December 3, 2025 • 38 mins
On this episode of Simply Money presented by Allworth Financial, Bob and Brian ask a powerful question: Are you just building wealth, or are you building a life? They explore the concept of "Return on Life" — and how many successful, high-net-worth families struggle to shift from accumulation to enjoyment. Through real stories and actionable advice, they help you confront financial fear, lifestyle paralysis, and the emotional habits that could be holding you back from a meaningful retirement. Plus, the surprising move from Vanguard that could bring crypto into the mainstream, a snapshot of the Cincinnati housing market, and how to plan around Medicare’s IRMAA surcharges.
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Episode Transcript
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Speaker 1 (00:05):
Tonight, what is the rate of return on your life?
In other words, are you using your money to create
a rich and meaningful set of experiences or are you
just sitting at home counting your money. You're listening to
Simply Money, presented by all Worth Financial. I'm Bob Sponseller
along with Brian James. If you think you've won the
(00:27):
money game, congratulations. Maybe you've sold a business, you've built
a wonderful career and retired, You've invested well, and now
you're sitting on let's say, a few million dollars or
maybe even more so. In other words, financially you're set.
So here's the uncomfortable question that we ask and need
to ask some folks that we work with. Are you
(00:47):
still just chasing return on investments? Or are you getting
any return on your life? In other words, benefiting for
all these years and years of hard work and wealth
that you've created. Brian, it comes up a caseasonly in
our office. It's something we like to call just being
trapped in accumulation mode.
Speaker 2 (01:06):
Yeah, I'm gonna steal that rol return on life. I
love that that Jason provided us with that this morning.
So we normally think of return on investment ROI, well,
this is return on life, meaning what are you getting
out all this? But you built this big pile of whatever?
What does it mean to you? And we see this
very frequently. I'm going to share some stories that are
going to generate emails from people who will recognize themselves
(01:27):
anonymized on the radio, because we've had these conversations very
recent recently with some of our clients who are also listeners.
And the ones I'm thinking of the most are the
ones who are accumulators, endless accumulators, just kind of trapped
in that mode of I have to have more and
more and more. I've been saving for thirty four years.
I don't really know what else to do, so I'm
just going to keep saving. These are the folks who
spend decades building this well through discipline, you know, constant
(01:51):
saving and good stewardship of their assets, not panicking during recessions,
down markets. You know, the business cycle goes up and down,
but they stay steady through all of.
Speaker 3 (01:59):
It, all of those habits that got them there.
Speaker 2 (02:02):
That's really hard to turn off, right that you can
only be a squirrel burying nuts for so long before
you got to go dig them up again. And even
after you've hit that number, people have a tough time transitioning.
Speaker 3 (02:12):
Out of this. And a lot of times people don't
even have a number.
Speaker 1 (02:15):
Right.
Speaker 2 (02:15):
I've just been working for thirty years. I don't really
know how much I need. I never stopped and step
back to look at the forest for the trees.
Speaker 3 (02:21):
This is what I do.
Speaker 2 (02:22):
I save things, and I build things. I don't spend
unless it's absolutely necessary. Well, one thing I can guarantee
is that if you don't spend it, your kids will.
You know, occasionally maybe treat yourself to that first class
ticket instead of coach, because that's what your kids are
gonna do. They didn't build it. They'll have a very
different different lifestyle with it.
Speaker 1 (02:41):
Yeah. I think, like a lot of things in life, Brian,
it comes down to balance, and I think that's one
of the areas you know, a good fiduciary financial advisor
can help folks with. And you mentioned one thing, having
a plan in the first place. I think a lot
of people, a lot of times, fear will dissipate, comfort
level will go up when they know they have a
plan and have clear goals set out and you're able
(03:03):
to run numbers and show people yep, using you know,
probability analysis and rate of return and inflat of inflation
assumptions and all that and just running the numb. I mean,
we can show people, you know, it makes sense from
a brain standpoint that you have enough money to hit
your goals. I think a lot of time that opens
up at least a door to start to discuss some
(03:25):
other things and allow people to dream a little. Sometimes, Brian,
even after showing people the quote unquote numbers, people just
can't get out of that accumulation mode or fear of
running out.
Speaker 3 (03:38):
Why do you think that is? Well, I think that's
just it.
Speaker 2 (03:41):
We get we get ingrained in whatever we we have
the habit of rights. Habits get are tough to break.
Think about quitting smoking or you know, any bad habits
you want that it's just something you did for a
long time, it's part of your life. Well that actually
hit This is a good habit. But that works the
same way. I'm just used to making more money than
I spend and putting it away and saving it and
(04:02):
building an estech. Well what happens there is And I
use this example all the time in my meetings here
in my office when we're doing financial planning, is you know,
there's a huge mountain that we all kind of hide behind.
We all simply convince ourselves that I don't know how
much I do. I don't really know what I want, right,
So don't I just know I don't have enough money.
I'm going to work toward that because there aren't any
(04:23):
other clear goals. Well, eventually you'll get to a point
where there is more than enough money as well. If
you do this for you know, several decades of your
working career, there's going to be more than enough. And honestly,
I think what the scary part becomes is what am
I going to do? I could do whatever I want,
Oh my gosh, what is it that I want to do?
I've never stopped to think about that, and that causes
a lot of us to hide behind the money. It
can be scary to think about the time that we're
(04:46):
going to have. It can be downright terrifying, Bob. I've
seen people just kind of stop in their tracks thinking
about this when it dawns on them that they have
built a plan that they can retire and they've simply
never sat down to figure out what that means.
Speaker 3 (04:58):
And I think a lot of.
Speaker 2 (04:58):
Us kind of revert to you know what, I I'm
just going to keep saving until I figure all that out.
And that can be a scary habit to get into
because it can lead you to work a lot longer,
you know, taking away time from you know, whatever you
want to do, your family, and so forth, working a
lot longer than you actually had to, simply because we
never took a breath to think about it.
Speaker 1 (05:15):
Yeah, speaking of taking a breath to think about it,
I'm going to share one story from an actual client
meeting I had earlier this year on this very topic.
This happens to be a widow. Her late husband was
one of my best friends. I mean, we've worked together
for years and years. Know the family really well, very
charitably inclined family, very involved in global missions work around
(05:38):
the world and big givers. And this lady happens to travel,
you know, overseas to Africa to you know, take a
look at how all these ministries are going, and it's
very tiresome to do that. And you know this, this
is a lady that's in her you know, early seventies.
And I just threw out the idea. I'm like, why
(05:59):
don't you start traveling first class, you'll arrive less tired,
You'll be able to sleep on the plane. I mean,
oftentimes these are twenty four hour trips to get to
these places. And you know, I just showed her, you know,
by adding one little budget item to her whole picture,
you know, I showed her she could afford it. She
started to do that on a couple of trips, and
(06:19):
in the next meeting we had, it was the first
thing she brought up. She's like, thank you so much
for suggesting that. It made me enjoy these trips much more.
I'm of more value when I get over there to
help the people I want to help, you know, just
opening the door to some of the possibilities that are
already in alignment with people in their hearts and minds
already know they want to do.
Speaker 3 (06:40):
Yeah. And I think here's another example of that.
Speaker 2 (06:43):
I have a lot of people who have grown up,
you know, over the decades, thinking that we are going
to buy a property somewhere near beach X because we
just love that play. We always go, this's just where
we went or where we've always gone. And the people
think differently about that. Now, with the cost of property insurance,
property taxes in someplace, hoa fees and all that kind
of stuff to buy a resort type of a property
(07:04):
that you have to worry about when you're not there.
These are the kind of folks who will leave family
parties here in Cincinnati early because there's a hurricane somewhere
in Florida and they need to go talk to whoever
the designated person in that neighborhood is who calls everybody
and says, you're roof blue off.
Speaker 3 (07:19):
That's another that's a shadow roll.
Speaker 2 (07:21):
By the way, I have lots of clients who I
have this other mystery person somewhere whose job is to
walk up down the street and tell everybody.
Speaker 3 (07:26):
What the damage is, the one who lives there all day.
Speaker 2 (07:28):
But anyway, what I'm talking about here is just a
difference in thinking. So a lot of those people have
come to the conclusion that, you know what, we were
planning on dropping seven hundred and fifty thousand to a
million maybe on some kind of property down there, including
the cost of having to maintain it and all that,
and we've kind of concluded that, you know what, why
don't you instead of dealing with all that extra hassle,
why don't you just go nicer places, stay in nicer places,
(07:50):
pick the airbnb something that's right on the beach, and
pay whatever it is. That's still going to be a
heck of a lot cheaper and a lot less stressful
than maintaining a property you're only going to be at,
you know, so many times year and again. It's just
all about that budget. I think when we're raising kids
and taking them on vacations and all that, we kind
of get in our head that a vacation should cost
only a couple three thousand dollars maybe, and that's it,
(08:11):
and we'll stay two or three blocks away from the beach.
But you don't have to do that anymore, right when
the budget says you can live differently than you should
do so within reason, just understand what the expenses are
and understand whether you value it. Just because I'm saying
it doesn't mean you got to do it, but it's
just something to take a breath and consider and challenge
the assumptions you've had for all these decades.
