October 30, 2025 • 41 mins
On this episode of Simply Money presented by Allworth Financial, Bob and Brian break down the latest Fed interest rate cut and what it means for your portfolio, borrowing costs, and the broader economy. They also spotlight Apple’s record-setting $4 trillion valuation, why it matters for your investments, and the behind-the-scenes changes happening in the S&P 500. Then, cybersecurity expert Dave Hatter joins the show to explain why elder scams are becoming a full-blown financial emergency—and how you can protect your family. Finally, the team answers your questions about backdoor Roths, mutual funds in taxable accounts, and how to think about refinancing in today’s rate environment.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
These foochs when the top of the hour news is
scary enough, quite happening minutes away by fifty five KRC.
Speaker 2 (00:14):
Tonight, the Fed lowers interest rates, protecting your family from scammers,
and we do answer your actual questions you're listening to
simply money, presented by all Worth Financial on Bob Sponseller
along with Brian James. Well, it came as absolutely no surprise,
but this time it was a bit unique, Brian, because
it happened during a government shutdown where data is a
(00:37):
little bit harder to come by. The Federal Reserve did
lower interest rates today.
Speaker 3 (00:42):
Yep, the lowered rates by quarter of a point, so
that puts interest rates between three seventy five and four percent.
This is the second time this year that they've lowered
interest rates, and the forecast is more to come. So
why are we doing this? This isn't like you said,
it's not a big shocker here. We're just at that
time of the economic cycle. Less to do with inflation
this time around, though, and more to do with the
(01:03):
labor market. So the reason is because we've had climbing
unemployment insurance claims and that suggests that labor market demand
is continuing to cool off because businesses are just slowing
down a bit, and that's an indicator it's time to
tap the gas.
Speaker 1 (01:15):
And so that's what we've done here, And so the.
Speaker 3 (01:17):
Government shutdown a delayed publication of most of these economic statistics,
including that unemployment rate. But anyway, it was last estimated
at about four point three percent in August.
Speaker 2 (01:27):
Yeah, I guess the thing counterbalancing the slightly weakening labor
market is we did get milder than expected inflation readings
last week.
Speaker 1 (01:37):
You know.
Speaker 2 (01:37):
That showed CPI consumer price Index rose three percent in
the last twelve months through September. The core inflation rate
was also at three percent, So at least temporarily, a
lot of these worries earlier in the year about tariff
driven extreme inflation are a bit on the back burner,
although we still have that big elusive trade deal to
(02:00):
work out with China, President Trump and President Chi. Supposedly
you're going to sit down and talk about that, you know,
yet this week, So we'll see what happens. Yeah, And
all signs point to more rate cuts too coming in
to the future. Because remember the thing we like in
almost as much as the rate cut announcements is what
do they indicate their thinking in advance here.
Speaker 1 (02:21):
So the.
Speaker 3 (02:23):
Statement that came out last month's after last month's quarter
point rate cut referenced additional adjustments to the policy rate.
The federal meet again in December, and of course we're
going to go through this again. If the shutdown is
still dragging on, we're still going to be flying a
little bit blind.
Speaker 1 (02:37):
But as we're sitting here right now.
Speaker 3 (02:38):
The market does seem to believe that there will be
future rate cuts coming for the balance of quarter four.
Speaker 2 (02:43):
So let's get into the potential impact on you for
all of this meaning lower rates. I mean, let's face it,
lower interest rates can mean borrowing costs or cheaper for businesses,
and that boost profits, which boosts stock prices. And we're
already kind of seeing that, you know, the market's pricing
this in this market continues to inch higher and higher
(03:04):
growth stocks, especially tech and consumer discretionary sectors often benefit
the most because their future earnings look more attractive when
discounted at lower rates. And we're starting to see finally
a little signs of life out of small cap stocks
for exactly this reason. A lot of these small caps
tend to have a bit more debt on their balance sheets,
(03:25):
and when the cost of that debt goes down, you know,
that means more profits for these companies. And Brian, we're
still in the middle of We're right smack in the
middle of earning season. We got a lot of bank
earnings out over the last week. Those numbers are good.
We're going to get some big tech earnings, you know,
ongoing the rest of this week.
Speaker 1 (03:44):
So we'll see how the report cards come in.
Speaker 2 (03:47):
But hey, anytime the cost of money goes down, that's
usually a good thing for everybody.
Speaker 3 (03:53):
Absolutely, And I would throw out one more reminder for
the bazillion time of how important it is to stay diversified.
Despite when we think we have our face, you're on
the pulse of the market. A lot of people out
there decided, you know what, I just want to reduce expenses,
and I'm just going to sit on the S and
P five hundred and that.
Speaker 1 (04:08):
Is large cap stocks.
Speaker 3 (04:09):
That is literally the five hundred largest companies of the
United States, and that is a great core holding. I
can't imagine we'd ever say otherwise. That said, if that's
all you've been doing, then you're missing out. You're leaving
some money on the table here, because as Bob just mentioned,
the small caps and the midcaps are running a little
bit because they will benefit. Those are the companies that
are just the reason they're small is they're trying to
grow from nothing, and they're using bank dollars to do it.
(04:30):
They can increase their profit margins as those interest rates fault.
Not to mention if you've been ignoring international stocks and
emerging markets, and SP five hundred is up about seventeen
percent as we're speaking, twenty six percent for the internationals
and about thirty three percent for the emerging market, So
you're leaving money on the table if you're not staying
diversified properly.
Speaker 1 (04:50):
And speaking of different asset classes.
Speaker 2 (04:52):
I mean, let's face it, bond prices typically rise when
interest rates are cut too. Why because existing bonds with
higher yields subtly become more attractive when new bonds are
issued at lower interest rates. A lot of people remain
very confused about how bonds work. I had a meeting
in my office yesterday with a very very intelligent, retired
(05:13):
gentleman who still needed me to kind of walk him through,
you know, bonds one oh one and how this all works,
and I think a lot of people get confused on that.
So you know, we're seeing again signs of life out
of the bond market. It's been kind of quiet and
in the background. But not only have you gotten a
pretty decent return out of bonds, but that might continue
(05:35):
here if rates continue to go down. You know, the
only thing that gets heard on this is savings account
rates and CDs and other money market funds. You know,
if as the Fed lowers rates, the interest rate you know,
being paid on these short term instruments, these liquid instruments
will come down too. So you know, just we're calling
(05:55):
that out, but beware, do not you know, watch your
saving's account rate fall down and say, well, gosh, I
need to go buy tech stocks with this money. Remember
you got an emergency fund for a reason, and that's
emergency liquid ready money. It shouldn't all of a sudden
become speculative because Apple breaks out, you know, of a
(06:17):
short term.
Speaker 3 (06:18):
Right, And I think that the middle point there too
is that if you've got a pile of money sitting
out there and some you know, some people are sitting
on cast, that's well more than their emergency fund.
Speaker 1 (06:26):
Just just for that security.
Speaker 3 (06:28):
Well, be realistic about how often you're actually going to
need to tap into that, and if the answer is
not all of it very very frequently, then go ahead
and lock some of it up one, two, maybe three
years in a CD and preserve some of these interest
rates where they are.
Speaker 1 (06:39):
It's still going to be safe.
Speaker 3 (06:40):
Yes, it'll be locked up, but you've probably got other
assets you could tap into if the wheels truly fell off.
You're going to keep some of it liquid anyway, So
but don't let the opportunity pass you by as these
rates fall.
Speaker 2 (06:49):
You're listening to Simple Money present up by all Worth
Financial on Bob Sponsorer along with Brian James. Well, you know,
everything is not one hundred percent hunky dory out there,
despite record in the stock market. Something we want to
touch on tonight is the credit sector. Brian. It's starting
to show a few cracks. Markets seem to be shrugging
it off for now, but let's unpack you know a
(07:12):
little bit of volatility that went on late last week
earlier this week in the credit market. It's just something
to keep an eye on.
Speaker 3 (07:20):
Yeah, So what we're talking about here is when companies
take out loans and they take them out of course,
from banks, and what do both sides do to protect
from that. So recent reports are showing that several institutions
are setting aside hundreds of millions of dollars for potential
loan losses. That that can be a sign of a
slowing economy, which also so can lowering interest rates, of course,
so let's not be surprised by this, but this is
(07:41):
just companies kind of planning for the future, even as
the broader market seems pretty comfortable. Things are going okay,
but some institutions are starting to set aside those dollars.
So some quick examples here, there's a company called Tricolor Holdings.
They're a subprime auto lender and a First Brands group
they're an autopart supplier. Both of those kind of ran
into try and that was raising some red flags, you know,
(08:01):
beyond the obvious here a little bit so a big
bank executive that's triggering them to be more cautious. Jamie Diamond,
we hear about him from him all the time. Of
JP Morgan Chase has said, and I quote, when you
see one cockroach, there's probably more, And he's just referring
to if one company is having trouble, then probably it's
elsewhere too.
Speaker 1 (08:19):
You just might not be seeing well.
Speaker 2 (08:21):
And as you already mentioned, a lot of what we're
talking about here is in the subprime space. And for
those folks at home where stars you know we're talking
about if you own high yield bond funds, those tend
to be funds that have below you know, triple A
even double A credit, you know, rated credit, and that's
where some of the cracks are coming in. I heard
(08:41):
an excellent interview yesterday morning with Brian moynihan, the CEO
of Bank of America. He seemed to think that, you know,
this is pretty isolated at this point to some of
these subprime lenders, some of these private you know, private capital,
private credit les that we've talked about before. So it's
(09:02):
just a reminder when you chase yield, whether that's in
private credit or highyield bond funds you got, you do
have to remember that you are taking credit risk when
you get into those instruments.
Speaker 1 (09:14):
So make sure that you're not.
Speaker 2 (09:16):
Over allocating to that sector or any of those sectors
just to chase yield, because the wheels can come off. Brian,
I've seen it over my career. You know, if we
have a credit crisis, these things can drop almost as
much as a decline in the stock market.
Speaker 1 (09:31):
So you just got to keep an eye on it.
I don't know what you're getting into, and remember them.
Speaker 3 (09:35):
It's not just interest rate decisions by the FED that
moves the credit markets. It's also the market itself. There
is supply and demand at play, just like there is
in the stock market. When investors get confident or lose confidence,
they will move the market and that does have an
effect on interest rates. That trickles all the way down
to your savings accounts and your mortgages and so forth.
Speaker 1 (09:54):
So learn what you own.
Speaker 3 (09:56):
Make sure you don't own anything that's going to sneak
up on you in that portfolio.
