Wealth from Wisdom

Understanding Wills and Trusts

November 09, 2019
Wealth from Wisdom
Understanding Wills and Trusts
Chapters
Wealth from Wisdom
Understanding Wills and Trusts
Nov 09, 2019
Carson Wealth

Leona Helmsley, a famous hotel owner known not-so-charitably as the “Queen of Mean” had a memorable will. Up until right before her death, she had wanted to leave her $8 billion estate to the care of the poor, but she changed it at the last minute to donate all the money to the care of dogs. 

She specifically left $12 million to her pug, which resulted in kidnapping and death threats. She left less than that to her grandchildren. Needless to say, wills, trusts and estate planning are complicated, involving legal issues, relationships and straight-up human personalities. 

On this episode of Wealth From Wisdom, we’ll look at understanding wills and trusts. How does estate and legacy planning work? How can you prepare in a way that will alleviate taxes, complexity and dysfunction for your family in the future?  



Show Notes Transcript

Leona Helmsley, a famous hotel owner known not-so-charitably as the “Queen of Mean” had a memorable will. Up until right before her death, she had wanted to leave her $8 billion estate to the care of the poor, but she changed it at the last minute to donate all the money to the care of dogs. 

She specifically left $12 million to her pug, which resulted in kidnapping and death threats. She left less than that to her grandchildren. Needless to say, wills, trusts and estate planning are complicated, involving legal issues, relationships and straight-up human personalities. 

On this episode of Wealth From Wisdom, we’ll look at understanding wills and trusts. How does estate and legacy planning work? How can you prepare in a way that will alleviate taxes, complexity and dysfunction for your family in the future?  



Speaker 1:
0:00
Okay, and here's the legal mumbo jumbo. The opinions voiced in wealth from wisdom with rod Carson for general information only and are not intended to provide specific advice or recommendations for any individual to determine what is appropriate for you. Consulted, qualified professional. All indices are unmanaged and 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 sec registered investment advisor.
Speaker 2:
0:29
The stock market hit another all time records $10 billion in social security benefits go unclaimed every single year. The federal reserve announced that they will raise interest rates by 250 skyrocketing cost of healthcare and retirement could now run 350,000 you've worked hard and saved 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 wealth is a Barron's hall of fame adviser at 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 straightforward and objective advice that can help you make the most out of every dollar you've saved for retirement. Welcome to wealth from wisdom with Carson wealth
Speaker 3:
1:13
Leona Helmsley. She is a famous hotel on her right and she was known maybe not so charitably as the queen of mean, and she had a memorable will up about right until before her death. She didn't want to leave her $8 billion estate to the care of the poor, but she changed at the last minute to donate all the money to the care of the dogs. If you remember. So on wealth, on wisdom. Today we're going to talk about and only a little bit about your wills and trust, but making last minute changes and the impact it can have to your portfolio, to your financial plan, to your financial life. I'm going to is Paul West. My health goes. Today's been a little while since he's been on, so I'm glad to have him back. We, we found him. I don't know who he was out surfing or on a cruise or where it was.
Speaker 3:
1:56
But Scott Koby senior investments. You're gonna just hear the Carson group. Welcome back. Glad to and nowhere near water. Nowhere near water. You brought your rain jacket and your way through today. I was out at half moon Bay talking to some people out there, some seals that really liked my presentation out there. It got well and know your audience. I guess so I'm sorry for all of our listeners today, this guy, you've been a senior investment strategist for how long here at the Carson group? Two and a half years. Two and a half years. But how long have you been in this financial advice profession in 1995 1995 they're pretty similar role of always working with advisers and working with their clients to help them understand what's going on in the markets. Okay, so almost a quarter century. How does that feel? That old. Really old. Thanks. Can we use sound distinguished?
Speaker 3:
2:38
Distinguished? Yeah. I'm, I'm, yeah, that's, that's a, yeah. I feel old now. Thanks for having me. I'm really glad you're here. So one of the things that I enjoy when Scott comes on the show is a lot of times on wealth for wisdom, we spend time with all of our listeners talking through those items that can impact their life and what happens. And this happens every day and earlier this week I was having some meeting with some very nice people and we always talk about they turn on the TV show and they turn on CNBC or MSNBC or any of those things, Scott. And they're all focused on the hot tip stock trade or in the moment type thing. But when the reality is, is as you've been doing this for 24 years, which is less than a quarter of a century, Scott just barely. Yeah. So I mean you've, you've seen people with successes, you've seen with people with failures. If you have that micro view of you're in the moment and worried about what this stock is going to do at this point of time or what's going to trade well that day, what's the likelihood of longterm success? Just as you've seen in working with them.