Speaker 1 (08:30):
One of the reasons we're bringing this topic up in
the first place is we came across the latest survey
called a World Happiness Report, and people in the United States,
believe it or not, dropped to twenty fourth globally, the
lowest ranking ever recorded in terms of people living in
the United States. And that's striking because obviously we have
(08:52):
more wealth on average than anybody in the world. This
isn't a story about lack of money. It's for many
Americas there's there's more than enough money, but there's not
enough happiness and and Brian, fewer than half of the
respondents to this survey said that the way they manage
or use their money actually makes them happy. Fewer than half.
(09:15):
And when asked what really brings them happiness, a lot
of people said saving and investing for the future. Pretty
shocking numbers. And you know, only a third of these
folks surveyed, even talked about are pointed to experiences, you know,
having experiences either with your spouse, or with your grandkids,
(09:36):
or with your family. I find that those survey results
to be uh sad and certainly lacking.
Speaker 2 (09:43):
And again I think, you know, like you said, the
key thing you said and all that was the person
who simply says, well, I save for.
Speaker 3 (09:49):
The future, it's what I do.
Speaker 2 (09:50):
Well, that's great, but you're gonna you're gonna probably wind
up regretting you didn't do the things that you do.
Nobody sits on their deathbed with their children and then
talks about that they didn't spend that money. So let's
go through examp some of a couple quick examples here
of just some similar situations to.
Speaker 3 (10:06):
Kind of compare and contrast.
Speaker 2 (10:07):
So we've got two people of the same age by
the same amount of money. Let's call it five million dollars.
Both of them are financially independent, there's no debt, we've
got good health situations. Life ahead of them is just
kind of all laid out there, and we're in good shape.
So John John is what we call a maximizer. He
tracks his net worth every month. That is his bread
and Butter's getting in that spreadsheet and updating his dollar amounts,
(10:27):
and he's gotten all of his accounts and taking a
look at zillo for what the house is worth, and
getting estimates on what the cars are worth, just so
we can look at see what his net worth is
doing every single month. He's still working part time, not
because he needs to, but he's never been able to
stop because he's just not confident he's ready for that.
And frankly hasn't thought about it because it's too scary.
He also chases CDs all over town looking for that
(10:47):
extra half percent here and there, those promo rates and
all that hasn't ever flown first class, and by god,
he's not going to buy a new car. He kind
of says he's going to travel once things calmed down,
but doesn't have anything booked yet.
Speaker 3 (10:57):
And he's his biggest fear.
Speaker 2 (10:59):
Is running out of money, even though he's obsessively tracking
all this, and his withdrawal rate is under two percent,
so his portfolio is perfect, but his calendar is empty.
So he's optimized his life, right, He's got it all perfect,
but it's all nice and tight and controlled, always worried
about what could go wrong. John is not a super
happy guy. We have clients that are in this kind
of a situation. So here's the other. The other is Renee. Now,
(11:20):
Renee's got everything all lined up. She's got five million bucks.
She's clear on what this is for. She has decided
that she's going to fly her grandkids into visit her
and make those memories that she's that's what she's investing in.
She's investing in memory. She's set up a donor advice
fund to give to causes she cares about. That gives
her control, but also also tax deductions on an annual basis.
(11:40):
And she also took her partner on this food tour
of Italy, something they dreamed of since their thirties. Still
investing wisely, but she's really focused on what that enables
her to do, not what it earns. She does not
have a really detailed super spreadsheet that she spends all
weekend updating. So again, put similar portfolios. Well, one calendar
is full and the other one is not. So choose
which of those who want to be and you can
(12:02):
probably guess which person is happier in retirement.
Speaker 1 (12:05):
Yeah, which person I'd rather hang out with at a
Christmas party? Who's way more interesting to spend time with. Yeah,
here's the all Worth advice. Once you have enough, don't
just continue to build wealth, build a life. Wealth doesn't
guarantee happiness. It's all about how you use it and
the meaningful experiences and relationships that you use your wealth
(12:27):
and your money to build into. That's what really matters
at the end of the day. One of the world's
largest asset managers just reverse course a bit and open
the door to crypto ETFs, what that means for sophisticated investors,
and whether now's the time to maybe reconsider digital assets.
You're listening to Simply Money is thated buy all Worth
(12:48):
Financial on fifty five KRC, the talk station. You're listening
to Simply Money presented by all Worth Financial on Bob
Sponsor along with Brian James. If you can't listen to
Simply Money live every night, subscribing get our daily podcasts.
Just search Simply Money on the iHeart app or wherever
(13:09):
you find your podcast. Straight ahead of six forty three.
We help people navigate appreciated investments in taxable accounts, how
to make sense of something called factor investing and how,
and we're going to help you figure out whether you're
over insured. A lot to talk about here coming up, Brian.
All Right, big news in the investment world tonight, and
(13:30):
it's not your usual market twist. The huge firm van Guard,
huge and well respected firm Vanguard, long known for conservative
long term investing. Just flip a major switch, Brian, what's
going on here with Vanguard?
Speaker 2 (13:46):
Well, Vanguard they manage about eleven trillion dollars in assets.
This is one of the biggest financial asset managers on
the face of the earth and in the universe, of course,
and they have about fifty million different households that they serve.
But they've decided to allow exchange trade funds and mutual
funds that primarily hold cryptocurrencies to be traded on their platform.
This is a big change. Uh, you know, this is
(14:07):
what it looks like today, is a policy change. But
this could be a pretty big moment for for how
mainstream investors start to view crypto because Vanguard is kind
of known as a you know, your main street type
of investment platform. But you know, for high net worth
folks like many of our listeners, then that this could
be a bit of an attention getter in terms of
I've always been nervous about having a bitcoin wallet set
up and doing all that crazy stuff. But if it
(14:28):
starts to look like regular investments, that might look a
little more attractive.
Speaker 1 (14:33):
Yeah, I mean, I think this is great. I mean
people are obviously asking for this, and you know, Vanguard
is just responding to what what folks out there want.
They want access to cryptocurrency. You know, the whole the
whole discussion of crypto is is. You know, we could
go on until dinner time talking about the pros and
cons and why you would use crypto in these wallets.
(14:55):
You know, they're aside from mutual funds and ETFs. There's
there's the reasons people want to have their hands on
their cryptocurrency, which I won't get into now. But where
where could crypto fit brian into a well diversified, responsibly
built portfolio. Why would folks want to even consider having
(15:15):
some of this stuff in their portfolio in the first place.
Speaker 2 (15:19):
Well, crypto can be just just like anything else, it
can be something that does offset other things in the portfolio.
Speaker 3 (15:25):
You know, I don't know that there's enough.
Speaker 2 (15:27):
History yet to truly say, you know, here, here's how
it works in modern portfolio theory in terms of what
kind of volatility it brings. That's the whole point of
modern portfolio theory. How do you mix different asset classes
together to maximize returns and minimize the roller coaster ride.
Speaker 3 (15:41):
That's what modern portfolio theory is.
Speaker 2 (15:44):
Crypto is new enough that it's really tough to say
here's how it where. It'll be decades before we can
truly identify this is what it does. Repeatedly in this
type of an environment, you know, with regard to economic
expansions and contractions, interest rate shifts, all those kinds of
things just take years to come together.
Speaker 3 (15:59):
And as crypto is in its infancy still, maybe it's
in todlerhood.
Speaker 2 (16:02):
I guess uh that it's going to take a very
long time to determine that, but it could be, and
it probably will someday be a valuable way to offset
some of the risk of the other types of investments
that we're that we're exposed to. So, you know, the
whole idea here that this is kind of a could
this could be a tipping point for crypto as an
institutional asset class. Some of the analysts out there are
arguing that vanguards take taking a cautious but significant entry
(16:26):
and that kind of signals that crypto is now being
accepted into mainstream finance, and that could accelerate adoption by
other traditional institutions, uh and kind of make things move
in a more mainstream manner. Now that's gonna that itself
will affect what crypto is and how it behaves, because
if you've got mom and pop type investors owning traditional
traditional type ETFs and mutual funds that are investing in
(16:47):
these things, well, that's going to affect how crypto moves
because there's a lot of dollar amounts that are going
to move into this. It will no longer just be
the play the playground for the speculators out there. People
are gonna be doing this in their four to one
k is that we've been talking about that all year long,
haven't we, Bob yep.
Speaker 1 (17:01):
And if you do, if we do start to see bitcoin,
for example, as part of target date retirement plan funds,
to your point, it does put a floor under the
price of bitcoin. But man, most people that are looking
for target date funds or looking for diversified portfolio that
they want exactly what you let off the segment talking about.
(17:22):
They want more of a modern portfolio theory approach here
where you know, in other words, you can measure over time,
over a long period of time, what mix of asset
classes gives me the highest rate of return per unit
of risk and have a pretty good idea of what
your expected volatility can be in a down market. This
is probably a good time to remind folks. I mean,
(17:43):
if you look at just the last month, I mean
cryptocurrency Bitcoin in particular, has been a.
Speaker 3 (17:49):
Very volatile asset class.
