October 23, 2025 • 40 mins
On this episode of Simply Money presented by Allworth Financial, Bob and Brian explore how Cincinnati’s corporate powerhouses like GE Aerospace, Kroger, P&G, and Fifth Third Bank don’t just shape our city—they could be shaping your portfolio, too. They share the hidden risks of having too much exposure to one company and how to protect your nest egg while staying loyal. Then, the duo tackles one of the biggest and most costly investing mistakes: putting the right investments in the wrong types of accounts. Plus, cyber expert Dave Hatter joins the show to explain how a recent Amazon Web Services outage exposed a new kind of financial risk: third-party vulnerability. And finally, your questions about conflicting risk tolerances in marriage, aligning your financial "team," shifting from growth to income, and building a plan when self-employed.
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Episode Transcript
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Speaker 1 (00:00):
I am destroyed about this now more than ever.
Speaker 2 (00:04):
Listen as often as possible fifty five KRC the talk station.
Speaker 3 (00:14):
Tonight.
Speaker 4 (00:15):
The power that local companies have on your portfolio, the
big money mistake that even seasoned investors make, and we
are tackling your questions. You're listening to Simply Money presented
by all Worth Financial on Bob Sponseller alone with Brian James.
Let's face it, we've got some great companies here in
the Cincinnati area and one of the biggest ones is
(00:37):
making national headlines.
Speaker 3 (00:39):
Tonight.
Speaker 1 (00:40):
GE Aerospace, our friends just down the hill in Evendale,
stock jump to a record level after reporting very strong earnings,
actually up about eighty two percent for the year, which
is fantastic. Business is exploding right now, especially when it
comes to the jet engines, so we're talking about a
lot of business for commercial airplanes.
Speaker 3 (00:57):
It's just a good business story.
Speaker 1 (00:58):
Orders are up, deliveries are up, meaning things are going well,
and profits are way up as well, way up to
So what's grabbing investor attention? Of course, GE has raised
its expectations for how much money it's going to make
going forward, and this is a very very different GE
than we've seen over the past ten to fifteen years
as it was kind of going through some convulsions of
what it was going to become, from one gigantic company
(01:20):
that did a little bit of everything to now the
situation where it has broken into four completely individual companies.
In the GE we know here in Cincinnati, though, is
on the aerospace side. That's what was built here a
long time ago. Actually, I think I like the history.
I don't know if you like this stuff, Bob, but
I like to understanding. I love where this stuff came from.
And ironically, that plant there in Evendale that's got its
(01:42):
roots in the right aeronautical plant.
Speaker 3 (01:44):
You guessed it. It's those right brothers.
Speaker 1 (01:47):
They were originally involved or that company was originally involved
in choosing that space there and to build their plant.
And that was taken over by GE directly in nineteen
forty eight, just after World War Two, starting with the
J four forty seven jet engine, and that has grown
into what we now know today is the world headquarters
for GE's aviation business. Has since expanded into a into
(02:08):
a huge global aerospace hub and is known for innovations
of both commercial and military engines, and just last year
a little over a year ago became its own company
after splitting from the big company GE So. GE Aerospace
is currently the third largest publicly traded company based in
the Cincinnati area. So and I know, we get we
wind up talking to a lot of people who spent
their careers there, pretty happy, driven people.
Speaker 3 (02:31):
But you can tell why it's been a successful company.
Speaker 4 (02:34):
Well, Brian, one of those people that spent their entire
career there is my own father. He spent over thirty
five years at GE. And and I mean, I'm grateful
to GE. GE allow, you know, put food on my
table growing up as a kid, made it possible for
me to go to college. So I'm very grateful to
GE and all the fine people over there. The history
(02:54):
is wonderful to study. But the thing that stands out
to me getting back money here is and you met.
You know, a lot of companies will beat their earnings estimate.
That happens all the time. People play the game. They
revised down and then come out with a beat. What's
great about GE Aerospace is they, you know, for the
first time in nearly a decade, they raised their guidance
(03:15):
going forward. And that's what you like to see, not
only the earnings announcement. But what's going to be happening
going happened going forward and ge aerospace raising guidance is
a good thing, all right, Brian, I know you want
to talk about a couple of other companies locally as well.
Speaker 1 (03:31):
Let's get into Kroger. Yeah, so click details on Kroger. So,
Kroger is the largest publicly traded company that's based in Cincinnati,
and it goes back all the way to eighteen eighty
three when twenty three year old Bernard Kroger invested his
life savings of all of three hundred and seventy two dollars.
So think of that cost basis and what kind of
capital gains he'd have to pay if he still owned
(03:51):
all of his stock in that company.
Speaker 3 (03:53):
But he opens to some direct he needs to do
some direct indexing forr with you to spread those dollars
out right, you know.
Speaker 1 (04:00):
So if he had simply taken that and put that
into adversified portfolio, he could be looking at a five
to six percent annualized rate of return. But that's equivalent
to about twelve and a half thousand dollars now in
twenty as recently as twenty twenty four, and he opened
that first grocery stores down and over the Rhine at
sixty six Pearl Street. I'm going to look that up
and see what's there now. I bet it's a restaurant
(04:21):
or loft apartments or something like that.
Speaker 3 (04:23):
Then was not a dispensary, Yeah, that could be.
Speaker 1 (04:26):
But then, finally, we can't talk about the Cincinnati business
history without getting into P ANDNG. So P and G
was founded by two immigrants from England and Ireland in.
Speaker 3 (04:37):
Eighteen thirty seven. They got together.
Speaker 1 (04:38):
This is William Procter and James Gamble really kind of
hit the ground running when they got contracts for the
Union Army going back to the Civil War. So Cincinnat's
got some pretty strong history related to the Civil War
as well, despite none of.
Speaker 3 (04:50):
The battles actually being fought here.
Speaker 1 (04:52):
But then in the eighteen eighties, ivory was invented and
it was off for races from there. So Procter and
Gamble is when we hear about soap operas, it happened
to floating soap.
Speaker 4 (05:01):
The floating soap. Do you think that's what made that
company really sing? Is people are like, hey, if you
can create a soap that'll float, I am all in.
Speaker 1 (05:09):
Well, Bob, these are the days when people took all
of their baths in half barrels, and it was very
helpful for the soap to be right on the surface.
We didn't have, you know, soap dishes and bathtubs and
so forth. But yeah, though, the term soap operas literally
comes from it comes from Procter and Gamble because they
were using soap operas on the radio and eventually TV
shows to market the soap.
Speaker 3 (05:29):
So that's where that came from. Bob, More history for you,
all right.
Speaker 4 (05:33):
Speaking of history, you know, we can't leave out our
good friends at Fifth Third Bank, another big local company
that's always in the news, and it's now one of
the largest banks in the United States. The name fifth
third was derived from the names of the banks to
predecessor companies, the third National Bank and fifth National Bank,
(05:54):
which merged in nineteen oh eight. Why is it called
fifth third and not third fifth? Supposedly the merger took
place when prohibitionist ideas were gaining popularity, and it is
a legend that fifth third was considered better than third fifth,
which could have been construed as a reference to three
(06:15):
fifths of alcohol. It's always interesting to look at back
at history, Brian, and see how things you know come
about here?
Speaker 3 (06:22):
Good stuff?
Speaker 4 (06:23):
All right, you're listening to simply money presented by all
Worth Financial. I'm Bob sponsor along with Brian James. What's
the point of all of this historical you know discussion. Well, first,
and if you're from Cincinnati, Brian, I know you and
I both are. These stories should give all of us
an immense sense of pride. The city's got a great
legacy of building excellent businesses. And second, and maybe more
(06:48):
importantly for our listeners with significant assets, it shows why
paying attention to local companies isn't just sentimental, it's smart
invest because, Brian, these companies do move markets in there
they continue to be very innovative.
Speaker 3 (07:04):
Yeah. Absolutely.
Speaker 1 (07:05):
The fifth third and not a lot of people know this,
but fifth third basically invented the ATM. The genie was
the original ATM that took hold here, I believe in
the seventies.
Speaker 3 (07:13):
And so your little old Cincinnati on the map. So
what do we do?
Speaker 1 (07:16):
So let's bring it back to the reason we do
this show on a daily base anyway, So what are
the kinds of things that people who are involved in
these opportunities, what are they exposed to. Well, a lot
of times when we see this very very frequently here
as we're doing financial planning for people, is overexposure to
one stock. It's great to have a career with a
company that's that's been around this long, and are these
(07:37):
power for this powerful, But at the same time that
can lead a lot to a lot of overexposure. And
we're not really just talking about the you know, the
fact that you've got a lot of stock in your
employee stock purchase plan or your four oh one K
or whatever, just the fact that your income is already
tied to it. So we want to make sure no
matter how great any stock is, we want to make
sure that our entire lives are not tied up to
(07:59):
it because there's something wrong. Of course, it's going to
take our portfolio with it, but if it's really bad,
it could potentially take our income and it just our
livelihood overall, not to mention the nest egg. So we
want to make sure that we usually recommend that you know,
no more than ten percent. Sometimes you can't control this,
my friends at P ANDG, and you're stuck a little bit.
But there are worst companies to be stuck with I
guess just to hope that we don't hire Dirk Yager
(08:21):
right when you're trying to retire that didn't.
Speaker 3 (08:23):
Go so well. You really don't like him, do you, Brian.
Speaker 1 (08:25):
Well you look look at the stock chart, see what
the market thought of him twenty five years ago. He
was not a popular man at that point. But but yeah, anyway,
all these things add up. You might have exploite stock
purchase plans, you could have restricted stock units, old option
grants from say fifteen years ago.
Speaker 3 (08:40):
All of it adds up. As long as the company
is doing well, feels great.
Speaker 1 (08:43):
But when something heads the heads the wrong direction, it
really can hit every part of your life. So just
make sure you've got things spread out just enough to
ensure that you don't take a hit like that.
Speaker 4 (08:53):
Well, let's face it, Brian, you and I are old
enough and have been doing this, you know, financial advice
gig for long enough. We have seen all of these
companies take big dives, you know, and to the employees
that work for them, through no fault of theirs at all.
Just stuff happens in the economy, a tough quarter, a lawsuit,
a flash crash, I mean, all these things can and
(09:16):
have happened. And even if you've got the best company
in the world and you're very loyal to it and
for good reason, you just can't sit there and have
two thirds of your net worth tied up in these things,
because you can get really taken for a ride and
whip saw it here, and it can negatively impact your
(09:37):
long term financial health if you don't have a plan
in place at a time.
