October 3, 2025 • 41 mins
On this episode of Simply Money presented by Allworth Financial, Bob and Brian tear into the latest batch of financial fear-mongering—those breathless headlines about shutdowns, gold spikes, Bitcoin surges, and the so-called "Wall Street fear index." They explain why these narratives often lack critical context and what really moves markets long term. Plus, they tackle open enrollment with smart, high-net-worth strategies for your healthcare, insurance, and retirement benefits. Thinking of selling a stock? Bob and Brian cover when to pull the trigger—and when not to. And a surprising look at how many parents are still financially supporting adult children, potentially at the cost of their own retirement goals.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
You today, do you I do got to put up
these Halloween decorations?
Speaker 2 (00:04):
Will it's time to do it? Dude? The rest I
do need to know. On fifty five KRC the talk station.
Speaker 3 (00:17):
Tonight, we rip apart some of the headlines, share smart
moves for open enrollment and talk about when it's time
to sell a stock. You're listening to Simply Money presented
by all Worth Financial on Bob Sponseller along with Brian James.
When we went into government shutdown mode. It's just almost comical, Brian.
The headlines that came pouring out over the last couple
(00:40):
of days. Here's what we found on one well known
financial website, all jammed together right on the home page.
Quote Treasury yield slide. Stock markets hold lower after the
ADP report, Dollar falls as markets digest political deadlock. Gold
hits another record as uncertainty builds. Bitcoin rises as investors
(01:01):
seek a global safe haven. Wall Street's Fear index jumps,
wire investors on edge. Those are all quotes within the
last forty eight hours.
Speaker 2 (01:11):
Brian.
Speaker 3 (01:12):
Meanwhile, the market moves higher. We closed it near record
highs yesterday. This stuff is just borderline garbage, and I'll
just say it it's irresponsible journalism, if you even want to.
Speaker 2 (01:23):
Call it that.
Speaker 3 (01:24):
It lacks any context of the bigger picture whatsoever. And
I guess that's why you and I are here, Brian.
I know you are an astute student of history. So
remind us again what typically happens during these market shutdowns.
Speaker 2 (01:41):
Hold on, I got a google a stute real quick.
I appreciate that.
Speaker 4 (01:44):
I'm going I'll pass that on to mom and they'll
hang it on the fridge and on the way home.
So dogs and cats living together mass hysteria.
Speaker 2 (01:50):
That's my favorite line to use from Ghostbusters.
Speaker 4 (01:52):
Whenever this kind of stuff happens, we have a tendency
as a society to take one little story and blow
it into a big thing because we like big things.
Speaker 2 (01:58):
We don't like calm rap thought.
Speaker 4 (02:01):
So the big thing right now is our of course,
our government shut down. So let's just go back through
some history here. Why is this important? Why is it
not important? The US government has experienced twenty funding gaps
leading to shutdowns since the current budget process was established
in nineteen seventy six. Remember the whole process of this
is we have to vote on a budget. There are
about twelve votes a year where we decide how we're
(02:21):
going to pay the bills, and every now and then
somebody gets into a snit and doesn't want to vote
on things and doesn't want to let the country move forward,
and this happened. So shutdowns don't last that long, though
the longest was in twenty eighteen into nineteen. It lasted
about thirty four days, a little over a month. Twelve
of them have lasted five days or less, which is
pretty normal. By the way, we do want to acknowledge
(02:41):
it that I'm making a little bit lighter this, but
there are people out there listening to this who just
got furloughed, so be sensitive to those situations. That's horrible
that those are the ones who get hurt the worst.
The rest of us are inconvenience for a little while.
But we definitely want to recognize how hard it can
be to lose a job like that, especially when a
lot of it is politically driven to Yeah, for.
Speaker 2 (03:00):
Sure, and we did mention that yesterday.
Speaker 3 (03:02):
I mean, yeah, for people who don't get a paycheck
for the next week or two or what have you.
I mean, historically they end up getting that pay back.
But let's face it, at the time when You're counting
on a paycheck to buy groceries, you know, this week,
and it doesn't show up. That's extremely troubling. And that's
why I hope we get some some adults in the
room here on both sides of the aisle and get
(03:24):
something you know, satisfied here in the short term. Speaking
of the real impact on the economy, Goldman Sachs came
out with an estimate that a shutdown can reduce GDP
growth by approximately point two percentage points for each week
it lasts. However, much of that is typically regained later,
(03:44):
so you know, again it over the over the long term,
this stuff is generally meaningless. I will say that, you know,
small business loans do get I heard some people talking
this morning on various news you know, interviews from government officials.
Small business loans get on placed on hold during these
shutdowns too, So that can impact some of our friends
(04:08):
in agricultural states that rely on these loans and other
small businesses. So you know, if this thing continues to
go on, there will be pressure mounting from all corners
of the country here to say, hey, let's get in
a room and get this done and keep moving the
country forward. Talk about the longer term impact of the
(04:28):
stock market.
Speaker 2 (04:29):
Brian.
Speaker 4 (04:30):
Yeah, So the average S and P five hundred return
during government shutdowns since nineteen seventy six, same period we've
been talking about, it's about zero percent. Sometimes we lose
a bit, a little bit, sometimes we gain a little bit,
but overall, generally nothing happens to the market. So market
movements during these these times are usually inconsistent, not tied
to the shut down themselves, And I think this is
because there is enough history to say that we know
(04:51):
these things get resolved. Absolutely, no one benefits by the
US federal government simply going away and not moving money
around in a circle. That doesn't help anybody. Therefore, it
won't last. As we we're sitting here right now, S
and P five hundred up about fifteen percent for the
year and is basically at an all time high. But interestingly,
emerging markets and in other international markets are doing even better.
You're merging up about almost thirty percent, international markets up
(05:13):
about twenty five percent. So that's a reflection by the
rest of the world that hey, maybe there's other countries
out there that are a little bit less volatile, and
we should be paying attention as well. Hopefully you've got
that all as part of your portfolio. If you don't,
you better look at it again.
Speaker 3 (05:28):
Yeah, and just one other reminder, what really moves markets,
you know, consistently, over time, forever and ever, is corporate earnings.
And we just flip the calendar in to the fourth quarter,
which means third quarter earning season is going to start
here in a week or so. That's where we get
the report cards of how companies are actually doing, and
that's what could move the market. So, as we talk
(05:49):
about all the time, make sure you're rebalancing, make sure
you're having your short term capital where it needs to be,
your emergency fund fully funded. Don't just assume that these
markets are gonna fly, you know, to the heavens forever,
because corrections, you know, do happen even in strong.
Speaker 2 (06:06):
Economies and strong markets.
Speaker 3 (06:08):
You're listening to Simply Money presented by all Worth Financial
on Bob Spuntseller along with Brian James. All Right, some
other news we're following. The SEC's Investor Advisory Committee held
a session on retail investor access to.
Speaker 2 (06:22):
Private equity markets.
Speaker 3 (06:24):
Brian, We've been talking about this for several weeks, if
not several months, it's interesting to me that the SEC
is finally starting to dive into this and look at
the impact on retail investors on giving them access to
some of these private equity private credit investments and walk
us through it. But I find it interesting and I
(06:45):
guess good that the things the SEC is actually calling
out here are things you and I have been calling
out on the show here for weeks, if not months,
So I think that's at least a good thing.
Speaker 2 (06:56):
Walk us through it.
Speaker 4 (06:56):
Yeah, most of this year, I think we've been talking
about on the on these very airwaves. So traditionally, private
markets and the word private is key here, So private equity,
private credit, venture capital have been pretty much the domain
of institutions and the ultra wealthy investors out there. Regular
folks have mostly been excluded, and that's kind of for
good reason. This isn't This stuff isn't simple, and it
(07:18):
usually requires a good amount of assets to put into it,
and there are a lot of moving parts. As you
might expect, these are opaque, illiquid, and hard to value
types of investments. However, the market for this has grown
enormously as capital has been seeking different ways other than
the public markets and all the trials and tribulations that
go along with it to fund their business operations. So
the question now is whether the restrictions that have been
(07:39):
in place for decades that made it kind of more
the territory for the wealthier people. Are those restrictions still
still reasonable or do we need to change something. So
that's why the whole purpose for this meeting, the IAC
put forward a report that had some ideas and guardrails
for how to responsibly expand access. So this isn't letter
of the law, this is just more of a think
tank type of a thing. The first things that they
(08:01):
put together this twenty eight page report. One of the
first things on it was they basically acknowledged that there
are reasons to do this. There is a shrinking number
of public companies and more and more multi billion dollar unicorn.
Speaker 2 (08:11):
Businesses so think Google, Facebook, and so forth.
Speaker 4 (08:14):
Also noted that fund manager's eagerness for this type of
retail money also coincides with a waning appetite among the
institutional investors. So the big money is losing interest, they're
wanting to pull in the small money.
Speaker 3 (08:25):
That's a Brian a little red flag. Maybe Brian I
talked about this. I think four months ago. I mean,
let's face it, this is how business works. You and
I have been in this industry now for decades upon decades.
These money managers, like everyone else, when they're trying to
build their business, what are they gonna do. They're gonna
look go look for where the money is.
Speaker 2 (08:44):
Yep.
Speaker 3 (08:45):
And so when this appetite from institutional investors is starting
to wane, as this report said, well we got to
find a place for new business. Let's co find all
the four to one K plans and embed these funds
in there.
Speaker 2 (08:58):
Right, Yeah, that's exactly right. Now.
Speaker 4 (09:00):
What you're referring to is what we've been talking about
all year long, because that's what made it a topic
in the first place. There's twelve trillion dollars with a
tee inside four O and k's and similar retirement plans.
The markets or the organizations and companies who who support
private equity and provide these business opportunities obviously would love
to tap into that.
Speaker 3 (09:19):
Yeah, let's look at some good things, at least I
think are positive things in this report. The report suggests
that small investors need to be told how the non
traded assets and private funds are valued. Since those values
can be hard to pin down, and yet they drive performance.
Speaker 2 (09:35):
Fees for the managers.
Speaker 4 (09:37):
So they're so funny to me because I got to
think that these wealthier and institutional investors are well aware
of these things are valued. So why do we need
to call this out for small investors? But please carry on?
Speaker 3 (09:47):
Another thing they put in the report that I think
is a good thing. They said retail investors should be
allowed more liquidity. Today, a lot of these funds you
can only redeem shares, you know, every quarter, sometimes every
a year, and so they want more liquidity if we're
going to dive into retirement plans and things like that.
Speaker 2 (10:05):
I think that's good.