Speaker 1 (17:51):
It's moved way with way more volatility than the stock
market has, so, you know it, we're still, to your point,
still learning how to use this stuff. You know, is
part of modern portfolio theory, and it's in a part
of a diversified portfolio. So I don't know my take
on this, Feel free to disagree. This is still you know,
should be used as a specultive asset class. I mean
(18:14):
maybe taking one, two, three, five percent of your portfolio
and investing in it more as a long term speculative
growth play, not looking to use it as a volatility hedge,
because it certainly has not been behaving that way.
Speaker 2 (18:31):
And just because they're starting to look like, uh, you know,
an investment you've held before exchange traded funds or mutual funds,
doesn't mean it's not going to be any less volatile.
Those those those types of things still own the underlying
asset that has always been volatile. So I wouldn't treat
this necessarily as a I'm gonna throw a quarter of
my portfolio into it and then sit on it. That's
not really the case here. Might you might use it
(18:52):
as seasoning for your portfolio maybe one to five percent
or something like that of a regulated crypto ETF and
and don't don't pull the trigger on any of these yet.
I would wagit n til Vanguard gets out there and
kind of starts to drive the market. In terms of
what this is going to look like, it's gonna start
to get a lot more attention from.
Speaker 3 (19:06):
The regulators as who are going to be very open
to it.
Speaker 2 (19:09):
Right this administration has been very clear that we're not
gonna we're not gonna put the pull the reins on
too much on these types of things, so it'll probably
be less regulated than we've seen in the past when
these types of things come up. But that said, again,
you don't treat it like a satellite position. This is
not something that did is to be a core of
your portfolio. And I definitely wouldn't be shocked if you
buy one of these things thinking I'm gonna sit on
(19:30):
it forever and it's gonna go through its various swings,
So don't be.
Speaker 3 (19:33):
Shocked if it's particularly volatile.
Speaker 2 (19:35):
But remember that's why you've got ninety five percent of
the rest of your portfolio of doing something entirely.
Speaker 3 (19:39):
Different exactly here's the all Worth advice.
Speaker 1 (19:42):
Don't treat crypto ETFs like the next great foundation of
your portfolio. Treat them, as Brian said, like a little
spice added to a well balanced meal. Add sparingly, with
purpose and within the context of a diversified, goal oriented portfolio.
Speaker 3 (20:00):
Season to Taste, Season to Taste Up.
Speaker 1 (20:03):
Next, our local housing expert joins us to break down
what's really happening in the greater Cincinnati real estate market
as we move on toward Christmas. You're listening to Simply
Money presented by all Worth Financial on fifty five KRC,
the talk station. You're listening to Simply Money presented by
(20:23):
all Worth Financial. I'm Bob Sponseller along with Brian James,
joined tonight by our real estate guru, missus Michelle Sloan. Michelle,
thank you as always for making time for us and
we all just want to know, as we head into
the last few weeks of twenty twenty five, how's it
looking out there in terms of the housing market and
(20:44):
what do you see happening, if anything, in the way
of change as we flip the calendar and head into
twenty twenty six.
Speaker 4 (20:53):
Well, those are all good questions and Honestly, we're in
that December deep freeze in the real estate market where
things definitely slow down, and you know, the buyers that
are out there are super serious. They need to find
a home. We have more inventory than we've seen in
(21:13):
quite some time. I do have some statistics for you
just sort of late twenty twenty five. Statistics is that
the median sales price in the Cincinnati area has increased
about four and a half percent, which is good, so
that's a positive. Our median price per square foot is
(21:38):
about one hundred and seventy seven dollars per square foot.
That's up almost eight percent over last year. And then
you know, if we're looking at the broader area, the
different markets within Cincinnati and each neighborhood is always just
a little bit different. But roughly our prices, the sales
(22:00):
prices are up, but the other thing that is up
is inventory. And with inventory up, the days on market
have also gone up pretty considerably. So we are seeing
homes that are on the market anywhere between thirty and
ninety days fifty two days on average, So that is
(22:23):
quite a change from what we have seen over the
last couple of years. So more inventory, fewer buyers, meaning
we have an inventory of about three months on hand,
so it could take up to three months to sell
your home. So you really need to be smart if
you're thinking about putting your home on the market anytime soon.
Speaker 2 (22:46):
Hey, Michelle, the something I've been wondering about. With these
prices where they are, do you feel like that people
more recently are looking smaller than.
Speaker 3 (22:55):
They used to?
Speaker 2 (22:55):
I mean, do we do we still have people looking
for the same size home, you know, four or five bedrooms,
or few people who only really need three maybe or
have thinking changed on that yet.
Speaker 4 (23:05):
I think that we are seeing a bit of a change.
But you know, in those lower price points and the
smaller homes, there aren't as many of them out there,
So you know where I'm seeing that there are more
and more four bedroom sort of typical four bedroom, two
and a half back homes that are sitting on the
(23:27):
market a little bit longer, and so there are opportunities there.
And that's the one thing that I would like to
stress to anyone who is considering getting back into the
buying side of things. There are so many opportunities and
there may be a home that's been on the market
(23:48):
for ninety days and let's say it's listed for five
hundred thousand dollars, which is above average for the city,
but you know, it's it's a price point that we
have seen being sold over and over again. There may
be more room for negotiation. Now. I wouldn't tell you
ever to go in on a home that's priced at
(24:11):
five hundred thousand dollars and offer like three hundred or
three point fifty. I mean, that's just a total slap
in the face to the cellar. So that's not realistic.
We're not in that sort of atmosphere that we want
to go in. But you know, there's opportunities to do
some negotiating, and that is definitely something that you want
(24:34):
to talk to your real estate agent about, Michelle.
Speaker 1 (24:38):
I want to ask a little bit about location where
these homes are available and where home buyers want to live.
And this is what I mean by that, are a
lot of first time home buyers wanting to stay closer
to the city and find smaller homes, which you said
there's not a whole lot of right now, And are
they reticent or hesitant to move out to the suburb
(25:00):
herbs along the two seventy five belt Way is there
a little bit of a mismatch on where the quote
unquote affordable homes are and where the people that are
potentially buyers of those homes want to live. What are
you seeing?
Speaker 3 (25:14):
You know?
Speaker 4 (25:14):
In that respect, absolutely, there are definitely parts of the
city and that's something that you need to consider when
you're buying a home. Do you want to live on
the West side? Do you want to live on the
east side? Where's your family? Where's your job? Where your kids?
If you have children, where would you like them to
(25:35):
go to school? How long are you planning on to
being in your home. There's so many questions, Bob, that
you want to answer for yourself, and then depending on
what you're looking for. You know, I often hear first
time home buyers say, you know, I'm fine with a small,
(25:55):
smaller home, but I would like to have a big yard,
a big fencedin yard for my dog. Well, that's a
great goal, but you may not find that inside the
two seventy five loop in your price range. You might
have to go farther outside of the city, and so
you have to really understand, Okay, how far do you
(26:17):
want to drive to get to work? How far do
you want to drive to get to the grocery, how
far you know, those all of those factors are so
very important. And when I have buyers who say, well,
I can live anywhere, boy, anywhere is a really tough
go because you're driving all around the city and it's
(26:40):
just it's not the best way to plan and strategize
to get the best value for your money.
Speaker 1 (26:48):
Well, because at the end of the day, you're not
just buying a home, you are buying an overall lifestyle
the things that you mentioned, And I think that's why
it's so important for someone to have an open and
honest conversation with a real estate professional like yourself, who
really will ask the right questions and then focus the
search accordingly. And I think a lot of times people
(27:10):
are just so quick to just buy something and then
six months later they're disappointed that they didn't think about
all the lifestyle issues that go into this things that
you've already listed.
Speaker 4 (27:21):
Absolutely, planning is key, and that's the one thing that
I really feel is important about a When you're a buyer,
you need to choose and hire a real estate agent
who's going to work with you every step of the way.
And that meaning is they're going to be not just
getting you to the closing table, not just finding you
(27:44):
our house and saying yep, that's the one by it,
you know, asking those tough questions. And I will often
ask my clients. I treat all of my clients as
if they're family, yeah, and I ask those questions. Do
you see yourself in this home for five to seven years?
(28:06):
Will it fit your lifestyle? Will it fit what you're
looking for?
Speaker 1 (28:10):
Great stuff? Michelle. You're listening to Simply moneyse ied by
all Worth Financial on fifty five KRC, the talk station.
You're listening to Simply Money Pause I buy all Worth
Financial on Bob Sponseller along with Brian James. Do you
have a financial question you'd like for us to answer.
There's a red button you can click while you're listening
(28:31):
to the show. If you're listening on the iHeart app,
simply record your question and it always comes straight to us.
All right, Brian, get ready for Rachel In Blue ass
she says, we're both working now, but our income swings
from year to year. How do you build an investment
plan that doesn't fall apart when cash flow is a
(28:51):
bit less predictable.
Speaker 2 (28:53):
Well, we need to make sure that we understand what
our cash flow is in the first place, and so
that makes really means understanding what your budget is, what
what income do you need to you know, think and
think expenses, don't think about income. I think a lot
of people get bogged down in this just trying just
trying to figure out, here's what my salary was, and
therefore that must be my income stream and I need
to to match that exact amount. Well, so if your
(29:18):
investment plan, your investment plan hopefully isn't completely tied to
your to your income anyway, those two things should be
really you know, kind of separate. Since you're working now, Yeah,
your income goes up and down, but the income is
there to pay the bills on a current basis, but
also there to uh for you to be able to
carve off a little bits and pieces here and save
(29:38):
that is going to go up and down, and that's okay.
