't incur it and deduct it.
Speaker 4 (30:48):
However, if I own five hundred individual stocks and one
of them trips over itself, well, I can take a loss,
and I can use that loss if I go ahead
and sell that individual stock, I can offset it against
any gains I might have. And if I have more
losses than gains, I can deduct up to three thousand
dollars right off my income. So I like direct indexing
for that point. But that said, if you have nothing
(31:08):
but IRA's and four one case, direct indexing will not
help you. There's no such thing as tax loss harvesting
in those types of accounts. Let's move on to Bart
and Milford. Who's got a question about taxes.
Speaker 1 (31:16):
Go ahead, Bart, how do I know if I'm paying
too much in taxes for my investments?
Speaker 2 (31:22):
Well, pretty loaded question, Bart.
Speaker 1 (31:24):
It depends on you know a multitude of things that
we don't know just from that question.
Speaker 2 (31:29):
One, where are you taking your income from?
Speaker 1 (31:31):
If you are taking an income stream from your portfolio,
we need to look at that.
Speaker 2 (31:35):
You know, are you taking it.
Speaker 1 (31:36):
From iras non iras roth IRA accounts and Newiti's pensions.
Where are you taking your income from? Another thing might
look at the composition of your investment portfolio, kind of
the to Brian's point on the last question. If you're
sitting there with a bunch of mutual funds that you've
owned for years in a taxable account, those are paying,
(32:00):
you know, distributions on capital gains every year in the
fourth quarter of the year, whether you take anything.
Speaker 2 (32:05):
Out or not. That's just the way mutual funds work.
Speaker 1 (32:08):
So there might be an opportunity to make your portfolio
more efficient through those two things. Looking at how how
you are taking your income stream from your portfolio and
then looking at what's the composition of your current portfolio,
and that that ignores the whole topic of roth conversions
and other things which can help potentially save you some
(32:30):
taxes down the road.
Speaker 2 (32:32):
Let's hear from Laura in Newport.
Speaker 1 (32:34):
If I already have a diversified portfolio, how often should
I read balance and who should be doing it?
Speaker 2 (32:41):
Yeah, Laura, so this is this question.
Speaker 4 (32:43):
Let's start with the second question, who should be doing
it well. If you've got a fiduciary based financial advisor
who's doing done a financial plan and all those things
for you that you should be looking to them, you're
already paying them money, so any any questions that come up,
you should be routing through them anyway to get to
get the best bang for your buck. Now, as far
as how often, I'd say it depends on the type
(33:03):
of portfolio that you own. But most people have piles
of mutual funds or exchange traded funds where there isn't
really a whole lot of risk in any single company.
That's how most people have investments. That's not everybody, but
I would say once a year it's worth looking at.
And the reason I say that is because most people
just tend to let it roll and kind of forget
about it. And what will happen is whatever's doing well
(33:24):
will be the kind of place to be for a
few years and things will get out of whack. So,
for example, if you've let your portfolio go as many
have for ten to fifteen years, there's a good bet
that you have way too much on the large cap side,
and probably a heck of a lot too much on
the technology side. These aren't bad things, but this is
why you want to kind of harvest some of the
gains and spread it out across things.
Speaker 3 (33:43):
If you have a four to oh one.
Speaker 4 (33:44):
K and that's your primary asset, and you are putting
money into it every week, every two weeks, or however
often you get paid, that will tend to stay somewhat
in balance. So don't be surprised if you don't see
because of the money flowing into it regularly, that will
keep it somewhat balanced. Let's move on for one more
quick one from Maria High.
Speaker 1 (34:00):
My adult son has a decent job and some savings,
but he's scared to invest because of market volatility. How
do I help him without.
Speaker 2 (34:07):
Just doing it for him?
Speaker 1 (34:09):
Well, Maria, the first war that comes to mind is education,
and oftentimes people just need to get a little historical
perspective on all the landmines that have been out there historically,
you know, throughout the history of the markets, going back
to the nineteen twenty six for example, there's always a
reason to be concerned about investing. I think maybe your
(34:29):
son has a little bit of recency bias. Let's face it,
he lived through COVID, perhaps the housing crisis. There's been
some you know, a lot of volatility here in recent years.
But I think sitting down and just walking him through,
in spite of short term volatility, what the long term
benefits of staying invested in the stock market had been.
(34:50):
Oftentimes that helps people get a little bit more of
a comfort level with putting some of their money away
or most of their money away for the long term.
Speaker 2 (34:59):
All right, coming up up next Brian's bottom line.
Speaker 1 (35:02):
He's going to spend a little time on a very
important topic, long term care. You're listening to Simply Money
presented by all Worth Financial on fifty five KRC the
talk station.
Speaker 2 (35:15):
Let's get this thing moment.
Speaker 1 (35:17):
You're listening to Simply Money presented by all Worth Financial
on Bob's Fun Seller along with Brian James.
Speaker 2 (35:22):
And it's time for Brian's bottom line.
Speaker 1 (35:25):
And today Brian's going to give us his bottom line
on long term care.
Speaker 2 (35:30):
Uh, Brian, Uh, laying on us.
Speaker 4 (35:33):
So this comes from Bob, This comes from a meeting
I had yesterday. This question comes up all the time,
where we'll go through we have a financial plan in place,
and we figured out the resources and the goals and
everything looks okay, and then the question comes up, well,
what if we have a long term care type of
a situation. We're both sitting here at the picture of health.
You know, let this happens to a lot of people.
How do we know what we can afford? And obviously
you know that the most people are coming thinking i'd
(35:54):
probably have to have long term care insurance, and yeah,
that can be an answer, that can be a solution,
but we never start there. And the reason is, I'll
be honest, I'm not super trusting of the insurance industry,
especially the long term care space. It's a good resource
to have if you've got if you've got.
Speaker 3 (36:09):
Plenty of resources to be protected, but it's also can
be really expensive if you don't.
Speaker 4 (36:13):
So you know, if you're somebody who wants your maybe
you're married couple, you're probably looking at twelve to fifteen
thousand dollars per year to get a really solid policy
that will pretty much cover everything and have inflation built
into it. But the inflation, of course, is also attached
to those premiums. So I don't think there are any
companies anymore. I remember twenty twenty five years ago when
some of them would tout the fact that they had
(36:34):
never raised their premiums.