Speaker 3 (10:07):
And yeah, so the the other thing, you know, right now,
a lot of these private equity private credit funds are
limited to what are called accredited investors, those with one
million dollars of net worth not counting their home and
with household incomes of you know, above two to three
hundred thousand dollars. Obviously, if we're going to get widespread
(10:30):
adoption of these private equity private credit things in retirement plans,
you're gonna have to relax those requirements. So these are
all things that they're looking at right now, and I
know you've got a couple others.
Speaker 2 (10:40):
To go over.
Speaker 4 (10:41):
Yeah, I want to go back to the point real
quick about the liquidity. So yes, any type of private equity,
private credit is not a bank account. We always talk
about to our clients about how most of the investments
we're going to talk to you about are not bank accounts.
They're going to go out, they're going to go down.
We can't treat it like an ATM. Anything with the
word private in it is even more so those dollars
are tied up. The high up of liquidity is not
necessarily itself a bad thing because think about what you're
(11:03):
asking to do. A lot of these businesses are smaller organizations.
They're looking to grow something from the ground up. That
might mean it's two, three, four, five, even longer years
before they've got liquid cash they could distribute if they
wanted to. So simply demanding I need a couple thousand
dollars because we want to go to the beach on vacation,
that's not what these types of investments are for.
Speaker 2 (11:22):
These are really really long term holds.
Speaker 4 (11:24):
They can benefit an overall portfolio, but they are one component,
not the only, not the only game in the box.
Speaker 3 (11:31):
And that's why historically, you know, wealthier investors that have,
you know, put money in these type of things understand
how it works because a lot of them are working
with fiduciary advisors where it's like, hey, if you're whatever slice,
you're gonna put in private equity that needs to be
longer term capital. To your point, Brian, that's not the
money we're going to use to buy a new car.
Speaker 2 (11:50):
Next year or go on vacation.
Speaker 3 (11:52):
So it's just interesting to watch all of this adapt
It looks like the SEC, at least for now, is
looking at the right kind of topics. We'll see, we'll
see how this all shakes up. Here's the all Worth advice.
While the SEC does appear to be making progress in
this area, we employ you to work with a fiduciary
(12:12):
financial advisor when it comes to evaluating whether these private
assets belong in your portfolio. Coming up next, an eye
opening look at just how many parents with great nest
eggs are supporting their adult children. And we aren't just
talking about cell phone bills. You're listening to simply money
presented by all Worth Financial on fifty five KRC, the
(12:34):
talk station to day's.
Speaker 5 (12:35):
News the Schumer shutdown to give taxpayer funded benefits.
Speaker 1 (12:38):
To illegal That is true.
Speaker 3 (12:39):
They want to give healthcare benefits to illegal aliens.
Speaker 2 (12:41):
Checky in each out.
Speaker 3 (12:42):
That's why Chuck Schumer shut the government down.
Speaker 1 (12:44):
The Path of Dysfunction fifty five KRC the talkstation.
Speaker 5 (12:49):
All Worth Financial a registered investment advisory firm. Any ideas
presented during this program are not intended to provide specific
financial advice. You should consult your own financial advisor, taxsultant,
or a state planning attorney to conduct your own due diligence.
Speaker 2 (13:08):
You're listening to simply money? Is that a buy?
Speaker 3 (13:09):
All Worth Financial? On bob'sponseller along with Brian James, what
do you do if you've built a solid portfolio but
feel like it's just sitting there? Plus how to handle
a big pile of cash and the smartest way to
give to charity. We'll answer all those questions and more
straight ahead at six forty three. If you ask a
lot of parents whether they'd ever stop supporting their kids,
(13:33):
almost all of them will say never, never, ever, ever.
Speaker 2 (13:36):
But here's the problem.
Speaker 3 (13:37):
This support and the numbers around that are really starting
to add up fast.
Speaker 4 (13:43):
Brian The new study from Amerprise Financial surveyed five hundred
and fifty four parents, and these are people with an
average of about seven hundred and fifty thousand dollars of
a vestable assets, So people in a comfortable situation. About
three quarters of them say they're footing the bill for
their adult underline bold face adult children's big ticket items.
So we're talking about down payments on homes graduate degrees.
(14:03):
About two thirds of these are covering ongoing costs like
phone bills and other living costs, and about ninety eight percent,
you know what, let's round that up to one hundred
percent are willing to let adult children live with them
after they turn twenty one. So some of these is
just reality. These are just numbers behind some of the
antecdotal stories we already know. Right, this is just the
situation for young people getting started. It's tough out there,
but about sixty five percent of parents believe they haven't
(14:24):
they have enough money for themselves to live comfortably in retirement.
About a third of them a little more worry that
supporting those adult children are going to hamper their plans.
And you and I can both attest to the number
of times we've had conversations with clients about how exactly
how much they.
Speaker 3 (14:37):
Can afford to to continue supporting their kids at this level.
It happens quite often. I mean that those are alarming numbers,
at least to me. You know, two thirds of parents
believe they're going to have enough money to live comfortably
in retirement. But then when thirty six percent of them
are a little over a third worry that the support
for adult children could throw that.
Speaker 2 (14:55):
Whole plan out a whack.
Speaker 3 (14:57):
That's not a high probability of s success in my mind.
In other words, we got to find a way to
responsibly and lovingly get these kids off the payroll. Let's
talk about why these adult children are going to the
bank of mom and dad. Young people. Let's face it,
they're achieving major life milestones such as full time work, marriage, homeownership,
(15:22):
and parenthood all later in life. For example, in twenty
twenty one, about forty percent of twenty one year old
we're working full time. That compares with sixty four percent
back in nineteen eighty according to Pew Research. So, you know,
I think more and more people have gone to college.
You know, culturally, we just got you know, pumpled into
(15:43):
our brain that if you don't go.
Speaker 2 (15:45):
To college, you're a failure.
Speaker 3 (15:46):
So guess what, We send everybody to college, even if
it meant borrowing the money and getting degrees that don't
necessarily lead to a career that pays the bills. So,
you know, I blame the overall culture for some of this,
and it's just moving these quote unquote adult children later
in life until they're actually going out earning a living
(16:08):
and taking on the responsibility of paying their own bills.
Speaker 2 (16:12):
Yeah, and then another factor of this is the wealth
of older Americans.
Speaker 4 (16:16):
That also explains some of this trend because today's baby boomers,
that's that's the richest generation we've ever seen in the
in the universe. So they've got more resources to dedicate
to their children. So put differently, prior generations may have
loved to do this, the resources simply weren't there to
do it with. But because of the abundance of wealth
that exists in the world today, it is now an
option to support your kids a lot longer than you
(16:37):
have to or than.
Speaker 2 (16:38):
You could before.
Speaker 4 (16:38):
So a lot of people are choosing to give their
kids a leg up, and that that means you know,
sometimes co signing for a credit card or a mortgage.
By the way, these are terrible ideas because you're gonna
wind up stuff with the debt. And if if that,
if that adult child can't pay the bills on their own,
then maybe that's the reason that they can't get that
mortgage in the first place. So be really really thoughtful
about about just assume you're gonna have to pay that bill,
if you're gonna take that step.
Speaker 3 (17:00):
You're listening to Simply Money presented by all Worth Financial
on Bob Sponseller along with Brian James. All Right, Brian,
we kind of defined the potential problem here. What are
the things that we need to be doing, you know,
both as parents and as advisors and clients and people
out there to kind of tackle this potential problem head
on before it really derails our long term financial diviability.
Speaker 4 (17:23):
Well, and this it far be it for us to
say that, no, you shouldn't support your children, end all,
be all, because of this spreadsheet we're looking at here.
So a lot of times it's just a fact of
life and people are gonna prioritize and that's completely understandable.
If you're gonna do that, don't ignore it. Make it
a budget item just like everything else. Treat it like
travel though, something you can afford, but it's not open ended,
and it's gonna be one of the first things that
(17:43):
has to get cut. If you yourselves need to figure
out how to kind of tighten the purse rings a
little bit. You also might be clear upfront put a
time living on it. Hey, well, we're gonna help you
out for a couple of years, but you really need
to have a target getto of mine to be stable
in the next two or three years.
Speaker 2 (17:57):
We cannot do this forever, so don't fall in love
with it.
Speaker 4 (18:00):
You can also tie this to milestone, so maybe maybe
that there's graduation, they land a new job, or just
helping them get to a certain target of savings so
that you can kind of say, all right, it's time
to let.
Speaker 2 (18:09):
Go of the vine and move on to your own world.
What ideas do you have, Bob.
Speaker 3 (18:15):
Well, I just think it comes down to communication and Brian, look,
you know my wife and I have three adult children,
you know, between ages twenty four and thirty, so we're
living this right now. Two of them got married in
the last couple of years. One of them just had
their first child. The youngest child is engaged in getting
married next year. So we're watching all this unfold, buying
(18:38):
the first house, having baby, you know, buying cars, all that,
And I think, I just come back to what I
always say on this show all the time.
Speaker 2 (18:47):
I firmly believe this.
Speaker 3 (18:49):
Human beings, all human beings respond to incentives. So you
got to incentivize people, even if it's hard sometimes, and
even if it's our own kids, you have to incentivize
them positively and negatively toward long term healthy behavior that
is going to be in their best interest for the
(19:09):
long term, to say nothing of mom and Dad's best
interest from a financial viability standpoint. So you got to
sit down and have some of those difficult conversations, and
then also a company that with some good wisdom and help,
you know, teach, you know, teach people how to do
this rather than just hand edicts down or write checks,
(19:31):
get to sit down and do some of the heavy
lifting with them and equip them to move into self sufficiency.
Speaker 4 (19:37):
Yeah, and I think one good way to do this
you can treat it as a loan, right, So just
tell them I'm going to help you out with this,
but I want to be paid back at a reasonable
interest rate now. But then what you can do is,
once they settle into the that loan is working out
from a cash flow standpoint, give.
Speaker 2 (19:51):
Them the money back.
Speaker 4 (19:51):
Don't tell them you're going to do that in advance,
but that'll be a nice surprise for them when they
have got themselves into a discipline where they can pay
all their bills, including what they owe you.
Speaker 2 (20:00):
Here's the all Worth advice.
Speaker 3 (20:02):
Even if you've built a great nest egg support for
adult children needs guard rails, love your kids, but try
not to sacrifice your own financial independence just to fund theirs.
Speaker 2 (20:13):
All Right, open enrollment is upon us.
Speaker 3 (20:15):
We'll walk through the benefits that could make the biggest
difference in your retirement plan, your investment strategy, and even
your legacy. You're listening to Simply Money, presented by all
Worth Financial on fifty five KRC, the talk station.
