Wealth from Wisdom

The ABCs of RMDs (Required Minimum Distributions)

June 07, 2019
Wealth from Wisdom
The ABCs of RMDs (Required Minimum Distributions)
Chapters
Wealth from Wisdom
The ABCs of RMDs (Required Minimum Distributions)
Jun 07, 2019
Carson Wealth
When you retire, RMD’s could trigger massive taxes and penalties with your IRA, 401K and other retirement accounts.
Show Notes Transcript

When you retire, RMD’s could trigger massive taxes and penalties with your IRA, 401K and other retirement accounts. Don’t miss this episode of Wealth From Wisdom with Paul West and guest Senior Investment Strategist Scott Kubie.

Speaker 1:
0:00
Okay, and here's the legal Mumbo jumbo, the opinions voiced and welfare wisdom with Ron Carson or for general information only and are not intended to provide specific advice or recommendations for any individual to determine what is appropriate for you. Consult a qualified professional. All indices are unmanaged. I may not be invested into directly. Investing involves risk including possible loss of principle. No strategy assures success or protects from loss. Past performance is no guarantee of future results. Advisory Services offered through CW m LLC, an SCC registered investment advisor.
Speaker 2:
0:30
The stock market hit another old time, records as much as $10 billion in social security benefits go unclaimed every single year. Federal Reserve announced that they will raise interest rates by 250 skyrocketing cost of healthcare and retirement could now run 350,000 words hard and save for retirement. That's great, but it's what you do with that money that really matters. Welcome to wealth from wisdom with Carson wealth. Carson and wealth is a Barron's hall of Fame Advisor and recognized by Forbes magazine as one of America's top wealth advisors and they're right here in Omaha. This is where you can count on straight forward and objective advice that could help you make the most out of every della you've saved for retirement. Welcome to wealth from wisdom with Carson wealth.
Speaker 3:
1:15
Hey everyone. Welcome to wealth or wisdom cohost. Today is Scott [inaudible]. Scott, I'm Paul West. Just want to make sure you know who you figured I was. Okay. I knew you from the last time we cohost. I cohosted with you. Just want to make sure you didn't change at the same, you're looking good man. Glad to be back. Scott is our senior investment strategist and it was part of the theme of the show today. Scott is we're going to talk a little bit about required minimum distribution. So is that why we picked you? I hope not for the age and I'm not, I'm not 70 and a half or headed to 72. Yeah. Yeah. Possibly not necessarily a, but Scott, you know, when you're on the show, we were going to talk a lot about the markets, what we're seeing, what we think is gonna happen. But, um, you know, one of my themes in the show I want us to talk about today is turning 70 or 70 and a half.
Speaker 3:
2:03
It's just easier to say 70 is the church. It's a big milestone in your life. Actually. Any zero birthday as a milestone. 2030, 40, 50. All right, keep going. Right. I, I stopped eating. I 50 was not as significant. I as is getting too high up, so yeah. Well you're halfway there. Okay. All right. Or a third of the way there. If you think like saw people, uh, but what's your in d under current law, uh, your required minimum distribution kicks in. Maybe you might've been seeing the news weather, uh, on TV or pops up on your iPad or your phone. They may change that age 72, but let's just operate under the current rules now when, when this happens, you're forced, you do not have a choice. This is a law that you have to figure out and you got to answer to in one of the things we talk about on today's show is what is the best, I would say time to do it of the year.
Speaker 3:
3:05
Should you do it in January or June or whenever. December. Right Scott or should you do it systematically? And we're going to talk about that. But the big thing is what we want to avoid people doing is forced to take this distribution when the market is down. So that's something that we're going to look at and let's just talk about where we are. So Scott, we're in June. Happy summer to you. Thank you. I know it's not officially the summer. It's not yet, but I'm telling you, everybody thinks this way. I shouldn't say everybody. The majority of people, it's past memorial day. So summer's here at summer. The pool's open lemonade, cold, refreshing cocktails, whatever you're enjoying. And, but you know, one of the things we have to think about is the market and what's going on and what's happening. And you know, one of my favorite things you do every single week, one of my favorite Scooby snacks. So as long as my right, that's all right. I will be, I will answer to that is you love, you love to put images up and kind of talk about what's going on and what's happening this week. So help with our listeners. What are, what are the images, what are the Scooby images of the
Speaker 4:
4:17
we clean out of the week, you know, there were no or big anniversaries this week. And so I thought one of them was a resounding success. One of them maybe depending on your point of view, but for most people, not so much. Uh, it was the 75th anniversary of d day, um, [inaudible] on this two, six of June. It was coming up this week and are now last week. And I just a amazing story of all the people, not just the soldiers who gave the lies with the French citizens, uh, all the people that allow that. I mean, it was a year's worth of planning to go into that as amazing and still there were challenges. So they were able to overcome those. I thought that's worth remembering. That's worth remembering the great things in the great sacrifices people made. And then on the same geo sense of bravery, but, but none of us attorney down nearly as well. It was the 30th anniversary of tenement square as well. I believe that was 30 years ago. Yeah. And, and you know, in the forgotten time actually if you think about it, yeah. And it just, it, it never really materialized. In fact, it's probably gotten worse since then, a lot of different ways. And so that's been tough. And then there were
Speaker 3:
5:18
true, hold on, I'm gonna stop. You are saying no. Is it true though that if you live in China and you Google, you can't find it
Speaker 4:
5:26
imagery? I don't believe he can. It just really goes to the Yale. It's, it's uh, if you've read 1984 from George Orwell just goes down the memory hole.