Speaker 3 (36:35):
Well, that's not a thing anymore.
Speaker 4 (36:36):
They all do it, and they do it regularly, and
it's understandable that the risk is that it's an expensive concern.
Speaker 2 (36:42):
You know.
Speaker 4 (36:42):
We always tell people you need to plan on maybe
three hundred and fifty thousand dollars for healthcare beyond your
normal out of pocket expenses for doctors and office visits
and all that kind of thing.
Speaker 3 (36:53):
But that doesn't mean you have to rush out and
get insurance.
Speaker 4 (36:56):
First of all, if you have a financial plan, you
can take a shot at what your cash flow is
or what your assets are going to look like at
that time, you may very well be able to self insure.
Because of the way compounding works and the way money
grows over time. If you have an idea what your
cash flow is, and you're honest with yourself about you're spending,
you'll have a clear idea of what will be left
at the end of it. And Bob, the other thing
I'll throw out there is people kind of forget that,
(37:17):
you know, when we say it's going to cost about
one hundred and fifteen thousand dollars per year for a
nice home in this area those days. We're talking end
of life, so about two and a half years, So
I need three hundred and fifty thousand dollars to do this.
Speaker 2 (37:27):
That is correct.
Speaker 4 (37:28):
That's the estimate that we use all the time. However,
it's not on top of all of your other expenses.
You're not going to the grocery store anymore. You might
have sold the house, you're not vacationing anymore, there's no
more mortgage. So yes, is it more than you're spending
at that time before you going home? Probably a little bit,
but it's not an entire sum layered on top of
your current expenses, right, You're already getting some of this,
(37:49):
and remember your social Security, your pensions will still be
coming in to cover it. It's a chunk, don't get
me wrong, but it's not as terrifying as it may
seem when you first look at it.
Speaker 2 (37:58):
Yeah, good stuff.
Speaker 1 (37:59):
The only thing thing I'll add there is I, oftentimes, Brian,
I like to look at a client's existing life insurance,
especially some permanent life insurance, because correct me if I'm wrong.
Last time I checked, we all have one hundred percent
chance of dying and collecting that death benefit only about
a fifty percent chance of needing long term care. So
sometimes that life insurance that you've owned for years that
(38:20):
can backfill at the end any money that you drew
down to pay for long term care costs during the
end of life.
Speaker 2 (38:27):
Thanks for listening.
Speaker 1 (38:28):
You've been listening to Simply Money, presented by all Worth
Financial on fifty five KRC, the talk station
Tonight some financial planning conundrums you should probably get tackled
here before it's too late. You're listening to Simply Money,
presented by all Worth Financial on Bob Sponseller along with
Brian James. Let's face it, life is about trade offs,
especially when it comes to your money. So instead of
pretending the answers are always black and white.
Speaker 2 (00:27):
Brian, this leads to our favorite answer. It depends we
need to eagle style.
Speaker 3 (00:32):
We need to start harmonizing.
Speaker 1 (00:34):
We're gonna turn this into a little game we like
to play. We'll walk through the scenarios, debate the options,
and show you what the pros and cons might mean
for your financial plan, your taxes, and your peace of mind.
And we're talking about the would you rather game financial version?
Speaker 2 (00:50):
All right?
Speaker 1 (00:50):
Question one, Brian, would you rather create a quote unquote
bucket strategy that segments your portfolio by time horizon or
use it's a total return strategy and just draw down
proportionally across all investments in your portfolio?
Speaker 2 (01:06):
What would you rather have? So?
Speaker 4 (01:08):
I'm total return and the reason I say that is
because I like the concept conceptually thinking about assets in
terms of a bucket, which which basically makes you feel
better about here's my short term money. We've here's my
goals that I have over the next two, three, four years.
We got to pay off the mortgage, we got to
do this to the house or whatever. So here's the
piles of money to do it. Then here's my midterm money,
here's my long term money. That makes sense conceptually, but
(01:31):
I think it's a lot harder to logistically put your
dollars together that way because you've gotten usually, you know,
especially the case of a married couple, you've got misproportions
in between the two spouses. One usually has more than
another because of just different career paths and that kind
of thing. Most importantly, tax treatment. You know, if I've
got pre tax, after tax and WROTH in the mix,
that makes it hard to literally divide up into buckets,
(01:52):
saying this account number is for the early bucket, this
account number is for the later bucket. So I like
to use that total return strategy, use the entire pile
of money. Then I can make tax planning decisions on
it at a game time, you know, point when during
the year that I actually need to do things.
Speaker 3 (02:06):
Oh what do you think?
Speaker 2 (02:06):
You do?
Speaker 3 (02:07):
You think of that differently.
Speaker 2 (02:08):
No, I agree with what you're saying.
Speaker 1 (02:10):
I would just bring up, you know, a couple of
maybe exceptions to that rule one.
Speaker 2 (02:14):
And I run across this once.
Speaker 1 (02:15):
In a while people that are about to retire, and
justifiably so, they're afraid of a of a market pulled
down or pull back right after they retire, and they
want to put that money in there for the long
term and draw it down like you're talking about, but
they are just afraid to pull the trigger on that.
And if it's going to cause people to put their
(02:37):
entire portfolio in a lower risk situation than they really
need to be or should be, that's where we'll pull
out maybe one, two, three years worth of cash flow
and put that in a shorter term strategy. And that
sometimes can give people the peace of mind of saying, hey,
even if the market goes down in the short term
for a period of time, I know we've got that.
(03:00):
We've got that nut.
Speaker 2 (03:01):
Covered here, you know, for the interim term.
Speaker 1 (03:04):
So it's it depends on the client, depends on the
risk profile, and you've already pointed out it depends on
how the portfolio is constructed, what type of assets and
tax ramifications we're dealing with, So it really is a
customized approach for each client. All right, Brian, would you
rather sell highly appreciated stock.
Speaker 2 (03:25):
And pay capital gains taxes now?
Speaker 1 (03:27):
Or hold it until death and pass it along with
a completely stepped up basis to your heirs where those
capital gains just vanish?