Speaker 1 (09:40):
Yeah, and then I'll give a quick example of personal
history here. So in two thousand and eight, obviously, that
was when we had the Great recession brought on by
the banking crisis, and I was working for what was
known as National City at the.
Speaker 3 (09:52):
Time up in Dayton, and we.
Speaker 1 (09:54):
At the shortly prior to that National City had purchased Providence,
and all of a sudden we were all in Cincinnati
helping the Provident, our Provident friends get get going, and
I just remember all the banks went through the same thing.
Of course, we all rode that roller coaster. Fifth Third
bottomed out. I don't quote me, I think two three
bucks to share something like that, as did National City.
And on the surface they looked fairly similar as regional banks. Well,
(10:17):
it wasn't that long after that one of them came back,
which is the one we're talking about today. National City
is now PNC, and by the way, PNC stands for
previously National City for those of you who were working
there that day that that announcement was made and those
little posted notes went up all over the windows anyway,
so you just never know. Is the point two banks
that looked otherwise the same one made it. One didn't
(10:38):
through that crisis. So this is why we always say,
be super careful not to have your absolute entire livelihood
and gymnastig tied to one company.
Speaker 3 (10:45):
Find a way to get it diversified.
Speaker 4 (10:47):
Yeah, and there are strategies to do that. I mean,
you know, I jokingly mentioned direct indexing. I mean, color strategies,
just good old put options, you know, to protect a
large position. There are strategies in play us to protect
the downside while still participating in the upside. But you
need a plan. Here's the all Worth advice. Loyalty to
(11:08):
our wonderful local companies is admirable and well placed, but
your retirement shouldn't depend on just one ticker symbol. Diversify
with purpose coming up next, how investors can lose thousand
avoidable taxes by putting the right investments in the wrong accounts.
You're listening to Simply Money, presented by all Worth Financial
(11:30):
on fifty five KRC the talk station.
Speaker 3 (11:33):
What they want to hear in the no twenty four
hours a day. We only deal in what you need
to hear these days. You need to keep an open mind.
On fifty five KRC the Talkstation.
Speaker 5 (11:48):
Allworth Financial a registered investment advisory firm. Any ideas presented
during this program are not intended to provide specific financial advice.
You should consult your own financial advisor, tax consultant, or
a state planning attorney to conduct your own due diligence.
Speaker 4 (12:07):
You're listening to Simple Money because that about all Worth
Financial UNBOP sponsorller along with Brian James. You've saved, diligently,
built your wealth wisely. But now what we're tackling the
biggest questions real families are asking about what comes next?
Straight ahead of six forty three. All right, you've done
your homework, You've got a diversified portfolio, you've picked strong funds,
(12:29):
have a solid foundation, maybe even some tax efficient ETFs.
But here's the question, did you put all of those
investments in the right places. Tonight, we're diving into what
might be one of the most overlooked and most expensive
mistakes we see when talking to folks in our office.
Speaker 3 (12:48):
Brian, let's get into it.
Speaker 1 (12:49):
Asset allocation versus asset location. One syllable makes a huge difference,
So we're gonna separate these two terms. It kind of
sound the same, but really couldn't be more different. Asset
allocation is the different types of things that you own
that make up a portfolio of stocks, bonds, alternatives, real estate,
you know, whatever else you've got there that make up
your overall asset mix.
Speaker 3 (13:10):
Asset location is where you put them.
Speaker 1 (13:12):
Is this and there are really three kinds of tax
treatment accounts. Asset location refers to tax treatments. Is it
a taxable account, is it tax deferred which means pre tax,
or is it tax free otherwise known as roth, or
possibly mean this babond something like that.
Speaker 3 (13:27):
So here's the thing.
Speaker 1 (13:28):
Some investments themselves, right that it's one thing to put
that put an investment in a certain type of account,
but there are certain investments themselves that can be more
tax efficient than others. Just no matter what accounts you
put them in, so where you park those accounts can
directly impact your annual tax bill and your long term returns,
because we want to we want to be thinking about
after tax returns, not just before.
Speaker 4 (13:51):
And we're going to walk through a couple of actual
examples here, so you know, we run into this all
the time.
Speaker 3 (13:57):
We call it the.
Speaker 4 (13:58):
Dey you know, dey mistakes that do it yourself mistakes.
Let's start with a hypothetical couple named Jeff and Rachel.
They're both sixty two and they're recently retired. They've got
three million dollars split evenly across three accounts, about a
million dollars in an IRA, a million dollars in a
Wroth IRA, and another one million dollars in a joint
(14:21):
taxable account. They've got a solid sixty percent stock forty
percent bond allocation, but they spread it evenly across all
three accounts. Each one has that same mix of stocks
and bonds, and Brian, what's the problem. The bonds, obviously
in that taxable account are generating interests at ordinary income rates,
(14:42):
and in their case that's thirty two percent. These people
are still working on earning a high income. The Wroth
account is holding value stocks and reads, which could have
been more tax efficient. You know, if the assets have
been placed elsewhere. They're losing thousands of dollars a year,
all because of how and where they place their assets,
(15:02):
not what they own. What they own is fine, it's
just where it's.
Speaker 1 (15:06):
Located, right, So I think let's drill into this a
little bit what we're talking about. So the reason we're saying,
for example, that value stocks and REITs are not very
efficiently held in the rocks because those are already slightly
more tax efficient on their own. Value stocks will spit
out a dividend. Dividends are generally taxed at fifteen percent,
not always, but most of the time there's a fixed
(15:29):
rate on them, not as ordinary income. So on the
other hand, the ordinary income types of things they own,
they do own a bunch of bonds, and that's sitting
in a taxable account. If they flip those over, right,
maybe they sell the bond funds in the taxable account
and buy and rebuy the value stocks and the real
estate investment trusts in that account, and then do the
same thing in the wrong Now they will have replaced
(15:49):
their assets.
Speaker 6 (15:50):
Now.
Speaker 1 (15:50):
It's never this simple of course, because that itself might
incur taxes, but it's something worth looking at and hopefully
that illustrates the impact of making sure we've got the
right assets in the right type of tax treatment type accounts.
Speaker 7 (16:03):
All right, hey, I've got.
Speaker 4 (16:04):
A question for you, because you know, to your point,
there is no one size fits all way to do this,
and I'm interested in your perspective on this because you know,
we all build financial plans every day and you might
have a little bit different perspective than me on this.
But if you're taking a regular income stream from a
(16:24):
taxable brokerage account, you know it is important to control
volatility in that account when you're pulling money from it.
Speaker 3 (16:32):
Is it wrong to have any.
Speaker 4 (16:34):
Bonds whatsoever in a taxable brokerage account, Brian No.
Speaker 3 (16:38):
I would I wouldn't say necessarily.
Speaker 1 (16:39):
And it's really only been, you know, the last couple
three years where I would say that that municipal bonds,
but for the highest brackets that I would say municipal
bonds have really been worth paying attention to. When rates
started to go up again and these types of assets,
we started to see more of a spread between taxable
and tax free as opposed to everything being on the
floor for fifteen years, then this wasn't quite as important.
(17:01):
You would you would basically on an after tax yield
in your taxable bond portfolio. You just wouldn't see as
much after tax rate of return, and it was a
little benefit to the tax free side. But now I
think I think it's now worth looking at. Now we're
kind of back to where we were again, maybe fifteen
years ago or so, where it makes more sense to
think about these things and think about bonds in general.
(17:22):
Now that that interest rates are off the floor, bonds
have a little bit more ability to move and can
can really be treated the.
Speaker 3 (17:28):
Way they were a while ago. Hopefully we'll get to
stay in that environment for a little while.
Speaker 4 (17:31):
All right, let's look at another case example. We'll talk
about Lisa. She's fifty nine, recently widowed. She has a
net worth of a little over five million dollars. Her
late husband managed their money himself, and now she's working
with an advisor. The advisor runs a tax analysis and
discovers her municipal bonds are placed in a rough IRA,
(17:53):
completely wasting that tax free you know, place to own assets.
Her growth stocks earned traditional IRA, setting her up for
huge require minimum distribution problems, and her taxable account has
bond funds that are spending off about twenty two thousand
dollars a year in fully taxable interest. I think this
(18:14):
this case is kind of making the point you know
you just made on it. It's a good time to,
you know, do a little bit of an inventory and
audit and see where all this stuff is placed. In
this case, the advisor rebounds everything for tax efficiency and projects.
Speaker 3 (18:30):
Forty one thousand dollars.
Speaker 4 (18:31):
In tax savings just over the next decade, Brian by
doing nothing but doing some planning and just relocating where
these assets are held.
Speaker 1 (18:40):
So I think one quick just a point of clarification here,
why why does it matter that her municipal bonds were
sitting in a wroth. Well, municipal bonds are tax free
no matter where they sit. That can be in a
taxable account, individual account of trust or whatever. They're not
gonna you're not gonna pay income taxes on those municipal bonds.
But if they're held in a roth, that means that
means you're waste that those dollars on something that was
(19:02):
tax free to begin with. And the other important point
is there's a difference between municipal tax free income and
taxable income. Bond interest that is taxable could be let's
call it four percent the comparatible comparable amount, and a
tax free and uni portfolio might be three percent. So
you're already giving up money on the front end. It's
the tax free You got to do the after tax.
Speaker 3 (19:20):
Analysis on that to find the benefit.
Speaker 4 (19:22):
Here's the all Worth advice. It's not just what you own,
it's where you accounts big time. Think your money safe
just because it's in the cloud. An Amazon cloud outage
this week proved otherwise. Next, why third party risk is
quietly becoming one of the biggest threats to your finances
in what you can do about it. You're listening to
(19:44):
Simply Money is thated by all Worth Financial on fifty
five KRC, the talk station.
Speaker 3 (19:50):
From Portland. Portland has been on fire for years to Chicago.
That's a great city. That's like a war zone to
write here in town. I mean it feels like things
are just getting.
Speaker 8 (19:59):
Work and worse.
Speaker 5 (20:00):
Fifty five krsers an iHeartRadio station.
Speaker 4 (20:09):
You're listening to Simple Money, presented by all Worth Financial.