Speaker 3:
5:35
Yeah. A day. I interesting that, that you, you think of Google as this unabridged universe and wealth of data, but yet certain countries still take control of what you can do. That
Speaker 4:
5:47
there were reports in China that they banned the image of Winnie the Pooh. Now you're like, why? What did Poodoo ate too much high? Well, it turns out that the police don't like the name, the president of China's physique and poos physique or not as, so people started to use poo as a representation of him. He got banned for a little while over that. Right.
Speaker 3:
6:05
Because of that. That didn't make Disney happy. No, I'm sure not. That's why they started their own content
Speaker 4:
6:11
division. That's, well that might've been that flicks instead of the Chinese
Speaker 3:
6:15
doing that. But I think they're bigger Netflix, that's for sure. Yeah. So those are, you know, they're very visual images to me, Scott, like, I mean, I think about the picture of course for me, you know, one of the most visible images is like take saving private Ryan. Such a famous movie in the image of them coming off the boats and what happened to me. So that day I will never forget the first time I saw that movie. And how intense that first 30 minute scene.
Speaker 4:
6:42
Yeah. And you, you hit that with that ramp fell and a lot of times people were shooting right in there and you were like, how can I get out of here? Cause there's nowhere to go. And there really isn't all that much protection in there as well. And so that, that just had to be, I just had to be some heroin minutes to write it
Speaker 3:
6:56
into that beach. Thank you again to all of our listeners to, for you, if you've provided your service, any of your family members and all the people that we've lost before us. Thank you. Um, I'll just spend a half of everybody throughout, you know, of course the United States. I was here at Carson. We appreciate your service. Um, and you know, those are the things that we have to remember. And I know we talk a lot about wealth from wisdom is you've got to learn from your mistakes and always get better for the future. Uh, so, you know, it's interesting to me, Scott, earlier this week I was out in Newport beach, California, visiting with some great families. Uh, you know, I got a chance to meet, uh, some of the children and they had some friends that showed up at the place we were having dinner. Uh, one of them was getting deployed and I was just thinking about the life they're going through.
Speaker 3:
7:42
Here's this person, you know, a family member and think about this family. Their son's getting deployed. Um, and he can't say where he's going and what he's doing. So imagine that I just sit here thinking, I'm like, I have a parent of three children and we view children's. Got, imagine if you knew your kid was going overseas but you didn't know where you didn't know what they were doing. It'd be tough. Really hard. Wait. Um, you know, we joke all the time about investing that we don't have a perfect crystal ball, that we can only take the best information we have to make a decision. I can't even imagine how much my brain would wander if I had a child that was somewhere in this world, most likely in a challenging situation and I didn't know where they were. How to communicate. Yeah.
Speaker 4:
8:26
Yeah. It's tough. And it reminds us all to that, you know, there's invest, there's risks in the investing market, which we, your assertions of those, but they're just life risks. There are things that get put in front of you and things that are, it also reminds you to, investing is just about investing, but it's about how you can take care of your family and support them in difficult times and challenges that they run through. And I, it's just a good lesson. I think that's one of the reasons I like to Harken back to some of those historical events as well, is remember that these bad things could happen and they can change the world in major. And I think it's just good to remember that. Yeah. So what else is new in this week in Scooby pictures is, was a great picture of a, of a, a US air force, um, the, uh, graduation there and just have happy cadets.
Speaker 4:
9:08
And it tied in well with the, uh, the picture of the soldiers coming off the landing crafts as well. And then obviously I thought that, you know, just the very tragic news that we saw the Virginia Beach with another mass shooting just seems to be that they come up so frequently at this point and a, just a picture of the victims to remember that the, nope. Nobody expected that. Nobody went to work thinking that was going to happen. And that's, that's, uh, just, it's, it's a tenuous difficult world at times. It, I mean, we've made it so much safer than used to be, but still, every once in awhile it just kind of grabs up and grabs people in a way that just doesn't seem fair.
Speaker 3:
9:41
Yeah, it's gut wrenching. It's heart wrenching is tragic. I mean, there's many, many words we could use to describe it, but you know, for, for me, Scott, Eh, it makes me sick to my stomach. I mean, certainly you hear about this and I get, people have mental challenges and diseases and there's a lot of challenges that we have to think through. Um, but you know, if you spot somebody like that, try to help, try to do what's best, try to help get them in to help try to do those things. But it also, when we talk about living your life by design and not by default, and many of us think, oh, we're in a bubble and we're safe. And you know, we live in Omaha, Nebraska, we probably feel more protected than other places because we think the Midwest is safer. And I believe it is, but it doesn't mean it's bubble proof by any means.