Speaker 1 (20:29):
I've been tuning in the election.
Speaker 2 (20:33):
Thanks for giving us Democrats our voice.
Speaker 5 (20:35):
You guys are making me think twice about sing this.
Speaker 2 (20:38):
Talk about it here.
Speaker 1 (20:39):
I feel like that I can be heard five KARC
the talk station, iHeartRadio station.
Speaker 3 (20:51):
You're listening to Simply Money, presented by all Worth Financial
on Bob Spondseller along with Brian James. All right, let's
be honest. Nobody circles the calendar waiting with baited breath
and anticipation for open enrollment. Most people, Brian, and I
know I'm in this category. I know that that dreaded
hr webinar webinar is coming where they're going to spend
(21:12):
an hour and a half walking through things that I
can figure out in about twelve minutes. But you know,
it's an important time of year because sometimes we just
gloss over open enrollment and we just checked the box
saying put me in everything I had last year. And
I've been guilty of this before. That's not the best strategy.
It really makes sense to spend some time walking through
(21:35):
this because some of these benefits that you have available
to you are significant and can make a big difference
in your overall financial plan.
Speaker 2 (21:43):
So let's take this topic seriously.
Speaker 3 (21:45):
Brian, walk us through some of these big items we
need to be paying attention to.
Speaker 2 (21:49):
That's right, Bob.
Speaker 4 (21:50):
It's October, which means it's time for Christmas decorations on
the hardware store and a review of our healthcare benefit.
So let's talk about the big one is health insurance
because Obviously, this is the one where you're gonna run
across the most. All year long, healthcare premiums are their
single largest annual workplace benefit costs out of the paychecks
of workers out there on the average.
Speaker 2 (22:09):
So you've got options here.
Speaker 4 (22:11):
A lot of times people don't understand the differences of
what all these things are. So let's start with a
high deductible health care plan. Sometimes those can look scary
and they sound you know, the word high deductible can
be a little terrifying. But they also come with the
ability to fund a health savings account.
Speaker 2 (22:26):
That's where the magic is for investors.
Speaker 4 (22:27):
If you, yeah, who would have thought that one day
we'd be looking at our health insurance plan for investments opportunities.
So the reason that's important, health savings account hsas are
triple tax advantage. The money goes in before tax if
as long as you get those invested right, don't sit
on those dollars. A lot of times if you just
open it up with whoever your employer has set up
(22:47):
for you, that's just a bank account, and you're gonna
want to look for better investment options than that. Look
for something that looks like a mutual fund. You should
be able to invest in something looks like a four
to one K. You may have to move your dollars
out of that account to another financial constitution entirely, which
can be a pain, but that's very well worth it,
because now you've triggered tax free growth. It's happening inside
an HSA. You're not going to pay taxes on. It's
(23:08):
similar to an IRRA four O one K, No different
dividend distributions anything like that. And then if you want
to pull those dollars out for health care expenses, those
are going to come out tax free. But here's the
fun thing, Bob. If you simply pay your healthcare expenses
now out of your regular cash flow, out of other
resources than the AHSA, hang onto those receipts and you
(23:29):
can build them all up. Let it grow for ten, fifteen,
twenty years, and then you can cash in. Think of
those receipts as gift cards. You can cash them in
twenty years worth of health care expenses.
Speaker 2 (23:37):
If you have those.
Speaker 4 (23:38):
Receipts and pull the money out tax free, then too,
you do not have to do it in the same
year you incurred the expense.
Speaker 3 (23:43):
That doesn't sound like very much fun. Brian, I wanted
to take three cruises next year, not two, and if
I give up one of those cruises, I can't not
spend my HSA account.
Speaker 4 (23:53):
W do I want to introduce you to a fiduciary
financial planner who can help you get your head out
of your rear end and make responsible financial decision.
Speaker 2 (24:00):
I need. I need one of those. I might need
three of those.
Speaker 3 (24:02):
All right, let's talk about life insurance options through work.
Employer provided life insurance is often very cheap, but it's limited,
usually only one or two time salary. Sometimes the company
covers the first you know, the first time your salary,
so it's great, but a lot of people need more
coverage than just one or two times they're pay and
(24:23):
so you know, the thing to remember here is if
you just default and go buy a bunch of supplemental
term insurance through the company, you're paying standard underwriting rates
and for people that are healthy, are not overweight, don't
have a bunch of diseases, and could qualify from an
underwriting standpoint, for cheaper coverage. On the outside, it behooves
(24:45):
you to take the time, make the small effort involved
to sit down and determine how much life insurance you need,
and oftentimes you can go out and get that on
the outside, getting preferred or super preferred underwriting rates and
pay less than you do through the company.
Speaker 4 (25:00):
And establish it and get to sit on it for
the rest of your life, regardless of you of your employment,
if you if you've stepped outside and done your own
term policy. So let's talk about another thing that comes
up this time. A lot of people are looking at benefits.
You got to log into that website and your eyes
will be drawn to your retirement plan. So there's hidden
opportunities there. A lot of people stop at the four
oh one K match. My company matches up to six
(25:21):
percent some percentage of that. That's all I'm gonna do.
There are other options there. If you are a higher
earner and you've got the cash flow, you're gonna want
to look for things like after tax four oh one
K contribution, which could introduce the idea of a mega
backdoor WROTH. This is its own entire show to go
over here. But what I would suggest that everybody do
is go get your summary plan description from your four
(25:41):
oh one K. That's like the instruction manual for your
four o one K or your four or three B
whatever you have, and see if you are able to
make after tax contributions. The benefit here is those dollars
could ultimately wind up in a wroth situation and you
can put in in the area of seventy thousand dollars away,
including your own contributions. We've always made your employer contributions
via matches and profit sharing and these after tax contributions.
Speaker 2 (26:04):
So again, lots of moving parts there.
Speaker 4 (26:06):
But if you are a higher income earner and you
have money piling up, congratulations. First of all, don't look,
don't miss the opportunity to do a megaback door.
Speaker 2 (26:13):
Look it up and see if it works in your
four oh one K.
Speaker 3 (26:15):
All right, here's another area of employee benefits. This is
often overlooked, and I want to highlight this tonight, and
it's the area of disability insurance. Let's face it, your income,
your ability to earn a paycheck might be your most
underappreciated yet most valuable resource of all your future earning power.
(26:36):
It's your biggest asset. Even if you already have millions
of dollars put away. A disabling event could wipe out
not just your income, but it could cause you to
deplete some of those savings and investments that you've worked
so hard to build and briant this group disability, you know,
you get guaranteed, you know issue on this. Everybody can
get it, and it tends to be pretty inexpensive.
Speaker 2 (26:58):
People need to take.
Speaker 3 (26:59):
Advantage that, even if you do the group policy, which
I recommend everybody does, especially if you've got you know,
twenty thirty, twenty five, thirty thirty five years left to work,
or even fifteen or twenty. Group disability is great, but
it's not comprehensive. You might want to look at supplementing
that if you need to, if you don't have enough
(27:21):
assets built out on the outside, but at least at
a minimum, especially for younger folks that have a long
runway you know, left to work, don't overlook that disability insurance.
It could be a real game changer. All right, here's
the all Worth advice. Open enrollment is a chance to
optimize your financial plan. Don't just click repeat and move on.
(27:44):
Make sure your choices are working as hard as your
money is. Coming up next, we'll tackle your real life
money dilemmas like investing four hundred thousand dollars in cash
making tax savvy, charitable gifts, and what to do when
you inherit an ira and more. You're listening to Simply Money,
presented by all Worth Financial on fifty five KRC, the
(28:05):
Talk Station.
Speaker 1 (28:07):
It's the main event for the importance events of today.
Speaker 4 (28:11):
Every day we discover something new and important.
Speaker 2 (28:13):
It's control our capital city, direct federal control, check in
throughout today, summit.
Speaker 5 (28:18):
With putin, there will be land swaps.
Speaker 1 (28:21):
We can make a deal.
Speaker 2 (28:22):
The everyday event.
Speaker 3 (28:23):
What is happening, the most important things, events in my day.
Speaker 1 (28:26):
To day, tracking our next weather, event, events affecting my money,
events in the.
Speaker 2 (28:30):
Middle East, happen, events happening now, important at this moment.
Speaker 1 (28:34):
Fifty five KRC, the talk Station. Your opinions are welcome
to here.
Speaker 2 (28:40):
I do think he is too old to run.
Speaker 5 (28:42):
In twenty twenty.
Speaker 2 (28:43):
Four, fifty five KRC the talk Station.
Speaker 3 (28:50):
You're listening to Simply Money, presented by Allworth Financial on
Bob Sponseller along with Brian James. Do you have a
financial question you'd like for us to answer. There's a
red button you can click while you're listening to the
show right on the iHeart app. Simply record your question
and it'll come straight to us. All right, Brian Martin
and Florence says, we've built a solid portfolio. But I
(29:12):
feel like every advisor pitches annuities to us. How do
we know if one actually fits our plan or if
it's just a sales pitch. Well, there's that p word again, Bob.
We run into that pa word all the time, and
clients are using this. They know they're being pitched.
Speaker 4 (29:25):
You know products that that's that start with here, you
should buy this product and then we'll figure out how
it fits into your financial plan, if we ever get
around to talking about a financial plan. Now, I don't
mean to bash in nudies. The nuities are tools like
anything else. Like as I always say, if I have
a hammer in my hand, I can build a birdhouse or.
Speaker 2 (29:40):
I can hit myself in the head with It's just
a tool.
Speaker 4 (29:42):
Uh but uh, but every tool has the right it
has to have a purpose. So a lot of annuities
are attracted because of the guarantees that they that they provide.
They'll say, you get the growth of the stock market,
but there will be a floor. So if the stock
market comes crashing down, it'll only go so far down.
But Bob, the thing that occurs to me with these
and Martin speaking to you is your quot I guess.
But every time the market comes back to a new high,
(30:04):
those guarantees were worthless because you're paying for it. So
you might have gotten all of the participation of the
market or some percentage of it, but you paid for that.
And if it's you know, if it's an index type
of annuity, you're gonna get maybe eighty percent of the upside,
none of the downside and so forth, but you're paying
an extra layer of fees. And when the market comes
back every time, as it has done again today we're
at an all time here high again here today, those
(30:25):
guarantees just aren't worth it. You're paying the insurance company
for a guarantee that they've never ever, ever, ever had
to pay out on. So I'm not a big fan
of annuities, except in situations where maybe we've got somebody
who just isn't really responsible with money and just needs
a much more mechanical plan that has to account for
growth as well. That's a great place for an annuity.