Speaker 4 (03:37):
Oh this is a big, big It depends because you know,
my first question is this all I have?
Speaker 3 (03:41):
Is it just this one stock?
Speaker 5 (03:42):
You know?
Speaker 4 (03:42):
Do I need to maybe I inherited some big pile
of money from accompany my parents sold or something like that.
Speaker 3 (03:49):
Well, I guess, in which case it wouldn't have any stock.
Speaker 4 (03:50):
But regardless, if this is the major asset of my
then then I'm not worried about capital gains taxes. I'm
worried about how I'm going to use this, you know,
for now. And it depends on the company too, because
if I'm sixty years old, I'm looking at twenty twenty
five years. I have no idea what that company is
going to look like. Remember the original Internet companies, For example,
we had Yahoo millionaires way back when.
Speaker 3 (04:11):
Yahoo isn't a thing anymore.
Speaker 4 (04:13):
Now it has morphed onto Google and Facebook and all
the other companies that we know now, so there's no
way to say this company's going to exist, So maybe
it's not.
Speaker 3 (04:20):
It's not necessarily a good idea to hang on to
it that long.
Speaker 4 (04:23):
I would say, if you're in a case like that,
a situation like that, figure out, you know, ideally we
want to get it down to you know, ten, maybe
fifteen percent of a portfolio, so that you're just not
overly exposed in anyone area. If this is indeed going
to be something that's going to support you, and so
you know, maybe maybe you work your way down by
selling off in chunks over time to get down to
some agreed upon asset levels.
Speaker 3 (04:43):
So what do you think?
Speaker 1 (04:45):
No, I agree as I looked at that question, you know,
I was going to say what you just said in
the last couple sentences. You got to get this thing
worked down responsibly over a reasonable period of time so
it's not taking up a disproportionately high percentage of your
overall portfolio.
Speaker 2 (05:00):
And then you can let some of that ride longer term.
Speaker 4 (05:03):
So I my turn to throw one at you. So
let's move on to the next one to do it
all right, Bob, would you rather have your entire portfolio
in a direct indexing structure with personalized tax loss harvesting,
or in.
Speaker 3 (05:15):
Real estate that cash flows. Which of those sounds better
to you?
Speaker 1 (05:19):
Well, I mean the first question I have is what
do you mean by real estate? Is this in a
professionally managed portfolio or rental properties or a couple houses
where I'm the landlord. I mean, you and I've talked
about this several times. I do not want to fix
broken toilets. I do not want to collect rent I
don't want to deal with all that stuff. So my answer,
without having more details around it, is give me that
(05:42):
direct indexing portfolio. Because I'm diversified, I can look at
the companies that I own, I'm spread across different industries,
different companies, and I've got that tax loss harvesting working
for me.
Speaker 2 (05:54):
I will take that all day, every day. Yeah.
Speaker 3 (05:57):
The happiest clients that I've known with real estate there.
Speaker 4 (06:00):
If you own real estate, you're one of two people
you figured out the game and you own a lot
of different properties and the mortgage is relatively down and
you're actually making money off it, or you own one
or two that you cannot wait to get rid of.
Speaker 3 (06:10):
Nobody is in the middle.
Speaker 4 (06:11):
There so yes, I personally, I'm currently involved in it
with in an organization that I'm helping.
Speaker 3 (06:16):
Part of my job is to kind of be a landlord.
I don't have plumb toilets, but I got to go
find the people who do.
Speaker 4 (06:20):
And uh, I love the organization, but I've got some
regrets some days about that.
Speaker 3 (06:25):
So yeah, going direct indexing, all right.
Speaker 4 (06:27):
Throwing you another one, Bob, how about would you rather
move to a no income tax state like Florida to
lower your tax bills or would you prefer to stay
in Cincinnati because of family?
Speaker 3 (06:36):
You know, because we're all kind of provincial around here.
Speaker 4 (06:38):
It's a pretty cool place to live, even if it
costs more to live here tax wise.
Speaker 2 (06:42):
Well here's my answer, and my answer has evolved, Brian.
Speaker 1 (06:46):
As I have aged and my kids have now become,
you know, all college educated and out out on their own.
Two of the three of them are married, one of
them has a baby, our third one just got engaged,
and they've taken jobs and they move all over the country.
And you know, I used to think, yep, go to Florida,
go somewhere, you know, Tennessee and and and not pay taxes.
(07:10):
Here's my bottom line answer, do not let the tax
tail wag the dog, meaning your your happiness, your proximity
to family, doctors, relationships, friends, things you like to do
it outweighs considerably.
Speaker 5 (07:28):
Uh.
Speaker 1 (07:28):
Saving a little money on income taxes. And we've talked
about this before. Even if you pay nothing in income taxes,
some of these states have way they do have ways
of getting tax dollars out of your pocket for things
like the increased cost of vehicle registrations or sales taxes.
So again my answer is, don't let the tax tail
(07:49):
wag the dog.
Speaker 2 (07:49):
Here. Do what's gonna give you.
Speaker 1 (07:52):
And your family the most meaning the most you know,
happiness and enjoy your retirement years.
Speaker 3 (07:59):
Yep.
Speaker 4 (07:59):
So on that topic, I'm with you. I mean to
figure out what you like and whatever. A lot of
conversations I've had with people who were the original plan
maybe was to buy a condo or a house down
in Florida, and so that obviously has ballooned. Anyway, the
cost of that is somewhat prohibitive anyhow. But what we'll
do is sometimes we'll model out. Okay, if this was
your plan to begin with and you can afford it,
here's what it would look like if you owned it
forever versus if we just carved out that same amount
(08:21):
of money, you know, several hundred thousand dollars for a
down payment and then whatever dollar amount for the mortgage payment.
Speaker 3 (08:26):
As well as the HOA fees. Don't forget this stuff.
Speaker 4 (08:28):
And insurance right, every time we have a hurricane, they
move that water line back and more, more and more
facilities wind up with higher insurance bremiums. Let's figure out
what that pile is and use it to go get
nicer airbnbs. Just create a sinking fund for vacations.
Speaker 1 (08:41):
You're listening to simply money presented by All with Financial
on Bob Sponseller along with Brian James. All right, Brian,
your turn. Would you rather fund a trust for your
grandkid's college tuition or give them seed money to start
a business?