Speaker 3:
10:32
And so one of the things that we'll talk about today is how do you insulate yourself from bubbles? How do you protect yourself? And if I can't share this enough, if you haven't protected yourself by having your will or your trust updated, you're making a huge mistake. If you don't have a power of attorney, Scott, if something happened to your family, you know, and you became paralyzed or did something, who's going to help you make decisions? Your wife, right? I hope you have a healthcare power of attorney in place. I do for my wife Courtney. So, but what happens if your kid goes to college and your kid gets in trouble or gets hurt or it goes to the hospital? Who can make the decision on them? Guess what? If they're now age of majority, no one, no one, right? Unless you actually have a healthcare power of attorney for our college aged kid.
Speaker 3:
11:28
That is something actually we've talked about here at the Carson Group. We have had several, if not many of our clients go through with that. And I just shared this with you because that's a great way to protect yourself. Um, that's a great way to protect your family. And many moms and dads out there haven't done it. It doesn't last a long time. But could you imagine your kids in the hospital and there's not a darn thing you can do about it. Wow, I can't. How are you going to feel how you're going go through it. So one of the things, and if you want questions on this, doing this on your own, on legal zoom or other areas is a bad idea. There's two pathways you can either do fixed or variable. And working with the state planning attorneys. If you want advice on who to work with and how to do that correctly, that's something we can do here at welfare. Wisdom (888) 419-8513 that's (888) 419-8513 don't delay. Don't make a mistake. It's one of the truths we see building out your estate plan, which means your will, your trust. One of the most avoided pieces we see, but actually when you hear about Virginia and of those things, I'm telling you, everybody that has those plans in place feels relieved, not relieved of what happened to them, but they actually spent the time to protect their family. (888) 419-8513 you're listening to wealth for wisdom.
Speaker 2:
12:48
Do you own an annuity? Inflated fees and commissions could be costing you and arm and a leg get straightforward and objective advice from Carson wealth by calling. (888) 419-8513 are you caring for an aging parent? Are you concerned about the skyrocketing cost of healthcare in longterm care or do you have questions about how to best manage an inheritance? We can help call Carson wealth today at (888) 419-8513 and now back to wealth from wisdom with Carson wealth. How volatile is this mark?
Speaker 3:
13:21
Good. And compared to
Speaker 4:
13:24
historical times? Slightly below average. So below average. Yeah. This year has been below average Dallas and yeah, slightly below average as far shell. And when you look at it from the number of 1% moves, um, generally speaking we've seen fewer than, than I average. The why in the world is everybody thinks it's so volatile. I have, I have long or I have long thought that there are certain things that you could get up and say in front of financial audience and no one would ever challenge you in one of those lines is while the market share is volatile right now, I don't think ever, maybe in 2017 when it was not volatile at all, it was the calmest year may be somebody would have challenged you. But outside of that, I think that people experience that. And of course the other thing is they forget how volatile it was in the past.
Speaker 4:
14:07
And the fact is that we all 1% move every week either up or down really isn't all that abnormal when you get down to it. Yeah. Well, and of course if we have a couple of days where it moves, I mean it's, it's like that's expected. That's life. That's, that's why it is a market. It's not rational everyone. It's not. So what happens with irrationality, things happen in weird ways and people and people heard too, you know, I mean every assist the Fed isn't going to move. And then insurance, ours is, everybody says the feds are going to cut two or three times. And so those big swings back and forth can really move the markets and big directions as well. Well,
Speaker 3:
14:42
yeah. So folks, the market, you just heard it here. Just to remind you, this is why it's called wealth from wisdom. The market is actually not more volatile here in 19 at this point,
Speaker 4:
14:53
that historical averages. So just realize that now, why do people say it interesting again? When did they say it? When the market's had a couple of down days or a couple down weeks. Yeah. You don't hear him say, oh the market is volatile on the good side effect in January and February there was these, some neo decent levels of volatility. It just happened to be that you were always making money and no one complains about that. No, not at all. So talking about where people are making money, um, or not, you know, where do you see right now, what's been some of the best performing sectors or sector year to date? You know, we've seen really the lowest risk sectors that have some tie to income production be the very best purport areas. So real estate has been extremely strong. Utilities have done very well. And then to some extent a consumer staples, uh, you know, the things that you buy every day, those sorts of companies, where that sell those in the stores as far as the, you know, the retail providers that do those, they have done very well.
Speaker 4:
15:49
They don't pay quite as high of dividends is the real estate and utilities markets too. Uh, but that low risk nature has actually been a pretty positive, uh, PR period overall. And those, those have just done really well. I, um, he actually year to date two, um, that's probably more related to the downturn. What was stretched out year today. Information technology, while it's been rough lately, has still had a pretty solid year, just got eclipsed by real estate finally as the top performing sector in recent weeks. We've seen that. Yeah. So even though it's been rough lately, it has such a huge surge on that early in the year that really profited from that. And that's one of the areas that we, we've focused too much on that short term and we forget the fact that that markets have actually done pretty well. And some of the volatile sectors have actually had good years so far this year.