Speaker 2 (09:59):
This is a good time, you know, if you if
you do work with a good fiduciary advisor or if
you are a self directed investor. Either way, you know,
now's a good time to just kind of have an
audit of the credit quality of your fixed income instruments
in your portfolio. Just make sure that there aren't some
potential land mines out there. And you know, when when
(10:22):
the market anticipates something is awry here you'll see some
of those prices start to fall, and again, if that's
more volatility, then you may be bargained for. Talk to
your advisor or take proactive action to maybe move up
a little bit on the credit risk scale, to make
sure you keep yourself out of harm's way, because there's
nothing worse than going through a stock market correction and
(10:45):
also feeling like you're safe and diversified and managing your
overall risk profile by having money in bonds, but getting
too aggressive in your bond portfolio and then have everything
go down at the same time.
Speaker 1 (10:59):
That that's a real gut punch.
Speaker 3 (11:00):
Yeah, and so just make sure that again, just to reiterate,
make sure we're looking at quality over yield chasing. So
you're going to want to look at high quality corporates,
triple B and above treasuries, investment grade munities, and not
speculative stuff because you're chasing yield. And make sure that
you're using the appropriate bonds for your tax bracket.
Speaker 1 (11:17):
There are tax free opportunities.
Speaker 3 (11:18):
A lot of people have forgotten this because interest rates
have been on the floor for so long, so we've
kind of forgotten that if we own you live in
if you live in Ohio and you own Ohio municipal bonds,
for example, then you will not pay state taxes there.
Speaker 1 (11:30):
And that's the different rules for different states.
Speaker 3 (11:32):
But regardless, all municipal bonds will avoid federal taxes. The
rates are lower, the yields are lower. Understand the difference.
You have to look at the compare a CD or
a corporate bond with a municipal bond using a tax
equivalent calculation to understand what are you giving up if
you pay taxes on the yield versus if you take
a lower but tax free yield.
Speaker 1 (11:52):
It may or may not be beneficial.
Speaker 3 (11:53):
But that's why you need to have an advisor in
your corner or understand how those calculations work.
Speaker 2 (11:58):
Yeah, and building a ladder portfolio of the individual bonds
can help you on both ends. It can help you
on the maturity standpoints, so you know everything tied to
one time frame and from a credit risk standpoint, here's
the Allworth advice. Don't mistake call markets for zero risk,
monitor credit, focus on transparency and position now for the unexpected.
(12:21):
Next the company that just did something only two others
have done before and you likely already own part of it.
You're listening to Simply Money, presented by all Worth Financial
on fifty five KRC the talk station, and.
Speaker 1 (12:34):
That they're using the pain of the American people as
their leverage. This is our only moment of leverage. What's
Trump do? China?
Speaker 4 (12:40):
The day's use after Hurricane Melistity is on Jamaica the
disaster area fifty five KRZ the talkstation.
Speaker 5 (12:47):
All Worth Financial a registered investment advisory firm. Any ideas
presented during this program are not intended to provide specific
financial advice. You should consult your own financial advisor, tax consultant,
or estate planning attorney to conduct your own due diligence.
Speaker 2 (13:06):
You're listening to Simply Money, here's that I buy all
Worth Financial on Bob Sponseller along with Brian James. If
you can't listen to Simply Money every night, subscribe and
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or family or both could use some financial advice, tell
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Speaker 1 (13:28):
Straight Ahead at six forty three.
Speaker 2 (13:30):
From duplicate insurance policies to tax trapped mutual funds and
embedded gains, we answer real listeners questions that could help
you streamline your financial plan. Well, Brian, tonight a milestone
for what could be the most popular US company in history.
Speaker 3 (13:49):
That's right, we're talking about Apple today. Was I'm not
sure if there's a could be in there. I think
it probably is. That's probably more recognizable than these days
than a lot of the other ones that might.
Speaker 1 (13:57):
Qualify for that for that title.
Speaker 3 (13:58):
But Apple become the third public country and a company
in history to reach a market valuation for trillion dollars
in Nvidia did this recently, as did Microsoft. So no
shock that a lot of these headlines are coming out
of the out of the technology industry. So they did this,
how did they cross that line? Well, the launch of
the new iPhone seventeen and the slimmer iPhone Air, which
(14:20):
is slimmer everywhere except where that big fat camera is.
But that's not what we're here to talk about today,
generated stronger than expected.
Speaker 1 (14:26):
Up And you looked at one of these I did,
I did look at him. I'm an Android guy, right,
I like my freedom, But I did. I did. I
was curious about what was out there.
Speaker 3 (14:34):
But yeah, so so stronger than expected upgrades both US
and China, and the last couple iPhones didn't seem to
generate as much interest as these two have, so that
is pushing them beyond where they've been in the past
into the stratosphere evaluation. In addition, services businesses now this
is what this is, what's known as the App Store,
the subscriptions you can get there, and the cloud services
(14:55):
that they offer. Those are forecast to exceed one hundred
billion dollars that's billion with a B and annual revenue
for the first time. So again, a pretty good run
for Apple here and also responding to just an overall
healthy economy with a lot.
Speaker 1 (15:08):
Of growth prospects.
Speaker 2 (15:10):
Brian, here's what I think might be going on with
the iPhone, and I might be you know, a case
in point here. I had an iPhone thirteen and so
my battery I was just having to charge my battery
too much. And I think this might be what's going on.
You know, I went and looked at the seventeen, and
it's faster, it's got a better battery. I don't think
(15:32):
there's any new, you know, tremendous bells and whistles to
this thing that make it revolutionary.
Speaker 1 (15:38):
This is what I mean. I did.
Speaker 2 (15:40):
I bought the seventeen Pro Max because I'm getting older,
my eyesight's getting worse. I wanted that bigger screen just
so I could blow stuff up.
Speaker 3 (15:49):
Cinematic quality movies with your phone is absolutely I wouldn't you.
Speaker 1 (15:53):
Know me, I use my camera all the time. Are important. Yeah,
I might even make a movie of you. I might
take a movie of you talking on this show. That's
not terrifying. There's a reason we're on the radio. But
I'm gonna put I'm gonna put it out on TikTok.
Speaker 3 (16:06):
Look in the mirror both of us and realize made
faces for radio, all right, but no in all you know,
all joking aside.
Speaker 2 (16:14):
I think we're getting into a period now where people
just need to replace their phones because they're getting old.
Speaker 3 (16:20):
Yeah, sixteen kind of fell on its face, didn't get
a lot of demand. So that means if you didn't
buy one, then your battery, like you said, your battery
and all the other things are just that much older.
So yeah, I think that a lot of the demand
that's coming from it's just time.
Speaker 1 (16:30):
To do it.
Speaker 3 (16:30):
These are the things we have to get used to.
Writing a check for something we shove in our pockets every.
Speaker 1 (16:34):
Three four years.
Speaker 2 (16:35):
All right, Well, while we're talking about milestones and market
moving names like Apple, here's another angle that's worth your attention.
What happens behind the scenes in this broad benchmark index
we call the S and P five hundred. You know,
you probably already own Apple, and this is why this
matters to your portfolio. Two companies are about to be
(16:56):
added to the S and P five hundred. One is
a spin off of well International and the other is
a spin off of DuPont.
Speaker 1 (17:04):
When's the last time we talked about DuPont stock.
Speaker 3 (17:06):
Brian, Exactly, Yeah, these are these are not exactly the
darlings of the investment world these days. It's like it's
nineteen fifty and we're talking about the industry that the
titans of industry here. So but anyway, so that this
is this is how the S and P five hundred works.
It's not the it's not a static list of five
hundred companies. It does get updated based on what companies
are doing well and who earns the right to be there.
(17:28):
That these this is literally the five hundred largest companies
in the United States. A good, bad, are indifferent. It's
just based on the size of that company, and that
does change over time, reflecting who the winners are and
who the losers are.
Speaker 2 (17:38):
Well, and that's good news for you if you're probably
diversified and you own some of these you know s
and P five hundred ETFs or mutual funds, because you
already own the companies to Brian's point that haven't yet
grabbed headlines like Apple have. But you know, we could
be sitting here a year from now and talking about
completely different companies. And if you already have a i
(18:00):
mean your portfolio, you will participate. I mean case in point,
who who even heard of Navidia five six years ago?
Speaker 1 (18:08):
And look for me?
Speaker 3 (18:08):
But that's because I'm a technology heard and that was before. Yeah, exactly,
well go there, But bad example on my part. But
so there's one one person within the sound of your
voice was aware of Nvidia before five years ago. So hey,
real quick, let's talk about the let's talk about so
what's going away? Well, if we're putting more in, what's
coming out? So CarMax is one of them that's going
to be removed by the end of the month, that's
(18:30):
being replaced. This is the the spinoff from DuPont Solstice
advanced materials. Eastman Chemical is going to be is gonna
come out November fourth, twenty five.
Speaker 1 (18:40):
That used to be a really good stock exactly.
Speaker 3 (18:42):
You know this again, it's it's the removing of the
old and replacing with the new. And is this just
just based on size. These companies are smaller now because
the demand for their products and services just hasn't held
up while others have moved up to take their place.
So it's just this just interesting. We can talk about
this probably once once every couple of years here to
uh to to kind of update people on how that
(19:02):
index works.
Speaker 1 (19:03):
Well, promise me, Brian that beyond meat will never get
added to this index.
Speaker 3 (19:08):
I know you love your plant based burgers, but I
think they got a little run ahead of them before
they're going to get put in the.
Speaker 1 (19:13):
S and P five hundred.
Speaker 2 (19:14):
All right, here's the all Worth advice. Owning the benchmark
index means you're already holding tomorrow's stars today, so make
sure your portfolio captures that breath, not just the spot
like names. Next, we're going to talk about why cyber
crimes against seniors are becoming a family emergency literally in
(19:35):
what you can do about it. You're listening to Simply Money,
presented by all Worth Financial on fifty five KRC the
talk station.
Speaker 1 (19:42):
What's happening in the a sports gambling, money laundering is
one big political game. The New York City Mayor's Race,
The day's news. You have never had a job? Fifty
five KRS the talk station. Another summer is ended our
radio station.
Speaker 2 (20:06):
You're listening to Simply Money, presided by all Worth Financial.
I'm Bob Sponsller along with Brian James, joined tonight by
our technology and cybersecurity guru, mister Dave hat Ter.
Speaker 1 (20:16):
Dave, it's always great to have you with us tonight.
Speaker 2 (20:20):
You want to talk about elder scams and this is
something that seems to be growing and growing in regularity,
and it's something we all need to be aware of
and make plans to prevent.
Speaker 4 (20:31):
Yeah, guys, sadly this appreciate you having me on. It's
always I think this is an important topic because you
know I have elderly parents, I know many of your
listeners do, and.