Speaker 2 (08:55):
Someday?
Speaker 4 (08:56):
Man, this is ay. I'll tell you what my favorite
thing to do for How old are my grandkids?
Speaker 2 (09:01):
Are? There?
Speaker 3 (09:02):
You talking babies? Little ones?
Speaker 4 (09:03):
You know, super young ones. I don't know if they're
going to start a business. My favorite thing in the
world to do, Bob is five twenty nine. And there's
pros and cons to this, but the rules changed in
twenty twenty four, so that basically, if they don't use
it for college, then they they can use it then
for a roth Ira contribution. There are moving parts of this.
There are rules and hoops and limits and stuff you
(09:25):
got to jump through. But I could put twelve thousand
dollars away in a lump and it will become about
thirty five thousand dollars by the time they're eighteen, and
then I can stote now they've got earned income, I
can start using those dollars to fund a roth Ira
for them. At the end of the day, all of
these things are about how can I help my kids
build wealth? Five twenty nine are a fantastic vehicle to
do that tax free.
Speaker 2 (09:44):
I agree, Brian. Whether it's a kid, a grandkid, or whatever.
Speaker 1 (09:48):
These these individuals are going to have to show me
a few things work, ethic, financial acumen, a good business plan,
all those things before I just start tossing money, you know,
towards some seed you know, startup company.
Speaker 4 (10:03):
Six month old has a he's got CEO all over him.
Speaker 1 (10:07):
All right, would you rather convert a large chunk of
your traditional ira to roth now? While taxes are known,
even if they're high or wait and see what Congress
does with future tax rates.
Speaker 4 (10:19):
What say you, Brian, Well, I'm kind of a round
about way. I'm doing this because I'm part of the
and there's a lot of people out there. This is
going to ring true. For my four oh one K
is mostly pre tax because that's all that existed. I
started working as a grown up about nineteen ninety seven.
Roth iras did not come into existence until about two thousand.
Roth Floral one k's much later than that, because that
is a plan by plan Acme Inc. Has to decide
(10:41):
at once to offer roth fol one k versus when
the IRS just said everybody can do it. So anyway,
I have a big pile of pre tax dollars. I
have learned that my happiest clients gave themselves flexibility from
a tax planning standpoint.
Speaker 2 (10:53):
Because they've got a pile of both.
Speaker 4 (10:54):
So what I'm doing now to catch up is Michelle
and I are putting all of our stuff on the
ROTH side. And yeah, I'm paying higher taxes now, but
I have decided it's important, It will be important to
me in fifteen twenty years to have two piles to
choose from. And the only way to get that roth
is to is to bite the bullet. Pay the taxes.
Speaker 1 (11:08):
Now, all right, let's do one more, Brian. Would you
rather spend retirement dollars on frequent, shorter trips like extended weekends,
road trips or cruises, or save for fewer but bigger
bucket list adventures like a trip to Antarctica or an
African sofari.
Speaker 2 (11:26):
This is all. This is pure preference.
Speaker 4 (11:28):
I'm gonn answer quickly and then because I want to
hear your side too, so I'm the opposite. I want,
I want, I want little check the box types of trips.
Speaker 3 (11:34):
I get bored going to the same place.
Speaker 4 (11:36):
I may go to a beach resort, fall in love
with it, and then I'll never want to see it
again because I've been there, I've seen it.
Speaker 3 (11:39):
I want to go find something else. That's just my preference.
Speaker 4 (11:42):
I like the parachute in somewhere I've never been and
go read all the signs of all the historical stuff
that ever happened there, and then never see it again.
Speaker 2 (11:48):
How about you, I'm going to put myself in the
both category.
Speaker 1 (11:51):
Here's what I mean. I do not like airports. I
don't like, you know, being around the general public. I
don't like people having control over overwhere and when I move.
That being said, I've been to a couple of these
places before and experienced some amazing things, and uh, there's
some there's some things I still want to see and
(12:13):
I'm worth I'm willing to bite the bullet and some
of the inconvenience to do it. So I put me
in the both category. Here's the all Worth advice. Retirement
is about trade offs. The right choice is the one
that fits your life, not just the spreadsheet or the math. Tonight,
how do you ensure your portfolio is actually working together
(12:35):
and is not just a pile of investments. You're listening
to Simply Money presented by all Worth Financial here on
fifty five KRC the talk station. You're listening to Simply
Money presented by all Worth Financial on Bob Sponseller along
with Brian James. How do you move the needle if
(12:56):
you have a good nest egg but you feel like
you need a little bit more. We'll answer that question
and others straight ahead at six forty three.
Speaker 2 (13:04):
But first, who day, Who day? Who?
Speaker 3 (13:08):
They think they're worth more than them? Bengals, everybody.
Speaker 4 (13:11):
So what we're talking about is Sportico came out with
their annual NFL valuations report. The bad news is that
Bengals are dead last in the NFL, thirty two out
of thirty two teams. Even the Browns are worth more
the Bengals. Franchi is worth five and a half billion dollars,
up seventeen percent from last year, and again the Browns
are ahead of them, which means that having seventeen quarterbacks
on your roster somehow creates a lot more value there.
(13:33):
So where's this coming from? Well, the growth here, it's
up seventeen percent.
Speaker 2 (13:37):
That's good.
Speaker 4 (13:37):
Joe Burrow, of course, plays a role in that he's
the single greatest appreciating assets that we have here. Five
and a half billion dollars still more than what Mike
Brown paid for this team because he got it from
his father. As long as they keep winning or giving
us heart attacks in January, of course, and keeping it interesting,
then that value is going to keep going up.
Speaker 3 (13:54):
But we'll see if they can get out of the basement.
Speaker 2 (13:56):
All right.
Speaker 1 (13:56):
The only way the Browns could be worth more than
the Bengals is because the Browns just got Ohio taxpayers
to pay for a beautiful new domed stadium that's gonna
house all kinds of events. And this is something I
think we should have done in Cincinnati decades ago. We
missed the boat by having an open air stadium and
(14:17):
not that dome. But that's the only reason I could
I could even imagine anything in Cleveland is worth more
than what we have here in Cincinnati. All right, did
you or something?