Speaker 4:
16:34
Yeah. So I would put real estate and utilities, and I'm gonna go out on a limb here, Scott. So be careful is they're not actually sexy pics, right? They are. They would be qualified as adults, so boring or bland to people. So most people think about technology and healthcare and others is the high flyers and done really well. But really which ones are at the bottom end of the sector so far this year? Yeah. You know, the space that we've seen though is healthcare. Ah, interesting. Yeah. And so the, there's a, the berries, they're two real reasons why one of us versus healthcare was one of the top performing sectors last year did very well. So it had a bit of a lead. Uh, but what we've seen is some political pressure in that area. Both, um, you remember there I think 23 Democratic presidential candidates and there are 23 of them that are criticizing healthcare companies.
Speaker 4:
17:23
And so that does have some pressure. But what pushed it over the edge a little bit politically, uh, was a proposal that a healthcare companies would actually have to disclose the discounts that they get between the hospitals and the drug makers and really open that up. And that was not viewed positively cause that was a republican led proposals. So they were getting it from both political parties. And you know, one of the things you look back on, it's the United States as a percentage of GDP has some of the highest costs in the world. And so that's a real big issue for everybody that when you look at life expectancy versus those percentages of what we pay, we're not getting a whole lot of extra boost in life expectancy. In fact, there are countries who spend less than we do that have higher life expectancy. And so that's just become a very popular political issue and certainly one that everybody wants to shore the credentials up as we started looking towards campaign season already, which is, it's disturbing, but it is the reality
Speaker 3:
18:16
where we are only going to become more and more prevalent. I mean, is this, to let 23 candidates I've lost,
Speaker 4:
18:22
I think that's the last count I, a couple of weeks ago on the pictures I do, when the vendors came out, we showed all the Pantheon of all the Avenger, uh, superheroes up there and then right below it I refer to him as the revenge years. Uh, which are all the debt and that seems to have done pretty well. So if anyone on the audience wants to use that, you don't have to quote me, you can do, you can just steal that line or you don't want it. I do, but I kind of have control over it anyway. So Cook Scott Coby Avengers versus revenger is yes. And I think it'd be interesting to see how that's certainly starting to appliance markets, uh, to some degree in, you know, in a greater fashion.
Speaker 3:
18:57
Yeah. Um, and you know, may with a challenging month here for all of us, Scott, and I think for, again, that's why I think everybody's saying it's volatile because it was a down mom, uh,
Speaker 4:
19:06
and, and every week was down as well. Um, you'll every full calendar week, there was parts of the early part of May. They did, you know, peak fairly early in the month. It didn't really go up a lot, so it felt like a very negative spirits after a series of really strong ones. But remember, I'm as of the year to date on and last Friday, a week ago, Friday, it's actually was up 10.7% and it's actually climbed a little bit. This is bigger than historical historical averages. So as higher year it's been a pretty good year. Yeah. You know, even with the volatility in May, but we did see where the s and p has been done about 6.4% nae, which tells you how well it did and a, and we've seen other weaknesses. Well except in the bond market, which I think that's one of the big stories is feel bonds are up.
Speaker 4:
19:47
Oh y'all 4.8% so far this year, which is huge. It gets during the rates, that means there's had to been a lot of price appreciation cause they don't yield that much as anybody's living off the interest of them knows. And so that's a really dramatic change and really speaks to some of the reasons why you want to have diversified portfolios that have all your chips in those highest equity baskets, both cause boring stocks as we talked about doing well. Um, but also some of the bonds also provided very nice cushion and in tough times make that ride a lot smoother.
Speaker 3:
20:16
Yeah, it is. It's a big miss so far this year. Uh, if people haven't understood that bonds have performed actually extremely well. Uh, and I'll bring this up. So when I was taught, started the show, I talk about required minimum distributions and when's the best time to retire and what does that look like? But one of the worst times to retire, and I know it sounds really obvious here, so stick with me because it's one of the most missed things is the worst time to retire is when the equity markets declined. Because what we found in historical evidence showed this, this your account balance on those first three to five years of retirement is the most important thing you have because that's when you start drawing money. That's when you need it. And if it goes down a lot, right when you need that dap and it dramatically changes either two things, one, the likelihood of you not running out of money or are you actually running out of money? And two, how much money you can actually enjoy your life with
Speaker 4:
21:23
you wa and Jamie Hopkins, who's is an expert in that space. Absolutely. Stakeholder here, he won the things he points out. Just do you actually spend more in those earliest retirement years you need to do so you've got, you've lost you and you no longer have the salary. You've got the biggest nest egg. So the biggest risk and it's your biggest expenditure time. All of those hitting at that same point.
Speaker 3:
21:43
Yeah. Most people don't believe us on that, Scott. Like, Oh and I'll tell you why. So I watched behaviors is one of the most important things I do and I explained this to people all day long. Like what's the power? Why is Carson Wealth so highly rated? Why are you highly ready to Paul? Why is the firms so highly rated? It's because it's not about just the numbers, it's about behavior. It's about how we coach you. And better yet how we hold you accountable. Segment one I tell you we're going to hold you accountable and getting your will, your trust and your healthcare power of attorney set up. Number two, I'm going to hold you to your asset allocation. Number three, I'm going to hold you on your spending it withdrawal techniques to make sure you're making the right decision. And to your point, and to Jamie's point, it is a huge mistake people make is like, oh, I want to grow my 401k as fast as humanly possible so when I retire I have as much as possible.