But if you're a person who understands the ups and
downs of the market, don't start there. Look at what
(30:46):
your plan can look like, and stress test it with
the ups and downs of the market, and if you
feel like you can handle the headlines as you have
thus far, an annuity might add a bunch of guarantees.
They'ren't really even guarantees. Those move on it go ahead,
Go ahead. So we'll move on to ED and Westchester.
Ed says he's heard about qualified charitable distributions from iras
(31:07):
otherwise known in the industry as qcds, and he's wanted
to know today really make a meaningful difference if somebody's
already giving, does to help them or is it not
worth looking into.
Speaker 3 (31:16):
ED Depending on your situation, these can make an incredible,
incredibly meaningful difference. So let me just explain everything that
comes out of an IRA that goes directly to charity.
And you can only start doing this after you're age seventy.
Speaker 2 (31:29):
And a half.
Speaker 3 (31:29):
By the way, every penny that goes directly from your
IRA to your chosen charity completely avoways income taxes. You
don't get the deduction like people are used to an
itemized deduction, But you know what, not having the income
even show up on your tax return is better than
an itemized deductions. It's tax free distribution from your IRA
(31:51):
doing the charitable giving that it sounds like you want
to do anyway, So you know, sit down and look
at some numbers, you know, compare your goals with your
overall plan. But if you're a you're seventy and a
half years old, and certainly if you're in a required
minimum distribution situation, these do make a meaningful difference. And
I can tell you virtually without exception, I'm having all
(32:12):
of my clients that are in this age category start
there with their charitable giving because it does make such
a difference. All right, Eric and fort Thomas says, I
inherited an IRA from my father, and the ten year
withdrawal rule is confusing. What's the best way to minimize
the tax impact?
Speaker 4 (32:30):
Well, Eric, condolence is to your family on the death
of your father. I'm sorry to hear that that happened,
but yeah, so you're running into what a lot of
people do, which is what happens to my parents' retirement money,
those tax advantage dollars when I inherit them. So what
Eric is referring to here is a rule change that
happened that affects anyone who passed away after twenty twenty.
If you inherit an IRA or a four to one
(32:52):
K or some kind of pre tax retirement arrangement, then
you basically.
Speaker 2 (32:55):
You have to pay the taxes on it, but not
all at once.
Speaker 4 (32:57):
You have ten years to pull those out and pay
income taxes on them.
Speaker 2 (33:02):
There is a minimal amount.
Speaker 4 (33:03):
You got to take out every year, but otherwise you
do have some flexibility for the bulk of it. So
the simplest solution, eric is is to basically figure out
when or your ugly tax year is going to be
versus whin or your your more friendly tax year is
going to be. If you if you if you feel
like you're in the situation you're going to be in
and your taxes aren't going to change much over the
next decade, then the simplest answer is divide that that
dollar amount by ten, take that amount every year. That way,
(33:25):
you'll spread it out over the decade and keep yourself
in the lowest tax brackets each of those ten years.
On the other hand, maybe your you yourselves as we
often are when when our parents pass we ourselves are
in our highest earnings years. Maybe you're in a fatter
bracket then you'll then you'll see here.
Speaker 3 (33:39):
Uh.
Speaker 4 (33:40):
Then then maybe you hold off and only do those
minimal distributions. Wait until year three or four, when perhaps
you are retired, then you start hitting that account first.
Speaker 2 (33:48):
Uh.
Speaker 4 (33:48):
And you want to try to do this of course,
you know, maybe when you're you're in your most favorable
tax years, before you yourself have turned on Social Security,
before you yourself are in required minimum distribution stage. So
I would bring these accounts to the forefront. If I
need money for something, Let's look at the inherited IRA first,
because that.
Speaker 2 (34:04):
Clock is ticking.
Speaker 4 (34:06):
Seth in Montgomery has a mortgage it's almost paid off, Bob,
But they have a bunch of cash sitting in a pile,
not earning very much, and they're just wondering, how did
they make the decision of blowing up that loan completely
or should they put that money to work in other ways?
Speaker 2 (34:16):
What do you think?
Speaker 3 (34:18):
Well, Seth, I usually evaluate this, you know, from two standpoints.
One is a cash flow decision. And first of all,
congratulations on almost having that mortgage nearly paid off. I'm
sure you put a lot of work into doing that.
But you know, we got to look at what your
interest rate is on the mortgage. And if the mortgage
truly is almost nearly paid off, you've already almost all
(34:38):
your payments right now are going pretty much to principle anyway.
And then you want to look at the opportunity cost
from a cash flow standpoint. If you just don't want
to make that mortgage payment anymore, paying it off with
some of that cash could free up some cash flow
and then maybe dollar cost average that cash flow that
now has become newly discovered back into it investment portfolio.
Speaker 2 (35:01):
That's one way to go about it.
Speaker 3 (35:03):
If you've got a large bunch of cash that's earning
next to nothing and you are paying interest, you know,
whether it's three, four or five percent on the mortgage,
I say knock the thing out and then do double duty.
You're get You'll love the cash flow benefits. And from
an opportunity cash standpoint, you're paying off a higher interest
rate loan with a cash balance that's earning a lower
(35:23):
interest rate. So hope that helps. Let's move on to
Heather in Westchester. She says, we're sitting on about four
hundred thousand dollars in cash because we're nervous about the markets.
Is there a discipline way to get that money working
for us Brian without going all in at.
Speaker 4 (35:40):
Once Landing, Heather and Seth should meet somewhere between Montgomery
and Westchester for a cup of coffee because this is
the same, same opportunity. So not a lot of time
here to get into too many details. But the easy
quick answer is do exactly what you just said. Don't
invest it all at once, break it into chunks you
can invest and make up some number five maybe it's
fifty thousand dollars a month for for however many months
(36:02):
that would be. The math is throwing me anyway, Just
don't throw it all at once. You're you're trying, you're
trying to avoid a two thousand and eight type situation
or twenty twenty two. Those types of things don't happen
very often. Dollar cost averaging is a way to go.
It can help you, but it can also work against
you if the market goes up, but the pain will
be be a little bit a little bit less there.
Speaker 2 (36:19):
So that's one way to think about.
Speaker 4 (36:21):
Another way to think is put all put one hundred
percent of your four one of your paycheck into your
four O one k, spend that cash down, get some
tax advantage investing going coming.
Speaker 3 (36:29):
Out next a refresher on the reasons why and when
you should consider selling a stock. You're listening to Simply
Money presented by all Worth Financial on fifty five KRC
the talk.
Speaker 2 (36:40):
Station, Mark Levin.
Speaker 1 (36:42):
Let me tell you absolutely reliable information and of course
not just one sided views. Use that affects you at
the top end to bottom of the hour fifty five
KRZ the talk station.
Speaker 3 (36:59):
You're listening to Money present all Worth Financial on Bob
Spon Seller along with Brian James. Well, every now and
then we like to revisit a topic we talk about
often here on this show, Brian, when and why to
sell a stock. It's a common question and something that
many investors struggle with and sometimes get this completely wrong.
So let's talk about all the reasons you want to
(37:21):
consider on why you would want to sell all or
part of a stock position.
Speaker 4 (37:26):
Well, the first reason, Bobb said is to rebalance your portfolio.
Speaker 2 (37:29):
Sometimes things get out of whack.
Speaker 4 (37:30):
When the market's been on great, great runs like it
has been recently, things grow a little faster than other things,
and then all of a sudden you have you have
an imbalance in your portfolio. So that can be a
great reason to take some to carve it off a
little bit and take some of that position down. Another
one is tax loss harvesting. So if you have a
losing position, right, if there's something that maybe you bought
didn't quite work out for the reasons that you bought it,
(37:52):
and it's sitting at a lost position, don't just ignore it.
Sometimes that can be a great tax planning opportunity to
offset a gain elsewhere sell the loser, and you can
also pair back something where maybe you want to take
profits and then you can avoid some of the taxes there.
And again speaking of taking profits, well that's kind of
the point. If an investment has actually accomplished what you
wanted it to, then it might be time to go
(38:12):
ahead and spike the football and sell it. If it
is significantly appreciated and all of a sudden, now it
has more risk because it's a bigger part of your portfolio.
Speaker 2 (38:20):
That can be a great reason to back off a
little bit. Brian, this I run into this often.
Speaker 3 (38:25):
This is one of the biggest mistakes that self directed
investors make that want to think they can pick stocks,
and you know, our ego gets in the way. We
never buy something and ever assume that it's going to
lose money, so we can't sell it in a downturn.
And even if it goes down, what do a lot
of people do. They just double down and they buy
(38:46):
more of it instead of just, you know, admitting that
it was a great idea at the time, but it's
not working. Take the loss, and then carve out some
of the games. Like you said, great tax planning strategy
and great way to rebalance your portfolio and get rid
of those losers and get some winners back in play,
because company fundamentals do change no matter how you evaluated
(39:08):
this at the time that you bought the stock. And
another topic, Brian, is stock concentration risk, especially with corporate executives.
We run into this all the time that have built
their entire world and net worth on one company. It
is not sacrilegious, It is not disloyal to take a
little bit of money off the table and not have
(39:30):
the proverbial too many eggs in one basket and one more.
Speaker 2 (39:34):
We didn't mention right this movie.
Speaker 4 (39:36):
This might have been kind of loud in us not
mentioning as an emotional attachment, right. Sometimes we have inherited stock.
Grandma and grandpa gave this to me, and it's part
of their legacy for.
Speaker 2 (39:44):
Me, and I want to hang on to it forever.
Speaker 4 (39:46):
I don't know anybody's grandma and grandpa who their lifelong
dream was to for everyone to hold XYZ Bank stock indefinitely.
They wanted you to have a financial asset to benefit
you and your family. So maybe keep a token piece,
but treat it like it like what it is. It's
something to support your financial situation.
Speaker 3 (40:02):
And we need to call out one thing that you
should virtually never do, and that's just never act on
what you read in the headlines or here on CNBC
while you're walking to the kitchen. That those are emotionally
driven decisions based on one talking head's opinion. Usually that's
bad advice, if it's really meant to be advice at all.
Speaker 2 (40:22):
Thanks for listening.
Speaker 3 (40:23):
You've been listening to Simply Money, presented by all Worth
Financial on fifty five KRC, the talk station. This is
for your information.
Speaker 1 (40:31):
Everything we do we keep you informed is FYI you information.
Speaker 3 (40:36):
We'll have the latest information on the whole situation in guys,
release the sausage eliminated.
Speaker 5 (40:41):
Come on info on the Russian summit they would like
to meet with me.
Speaker 2 (40:44):
Check in throughout the day.