Speaker 2 (14:30):
I don't care? Did you or someone you know?
Speaker 1 (14:32):
Wats the latest podcast that you see Grads Travis and
Jason Kelsey put out, you know, in case you missed it,
they had a little special guest on, someone named Taylor Swift.
She's Travis's girlfriend, and she announced her upcoming new album, Brian,
I know you.
Speaker 2 (14:52):
Love this topic, so take it away. Yeah.
Speaker 4 (14:55):
So I've got all the songs memorized and I am
in my I am in my t era. So she's
a juggernaut for sure. So she doesn't just drop albums.
She they plugg directly into the economy's bloodstream. She was
here not that long ago and injected an enormous amount
of money into the Cincinnati economy, as she does everywhere
she goes. So, so now that the aerostour is over with,
(15:16):
we can kind of look back and see exactly what
the impact was. According to market Watch, she injected five
billion dollars into the US economy, and that's enough to
outpace the GDP of fifty countries. This is one talented
songwriter and singer who has created more economic value than
fifty countries on the planet. So I'm not a huge
song a fan of her music, but I'm a fan
(15:38):
of the concept that somebody can even do this and
have this much of an impact. I can't stand the
fact that she comes along packages up with the Kansas
City Chiefs, but I really am impressed with her ability
to do what she's done.
Speaker 2 (15:48):
I do think it's a cool story.
Speaker 1 (15:49):
Yeah, I mean she's, you know, all joking aside. She's
not just a great songwriter and performer. I mean, what
a wonderful, brilliant business owner. I mean, this lady is brilliant.
You know, billion dollars injected into the US economy, over
two billion in ticket sales across her one hundred and
forty nine shows on that last tour. I mean, the
(16:10):
Fed's Beige Book even cited her new eras tour is
a factor in broader tourism and hospitality trends. There are
not many people moving the needle like that.
Speaker 2 (16:22):
All right.
Speaker 4 (16:23):
We've never talked about anybody making the cover of the
Beige Book, but here we are.
Speaker 2 (16:27):
Yep, all right, parents, brace yourself.
Speaker 1 (16:29):
The tooth fairy long, the MVP of childhood rewards, is
suddenly cutting back. According to Delta Dentals twenty twenty five,
original tooth Fairy pole. I didn't even know there was
such a thing. The tooth fairy is trimming her budget.
The average payout per tooth has dropped from five dollars
(16:49):
and eighty four cents to just five dollars and one
cents of fourteen percent? Dive Brian, who answers these poles?
Where do the even gather this data?
Speaker 4 (17:02):
This is this is market moving data here. You heard
it here first, folks, A fourteen percent drop in the
amount of money being generated by baby teeth under pillows.
So this is of course coming from in this survey.
This is coming from just where you would expect and inflation. Uh,
people just paying more attention to where they're going, or
just a demand for you know, just overall smarter economics. Now, hey, Bob,
(17:22):
I want to tell you that even this is an
area where you have to watch out for fraud. For
my now, actually it's her twenty first to day, so
happy birthday. Second kid, when she was three, she put
up my little pony shoes under her pillow and tried
to convince us they were baby teeth to make a
little bit of cash. Financial fraud is everywhere, Bob. We
have to be vigilant.
Speaker 1 (17:41):
Well, and I'm just waiting for the next market drop
market Watch story to pop somehow blaming the fourteen percent
dive in tooth fairy outflows to Trump tariffs. I'm waiting
for that that article to come out. All right, Every
Sunday you'll find our all Worth Advice in the Cincinnati
and Wire. Here is a preview Corey and Cincinnati asks,
(18:03):
how do I know if my portfolio is actually working
together or just sitting there as a pile of investments.
Speaker 2 (18:10):
How would you answer that one, Brian.
Speaker 4 (18:12):
Well, I would say you got to understand how what
what does it consist of? And first of all, maybe
it always was a pile of investments. Is anyone looking
at it? You know, maybe you've if it's your four
oh and k we're talking about perhaps you've signed up
for a service where they're gonna, you know, they're going
to rebalance it inside your four oh and k or
perhaps you are doing yourself. The fact that you're asking
a question tells me that at least you are not
doing yourself. There there is a decent chance that it's
(18:33):
a pile of investments that's not necessarily a terrible thing.
If you have again, if it's a four to oh
one k H, then you're putting money into it every
two weeks, every month, or however often you get paid,
and that by itself will keep a portfolio relatively diversified,
be a bit relatively balanced, because there's always new money
flowing into it, which means the thing in there that's
not doing so good you buy more shares of the
(18:55):
thing that is doing well and therefore slightly more expensive.
You're buying less shares of spread that out over time,
and you wind up with a fairly diversified portfolio. So
it's not necessarily a bad thing if nobody's looking at it.
But if nobody has ever made a decision of I
should own X, and I should I should not own why,
then therefore there probably is just a pile. And I
do see every now and then where I can clearly
tell somebody looked at what the what what the funds
(19:16):
in there for? And K did you know last year?
And that was what the decision was based on. And
we get somebody that's got a big pile of small
cap stocks or something like that, and I can tell
that it was only looked at one time.
Speaker 3 (19:26):
So just think about how you made that decision.
Speaker 2 (19:28):
Sounds good.
Speaker 1 (19:29):
Coming up next, we tackle a nuanced part of the
home selling process that could end up fetching you less
than you think when you sell your home. You're listening
to Simply Money presented by all Worth Financial on.
Speaker 2 (19:39):
Fifty five KR. See the talk station.
Speaker 1 (19:48):
You're listening to Simply Money presented by all Worth Financial.
I'm Bob Sponsor along with Brian James, joined tonight by
our real estate expert Michelle Sloan, owner of Remax Time. Michelle,
thanks for making time for us tonight, and I know
you want to talk about an important topic right now.
How to handle this whole situation we run into when
(20:08):
buying a home, and that's the appraisal. How to handle
the whole appraisal situation.
Speaker 5 (20:13):
Absolutely, I'm going to start with the sellers first, because
the seller always wants the absolute highest price for their home.