Speaker 4:
3:42
You know, it's near zero. When I, when I was teaching, uh, investments, the university of Breskit Omaha a part time, one time I remember most of my fate, one of my favorite questions, this guy raises his hands, always the guy who raises the hand with the bad questions. He says, well, you know, why don't you just pick the stock that's going to go up one or 2% today and then sell it and switch to the next one that's going to go up one or 2% the next day. I'm like, if it was really that easy, don't you think everybody would do it? It's not that easy. You get it right, you get it wrong. And also you get it where you get over your, your skis and you start thinking that you're really good at picking stocks cause you get a couple of them right? And then all of a sudden they start going against you and then you have the doubts, the remorse, and you're the deal with. And then boom, you're out of the market. And one of the things I think we've learned over our careers is that staying invested at the level of risks that you can tolerate is actually the biggest way that you can generate financial success for you and your plan.
Speaker 3:
4:32
Yeah. And I think one of the biggest mistakes people make is they take that piece of information and then they think they have advice or guidance. But the reality is, is the people that already have that information have already enacted their traits, whether it's a buy or sell. And so they're too late in the game. So they, they're what we call their in a follower bias. They're following other people, but who knows if that's truly gonna be the right decision for them. And one of the things I want to look at is, you know, taking the longterm view. Uh, and one of the things I want to share with all of you, I read this great statistic the other day, so I'm gonna share this with you. So Scott, I don't have you as a social media junkie. Is that a fair?
Speaker 4:
5:10
Is that is, that is a very fair statement. Okay.
Speaker 3:
5:13
If I'm on a continuum, I'm not a junkie, but I do participate. So I have my Twitter handle at Paul West coach, I'm on LinkedIn frequently. Actually was just telling you before we came on air today that I just feel like there's all these bots now on LinkedIn that are just pinging me with, Hey, do you want to meet? Can I talk? All of these? They're not personalized, which of course I don't like. I can sniff through those in a heartbeat. So here's a question for you. If you think about like TV, you often see a little segment at that point and that's all you saw, that's all you remember. And then you probably fades from your memory. So if socially you post something, how long does your content actually last? And this isn't gonna be a trivia question, I'm not going to, you know, pull a Jim on you here.
Speaker 3:
5:53
Okay. All right. But if you post something on Twitter, it stays relevant for 18 minutes. If you post it on Facebook, five hours, Instagram, 21 hours, LinkedIn, 24 hours, YouTube, 20 days. So almost three weeks. Pinterest is four months. If you actually write a blog and put on your website two years, look at that gap of information that you have in terms of how long something's relevant. And I really put like Twitter into the news. The really the same thing. They're short, they're fast, they're quick tidbits of information, but it really just depends what people get out of it. And what they learn. And when I want to spend some time on today's show is how do you take tidbits of information and realize what is truly important versus what's urgent. Also, what's not important, what's not an urgent and what you need to ignore.
Speaker 3:
6:48
Um, I read a fantastic book, um, and I'll promote it here. He doesn't even know it. Uh, but I read a book called essentialism. Um, it's by Greg McCown if I pronounced that correctly, Greg, I'm sorry if I didn't, but it talks about how being essential in your life is figuring out what's the most important things you need to be doing and getting those done and realizing it's okay to say the word no. So as you look at your personal financial situation, I want you to be able to apply the same principles Scott is, when do I say no and how do I think through it? So let's just take an example of where we are. So you're a senior investment strategist. Got you. Get, you have to sort through, I'm going to call it a enormous amount of financial data. So how many articles and blogs and stats do you read on a weekly basis?
Speaker 4:
7:34
It's gotta be up in the thousands.
Speaker 3:
7:36
Okay. Yeah. And thousands in terms of articles and posts and videos and
Speaker 4:
7:41
videos and looking at data releases and diving into those data releases to the tables that are underneath them. And when you start getting all that information, it's a lot.
Speaker 3:
7:49
Yeah. So how do you, you enrolled, you're successful, you're helping one of the largest fiduciary RAs in the country, giving them investment advice and guidance from a macro level. Also how to communicate with consumers so they can understand it. Then you don't overwhelm them. How do you figure out, how do you sort down from thousands and thousands and pair it down into a consumable message for consumer?