I'm Bob Sponsorer along with Brian James joined tonight by
our cybersecurity and technology guru, mister Dave Hatter. Dave, thanks
as always for being with us, and we got a
lot to talk about tonight, so let's get into it first.
We are really interested to hear your perspective on this
(20:29):
recent Amazon Cloud Services outage that had a lot of
stuff shut down for a couple of days.
Speaker 3 (20:36):
What was going on there and what do we need
to be aware of? Yeah, Dave, why did all my
stuff break the other day?
Speaker 7 (20:41):
Well, as always, thanks for having me on guys.
Speaker 9 (20:43):
And you know, Amazon Web Services is a cloud provider
that provides services for lots of other companies. Some estimate
anywhere between thirty percent and thirty eight percent of essentially
all Internet based services. You know, think of anything that
you're using online, your bank, you're a great net of
things device. I don't know if you guys saw sleep
number beds stop working because of this, but they host
(21:04):
about thirty eight percent of that. So when there's an
outage like this, which lasted roughly fifteen hours, and experts
estimate will.
Speaker 7 (21:12):
Cost billions of dollars by the time it's all added.
Speaker 9 (21:14):
Up across all the different services that went down, including
things like Zoom and video games like ropeblocks.
Speaker 7 (21:20):
It's pretty devastating. You know.
Speaker 9 (21:22):
While I'm generally a proponent of cloud based services and
the three big providers. You got AWS, you got Microsoft,
and you've got Google Cloud. Kind of the three main players,
there are others out there. It does, in my opinion,
show we continue to build systems that are sort of
brutal and fragile, and as our society becomes increasingly digital,
we rely on these things.
Speaker 7 (21:42):
I mean, you could see the impact.
Speaker 9 (21:43):
Even your Internet of Beings devices, ring cameras and so
forth stop working because the backing services that make it
work are hosted in these giant cloud providers like AWS.
Speaker 7 (21:52):
So it's concerning to me. Thankfully, the outage wasn't that long.
This isn't the first one. Every one of these major
providers has had some sort of like this.
Speaker 9 (22:01):
You know, in my mind, it shows we have to
be focused on robustness, resilience, and uptime versus cost and
market share.
Speaker 4 (22:10):
Well, Dave, I'll tell you my wife had no problem
continuing business as usual with AWS. I mean, the little
blind that she ordered to go in our bathroom windows
showed up as scheduled. She still managed to work through
this and spend money. So but in all seriesness, what
are we supposed.
Speaker 7 (22:28):
To do about it?
Speaker 4 (22:29):
I mean, the world has evolved to where we we
do we just depend on all this stuff just to function.
Are there any are there any practical tips or pieces
of advice, you know, relative to this outage that we
should be aware of and anything we should take actual
action on.
Speaker 9 (22:46):
Well, the good news is, at this point, from what
they've reported, it appears to be a DNS do may
name system issue that caused services to go down inside AWS,
which then rippled out to the companies that depend on it.
Speaker 7 (22:57):
So it doesn't appear to be a cyber attack.
Speaker 9 (22:59):
But again, when you think about things guys like that
are proposed digital ID, central bank, digital currency. Imagine if
this weren't just a simple mistake or mechanical failure or
something that caused this, and it were an intem nation
state actor like China that deliberately knocked this out, and
let's say it couldn't be repaired in fifteen hours, let's
say it took fifteen days.
Speaker 7 (23:18):
Think of the impact of that.
Speaker 9 (23:19):
So we've got to be as our society becomes increasingly
digital and increasingly.
Speaker 7 (23:23):
Reliant on these sorts of technologies.
Speaker 9 (23:26):
We really need to be thinking about the impact on society,
the possible disastrous consequences of wide scale, long term outages,
and be focused on building systems that again are resilient
and robust. I mean, this is the prime example of
third party risk. You build a service that relies on
another service, it goes down and now you're out. And
too much concentration in the hand of all the hands
(23:48):
of a small number of players. So there's no simple
answer for this going forward other than businesses need to
think about how can they Dislike you, guys would advise
and investing, diversify so that you're not dependent on one
provider who then takes you out to a third party outage.
Speaker 3 (24:05):
Yeah, got you, Dave, So thank you for that for
the summary there. So let me ask you.
Speaker 1 (24:10):
You're a business owner, so and you would have done
things a long time ago. I'm sure there really is
nothing that you did in response to this, But what
are the steps that you took as a business owner
to protect yourself from these types of things.
Speaker 9 (24:20):
Well, again, it's really about diversification, understanding the players, getting
things like a sock two type two audit, understanding what
is their disaster recovery policy, What is their uptime and
SLA agreements with you as part of their contracts. You know, again,
cloud services in general, I'm a fan of it reduces
(24:42):
capital expense, it reduces complexity on prem but you've got
to understand the players. And again, while there are ways
even within these providers, like Amazon Web Services has multiple
different data centers across the country, it costs more to
try to build resilience in It costs or to diversify
across multiple cloud service providers to limiture risk and it
(25:05):
you know, I understand why businesses will put all their
eggs in white basket and look for the low cost solution.
But at the same time, how much downtime can your
business withstand? If you're down for three or four days
because of a third party outage to a provider you use, well,
you know they're not going to pay you back for
that in all likelihood?
Speaker 7 (25:23):
Can you withstand that kind of outage?
Speaker 9 (25:25):
So it's guys, it's really thinking about risk and you know,
making risk informed decisions and trying to mitigate the risk
to the extent your budget can withstand it, and that
you can withstand outages.
Speaker 4 (25:36):
All right, switching gears here to you know, because what
we're talking about right now is things business owners probably
need to think about, you know, thinking about ordinary folks
that are subject to potential hacking schemes. Here you came
across the story, you know, when we talk about this
all the time, the risk of AI coming in and
hacking people and committing cybercrime.
Speaker 3 (25:57):
Talk about this most recent AI really really cyber crime spree.
Speaker 7 (26:02):
Yes.
Speaker 9 (26:03):
So the bottom line is, for the average consumer, your
biggest risk from AI is deep fakes and spoofing. It's
it's trivially easy to go online, find a free sight
and clone someone's voice, create completely fake videos, etc. People
need to look into that and need to understand that risk.
This article, though, is about, you know, more of a
business angle around a hacker who went out and used
(26:23):
anthropics claude, which is a quote.
Speaker 7 (26:26):
It's primarily focused on.
Speaker 9 (26:27):
Quote vibe coding unquote, which I hate that term, but
it's the idea that you don't need to know how
to write software anymore. You just tell the AI what
you want and it produces it for you. I can
tell you there are.
Speaker 8 (26:37):
All kinds of problems with that, but suffice it to
say that's become a common thing in the business, and
a hacker used this to essentially go out and say,
all right, I want to find companies that have vulnerabilities.
Speaker 9 (26:52):
And then once I've identified these companies that have vulnerabilities,
vulnerabilities meaning like you have old unpatched software, you have
stuff that's no longer supported by the vent there, you
have known problems that have not been fixed in your environment,
which is common guys, very common across businesses and governments.
Find those companies and then create It showed me how
I can exploit those vulnerabilities, whether it's you know, try
(27:15):
this particular approach on this particular firewall, write some software
or whatever that would allow me to exploit these this
this particular individual or individuals. Basically, then you know, used
claw to figure out who to attack because they have vulnerabilities,
and then build tools using this to specifically attack them.
Speaker 7 (27:34):
And you know, that's kind of where we're at, you know.
Speaker 9 (27:37):
Sadly, while there's a lot of upside AI, some of
the downside is it supercharges these sorts of attacks, and
it gives people who would not normally have this knowledge
or skills to launch these sorts of attacks. The ability
to do it because the AI helps them.
Speaker 4 (27:53):
All right, We got to leave it there for tonight.
We are certainly living in interesting times, thanks as all
these Dave. You're listening to Simply Money, presented by all
Worth Financial on fifty five KRC, the Talk Station.
Speaker 6 (28:05):
Mark Levin, you know, America, we spend an awful lot
of time in this country responding to an unreality created
by the people who hate America, created by people who
get sucked into the narratives that are pushed out there
each and every day. And they're posting, and they're posting,
and they're posting, and they'll move on to the next thing,
and the next thing and the next thing.
Speaker 3 (28:25):
That's what the media enemy do.
Speaker 2 (28:26):
Mark Levin tonight at ten oh six on fifty five KRC,
the Talk Station.
Speaker 3 (28:32):
Why don't you grab a pen you're going to want
to take this number of year?
Speaker 9 (28:35):
Why do we keep letting thousands of people come over
and do nothing about it?
Speaker 3 (28:38):
My family's safety is at risk. Fifty five KRC, the
Talk Station. You're listening to Simply Money.
Speaker 4 (28:48):
Is that a buy? All Worth Financial and Bob Sponseller
along with Ryan James. 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 apps, record your question and it will come
straight to us. Allison in Lebanon leads us off tonight, Brian.
She says, I'm in my fifties and my spouse and
(29:09):
I have very different risk tolerances. How do you build
one plan when one person's nervous and the others aggressive.
This happens from time to time, Brian. We see this
more often than not. It's a great question to dive into.
Speaker 3 (29:24):
Yeah, go figure marry.
Speaker 1 (29:25):
Couples don't tend to agree on absolutely everything, and so
this is another place where sometimes some differences can come in.
Speaker 3 (29:33):
Now.
Speaker 1 (29:33):
Interestingly, I would say more often than not, there's a
there's a difference of opinion in UH, in risk tolerance,
and frankly, this is the kind of thing that keeps
marriages alive.
Speaker 3 (29:42):
If everybody agreed on everything, I think everybody would be divorced.
It doesn't doesn't resent ten to go very well. Anyway.
How do you deal with this?
Speaker 1 (29:48):
Well, first of all, understand exactly what each other means.
A lot of people will say they're they're, they're there.
They'll say they're conservative when it comes to investments, but
then we look at a portfolio and it looks not
necessarily aggressive, but it's much more growth oriented. So make
sure everybody's defining the terms, you know, the right way.
Conservative can simply mean I don't want to get into
cryptocurrency or speculative types of stuff. I don't want to
(30:09):
be day trading that kind of thing. But I might
be okay with a portfolio of S and P five
hundred based index type stocks because I know the market
goes up and down. Or it can mean I want
to bury everything in the backyard and never read a headline.
So just make sure you have big discussions about what
the impact of those various types of portfolios will be.