They want a million dollars for their home, right, But
that's not often reality. So when you're pricing homes, you
want to price it to evaluation that an appraiser will
value the home at that price, and if you're willing
(20:38):
to pay more, And this is the question that I
have to have with my buyers, is if you're willing
to pay more, you may have to come out of
pocket if an appraisal is short of the actual contract
price that you agreed to. So, I mean, that's kind
of a lot to soak in, but you have to
(21:00):
understand that if you are getting a loan, the bank
wants to make sure that the appraisal of that property
is the same price or higher than your contract price.
If it's not, you either have to renegotiate or the
buyer has to bring that extra to closing. And we
(21:22):
are seeing a lot of buyers that have some of
that extra cash, bringing an extra ten thousand dollars, twenty
thousand dollars that's over and above the valuation that an
appraiser has given you for the home.
Speaker 3 (21:35):
Does that make sense?
Speaker 4 (21:36):
It does, Michelle, Thanks for that. So the thing that's
occurring to me is okay. What you're saying is if
somebody finds themselves in the situation where the appraisal didn't
come in at the right amount, they need to throw
more cash in ostensibly to make sure that their down
payment is at the right level. Are you aiming for
what's happening nowadays?
Speaker 2 (21:54):
Right?
Speaker 4 (21:55):
Because what I'm getting at is the twenty percent. If
I make a twenty percent down payment, I get to
avoid you know, I get to avoid the extra insurance
payments PMI.
Speaker 2 (22:02):
Yeah.
Speaker 4 (22:03):
Are people normally when you're doing these transactions, are they
coming with twenty or are you seeing a lot it'll
be in five and between five and twenty. What does
it look like nowadays?
Speaker 5 (22:11):
It's a mixed bag. It absolutely is, Brian. You know
the interesting thing is that you know we still have
we have buyers all over the board. So I'll give
you a quick example. I had a listing. We had
eight offers. Of those eight offers, we had one cash
(22:31):
one that was willing to pay an exorbitant price over
list price, but they weren't willing to give any appraisal.
Gap coverage is what we call it. If they're willing
to put down a little extra. We have people that
are just putting five percent down, ten percent down, and
then the twenty percent down. So your down payment is
(22:53):
not going to change unless you want to, you know,
mess around with that with your lender. The down payment's
not necessarily going to change, but it's the amount of
cash that you're going to bring to closing could change.
So as a listing agent, I'm always looking for buyers
who have the cash to be able to make up
(23:15):
the difference if needed during the pay appraisal process.
Speaker 1 (23:21):
Michelle, as I listen to this whole topic, I mean
to me, this just screams of make sure you are
working with a skilled, experienced real estate professional like yourself,
because there's a lot of variables at play. You know
right now based on what you're talking about, And what
I mean by that is if the banks are coming
in and appraising these properties at a little bit less
(23:41):
than the quote unquote sale price or offer price, I
know they're trying to protect themselves. You got a buyer
that's really emotional and wants to get involved in the home.
You got a seller sitting there saying, Wow, I've got
eight offers coming in and I can just keep jacking
up this price at some point, you know, somebody needs
to run the numbers and give good advice on how
(24:03):
to play this game. Here what I can imagine, it's
just a box of chocolates for you trying to balance
buyers and sellers and actually go in with an actual
strategy on how to make sure you get the home
you want. But you're not overpaying or doing something irresponsible.
Speaker 5 (24:20):
Absolutely. I mean, there there are some duds in your
box of chocolate. Let's tell you some of those nasty
cream filled ones.
Speaker 1 (24:28):
Don't know that say that charity. There's very few things
I would not eat that that are wrapped in chocolate.
Speaker 2 (24:36):
But we won't go you know, but go ahead, Okay.
Speaker 5 (24:41):
Good, well we're yeah, we're really going off on a tangent.
I like the chocolate talk, though, I really do.
Speaker 4 (24:46):
Hey, Michelle, I do it, so I do question. You
were talking about cash before. Are we still in a
situation where UH sellers are more willing to accept a
lower cash office offer instead of the highest one that
still needs to be underwritten or people are people willing
to be patient or they just want it done at
this point.
Speaker 5 (25:02):
Okay, So that's that's also honestly a really good question,
and it brings up a conversation that we have to
have because you hear the old saying cash is king.
But let's just go. Let's just say the house you
have a sales price of three hundred thousand dollars, and
the cash offer is three hundred thousand dollars, but we
(25:23):
have a financed offer with let's say a guaranteed appraisal
gap right of three twenty. Are you going to wait
an extra two or three weeks for an extra twenty grand? Heck,
yes you are, because if there's if we know and
they can prove that they have the money to pay
that appraisal gap, then that's the offer I'm going to
(25:47):
recommend that the seller take. And so it really does
come down to you have to look at all of
the minute details because in that same scenario, if someone
offered four four hundred thousand dollars and that's the highest price,
and you get you look at that with dollar signs
in your eyes, but you know what, that's not a
(26:09):
real number because when the appraisal comes in at three
hundred or maybe three ten, guess what, that's what you're
gonna end up with, not the four hundred you're not.
That's that pie in the sky, that's the rainbow, that's
the that's the chocolate whatever your favorite chocolate candy is
that you're going to gorge yourself with, because you know what,
that four hundred is not realistic. And I have agents
(26:31):
who get really angry with me because they're like, but
my offer was the highest, and you know, you have
to think about that. And that's where I think you
do have to work with an experienced agent because your
offer may have on paper been the highest.
Speaker 2 (26:47):
But is it really no, it really wasn't. Well, there's
a lot a lot of no. Sorry, Brent.
Speaker 1 (26:54):
This this comes down to very similar things that we
deal with. And what I'm talking about here is dealing
with emotion and patience, and those two words are things
that certain people don't want to hear. And that's why
that's really where at the end of the day, a
good advisor, you know, more.
Speaker 2 (27:10):
Than pays for themselves.
Speaker 1 (27:11):
I don't care whether it's on the investment side of
things or the real estate side of things. You really
do need to have a seasoned pro that can that
can help balance out the emotion and inject a little
patience into the situation.
Speaker 2 (27:23):
Situation, right, Michelle.
Speaker 1 (27:25):
Absolutely, all right, Well, hey, great stuff as always, Michelle,
thanks for making time for us tonight, and thanks also
for being the only adult in the room tonight.