Speaker 1 (20:41):
This is a growing concern.
Speaker 4 (20:42):
So just one stat and this is a great site
for folks, by the way, just for general stats and information.
The Internet Prime Complaints Center IC three, which is run
by the FBI. They put out a fraud report every
year that's got all kinds of stats in it. And
again the site is just useful in a lot of ways.
I encourage able to bookmarkt IC three dot gov. Elderfront
(21:04):
losses hit four point eight eight billion and twenty twenty four,
a staggering forty three percent jump from the previous year.
The average senior victim lost over eighty three thousand dollars.
And then another good site for some insight into this
is the Federal Trade Commission FTC FTC dot gov. So
here's a headline from a public service announcement they put out.
Business and government impersonators go after older adelse life savings.
(21:28):
And then they have some stats in there too they say,
in fact, reported losses of over one hundred thousand dollars
increase nearly sevenfold from twenty twenty to twenty twenty four. So,
you know, I hate to always be the doomsday guy,
the guy with the ten four hat, always warning about
this stuff, but you know, I don't want to see
people lose their entire life savings. And this is we
(21:49):
spend more time online and every facet of our lives working, education,
you know school, you name it, think about it. What
are you not doing online?
Speaker 1 (21:58):
Nowadays?
Speaker 4 (21:59):
It just created to that many more attack factors for
the bad guys. You're throwing things like artificial intelligence and
the ability to generate, to clone someone's voice, to generate
incredibly realistic videos, incredibly realistic texts, to kind of eliminate
all the old school tells like well, I got an
email asking me to do something weird and I need
to send gift cards to the hamlet, and county sheriffs
can arrest me, but the grammars all weird and so forth.
Speaker 1 (22:22):
All that's gone.
Speaker 4 (22:23):
The bad guys have access to low cost or free
tools that make it really easy for them to run
these sort of scams at scale. And again you don't
have to take my word for it. You can see
what the FBI is saying, You see what the FTC
is saying. And at one last point, and then I'll
let you guys start asking some specific questions. Is you
know this again, the documentation is all out there. The
(22:45):
scams are increasing, They're targeting elderly people in some cases,
but you know, we're all subject to all kinds of scams.
And this kind of education is important as is a
healthy dose of skepticism and vigilance. You know, the Hamlet
and County sheriff is not going to call you you
and tell you that because of a parking ticket, they're
coming at three to arrest you if you don't buy
gift cards or send an INMO payment, right, they don't
(23:08):
operate that way.
Speaker 3 (23:09):
Hey, hey Dave, So yeah, and then those are those
are those are all great examples. But you're right, this
isn't new news anymore. And I think but the one,
the one that is new is the to me is
the deep fake stuff. I don't think we've even scratched
the surface on that. I have yet to hear a story,
you know, about somebody losing an awful lot of money
yet to that. But that is coming and it's going
to be huge. So these articles you said is extremely
(23:29):
helpful here, but they reference an awful lot about cyber insurance.
So I don't want to drag you off course here,
but is this something that we should be considering. I mean,
maybe we all have home insurance, we have fire insurance,
we got flood insurance in some case. Is it we
at a point where we should all consider cyber insurance?
Speaker 1 (23:43):
Do you think Uh.
Speaker 4 (23:45):
I think it's worth it as a business, absolutely, But
I also find that many small businesses that I talked
to about this stuff because in my real job, I'm
now talking about this all the time and trying to
help business.
Speaker 1 (23:57):
Come on, David, this is your real job.
Speaker 2 (24:01):
You know.
Speaker 4 (24:02):
People will say, well, I've got cyber insurance, I don't
have to care about this, And I just like to
remind folks, well, your fire insurance does not keep your
building from burning down. You know, ideally it helps you
recover should that happen. So you can't just say, well,
I got insurance, I'm good to go.
Speaker 1 (24:15):
Right.
Speaker 4 (24:15):
You need a strategy where you're trying to parden your environment,
defend yourself against these kind of attacks. Be smart, be vigilant,
move slow, and then you know, be resilient. Part of
that resilience, you know, in addition to backups and so forth,
might be insurance. You know, as an individual, does it
make sense to get some kind of personal cyber insurance, Maybe,
(24:36):
especially if you have a lot of risk, if you're
a high net worth person. But I think there's a
lot of things you can do.
Speaker 1 (24:41):
Guys.
Speaker 4 (24:42):
Again, the first step is always knowledge, right, I mean,
you can't defend against something you don't know about.
Speaker 1 (24:48):
Knowledge skepticism.
Speaker 4 (24:49):
It's doing the simple things we talk about all the time, strong,
unique passwords, multifacture authentication. It's also doing things like freezing
your credit. I'm sure you guys would agree. You know,
if I have frozen mind, yeah, until I need to
get credit, I keep it frozen. I unlock it when
I need it, and I lock it back. You know,
it's not foolproof, but you know you're raising the bar.
(25:11):
You're making yourself a much more difficult target for the
bad guys because in most of these cases, especially you know,
these targeting of elders, they're not specifically targeting individuals.
Speaker 1 (25:22):
They're going for low hanging fruit.
Speaker 4 (25:23):
And if you take the kind of advice we're giving
out here, if you harden yourself, if you do these
basic practices, you're going to be a much more difficult target.
They're just going to move on. And again the skepticism.
You know, I encourage any of your listeners pick up
the phone and try to call Microsoft or Google and
get help. And my point is they are not looking
(25:43):
at your computer and going, hey, I think you've got
a virus. I'm going to call you up today and
tell you let me help you remove this virus. If
you get a call, an unsolicited call from a company
that claims you have some kind of virus and they
want to help you, the likelihood that is not a
scam is probably greater than all three of us getting
hit by a meteor. Right now, it is a scam, right,
(26:05):
So again, vigilance, knowledge, skepticism, and you know, when you
look at the numbers, one of these reports say there's
eighty five trillion dollars in wealth out there in the
Baby boom and silent generation. The bad guys know this, right,
They know there's an enormous amount of money. They know
in a lot of cases, older people may not even
be aware that it's possible to create a very you know,
(26:28):
a perfect deep fake.
Speaker 1 (26:29):
Audio or video.
Speaker 4 (26:30):
And you know, you guys mentioned there is documented evidence
already more in a corporate setting of large scale fraud
that's been perpetrated using deep fake voice cloning and videos.
I encourage your folks go look up the story about
the Ferrari CFO who got a nearly got deep fake
voice cloned into fraud from the so called Ferrari CEO
(26:52):
and these are people that know each other personally.
Speaker 1 (26:54):
This is the real gave us a segment maybe for
next week. I'm in right that one. Now why I
would look into it well documented, Dave.
Speaker 2 (27:03):
I was going to ask about the whole phone thing
and voice cloning.
Speaker 1 (27:07):
Yeah, so I'll just ask it this way.
Speaker 2 (27:09):
I mean, are we now at a point where it's
just because I know what I do. I never answer
my phone ever, ever, ever, unless I know who's calling me,
I just don't answer my phone. Are we at the
point now where our advice to folks, especially elderly and
maybe vulnerable folks, just give that blanket advice, do not
(27:30):
answer your phone unless you know who it is.
Speaker 1 (27:33):
Are we at that point? Is that the best way
to protect folks? I think?
Speaker 4 (27:37):
So I can tell you I do not ever answer
my phone from a number I don't recognize, and I'm
even sometimes skeptical if it is an number I do recognize,
Because keep in mind, guys, spoofing what's in my mind
is the biggest driver of all this, creating something that
looks realistic but isn't. It's fairly easy to do in
any digital mechanism. It's really easy to send a phone
(27:57):
call from any number you want, if you know what
you're doing in it does not require a lot of skills.
So you know, if I could find one of your
two cell phone numbers, or if I happen to have it,
I could easily spoof a call that would look like
it came from your cell phone. I could easily send
a text that looks like it comes from you. And
you know, same thing with emails. So skepticism, vigilance, don't
answer the phone. If it's important, they'll leave a message,
(28:19):
or they'll contact you some other way. Go read what
the government says. You know, IRS, FBI. They are not
going to call you and tell you some terrible thing
is going to happen to you if you don't make
it in when a payment by five pm. They don't
operate that way, and they state that clearly on their
own websites. So again, there's there's tons of useful information
out there that can help people avoid these kind of scams.
(28:41):
FTC dot gov, IC three dot gov. But it all
starts with skepticism and caution, like don't answer your phone.
If you don't recognize the number, they'll leave a message,
and if they don't, must not be important.
Speaker 1 (28:53):
All right, good stuff as always, Dave.
Speaker 2 (28:55):
You're listening to Simply Money, presented by all Worth Financial
on fifty five KRCV Talkstation.
Speaker 1 (29:02):
Mark Levin, you know, America.
Speaker 6 (29:04):
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 1 (29:22):
That's what the media and they do. Mark Levin, Tonight
at ten oh six on fifty five KRS the Talk station.
Your opinions are welcome to here.
Speaker 2 (29:31):
Why do we keep letting thousands of people come over
and do nothing about it?
Speaker 1 (29:34):
My family's safety is at risk. Fifty five KRC the
Talk Station.
Speaker 2 (29:43):
We're listening to Simple Money present by all Work Financial.
I'm Bob sponseller along with Brian James. Do you have
a financial question you'd like for us to answer. There's
a red button you can click while you're listening to
the show. If you're listening to the show on the
iHeart app. Simply record your question and it will come
straight to us. All right, Brian, get ready for Martin
(30:03):
from Westchester. He says, we've hit the income limit for
ROTH contributions, but we keep hearing.
Speaker 1 (30:09):
About the backdoor WROTH.
Speaker 2 (30:11):
How do you do that correctly without triggering the pro
rata rule?
Speaker 3 (30:16):
Great, great question, And this is now we're getting into
some tax planning.
Speaker 1 (30:19):
I love tax planning. This, This is right in your
wheel where we how we move the needle in financial
planning nowadays.
Speaker 3 (30:23):
So for a lot of savers hitting that Wroth IRA
income limit, Bob feels like that door just slam shut.
I can't put any more in because I'm earning too much.
There's a perfectly legal side entrance called the back door WROTH.
The trigger is doing it right because there's there's a
rule out there that could could discount some of the
benefit of it.
Speaker 1 (30:40):
So anyway, here's what a backdoor roth IRA works.