Speaker 4:
8:12
Yeah. So one of them is you focus on the things that are most important. So big numbers, especially if you're trying to communicate to consumers. People can understand things like jobs, economic growth, that these are concepts that are even economic gross, a little hard. But jobs is pretty easy. Retail sales, what percentage of people, uh, spent, uh, you have the, of their income out, uh, and sales and is that increasing or decreasing? So trying to focus on those sort of aspects and then also looking at some of those indicators that may be are a little bit harder to understand. Uh, but at the same time they have some leading indication of where the economy might be headed. So the ones you don't want to focus on and don't want to share about are ones that tell you where the economy's been over the last couple of years, but they don't really have any idea, you know, any informational value about where it's headed or ones that are really,
Speaker 3:
8:56
really hard to explain to people because nobody gets those anyway. Yeah. If you can't consume an I, I think there's a famous statement that what a goldfish is, attention span is eight seconds. Something that you've never heard that before. I know there's some great video about that and that we as humans, ours is approximately seven seconds. That's good to know that we're right in line and competitive with the goldfish. Yeah. Well I need to get back to it too is just that when you're trying to communicate economic data, one of the challenges now is that people are desiring it to be in a much more digestible format, which you just talked about with the Twitter and the LinkedIn and that we need to produce and share things in of bite sized content. That is so short. I you, I feel like sometimes when I watch the news, uh, which I every once in awhile do, I'm not that, I'm not that out of social media that I have to get all my content watching the evening news.
Speaker 3:
9:42
I just want to say that if the defense on myself. But, uh, when you go home and you grab a scotch and you sit on a five 30 in Washington is I get [inaudible] that's a, I'm not denying that. I'm not too, but, uh, you know, even those segments have gotten a lot shorter and they're very hard impacting and they move on because that's just how people want to consume that information. I know. Disagree, Scott. And I do. I do. We'll watch the news occasionally as well. So I'm not saying anything against it. Many people do. Um, and it's important is how they get information. But I do have a problem with, in today's society and culture, if you watch the news both locally and nationally, there's a phrase that always is now listed and it says, breaking news, breaking news, breaking news, everything is now breaking news.
Speaker 3:
10:28
Why? It's almost like the Pavlov's dog theory realm here, right? Is we're insulated. So they say, Oh, we have some news. Well now it doesn't sound as interesting saying we have breaking news. A cat ran up a tree. Well that's not breaking news. And I think as you think about, if you watch next time you watch any stations, CNN, Fox, you pick it, you're going to see that it's usually in red by the way. Or in darker colors to try to get you to draw attention to that. And so your job, Scott, what I'm trying to get back to here is is you got to help sort through what's really breaking news and what's not, what's important. So let's take what's transpired over the last couple of weeks. The fed, the Fed's had an important play on the economy, so they cut rates again. So now we've had, what is this three rate cuts in the last, how many months?
Speaker 3:
11:12
About four and a half months. Four and a half meet. About every month and a half or so? I guess so it actually would be three months if you go from meeting to meeting there and then, yeah, but in terms of duration of a calendar, so that's something people get, that's something they understand. It's simple for them to consume. And especially if they have loans on their houses, which is usually the primary for most people, maybe their cars or automobiles or those things. That's where they see impacts. So that effects everybody. So I think you have to sort through what impacts everybody and then you start maybe drilling down from there. That's really important, except for the fact that almost everybody knew the fed was going to cut rates. And so that was already fully baked into it. And what we were paying the most attention to actually was the press conference and the press release afterwards.
Speaker 3:
11:52
It really give us additional new information as opposed to information that everybody pretty much had baked in already. Yeah. And I'm gonna, I'm gonna disagree with you there, Scott. All right. Okay. Here's why. So everybody who pays attention to the market would all agree it was baked in. But for the majority of Americans who don't pay attention, FairPoint, they don't know. So for them it was breaking news because Hey, the fed cut rates where we all know it was already priced in, but that's also why they engage you as a professional because you're monitoring all those things and looking at it where you're not as worried about those things. So that's just is a huge blunder. I see people make Scott, it's a problem is they, they aren't paying attention. They'd professional. If you want help, we actually have a document. It's called eight blunders that investors make. If you want a copy of it, just text us. Go to 33 four four four text the word blunders and we'll send you a document that explains it. So just text 33 four four four and we'll send that out to you. You're listening to wealth from wisdom.