Speaker 2 (27:36):
You need some chocolate now, all right, bring it. I'll
eat whatever you got.
Speaker 1 (27:41):
You're listening Simply Money presented by all Worth Financial on fifty.
Speaker 2 (27:46):
Five KRC, the talk station.
Speaker 1 (27:53):
You're listening to Simply Money presented by all Worth Financial
on Bob Spondsller along with Brian James.
Speaker 2 (27:58):
You have a financial question you like for us to answer.
Speaker 1 (28:01):
There's a red button sitting right there while you're listening
to the show on the iHeart app. Just click that
red button, record your question and it'll come straight to us.
Speaking of questions, Dan and Madeira has one. Let's kick
it off with Dan.
Speaker 2 (28:16):
I've done well saving and investing, but I feel stuck
at this level. How do I move from one million
to five million in network?
Speaker 1 (28:26):
Well, Dan, there's the answers that come to mine are two.
There's really kind of only two things you could control
save more money, save and invest more. And along with that,
examine your investment strategy and see if you've got some
dormant money that might be sitting in cash or low
growth type investments. Get it into something more diversified that
(28:49):
has the opportunity to grow and compound more over time.
Those are the two things that you can control is
how much risk you're taking and growth potential you've got
with your portfolio, and then how how much you're saving
and investing into your portfolio. And a good advisor could
sit down and help you go through some of that.
Speaker 3 (29:07):
Bob.
Speaker 4 (29:07):
I'd have another quick question for Dan, which is when
you hit five million, is it going to be how
do I get to ten million? Then how do I
get to fifteen? Where does it all end? And what
are you really trying to accomplish? I would start there,
not a bad instinct, but at the same time, start
at the end. What do you want at the end
of all this?
Speaker 2 (29:21):
All right, let's hear from John and fort Wright. What's
your take on direct indexing versus traditional ets? Yeah?
Speaker 3 (29:29):
John, great question.
Speaker 4 (29:29):
So the direct indexing is something that's becoming more and
more popular. Most people know what an index is, right,
It's a big pile of stocks that we all kind
of look at and go yep, that's the stock market.
The most common one that we hear of is the
s and P five hundred, which is nothing more than
the five hundred largest companies in the United States, whether
they're good or bad.
Speaker 3 (29:46):
It's two different things.
Speaker 4 (29:48):
The other one is the dal Jones, which is thirty
stocks that somebody liked one hundred years ago. But in
any case, direct indexing, well, a lot of people own
mutual funds that replicate these indexes. Right, there's plenty of
S and P five hundred in you've got one in
your four oh and K four to H three B,
so on and so forth. Direct indexing takes it to
another level where you don't own one thing that owns
the five hundred stocks in the S and P five hundred.
(30:10):
You own literally all five hundred stocks. There are ways now,
with technology and the efficiencies that it brings, to set
somebody up with a portfolio that literally has those five
hundred different stocks.
Speaker 3 (30:20):
And you might go, oh, my gosh, how fat is
that statement?
Speaker 4 (30:22):
And you're right, it's a fat statement because you literally
have all the activity, all the dividends, are all the
ups and downs of these individual stocks.
Speaker 3 (30:28):
So why does anybody bother doing this?
Speaker 4 (30:30):
The main goal there is tax loss harvesting. If I
own an index mutual fund and one of the stocks
in the S and P five hundred has a bad year,
as many of them do.
Speaker 3 (30:40):
That's how the market works. Good years, bad years.
Speaker 4 (30:42):
Then I cannot take If it's inside the fund, I
cannot take that loss.
Speaker 3 (30:46):
I can't incur it and deduct it.
Speaker 4 (30:48):
However, if I own five hundred individual stocks and one
of them trips over itself, well, I can take a loss,
and I can use that loss if I go ahead
and sell that individual stock, I can offset it against
any gains I might have. And if I have more
losses than gains, I can deduct up to three thousand
dollars right off my income. So I like direct indexing
for that point. But that said, if you have nothing
(31:08):
but IRA's and four one case, direct indexing will not
help you. There's no such thing as tax loss harvesting
in those types of accounts. Let's move on to Bart
and Milford. Who's got a question about taxes.
Speaker 1 (31:16):
Go ahead, Bart, how do I know if I'm paying
too much in taxes for my investments?
Speaker 2 (31:22):
Well, pretty loaded question, Bart.
Speaker 1 (31:24):
It depends on you know a multitude of things that
we don't know just from that question.
Speaker 2 (31:29):
One, where are you taking your income from?
Speaker 1 (31:31):
If you are taking an income stream from your portfolio,
we need to look at that.
Speaker 2 (31:35):
You know, are you taking it.
Speaker 1 (31:36):
From iras non iras roth IRA accounts and Newiti's pensions.
Where are you taking your income from? Another thing might
look at the composition of your investment portfolio, kind of
the to Brian's point on the last question. If you're
sitting there with a bunch of mutual funds that you've
owned for years in a taxable account, those are paying,
(32:00):
you know, distributions on capital gains every year in the
fourth quarter of the year, whether you take anything.
Speaker 2 (32:05):
Out or not. That's just the way mutual funds work.
Speaker 1 (32:08):
So there might be an opportunity to make your portfolio
more efficient through those two things. Looking at how how
you are taking your income stream from your portfolio and
then looking at what's the composition of your current portfolio,
and that that ignores the whole topic of roth conversions
and other things which can help potentially save you some
(32:30):
taxes down the road.
Speaker 2 (32:32):
Let's hear from Laura in Newport.
Speaker 1 (32:34):
If I already have a diversified portfolio, how often should
I read balance and who should be doing it?
Speaker 2 (32:41):
Yeah, Laura, so this is this question.
Speaker 4 (32:43):
Let's start with the second question, who should be doing
it well. If you've got a fiduciary based financial advisor
who's doing done a financial plan and all those things
for you that you should be looking to them, you're
already paying them money, so any any questions that come up,
you should be routing through them anyway to get to
get the best bang for your buck. Now, as far
as how often, I'd say it depends on the type
(33:03):
of portfolio that you own. But most people have piles
of mutual funds or exchange traded funds where there isn't
really a whole lot of risk in any single company.