Speaker 3 (30:43):
The reason it exists is because there are income limitations
to whether you can make a contribution. If you exceed
those income limitations, you can do it with an extra
hop in the middle. What you can do is you're
making a non deductible contribution to a traditional IRA. This
is no different then a contribution you'd ever make to
it to any kind of IRA, you're just sticking money
(31:04):
in there. The non deductible part will come up when
you do your taxes and you find out Nope, you
can't deduct that, so you don't have to label it
or anything crazy on the front end, and then you
immediately convert those dollars to a ROTH. What we're doing
here is the income limitation only applies to contributions new
money flowing into the ROTH. By the time, it's already
in there, whether you deduct it or not, it's already
(31:24):
in there. Of course, it's it's an existing pile of money,
which means we're talking about a conversion from traditional to ROTH.
So let's answer Martin's question. This is what he actually asked.
What can happen though, is if you have traditional pre
tax dollars in an IRA, then you're going to run
into the pro rata rules.
Speaker 1 (31:40):
So here, let's give an example.
Speaker 3 (31:41):
You've got ninety five thousand dollars in pre tax IRA
money and you're going to add five thousand after tax
for a backdoor. When you convert the five thousand, the
IRS is going to say only five percent of that
is after tax, so ninety five percent of it becomes
taxable anyway. So that's what we want to avoid if
you basically want to have any traditional pre tax dollars.
(32:02):
So if you've got the ability to do so, you're
gonna want to move those pre tax iras into your
four oh one K. Therefore, you do not have an IRA,
and you just have to be in that state by
New Year's Eve and then everything will be clear for
the for the year. But make sure you don't have
any pretax iras at all. Move those dollars to four
oh one K, then you can do your conversion. We're
going to move on to Karen and Loveland. So Karen's
(32:22):
got a couple of life insurance policies, bought those over
the years, and she wants to know which ones do
you keep versus which ones is your place?
Speaker 1 (32:28):
How do you make that decision, Bob.
Speaker 2 (32:30):
Well, Karen, I'd start with your financial plan, you know,
and this is where I always start. How much life
insurance do you still need giving your current situation and
for how long do you need it? In other words,
update your financial plan, you know, up to current your
current status based on the needs of your family. Now
that'll help you determine how much life insurance you need
(32:51):
and for how long. A good advisor ought to be
able to run those numbers and give you those answers.
Once you've got those answers, then you start to look
at these pops policies. You know, are they term policies,
are they permanent policies with cash value? You can also
evaluate what your potential long term care situation might be.
Speaker 1 (33:11):
Brian.
Speaker 2 (33:12):
You know, we talked about this a couple times over
the last couple of weeks. A lot of times people
will take these old cash value life insurance policies and
use them to handle a potential long term care need
by just on a tax free basis. Think think the
insurance equivalent of an IRA rollover. It's referred to as
a ten thirty one or ten thirty five exchange. You
(33:34):
move that existing life insurance policy into a hybrid policy,
and now you've got some death benefit and some long
term care protection.
Speaker 1 (33:41):
There's a lot of things that you can do.
Speaker 2 (33:43):
Some people don't need any insurance at all, and then
you start to look at the tax impact of cashing
out of some of these policies versus doing some other things.
Speaker 3 (33:52):
So just redeploying your assets from something you don't need
into something you do. No different than converting your kids
or your former adult kids a bedroom into a sports.
Speaker 2 (34:01):
Bar or a hobby room or something something I don't
need versus something I do. But again, it starts with
a financial plan. Find out how much insurance you actually
need and for how long you need it, and then
go from there. All right, Brian, you're gonna hear from
another Brian from Cincinnati says we've got mutual funds in
taxable accounts that keep distributing these pesky gains. Is it
(34:22):
smarter to move toward ETFs or are there hidden costs
to switching?
Speaker 1 (34:26):
Well, hello Brian and Cincinnati, are you me? No, you're not.
Speaker 3 (34:30):
You've got a legit question here, And this is something
we run into all the time, because, yeah, mutual fund
If somebody has built up a good sized pile of money,
then they probably did it a long time ago when
mutual funds were really the only game in town. So
we're going back fifteen twenty, maybe longer than that. And
if you've built up a pile of money, good on you.
That's a great thing. But mutual funds aren't the most
efficient things out there anymore. They used to be, but
(34:51):
now there's better options. Exchange traded funds are more efficient
because they will not have those same distributions. Not enough
time here to get into why that is, but they
still represent the same thing. For example, an S and
P five hundred index ETF is going to be a
more efficient tool than a mutual fund, and lots of
reasons for that. So, yes, to answer your question, it's
a smarter move to look toward ETFs. Yes, there are
(35:13):
going to be hidden costs because presumably you've been doing
this for a long time, you've got gains built up.
There shouldn't be really any transactional costs or anything like that.
Speaker 1 (35:21):
That would be a rare case. But you're going to
pay taxes.
Speaker 3 (35:23):
That doesn't mean it's a bad idea, because remember, if
you've got a long runway, I'm going to guess we
have no idea how old Brian is, but let's pretend
he's me, he's fifty, it's got a long runway to go.
And so therefore, taking some sacrifice now in terms of
eating some of those capital gains taxes and converting to
what i'd be looking at is something that involves direct indexing,
so that you can not only get a more efficient
(35:46):
portfolio with fewer distributions, you can actually go the other
direction and start to harvest some of those tax losses
as they occur because you own individual securities versus those
mutual funds or ETFs. But to answer question, yeah, you're
going to want to pay attention to capital gains. All right,
we got time for one more quickie, so we're gonna
go to Jeff and Hebrew. Jeff says they're retired and
they've got income coming. Should they be reinvesting the dividends
(36:07):
and interest or should they use those to fund living expenses?
Speaker 2 (36:09):
Bob Well, Jeff, there's no magic answer to this. I
think you got to be looking at your tax situation
rather than worrying about, you know, whether to use dividends
and interest to fun living expenses, meaning, you know, depending
on the composition of your portfolio, ira versus non, ira
versus roth, I'd let the tax situation dictate how you
(36:31):
construct your retirement income strategy and then go from there.
Coming up next, we've got Brian's bottom line where he's
going to talk about it's it's great because it's finally
time to talk about lowering mortgage rates. Brian has some
thoughts on that coming up next. You're listening to Simply Money,
presented by all Worth Financial on fifty five KRC, the
(36:51):
talk station.
Speaker 1 (36:53):
You do do you? I do?
Speaker 6 (36:55):
Got to put up these Halloween decorations, do some work,
the laundry.
Speaker 1 (36:59):
We do have to go shout and will this is
what we do. We do the rest. It's time to
do it. We do traffic and weather, doing the news
at the top and bottom of the album. This is
the most important thing we can do. Do check in.
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
(37:19):
let's do it. On fifty five KRS the talk station.
Speaker 3 (37:24):
I am so worried that next month I have to
choose between groceries for my kids or gas for my car.
Speaker 1 (37:29):
Talk about it here fifty five KRC, the talk Station.
Speaker 2 (37:37):
You're listening to Simple Money, presented my all Work Financial
Bob sponsorer along with Brian James and Brian.
Speaker 1 (37:42):
You want to talk about mortgages tonight we are back in,
back in time.
Speaker 3 (37:47):
Remember the days, Bob, not that long ago where people
were refinancing two and three times a year. Well, we're
kind of getting back there. We've had several years of
higher rates, you know, and let's kind of quantify this
with history here. You might be saying, now there was
seven or seven and a half percent mortgage, maybe even
higher than that.
Speaker 1 (38:03):
In some cases, people still got to live their lives.
Speaker 3 (38:05):
Jobs change, people have to move for whatever reason, and
mortgages are just requirements.
Speaker 1 (38:09):
You got to deal with it.
Speaker 3 (38:10):
We all got spoiled with those two and three percent mortgages,
and I think a lot of us convinced ourselves that
that was a god given right, was just a good
period of time, and let's not kick ourselves too hard
because life happened and we had to go ahead and
get a seven eight percent mortgage. That said, it's now
time to start paying attention to maybe refinancing. If you
bought a home a few years ago at seven and
a half percent percent or higher, I would start looking
(38:33):
at refinance quotes today. We said earlier that the Fed
just cut interest rates and there's more rates coming based
on what their future indications are as well as what
the market thinks is happening.
Speaker 1 (38:43):
So this will work out the best.
Speaker 3 (38:46):
If you've got at least twenty percent equity, your credit's
in good shape, and you plan to stay in that
home five plus years, the break even in the long
term savings makes sense. So a lot of people were
very frustrated. It's stressful to move anyway.
Speaker 1 (38:57):
Darn it.
Speaker 3 (38:58):
Now I got to do this and the rates are
up at seven one and a half percent. Why do
things never go my way? Well, life gives you a
second chance, and you're coming up on those times. So
doesn't mean you have to rush out and do this
right now. We're in a declining rate environment. There's not
much to indicate it's going to go the other way
anytime soon. So if maybe you don't have the equity
built up, then in the short run, you're gonna want
to build up some cash. Try to find ways to
(39:18):
do it, you know, over the next several you know,
maybe three to six months, figure out where you can
carve out some extra cash as well. And if you've
got some credit issues out there, maybe your score isn't
quite what it needs to be, well, you've got time
to kind of start cleaning that up. Because now now
is the time to do it. We are in a
declining rate environment. You might even get a better opportunity
than where we're sitting right now, but now is the
(39:38):
time to start planning for it, so you can pull
the trigger at the right time.
Speaker 1 (39:42):
Yeah, Brian, A good rule of thumb, you know, to
your point.
Speaker 2 (39:45):
You know in every situation is different, but you got
to look at the fees associated with refinancing, closing costs,
all that. But a good rule of thumb to start
with is if the rate drops about one percent from
you know where you currently are, it's time to start
shopping it. You can usually, you know, come out ahead
on that game, would you agree, Oh?
Speaker 3 (40:03):
Absolutely, so again, if you're at seven and a half
percent rate, I'm looking right now at a bank that
won't be named because we don't advertise for banks, but
I always look at this site because they plaster it
right on the front page. Thirty year fixed for six
point h nine percent, fifteen year for five thirty nine
and again these are low. Look at the interest rate
as well as look at the closing costs, and you're
going to come out ahead. Don't rush out and do
this right now, but start thinking about it, learn how
(40:25):
it works, because a lot of people, a lot of
the people I'm talking to are first time home buyers,
just got stuck with that higher interest rates.
Speaker 1 (40:31):
Time to learn about refis. Thanks for listening tonight.
Speaker 2 (40:33):
Tune in tomorrow where we're going to have a former
actual voting member of the Fed with us to talk
interest rates. You've been listening to Simply Money, presented by
all Worth Financial on fifty five KRC, the talk station,
Mark Laden.
Speaker 6 (40:48):
Probably the people who should be listening aren't, but there
are a lot of people who tune in by accident.
Speaker 1 (40:52):
Then they start listening. I get this wherever I go listen.