Speaker 2:
12:49
Do you own an annuity? Inflated fees and commissions could be costing you an 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 and 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.
Speaker 3:
13:19
Hey, welcome back to wealth farmers. Oh, I'm Paul West. My co host today is Scott Gooby. Scott's a senior investment strategist here at the Carson groups. Got welcome back. Thanks fall. Yeah, I mean your role in the organization is to help take a really national and global view of the markets. What's happening, help communicate to all of our advisors and partners across the country. But you do it in a way where we're able to communicate it in a language that our class understand. If we went out and asked our clients to describe what alpha means or beta or a lot of other Greek letters that are Greek, Greek letters are bad. If you want people to understand what they're talking about, people, complex scenarios explained in 30 seconds or less to make them simple. So there's a lot of things that you have to look at in terms of asset allocation, time horizon.
Speaker 3:
14:11
Um, you know, what's the right actual investment choices between ETFs, stocks, bonds, alternative investments, non-correlated investments, real estate. Do I have too much concentration in one size stock or sector versus the other? But the reality is, is it all fits into your entire game plan and game plans is can change. But one of the things you do is you help us look at the macro environment. So let's talk about where we are just in the macro environment. So we talked briefly in last segment about interest rate cuts. So we just had an interest rate cuts. So a simple trivia question here for you. If you're ready. I didn't, I didn't prep you for these types of questions. I know you love. So we've had these three interest rate cuts in the calendar year, your last four and a half months. So what happens when interest rates go down? What happens to bond prices?
Speaker 4:
15:04
Uh, when interest rates go down, bond prices go up. All right, so this is that we're saying thank you for asking an easy question for me.
Speaker 3:
15:11
You said, I set you up. So now I'm going to flip it on you. So if interest rates now get raised again at some point and rise, what happens to the price of bonds? And then we'd go down. All right, good. Your passenger two for two today. I know we're keeping it simple, but people forget that. So now everyone's excited that they can maybe borrow money at a lower rate than they anticipated. But the reality is they're forgetting that if they owned bonds or other fixed income, if the interest rates go up. And I used to say if when they will at some point, I don't know what when or what that looks like, but they could go up again. And I don't want people to forget that they sometimes get trapped in this perception that bonds or fixed income won't decline in value because we've really been in a low interest rate or declining interest rate environment since 2008 that, and we have to educate them. So we had an inverted yield curve and we also now have a very flat yield curve today. Can you explain simply to our listeners what that means?
Speaker 4:
16:14
So an inverted yield curve means that the short term rates are above those that are further out. So in the ones that we pay most attention to that the three month interest rate on government debt is higher than it might be for a 10 year government debt, which is unnatural because you think, Oh, if I'm going to lend somebody money for a significant period of time, I, there are some things though, something bad could happen, inflation or whatever. But also there's that, what would I, what could I have done with the money? And so the longer that I'm tying my money up, I should get some extra premium for that. So when I'm actually getting a lower interest rate for a longterm, for a longterm investment than I am for a short term, some kind of backwards. And that's why we call it an inverted yield curve, partly because the difference between those two, but also to signify it's kind of different than we would expect in a normal capitalist system.
Speaker 4:
17:02
It's almost like you're hanging upside down. It is. Yeah. Yeah. And I think one of the points too about that is like the federal reserve, they affect short term interest rates with their interest rate cuts or hikes, but they market Curry react to those on the longer term in a totally different fashion. So, uh, the fed raised rates and the markets thought that was a bad idea and anticipates that they're going to have to lower them in the future so the longterm rates will actually drop rather than increase. And so that's some of what we wrestle with from an overall economic standpoint. Yeah. Yeah.
Speaker 3:
17:32
Um, so Scott, I don't know the answer to this question. So do you have any siblings? I do. Okay. One sister K, one sister. So if your sister said, Hey, can I borrow $1,000 but I'm going to pay you back at the end of this month? What'd you say? Okay, sure. Okay. Yeah, I hope she's listening by the way. She will now. Yeah. So that you, you're like, okay, I'll give you a thousand give me $1,000 back. But it's November. So now what if she said, Hey can I borrow a thousand but I'll pay you back one year from now? Would you be as comfortable saying, Oh just give me $1,000 at the end of one year a little less cause I'm tying that money up for a longer period of time. Yeah. And then let's say, okay, I want to borrow $1,000 from you Scott, but I don't want to pay you back to the year 2025 yeah, I think I'd probably want some interest at that point.