You know, somebody who is so super conservative that they
(30:31):
want to again bury everything in the backyard and never
see any fluctuation is probably going to eventually suffer from
inflation eating away at the portfolio if nothing is really growing.
Somebody who's on the other end of the spectrum, who
is extremely aggressive is going to have some very bumpy,
white knuckle times during those market pullbacks that.
Speaker 3 (30:49):
Don't feel that like that big of a deal.
Speaker 1 (30:51):
When your thirties forties still working, but will really change
the trajectory when you are retired and you've got really
the big thing is time to think about it, and
it's impacting your portfolio. So the right answer is going
to be somewhere in the middle. But bring everybody to
the table with a financial advisor. And the more Alison
you talk to your spouse about this and not the advisor,
(31:12):
the better off you'll be. Let the advisor be in
the middle to kind of mediate that conversation. But it's
an important, good conversation they have, especially as you're starting
to head into those retirement years. Jeff and Anderson. Jeff
says they've got a few advisors in the mix. They've
got separate tax, legal, and investment people, and they've worked
together for a long time. But these groups are not
talking to each other. How do you actually get everybody
(31:32):
on the same page. Sounds like Jeff's being a sort
of pinball or ping pongs between all these different advisors.
Speaker 3 (31:37):
Bob, have you run across that.
Speaker 9 (31:40):
I have.
Speaker 4 (31:40):
I run into it all the time, and I'm pretty
passionate about this topic. So Jeff, I'm going to use
a football team analogy. Hope this makes sense. What you've
got right now, And you might have very good ones,
but you've just got a bunch of different players running
around on the field, very skilled probably players, but they're
not talking to whateother and they're not coordinating with one
(32:01):
another's which means you don't have a head coach. You
don't have a head coach putting together a game plan,
forcing communication between these people. And this is what a
fid financial advisor is supposed to do. Take the bull
by the horns and speak with you who I will
say is the general manager of this hypothetical football team,
(32:23):
because let's face it, you've got hiring and firing power
over everyone, which is how it should be.
Speaker 3 (32:30):
But a good financial advisor, a true fiduciary, brings.
Speaker 4 (32:33):
These people to the table sparks, communication and planning. And
I have found over many, many years, all of these
CPAs and attorneys are more than willing to work with
me if I treat them with respect and I value
their opinion. And sometimes they don't want to talk to
commission salespeople because those people are not fiduciaries and they
(32:58):
can smell a sale coming from you know, a mile away,
and they don't want to interact.
Speaker 3 (33:02):
With those kind of folks.
Speaker 4 (33:03):
So get a good fiduciary financial advisor to really run
the show here. Get people in the same room, force
the communication, get the team members working together, and Jeff
as the general manager. You and your family are going
to come out way ahead if you can get everybody
working together. Hope that helps, all right, Tom, and Montgomery says,
(33:26):
We've say invested for years, but now that retirement is near,
I'm realizing we've planned for growth, we haven't done anything
to plan for income. How do you shift gears without
completely starting over?
Speaker 1 (33:39):
Well, Tom, that's a great question, and I hope you're
not kicking yourself too hard because that's what you should
have done, you know, investing for growth before you're retiring.
That's that's how you get to the point where you
can retire. So again that you've made the right moves.
It sounds like you're just trying to think about what
that next step is. So and you're not alone, right, So,
there was a study done by JP Morgan in twenty
twenty five. They found that seventy percent of pre retirees
(34:02):
still have growth heavy portfolios. And heck, I would put
myself in this category. I'm fifty one and I'm still
all growth. I don't really care what the market's gonna
do to me in the next ten fifteen years while
I am heading into retirement myself.
Speaker 3 (34:13):
So I think the right way to handle.
Speaker 1 (34:15):
This is is to just it's a transition, and you know,
maybe think about it this way. You're going to want
to think your money and say three buckets, so one
to two years worth of your income in cash and
short term.
Speaker 3 (34:27):
This is kind of an emergency fund.
Speaker 1 (34:29):
It's also kind of just a short term we are
going to consciously spend these dollars, and you want to
park this in something that's getting a little bit interest,
maybe three and a half four percent you should be
able to get right now, but consciously spend that down
over time, and then you're gonna have a second bucket
that's more medium term income. This could be bond ladders
or perhaps dividend paying ETFs that kind of thing. And then,
(34:49):
of course you got your third bucket, which you already
have plenty of and most people do. That's your long
term growth stocks and equity funds. And as these buckets,
think of it this way, that long term growth bucket
is the one that's going to grow the most. Let
it overflow occasionally into the medium urn bucket. In turn,
that medium term bucket should be spitting interest into your
cash and short term bucket. This isn't something you're going
to accomplish in an afternoon, but those I think are
(35:11):
the kind of that that's a good way to break
it down, to really get down to what you need there.
So I think we have time for one more quick one. David,
and Mason says his wife and he are both self employed.
Income moves around a lot. How do you create a
stable financial plan when that paycheck isn't quite predictable?
Speaker 4 (35:26):
Well, real, David is someone who owned a business, you
know personally for years and years. I've lived this, and
here's my quick and simple answer. You need a larger
emergency fund. You just and I know it's boring, it's
not sexy, you don't earn a big return, but you
got to just put a little bit more money away,
you know, for a rainy day, and make sure you
don't get into a problem, you know, with short term
(35:48):
cash flow.
Speaker 3 (35:49):
Coming up next, we've got Brian's bottom line.
Speaker 4 (35:52):
You're listening to Simply Money, presented by all Worth Financial
on fifty five KRC, The Talk Station.
Speaker 3 (35:58):
You, I got a lot do you.
Speaker 6 (36:00):
I do got to put up these Halloween decorations, do.
Speaker 5 (36:03):
Some work, do the laundry.
Speaker 3 (36:04):
We do have to go shopping. Will this is what
we do. Do the rest.
Speaker 7 (36:08):
It's time to do it.
Speaker 3 (36:09):
We do traffic and weather, doing the news at the
top and bottom of the hotus.
Speaker 7 (36:13):
It's the most important thing we can do do check in.
Speaker 3 (36:15):
Let's do it the way you want. I do need
to know. It's important that we do it today. While
doing your day. There's always more to do. I ain't
doing nothing today. I do have something to say, so
let's do it. On fifty five KRC the Talk Station. Hey,
is Brian Thomas wisk I am.
Speaker 4 (36:30):
So worried that next month I have to choose between
groceries for my kids or gas for my car.
Speaker 3 (36:35):
Talk about it here fifty five KRC, The Talk Station.
Speaker 4 (36:43):
Moment you're listening to Simple Money? Is that about all
worth financial? I'm Bob sponsorller along with Brian James. Speaking
of Brian James, it's time for Brian's bottom line. Brian
wants to highlight a bit of an income to tax
I think loophole for our friends in northern Kentucky, which
is worth learning about.
Speaker 3 (37:01):
Brian, what do you have for us tonight?
Speaker 1 (37:03):
Yeah, So, first off, I want to thank all of
you for your service, those of you manning our three
forts down there for it's mental right, and Thomas defending
us from the mongol hordes of Florence. But Kentucky actually
has some retirement tax breaks. This isn't quite Florida or
you know, it's not a tax free state, but there
are some things, some moving parts there that could be
attractive to you. So you know, let's start with the basics.
(37:24):
Kentucky does not tax your Social Security benefits. Zero's abziltch.
Speaker 3 (37:28):
They do not at all.
Speaker 1 (37:29):
And the other piece of this, the state gives each
retiree what's called a retirement income exclusion. Right now, that
exclusion is thirty one thousand dollars a little over thirty
one thousand per person. We're not talking federal by the way,
this is Kentucky state income tax. So that means the
first thirty one thousand dollars of retirement income, which includes
pension IRA four one kadrawals, can be completely free from
(37:49):
Kentucky state income tax.
Speaker 3 (37:51):
And so there's more to that.
Speaker 1 (37:53):
There's potentially a bill on the floor in frankfort House
Bill one forty six could raise that exclusion up to
forty one dollars starting in twenty twenty six. So if
you're maybe planning on major withdrawals from your retirement accounts,
it might make sense to try to push that into
twenty twenty six if you, if you.
Speaker 3 (38:10):
Have the ability to do that.
Speaker 1 (38:11):
And so also a special carve out for public service
employees teachers, firefighters, police, other state workers if part of
your pension is from service before January first, nineteen ninety eight.
Speaker 3 (38:22):
Right, So we're going back aways here. You got to
think about this one.
Speaker 1 (38:24):
That portion from before that timeframe can be completely exemped
from Kentucky income tax. So it could be a big
deal for long tenured public retirees who have been around
for a little while.
Speaker 3 (38:34):
So, Brian, this is this is good stuff.
Speaker 4 (38:36):
How you know, how do you segregate income coming from
before nineteen ninety eight.
Speaker 3 (38:41):
I'm curious. Oh, I don't know. I don't But that's
a whole segment unto itself. Bob.
Speaker 1 (38:45):
No, if this, if this affects you, it'll it should
appear on your pension statement. There should be a category
that says this, this income came from before January whatever
of nineteen ninety eight. You're not going to be able
to determine that on your own. That's for actuaries to track.
Speaker 4 (38:57):
So it's kind of much a proportional proportional calculation of
your pension based on how much was a crude prior
to ninety eight.
Speaker 1 (39:04):
Correct, And for those of you who have done your
own taxes for a long time, you'll remember things like
if you had an IRA before or a four oh
one K before nineteen eighty three, there are these rules
that apply and so forth. Those are these are all
things that you would be running across and say turbo
tax or whatever. But so a good deal for you know,
people in Kentucky. Real quick comparison, how does this look
in Ohio? Will pretty much most retirement income, including IRA withdrawals,
(39:27):
is fully taxed at the state level, although Ohio did
recently cut its taxes to the three percent range. Indiana
pension and IRA income is also taxable, but you do
get a smaller deduction for certain public pensions. But within
these listening area here, Kentucky's system is one of the
more generous in the region.
Speaker 4 (39:44):
I think I'm going to sell my house immediately and
move to Covington.
Speaker 7 (39:47):
Thanks for listening tonight.
Speaker 4 (39:48):
You've been listening to Simply Money, presented by all Worth
Financial and fifty five KRC the Talk station, Mark Levin.