As long as you've got an emergency fund out there.
Income swings are gonna happen. You're gonna have your feast
and famine years. You know, perhaps you're in sales, you're
in the kind of kind of unpredictable types of situations.
So just make sure there's enough on the side is
sitting in a heeled savings account or something like that. Uh,
that is there, and be okay with tapping into it
when you need to. You know there stuff happens, And
(30:00):
what I always recommend is, let's figure out what the
new zero is. Maybe your emergency fund needs to be
fifty thousand dollars something like that.
Speaker 3 (30:06):
That's great.
Speaker 2 (30:07):
Then when it creeps up to sixty thousand dollars, that
means you got ten thousand to go do anything else with,
make that extra roth IRA contribution, take the extra trip
with the family.
Speaker 3 (30:15):
If that's if that's appropriate or whatever.
Speaker 2 (30:18):
But if it drops from fifty to forty, well now
we're not doing any of those things, and we're gonna
do what we can to get it back up to
that fifty thousand dollars amount. So income swings will happen.
Speaker 3 (30:26):
It is okay.
Speaker 2 (30:27):
You are allowed to dip into your emergency fund when
everything else is otherwise stable. You'll get it back to
where it's supposed to be. Deal with life as it's
handed to You'll be all right. Moving on to Greg
and Mason, and Greg. Greg's got he's got some appreciated
investments that he's really scared to touch, and we're gonna
guess that he's gonna talk about taxes. So, Bob, how
do you decide when the tax bill is worth it
versus a shift in strategy?
Speaker 1 (30:49):
Well, I'd first say to Greg, if you were sitting
in the office talking to me, I would I would
first ask your why, In other words, why are you scared?
And you know, for a lot of people, they have
different reasons. I would say, if I had to guess,
the two most common ones here would be these are
probably some long term winners. And Greg likes looking at
(31:11):
that high accumulated return of those investments and like it says, man,
what what should I What? What am I going to do?
If I get out of this thing that's done really well?
Where am I going to put that money? And then
the other thing you already mentioned. People just do not want,
under any circumstances to pay the irs anything if they
can avoid it. And a lot of times, you know,
(31:32):
we we can tend to let the tax tail wag
the dogs, so to speak. And then you really don't
have a strategy. So I would say, sit down. You know,
there's pros and cons to making any shifts or any
changes to your investment portfolio in terms of risk, reward, taxes,
so to speak. So sit down with a good advisor
and actually know what your strategy is, and then you
(31:55):
got to make some assumptions on if I do this,
how does it impact that vice versa, and if if
you sit down and collaborate with a good advisor, most
of the time you can come up with some good
trade offs and feel good about the decisions you are
either going to make or sometimes not make. Sometimes we
tell people not to do anything because it could potentially
(32:16):
do more harm than good. So hope that helps Greg.
Let's move to Andy and Hyde Park. He says, we
have a mix of mutual funds and ETFs in a
taxable account. Is it smarter to clean it up now
for tax efficiency or let sleeping dogs lie. Sounds like
a very similar question, just worded a little bit differently
than what Greg was asking me.
Speaker 2 (32:36):
Yeah, that's right, and I think Andy's been probably a
long time recent listener because we've been talking about these
types of things. So, yeah, mutual funds ETFs have been
a great investment strategies for long periods of time. They're
not the most tax efficient, they're not terrible either, but
they're not the most tax efficient given what is available
out there now. So yeah, I think it is at
least worth understanding how you could get to a more
(32:59):
taxific type of a position while still maintaining that kind
of growth position there. So easiest thing first thing you
do is look for any position that's sitting at a loss.
And I'm not talking just about that ticker symbol, just
the fun look underneath it. Look at what are called
tax lots. Every position that is having its dividends reinvested
is buying something every month, every quarter whenever the dividends hit,
(33:20):
and those each individual lot of those reinvestments could be
sitting at a loss. Look underneath that in the cost
basis section of your financial provider's website. And this is
an a taxable account, of course, and see if there's
anything sitting at a loss that you can sell and
then sell it. So what that does, of course, is
now you're stacking up losses that you get to take
as a deduction against anything that you're going to generate
(33:41):
gains off of. And if you happen to have more
losses than gains in a given year, you get a
straight up deduction of up to three thousand dollars. Now
the question is always, well what do I do with this?
Speaker 3 (33:50):
Well, you can't.
Speaker 2 (33:50):
What you can't do is buy the same thing right back.
You can't sell it in the morning and by it
in the afternoon. The IRS will call that a wash
sale and they will disallow that loss out of it
for thirty days. Or find something that is similar but
not identical. That's the free one.
Speaker 3 (34:04):
That's easy.
Speaker 2 (34:05):
And then figure out if any of your winners the
funds that are sitting at gains are they creating ongoing
tax drag.
Speaker 3 (34:10):
You're going to see it very soon.
Speaker 2 (34:12):
If you've got a mutual fund out there, especially the
older actively trading ones, those can kick out huge capital
gains distributions in every December. You might want to have
an eye on what they're going to do. And they're
usually are informing you. If you're reading a lot of
the junk email they send out, one of them is
going to tell you what to expect with capital gained purposes.
So pay attention to that and then just understand what
that gain is. If you have a low income year
(34:34):
coming up, it probably is okay. You might even get
away with a zero percent capital gain taxation. So these
are there's a lot of moves that can be made here,
but you have to understand the situation that you're in.
Talk to your tax tax professional or your financial advisor
to see if there's any things you should be taken
care of, taken advantage of.
Speaker 1 (34:52):
All Right, coming up next, we've got Brian's bottom line
where he's going to talk about IRMA and just overall
how that factors into managing your health care expenses heading
into twenty twenty six. You're listening to Simply Money presented
by Allworth Financial on fifty five KRC, the talk station.
(35:14):
You're listening to Simply Money present up by Allworth Financial.
I'm Bob Sponseller along with Brian James. We spent more
than a few minutes yesterday just talking about the overall
challenges of planning for healthcare expenses. And in Brian's bottom
line tonight, he talks he gives us some practical advice
on how to handle the situation here as we head
into twenty twenty six. Brian, anxious to hear your thoughts
(35:37):
on healthcare planning.
Speaker 2 (35:38):
Well, It's is the season to have the family over
the holidays and that includes Aunt good old Aunt Irma
and her marshmellow whatever cast role, the weird thing that
she's always made for all these years, but now we're
not talking about.
Speaker 1 (35:51):
Is that different than Aunt Edna, the lady that likes
to ride on top of station wagons?
Speaker 2 (35:55):
But I don't know if she enjoyed that in that movie.
She kind of didn't have a choice about it because
she was dead. By No, this is ant irma, perfectly
healthy and with us today. IRMA that's her nickname. It
stands for income related Monthly Adjustment amount. Most people know
it as the search ards I got to pay for
my Medicare premium. Most more retirees are paying this now
than ever before because those income brackets that trigger IRMA
(36:18):
didn't rise as fast as wages and investment income have
over the decades. So IRMA is based off of your
income from two years ago. So your twenty twenty five
Medicare premiums are being calculated based off of what you
earned in twenty twenty three from salary if you are
still working, any required minimum distributions, ROTH conversions, capital gains,
business income, basically everything. Once you cross that threshold. This
(36:40):
is what people get surprised by Once you cross a
threshold of IRMA by even a dollar, you don't just
pay a little more. It's not marginal like it used
to be. You can pay hundreds or even thousands extra
per year. So it is very well worth making sure
you know where those thresholds are and what kind of
income you're generating that may trigger you or push you into.
Speaker 3 (36:59):
A higher ERMA racket.
Speaker 2 (37:00):
So where this is coming from and the kind of
cost that we're looking to battle here. So your standard
medicare Part B Premium aout one hundred and seventy five
hundred and eighty bucks a month per person, but with
IRMA that can go up to that's a month, by
the way, that can go up to five hundred bucks
per person with those IRMA charges. And then if you
have Part D the drug benefit too, now you've got.
Speaker 3 (37:21):
Those search charges.
Speaker 2 (37:22):
You know, wealthy retirees can end up paying over six
thousand dollars extra per year, sometimes even more. Now what
do we do about this, Well, manage your taxable income
before retirement, so years before their retirement, you know, higher earners,
you're gonna you're gonna have bonus, you're gonna have restricted
stock things coming do vesting schedules, all those kinds of
things that are gonna create taxation in a year, so
(37:43):
you're gonna want to make sure that you know what
those are. There may not be anything you can do
about it, but be aware so you can identify the
ones you can impact. Roth conversions are always valuable, but
make sure you do them at the right time. Try
to get them done before you're gonna have this situation.
If you can at all, early sixties is great, if
you can pull that off. Health savings accounts use those
as well. You can shelter money tax free and take
(38:05):
advantage of that tax free medical IRA that's out there.
And finally, if you've got large capital gains, spread them
into multiple years. You've got a month to sort that
out to get something in twenty five and maybe a
little something in twenty six.