Speaker 3:
18:19
You would write your natural, you're not being a non, you know, you're not being a good sibling there. You are being a good sibling, you're just trying to look out for yourself and be realistic. And that's what a flat curve is today. The problem is, is the amount of money you requests on interest right now versus five years is almost the same and it should be higher down the road. So one year from now, maybe you asked for, instead of $1,000 back, I want 1,040 right, right. So some, some small amount or $10, whatever it is. But in five years you're going like, you know what, I'm probably gonna need, you know, 1100 from you or some number that makes up for your money being tied up that you could have earned in some other investment vehicle. Oh, absolutely. Yeah. And I think people forget about that. So we want people to understand it, but it's our job as investors on behalf of all the families we serve across the country to look at that. So why would I put money in something that holds for five years where I can get the same return if I hold it for three months.
Speaker 4:
19:25
And one of the built in expectations really is, is that if the rates are the same for five years and three months, what the market's really saying is we think that rates are going to go down in the future. And so you might actually be better off taking the same rate for five years as you would for three months, because that same rate may not be available as you go into the future. And so that's really the trade off that investors are making is they're putting some expectation of where rates are gonna be as opposed to where they are now and figuring out what the best payoff is.
Speaker 3:
19:52
Yeah. So what do you think, I mean the reality is of the next time of a rate cut probably is now March of 2020
Speaker 4:
19:57
I think that's the earliest likely possible.
Speaker 3:
20:00
Yeah. And so what do you, what do you think the possibility is of that? Any, any guidance for our listeners?
Speaker 4:
20:06
I have personal views, less than a, less than a 33% chance. Markets are right now a little bit of a higher than that, but I think from the economic data that we saw last week and generally the fed communication, that economic data was strong enough to suggest that the fed doesn't need to keep cutting rates and this has started a part of their standard playbook is when things start going a little wrong. After they've raised rates, they pause raising rates, then they look out, we still need to do something. We cut rates three times and then we turn around and we pause and see whether those affects how that affects the economy. What are the important things I think listeners should understand about rate cuts is it takes time for them to work their way into the economy. It isn't, Oh wow, we cut rates and start our producer team is out buying a new house the next day. It takes time for people to make those decisions and therefore that there's a lag between that so it makes sense for the fed to pause and actually see what they've actually caused to happen and how much they boost they've given the economy. Or if it's not moving enough, then they have to look back and see, do we need to cut rates again?
Speaker 3:
21:06
Yeah, and I think we're in, we're not going to talk any further than this cause we'll lose our listeners. Fair the amount. We could talk about rate cuts, but we want people to understand if, if I'm listening today, here's what tangible, the odds of the, the rates keep going lower and lower is getting slim. We go down to zero or we could go negative, but we'd be an unchartered waters at that point in time. If you haven't refinanced your home or you're looking to go get alone, you're probably not going to get a much better time than right now. And so why? Why wait, make, make a end of year resolution to yourself? You've got a little bit of time left. Get it done. Make it happen. Because yes, the rates could go down a little more, but it also, we gotta have chances where the rates go up and can go up quickly. We don't know if they will or won't, but the risk you're taking is on a percentage basis. Your downside is way more protected. And one of our fundamental beliefs here at the Carson group is always protect the downside and let your upside take care of itself. So why take more risk and waiting? Oh, I'm going to wait for the next quarter basis. Point change. If you can lock in now and again, very good low rates, you're, you're most likely going to be better off.
Speaker 4:
22:14
But like what we talked about in the first segment, you're trying to pick the perfect stock at the perfect time and get in and out of the marketing ends up causing you to miss out on great return potential. The same thing is true with your mortgage. If you're always trying to get it perfect, if you can get a good opportunity, take advantage of it and then you win.
Speaker 3:
22:30
Yeah. Um, there's this phrase, right, it's called perfectionist, right? So it's, you ask any perfectionists or self-proclaimed perfectionist, they say it's a blessing and curse blessing it. Cause they always like to get things done to the extreme. It's a curse because it's something that's never done enough or never done perfectly. And I look at your financial situation and this is why you engaged trusted fiduciary. So again, Carson's a fiduciary. We always have to do what's always in the client's best interest, both legally, but I also, I think we all, Scott, I would agree ethically, we do that as well. You bet. Putting a plan together and actually implementing it, even if it's not a hundred percent perfect, is still better than doing nothing all day long because you're getting a plan. You're making it happen. You know, we always talk about, you know that you can use the phrase a lot more was said than done and the same thing can happen.