I listened for a week. I listen to two. I said,
I like this guy. I like what he has to say.
Mark Levin Tonight at ten o six on fifty five KRC,
the talk station.
Speaker 5 (41:06):
When I was in Iraq, are cond
These foochs when the top of the hour news is
scary enough, quite happening minutes away by fifty five KRC.
Speaker 2 (00:14):
Tonight, the Fed lowers interest rates, protecting your family from scammers,
and we do answer your actual questions you're listening to
simply money, presented by all Worth Financial on Bob Sponseller
along with Brian James. Well, it came as absolutely no surprise,
but this time it was a bit unique, Brian, because
it happened during a government shutdown where data is a
(00:37):
little bit harder to come by. The Federal Reserve did
lower interest rates today.
Speaker 3 (00:42):
Yep, the lowered rates by quarter of a point, so
that puts interest rates between three seventy five and four percent.
This is the second time this year that they've lowered
interest rates, and the forecast is more to come. So
why are we doing this? This isn't like you said,
it's not a big shocker here. We're just at that
time of the economic cycle. Less to do with inflation
this time around, though, and more to do with the
(01:03):
labor market. So the reason is because we've had climbing
unemployment insurance claims and that suggests that labor market demand
is continuing to cool off because businesses are just slowing
down a bit, and that's an indicator it's time to
tap the gas.
Speaker 1 (01:15):
And so that's what we've done here, And so the.
Speaker 3 (01:17):
Government shutdown a delayed publication of most of these economic statistics,
including that unemployment rate. But anyway, it was last estimated
at about four point three percent in August.
Speaker 2 (01:27):
Yeah, I guess the thing counterbalancing the slightly weakening labor
market is we did get milder than expected inflation readings
last week.
Speaker 1 (01:37):
You know.
Speaker 2 (01:37):
That showed CPI consumer price Index rose three percent in
the last twelve months through September. The core inflation rate
was also at three percent, So at least temporarily, a
lot of these worries earlier in the year about tariff
driven extreme inflation are a bit on the back burner,
although we still have that big elusive trade deal to
(02:00):
work out with China, President Trump and President Chi. Supposedly
you're going to sit down and talk about that, you know,
yet this week, So we'll see what happens. Yeah, And
all signs point to more rate cuts too coming in
to the future. Because remember the thing we like in
almost as much as the rate cut announcements is what
do they indicate their thinking in advance here.
Speaker 1 (02:21):
So the.
Speaker 3 (02:23):
Statement that came out last month's after last month's quarter
point rate cut referenced additional adjustments to the policy rate.
The federal meet again in December, and of course we're
going to go through this again. If the shutdown is
still dragging on, we're still going to be flying a
little bit blind.
Speaker 1 (02:37):
But as we're sitting here right now.
Speaker 3 (02:38):
The market does seem to believe that there will be
future rate cuts coming for the balance of quarter four.
Speaker 2 (02:43):
So let's get into the potential impact on you for
all of this meaning lower rates. I mean, let's face it,
lower interest rates can mean borrowing costs or cheaper for businesses,
and that boost profits, which boosts stock prices. And we're
already kind of seeing that, you know, the market's pricing
this in this market continues to inch higher and higher
(03:04):
growth stocks, especially tech and consumer discretionary sectors often benefit
the most because their future earnings look more attractive when
discounted at lower rates. And we're starting to see finally
a little signs of life out of small cap stocks
for exactly this reason. A lot of these small caps
tend to have a bit more debt on their balance sheets,
(03:25):
and when the cost of that debt goes down, you know,
that means more profits for these companies. And Brian, we're
still in the middle of We're right smack in the
middle of earning season. We got a lot of bank
earnings out over the last week. Those numbers are good.
We're going to get some big tech earnings, you know,
ongoing the rest of this week.
Speaker 1 (03:44):
So we'll see how the report cards come in.
Speaker 2 (03:47):
But hey, anytime the cost of money goes down, that's
usually a good thing for everybody.
Speaker 3 (03:53):
Absolutely, And I would throw out one more reminder for
the bazillion time of how important it is to stay diversified.
Despite when we think we have our face, you're on
the pulse of the market. A lot of people out
there decided, you know what, I just want to reduce expenses,
and I'm just going to sit on the S and
P five hundred and that.
Speaker 1 (04:08):
Is large cap stocks.
Speaker 3 (04:09):
That is literally the five hundred largest companies of the
United States, and that is a great core holding. I
can't imagine we'd ever say otherwise. That said, if that's
all you've been doing, then you're missing out. You're leaving
some money on the table here, because as Bob just mentioned,
the small caps and the midcaps are running a little
bit because they will benefit. Those are the companies that
are just the reason they're small is they're trying to
grow from nothing, and they're using bank dollars to do it.
(04:30):
They can increase their profit margins as those interest rates fault.
Not to mention if you've been ignoring international stocks and
emerging markets, and SP five hundred is up about seventeen
percent as we're speaking, twenty six percent for the internationals
and about thirty three percent for the emerging market, So
you're leaving money on the table if you're not staying
diversified properly.
Speaker 1 (04:50):
And speaking of different asset classes.
Speaker 2 (04:52):
I mean, let's face it, bond prices typically rise when
interest rates are cut too. Why because existing bonds with
higher yields subtly become more attractive when new bonds are
issued at lower interest rates. A lot of people remain
very confused about how bonds work. I had a meeting
in my office yesterday with a very very intelligent, retired
(05:13):
gentleman who still needed me to kind of walk him through,
you know, bonds one oh one and how this all works,
and I think a lot of people get confused on that.
So you know, we're seeing again signs of life out
of the bond market. It's been kind of quiet and
in the background. But not only have you gotten a
pretty decent return out of bonds, but that might continue
(05:35):
here if rates continue to go down. You know, the
only thing that gets heard on this is savings account
rates and CDs and other money market funds. You know,
if as the Fed lowers rates, the interest rate you know,
being paid on these short term instruments, these liquid instruments
will come down too. So you know, just we're calling
(05:55):
that out, but beware, do not you know, watch your
saving's account rate fall down and say, well, gosh, I
need to go buy tech stocks with this money. Remember
you got an emergency fund for a reason, and that's
emergency liquid ready money. It shouldn't all of a sudden
become speculative because Apple breaks out, you know, of a
(06:17):
short term.
Speaker 3 (06:18):
Right, And I think that the middle point there too
is that if you've got a pile of money sitting
out there and some you know, some people are sitting
on cast, that's well more than their emergency fund.
Speaker 1 (06:26):
Just just for that security.
Speaker 3 (06:28):
Well, be realistic about how often you're actually going to
need to tap into that, and if the answer is
not all of it very very frequently, then go ahead
and lock some of it up one, two, maybe three
years in a CD and preserve some of these interest
rates where they are.
Speaker 1 (06:39):
It's still going to be safe.
Speaker 3 (06:40):
Yes, it'll be locked up, but you've probably got other
assets you could tap into if the wheels truly fell off.
You're going to keep some of it liquid anyway, So
but don't let the opportunity pass you by as these
rates fall.
Speaker 2 (06:49):
You're listening to Simple Money present up by all Worth
Financial on Bob Sponsorer along with Brian James. Well, you know,
everything is not one hundred percent hunky dory out there,
despite record in the stock market. Something we want to
touch on tonight is the credit sector. Brian. It's starting
to show a few cracks. Markets seem to be shrugging
it off for now, but let's unpack you know a
(07:12):
little bit of volatility that went on late last week
earlier this week in the credit market. It's just something
to keep an eye on.
Speaker 3 (07:20):
Yeah, So what we're talking about here is when companies
take out loans and they take them out of course,
from banks, and what do both sides do to protect
from that. So recent reports are showing that several institutions
are setting aside hundreds of millions of dollars for potential
loan losses. That that can be a sign of a
slowing economy, which also so can lowering interest rates, of course,
so let's not be surprised by this, but this is
(07:41):
just companies kind of planning for the future, even as
the broader market seems pretty comfortable. Things are going okay,
but some institutions are starting to set aside those dollars.
So some quick examples here, there's a company called Tricolor Holdings.
They're a subprime auto lender and a First Brands group
they're an autopart supplier. Both of those kind of ran
into try and that was raising some red flags, you know,
(08:01):
beyond the obvious here a little bit so a big
bank executive that's triggering them to be more cautious. Jamie Diamond,
we hear about him from him all the time. Of
JP Morgan Chase has said, and I quote, when you
see one cockroach, there's probably more, And he's just referring
to if one company is having trouble, then probably it's
elsewhere too.
Speaker 1 (08:19):
You just might not be seeing well.
Speaker 2 (08:21):
And as you already mentioned, a lot of what we're
talking about here is in the subprime space. And for
those folks at home where stars you know we're talking
about if you own high yield bond funds, those tend
to be funds that have below you know, triple A
even double A credit, you know, rated credit, and that's
where some of the cracks are coming in. I heard
(08:41):
an excellent interview yesterday morning with Brian moynihan, the CEO
of Bank of America. He seemed to think that, you know,
this is pretty isolated at this point to some of
these subprime lenders, some of these private you know, private capital,
private credit les that we've talked about before. So it's
(09:02):
just a reminder when you chase yield, whether that's in
private credit or highyield bond funds you got, you do
have to remember that you are taking credit risk when
you get into those instruments.
Speaker 1 (09:14):
So make sure that you're not.
Speaker 2 (09:16):
Over allocating to that sector or any of those sectors
just to chase yield, because the wheels can come off. Brian,
I've seen it over my career. You know, if we
have a credit crisis, these things can drop almost as
much as a decline in the stock market.
Speaker 1 (09:31):
So you just got to keep an eye on it.
I don't know what you're getting into, and remember them.
Speaker 3 (09:35):
It's not just interest rate decisions by the FED that
moves the credit markets. It's also the market itself. There
is supply and demand at play, just like there is
in the stock market. When investors get confident or lose confidence,
they will move the market and that does have an
effect on interest rates. That trickles all the way down
to your savings accounts and your mortgages and so forth.
Speaker 1 (09:54):
So learn what you own.
Speaker 3 (09:56):
Make sure you don't own anything that's going to sneak
up on you in that portfolio.
Speaker 2 (09:59):
This is a good time, you know, if you if
you do work with a good fiduciary advisor or if
you are a self directed investor. Either way, you know,
now's a good time to just kind of have an
audit of the credit quality of your fixed income instruments
in your portfolio. Just make sure that there aren't some
potential land mines out there. And you know, when when
(10:22):
the market anticipates something is awry here you'll see some
of those prices start to fall, and again, if that's
more volatility, then you may be bargained for. Talk to
your advisor or take proactive action to maybe move up
a little bit on the credit risk scale, to make
sure you keep yourself out of harm's way, because there's
nothing worse than going through a stock market correction and
(10:45):
also feeling like you're safe and diversified and managing your
overall risk profile by having money in bonds, but getting
too aggressive in your bond portfolio and then have everything
go down at the same time.