Speaker 1 (38:16):
Brian, don't you just love how Congress continues to make
the tax code nice and simple for us more and
more every year.
Speaker 3 (38:22):
It's wonderful taxs on those cards. That's what we're doing.
Speaker 1 (38:26):
Thanks for listening tonight. You've been listening to Simply Money,
presented by all Worth Financial on fifty five KRC, the
talk station
Tonight, what is the rate of return on your life?
In other words, are you using your money to create
a rich and meaningful set of experiences or are you
just sitting at home counting your money. You're listening to
Simply Money, presented by all Worth Financial. I'm Bob Sponseller
along with Brian James. If you think you've won the
(00:27):
money game, congratulations. Maybe you've sold a business, you've built
a wonderful career and retired, You've invested well, and now
you're sitting on let's say, a few million dollars or
maybe even more so. In other words, financially you're set.
So here's the uncomfortable question that we ask and need
to ask some folks that we work with. Are you
(00:47):
still just chasing return on investments? Or are you getting
any return on your life? In other words, benefiting for
all these years and years of hard work and wealth
that you've created. Brian, it comes up a caseasonly in
our office. It's something we like to call just being
trapped in accumulation mode.
Speaker 2 (01:06):
Yeah, I'm gonna steal that rol return on life. I
love that that Jason provided us with that this morning.
So we normally think of return on investment ROI, well,
this is return on life, meaning what are you getting
out all this? But you built this big pile of whatever?
What does it mean to you? And we see this
very frequently. I'm going to share some stories that are
going to generate emails from people who will recognize themselves
(01:27):
anonymized on the radio, because we've had these conversations very
recent recently with some of our clients who are also listeners.
And the ones I'm thinking of the most are the
ones who are accumulators, endless accumulators, just kind of trapped
in that mode of I have to have more and
more and more. I've been saving for thirty four years.
I don't really know what else to do, so I'm
just going to keep saving. These are the folks who
spend decades building this well through discipline, you know, constant
(01:51):
saving and good stewardship of their assets, not panicking during recessions,
down markets. You know, the business cycle goes up and down,
but they stay steady through all of.
Speaker 3 (01:59):
It, all of those habits that got them there.
Speaker 2 (02:02):
That's really hard to turn off, right that you can
only be a squirrel burying nuts for so long before
you got to go dig them up again. And even
after you've hit that number, people have a tough time transitioning.
Speaker 3 (02:12):
Out of this. And a lot of times people don't
even have a number.
Speaker 1 (02:15):
Right.
Speaker 2 (02:15):
I've just been working for thirty years. I don't really
know how much I need. I never stopped and step
back to look at the forest for the trees.
Speaker 3 (02:21):
This is what I do.
Speaker 2 (02:22):
I save things, and I build things. I don't spend
unless it's absolutely necessary. Well, one thing I can guarantee
is that if you don't spend it, your kids will.
You know, occasionally maybe treat yourself to that first class
ticket instead of coach, because that's what your kids are
gonna do. They didn't build it. They'll have a very
different different lifestyle with it.
Speaker 1 (02:41):
Yeah. I think, like a lot of things in life, Brian,
it comes down to balance, and I think that's one
of the areas you know, a good fiduciary financial advisor
can help folks with. And you mentioned one thing, having
a plan in the first place. I think a lot
of people, a lot of times, fear will dissipate, comfort
level will go up when they know they have a
plan and have clear goals set out and you're able
(03:03):
to run numbers and show people yep, using you know,
probability analysis and rate of return and inflat of inflation
assumptions and all that and just running the numb. I mean,
we can show people, you know, it makes sense from
a brain standpoint that you have enough money to hit
your goals. I think a lot of time that opens
up at least a door to start to discuss some
(03:25):
other things and allow people to dream a little. Sometimes, Brian,
even after showing people the quote unquote numbers, people just
can't get out of that accumulation mode or fear of
running out.
Speaker 3 (03:38):
Why do you think that is? Well, I think that's
just it.
Speaker 2 (03:41):
We get we get ingrained in whatever we we have
the habit of rights. Habits get are tough to break.
Think about quitting smoking or you know, any bad habits
you want that it's just something you did for a
long time, it's part of your life. Well that actually
hit This is a good habit. But that works the
same way. I'm just used to making more money than
I spend and putting it away and saving it and
(04:02):
building an estech. Well what happens there is And I
use this example all the time in my meetings here
in my office when we're doing financial planning, is you know,
there's a huge mountain that we all kind of hide behind.
We all simply convince ourselves that I don't know how
much I do. I don't really know what I want, right,
So don't I just know I don't have enough money.
I'm going to work toward that because there aren't any
(04:23):
other clear goals. Well, eventually you'll get to a point
where there is more than enough money as well. If
you do this for you know, several decades of your
working career, there's going to be more than enough. And honestly,
I think what the scary part becomes is what am
I going to do? I could do whatever I want,
Oh my gosh, what is it that I want to do?
I've never stopped to think about that, and that causes
a lot of us to hide behind the money. It
can be scary to think about the time that we're
(04:46):
going to have. It can be downright terrifying, Bob. I've
seen people just kind of stop in their tracks thinking
about this when it dawns on them that they have
built a plan that they can retire and they've simply
never sat down to figure out what that means.
Speaker 3 (04:58):
And I think a lot of.
Speaker 2 (04:58):
Us kind of revert to you know what, I I'm
just going to keep saving until I figure all that out.
And that can be a scary habit to get into
because it can lead you to work a lot longer,
you know, taking away time from you know, whatever you
want to do, your family, and so forth, working a
lot longer than you actually had to, simply because we
never took a breath to think about it.
Speaker 1 (05:15):
Yeah, speaking of taking a breath to think about it,
I'm going to share one story from an actual client
meeting I had earlier this year on this very topic.
This happens to be a widow. Her late husband was
one of my best friends. I mean, we've worked together
for years and years. Know the family really well, very
charitably inclined family, very involved in global missions work around
(05:38):
the world and big givers. And this lady happens to travel,
you know, overseas to Africa to you know, take a
look at how all these ministries are going, and it's
very tiresome to do that. And you know this, this
is a lady that's in her you know, early seventies.
And I just threw out the idea. I'm like, why
(05:59):
don't you start traveling first class, you'll arrive less tired,
You'll be able to sleep on the plane. I mean,
oftentimes these are twenty four hour trips to get to
these places. And you know, I just showed her, you know,
by adding one little budget item to her whole picture,
you know, I showed her she could afford it. She
started to do that on a couple of trips, and
(06:19):
in the next meeting we had, it was the first
thing she brought up. She's like, thank you so much
for suggesting that. It made me enjoy these trips much more.
I'm of more value when I get over there to
help the people I want to help, you know, just
opening the door to some of the possibilities that are
already in alignment with people in their hearts and minds
already know they want to do.
Speaker 3 (06:40):
Yeah. And I think here's another example of that.
Speaker 2 (06:43):
I have a lot of people who have grown up,
you know, over the decades, thinking that we are going
to buy a property somewhere near beach X because we
just love that play. We always go, this's just where
we went or where we've always gone. And the people
think differently about that. Now, with the cost of property insurance,
property taxes in someplace, hoa fees and all that kind
of stuff to buy a resort type of a property
(07:04):
that you have to worry about when you're not there.
These are the kind of folks who will leave family
parties here in Cincinnati early because there's a hurricane somewhere
in Florida and they need to go talk to whoever
the designated person in that neighborhood is who calls everybody
and says, you're roof blue off.
Speaker 3 (07:19):
That's another that's a shadow roll.
Speaker 2 (07:21):
By the way, I have lots of clients who I
have this other mystery person somewhere whose job is to
walk up down the street and tell everybody.
Speaker 3 (07:26):
What the damage is, the one who lives there all day.
Speaker 2 (07:28):
But anyway, what I'm talking about here is just a
difference in thinking. So a lot of those people have
come to the conclusion that, you know what, we were
planning on dropping seven hundred and fifty thousand to a
million maybe on some kind of property down there, including
the cost of having to maintain it and all that,
and we've kind of concluded that, you know what, why
don't you instead of dealing with all that extra hassle,
why don't you just go nicer places, stay in nicer places,
(07:50):
pick the airbnb something that's right on the beach, and
pay whatever it is. That's still going to be a
heck of a lot cheaper and a lot less stressful
than maintaining a property you're only going to be at,
you know, so many times year and again. It's just
all about that budget. I think when we're raising kids
and taking them on vacations and all that, we kind
of get in our head that a vacation should cost
only a couple three thousand dollars maybe, and that's it,
(08:11):
and we'll stay two or three blocks away from the beach.
But you don't have to do that anymore, right when
the budget says you can live differently than you should
do so within reason, just understand what the expenses are
and understand whether you value it. Just because I'm saying
it doesn't mean you got to do it, but it's
just something to take a breath and consider and challenge
the assumptions you've had for all these decades.