Speaker 3:
23:26
Your personal financial situation, you're listening today, maybe you never actually completed your will or completed your trust. He never got your home refinanced. It's got, I still have some people that come in the door here that ho have home mortgages. They're in great credit and they're still above 5% wow. Why? I was just too, I ran out of time. I didn't get this done. I'm, I'm, I'm just asking all of our listeners today, each one of us has a to do list. So if you're still working, you have your work to do list and then you have your family to do list. But all of us have a personal to do list those things that we need to do to help ourselves out personally to get to retirement or in retirement, achieve our goals and do what we're looking to do. We've got to bubble up and figure out what are the most one or two important things, no different than you read thousands of articles of week to help us as advisors figure out what's the best thing to communicate with clients. We too, as humans have to figure out all that noise we have.
Speaker 4:
24:22
And I think one of the things that I see out there that in addition, the mortgage, big chunks of money sitting in cash and bank accounts earning very low rates of interest that could be doing something so much better for, for those, for those clients, for those investors. But it's not,
Speaker 3:
24:36
yeah, it's not. And I think people have to learn how to best, uh, accumulate their wealth and figuring out ways to do it. And so we actually wrote a document to help all of our listeners accumulate wealth. So if you want, you can text us. It's really easy. All you do is put in the number three, three, four, four, four and just text the word accumulate and we'll be able to send this directly to you. Just teach you ways to accumulate more wealth during your life and to help figure out, yes, these things are interesting that we see on CNBC and MSNBC, on Twitter, on Instagram, all that stuff. But are they important for you in your life? Our job is to help you figure those out. That's why you're listening to wealth from wisdom. And we'll be back in a moment.
Speaker 2:
25:14
Any 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 do you have a lot of assets but are short on cash? Learn how you could 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. Hey, welcome back to wealth, wealth
Speaker 3:
25:48
wisdom. I'm Paul last, my cohost today is Scott [inaudible]. Scott, we've been talking about really I would say to our listeners those techniques that can help them sort through the noise, realize what's important for them, not urgent, not interesting. We can all read interesting things, but they need to be important. So we get a lot of data thrown in us. We've talked about interest rates, we've talked about the rate cut, but we also see, you know there's this bubbly feeling about the economy. Bubbly can be good. Bubble can also be scary. That word can be used either way. If you notice a, so a lot of us read about unemployment, and I think there's important things that people don't understand about unemployment is there's a lot of factors. It's not saying, Hey, there are this many people who are employed and there's this many people who are unemployed. Just add them all together and then you figure out you're on unemployment rate sitting at 3.6% there's this little concept known about people who are actively
Speaker 4:
26:44
looking for work, right? Right. And so what does that actually mean? So that means you have to be out looking for a job and otherwise you don't count as unemployed at that, in that, in that case. And so for instance, someone who has retired, who is no longer working and is not seeking work, they are not unemployed because they're not trying to find a job at that time. Okay? So if I'm sitting on the couch in my parents' basement and I'm 22 years old and I just don't want to go out looking, where do I, where do I, I am not going to offend that segment of our listener. So they would, but you're going to make happy their parents. I can't imagine. That's true. That's true. And I would say that it is a really a been a great time to go out and find jobs because unemployment is at a roughly at a 50 year low, a little bit higher than that, but it only because people got out of the basement or off the couch and went, uh, went to seeking work and a few of them didn't find it, but then they became unemployed at that point because they were out looking and actively seeking a job position.
Speaker 4:
27:34
And so this has been really a great economy as far as the ability for wages are starting to climb at a faster rate. And I think that's lured people into the workforce that hadn't been there before and it caused them to start looking for jobs. She only had been great, frankly for our country that so many people have been able to find work and then participate in the wage benefits from that. So a lot of people love to read articles or stories on social media about how much CEOs make and about their excessive changes in increases usually in their compensation. But if we look at the average American and their year over year wage growth, what does that look like today? So what, obviously each employer's gonna make their own decision on what works for them. But just on an aggregate for the entire U S economy, what are you seeing?