Speaker 6 (39:55):
Probably the people who should be listening aren't, but there
are a lot of people who tune in actually, and
then they start listening.
Speaker 3 (40:00):
I get this wherever I go and listen. I listened
for a week. I listened to two. He said, I
like this guy. I like what he has to say.
Speaker 2 (40:07):
Mark Levin Tonight at ten o six on fifty five KRC,
the Talk station.
Speaker 3 (40:13):
Maybe this is you
I am destroyed about this now more than ever.
Speaker 2 (00:04):
Listen as often as possible fifty five KRC the talk station.
Speaker 3 (00:14):
Tonight.
Speaker 4 (00:15):
The power that local companies have on your portfolio, the
big money mistake that even seasoned investors make, and we
are tackling your questions. You're listening to Simply Money presented
by all Worth Financial on Bob Sponseller alone with Brian James.
Let's face it, we've got some great companies here in
the Cincinnati area and one of the biggest ones is
(00:37):
making national headlines.
Speaker 3 (00:39):
Tonight.
Speaker 1 (00:40):
GE Aerospace, our friends just down the hill in Evendale,
stock jump to a record level after reporting very strong earnings,
actually up about eighty two percent for the year, which
is fantastic. Business is exploding right now, especially when it
comes to the jet engines, so we're talking about a
lot of business for commercial airplanes.
Speaker 3 (00:57):
It's just a good business story.
Speaker 1 (00:58):
Orders are up, deliveries are up, meaning things are going well,
and profits are way up as well, way up to
So what's grabbing investor attention? Of course, GE has raised
its expectations for how much money it's going to make
going forward, and this is a very very different GE
than we've seen over the past ten to fifteen years
as it was kind of going through some convulsions of
what it was going to become, from one gigantic company
(01:20):
that did a little bit of everything to now the
situation where it has broken into four completely individual companies.
In the GE we know here in Cincinnati, though, is
on the aerospace side. That's what was built here a
long time ago. Actually, I think I like the history.
I don't know if you like this stuff, Bob, but
I like to understanding. I love where this stuff came from.
And ironically, that plant there in Evendale that's got its
(01:42):
roots in the right aeronautical plant.
Speaker 3 (01:44):
You guessed it. It's those right brothers.
Speaker 1 (01:47):
They were originally involved or that company was originally involved
in choosing that space there and to build their plant.
And that was taken over by GE directly in nineteen
forty eight, just after World War Two, starting with the
J four forty seven jet engine, and that has grown
into what we now know today is the world headquarters
for GE's aviation business. Has since expanded into a into
(02:08):
a huge global aerospace hub and is known for innovations
of both commercial and military engines, and just last year
a little over a year ago became its own company
after splitting from the big company GE So. GE Aerospace
is currently the third largest publicly traded company based in
the Cincinnati area. So and I know, we get we
wind up talking to a lot of people who spent
their careers there, pretty happy, driven people.
Speaker 3 (02:31):
But you can tell why it's been a successful company.
Speaker 4 (02:34):
Well, Brian, one of those people that spent their entire
career there is my own father. He spent over thirty
five years at GE. And and I mean, I'm grateful
to GE. GE allow, you know, put food on my
table growing up as a kid, made it possible for
me to go to college. So I'm very grateful to
GE and all the fine people over there. The history
(02:54):
is wonderful to study. But the thing that stands out
to me getting back money here is and you met.
You know, a lot of companies will beat their earnings estimate.
That happens all the time. People play the game. They
revised down and then come out with a beat. What's
great about GE Aerospace is they, you know, for the
first time in nearly a decade, they raised their guidance
(03:15):
going forward. And that's what you like to see, not
only the earnings announcement. But what's going to be happening
going happened going forward and ge aerospace raising guidance is
a good thing, all right, Brian, I know you want
to talk about a couple of other companies locally as well.
Speaker 1 (03:31):
Let's get into Kroger. Yeah, so click details on Kroger. So,
Kroger is the largest publicly traded company that's based in Cincinnati,
and it goes back all the way to eighteen eighty
three when twenty three year old Bernard Kroger invested his
life savings of all of three hundred and seventy two dollars.
So think of that cost basis and what kind of
capital gains he'd have to pay if he still owned
(03:51):
all of his stock in that company.
Speaker 3 (03:53):
But he opens to some direct he needs to do
some direct indexing forr with you to spread those dollars
out right, you know.
Speaker 1 (04:00):
So if he had simply taken that and put that
into adversified portfolio, he could be looking at a five
to six percent annualized rate of return. But that's equivalent
to about twelve and a half thousand dollars now in
twenty as recently as twenty twenty four, and he opened
that first grocery stores down and over the Rhine at
sixty six Pearl Street. I'm going to look that up
and see what's there now. I bet it's a restaurant
(04:21):
or loft apartments or something like that.
Speaker 3 (04:23):
Then was not a dispensary, Yeah, that could be.
Speaker 1 (04:26):
But then, finally, we can't talk about the Cincinnati business
history without getting into P ANDNG. So P and G
was founded by two immigrants from England and Ireland in.
Speaker 3 (04:37):
Eighteen thirty seven. They got together.
Speaker 1 (04:38):
This is William Procter and James Gamble really kind of
hit the ground running when they got contracts for the
Union Army going back to the Civil War. So Cincinnat's
got some pretty strong history related to the Civil War
as well, despite none of.
Speaker 3 (04:50):
The battles actually being fought here.
Speaker 1 (04:52):
But then in the eighteen eighties, ivory was invented and
it was off for races from there. So Procter and
Gamble is when we hear about soap operas, it happened
to floating soap.
Speaker 4 (05:01):
The floating soap. Do you think that's what made that
company really sing? Is people are like, hey, if you
can create a soap that'll float, I am all in.
Speaker 1 (05:09):
Well, Bob, these are the days when people took all
of their baths in half barrels, and it was very
helpful for the soap to be right on the surface.
We didn't have, you know, soap dishes and bathtubs and
so forth. But yeah, though, the term soap operas literally
comes from it comes from Procter and Gamble because they
were using soap operas on the radio and eventually TV
shows to market the soap.
Speaker 3 (05:29):
So that's where that came from. Bob, More history for you,
all right.
Speaker 4 (05:33):
Speaking of history, you know, we can't leave out our
good friends at Fifth Third Bank, another big local company
that's always in the news, and it's now one of
the largest banks in the United States. The name fifth
third was derived from the names of the banks to
predecessor companies, the third National Bank and fifth National Bank,
(05:54):
which merged in nineteen oh eight. Why is it called
fifth third and not third fifth? Supposedly the merger took
place when prohibitionist ideas were gaining popularity, and it is
a legend that fifth third was considered better than third fifth,
which could have been construed as a reference to three
(06:15):
fifths of alcohol. It's always interesting to look at back
at history, Brian, and see how things you know come
about here?
Speaker 3 (06:22):
Good stuff?
Speaker 4 (06:23):
All right, you're listening to simply money presented by all
Worth Financial. I'm Bob sponsor along with Brian James. What's
the point of all of this historical you know discussion. Well, first,
and if you're from Cincinnati, Brian, I know you and
I both are. These stories should give all of us
an immense sense of pride. The city's got a great
legacy of building excellent businesses. And second, and maybe more
(06:48):
importantly for our listeners with significant assets, it shows why
paying attention to local companies isn't just sentimental, it's smart
invest because, Brian, these companies do move markets in there
they continue to be very innovative.
Speaker 3 (07:04):
Yeah. Absolutely.
Speaker 1 (07:05):
The fifth third and not a lot of people know this,
but fifth third basically invented the ATM. The genie was
the original ATM that took hold here, I believe in
the seventies.
Speaker 3 (07:13):
And so your little old Cincinnati on the map. So
what do we do?
Speaker 1 (07:16):
So let's bring it back to the reason we do
this show on a daily base anyway, So what are
the kinds of things that people who are involved in
these opportunities, what are they exposed to. Well, a lot
of times when we see this very very frequently here
as we're doing financial planning for people, is overexposure to
one stock. It's great to have a career with a
company that's that's been around this long, and are these
(07:37):
power for this powerful, But at the same time that
can lead a lot to a lot of overexposure. And
we're not really just talking about the you know, the
fact that you've got a lot of stock in your
employee stock purchase plan or your four oh one K
or whatever, just the fact that your income is already
tied to it. So we want to make sure no
matter how great any stock is, we want to make
sure that our entire lives are not tied up to
(07:59):
it because there's something wrong. Of course, it's going to
take our portfolio with it, but if it's really bad,
it could potentially take our income and it just our
livelihood overall, not to mention the nest egg. So we
want to make sure that we usually recommend that you know,
no more than ten percent. Sometimes you can't control this,
my friends at P ANDG, and you're stuck a little bit.
But there are worst companies to be stuck with I
guess just to hope that we don't hire Dirk Yager
(08:21):
right when you're trying to retire that didn't.
Speaker 3 (08:23):
Go so well. You really don't like him, do you, Brian.
Speaker 1 (08:25):
Well you look look at the stock chart, see what
the market thought of him twenty five years ago. He
was not a popular man at that point. But but yeah, anyway,
all these things add up. You might have exploite stock
purchase plans, you could have restricted stock units, old option
grants from say fifteen years ago.
Speaker 3 (08:40):
All of it adds up. As long as the company
is doing well, feels great.
Speaker 1 (08:43):
But when something heads the heads the wrong direction, it
really can hit every part of your life. So just
make sure you've got things spread out just enough to
ensure that you don't take a hit like that.
Speaker 4 (08:53):
Well, let's face it, Brian, you and I are old
enough and have been doing this, you know, financial advice
gig for long enough. We have seen all of these
companies take big dives, you know, and to the employees
that work for them, through no fault of theirs at all.
Just stuff happens in the economy, a tough quarter, a lawsuit,
a flash crash, I mean, all these things can and
(09:16):
have happened. And even if you've got the best company
in the world and you're very loyal to it and
for good reason, you just can't sit there and have
two thirds of your net worth tied up in these things,
because you can get really taken for a ride and
whip saw it here, and it can negatively impact your
(09:37):
long term financial health if you don't have a plan
in place at a time.
Speaker 1 (09:40):
Yeah, and then I'll give a quick example of personal
history here. So in two thousand and eight, obviously, that
was when we had the Great recession brought on by
the banking crisis, and I was working for what was
known as National City at the.