Speaker 1 (08:30):
One of the reasons we're bringing this topic up in
the first place is we came across the latest survey
called a World Happiness Report, and people in the United States,
believe it or not, dropped to twenty fourth globally, the
lowest ranking ever recorded in terms of people living in
the United States. And that's striking because obviously we have
(08:52):
more wealth on average than anybody in the world. This
isn't a story about lack of money. It's for many
Americas there's there's more than enough money, but there's not
enough happiness and and Brian, fewer than half of the
respondents to this survey said that the way they manage
or use their money actually makes them happy. Fewer than half.
(09:15):
And when asked what really brings them happiness, a lot
of people said saving and investing for the future. Pretty
shocking numbers. And you know, only a third of these
folks surveyed, even talked about are pointed to experiences, you know,
having experiences either with your spouse, or with your grandkids,
(09:36):
or with your family. I find that those survey results
to be uh sad and certainly lacking.
Speaker 2 (09:43):
And again I think, you know, like you said, the
key thing you said and all that was the person
who simply says, well, I save for.
Speaker 3 (09:49):
The future, it's what I do.
Speaker 2 (09:50):
Well, that's great, but you're gonna you're gonna probably wind
up regretting you didn't do the things that you do.
Nobody sits on their deathbed with their children and then
talks about that they didn't spend that money. So let's
go through examp some of a couple quick examples here
of just some similar situations to.
Speaker 3 (10:06):
Kind of compare and contrast.
Speaker 2 (10:07):
So we've got two people of the same age by
the same amount of money. Let's call it five million dollars.
Both of them are financially independent, there's no debt, we've
got good health situations. Life ahead of them is just
kind of all laid out there, and we're in good shape.
So John John is what we call a maximizer. He
tracks his net worth every month. That is his bread
and Butter's getting in that spreadsheet and updating his dollar amounts,
(10:27):
and he's gotten all of his accounts and taking a
look at zillo for what the house is worth, and
getting estimates on what the cars are worth, just so
we can look at see what his net worth is
doing every single month. He's still working part time, not
because he needs to, but he's never been able to
stop because he's just not confident he's ready for that.
And frankly hasn't thought about it because it's too scary.
He also chases CDs all over town looking for that
(10:47):
extra half percent here and there, those promo rates and
all that hasn't ever flown first class, and by god,
he's not going to buy a new car. He kind
of says he's going to travel once things calmed down,
but doesn't have anything booked yet.
Speaker 3 (10:57):
And he's his biggest fear.
Speaker 2 (10:59):
Is running out of money, even though he's obsessively tracking
all this, and his withdrawal rate is under two percent,
so his portfolio is perfect, but his calendar is empty.
So he's optimized his life, right, He's got it all perfect,
but it's all nice and tight and controlled, always worried
about what could go wrong. John is not a super
happy guy. We have clients that are in this kind
of a situation. So here's the other. The other is Renee. Now,
(11:20):
Renee's got everything all lined up. She's got five million bucks.
She's clear on what this is for. She has decided
that she's going to fly her grandkids into visit her
and make those memories that she's that's what she's investing in.
She's investing in memory. She's set up a donor advice
fund to give to causes she cares about. That gives
her control, but also also tax deductions on an annual basis.
(11:40):
And she also took her partner on this food tour
of Italy, something they dreamed of since their thirties. Still
investing wisely, but she's really focused on what that enables
her to do, not what it earns. She does not
have a really detailed super spreadsheet that she spends all
weekend updating. So again, put similar portfolios. Well, one calendar
is full and the other one is not. So choose
which of those who want to be and you can
(12:02):
probably guess which person is happier in retirement.
Speaker 1 (12:05):
Yeah, which person I'd rather hang out with at a
Christmas party? Who's way more interesting to spend time with. Yeah,
here's the all Worth advice. Once you have enough, don't
just continue to build wealth, build a life. Wealth doesn't
guarantee happiness. It's all about how you use it and
the meaningful experiences and relationships that you use your wealth
(12:27):
and your money to build into. That's what really matters
at the end of the day. One of the world's
largest asset managers just reverse course a bit and open
the door to crypto ETFs, what that means for sophisticated investors,
and whether now's the time to maybe reconsider digital assets.
You're listening to Simply Money is thated buy all Worth
(12:48):
Financial on fifty five KRC, the talk station. You're listening
to Simply Money presented by all Worth Financial on Bob
Sponsor along with Brian James. If you can't listen to
Simply Money live every night, subscribing get our daily podcasts.
Just search Simply Money on the iHeart app or wherever
(13:09):
you find your podcast. Straight ahead of six forty three.
We help people navigate appreciated investments in taxable accounts, how
to make sense of something called factor investing and how,
and we're going to help you figure out whether you're
over insured. A lot to talk about here coming up, Brian.
All Right, big news in the investment world tonight, and
(13:30):
it's not your usual market twist. The huge firm van Guard,
huge and well respected firm Vanguard, long known for conservative
long term investing. Just flip a major switch, Brian, what's
going on here with Vanguard?
Speaker 2 (13:46):
Well, Vanguard they manage about eleven trillion dollars in assets.
This is one of the biggest financial asset managers on
the face of the earth and in the universe, of course,
and they have about fifty million different households that they serve.
But they've decided to allow exchange trade funds and mutual
funds that primarily hold cryptocurrencies to be traded on their platform.
This is a big change. Uh, you know, this is
(14:07):
what it looks like today, is a policy change. But
this could be a pretty big moment for for how
mainstream investors start to view crypto because Vanguard is kind
of known as a you know, your main street type
of investment platform. But you know, for high net worth
folks like many of our listeners, then that this could
be a bit of an attention getter in terms of
I've always been nervous about having a bitcoin wallet set
up and doing all that crazy stuff. But if it
(14:28):
starts to look like regular investments, that might look a
little more attractive.
Speaker 1 (14:33):
Yeah, I mean, I think this is great. I mean
people are obviously asking for this, and you know, Vanguard
is just responding to what what folks out there want.
They want access to cryptocurrency. You know, the whole the
whole discussion of crypto is is. You know, we could
go on until dinner time talking about the pros and
cons and why you would use crypto in these wallets.
(14:55):
You know, they're aside from mutual funds and ETFs. There's
there's the reasons people want to have their hands on
their cryptocurrency, which I won't get into now. But where
where could crypto fit brian into a well diversified, responsibly
built portfolio. Why would folks want to even consider having
(15:15):
some of this stuff in their portfolio in the first place.
Speaker 2 (15:19):
Well, crypto can be just just like anything else, it
can be something that does offset other things in the portfolio.
Speaker 3 (15:25):
You know, I don't know that there's enough.
Speaker 2 (15:27):
History yet to truly say, you know, here, here's how
it works in modern portfolio theory in terms of what
kind of volatility it brings. That's the whole point of
modern portfolio theory. How do you mix different asset classes
together to maximize returns and minimize the roller coaster ride.
Speaker 3 (15:41):
That's what modern portfolio theory is.
Speaker 2 (15:44):
Crypto is new enough that it's really tough to say
here's how it where. It'll be decades before we can
truly identify this is what it does. Repeatedly in this
type of an environment, you know, with regard to economic
expansions and contractions, interest rate shifts, all those kinds of
things just take years to come together.
Speaker 3 (15:59):
And as crypto is in its infancy still, maybe it's
in todlerhood.
Speaker 2 (16:02):
I guess uh that it's going to take a very
long time to determine that, but it could be, and
it probably will someday be a valuable way to offset
some of the risk of the other types of investments
that we're that we're exposed to. So, you know, the
whole idea here that this is kind of a could
this could be a tipping point for crypto as an
institutional asset class. Some of the analysts out there are
arguing that vanguards take taking a cautious but significant entry
(16:26):
and that kind of signals that crypto is now being
accepted into mainstream finance, and that could accelerate adoption by
other traditional institutions, uh and kind of make things move
in a more mainstream manner. Now that's gonna that itself
will affect what crypto is and how it behaves, because
if you've got mom and pop type investors owning traditional
traditional type ETFs and mutual funds that are investing in
(16:47):
these things, well, that's going to affect how crypto moves
because there's a lot of dollar amounts that are going
to move into this. It will no longer just be
the play the playground for the speculators out there. People
are gonna be doing this in their four to one
k is that we've been talking about that all year long,
haven't we, Bob yep.
Speaker 1 (17:01):
And if you do, if we do start to see bitcoin,
for example, as part of target date retirement plan funds,
to your point, it does put a floor under the
price of bitcoin. But man, most people that are looking
for target date funds or looking for diversified portfolio that
they want exactly what you let off the segment talking about.
(17:22):
They want more of a modern portfolio theory approach here
where you know, in other words, you can measure over time,
over a long period of time, what mix of asset
classes gives me the highest rate of return per unit
of risk and have a pretty good idea of what
your expected volatility can be in a down market. This
is probably a good time to remind folks. I mean,
(17:43):
if you look at just the last month, I mean
cryptocurrency Bitcoin in particular, has been a.
Speaker 3 (17:49):
Very volatile asset class.
Speaker 1 (17:51):
It's moved way with way more volatility than the stock
market has, so, you know it, we're still, to your point,
still learning how to use this stuff. You know, is
part of modern portfolio theory, and it's in a part
of a diversified portfolio. So I don't know my take
on this, Feel free to disagree. This is still you know,
should be used as a specultive asset class. I mean
(18:14):
maybe taking one, two, three, five percent of your portfolio
and investing in it more as a long term speculative
growth play, not looking to use it as a volatility hedge,
because it certainly has not been behaving that way.