Speaker 1 (10:59):
That that's a real gut punch.
Speaker 3 (11:00):
Yeah, and so just make sure that again, just to reiterate,
make sure we're looking at quality over yield chasing. So
you're going to want to look at high quality corporates,
triple B and above treasuries, investment grade munities, and not
speculative stuff because you're chasing yield. And make sure that
you're using the appropriate bonds for your tax bracket.
Speaker 1 (11:17):
There are tax free opportunities.
Speaker 3 (11:18):
A lot of people have forgotten this because interest rates
have been on the floor for so long, so we've
kind of forgotten that if we own you live in
if you live in Ohio and you own Ohio municipal bonds,
for example, then you will not pay state taxes there.
Speaker 1 (11:30):
And that's the different rules for different states.
Speaker 3 (11:32):
But regardless, all municipal bonds will avoid federal taxes. The
rates are lower, the yields are lower. Understand the difference.
You have to look at the compare a CD or
a corporate bond with a municipal bond using a tax
equivalent calculation to understand what are you giving up if
you pay taxes on the yield versus if you take
a lower but tax free yield.
Speaker 1 (11:52):
It may or may not be beneficial.
Speaker 3 (11:53):
But that's why you need to have an advisor in
your corner or understand how those calculations work.
Speaker 2 (11:58):
Yeah, and building a ladder portfolio of the individual bonds
can help you on both ends. It can help you
on the maturity standpoints, so you know everything tied to
one time frame and from a credit risk standpoint, here's
the Allworth advice. Don't mistake call markets for zero risk,
monitor credit, focus on transparency and position now for the unexpected.
(12:21):
Next the company that just did something only two others
have done before and you likely already own part of it.
You're listening to Simply Money, presented by all Worth Financial
on fifty five KRC the talk station, and.
Speaker 1 (12:34):
That they're using the pain of the American people as
their leverage. This is our only moment of leverage. What's
Trump do? China?
Speaker 4 (12:40):
The day's use after Hurricane Melistity is on Jamaica the
disaster area fifty five KRZ the talkstation.
Speaker 5 (12:47):
All Worth Financial a registered investment advisory firm. Any ideas
presented during this program are not intended to provide specific
financial advice. You should consult your own financial advisor, tax consultant,
or estate planning attorney to conduct your own due diligence.
Speaker 2 (13:06):
You're listening to Simply Money, here's that I buy all
Worth Financial on Bob Sponseller along with Brian James. If
you can't listen to Simply Money every night, subscribe and
get our daily podcast. And if you think your friends
or family or both could use some financial advice, tell
them about us as well. Just search Simply Money on
the iHeart app or wherever you find your podcast.
Speaker 1 (13:28):
Straight Ahead at six forty three.
Speaker 2 (13:30):
From duplicate insurance policies to tax trapped mutual funds and
embedded gains, we answer real listeners questions that could help
you streamline your financial plan. Well, Brian, tonight a milestone
for what could be the most popular US company in history.
Speaker 3 (13:49):
That's right, we're talking about Apple today. Was I'm not
sure if there's a could be in there. I think
it probably is. That's probably more recognizable than these days
than a lot of the other ones that might.
Speaker 1 (13:57):
Qualify for that for that title.
Speaker 3 (13:58):
But Apple become the third public country and a company
in history to reach a market valuation for trillion dollars
in Nvidia did this recently, as did Microsoft. So no
shock that a lot of these headlines are coming out
of the out of the technology industry. So they did this,
how did they cross that line? Well, the launch of
the new iPhone seventeen and the slimmer iPhone Air, which
(14:20):
is slimmer everywhere except where that big fat camera is.
But that's not what we're here to talk about today,
generated stronger than expected.
Speaker 1 (14:26):
Up And you looked at one of these I did,
I did look at him. I'm an Android guy, right,
I like my freedom, But I did. I did. I
was curious about what was out there.
Speaker 3 (14:34):
But yeah, so so stronger than expected upgrades both US
and China, and the last couple iPhones didn't seem to
generate as much interest as these two have, so that
is pushing them beyond where they've been in the past
into the stratosphere evaluation. In addition, services businesses now this
is what this is, what's known as the App Store,
the subscriptions you can get there, and the cloud services
(14:55):
that they offer. Those are forecast to exceed one hundred
billion dollars that's billion with a B and annual revenue
for the first time. So again, a pretty good run
for Apple here and also responding to just an overall
healthy economy with a lot.
Speaker 1 (15:08):
Of growth prospects.
Speaker 2 (15:10):
Brian, here's what I think might be going on with
the iPhone, and I might be you know, a case
in point here. I had an iPhone thirteen and so
my battery I was just having to charge my battery
too much. And I think this might be what's going on.
You know, I went and looked at the seventeen, and
it's faster, it's got a better battery. I don't think
(15:32):
there's any new, you know, tremendous bells and whistles to
this thing that make it revolutionary.
Speaker 1 (15:38):
This is what I mean. I did.
Speaker 2 (15:40):
I bought the seventeen Pro Max because I'm getting older,
my eyesight's getting worse. I wanted that bigger screen just
so I could blow stuff up.
Speaker 3 (15:49):
Cinematic quality movies with your phone is absolutely I wouldn't you.
Speaker 1 (15:53):
Know me, I use my camera all the time. Are important. Yeah,
I might even make a movie of you. I might
take a movie of you talking on this show. That's
not terrifying. There's a reason we're on the radio. But
I'm gonna put I'm gonna put it out on TikTok.
Speaker 3 (16:06):
Look in the mirror both of us and realize made
faces for radio, all right, but no in all you know,
all joking aside.
Speaker 2 (16:14):
I think we're getting into a period now where people
just need to replace their phones because they're getting old.
Speaker 3 (16:20):
Yeah, sixteen kind of fell on its face, didn't get
a lot of demand. So that means if you didn't
buy one, then your battery, like you said, your battery
and all the other things are just that much older.
So yeah, I think that a lot of the demand
that's coming from it's just time.
Speaker 1 (16:30):
To do it.
Speaker 3 (16:30):
These are the things we have to get used to.
Writing a check for something we shove in our pockets every.
Speaker 1 (16:34):
Three four years.
Speaker 2 (16:35):
All right, Well, while we're talking about milestones and market
moving names like Apple, here's another angle that's worth your attention.
What happens behind the scenes in this broad benchmark index
we call the S and P five hundred. You know,
you probably already own Apple, and this is why this
matters to your portfolio. Two companies are about to be
(16:56):
added to the S and P five hundred. One is
a spin off of well International and the other is
a spin off of DuPont.
Speaker 1 (17:04):
When's the last time we talked about DuPont stock.
Speaker 3 (17:06):
Brian, Exactly, Yeah, these are these are not exactly the
darlings of the investment world these days. It's like it's
nineteen fifty and we're talking about the industry that the
titans of industry here. So but anyway, so that this
is this is how the S and P five hundred works.
It's not the it's not a static list of five
hundred companies. It does get updated based on what companies
are doing well and who earns the right to be there.
(17:28):
That these this is literally the five hundred largest companies
in the United States. A good, bad, are indifferent. It's
just based on the size of that company, and that
does change over time, reflecting who the winners are and
who the losers are.
Speaker 2 (17:38):
Well, and that's good news for you if you're probably
diversified and you own some of these you know s
and P five hundred ETFs or mutual funds, because you
already own the companies to Brian's point that haven't yet
grabbed headlines like Apple have. But you know, we could
be sitting here a year from now and talking about
completely different companies. And if you already have a i
(18:00):
mean your portfolio, you will participate. I mean case in point,
who who even heard of Navidia five six years ago?
Speaker 1 (18:08):
And look for me?
Speaker 3 (18:08):
But that's because I'm a technology heard and that was before. Yeah, exactly,
well go there, But bad example on my part. But
so there's one one person within the sound of your
voice was aware of Nvidia before five years ago. So hey,
real quick, let's talk about the let's talk about so
what's going away? Well, if we're putting more in, what's
coming out? So CarMax is one of them that's going
to be removed by the end of the month, that's
(18:30):
being replaced. This is the the spinoff from DuPont Solstice
advanced materials. Eastman Chemical is going to be is gonna
come out November fourth, twenty five.
Speaker 1 (18:40):
That used to be a really good stock exactly.
Speaker 3 (18:42):
You know this again, it's it's the removing of the
old and replacing with the new. And is this just
just based on size. These companies are smaller now because
the demand for their products and services just hasn't held
up while others have moved up to take their place.
So it's just this just interesting. We can talk about
this probably once once every couple of years here to
uh to to kind of update people on how that
(19:02):
index works.
Speaker 1 (19:03):
Well, promise me, Brian that beyond meat will never get
added to this index.
Speaker 3 (19:08):
I know you love your plant based burgers, but I
think they got a little run ahead of them before
they're going to get put in the.
Speaker 1 (19:13):
S and P five hundred.
Speaker 2 (19:14):
All right, here's the all Worth advice. Owning the benchmark
index means you're already holding tomorrow's stars today, so make
sure your portfolio captures that breath, not just the spot
like names. Next, we're going to talk about why cyber
crimes against seniors are becoming a family emergency literally in
(19:35):
what you can do about it. You're listening to Simply Money,
presented by all Worth Financial on fifty five KRC the
talk station.
Speaker 1 (19:42):
What's happening in the a sports gambling, money laundering is
one big political game. The New York City Mayor's Race,
The day's news. You have never had a job? Fifty
five KRS the talk station. Another summer is ended our
radio station.
Speaker 2 (20:06):
You're listening to Simply Money, presided by all Worth Financial.
I'm Bob Sponsller along with Brian James, joined tonight by
our technology and cybersecurity guru, mister Dave hat Ter.
Speaker 1 (20:16):
Dave, it's always great to have you with us tonight.
Speaker 2 (20:20):
You want to talk about elder scams and this is
something that seems to be growing and growing in regularity,
and it's something we all need to be aware of
and make plans to prevent.
Speaker 4 (20:31):
Yeah, guys, sadly this appreciate you having me on. It's
always I think this is an important topic because you
know I have elderly parents, I know many of your
listeners do, and.
Speaker 1 (20:41):
This is a growing concern.
Speaker 4 (20:42):
So just one stat and this is a great site
for folks, by the way, just for general stats and information.