Speaker 3:
22:39
So I'm just going to challenge you right now as a listener. So if you're between the, if you're going to retire in the next two years or three years, you better go as conservative as possible on your farm on k really. I know you're looking at me funny Scott, but I mean it's something, I'm not saying it's a decision for everyone, but you're, if you're truly going to retire, let's just, I'll give you an example. If you have $1 million right now in your 401k, which is an abnormal to be a six year old and have $1 million. So if you go conservative and your 1 million goes to 1.1 million over the next two years versus if the market goes down 30% and you stay in your all equity allocation and now you have 700,000 versus 1 million or 1.1
Speaker 4:
23:27
they change, is that change? If that changes, your retirement is 1 million
Speaker 3:
23:31
versus once, right? Absolutely. So you may say, oh well Paul, I want to get to 1.1 or 1.2 I'd love for you to get there, but what's more important getting to there or your assuredness to actually be able to retire?
Speaker 4:
23:44
Yeah, I think that's what that preretirement
Speaker 3:
23:46
stage, those five ish years before retirement, especially when you start to have a good idea of when you're going to step out of the workforce. A very, very crucial period. A great time to get out if you haven't already and don't assume and don't assume you should do it at the same time. Someone else did it. Uh, you need, you need professionals to look at it. And I call, one of the things that good professionals do is do what? What if modeling? What if this happens? What if that happens? What if they both happen on a fall? Three things happen. And it's like laws of probability. So Scott, if I'm going to ask you to roll the dice, what's the odds of you rolling? Oh, one, one six. Okay. What's the odds of you rolling? A six one six. Okay. What's the odds of you rolling six the first time in a six again, the second time.
Speaker 3:
24:31
One in 36. Okay. Right. Don't keep going and see 16 after that I want to, I'm then the math, I get a little tougher. But here's the point. How, how willing are people going to go to keep gambling and worrying about those things? They don't think about it. So one of the things we specialize here is getting people ready for retirement. So if you have questions for us, we love to talk through those. If you want to help getting ready for retirement. (888) 419-8513 that's (888) 419-8513 really, if you think about this, if you're the type person that you want to get the most money you've saved inside your IRA 401k give us a call. (888) 419-8513 we'll be right back.
Speaker 2:
25:11
You're listening to wealth for wisdom. Major decision in life is worth getting a second opinion and financial planning is no exception. Let's talk about how you could make your money go further in retirement than you ever thought possible. Call Carson wealth. Just schedule your free initial analysis now at (888) 419-8513 did you have a lot of assets but are short on cash? Learn how you can leverage your assets to free up cash with Carson wealth by calling (888) 419-8513 and now back to wealth from wisdom with Carson wealth.
Speaker 3:
25:47
Imagine this, we have a big downturn in the stock market and you're forced to sell your investments at that, the worst possible time. So essentially you're locking in your losses. What does that mean? You're never going to get this money back again. Same thing as light that on fire. Hey, I'm Paul Weiss. You're listening to well for wisdom coast today is Scott [inaudible] and Scott, let's keep talking about what's going on in the market in the world, uh, how it affects your distributions, how it affects your life. Um, you know, so we spent some time talking about volatility and again, we're not that volatile this year compared to historical norms. So get that word out of your language, uh, to you already know my feeling on this. I always feel like people say that the stock market's volatile. I agree. Like you can see in front of a stage and people won't disagree. Just like I can't stand when I ask people, how are you doing? And they say, busy. It's my least favorite word. Everybody knows that. You get irritated. I
Speaker 3:
26:44
that was starting to get ready. My hands are cringey now even thinking about it for me to fist, but just live your life. I mean stop worrying about building your plan around what everybody else wants you to do. Do what you want to do and how you approach it. So when I think about what we can offer you here on wealth and wisdom, it's advice to help you make a right decision. But no. So I said to make a decision to not sit around and do nothing to actually move forward. I got to tell you, one of the things we do here, and I'll share this with you, it's a technique we do here at the Carson Group. We call it our six most. So every night before we leave as an employee here at the firm, or we don't call them employees, we call them stakeholders. You're supposed to write down the six most important things you can do tomorrow.
Speaker 3:
27:34
So two reasons. One, when you come in in the morning, you know exactly where to focus your time too. It's got a chance to work in your brain overnight. And you can sometimes even work those out in your brain. Three I benefit, I see is if there was a reason why you couldn't come in, your colleagues could pick up what was most important on your plate. So why I share that with you is Scott, I love doing that just for multiple reasons. One, I feel more productive, but to, you know, I love doing and I got mine here with me crossing it off
Speaker 4:
28:05
is the best, isn't it? Yeah, I did that check check.