Speaker 3 (09:52):
Time up in Dayton, and we.
Speaker 1 (09:54):
At the shortly prior to that National City had purchased Providence,
and all of a sudden we were all in Cincinnati
helping the Provident, our Provident friends get get going, and
I just remember all the banks went through the same thing.
Of course, we all rode that roller coaster. Fifth Third
bottomed out. I don't quote me, I think two three
bucks to share something like that, as did National City.
And on the surface they looked fairly similar as regional banks. Well,
(10:17):
it wasn't that long after that one of them came back,
which is the one we're talking about today. National City
is now PNC, and by the way, PNC stands for
previously National City for those of you who were working
there that day that that announcement was made and those
little posted notes went up all over the windows anyway,
so you just never know. Is the point two banks
that looked otherwise the same one made it. One didn't
(10:38):
through that crisis. So this is why we always say,
be super careful not to have your absolute entire livelihood
and gymnastig tied to one company.
Speaker 3 (10:45):
Find a way to get it diversified.
Speaker 4 (10:47):
Yeah, and there are strategies to do that. I mean,
you know, I jokingly mentioned direct indexing. I mean, color strategies,
just good old put options, you know, to protect a
large position. There are strategies in play us to protect
the downside while still participating in the upside. But you
need a plan. Here's the all Worth advice. Loyalty to
(11:08):
our wonderful local companies is admirable and well placed, but
your retirement shouldn't depend on just one ticker symbol. Diversify
with purpose coming up next, how investors can lose thousand
avoidable taxes by putting the right investments in the wrong accounts.
You're listening to Simply Money, presented by all Worth Financial
(11:30):
on fifty five KRC the talk station.
Speaker 3 (11:33):
What they want to hear in the no twenty four
hours a day. We only deal in what you need
to hear these days. You need to keep an open mind.
On fifty five KRC the Talkstation.
Speaker 5 (11:48):
Allworth Financial a registered investment advisory firm. Any ideas presented
during this program are not intended to provide specific financial advice.
You should consult your own financial advisor, tax consultant, or
a state planning attorney to conduct your own due diligence.
Speaker 4 (12:07):
You're listening to Simple Money because that about all Worth
Financial UNBOP sponsorller along with Brian James. You've saved, diligently,
built your wealth wisely. But now what we're tackling the
biggest questions real families are asking about what comes next?
Straight ahead of six forty three. All right, you've done
your homework, You've got a diversified portfolio, you've picked strong funds,
(12:29):
have a solid foundation, maybe even some tax efficient ETFs.
But here's the question, did you put all of those
investments in the right places. Tonight, we're diving into what
might be one of the most overlooked and most expensive
mistakes we see when talking to folks in our office.
Speaker 3 (12:48):
Brian, let's get into it.
Speaker 1 (12:49):
Asset allocation versus asset location. One syllable makes a huge difference,
So we're gonna separate these two terms. It kind of
sound the same, but really couldn't be more different. Asset
allocation is the different types of things that you own
that make up a portfolio of stocks, bonds, alternatives, real estate,
you know, whatever else you've got there that make up
your overall asset mix.
Speaker 3 (13:10):
Asset location is where you put them.
Speaker 1 (13:12):
Is this and there are really three kinds of tax
treatment accounts. Asset location refers to tax treatments. Is it
a taxable account, is it tax deferred which means pre tax,
or is it tax free otherwise known as roth, or
possibly mean this babond something like that.
Speaker 3 (13:27):
So here's the thing.
Speaker 1 (13:28):
Some investments themselves, right that it's one thing to put
that put an investment in a certain type of account,
but there are certain investments themselves that can be more
tax efficient than others. Just no matter what accounts you
put them in, so where you park those accounts can
directly impact your annual tax bill and your long term returns,
because we want to we want to be thinking about
after tax returns, not just before.
Speaker 4 (13:51):
And we're going to walk through a couple of actual
examples here, so you know, we run into this all
the time.
Speaker 3 (13:57):
We call it the.
Speaker 4 (13:58):
Dey you know, dey mistakes that do it yourself mistakes.
Let's start with a hypothetical couple named Jeff and Rachel.
They're both sixty two and they're recently retired. They've got
three million dollars split evenly across three accounts, about a
million dollars in an IRA, a million dollars in a
Wroth IRA, and another one million dollars in a joint
(14:21):
taxable account. They've got a solid sixty percent stock forty
percent bond allocation, but they spread it evenly across all
three accounts. Each one has that same mix of stocks
and bonds, and Brian, what's the problem. The bonds, obviously
in that taxable account are generating interests at ordinary income rates,
(14:42):
and in their case that's thirty two percent. These people
are still working on earning a high income. The Wroth
account is holding value stocks and reads, which could have
been more tax efficient. You know, if the assets have
been placed elsewhere. They're losing thousands of dollars a year,
all because of how and where they place their assets,
(15:02):
not what they own. What they own is fine, it's
just where it's.
Speaker 1 (15:06):
Located, right, So I think let's drill into this a
little bit what we're talking about. So the reason we're saying,
for example, that value stocks and REITs are not very
efficiently held in the rocks because those are already slightly
more tax efficient on their own. Value stocks will spit
out a dividend. Dividends are generally taxed at fifteen percent,
not always, but most of the time there's a fixed
(15:29):
rate on them, not as ordinary income. So on the
other hand, the ordinary income types of things they own,
they do own a bunch of bonds, and that's sitting
in a taxable account. If they flip those over, right,
maybe they sell the bond funds in the taxable account
and buy and rebuy the value stocks and the real
estate investment trusts in that account, and then do the
same thing in the wrong Now they will have replaced
(15:49):
their assets.
Speaker 6 (15:50):
Now.
Speaker 1 (15:50):
It's never this simple of course, because that itself might
incur taxes, but it's something worth looking at and hopefully
that illustrates the impact of making sure we've got the
right assets in the right type of tax treatment type accounts.
Speaker 7 (16:03):
All right, hey, I've got.
Speaker 4 (16:04):
A question for you, because you know, to your point,
there is no one size fits all way to do this,
and I'm interested in your perspective on this because you know,
we all build financial plans every day and you might
have a little bit different perspective than me on this.
But if you're taking a regular income stream from a
(16:24):
taxable brokerage account, you know it is important to control
volatility in that account when you're pulling money from it.
Speaker 3 (16:32):
Is it wrong to have any.
Speaker 4 (16:34):
Bonds whatsoever in a taxable brokerage account, Brian No.
Speaker 3 (16:38):
I would I wouldn't say necessarily.
Speaker 1 (16:39):
And it's really only been, you know, the last couple
three years where I would say that that municipal bonds,
but for the highest brackets that I would say municipal
bonds have really been worth paying attention to. When rates
started to go up again and these types of assets,
we started to see more of a spread between taxable
and tax free as opposed to everything being on the
floor for fifteen years, then this wasn't quite as important.
(17:01):
You would you would basically on an after tax yield
in your taxable bond portfolio. You just wouldn't see as
much after tax rate of return, and it was a
little benefit to the tax free side. But now I
think I think it's now worth looking at. Now we're
kind of back to where we were again, maybe fifteen
years ago or so, where it makes more sense to
think about these things and think about bonds in general.
(17:22):
Now that that interest rates are off the floor, bonds
have a little bit more ability to move and can
can really be treated the.
Speaker 3 (17:28):
Way they were a while ago. Hopefully we'll get to
stay in that environment for a little while.
Speaker 4 (17:31):
All right, let's look at another case example. We'll talk
about Lisa. She's fifty nine, recently widowed. She has a
net worth of a little over five million dollars. Her
late husband managed their money himself, and now she's working
with an advisor. The advisor runs a tax analysis and
discovers her municipal bonds are placed in a rough IRA,
(17:53):
completely wasting that tax free you know, place to own assets.
Her growth stocks earned traditional IRA, setting her up for
huge require minimum distribution problems, and her taxable account has
bond funds that are spending off about twenty two thousand
dollars a year in fully taxable interest. I think this
(18:14):
this case is kind of making the point you know
you just made on it. It's a good time to,
you know, do a little bit of an inventory and
audit and see where all this stuff is placed. In
this case, the advisor rebounds everything for tax efficiency and projects.
Speaker 3 (18:30):
Forty one thousand dollars.
Speaker 4 (18:31):
In tax savings just over the next decade, Brian by
doing nothing but doing some planning and just relocating where
these assets are held.
Speaker 1 (18:40):
So I think one quick just a point of clarification here,
why why does it matter that her municipal bonds were
sitting in a wroth. Well, municipal bonds are tax free
no matter where they sit. That can be in a
taxable account, individual account of trust or whatever. They're not
gonna you're not gonna pay income taxes on those municipal bonds.
But if they're held in a roth, that means that
means you're waste that those dollars on something that was
(19:02):
tax free to begin with. And the other important point
is there's a difference between municipal tax free income and
taxable income. Bond interest that is taxable could be let's
call it four percent the comparatible comparable amount, and a
tax free and uni portfolio might be three percent. So
you're already giving up money on the front end. It's
the tax free You got to do the after tax.
Speaker 3 (19:20):
Analysis on that to find the benefit.
Speaker 4 (19:22):
Here's the all Worth advice. It's not just what you own,
it's where you accounts big time. Think your money safe
just because it's in the cloud. An Amazon cloud outage
this week proved otherwise. Next, why third party risk is
quietly becoming one of the biggest threats to your finances
in what you can do about it. You're listening to
(19:44):
Simply Money is thated by all Worth Financial on fifty
five KRC, the talk station.
Speaker 3 (19:50):
From Portland. Portland has been on fire for years to Chicago.
That's a great city. That's like a war zone to
write here in town. I mean it feels like things
are just getting.
Speaker 8 (19:59):
Work and worse.
Speaker 5 (20:00):
Fifty five krsers an iHeartRadio station.
Speaker 4 (20:09):
You're listening to Simple Money, presented by all Worth Financial.
I'm Bob Sponsorer along with Brian James joined tonight by
our cybersecurity and technology guru, mister Dave Hatter. Dave, thanks
as always for being with us, and we got a
lot to talk about tonight, so let's get into it first.
We are really interested to hear your perspective on this
(20:29):
recent Amazon Cloud Services outage that had a lot of
stuff shut down for a couple of days.
Speaker 3 (20:36):
What was going on there and what do we need
to be aware of? Yeah, Dave, why did all my
stuff break the other day?