That's how most people have investments. That's not everybody, but
I would say once a year it's worth looking at.
And the reason I say that is because most people
just tend to let it roll and kind of forget
about it. And what will happen is whatever's doing well
(33:24):
will be the kind of place to be for a
few years and things will get out of whack. So,
for example, if you've let your portfolio go as many
have for ten to fifteen years, there's a good bet
that you have way too much on the large cap side,
and probably a heck of a lot too much on
the technology side. These aren't bad things, but this is
why you want to kind of harvest some of the
gains and spread it out across things.
Speaker 3 (33:43):
If you have a four to oh one.
Speaker 4 (33:44):
K and that's your primary asset, and you are putting
money into it every week, every two weeks, or however
often you get paid, that will tend to stay somewhat
in balance. So don't be surprised if you don't see
because of the money flowing into it regularly, that will
keep it somewhat balanced. Let's move on for one more
quick one from Maria High.
Speaker 1 (34:00):
My adult son has a decent job and some savings,
but he's scared to invest because of market volatility. How
do I help him without.
Speaker 2 (34:07):
Just doing it for him?
Speaker 1 (34:09):
Well, Maria, the first war that comes to mind is education,
and oftentimes people just need to get a little historical
perspective on all the landmines that have been out there historically,
you know, throughout the history of the markets, going back
to the nineteen twenty six for example, there's always a
reason to be concerned about investing. I think maybe your
(34:29):
son has a little bit of recency bias. Let's face it,
he lived through COVID, perhaps the housing crisis. There's been
some you know, a lot of volatility here in recent years.
But I think sitting down and just walking him through,
in spite of short term volatility, what the long term
benefits of staying invested in the stock market had been.
(34:50):
Oftentimes that helps people get a little bit more of
a comfort level with putting some of their money away
or most of their money away for the long term.
Speaker 2 (34:59):
All right, coming up up next Brian's bottom line.
Speaker 1 (35:02):
He's going to spend a little time on a very
important topic, long term care. You're listening to Simply Money
presented by all Worth Financial on fifty five KRC the
talk station.
Speaker 2 (35:15):
Let's get this thing moment.
Speaker 1 (35:17):
You're listening to Simply Money presented by all Worth Financial
on Bob's Fun Seller along with Brian James.
Speaker 2 (35:22):
And it's time for Brian's bottom line.
Speaker 1 (35:25):
And today Brian's going to give us his bottom line
on long term care.
Speaker 2 (35:30):
Uh, Brian, Uh, laying on us.
Speaker 4 (35:33):
So this comes from Bob, This comes from a meeting
I had yesterday. This question comes up all the time,
where we'll go through we have a financial plan in place,
and we figured out the resources and the goals and
everything looks okay, and then the question comes up, well,
what if we have a long term care type of
a situation. We're both sitting here at the picture of health.
You know, let this happens to a lot of people.
How do we know what we can afford? And obviously
you know that the most people are coming thinking i'd
(35:54):
probably have to have long term care insurance, and yeah,
that can be an answer, that can be a solution,
but we never start there. And the reason is, I'll
be honest, I'm not super trusting of the insurance industry,
especially the long term care space. It's a good resource
to have if you've got if you've got.
Speaker 3 (36:09):
Plenty of resources to be protected, but it's also can
be really expensive if you don't.
Speaker 4 (36:13):
So you know, if you're somebody who wants your maybe
you're married couple, you're probably looking at twelve to fifteen
thousand dollars per year to get a really solid policy
that will pretty much cover everything and have inflation built
into it. But the inflation, of course, is also attached
to those premiums. So I don't think there are any
companies anymore. I remember twenty twenty five years ago when
some of them would tout the fact that they had
(36:34):
never raised their premiums.
Speaker 3 (36:35):
Well, that's not a thing anymore.
Speaker 4 (36:36):
They all do it, and they do it regularly, and
it's understandable that the risk is that it's an expensive concern.
Speaker 2 (36:42):
You know.
Speaker 4 (36:42):
We always tell people you need to plan on maybe
three hundred and fifty thousand dollars for healthcare beyond your
normal out of pocket expenses for doctors and office visits
and all that kind of thing.
Speaker 3 (36:53):
But that doesn't mean you have to rush out and
get insurance.
Speaker 4 (36:56):
First of all, if you have a financial plan, you
can take a shot at what your cash flow is
or what your assets are going to look like at
that time, you may very well be able to self insure.
Because of the way compounding works and the way money
grows over time. If you have an idea what your
cash flow is, and you're honest with yourself about you're spending,
you'll have a clear idea of what will be left
at the end of it. And Bob, the other thing
I'll throw out there is people kind of forget that,
(37:17):
you know, when we say it's going to cost about
one hundred and fifteen thousand dollars per year for a
nice home in this area those days. We're talking end
of life, so about two and a half years, So
I need three hundred and fifty thousand dollars to do this.
Speaker 2 (37:27):
That is correct.
Speaker 4 (37:28):
That's the estimate that we use all the time. However,
it's not on top of all of your other expenses.
You're not going to the grocery store anymore. You might
have sold the house, you're not vacationing anymore, there's no
more mortgage. So yes, is it more than you're spending
at that time before you going home? Probably a little bit,
but it's not an entire sum layered on top of
your current expenses, right, You're already getting some of this,
(37:49):
and remember your social Security, your pensions will still be
coming in to cover it. It's a chunk, don't get
me wrong, but it's not as terrifying as it may
seem when you first look at it.
Speaker 2 (37:58):
Yeah, good stuff.
Speaker 1 (37:59):
The only thing thing I'll add there is I, oftentimes, Brian,
I like to look at a client's existing life insurance,
especially some permanent life insurance, because correct me if I'm wrong.
Last time I checked, we all have one hundred percent
chance of dying and collecting that death benefit only about
a fifty percent chance of needing long term care. So
sometimes that life insurance that you've owned for years that
(38:20):
can backfill at the end any money that you drew
down to pay for long term care costs during the
end of life.
Speaker 2 (38:27):
Thanks for listening.
Speaker 1 (38:28):
You've been listening to Simply Money, presented by all Worth
Financial on fifty five KRC, the talk station
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