Speaker 3:
28:08
Yeah. I know you do one as well or I call it the honey do list on the weekend, right? That we get you just cross it off and it uh, makes you, it just makes you feel better knowing that you got something done. So what we want to help you on wealth and wisdom is crossed those things off. And one of the things that people spend a lot of time is talking about our trade policy, but I really, Scott, I'm not sure they even know what our trade policy is. And what people tend to do is take bits and pieces of what's happening. And then they combine them, but kind of like squish them together to form or, and render their own opinion. So here we are, we're in the first week of June. Where are we on trade policy? I mean, what are you seeing right now? So we can kind of bring people to speed and ignore everything else you've heard. But where are we right now on the trade policy?
Speaker 4:
29:00
Well, last, last, last thing when we talked some about how the market had gone down in May and really trade has been the biggest catalyst, or at least the key catalyst to that are we, everything was pointing to that we were going to hit it, get to a deal with the Chinese, and then it's pretty safe. I think it's pretty fair to say that the Chinese backed away from some promises that they indicated they were going to make. And so therefore the president stepped in and, and raise the tariffs on that. My favorite quote on that, it comes from a New York Times columnist who leans a little bit left, but he's talking about the president in a positive way. He says that, that, uh, he says, I'm not, I'm not sure that the, you know, from his own bias, he's, these are not mine, so don't, don't, don't email me yet.
Speaker 4:
29:38
How would he says, I'm not sure that the, the Trump, the president, the u s deserved, but there was clearly the president that the Chinese deserved in a sense that this going back presence from both parties have been very willing to let the Chinese continue to steal intellectual property from us corporations and basically not pay him for that, whether it's movies, but more importantly, uh, designs of techniques and skills and patented things that would be very valuable that people spend a lot of time investing on that basically the Chinese will turn around and steal that and compete with you. And, and they do it for a particular reason, which we can delve into a little bit later. So that's, that's the one that really kicked us off. And then the last bit of pressure is there was a big surprise, uh, that the president, uh, announced that they were be tariffs coming on, uh, for the, against the Mexican goods shipped from Mexico.
Speaker 4:
30:28
I started starting to 5% haylage up to 25 cents. That was a big shock to the market for a couple reasons. One, it came out of nowhere and people are sort of scratching their heads because they say, well, I thought we had a deal that we s we have agreed to that we haven't ratified and we're already changing the deal that we haven't ratified between the countries. Even though the presidents, the countries have all agreed to it, they haven't gone through the, the ratification process. So that was really confusing because people were sort of anticipating that they would get that deal approved as part of the overall strength that the administration would show in trade, but they kind of undercut their own policy. The other one says that trade was used as a tool for a nonbusiness or non trade activity. So this isn't about the shipping of goods is about business, it's about immigration.
Speaker 4:
31:09
But they introduced a tariff, which is a trade policy on that. And so the question is what other things could they, or would they do, you know, down the different president, would they say, uh, somebody isn't cutting their co two emissions as fast as we want. We're going to slap a 10% tariff on their goods. And that becomes a great degree of unstability for, for businesses to figure out how to invest if the terrorist can come on and off very quickly, you don't know how to shape your supply chain. And that becomes a big challenge. And so that's why we saw the market decline on that.
Speaker 3:
31:37
Yeah, I mean, and I think a lot of it is, you know, Scott, I joke that people tend to just infer what the right answer is. They either say, oh, they're former against him, they don't know if they're right or not. And what you're bringing up here is a great case study on this is it could be right, but it's different per country, right? So I think people have to realize like most people when they're in, I'm going to call him here in New York, coffee cafe conversations. Oh, do you like the tariff deal or not? Well, for who? Right? That's like, do you like stocks are not well sure do I like us stocks or foreign stocks? Do I like small cap or do I like large cap? Do I like value or do I like growth? You know? So you have to drill down to that next level. And I think what we got to do is people stop saying, oh, either for or against tariffs because there could be some, like you said, that are great or make sense, whether it's China, some of them may be that don't make sense whether it's Mexico, but I think we have to educate our listeners that is different. And it's just like advice. I give somebody it, you could have two people both. So say you and our producer Mag and you both slid your statement across to me for $1 million each. All right. Good job.
Speaker 4:
32:50
You're doing awesome. Saving. All right. Thanks a lot. [inaudible] oh yeah, it's quite a cold man. Okay.
Speaker 3:
32:56
Well, but let's say you both had the same holdings. Does that mean it's right for both of you? Yeah, absolutely. No, no. So same thing for tariffs I would say is it doesn't mean the same policy is right for the country. Each country is different relationships with the United States. So I just want to help educate people. And another thing to educate people on is there's a lot of credence put on a three letter term called GDP. Yup. And a lot of people, uh, I want to say live and die by it, but they, they monitor her closely. Uh, and it's also, I would say probably one of the bigger mover of the markets, which you say Scott.
Speaker 4:
33:36
Yeah. I mean certainly the premier expression of how the US economy is performing at this time. Yeah. So what's the look like recently? So the top, I never, we just had a revision this week from where first quarter came out in first quarter came out originally. 3.2 is just revised down to 3.1. Yeah. It's a very strong number. If s economy grew at 3% every quarter we will be growing like gang busters and we would be concerned about inflation and not about the federal lowering rates but that we, they'd probably be raising it at that point. What we saw though as you look under the numbers that it wasn't quite as strong a, there was a lot of you know, inventory buildup in certain like one time factor. So what we really saw was the economy growing at just a little bit below 2% that had some one time factors that boosted up to above three and that's one of the things that we always want to focus on it Carson is to get deep enough into the numbers that we understand where it's really moving in the market.