Speaker 7 (20:41):
Well, as always, thanks for having me on guys.
Speaker 9 (20:43):
And you know, Amazon Web Services is a cloud provider
that provides services for lots of other companies. Some estimate
anywhere between thirty percent and thirty eight percent of essentially
all Internet based services. You know, think of anything that
you're using online, your bank, you're a great net of
things device. I don't know if you guys saw sleep
number beds stop working because of this, but they host
(21:04):
about thirty eight percent of that. So when there's an
outage like this, which lasted roughly fifteen hours, and experts
estimate will.
Speaker 7 (21:12):
Cost billions of dollars by the time it's all added.
Speaker 9 (21:14):
Up across all the different services that went down, including
things like Zoom and video games like ropeblocks.
Speaker 7 (21:20):
It's pretty devastating. You know.
Speaker 9 (21:22):
While I'm generally a proponent of cloud based services and
the three big providers. You got AWS, you got Microsoft,
and you've got Google Cloud. Kind of the three main players,
there are others out there. It does, in my opinion,
show we continue to build systems that are sort of
brutal and fragile, and as our society becomes increasingly digital,
we rely on these things.
Speaker 7 (21:42):
I mean, you could see the impact.
Speaker 9 (21:43):
Even your Internet of Beings devices, ring cameras and so
forth stop working because the backing services that make it
work are hosted in these giant cloud providers like AWS.
Speaker 7 (21:52):
So it's concerning to me. Thankfully, the outage wasn't that long.
This isn't the first one. Every one of these major
providers has had some sort of like this.
Speaker 9 (22:01):
You know, in my mind, it shows we have to
be focused on robustness, resilience, and uptime versus cost and
market share.
Speaker 4 (22:10):
Well, Dave, I'll tell you my wife had no problem
continuing business as usual with AWS. I mean, the little
blind that she ordered to go in our bathroom windows
showed up as scheduled. She still managed to work through
this and spend money. So but in all seriesness, what
are we supposed.
Speaker 7 (22:28):
To do about it?
Speaker 4 (22:29):
I mean, the world has evolved to where we we
do we just depend on all this stuff just to function.
Are there any are there any practical tips or pieces
of advice, you know, relative to this outage that we
should be aware of and anything we should take actual
action on.
Speaker 9 (22:46):
Well, the good news is, at this point, from what
they've reported, it appears to be a DNS do may
name system issue that caused services to go down inside AWS,
which then rippled out to the companies that depend on it.
Speaker 7 (22:57):
So it doesn't appear to be a cyber attack.
Speaker 9 (22:59):
But again, when you think about things guys like that
are proposed digital ID, central bank, digital currency. Imagine if
this weren't just a simple mistake or mechanical failure or
something that caused this, and it were an intem nation
state actor like China that deliberately knocked this out, and
let's say it couldn't be repaired in fifteen hours, let's
say it took fifteen days.
Speaker 7 (23:18):
Think of the impact of that.
Speaker 9 (23:19):
So we've got to be as our society becomes increasingly
digital and increasingly.
Speaker 7 (23:23):
Reliant on these sorts of technologies.
Speaker 9 (23:26):
We really need to be thinking about the impact on society,
the possible disastrous consequences of wide scale, long term outages,
and be focused on building systems that again are resilient
and robust. I mean, this is the prime example of
third party risk. You build a service that relies on
another service, it goes down and now you're out. And
too much concentration in the hand of all the hands
(23:48):
of a small number of players. So there's no simple
answer for this going forward other than businesses need to
think about how can they Dislike you, guys would advise
and investing, diversify so that you're not dependent on one
provider who then takes you out to a third party outage.
Speaker 3 (24:05):
Yeah, got you, Dave, So thank you for that for
the summary there. So let me ask you.
Speaker 1 (24:10):
You're a business owner, so and you would have done
things a long time ago. I'm sure there really is
nothing that you did in response to this, But what
are the steps that you took as a business owner
to protect yourself from these types of things.
Speaker 9 (24:20):
Well, again, it's really about diversification, understanding the players, getting
things like a sock two type two audit, understanding what
is their disaster recovery policy, What is their uptime and
SLA agreements with you as part of their contracts. You know, again,
cloud services in general, I'm a fan of it reduces
(24:42):
capital expense, it reduces complexity on prem but you've got
to understand the players. And again, while there are ways
even within these providers, like Amazon Web Services has multiple
different data centers across the country, it costs more to
try to build resilience in It costs or to diversify
across multiple cloud service providers to limiture risk and it
(25:05):
you know, I understand why businesses will put all their
eggs in white basket and look for the low cost solution.
But at the same time, how much downtime can your
business withstand? If you're down for three or four days
because of a third party outage to a provider you use, well,
you know they're not going to pay you back for
that in all likelihood?
Speaker 7 (25:23):
Can you withstand that kind of outage?
Speaker 9 (25:25):
So it's guys, it's really thinking about risk and you know,
making risk informed decisions and trying to mitigate the risk
to the extent your budget can withstand it, and that
you can withstand outages.
Speaker 4 (25:36):
All right, switching gears here to you know, because what
we're talking about right now is things business owners probably
need to think about, you know, thinking about ordinary folks
that are subject to potential hacking schemes. Here you came
across the story, you know, when we talk about this
all the time, the risk of AI coming in and
hacking people and committing cybercrime.
Speaker 3 (25:57):
Talk about this most recent AI really really cyber crime spree.
Speaker 7 (26:02):
Yes.
Speaker 9 (26:03):
So the bottom line is, for the average consumer, your
biggest risk from AI is deep fakes and spoofing. It's
it's trivially easy to go online, find a free sight
and clone someone's voice, create completely fake videos, etc. People
need to look into that and need to understand that risk.
This article, though, is about, you know, more of a
business angle around a hacker who went out and used
(26:23):
anthropics claude, which is a quote.
Speaker 7 (26:26):
It's primarily focused on.
Speaker 9 (26:27):
Quote vibe coding unquote, which I hate that term, but
it's the idea that you don't need to know how
to write software anymore. You just tell the AI what
you want and it produces it for you. I can
tell you there are.
Speaker 8 (26:37):
All kinds of problems with that, but suffice it to
say that's become a common thing in the business, and
a hacker used this to essentially go out and say,
all right, I want to find companies that have vulnerabilities.
Speaker 9 (26:52):
And then once I've identified these companies that have vulnerabilities,
vulnerabilities meaning like you have old unpatched software, you have
stuff that's no longer supported by the vent there, you
have known problems that have not been fixed in your environment,
which is common guys, very common across businesses and governments.
Find those companies and then create It showed me how
I can exploit those vulnerabilities, whether it's you know, try
(27:15):
this particular approach on this particular firewall, write some software
or whatever that would allow me to exploit these this
this particular individual or individuals. Basically, then you know, used
claw to figure out who to attack because they have vulnerabilities,
and then build tools using this to specifically attack them.
Speaker 7 (27:34):
And you know, that's kind of where we're at, you know.
Speaker 9 (27:37):
Sadly, while there's a lot of upside AI, some of
the downside is it supercharges these sorts of attacks, and
it gives people who would not normally have this knowledge
or skills to launch these sorts of attacks. The ability
to do it because the AI helps them.
Speaker 4 (27:53):
All right, We got to leave it there for tonight.
We are certainly living in interesting times, thanks as all
these Dave. You're listening to Simply Money, presented by all
Worth Financial on fifty five KRC, the Talk Station.
Speaker 6 (28:05):
Mark Levin, you know, America, we spend an awful lot
of time in this country responding to an unreality created
by the people who hate America, created by people who
get sucked into the narratives that are pushed out there
each and every day. And they're posting, and they're posting,
and they're posting, and they'll move on to the next thing,
and the next thing and the next thing.
Speaker 3 (28:25):
That's what the media enemy do.
Speaker 2 (28:26):
Mark Levin tonight at ten oh six on fifty five KRC,
the Talk Station.
Speaker 3 (28:32):
Why don't you grab a pen you're going to want
to take this number of year?
Speaker 9 (28:35):
Why do we keep letting thousands of people come over
and do nothing about it?
Speaker 3 (28:38):
My family's safety is at risk. Fifty five KRC, the
Talk Station. You're listening to Simply Money.
Speaker 4 (28:48):
Is that a buy? All Worth Financial and Bob Sponseller
along with Ryan James. 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 apps, record your question and it will come
straight to us. Allison in Lebanon leads us off tonight, Brian.
She says, I'm in my fifties and my spouse and
(29:09):
I have very different risk tolerances. How do you build
one plan when one person's nervous and the others aggressive.
This happens from time to time, Brian. We see this
more often than not. It's a great question to dive into.
Speaker 3 (29:24):
Yeah, go figure marry.
Speaker 1 (29:25):
Couples don't tend to agree on absolutely everything, and so
this is another place where sometimes some differences can come in.
Speaker 3 (29:33):
Now.
Speaker 1 (29:33):
Interestingly, I would say more often than not, there's a
there's a difference of opinion in UH, in risk tolerance,
and frankly, this is the kind of thing that keeps
marriages alive.
Speaker 3 (29:42):
If everybody agreed on everything, I think everybody would be divorced.
It doesn't doesn't resent ten to go very well. Anyway.
How do you deal with this?
Speaker 1 (29:48):
Well, first of all, understand exactly what each other means.
A lot of people will say they're they're, they're there.
They'll say they're conservative when it comes to investments, but
then we look at a portfolio and it looks not
necessarily aggressive, but it's much more growth oriented. So make
sure everybody's defining the terms, you know, the right way.
Conservative can simply mean I don't want to get into
cryptocurrency or speculative types of stuff. I don't want to
(30:09):
be day trading that kind of thing. But I might
be okay with a portfolio of S and P five
hundred based index type stocks because I know the market
goes up and down. Or it can mean I want
to bury everything in the backyard and never read a headline.
So just make sure you have big discussions about what
the impact of those various types of portfolios will be.
You know, somebody who is so super conservative that they
(30:31):
want to again bury everything in the backyard and never
see any fluctuation is probably going to eventually suffer from
inflation eating away at the portfolio if nothing is really growing.
Somebody who's on the other end of the spectrum, who
is extremely aggressive is going to have some very bumpy,
white knuckle times during those market pullbacks that.
Speaker 3 (30:49):
Don't feel that like that big of a deal.