Speaker 1 (40:45):
We have information for your information, my news, traffic and weather,
information about my money, on tariffs and trade. This is
important information for Are you listen just Fyi'm fifty five KRC,
the talk station.
Speaker 2 (41:00):
He i am Brandt and her name
You today, do you I do got to put up
these Halloween decorations?
Speaker 2 (00:04):
Will it's time to do it? Dude? The rest I
do need to know. On fifty five KRC the talk station.
Speaker 3 (00:17):
Tonight, we rip apart some of the headlines, share smart
moves for open enrollment and talk about when it's time
to sell a stock. You're listening to Simply Money presented
by all Worth Financial on Bob Sponseller along with Brian James.
When we went into government shutdown mode. It's just almost comical, Brian.
The headlines that came pouring out over the last couple
(00:40):
of days. Here's what we found on one well known
financial website, all jammed together right on the home page.
Quote Treasury yield slide. Stock markets hold lower after the
ADP report, Dollar falls as markets digest political deadlock. Gold
hits another record as uncertainty builds. Bitcoin rises as investors
(01:01):
seek a global safe haven. Wall Street's Fear index jumps,
wire investors on edge. Those are all quotes within the
last forty eight hours.
Speaker 2 (01:11):
Brian.
Speaker 3 (01:12):
Meanwhile, the market moves higher. We closed it near record
highs yesterday. This stuff is just borderline garbage, and I'll
just say it it's irresponsible journalism, if you even want to.
Speaker 2 (01:23):
Call it that.
Speaker 3 (01:24):
It lacks any context of the bigger picture whatsoever. And
I guess that's why you and I are here, Brian.
I know you are an astute student of history. So
remind us again what typically happens during these market shutdowns.
Speaker 2 (01:41):
Hold on, I got a google a stute real quick.
I appreciate that.
Speaker 4 (01:44):
I'm going I'll pass that on to mom and they'll
hang it on the fridge and on the way home.
So dogs and cats living together mass hysteria.
Speaker 2 (01:50):
That's my favorite line to use from Ghostbusters.
Speaker 4 (01:52):
Whenever this kind of stuff happens, we have a tendency
as a society to take one little story and blow
it into a big thing because we like big things.
Speaker 2 (01:58):
We don't like calm rap thought.
Speaker 4 (02:01):
So the big thing right now is our of course,
our government shut down. So let's just go back through
some history here. Why is this important? Why is it
not important? The US government has experienced twenty funding gaps
leading to shutdowns since the current budget process was established
in nineteen seventy six. Remember the whole process of this
is we have to vote on a budget. There are
about twelve votes a year where we decide how we're
(02:21):
going to pay the bills, and every now and then
somebody gets into a snit and doesn't want to vote
on things and doesn't want to let the country move forward,
and this happened. So shutdowns don't last that long, though
the longest was in twenty eighteen into nineteen. It lasted
about thirty four days, a little over a month. Twelve
of them have lasted five days or less, which is
pretty normal. By the way, we do want to acknowledge
(02:41):
it that I'm making a little bit lighter this, but
there are people out there listening to this who just
got furloughed, so be sensitive to those situations. That's horrible
that those are the ones who get hurt the worst.
The rest of us are inconvenience for a little while.
But we definitely want to recognize how hard it can
be to lose a job like that, especially when a
lot of it is politically driven to Yeah, for.
Speaker 2 (03:00):
Sure, and we did mention that yesterday.
Speaker 3 (03:02):
I mean, yeah, for people who don't get a paycheck
for the next week or two or what have you.
I mean, historically they end up getting that pay back.
But let's face it, at the time when You're counting
on a paycheck to buy groceries, you know, this week,
and it doesn't show up. That's extremely troubling. And that's
why I hope we get some some adults in the
room here on both sides of the aisle and get
(03:24):
something you know, satisfied here in the short term. Speaking
of the real impact on the economy, Goldman Sachs came
out with an estimate that a shutdown can reduce GDP
growth by approximately point two percentage points for each week
it lasts. However, much of that is typically regained later,
(03:44):
so you know, again it over the over the long term,
this stuff is generally meaningless. I will say that, you know,
small business loans do get I heard some people talking
this morning on various news you know, interviews from government officials.
Small business loans get on placed on hold during these
shutdowns too, So that can impact some of our friends
(04:08):
in agricultural states that rely on these loans and other
small businesses. So you know, if this thing continues to
go on, there will be pressure mounting from all corners
of the country here to say, hey, let's get in
a room and get this done and keep moving the
country forward. Talk about the longer term impact of the
(04:28):
stock market.
Speaker 2 (04:29):
Brian.
Speaker 4 (04:30):
Yeah, So the average S and P five hundred return
during government shutdowns since nineteen seventy six, same period we've
been talking about, it's about zero percent. Sometimes we lose
a bit, a little bit, sometimes we gain a little bit,
but overall, generally nothing happens to the market. So market
movements during these these times are usually inconsistent, not tied
to the shut down themselves, And I think this is
because there is enough history to say that we know
(04:51):
these things get resolved. Absolutely, no one benefits by the
US federal government simply going away and not moving money
around in a circle. That doesn't help anybody. Therefore, it
won't last. As we we're sitting here right now, S
and P five hundred up about fifteen percent for the
year and is basically at an all time high. But interestingly,
emerging markets and in other international markets are doing even better.
You're merging up about almost thirty percent, international markets up
(05:13):
about twenty five percent. So that's a reflection by the
rest of the world that hey, maybe there's other countries
out there that are a little bit less volatile, and
we should be paying attention as well. Hopefully you've got
that all as part of your portfolio. If you don't,
you better look at it again.
Speaker 3 (05:28):
Yeah, and just one other reminder, what really moves markets,
you know, consistently, over time, forever and ever, is corporate earnings.
And we just flip the calendar in to the fourth quarter,
which means third quarter earning season is going to start
here in a week or so. That's where we get
the report cards of how companies are actually doing, and
that's what could move the market. So, as we talk
(05:49):
about all the time, make sure you're rebalancing, make sure
you're having your short term capital where it needs to be,
your emergency fund fully funded. Don't just assume that these
markets are gonna fly, you know, to the heavens forever,
because corrections, you know, do happen even in strong.
Speaker 2 (06:06):
Economies and strong markets.
Speaker 3 (06:08):
You're listening to Simply Money presented by all Worth Financial
on Bob Spuntseller along with Brian James. All Right, some
other news we're following. The SEC's Investor Advisory Committee held
a session on retail investor access to.
Speaker 2 (06:22):
Private equity markets.
Speaker 3 (06:24):
Brian, We've been talking about this for several weeks, if
not several months, it's interesting to me that the SEC
is finally starting to dive into this and look at
the impact on retail investors on giving them access to
some of these private equity private credit investments and walk
us through it. But I find it interesting and I
(06:45):
guess good that the things the SEC is actually calling
out here are things you and I have been calling
out on the show here for weeks, if not months,
So I think that's at least a good thing.
Speaker 2 (06:56):
Walk us through it.
Speaker 4 (06:56):
Yeah, most of this year, I think we've been talking
about on the on these very airwaves. So traditionally, private
markets and the word private is key here, So private equity,
private credit, venture capital have been pretty much the domain
of institutions and the ultra wealthy investors out there. Regular
folks have mostly been excluded, and that's kind of for
good reason. This isn't This stuff isn't simple, and it
(07:18):
usually requires a good amount of assets to put into it,
and there are a lot of moving parts. As you
might expect, these are opaque, illiquid, and hard to value
types of investments. However, the market for this has grown
enormously as capital has been seeking different ways other than
the public markets and all the trials and tribulations that
go along with it to fund their business operations. So
the question now is whether the restrictions that have been
(07:39):
in place for decades that made it kind of more
the territory for the wealthier people. Are those restrictions still
still reasonable or do we need to change something. So
that's why the whole purpose for this meeting, the IAC
put forward a report that had some ideas and guardrails
for how to responsibly expand access. So this isn't letter
of the law, this is just more of a think
tank type of a thing. The first things that they
(08:01):
put together this twenty eight page report. One of the
first things on it was they basically acknowledged that there
are reasons to do this. There is a shrinking number
of public companies and more and more multi billion dollar unicorn.
Speaker 2 (08:11):
Businesses so think Google, Facebook, and so forth.
Speaker 4 (08:14):
Also noted that fund manager's eagerness for this type of
retail money also coincides with a waning appetite among the
institutional investors. So the big money is losing interest, they're
wanting to pull in the small money.
Speaker 3 (08:25):
That's a Brian a little red flag. Maybe Brian I
talked about this. I think four months ago. I mean,
let's face it, this is how business works. You and
I have been in this industry now for decades upon decades.
These money managers, like everyone else, when they're trying to
build their business, what are they gonna do. They're gonna
look go look for where the money is.
Speaker 2 (08:44):
Yep.
Speaker 3 (08:45):
And so when this appetite from institutional investors is starting
to wane, as this report said, well we got to
find a place for new business. Let's co find all
the four to one K plans and embed these funds
in there.
Speaker 2 (08:58):
Right, Yeah, that's exactly right. Now.
Speaker 4 (09:00):
What you're referring to is what we've been talking about
all year long, because that's what made it a topic
in the first place. There's twelve trillion dollars with a
tee inside four O and k's and similar retirement plans.
The markets or the organizations and companies who who support
private equity and provide these business opportunities obviously would love
to tap into that.
Speaker 3 (09:19):
Yeah, let's look at some good things, at least I
think are positive things in this report. The report suggests
that small investors need to be told how the non
traded assets and private funds are valued. Since those values
can be hard to pin down, and yet they drive performance.
Speaker 2 (09:35):
Fees for the managers.
Speaker 4 (09:37):
So they're so funny to me because I got to
think that these wealthier and institutional investors are well aware
of these things are valued. So why do we need
to call this out for small investors? But please carry on?
Speaker 3 (09:47):
Another thing they put in the report that I think
is a good thing. They said retail investors should be
allowed more liquidity. Today, a lot of these funds you
can only redeem shares, you know, every quarter, sometimes every
a year, and so they want more liquidity if we're
going to dive into retirement plans and things like that.
Speaker 2 (10:05):
I think that's good.
Speaker 3 (10:07):
And yeah, so the the other thing, you know, right now,
a lot of these private equity private credit funds are
limited to what are called accredited investors, those with one
million dollars of net worth not counting their home and
with household incomes of you know, above two to three
hundred thousand dollars. Obviously, if we're going to get widespread
(10:30):
adoption of these private equity private credit things in retirement plans,
you're gonna have to relax those requirements. So these are
all things that they're looking at right now, and I
know you've got a couple others.