Speaker 3:
34:25
Yeah. And I think it's so important, like in GDP is an important number and I would say a number that everyone's got to pay attention to is their own personal number. So Scott, we came up with a concept here and I want to share this with you. So that is our family index number. And what I mean by that is a lot of people say, hey, I want to earn 3% I want to earn 5% 7% 9% 11% yes, there are people that I go higher than that. Now I have to talk them off the rational cliff. But that's a whole different story. But when I share this with you is you're really, your targeted rate of return should be based on what's important for you and your family. So that's why we call it the family index number. I'd rather help the QB family and the West family target.
Speaker 3:
35:07
What's their rate of return that's going to help them maximize their life rather than just pick a number. So one of the things we do is we actually run a free family index number analysis. If you're interested in that (888) 419-8513 it's confidential. And most people do it feel so much better knowing are they set up in a way that's going to help them be successful? Or if not, what tweaks should they make? (888) 419-8513. Hey, don't forget, we're also a fiduciary. Ask your adviser or your broker, are they a fiduciary? Get it and writing for them. We're going to talk about the sec Greg regulation that happened earlier this week. You're listening to well for wisdom. Have you ever wondered how do other people get away with paying fewer taxes than everyone else? Learn how you can save thousands of dollars in taxes by calling Carson well at eight, 88419008513
Speaker 2:
36:02
security risks, taxes and healthcare. This is where you can count on straightforward and objective advice on the biggest challenges with investing for retirement. And now back to wealth from wisdom with Carson wealth. And you're listening to well for wisdom.
Speaker 3:
36:16
Do they have, do I buy a Scag QB senior investment strategist here at the Carson Group? Um, Paul West especially some time talking to you about what's going on in the market. Spend some time talking about terrorists, spend about time talking about investments and what we're thinking. The lack of volatility, even though people think it is volatile. Uh, let's next talk about something and I say it all the time. Uh, my favorite f word is fiduciary
Speaker 4:
36:40
with that one. Right? Oh, hi. I'm Niecy was coming for [inaudible]. Okay, that's good. All that's good. Fine. That's for sure. Uh, yeah,
Speaker 3:
36:48
so it just still amazing to be all, all of you listening. Very few of you truly know what the difference is between a broker and a fiduciary. So the fiduciary has a legal and ethical obligation to do what's in your best interest. A broker only asked to do something with it. Should they deem suitable for you? Suitable doesn't mean best. Does not. Okay. Just because it's suitable for you to have cable TV, does it mean you need to have it? No. Right. You could use, it doesn't Mean Hulu sling, whatever you want to do direct to UB. You choose what's best for you.
Speaker 4:
37:23
It doesn't mean the suit that you buy is suitable for you may be suitable for you, but it may not be the best looking one.
Speaker 3:
37:29
It could be a, uh, a lower cost one versus a four figure one, whatever you want it to be. But so Scott, I'm going to tell you I'm bummed. All right man. I'm just bummed that I worked. So you all know we're a fiduciary and you think, Amy, we're pushing her best interest here. I'm not, our job on welfare wisdom is to educate people. And I almost said a bad word there and I'm just, I just, cause I get so passionate about this and so the sec had a chance to level the plain field and make people that are held to the broker standard come up to our standard as a fiduciary and they didn't come through. So the new rule creates, well I'm going to call, um, a best interest standard. So this is going to require your broker that they at least have to adhere to what's called a best interest standard. And what do they mean by that? Is that it's basically a broker has to act in your best interest, but this means they just disclose conflicts and I'll light requirement to mitigate them. However, it's not clear how much mitigation will actually be necessary. You know what that says to me, I'm going to go bury it in some extra long document and that's going to suffice.
Speaker 4:
38:42
Yeah, I think that's tough because they've now they've given them some words that they can sort of wrap themselves around and say, no, we're acting in your best interest when it's not nearly as stuff a standard as a fiduciary has to face. And that's almost a worse situation than we were in before where they didn't have to, they couldn't say they were working the best interest. They just had to say it was suitable.
Speaker 3:
39:01
Yeah. Well, and here's the, here's the thing. I want you to ask your advisor. If they propose something and they say, Hey, I think you should do this. Ask them the following question. What's the next best alternative to that? What's your next best recommendation? Why? Okay, which one pays you more or less? Who? You see what I'm saying here? So those are questions I would be asking. By the way, if you ask me as a fiduciary, okay, I'll give you my next best recommendation. Do I get paid more or less? Neither. It's the same thing. So that's why I'm always going to give you my best recommendation first because I have a legal and ethical obligation. I have no conflict with compensation, no conflict with commissions, get it in writing. And so I wished, wished the sec would have stepped it up. It doesn't mean we're going to give up the advocacy.