Speaker 1 (30:51):
When your thirties forties still working, but will really change
the trajectory when you are retired and you've got really
the big thing is time to think about it, and
it's impacting your portfolio. So the right answer is going
to be somewhere in the middle. But bring everybody to
the table with a financial advisor. And the more Alison
you talk to your spouse about this and not the advisor,
(31:12):
the better off you'll be. Let the advisor be in
the middle to kind of mediate that conversation. But it's
an important, good conversation they have, especially as you're starting
to head into those retirement years. Jeff and Anderson. Jeff
says they've got a few advisors in the mix. They've
got separate tax, legal, and investment people, and they've worked
together for a long time. But these groups are not
talking to each other. How do you actually get everybody
(31:32):
on the same page. Sounds like Jeff's being a sort
of pinball or ping pongs between all these different advisors.
Speaker 3 (31:37):
Bob, have you run across that.
Speaker 9 (31:40):
I have.
Speaker 4 (31:40):
I run into it all the time, and I'm pretty
passionate about this topic. So Jeff, I'm going to use
a football team analogy. Hope this makes sense. What you've
got right now, And you might have very good ones,
but you've just got a bunch of different players running
around on the field, very skilled probably players, but they're
not talking to whateother and they're not coordinating with one
(32:01):
another's which means you don't have a head coach. You
don't have a head coach putting together a game plan,
forcing communication between these people. And this is what a
fid financial advisor is supposed to do. Take the bull
by the horns and speak with you who I will
say is the general manager of this hypothetical football team,
(32:23):
because let's face it, you've got hiring and firing power
over everyone, which is how it should be.
Speaker 3 (32:30):
But a good financial advisor, a true fiduciary, brings.
Speaker 4 (32:33):
These people to the table sparks, communication and planning. And
I have found over many, many years, all of these
CPAs and attorneys are more than willing to work with
me if I treat them with respect and I value
their opinion. And sometimes they don't want to talk to
commission salespeople because those people are not fiduciaries and they
(32:58):
can smell a sale coming from you know, a mile away,
and they don't want to interact.
Speaker 3 (33:02):
With those kind of folks.
Speaker 4 (33:03):
So get a good fiduciary financial advisor to really run
the show here. Get people in the same room, force
the communication, get the team members working together, and Jeff
as the general manager. You and your family are going
to come out way ahead if you can get everybody
working together. Hope that helps, all right, Tom, and Montgomery says,
(33:26):
We've say invested for years, but now that retirement is near,
I'm realizing we've planned for growth, we haven't done anything
to plan for income. How do you shift gears without
completely starting over?
Speaker 1 (33:39):
Well, Tom, that's a great question, and I hope you're
not kicking yourself too hard because that's what you should
have done, you know, investing for growth before you're retiring.
That's that's how you get to the point where you
can retire. So again that you've made the right moves.
It sounds like you're just trying to think about what
that next step is. So and you're not alone, right, So,
there was a study done by JP Morgan in twenty
twenty five. They found that seventy percent of pre retirees
(34:02):
still have growth heavy portfolios. And heck, I would put
myself in this category. I'm fifty one and I'm still
all growth. I don't really care what the market's gonna
do to me in the next ten fifteen years while
I am heading into retirement myself.
Speaker 3 (34:13):
So I think the right way to handle.
Speaker 1 (34:15):
This is is to just it's a transition, and you know,
maybe think about it this way. You're going to want
to think your money and say three buckets, so one
to two years worth of your income in cash and
short term.
Speaker 3 (34:27):
This is kind of an emergency fund.
Speaker 1 (34:29):
It's also kind of just a short term we are
going to consciously spend these dollars, and you want to
park this in something that's getting a little bit interest,
maybe three and a half four percent you should be
able to get right now, but consciously spend that down
over time, and then you're gonna have a second bucket
that's more medium term income. This could be bond ladders
or perhaps dividend paying ETFs that kind of thing. And then,
(34:49):
of course you got your third bucket, which you already
have plenty of and most people do. That's your long
term growth stocks and equity funds. And as these buckets,
think of it this way, that long term growth bucket
is the one that's going to grow the most. Let
it overflow occasionally into the medium urn bucket. In turn,
that medium term bucket should be spitting interest into your
cash and short term bucket. This isn't something you're going
to accomplish in an afternoon, but those I think are
(35:11):
the kind of that that's a good way to break
it down, to really get down to what you need there.
So I think we have time for one more quick one. David,
and Mason says his wife and he are both self employed.
Income moves around a lot. How do you create a
stable financial plan when that paycheck isn't quite predictable?
Speaker 4 (35:26):
Well, real, David is someone who owned a business, you
know personally for years and years. I've lived this, and
here's my quick and simple answer. You need a larger
emergency fund. You just and I know it's boring, it's
not sexy, you don't earn a big return, but you
got to just put a little bit more money away,
you know, for a rainy day, and make sure you
don't get into a problem, you know, with short term
(35:48):
cash flow.
Speaker 3 (35:49):
Coming up next, we've got Brian's bottom line.
Speaker 4 (35:52):
You're listening to Simply Money, presented by all Worth Financial
on fifty five KRC, The Talk Station.
Speaker 3 (35:58):
You, I got a lot do you.
Speaker 6 (36:00):
I do got to put up these Halloween decorations, do.
Speaker 5 (36:03):
Some work, do the laundry.
Speaker 3 (36:04):
We do have to go shopping. Will this is what
we do. Do the rest.
Speaker 7 (36:08):
It's time to do it.
Speaker 3 (36:09):
We do traffic and weather, doing the news at the
top and bottom of the hotus.
Speaker 7 (36:13):
It's the most important thing we can do do check in.
Speaker 3 (36:15):
Let's do it the way you want. I do need
to know. It's important that we do it today. While
doing your day. There's always more to do. I ain't
doing nothing today. I do have something to say, so
let's do it. On fifty five KRC the Talk Station. Hey,
is Brian Thomas wisk I am.
Speaker 4 (36:30):
So worried that next month I have to choose between
groceries for my kids or gas for my car.
Speaker 3 (36:35):
Talk about it here fifty five KRC, The Talk Station.
Speaker 4 (36:43):
Moment you're listening to Simple Money? Is that about all
worth financial? I'm Bob sponsorller along with Brian James. Speaking
of Brian James, it's time for Brian's bottom line. Brian
wants to highlight a bit of an income to tax
I think loophole for our friends in northern Kentucky, which
is worth learning about.
Speaker 3 (37:01):
Brian, what do you have for us tonight?
Speaker 1 (37:03):
Yeah, So, first off, I want to thank all of
you for your service, those of you manning our three
forts down there for it's mental right, and Thomas defending
us from the mongol hordes of Florence. But Kentucky actually
has some retirement tax breaks. This isn't quite Florida or
you know, it's not a tax free state, but there
are some things, some moving parts there that could be
attractive to you. So you know, let's start with the basics.
(37:24):
Kentucky does not tax your Social Security benefits. Zero's abziltch.
Speaker 3 (37:28):
They do not at all.
Speaker 1 (37:29):
And the other piece of this, the state gives each
retiree what's called a retirement income exclusion. Right now, that
exclusion is thirty one thousand dollars a little over thirty
one thousand per person. We're not talking federal by the way,
this is Kentucky state income tax. So that means the
first thirty one thousand dollars of retirement income, which includes
pension IRA four one kadrawals, can be completely free from
(37:49):
Kentucky state income tax.
Speaker 3 (37:51):
And so there's more to that.
Speaker 1 (37:53):
There's potentially a bill on the floor in frankfort House
Bill one forty six could raise that exclusion up to
forty one dollars starting in twenty twenty six. So if
you're maybe planning on major withdrawals from your retirement accounts,
it might make sense to try to push that into
twenty twenty six if you, if you.
Speaker 3 (38:10):
Have the ability to do that.
Speaker 1 (38:11):
And so also a special carve out for public service
employees teachers, firefighters, police, other state workers if part of
your pension is from service before January first, nineteen ninety eight.
Speaker 3 (38:22):
Right, So we're going back aways here. You got to
think about this one.
Speaker 1 (38:24):
That portion from before that timeframe can be completely exemped
from Kentucky income tax. So it could be a big
deal for long tenured public retirees who have been around
for a little while.
Speaker 3 (38:34):
So, Brian, this is this is good stuff.
Speaker 4 (38:36):
How you know, how do you segregate income coming from
before nineteen ninety eight.
Speaker 3 (38:41):
I'm curious. Oh, I don't know. I don't But that's
a whole segment unto itself. Bob.
Speaker 1 (38:45):
No, if this, if this affects you, it'll it should
appear on your pension statement. There should be a category
that says this, this income came from before January whatever
of nineteen ninety eight. You're not going to be able
to determine that on your own. That's for actuaries to track.
Speaker 4 (38:57):
So it's kind of much a proportional proportional calculation of
your pension based on how much was a crude prior
to ninety eight.
Speaker 1 (39:04):
Correct, And for those of you who have done your
own taxes for a long time, you'll remember things like
if you had an IRA before or a four oh
one K before nineteen eighty three, there are these rules
that apply and so forth. Those are these are all
things that you would be running across and say turbo
tax or whatever. But so a good deal for you know,
people in Kentucky. Real quick comparison, how does this look
in Ohio? Will pretty much most retirement income, including IRA withdrawals,
(39:27):
is fully taxed at the state level, although Ohio did
recently cut its taxes to the three percent range. Indiana
pension and IRA income is also taxable, but you do
get a smaller deduction for certain public pensions. But within
these listening area here, Kentucky's system is one of the
more generous in the region.
Speaker 4 (39:44):
I think I'm going to sell my house immediately and
move to Covington.
Speaker 7 (39:47):
Thanks for listening tonight.
Speaker 4 (39:48):
You've been listening to Simply Money, presented by all Worth
Financial and fifty five KRC the Talk station, Mark Levin.
Speaker 6 (39:55):
Probably the people who should be listening aren't, but there
are a lot of people who tune in actually, and
then they start listening.
Speaker 3 (40:00):
I get this wherever I go and listen. I listened
for a week. I listened to two. He said, I
like this guy. I like what he has to say.
Speaker 2 (40:07):
Mark Levin Tonight at ten o six on fifty five KRC,
the Talk station.
Speaker 3 (40:13):
Maybe this is you
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