Speaker 2 (10:40):
To go over.
Speaker 4 (10:41):
Yeah, I want to go back to the point real
quick about the liquidity. So yes, any type of private equity,
private credit is not a bank account. We always talk
about to our clients about how most of the investments
we're going to talk to you about are not bank accounts.
They're going to go out, they're going to go down.
We can't treat it like an ATM. Anything with the
word private in it is even more so those dollars
are tied up. The high up of liquidity is not
necessarily itself a bad thing because think about what you're
(11:03):
asking to do. A lot of these businesses are smaller organizations.
They're looking to grow something from the ground up. That
might mean it's two, three, four, five, even longer years
before they've got liquid cash they could distribute if they
wanted to. So simply demanding I need a couple thousand
dollars because we want to go to the beach on vacation,
that's not what these types of investments are for.
Speaker 2 (11:22):
These are really really long term holds.
Speaker 4 (11:24):
They can benefit an overall portfolio, but they are one component,
not the only, not the only game in the box.
Speaker 3 (11:31):
And that's why historically, you know, wealthier investors that have,
you know, put money in these type of things understand
how it works because a lot of them are working
with fiduciary advisors where it's like, hey, if you're whatever slice,
you're gonna put in private equity that needs to be
longer term capital. To your point, Brian, that's not the
money we're going to use to buy a new car.
Speaker 2 (11:50):
Next year or go on vacation.
Speaker 3 (11:52):
So it's just interesting to watch all of this adapt
It looks like the SEC, at least for now, is
looking at the right kind of topics. We'll see, we'll
see how this all shakes up. Here's the all Worth advice.
While the SEC does appear to be making progress in
this area, we employ you to work with a fiduciary
(12:12):
financial advisor when it comes to evaluating whether these private
assets belong in your portfolio. Coming up next, an eye
opening look at just how many parents with great nest
eggs are supporting their adult children. And we aren't just
talking about cell phone bills. You're listening to simply money
presented by all Worth Financial on fifty five KRC, the
(12:34):
talk station to day's.
Speaker 5 (12:35):
News the Schumer shutdown to give taxpayer funded benefits.
Speaker 1 (12:38):
To illegal That is true.
Speaker 3 (12:39):
They want to give healthcare benefits to illegal aliens.
Speaker 2 (12:41):
Checky in each out.
Speaker 3 (12:42):
That's why Chuck Schumer shut the government down.
Speaker 1 (12:44):
The Path of Dysfunction fifty five KRC the talkstation.
Speaker 5 (12:49):
All Worth Financial a registered investment advisory firm. Any ideas
presented during this program are not intended to provide specific
financial advice. You should consult your own financial advisor, taxsultant,
or a state planning attorney to conduct your own due diligence.
Speaker 2 (13:08):
You're listening to simply money? Is that a buy?
Speaker 3 (13:09):
All Worth Financial? On bob'sponseller along with Brian James, what
do you do if you've built a solid portfolio but
feel like it's just sitting there? Plus how to handle
a big pile of cash and the smartest way to
give to charity. We'll answer all those questions and more
straight ahead at six forty three. If you ask a
lot of parents whether they'd ever stop supporting their kids,
(13:33):
almost all of them will say never, never, ever, ever.
Speaker 2 (13:36):
But here's the problem.
Speaker 3 (13:37):
This support and the numbers around that are really starting
to add up fast.
Speaker 4 (13:43):
Brian The new study from Amerprise Financial surveyed five hundred
and fifty four parents, and these are people with an
average of about seven hundred and fifty thousand dollars of
a vestable assets, So people in a comfortable situation. About
three quarters of them say they're footing the bill for
their adult underline bold face adult children's big ticket items.
So we're talking about down payments on homes graduate degrees.
(14:03):
About two thirds of these are covering ongoing costs like
phone bills and other living costs, and about ninety eight percent,
you know what, let's round that up to one hundred
percent are willing to let adult children live with them
after they turn twenty one. So some of these is
just reality. These are just numbers behind some of the
antecdotal stories we already know. Right, this is just the
situation for young people getting started. It's tough out there,
but about sixty five percent of parents believe they haven't
(14:24):
they have enough money for themselves to live comfortably in retirement.
About a third of them a little more worry that
supporting those adult children are going to hamper their plans.
And you and I can both attest to the number
of times we've had conversations with clients about how exactly
how much they.
Speaker 3 (14:37):
Can afford to to continue supporting their kids at this level.
It happens quite often. I mean that those are alarming numbers,
at least to me. You know, two thirds of parents
believe they're going to have enough money to live comfortably
in retirement. But then when thirty six percent of them
are a little over a third worry that the support
for adult children could throw that.
Speaker 2 (14:55):
Whole plan out a whack.
Speaker 3 (14:57):
That's not a high probability of s success in my mind.
In other words, we got to find a way to
responsibly and lovingly get these kids off the payroll. Let's
talk about why these adult children are going to the
bank of mom and dad. Young people. Let's face it,
they're achieving major life milestones such as full time work, marriage, homeownership,
(15:22):
and parenthood all later in life. For example, in twenty
twenty one, about forty percent of twenty one year old
we're working full time. That compares with sixty four percent
back in nineteen eighty according to Pew Research. So, you know,
I think more and more people have gone to college.
You know, culturally, we just got you know, pumpled into
(15:43):
our brain that if you don't go.
Speaker 2 (15:45):
To college, you're a failure.
Speaker 3 (15:46):
So guess what, We send everybody to college, even if
it meant borrowing the money and getting degrees that don't
necessarily lead to a career that pays the bills. So,
you know, I blame the overall culture for some of this,
and it's just moving these quote unquote adult children later
in life until they're actually going out earning a living
(16:08):
and taking on the responsibility of paying their own bills.
Speaker 2 (16:12):
Yeah, and then another factor of this is the wealth
of older Americans.
Speaker 4 (16:16):
That also explains some of this trend because today's baby boomers,
that's that's the richest generation we've ever seen in the
in the universe. So they've got more resources to dedicate
to their children. So put differently, prior generations may have
loved to do this, the resources simply weren't there to
do it with. But because of the abundance of wealth
that exists in the world today, it is now an
option to support your kids a lot longer than you
(16:37):
have to or than.
Speaker 2 (16:38):
You could before.
Speaker 4 (16:38):
So a lot of people are choosing to give their
kids a leg up, and that that means you know,
sometimes co signing for a credit card or a mortgage.
By the way, these are terrible ideas because you're gonna
wind up stuff with the debt. And if if that,
if that adult child can't pay the bills on their own,
then maybe that's the reason that they can't get that
mortgage in the first place. So be really really thoughtful
about about just assume you're gonna have to pay that bill,
if you're gonna take that step.
Speaker 3 (17:00):
You're listening to Simply Money presented by all Worth Financial
on Bob Sponseller along with Brian James. All Right, Brian,
we kind of defined the potential problem here. What are
the things that we need to be doing, you know,
both as parents and as advisors and clients and people
out there to kind of tackle this potential problem head
on before it really derails our long term financial diviability.
Speaker 4 (17:23):
Well, and this it far be it for us to
say that, no, you shouldn't support your children, end all,
be all, because of this spreadsheet we're looking at here.
So a lot of times it's just a fact of
life and people are gonna prioritize and that's completely understandable.
If you're gonna do that, don't ignore it. Make it
a budget item just like everything else. Treat it like
travel though, something you can afford, but it's not open ended,
and it's gonna be one of the first things that
(17:43):
has to get cut. If you yourselves need to figure
out how to kind of tighten the purse rings a
little bit. You also might be clear upfront put a
time living on it. Hey, well, we're gonna help you
out for a couple of years, but you really need
to have a target getto of mine to be stable
in the next two or three years.
Speaker 2 (17:57):
We cannot do this forever, so don't fall in love
with it.
Speaker 4 (18:00):
You can also tie this to milestone, so maybe maybe
that there's graduation, they land a new job, or just
helping them get to a certain target of savings so
that you can kind of say, all right, it's time
to let.
Speaker 2 (18:09):
Go of the vine and move on to your own world.
What ideas do you have, Bob.
Speaker 3 (18:15):
Well, I just think it comes down to communication and Brian, look,
you know my wife and I have three adult children,
you know, between ages twenty four and thirty, so we're
living this right now. Two of them got married in
the last couple of years. One of them just had
their first child. The youngest child is engaged in getting
married next year. So we're watching all this unfold, buying
(18:38):
the first house, having baby, you know, buying cars, all that,
And I think, I just come back to what I
always say on this show all the time.
Speaker 2 (18:47):
I firmly believe this.
Speaker 3 (18:49):
Human beings, all human beings respond to incentives. So you
got to incentivize people, even if it's hard sometimes, and
even if it's our own kids, you have to incentivize
them positively and negatively toward long term healthy behavior that
is going to be in their best interest for the
(19:09):
long term, to say nothing of mom and Dad's best
interest from a financial viability standpoint. So you got to
sit down and have some of those difficult conversations, and
then also a company that with some good wisdom and help,
you know, teach, you know, teach people how to do
this rather than just hand edicts down or write checks,
(19:31):
get to sit down and do some of the heavy
lifting with them and equip them to move into self sufficiency.
Speaker 4 (19:37):
Yeah, and I think one good way to do this
you can treat it as a loan, right, So just
tell them I'm going to help you out with this,
but I want to be paid back at a reasonable
interest rate now. But then what you can do is,
once they settle into the that loan is working out
from a cash flow standpoint, give.
Speaker 2 (19:51):
Them the money back.
Speaker 4 (19:51):
Don't tell them you're going to do that in advance,
but that'll be a nice surprise for them when they
have got themselves into a discipline where they can pay
all their bills, including what they owe you.
Speaker 2 (20:00):
Here's the all Worth advice.
Speaker 3 (20:02):
Even if you've built a great nest egg support for
adult children needs guard rails, love your kids, but try
not to sacrifice your own financial independence just to fund theirs.
Speaker 2 (20:13):
All Right, open enrollment is upon us.
Speaker 3 (20:15):
We'll walk through the benefits that could make the biggest
difference in your retirement plan, your investment strategy, and even
your legacy. You're listening to Simply Money, presented by all
Worth Financial on fifty five KRC, the talk station.
Speaker 1 (20:29):
I've been tuning in the election.
Speaker 2 (20:33):
Thanks for giving us Democrats our voice.
Speaker 5 (20:35):
You guys are making me think twice about sing this.
Speaker 2 (20:38):
Talk about it here.
Speaker 1 (20:39):
I feel like that I can be heard five KARC
the talk station, iHeartRadio station.