Speaker 2 (18:31):
And just because they're starting to look like, uh, you know,
an investment you've held before exchange traded funds or mutual funds,
doesn't mean it's not going to be any less volatile.
Those those those types of things still own the underlying
asset that has always been volatile. So I wouldn't treat
this necessarily as a I'm gonna throw a quarter of
my portfolio into it and then sit on it. That's
not really the case here. Might you might use it
(18:52):
as seasoning for your portfolio maybe one to five percent
or something like that of a regulated crypto ETF and
and don't don't pull the trigger on any of these yet.
I would wagit n til Vanguard gets out there and
kind of starts to drive the market. In terms of
what this is going to look like, it's gonna start
to get a lot more attention from.
Speaker 3 (19:06):
The regulators as who are going to be very open
to it.
Speaker 2 (19:09):
Right this administration has been very clear that we're not
gonna we're not gonna put the pull the reins on
too much on these types of things, so it'll probably
be less regulated than we've seen in the past when
these types of things come up. But that said, again,
you don't treat it like a satellite position. This is
not something that did is to be a core of
your portfolio. And I definitely wouldn't be shocked if you
buy one of these things thinking I'm gonna sit on
(19:30):
it forever and it's gonna go through its various swings,
So don't be.
Speaker 3 (19:33):
Shocked if it's particularly volatile.
Speaker 2 (19:35):
But remember that's why you've got ninety five percent of
the rest of your portfolio of doing something entirely.
Speaker 3 (19:39):
Different exactly here's the all Worth advice.
Speaker 1 (19:42):
Don't treat crypto ETFs like the next great foundation of
your portfolio. Treat them, as Brian said, like a little
spice added to a well balanced meal. Add sparingly, with
purpose and within the context of a diversified, goal oriented portfolio.
Speaker 3 (20:00):
Season to Taste, Season to Taste Up.
Speaker 1 (20:03):
Next, our local housing expert joins us to break down
what's really happening in the greater Cincinnati real estate market
as we move on toward Christmas. You're listening to Simply
Money presented by all Worth Financial on fifty five KRC,
the talk station. You're listening to Simply Money presented by
(20:23):
all Worth Financial. I'm Bob Sponseller along with Brian James,
joined tonight by our real estate guru, missus Michelle Sloan. Michelle,
thank you as always for making time for us and
we all just want to know, as we head into
the last few weeks of twenty twenty five, how's it
looking out there in terms of the housing market and
(20:44):
what do you see happening, if anything, in the way
of change as we flip the calendar and head into
twenty twenty six.
Speaker 4 (20:53):
Well, those are all good questions and Honestly, we're in
that December deep freeze in the real estate market where
things definitely slow down, and you know, the buyers that
are out there are super serious. They need to find
a home. We have more inventory than we've seen in
(21:13):
quite some time. I do have some statistics for you
just sort of late twenty twenty five. Statistics is that
the median sales price in the Cincinnati area has increased
about four and a half percent, which is good, so
that's a positive. Our median price per square foot is
(21:38):
about one hundred and seventy seven dollars per square foot.
That's up almost eight percent over last year. And then
you know, if we're looking at the broader area, the
different markets within Cincinnati and each neighborhood is always just
a little bit different. But roughly our prices, the sales
(22:00):
prices are up, but the other thing that is up
is inventory. And with inventory up, the days on market
have also gone up pretty considerably. So we are seeing
homes that are on the market anywhere between thirty and
ninety days fifty two days on average, So that is
(22:23):
quite a change from what we have seen over the
last couple of years. So more inventory, fewer buyers, meaning
we have an inventory of about three months on hand,
so it could take up to three months to sell
your home. So you really need to be smart if
you're thinking about putting your home on the market anytime soon.
Speaker 2 (22:46):
Hey, Michelle, the something I've been wondering about. With these
prices where they are, do you feel like that people
more recently are looking smaller than.
Speaker 3 (22:55):
They used to?
Speaker 2 (22:55):
I mean, do we do we still have people looking
for the same size home, you know, four or five bedrooms,
or few people who only really need three maybe or
have thinking changed on that yet.
Speaker 4 (23:05):
I think that we are seeing a bit of a change.
But you know, in those lower price points and the
smaller homes, there aren't as many of them out there,
So you know where I'm seeing that there are more
and more four bedroom sort of typical four bedroom, two
and a half back homes that are sitting on the
(23:27):
market a little bit longer, and so there are opportunities there.
And that's the one thing that I would like to
stress to anyone who is considering getting back into the
buying side of things. There are so many opportunities and
there may be a home that's been on the market
(23:48):
for ninety days and let's say it's listed for five
hundred thousand dollars, which is above average for the city,
but you know, it's it's a price point that we
have seen being sold over and over again. There may
be more room for negotiation. Now. I wouldn't tell you
ever to go in on a home that's priced at
(24:11):
five hundred thousand dollars and offer like three hundred or
three point fifty. I mean, that's just a total slap
in the face to the cellar. So that's not realistic.
We're not in that sort of atmosphere that we want
to go in. But you know, there's opportunities to do
some negotiating, and that is definitely something that you want
(24:34):
to talk to your real estate agent about, Michelle.
Speaker 1 (24:38):
I want to ask a little bit about location where
these homes are available and where home buyers want to live.
And this is what I mean by that, are a
lot of first time home buyers wanting to stay closer
to the city and find smaller homes, which you said
there's not a whole lot of right now, And are
they reticent or hesitant to move out to the suburb
(25:00):
herbs along the two seventy five belt Way is there
a little bit of a mismatch on where the quote
unquote affordable homes are and where the people that are
potentially buyers of those homes want to live. What are
you seeing?
Speaker 3 (25:14):
You know?
Speaker 4 (25:14):
In that respect, absolutely, there are definitely parts of the
city and that's something that you need to consider when
you're buying a home. Do you want to live on
the West side? Do you want to live on the
east side? Where's your family? Where's your job? Where your kids?
If you have children, where would you like them to
(25:35):
go to school? How long are you planning on to
being in your home. There's so many questions, Bob, that
you want to answer for yourself, and then depending on
what you're looking for. You know, I often hear first
time home buyers say, you know, I'm fine with a small,
(25:55):
smaller home, but I would like to have a big yard,
a big fencedin yard for my dog. Well, that's a
great goal, but you may not find that inside the
two seventy five loop in your price range. You might
have to go farther outside of the city, and so
you have to really understand, Okay, how far do you
(26:17):
want to drive to get to work? How far do
you want to drive to get to the grocery, how
far you know, those all of those factors are so
very important. And when I have buyers who say, well,
I can live anywhere, boy, anywhere is a really tough
go because you're driving all around the city and it's
(26:40):
just it's not the best way to plan and strategize
to get the best value for your money.
Speaker 1 (26:48):
Well, because at the end of the day, you're not
just buying a home, you are buying an overall lifestyle
the things that you mentioned, And I think that's why
it's so important for someone to have an open and
honest conversation with a real estate professional like yourself, who
really will ask the right questions and then focus the
search accordingly. And I think a lot of times people
(27:10):
are just so quick to just buy something and then
six months later they're disappointed that they didn't think about
all the lifestyle issues that go into this things that
you've already listed.
Speaker 4 (27:21):
Absolutely, planning is key, and that's the one thing that
I really feel is important about a When you're a buyer,
you need to choose and hire a real estate agent
who's going to work with you every step of the way.
And that meaning is they're going to be not just
getting you to the closing table, not just finding you
(27:44):
our house and saying yep, that's the one by it,
you know, asking those tough questions. And I will often
ask my clients. I treat all of my clients as
if they're family, yeah, and I ask those questions. Do
you see yourself in this home for five to seven years?
(28:06):
Will it fit your lifestyle? Will it fit what you're
looking for?
Speaker 1 (28:10):
Great stuff? Michelle. You're listening to Simply moneyse ied by
all Worth Financial on fifty five KRC, the talk station.
You're listening to Simply Money Pause I buy all Worth
Financial on Bob Sponseller along with Brian James. Do you
have a financial question you'd like for us to answer.
There's a red button you can click while you're listening
(28:31):
to the show. If you're listening on the iHeart app,
simply record your question and it always comes straight to us.
All right, Brian, get ready for Rachel In Blue ass
she says, we're both working now, but our income swings
from year to year. How do you build an investment
plan that doesn't fall apart when cash flow is a
(28:51):
bit less predictable.
Speaker 2 (28:53):
Well, we need to make sure that we understand what
our cash flow is in the first place, and so
that makes really means understanding what your budget is, what
what income do you need to you know, think and
think expenses, don't think about income. I think a lot
of people get bogged down in this just trying just
trying to figure out, here's what my salary was, and
therefore that must be my income stream and I need
to to match that exact amount. Well, so if your
(29:18):
investment plan, your investment plan hopefully isn't completely tied to
your to your income anyway, those two things should be
really you know, kind of separate. Since you're working now, Yeah,
your income goes up and down, but the income is
there to pay the bills on a current basis, but
also there to uh for you to be able to
carve off a little bits and pieces here and save
(29:38):
that is going to go up and down, and that's okay.