The Internet Prime Complaints Center IC three, which is run
by the FBI. They put out a fraud report every
year that's got all kinds of stats in it. And
again the site is just useful in a lot of ways.
I encourage able to bookmarkt IC three dot gov. Elderfront
(21:04):
losses hit four point eight eight billion and twenty twenty four,
a staggering forty three percent jump from the previous year.
The average senior victim lost over eighty three thousand dollars.
And then another good site for some insight into this
is the Federal Trade Commission FTC FTC dot gov. So
here's a headline from a public service announcement they put out.
Business and government impersonators go after older adelse life savings.
(21:28):
And then they have some stats in there too they say,
in fact, reported losses of over one hundred thousand dollars
increase nearly sevenfold from twenty twenty to twenty twenty four. So,
you know, I hate to always be the doomsday guy,
the guy with the ten four hat, always warning about
this stuff, but you know, I don't want to see
people lose their entire life savings. And this is we
(21:49):
spend more time online and every facet of our lives working, education,
you know school, you name it, think about it. What
are you not doing online?
Speaker 1 (21:58):
Nowadays?
Speaker 4 (21:59):
It just created to that many more attack factors for
the bad guys. You're throwing things like artificial intelligence and
the ability to generate, to clone someone's voice, to generate
incredibly realistic videos, incredibly realistic texts, to kind of eliminate
all the old school tells like well, I got an
email asking me to do something weird and I need
to send gift cards to the hamlet, and county sheriffs
can arrest me, but the grammars all weird and so forth.
Speaker 1 (22:22):
All that's gone.
Speaker 4 (22:23):
The bad guys have access to low cost or free
tools that make it really easy for them to run
these sort of scams at scale. And again you don't
have to take my word for it. You can see
what the FBI is saying, You see what the FTC
is saying. And at one last point, and then I'll
let you guys start asking some specific questions. Is you
know this again, the documentation is all out there. The
(22:45):
scams are increasing, They're targeting elderly people in some cases,
but you know, we're all subject to all kinds of scams.
And this kind of education is important as is a
healthy dose of skepticism and vigilance. You know, the Hamlet
and County sheriff is not going to call you you
and tell you that because of a parking ticket, they're
coming at three to arrest you if you don't buy
gift cards or send an INMO payment, right, they don't
(23:08):
operate that way.
Speaker 3 (23:09):
Hey, hey Dave, So yeah, and then those are those
are those are all great examples. But you're right, this
isn't new news anymore. And I think but the one,
the one that is new is the to me is
the deep fake stuff. I don't think we've even scratched
the surface on that. I have yet to hear a story,
you know, about somebody losing an awful lot of money
yet to that. But that is coming and it's going
to be huge. So these articles you said is extremely
(23:29):
helpful here, but they reference an awful lot about cyber insurance.
So I don't want to drag you off course here,
but is this something that we should be considering. I mean,
maybe we all have home insurance, we have fire insurance,
we got flood insurance in some case. Is it we
at a point where we should all consider cyber insurance?
Speaker 1 (23:43):
Do you think Uh.
Speaker 4 (23:45):
I think it's worth it as a business, absolutely, But
I also find that many small businesses that I talked
to about this stuff because in my real job, I'm
now talking about this all the time and trying to
help business.
Speaker 1 (23:57):
Come on, David, this is your real job.
Speaker 2 (24:01):
You know.
Speaker 4 (24:02):
People will say, well, I've got cyber insurance, I don't
have to care about this, And I just like to
remind folks, well, your fire insurance does not keep your
building from burning down. You know, ideally it helps you
recover should that happen. So you can't just say, well,
I got insurance, I'm good to go.
Speaker 1 (24:15):
Right.
Speaker 4 (24:15):
You need a strategy where you're trying to parden your environment,
defend yourself against these kind of attacks. Be smart, be vigilant,
move slow, and then you know, be resilient. Part of
that resilience, you know, in addition to backups and so forth,
might be insurance. You know, as an individual, does it
make sense to get some kind of personal cyber insurance, Maybe,
(24:36):
especially if you have a lot of risk, if you're
a high net worth person. But I think there's a
lot of things you can do.
Speaker 1 (24:41):
Guys.
Speaker 4 (24:42):
Again, the first step is always knowledge, right, I mean,
you can't defend against something you don't know about.
Speaker 1 (24:48):
Knowledge skepticism.
Speaker 4 (24:49):
It's doing the simple things we talk about all the time, strong,
unique passwords, multifacture authentication. It's also doing things like freezing
your credit. I'm sure you guys would agree. You know,
if I have frozen mind, yeah, until I need to
get credit, I keep it frozen. I unlock it when
I need it, and I lock it back. You know,
it's not foolproof, but you know you're raising the bar.
(25:11):
You're making yourself a much more difficult target for the
bad guys because in most of these cases, especially you know,
these targeting of elders, they're not specifically targeting individuals.
Speaker 1 (25:22):
They're going for low hanging fruit.
Speaker 4 (25:23):
And if you take the kind of advice we're giving
out here, if you harden yourself, if you do these
basic practices, you're going to be a much more difficult target.
They're just going to move on. And again the skepticism.
You know, I encourage any of your listeners pick up
the phone and try to call Microsoft or Google and
get help. And my point is they are not looking
(25:43):
at your computer and going, hey, I think you've got
a virus. I'm going to call you up today and
tell you let me help you remove this virus. If
you get a call, an unsolicited call from a company
that claims you have some kind of virus and they
want to help you, the likelihood that is not a
scam is probably greater than all three of us getting
hit by a meteor. Right now, it is a scam, right,
(26:05):
So again, vigilance, knowledge, skepticism, and you know, when you
look at the numbers, one of these reports say there's
eighty five trillion dollars in wealth out there in the
Baby boom and silent generation. The bad guys know this, right,
They know there's an enormous amount of money. They know
in a lot of cases, older people may not even
be aware that it's possible to create a very you know,
(26:28):
a perfect deep fake.
Speaker 1 (26:29):
Audio or video.
Speaker 4 (26:30):
And you know, you guys mentioned there is documented evidence
already more in a corporate setting of large scale fraud
that's been perpetrated using deep fake voice cloning and videos.
I encourage your folks go look up the story about
the Ferrari CFO who got a nearly got deep fake
voice cloned into fraud from the so called Ferrari CEO
(26:52):
and these are people that know each other personally.
Speaker 1 (26:54):
This is the real gave us a segment maybe for
next week. I'm in right that one. Now why I
would look into it well documented, Dave.
Speaker 2 (27:03):
I was going to ask about the whole phone thing
and voice cloning.
Speaker 1 (27:07):
Yeah, so I'll just ask it this way.
Speaker 2 (27:09):
I mean, are we now at a point where it's
just because I know what I do. I never answer
my phone ever, ever, ever, unless I know who's calling me,
I just don't answer my phone. Are we at the
point now where our advice to folks, especially elderly and
maybe vulnerable folks, just give that blanket advice, do not
(27:30):
answer your phone unless you know who it is.
Speaker 1 (27:33):
Are we at that point? Is that the best way
to protect folks? I think?
Speaker 4 (27:37):
So I can tell you I do not ever answer
my phone from a number I don't recognize, and I'm
even sometimes skeptical if it is an number I do recognize,
Because keep in mind, guys, spoofing what's in my mind
is the biggest driver of all this, creating something that
looks realistic but isn't. It's fairly easy to do in
any digital mechanism. It's really easy to send a phone
(27:57):
call from any number you want, if you know what
you're doing in it does not require a lot of skills.
So you know, if I could find one of your
two cell phone numbers, or if I happen to have it,
I could easily spoof a call that would look like
it came from your cell phone. I could easily send
a text that looks like it comes from you. And
you know, same thing with emails. So skepticism, vigilance, don't
answer the phone. If it's important, they'll leave a message,
(28:19):
or they'll contact you some other way. Go read what
the government says. You know, IRS, FBI. They are not
going to call you and tell you some terrible thing
is going to happen to you if you don't make
it in when a payment by five pm. They don't
operate that way, and they state that clearly on their
own websites. So again, there's there's tons of useful information
out there that can help people avoid these kind of scams.
(28:41):
FTC dot gov, IC three dot gov. But it all
starts with skepticism and caution, like don't answer your phone.
If you don't recognize the number, they'll leave a message,
and if they don't, must not be important.
Speaker 1 (28:53):
All right, good stuff as always, Dave.
Speaker 2 (28:55):
You're listening to Simply Money, presented by all Worth Financial
on fifty five KRCV Talkstation.
Speaker 1 (29:02):
Mark Levin, you know, America.
Speaker 6 (29:04):
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 1 (29:22):
That's what the media and they do. Mark Levin, Tonight
at ten oh six on fifty five KRS the Talk station.
Your opinions are welcome to here.
Speaker 2 (29:31):
Why do we keep letting thousands of people come over
and do nothing about it?
Speaker 1 (29:34):
My family's safety is at risk. Fifty five KRC the
Talk Station.
Speaker 2 (29:43):
We're listening to Simple Money present by all Work Financial.
I'm Bob sponseller along with Brian James. Do you have
a financial question you'd like for us to answer. There's
a red button you can click while you're listening to
the show. If you're listening to the show on the
iHeart app. Simply record your question and it will come
straight to us. All right, Brian, get ready for Martin
(30:03):
from Westchester. He says, we've hit the income limit for
ROTH contributions, but we keep hearing.
Speaker 1 (30:09):
About the backdoor WROTH.
Speaker 2 (30:11):
How do you do that correctly without triggering the pro
rata rule?
Speaker 3 (30:16):
Great, great question, And this is now we're getting into
some tax planning.
Speaker 1 (30:19):
I love tax planning. This, This is right in your
wheel where we how we move the needle in financial
planning nowadays.
Speaker 3 (30:23):
So for a lot of savers hitting that Wroth IRA
income limit, Bob feels like that door just slam shut.
I can't put any more in because I'm earning too much.
There's a perfectly legal side entrance called the back door WROTH.
The trigger is doing it right because there's there's a
rule out there that could could discount some of the
benefit of it.
Speaker 1 (30:40):
So anyway, here's what a backdoor roth IRA works.
Speaker 3 (30:43):
The reason it exists is because there are income limitations
to whether you can make a contribution. If you exceed
those income limitations, you can do it with an extra
hop in the middle. What you can do is you're
making a non deductible contribution to a traditional IRA. This
is no different then a contribution you'd ever make to
it to any kind of IRA, you're just sticking money
(31:04):
in there. The non deductible part will come up when
you do your taxes and you find out Nope, you
can't deduct that, so you don't have to label it
or anything crazy on the front end, and then you
immediately convert those dollars to a ROTH. What we're doing
here is the income limitation only applies to contributions new
money flowing into the ROTH. By the time, it's already
in there, whether you deduct it or not, it's already
(31:24):
in there. Of course, it's it's an existing pile of money,
which means we're talking about a conversion from traditional to ROTH.