Speaker 3 (20:51):
You're listening to Simply Money, presented by all Worth Financial
on Bob Spondseller along with Brian James. All right, let's
be honest. Nobody circles the calendar waiting with baited breath
and anticipation for open enrollment. Most people, Brian, and I
know I'm in this category. I know that that dreaded
hr webinar webinar is coming where they're going to spend
(21:12):
an hour and a half walking through things that I
can figure out in about twelve minutes. But you know,
it's an important time of year because sometimes we just
gloss over open enrollment and we just checked the box
saying put me in everything I had last year. And
I've been guilty of this before. That's not the best strategy.
It really makes sense to spend some time walking through
(21:35):
this because some of these benefits that you have available
to you are significant and can make a big difference
in your overall financial plan.
Speaker 2 (21:43):
So let's take this topic seriously.
Speaker 3 (21:45):
Brian, walk us through some of these big items we
need to be paying attention to.
Speaker 2 (21:49):
That's right, Bob.
Speaker 4 (21:50):
It's October, which means it's time for Christmas decorations on
the hardware store and a review of our healthcare benefit.
So let's talk about the big one is health insurance
because Obviously, this is the one where you're gonna run
across the most. All year long, healthcare premiums are their
single largest annual workplace benefit costs out of the paychecks
of workers out there on the average.
Speaker 2 (22:09):
So you've got options here.
Speaker 4 (22:11):
A lot of times people don't understand the differences of
what all these things are. So let's start with a
high deductible health care plan. Sometimes those can look scary
and they sound you know, the word high deductible can
be a little terrifying. But they also come with the
ability to fund a health savings account.
Speaker 2 (22:26):
That's where the magic is for investors.
Speaker 4 (22:27):
If you, yeah, who would have thought that one day
we'd be looking at our health insurance plan for investments opportunities.
So the reason that's important, health savings account hsas are
triple tax advantage. The money goes in before tax if
as long as you get those invested right, don't sit
on those dollars. A lot of times if you just
open it up with whoever your employer has set up
(22:47):
for you, that's just a bank account, and you're gonna
want to look for better investment options than that. Look
for something that looks like a mutual fund. You should
be able to invest in something looks like a four
to one K. You may have to move your dollars
out of that account to another financial constitution entirely, which
can be a pain, but that's very well worth it,
because now you've triggered tax free growth. It's happening inside
an HSA. You're not going to pay taxes on. It's
(23:08):
similar to an IRRA four O one K, No different
dividend distributions anything like that. And then if you want
to pull those dollars out for health care expenses, those
are going to come out tax free. But here's the
fun thing, Bob. If you simply pay your healthcare expenses
now out of your regular cash flow, out of other
resources than the AHSA, hang onto those receipts and you
(23:29):
can build them all up. Let it grow for ten, fifteen,
twenty years, and then you can cash in. Think of
those receipts as gift cards. You can cash them in
twenty years worth of health care expenses.
Speaker 2 (23:37):
If you have those.
Speaker 4 (23:38):
Receipts and pull the money out tax free, then too,
you do not have to do it in the same
year you incurred the expense.
Speaker 3 (23:43):
That doesn't sound like very much fun. Brian, I wanted
to take three cruises next year, not two, and if
I give up one of those cruises, I can't not
spend my HSA account.
Speaker 4 (23:53):
W do I want to introduce you to a fiduciary
financial planner who can help you get your head out
of your rear end and make responsible financial decision.
Speaker 2 (24:00):
I need. I need one of those. I might need
three of those.
Speaker 3 (24:02):
All right, let's talk about life insurance options through work.
Employer provided life insurance is often very cheap, but it's limited,
usually only one or two time salary. Sometimes the company
covers the first you know, the first time your salary,
so it's great, but a lot of people need more
coverage than just one or two times they're pay and
(24:23):
so you know, the thing to remember here is if
you just default and go buy a bunch of supplemental
term insurance through the company, you're paying standard underwriting rates
and for people that are healthy, are not overweight, don't
have a bunch of diseases, and could qualify from an
underwriting standpoint, for cheaper coverage. On the outside, it behooves
(24:45):
you to take the time, make the small effort involved
to sit down and determine how much life insurance you need,
and oftentimes you can go out and get that on
the outside, getting preferred or super preferred underwriting rates and
pay less than you do through the company.
Speaker 4 (25:00):
And establish it and get to sit on it for
the rest of your life, regardless of you of your employment,
if you if you've stepped outside and done your own
term policy. So let's talk about another thing that comes
up this time. A lot of people are looking at benefits.
You got to log into that website and your eyes
will be drawn to your retirement plan. So there's hidden
opportunities there. A lot of people stop at the four
oh one K match. My company matches up to six
(25:21):
percent some percentage of that. That's all I'm gonna do.
There are other options there. If you are a higher
earner and you've got the cash flow, you're gonna want
to look for things like after tax four oh one
K contribution, which could introduce the idea of a mega
backdoor WROTH. This is its own entire show to go
over here. But what I would suggest that everybody do
is go get your summary plan description from your four
(25:41):
oh one K. That's like the instruction manual for your
four o one K or your four or three B
whatever you have, and see if you are able to
make after tax contributions. The benefit here is those dollars
could ultimately wind up in a wroth situation and you
can put in in the area of seventy thousand dollars away,
including your own contributions. We've always made your employer contributions
via matches and profit sharing and these after tax contributions.
Speaker 2 (26:04):
So again, lots of moving parts there.
Speaker 4 (26:06):
But if you are a higher income earner and you
have money piling up, congratulations. First of all, don't look,
don't miss the opportunity to do a megaback door.
Speaker 2 (26:13):
Look it up and see if it works in your
four oh one K.
Speaker 3 (26:15):
All right, here's another area of employee benefits. This is
often overlooked, and I want to highlight this tonight, and
it's the area of disability insurance. Let's face it, your income,
your ability to earn a paycheck might be your most
underappreciated yet most valuable resource of all your future earning power.
(26:36):
It's your biggest asset. Even if you already have millions
of dollars put away. A disabling event could wipe out
not just your income, but it could cause you to
deplete some of those savings and investments that you've worked
so hard to build and briant this group disability, you know,
you get guaranteed, you know issue on this. Everybody can
get it, and it tends to be pretty inexpensive.
Speaker 2 (26:58):
People need to take.
Speaker 3 (26:59):
Advantage that, even if you do the group policy, which
I recommend everybody does, especially if you've got you know,
twenty thirty, twenty five, thirty thirty five years left to work,
or even fifteen or twenty. Group disability is great, but
it's not comprehensive. You might want to look at supplementing
that if you need to, if you don't have enough
(27:21):
assets built out on the outside, but at least at
a minimum, especially for younger folks that have a long
runway you know, left to work, don't overlook that disability insurance.
It could be a real game changer. All right, here's
the all Worth advice. Open enrollment is a chance to
optimize your financial plan. Don't just click repeat and move on.
(27:44):
Make sure your choices are working as hard as your
money is. Coming up next, we'll tackle your real life
money dilemmas like investing four hundred thousand dollars in cash
making tax savvy, charitable gifts, and what to do when
you inherit an ira and more. You're listening to Simply Money,
presented by all Worth Financial on fifty five KRC, the
(28:05):
Talk Station.
Speaker 1 (28:07):
It's the main event for the importance events of today.
Speaker 4 (28:11):
Every day we discover something new and important.
Speaker 2 (28:13):
It's control our capital city, direct federal control, check in
throughout today, summit.
Speaker 5 (28:18):
With putin, there will be land swaps.
Speaker 1 (28:21):
We can make a deal.
Speaker 2 (28:22):
The everyday event.
Speaker 3 (28:23):
What is happening, the most important things, events in my day.
Speaker 1 (28:26):
To day, tracking our next weather, event, events affecting my money,
events in the.
Speaker 2 (28:30):
Middle East, happen, events happening now, important at this moment.
Speaker 1 (28:34):
Fifty five KRC, the talk Station. Your opinions are welcome
to here.
Speaker 2 (28:40):
I do think he is too old to run.
Speaker 5 (28:42):
In twenty twenty.
Speaker 2 (28:43):
Four, fifty five KRC the talk Station.
Speaker 3 (28:50):
You're listening to Simply Money, presented by Allworth Financial on
Bob Sponseller along with Brian James. Do you have a
financial question you'd like for us to answer. There's a
red button you can click while you're listening to the
show right on the iHeart app. Simply record your question
and it'll come straight to us. All right, Brian Martin
and Florence says, we've built a solid portfolio. But I
(29:12):
feel like every advisor pitches annuities to us. How do
we know if one actually fits our plan or if
it's just a sales pitch. Well, there's that p word again, Bob.
We run into that pa word all the time, and
clients are using this. They know they're being pitched.
Speaker 4 (29:25):
You know products that that's that start with here, you
should buy this product and then we'll figure out how
it fits into your financial plan, if we ever get
around to talking about a financial plan. Now, I don't
mean to bash in nudies. The nuities are tools like
anything else. Like as I always say, if I have
a hammer in my hand, I can build a birdhouse or.
Speaker 2 (29:40):
I can hit myself in the head with It's just
a tool.
Speaker 4 (29:42):
Uh but uh, but every tool has the right it
has to have a purpose. So a lot of annuities
are attracted because of the guarantees that they that they provide.
They'll say, you get the growth of the stock market,
but there will be a floor. So if the stock
market comes crashing down, it'll only go so far down.
But Bob, the thing that occurs to me with these
and Martin speaking to you is your quot I guess.
But every time the market comes back to a new high,
(30:04):
those guarantees were worthless because you're paying for it. So
you might have gotten all of the participation of the
market or some percentage of it, but you paid for that.
And if it's you know, if it's an index type
of annuity, you're gonna get maybe eighty percent of the upside,
none of the downside and so forth, but you're paying
an extra layer of fees. And when the market comes
back every time, as it has done again today we're
at an all time here high again here today, those
(30:25):
guarantees just aren't worth it. You're paying the insurance company
for a guarantee that they've never ever, ever, ever had
to pay out on. So I'm not a big fan
of annuities, except in situations where maybe we've got somebody
who just isn't really responsible with money and just needs
a much more mechanical plan that has to account for
growth as well. That's a great place for an annuity.
But if you're a person who understands the ups and
downs of the market, don't start there. Look at what
(30:46):
your plan can look like, and stress test it with
the ups and downs of the market, and if you
feel like you can handle the headlines as you have
thus far, an annuity might add a bunch of guarantees.
They'ren't really even guarantees. Those move on it go ahead,
Go ahead. So we'll move on to ED and Westchester.