As long as you've got an emergency fund out there.
Income swings are gonna happen. You're gonna have your feast
and famine years. You know, perhaps you're in sales, you're
in the kind of kind of unpredictable types of situations.
So just make sure there's enough on the side is
sitting in a heeled savings account or something like that. Uh,
that is there, and be okay with tapping into it
when you need to. You know there stuff happens, And
(30:00):
what I always recommend is, let's figure out what the
new zero is. Maybe your emergency fund needs to be
fifty thousand dollars something like that.
Speaker 3 (30:06):
That's great.
Speaker 2 (30:07):
Then when it creeps up to sixty thousand dollars, that
means you got ten thousand to go do anything else with,
make that extra roth IRA contribution, take the extra trip
with the family.
Speaker 3 (30:15):
If that's if that's appropriate or whatever.
Speaker 2 (30:18):
But if it drops from fifty to forty, well now
we're not doing any of those things, and we're gonna
do what we can to get it back up to
that fifty thousand dollars amount. So income swings will happen.
Speaker 3 (30:26):
It is okay.
Speaker 2 (30:27):
You are allowed to dip into your emergency fund when
everything else is otherwise stable. You'll get it back to
where it's supposed to be. Deal with life as it's
handed to You'll be all right. Moving on to Greg
and Mason, and Greg. Greg's got he's got some appreciated
investments that he's really scared to touch, and we're gonna
guess that he's gonna talk about taxes. So, Bob, how
do you decide when the tax bill is worth it
versus a shift in strategy?
Speaker 1 (30:49):
Well, I'd first say to Greg, if you were sitting
in the office talking to me, I would I would
first ask your why, In other words, why are you scared?
And you know, for a lot of people, they have
different reasons. I would say, if I had to guess,
the two most common ones here would be these are
probably some long term winners. And Greg likes looking at
(31:11):
that high accumulated return of those investments and like it says, man,
what what should I What? What am I going to do?
If I get out of this thing that's done really well?
Where am I going to put that money? And then
the other thing you already mentioned. People just do not want,
under any circumstances to pay the irs anything if they
can avoid it. And a lot of times, you know,
(31:32):
we we can tend to let the tax tail wag
the dogs, so to speak. And then you really don't
have a strategy. So I would say, sit down. You know,
there's pros and cons to making any shifts or any
changes to your investment portfolio in terms of risk, reward, taxes,
so to speak. So sit down with a good advisor
and actually know what your strategy is, and then you
(31:55):
got to make some assumptions on if I do this,
how does it impact that vice versa, and if if
you sit down and collaborate with a good advisor, most
of the time you can come up with some good
trade offs and feel good about the decisions you are
either going to make or sometimes not make. Sometimes we
tell people not to do anything because it could potentially
(32:16):
do more harm than good. So hope that helps Greg.
Let's move to Andy and Hyde Park. He says, we
have a mix of mutual funds and ETFs in a
taxable account. Is it smarter to clean it up now
for tax efficiency or let sleeping dogs lie. Sounds like
a very similar question, just worded a little bit differently
than what Greg was asking me.
Speaker 2 (32:36):
Yeah, that's right, and I think Andy's been probably a
long time recent listener because we've been talking about these
types of things. So, yeah, mutual funds ETFs have been
a great investment strategies for long periods of time. They're
not the most tax efficient, they're not terrible either, but
they're not the most tax efficient given what is available
out there now. So yeah, I think it is at
least worth understanding how you could get to a more
(32:59):
taxific type of a position while still maintaining that kind
of growth position there. So easiest thing first thing you
do is look for any position that's sitting at a loss.
And I'm not talking just about that ticker symbol, just
the fun look underneath it. Look at what are called
tax lots. Every position that is having its dividends reinvested
is buying something every month, every quarter whenever the dividends hit,
(33:20):
and those each individual lot of those reinvestments could be
sitting at a loss. Look underneath that in the cost
basis section of your financial provider's website. And this is
an a taxable account, of course, and see if there's
anything sitting at a loss that you can sell and
then sell it. So what that does, of course, is
now you're stacking up losses that you get to take
as a deduction against anything that you're going to generate
(33:41):
gains off of. And if you happen to have more
losses than gains in a given year, you get a
straight up deduction of up to three thousand dollars. Now
the question is always, well what do I do with this?
Speaker 3 (33:50):
Well, you can't.
Speaker 2 (33:50):
What you can't do is buy the same thing right back.
You can't sell it in the morning and by it
in the afternoon. The IRS will call that a wash
sale and they will disallow that loss out of it
for thirty days. Or find something that is similar but
not identical. That's the free one.
Speaker 3 (34:04):
That's easy.
Speaker 2 (34:05):
And then figure out if any of your winners the
funds that are sitting at gains are they creating ongoing
tax drag.
Speaker 3 (34:10):
You're going to see it very soon.
Speaker 2 (34:12):
If you've got a mutual fund out there, especially the
older actively trading ones, those can kick out huge capital
gains distributions in every December. You might want to have
an eye on what they're going to do. And they're
usually are informing you. If you're reading a lot of
the junk email they send out, one of them is
going to tell you what to expect with capital gained purposes.
So pay attention to that and then just understand what
that gain is. If you have a low income year
(34:34):
coming up, it probably is okay. You might even get
away with a zero percent capital gain taxation. So these
are there's a lot of moves that can be made here,
but you have to understand the situation that you're in.
Talk to your tax tax professional or your financial advisor
to see if there's any things you should be taken
care of, taken advantage of.
Speaker 1 (34:52):
All Right, coming up next, we've got Brian's bottom line
where he's going to talk about IRMA and just overall
how that factors into managing your health care expenses heading
into twenty twenty six. You're listening to Simply Money presented
by Allworth Financial on fifty five KRC, the talk station.
(35:14):
You're listening to Simply Money present up by Allworth Financial.
I'm Bob Sponseller along with Brian James. We spent more
than a few minutes yesterday just talking about the overall
challenges of planning for healthcare expenses. And in Brian's bottom
line tonight, he talks he gives us some practical advice
on how to handle the situation here as we head
into twenty twenty six. Brian, anxious to hear your thoughts
(35:37):
on healthcare planning.
Speaker 2 (35:38):
Well, It's is the season to have the family over
the holidays and that includes Aunt good old Aunt Irma
and her marshmellow whatever cast role, the weird thing that
she's always made for all these years, but now we're
not talking about.
Speaker 1 (35:51):
Is that different than Aunt Edna, the lady that likes
to ride on top of station wagons?
Speaker 2 (35:55):
But I don't know if she enjoyed that in that movie.
She kind of didn't have a choice about it because
she was dead. By No, this is ant irma, perfectly
healthy and with us today. IRMA that's her nickname. It
stands for income related Monthly Adjustment amount. Most people know
it as the search ards I got to pay for
my Medicare premium. Most more retirees are paying this now
than ever before because those income brackets that trigger IRMA
(36:18):
didn't rise as fast as wages and investment income have
over the decades. So IRMA is based off of your
income from two years ago. So your twenty twenty five
Medicare premiums are being calculated based off of what you
earned in twenty twenty three from salary if you are
still working, any required minimum distributions, ROTH conversions, capital gains,
business income, basically everything. Once you cross that threshold. This
(36:40):
is what people get surprised by Once you cross a
threshold of IRMA by even a dollar, you don't just
pay a little more. It's not marginal like it used
to be. You can pay hundreds or even thousands extra
per year. So it is very well worth making sure
you know where those thresholds are and what kind of
income you're generating that may trigger you or push you into.
Speaker 3 (36:59):
A higher ERMA racket.
Speaker 2 (37:00):
So where this is coming from and the kind of
cost that we're looking to battle here. So your standard
medicare Part B Premium aout one hundred and seventy five
hundred and eighty bucks a month per person, but with
IRMA that can go up to that's a month, by
the way, that can go up to five hundred bucks
per person with those IRMA charges. And then if you
have Part D the drug benefit too, now you've got.
Speaker 3 (37:21):
Those search charges.
Speaker 2 (37:22):
You know, wealthy retirees can end up paying over six
thousand dollars extra per year, sometimes even more. Now what
do we do about this, Well, manage your taxable income
before retirement, so years before their retirement, you know, higher earners,
you're gonna you're gonna have bonus, you're gonna have restricted
stock things coming do vesting schedules, all those kinds of
things that are gonna create taxation in a year, so
(37:43):
you're gonna want to make sure that you know what
those are. There may not be anything you can do
about it, but be aware so you can identify the
ones you can impact. Roth conversions are always valuable, but
make sure you do them at the right time. Try
to get them done before you're gonna have this situation.
If you can at all, early sixties is great, if
you can pull that off. Health savings accounts use those
as well. You can shelter money tax free and take
(38:05):
advantage of that tax free medical IRA that's out there.
And finally, if you've got large capital gains, spread them
into multiple years. You've got a month to sort that
out to get something in twenty five and maybe a
little something in twenty six.
Speaker 1 (38:16):
Brian, don't you just love how Congress continues to make
the tax code nice and simple for us more and
more every year.
Speaker 3 (38:22):
It's wonderful taxs on those cards. That's what we're doing.
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