So let's answer Martin's question. This is what he actually asked.
What can happen though, is if you have traditional pre
tax dollars in an IRA, then you're going to run
into the pro rata rules.
Speaker 1 (31:40):
So here, let's give an example.
Speaker 3 (31:41):
You've got ninety five thousand dollars in pre tax IRA
money and you're going to add five thousand after tax
for a backdoor. When you convert the five thousand, the
IRS is going to say only five percent of that
is after tax, so ninety five percent of it becomes
taxable anyway. So that's what we want to avoid if
you basically want to have any traditional pre tax dollars.
(32:02):
So if you've got the ability to do so, you're
gonna want to move those pre tax iras into your
four oh one K. Therefore, you do not have an IRA,
and you just have to be in that state by
New Year's Eve and then everything will be clear for
the for the year. But make sure you don't have
any pretax iras at all. Move those dollars to four
oh one K, then you can do your conversion. We're
going to move on to Karen and Loveland. So Karen's
(32:22):
got a couple of life insurance policies, bought those over
the years, and she wants to know which ones do
you keep versus which ones is your place?
Speaker 1 (32:28):
How do you make that decision, Bob.
Speaker 2 (32:30):
Well, Karen, I'd start with your financial plan, you know,
and this is where I always start. How much life
insurance do you still need giving your current situation and
for how long do you need it? In other words,
update your financial plan, you know, up to current your
current status based on the needs of your family. Now
that'll help you determine how much life insurance you need
(32:51):
and for how long. A good advisor ought to be
able to run those numbers and give you those answers.
Once you've got those answers, then you start to look
at these pops policies. You know, are they term policies,
are they permanent policies with cash value? You can also
evaluate what your potential long term care situation might be.
Speaker 1 (33:11):
Brian.
Speaker 2 (33:12):
You know, we talked about this a couple times over
the last couple of weeks. A lot of times people
will take these old cash value life insurance policies and
use them to handle a potential long term care need
by just on a tax free basis. Think think the
insurance equivalent of an IRA rollover. It's referred to as
a ten thirty one or ten thirty five exchange. You
(33:34):
move that existing life insurance policy into a hybrid policy,
and now you've got some death benefit and some long
term care protection.
Speaker 1 (33:41):
There's a lot of things that you can do.
Speaker 2 (33:43):
Some people don't need any insurance at all, and then
you start to look at the tax impact of cashing
out of some of these policies versus doing some other things.
Speaker 3 (33:52):
So just redeploying your assets from something you don't need
into something you do. No different than converting your kids
or your former adult kids a bedroom into a sports.
Speaker 2 (34:01):
Bar or a hobby room or something something I don't
need versus something I do. But again, it starts with
a financial plan. Find out how much insurance you actually
need and for how long you need it, and then
go from there. All right, Brian, you're gonna hear from
another Brian from Cincinnati says we've got mutual funds in
taxable accounts that keep distributing these pesky gains. Is it
(34:22):
smarter to move toward ETFs or are there hidden costs
to switching?
Speaker 1 (34:26):
Well, hello Brian and Cincinnati, are you me? No, you're not.
Speaker 3 (34:30):
You've got a legit question here, And this is something
we run into all the time, because, yeah, mutual fund
If somebody has built up a good sized pile of money,
then they probably did it a long time ago when
mutual funds were really the only game in town. So
we're going back fifteen twenty, maybe longer than that. And
if you've built up a pile of money, good on you.
That's a great thing. But mutual funds aren't the most
efficient things out there anymore. They used to be, but
(34:51):
now there's better options. Exchange traded funds are more efficient
because they will not have those same distributions. Not enough
time here to get into why that is, but they
still represent the same thing. For example, an S and
P five hundred index ETF is going to be a
more efficient tool than a mutual fund, and lots of
reasons for that. So, yes, to answer your question, it's
a smarter move to look toward ETFs. Yes, there are
(35:13):
going to be hidden costs because presumably you've been doing
this for a long time, you've got gains built up.
There shouldn't be really any transactional costs or anything like that.
Speaker 1 (35:21):
That would be a rare case. But you're going to
pay taxes.
Speaker 3 (35:23):
That doesn't mean it's a bad idea, because remember, if
you've got a long runway, I'm going to guess we
have no idea how old Brian is, but let's pretend
he's me, he's fifty, it's got a long runway to go.
And so therefore, taking some sacrifice now in terms of
eating some of those capital gains taxes and converting to
what i'd be looking at is something that involves direct indexing,
so that you can not only get a more efficient
(35:46):
portfolio with fewer distributions, you can actually go the other
direction and start to harvest some of those tax losses
as they occur because you own individual securities versus those
mutual funds or ETFs. But to answer question, yeah, you're
going to want to pay attention to capital gains. All right,
we got time for one more quickie, so we're gonna
go to Jeff and Hebrew. Jeff says they're retired and
they've got income coming. Should they be reinvesting the dividends
(36:07):
and interest or should they use those to fund living expenses?
Speaker 2 (36:09):
Bob Well, Jeff, there's no magic answer to this. I
think you got to be looking at your tax situation
rather than worrying about, you know, whether to use dividends
and interest to fun living expenses, meaning, you know, depending
on the composition of your portfolio, ira versus non, ira
versus roth, I'd let the tax situation dictate how you
(36:31):
construct your retirement income strategy and then go from there.
Coming up next, we've got Brian's bottom line where he's
going to talk about it's it's great because it's finally
time to talk about lowering mortgage rates. Brian has some
thoughts on that coming up next. You're listening to Simply Money,
presented by all Worth Financial on fifty five KRC, the
(36:51):
talk station.
Speaker 1 (36:53):
You do do you? I do?
Speaker 6 (36:55):
Got to put up these Halloween decorations, do some work,
the laundry.
Speaker 1 (36:59):
We do have to go shout and will this is
what we do. We do the rest. It's time to
do it. We do traffic and weather, doing the news
at the top and bottom of the album. This is
the most important thing we can do. Do check in.
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
(37:19):
let's do it. On fifty five KRS the talk station.
Speaker 3 (37:24):
I am so worried that next month I have to
choose between groceries for my kids or gas for my car.
Speaker 1 (37:29):
Talk about it here fifty five KRC, the talk Station.
Speaker 2 (37:37):
You're listening to Simple Money, presented my all Work Financial
Bob sponsorer along with Brian James and Brian.
Speaker 1 (37:42):
You want to talk about mortgages tonight we are back in,
back in time.
Speaker 3 (37:47):
Remember the days, Bob, not that long ago where people
were refinancing two and three times a year. Well, we're
kind of getting back there. We've had several years of
higher rates, you know, and let's kind of quantify this
with history here. You might be saying, now there was
seven or seven and a half percent mortgage, maybe even
higher than that.
Speaker 1 (38:03):
In some cases, people still got to live their lives.
Speaker 3 (38:05):
Jobs change, people have to move for whatever reason, and
mortgages are just requirements.
Speaker 1 (38:09):
You got to deal with it.
Speaker 3 (38:10):
We all got spoiled with those two and three percent mortgages,
and I think a lot of us convinced ourselves that
that was a god given right, was just a good
period of time, and let's not kick ourselves too hard
because life happened and we had to go ahead and
get a seven eight percent mortgage. That said, it's now
time to start paying attention to maybe refinancing. If you
bought a home a few years ago at seven and
a half percent percent or higher, I would start looking
(38:33):
at refinance quotes today. We said earlier that the Fed
just cut interest rates and there's more rates coming based
on what their future indications are as well as what
the market thinks is happening.
Speaker 1 (38:43):
So this will work out the best.
Speaker 3 (38:46):
If you've got at least twenty percent equity, your credit's
in good shape, and you plan to stay in that
home five plus years, the break even in the long
term savings makes sense. So a lot of people were
very frustrated. It's stressful to move anyway.
Speaker 1 (38:57):
Darn it.
Speaker 3 (38:58):
Now I got to do this and the rates are
up at seven one and a half percent. Why do
things never go my way? Well, life gives you a
second chance, and you're coming up on those times. So
doesn't mean you have to rush out and do this
right now. We're in a declining rate environment. There's not
much to indicate it's going to go the other way
anytime soon. So if maybe you don't have the equity
built up, then in the short run, you're gonna want
to build up some cash. Try to find ways to
(39:18):
do it, you know, over the next several you know,
maybe three to six months, figure out where you can
carve out some extra cash as well. And if you've
got some credit issues out there, maybe your score isn't
quite what it needs to be, well, you've got time
to kind of start cleaning that up. Because now now
is the time to do it. We are in a
declining rate environment. You might even get a better opportunity
than where we're sitting right now, but now is the
(39:38):
time to start planning for it, so you can pull
the trigger at the right time.
Speaker 1 (39:42):
Yeah, Brian, A good rule of thumb, you know, to
your point.
Speaker 2 (39:45):
You know in every situation is different, but you got
to look at the fees associated with refinancing, closing costs,
all that. But a good rule of thumb to start
with is if the rate drops about one percent from
you know where you currently are, it's time to start
shopping it. You can usually, you know, come out ahead
on that game, would you agree, Oh?
Speaker 3 (40:03):
Absolutely, so again, if you're at seven and a half
percent rate, I'm looking right now at a bank that
won't be named because we don't advertise for banks, but
I always look at this site because they plaster it
right on the front page. Thirty year fixed for six
point h nine percent, fifteen year for five thirty nine
and again these are low. Look at the interest rate
as well as look at the closing costs, and you're
going to come out ahead. Don't rush out and do
this right now, but start thinking about it, learn how
(40:25):
it works, because a lot of people, a lot of
the people I'm talking to are first time home buyers,
just got stuck with that higher interest rates.
Speaker 1 (40:31):
Time to learn about refis. Thanks for listening tonight.
Speaker 2 (40:33):
Tune in tomorrow where we're going to have a former
actual voting member of the Fed with us to talk
interest rates. You've been listening to Simply Money, presented by
all Worth Financial on fifty five KRC, the talk station,
Mark Laden.
Speaker 6 (40:48):
Probably the people who should be listening aren't, but there
are a lot of people who tune in by accident.
Speaker 1 (40:52):
Then they start listening. I get this wherever I go listen.
I listened for a week. I listen to two. I said,
I like this guy. I like what he has to say.
Mark Levin Tonight at ten o six on fifty five KRC,
the talk station.
Speaker 5 (41:06):
When I was in Iraq, are cond
Simply Money News
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