Ed says he's heard about qualified charitable distributions from iras
(31:07):
otherwise known in the industry as qcds, and he's wanted
to know today really make a meaningful difference if somebody's
already giving, does to help them or is it not
worth looking into.
Speaker 3 (31:16):
ED Depending on your situation, these can make an incredible,
incredibly meaningful difference. So let me just explain everything that
comes out of an IRA that goes directly to charity.
And you can only start doing this after you're age seventy.
Speaker 2 (31:29):
And a half.
Speaker 3 (31:29):
By the way, every penny that goes directly from your
IRA to your chosen charity completely avoways income taxes. You
don't get the deduction like people are used to an
itemized deduction, But you know what, not having the income
even show up on your tax return is better than
an itemized deductions. It's tax free distribution from your IRA
(31:51):
doing the charitable giving that it sounds like you want
to do anyway, So you know, sit down and look
at some numbers, you know, compare your goals with your
overall plan. But if you're a you're seventy and a
half years old, and certainly if you're in a required
minimum distribution situation, these do make a meaningful difference. And
I can tell you virtually without exception, I'm having all
(32:12):
of my clients that are in this age category start
there with their charitable giving because it does make such
a difference. All right, Eric and fort Thomas says, I
inherited an IRA from my father, and the ten year
withdrawal rule is confusing. What's the best way to minimize
the tax impact?
Speaker 4 (32:30):
Well, Eric, condolence is to your family on the death
of your father. I'm sorry to hear that that happened,
but yeah, so you're running into what a lot of
people do, which is what happens to my parents' retirement money,
those tax advantage dollars when I inherit them. So what
Eric is referring to here is a rule change that
happened that affects anyone who passed away after twenty twenty.
If you inherit an IRA or a four to one
(32:52):
K or some kind of pre tax retirement arrangement, then
you basically.
Speaker 2 (32:55):
You have to pay the taxes on it, but not
all at once.
Speaker 4 (32:57):
You have ten years to pull those out and pay
income taxes on them.
Speaker 2 (33:02):
There is a minimal amount.
Speaker 4 (33:03):
You got to take out every year, but otherwise you
do have some flexibility for the bulk of it. So
the simplest solution, eric is is to basically figure out
when or your ugly tax year is going to be
versus whin or your your more friendly tax year is
going to be. If you if you if you feel
like you're in the situation you're going to be in
and your taxes aren't going to change much over the
next decade, then the simplest answer is divide that that
dollar amount by ten, take that amount every year. That way,
(33:25):
you'll spread it out over the decade and keep yourself
in the lowest tax brackets each of those ten years.
On the other hand, maybe your you yourselves as we
often are when when our parents pass we ourselves are
in our highest earnings years. Maybe you're in a fatter
bracket then you'll then you'll see here.
Speaker 3 (33:39):
Uh.
Speaker 4 (33:40):
Then then maybe you hold off and only do those
minimal distributions. Wait until year three or four, when perhaps
you are retired, then you start hitting that account first.
Speaker 2 (33:48):
Uh.
Speaker 4 (33:48):
And you want to try to do this of course,
you know, maybe when you're you're in your most favorable
tax years, before you yourself have turned on Social Security,
before you yourself are in required minimum distribution stage. So
I would bring these accounts to the forefront. If I
need money for something, Let's look at the inherited IRA first,
because that.
Speaker 2 (34:04):
Clock is ticking.
Speaker 4 (34:06):
Seth in Montgomery has a mortgage it's almost paid off, Bob,
But they have a bunch of cash sitting in a pile,
not earning very much, and they're just wondering, how did
they make the decision of blowing up that loan completely
or should they put that money to work in other ways?
Speaker 2 (34:16):
What do you think?
Speaker 3 (34:18):
Well, Seth, I usually evaluate this, you know, from two standpoints.
One is a cash flow decision. And first of all,
congratulations on almost having that mortgage nearly paid off. I'm
sure you put a lot of work into doing that.
But you know, we got to look at what your
interest rate is on the mortgage. And if the mortgage
truly is almost nearly paid off, you've already almost all
(34:38):
your payments right now are going pretty much to principle anyway.
And then you want to look at the opportunity cost
from a cash flow standpoint. If you just don't want
to make that mortgage payment anymore, paying it off with
some of that cash could free up some cash flow
and then maybe dollar cost average that cash flow that
now has become newly discovered back into it investment portfolio.
Speaker 2 (35:01):
That's one way to go about it.
Speaker 3 (35:03):
If you've got a large bunch of cash that's earning
next to nothing and you are paying interest, you know,
whether it's three, four or five percent on the mortgage,
I say knock the thing out and then do double duty.
You're get You'll love the cash flow benefits. And from
an opportunity cash standpoint, you're paying off a higher interest
rate loan with a cash balance that's earning a lower
(35:23):
interest rate. So hope that helps. Let's move on to
Heather in Westchester. She says, we're sitting on about four
hundred thousand dollars in cash because we're nervous about the markets.
Is there a discipline way to get that money working
for us Brian without going all in at.
Speaker 4 (35:40):
Once Landing, Heather and Seth should meet somewhere between Montgomery
and Westchester for a cup of coffee because this is
the same, same opportunity. So not a lot of time
here to get into too many details. But the easy
quick answer is do exactly what you just said. Don't
invest it all at once, break it into chunks you
can invest and make up some number five maybe it's
fifty thousand dollars a month for for however many months
(36:02):
that would be. The math is throwing me anyway, Just
don't throw it all at once. You're you're trying, you're
trying to avoid a two thousand and eight type situation
or twenty twenty two. Those types of things don't happen
very often. Dollar cost averaging is a way to go.
It can help you, but it can also work against
you if the market goes up, but the pain will
be be a little bit a little bit less there.
Speaker 2 (36:19):
So that's one way to think about.
Speaker 4 (36:21):
Another way to think is put all put one hundred
percent of your four one of your paycheck into your
four O one k, spend that cash down, get some
tax advantage investing going coming.
Speaker 3 (36:29):
Out next a refresher on the reasons why and when
you should consider selling a stock. You're listening to Simply
Money presented by all Worth Financial on fifty five KRC
the talk.
Speaker 2 (36:40):
Station, Mark Levin.
Speaker 1 (36:42):
Let me tell you absolutely reliable information and of course
not just one sided views. Use that affects you at
the top end to bottom of the hour fifty five
KRZ the talk station.
Speaker 3 (36:59):
You're listening to Money present all Worth Financial on Bob
Spon Seller along with Brian James. Well, every now and
then we like to revisit a topic we talk about
often here on this show, Brian, when and why to
sell a stock. It's a common question and something that
many investors struggle with and sometimes get this completely wrong.
So let's talk about all the reasons you want to
(37:21):
consider on why you would want to sell all or
part of a stock position.
Speaker 4 (37:26):
Well, the first reason, Bobb said is to rebalance your portfolio.
Speaker 2 (37:29):
Sometimes things get out of whack.
Speaker 4 (37:30):
When the market's been on great, great runs like it
has been recently, things grow a little faster than other things,
and then all of a sudden you have you have
an imbalance in your portfolio. So that can be a
great reason to take some to carve it off a
little bit and take some of that position down. Another
one is tax loss harvesting. So if you have a
losing position, right, if there's something that maybe you bought
didn't quite work out for the reasons that you bought it,
(37:52):
and it's sitting at a lost position, don't just ignore it.
Sometimes that can be a great tax planning opportunity to
offset a gain elsewhere sell the loser, and you can
also pair back something where maybe you want to take
profits and then you can avoid some of the taxes there.
And again speaking of taking profits, well that's kind of
the point. If an investment has actually accomplished what you
wanted it to, then it might be time to go
(38:12):
ahead and spike the football and sell it. If it
is significantly appreciated and all of a sudden, now it
has more risk because it's a bigger part of your portfolio.
Speaker 2 (38:20):
That can be a great reason to back off a
little bit. Brian, this I run into this often.
Speaker 3 (38:25):
This is one of the biggest mistakes that self directed
investors make that want to think they can pick stocks,
and you know, our ego gets in the way. We
never buy something and ever assume that it's going to
lose money, so we can't sell it in a downturn.
And even if it goes down, what do a lot
of people do. They just double down and they buy
(38:46):
more of it instead of just, you know, admitting that
it was a great idea at the time, but it's
not working. Take the loss, and then carve out some
of the games. Like you said, great tax planning strategy
and great way to rebalance your portfolio and get rid
of those losers and get some winners back in play,
because company fundamentals do change no matter how you evaluated
(39:08):
this at the time that you bought the stock. And
another topic, Brian, is stock concentration risk, especially with corporate executives.
We run into this all the time that have built
their entire world and net worth on one company. It
is not sacrilegious, It is not disloyal to take a
little bit of money off the table and not have
(39:30):
the proverbial too many eggs in one basket and one more.
Speaker 2 (39:34):
We didn't mention right this movie.
Speaker 4 (39:36):
This might have been kind of loud in us not
mentioning as an emotional attachment, right. Sometimes we have inherited stock.
Grandma and grandpa gave this to me, and it's part
of their legacy for.
Speaker 2 (39:44):
Me, and I want to hang on to it forever.
Speaker 4 (39:46):
I don't know anybody's grandma and grandpa who their lifelong
dream was to for everyone to hold XYZ Bank stock indefinitely.
They wanted you to have a financial asset to benefit
you and your family. So maybe keep a token piece,
but treat it like it like what it is. It's
something to support your financial situation.
Speaker 3 (40:02):
And we need to call out one thing that you
should virtually never do, and that's just never act on
what you read in the headlines or here on CNBC
while you're walking to the kitchen. That those are emotionally
driven decisions based on one talking head's opinion. Usually that's
bad advice, if it's really meant to be advice at all.
Speaker 2 (40:22):
Thanks for listening.
Speaker 3 (40:23):
You've been listening to Simply Money, presented by all Worth
Financial on fifty five KRC, the talk station. This is
for your information.
Speaker 1 (40:31):
Everything we do we keep you informed is FYI you information.
Speaker 3 (40:36):
We'll have the latest information on the whole situation in guys,
release the sausage eliminated.
Speaker 5 (40:41):
Come on info on the Russian summit they would like
to meet with me.
Speaker 2 (40:44):
Check in throughout the day.
Speaker 1 (40:45):
We have information for your information, my news, traffic and weather,
information about my money, on tariffs and trade. This is
important information for Are you listen just Fyi'm fifty five KRC,
the talk station.
Speaker 2 (41:00):
He i am Brandt and her name
Simply Money News
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
The Joe Rogan Experience
The official podcast of comedian Joe Rogan.