Speaker 3:
39:52
Um, plenty of people in our profession. We're in Washington DC earlier this week trying to really fight for it. Uh, but it really, you know, confirmed that we've got a long ways to go in this business. Um, I think it's great for firms like us at this Carson group. I'd rather be vocal and out in front of this trend than being trying to keep any tailwinds they have going. Now, at the end of the day, all consumers are gonna figure this out and it's just like everything else in life. It's only so long before people finally said, man, this is really silly that I need to go to a brick and mortar store to get a VCR tape, a DVD. And if I don't return it on time, I could hit with late fees. Right?
Speaker 4:
40:40
Let me make asked what would a VCR tape was. I didn't even say Peyto was trying to even really be careful here,
Speaker 3:
40:45
but think about it. Those people realized they couldn't handle it anymore, so people developed a new way. So I'm telling you right now, we're at the forefront of this is advisors who behave as fiduciaries are. And so I'd rather be affiliated and working with them ahead of time then not because you make a mistake and we'll keep updating you on what's going on with this sec rule. Uh, you know, I just give you an example. Um, think about sales competitions with the ward trips, bonuses and other rewards that tend to prioritize growth of over Customer Care, Aka think wells Fargo and what's happened to them and been very public. How is that good for you? It's not, so let's just not beat around the Bush on that one and what that is. But what I would like to keep talking about, Scott here is as we think about the market and what's happening and what's going on, um, you know, one of the things that people ask us is about fed rate hikes in or is it going to go up or is it going to go down? So I'd love just to hear some of your current thinking related
Speaker 4:
41:54
to that. Yeah, so we're, one of the things we don't see that it shifted even more than than a w in the last report is that there's been a really a big movement towards the expectations the Fed's going to cover SF chairman Powell was out and said that if we continue to have trade challenges that are pushing the, causing the economy to slow, and we can delve into that and this for a second or two. Uh, but within the Fed does, is watching that they're paying attention to that. And the basic impression they left with is if things are good, slow enough, the Fed, the Fed is going to cut rates at some point in order to do that. And that's clearly what the market would like it to do. They have are going to have expectations that they were going to cut by at least, you know, 75% chance of a cut or more, uh, in September. And that's even moved way past that now at this point where the market is clearly pricing in a fed lowering interest and because the economy seems to be slowing, it's to some degree.
Speaker 3:
42:44
Yeah. So if they don't do it, are we going to see a down? Yeah.
Speaker 4:
42:46
Well I think that's a good question. You know, it's almost now that if your good news comes out that shows the economy is not doing as poorly as people anticipate, then that may take some of those fee fed, fed rake hats off to the table. And so then the market will process. But I'd rather have the rate cut or would I rather have the stronger economy and it made me, they vote for the rate cut so that we could be in a situation where good economic news might actually push the, the market lower, which is hard for people to understand. But that's part of the overall incentives that we created when we use interest rates and how that all requires were
Speaker 3:
43:16
required rate of return. Yeah, I mean, so it's it for me, Scott, and I've talked about this and here's my belief and I help a ton of families through just our entire Carson wealth organization across the country. I really think there is this huge ceiling that is just blocked at 5% on mortgage rates. And the reason why I say it, and I'm nodding and I'm actually was going to look right at my producer, but she already beat me to it. So people that are millennials, Gen z's, and others are, they've never experienced the world where they've had to pay a mortgage over 5% yeah. Right. So now if they like to flip houses or do things like that, could you imagine if I said, Oh meg, our producer, it's 6% or 7% you'd probably not do it right? Not because it doesn't make the right percentage. You're probably a four, three or 4% today, but it's because it's a behavioral thing. I can't pay more than five. I've never seen it more than five. I could never do it where Scott, I mean, I remember my first mortgage was eight and a half percent. Many people. That was double duty.
Speaker 4:
44:23
Yeah. You talked to people from the 70s and then this is, the rates now are just unbelievably low.
Speaker 3:
44:28
Yeah. So it makes a world of difference people. But you know, and as I think about many of people have to be great savers and figure out what to do. But once you are a great saver, it's, you gotta figure out how to take actions you can't keep saving and saving. And I see a lot of people right now that have saved and have a ton of cash and don't know what to do. And there are strategies, there are ways to do that. If you want to hear one of them, we didn't talk about them confidentially with you. (888) 419-8513 there's actually ways to not be correlated to the market to help you earn a good return. (888) 419-8513 hey, Scott, really enjoyed having you on the show this week. Thanks for being here. Can you come back again? Absolutely. All right, well you have some more Scooby images for me. All right, perfect. Hey, thanks for letting everybody you've been listening to wealth for wisdom,
Speaker 2:
45:19
social security, income taxes, estate planning. Every week we talk about how to make your money go further in retirement right here on wealth from wisdom with Barron's hall of fame. Advise there, Ron Carson.
Speaker 1:
45:31
Okay, and here's the legal Mumbo jumbo. The opinions voiced in wealth from wisdom with Ron Carson or for general information only, and are not intended to provide specific advice or recommendations for any individual to determine what is appropriate for you. Consult a qualified professional. All indices are unmanaged. I may not be invested into directly. Investing involves risk, including possible loss of principle. No strategy assures success or protects from loss. Past performance is no guarantee of future results. Advisory Services offered through Cwm LLC, an SCC registered investment advisor.