Speaker 4:
28:20
Just in terms of the average year over year wage growth for a little over the last year, we've seen above 3% wage growth, 3% over which a little over. That dude actually just crept down to right around that. Just real close to that three level. It's been above that recently, but also inflation has been well below 2% so that means that people's wages on a real basis after the effects of inflation that they can purchase more than they could the previous year. And that's when that happens at a decent pace, that that really means that people are getting wealthier, they're paying off a little bit of extra debt, they're buying a little bit more, they're buying something nicer. What are the, that is in that sense or in the really positive for the economy. Yeah. And it sounds so simple and people might be listening say, well okay, well if my wage growth grew 3% last year and I had inflation of 2% so I net at one, what does that really mean?
Speaker 4:
29:08
Is that impactful? But what you're saying is it's super impactful for the entire U S economy. Cause if you take each American and you take that 1% and you apply the aggregate view on this, it's super impactful. The entire economy. That's exactly right. And even beyond that, the groups that have been doing the best in the recent year or so have been those that are in the lowest level for wages on a percentage basis. And so you were actually seeing yo high school educator less than high school educated men, for instance, which is a tough group to employ. They've actually been even better as there've
Speaker 3:
29:42
been a lot of demand for those types of jobs that really kicked back in the economy. And so groups that have really struggled out of the financial crisis are starting to do much better now. Yeah. So if they're doing better, they have the ability to save more. But I think we all have this Teeter totter of how much do we save versus how much do we spend. Right. There's only a certain amount of dollars sitting in your pot that you're gonna be able to use each month. So then if you look at housing, putting food on my table, a lifestyle, entertainment, um, I have three children all in private high school. So education is a large portion of my budget. So what, what do you see? What is the average American, what's the personal savings rate looking like here today? So it's about 8%. A little eight at eight.
Speaker 3:
30:23
Yeah. So it's actually, that's like unemployment. It's a little bit of a funny number in some ways. So how they measure that, which not, not interesting enough to get into on the show. Um, but it is that people are where I think we can take from that as people are being very balanced in their overall management of their own budget. They're spending money when, when they can, but they're certainly squirreling away some of that and hopefully investing some of that money well in 401k plans or whatever that will allow them to eventually reach their goals and retire. And so what we're seeing as a consumer that is much more balanced than they were back in the financial crisis where they were much more extended with real estate loans and other issues. Okay. So here's a question for you. I hear 8% Scott and I, I'm thinking this has to include, this can't be just what an after tax.
Speaker 3:
31:06
I can't be saving 8% after tax. It's probably gotta be a combination of what I'm putting into my 401k or if I have a four Oh three B or a soloK or whatever. So it includes both what I, what I defer pretax in my retirement plan at the office and whatever I save after one. It's gonna include, you know, it's going to be disproportionately skewed towards wealthier. Higher earners were able to put away some more. But yes, in general speaking, it's a great measure to say what is the average person doing on a percentage basis and right now putting away about 8% that's a pretty good number two. I think overall for the long run, I think for financial planners would say putting 8% of your salary away is probably a pretty good move for all. Yeah. Well it is. And I think if everybody could hit that, Scott, as a financial planner, I'd feel great.
Speaker 3:
31:50
But I would also tell for our listeners, so those ones that were on the couch earlier, they got up, they got a job. You know, you think about do I really want to put money away or not? And the reality is, is your best friend over your life that's not human is going to be compounded trust. So your ability to make money, the longer you have it invested, the better off you're going to be unless you make some crazy, terrible strategic investments. So the sooner you get started and you may think to yourself, Oh, I can't give up that extra $500 a month or 100 whatever the number is. If you're young, the earlier you start, the better. Because that ability for it to keep building and building and building and know different weave. And there's many people that walk through our door and they're 55 years old and they didn't start till the last five years or 10 years or they had a tragedy in their life, whether a death, a divorce or whatever happened.
Speaker 3:
32:44
And so they've had to start over or rebuild. We get it. But the sooner you can put money in, the faster you're going to be able to get to that finish line in the next chapter of your life. It makes a massive difference. So, you know, as I mentioned in an earlier segment, I used to teach the university brassica in Omaha part-time at some of my, my students were actually working already full time and they were just doing a fantastic job of savings. I'm like, they are going to have so much put away if they're able to keep on that plan because they had those extra years for it to work for them. Yeah, it's funny Scott, I'm gonna tell a quick story. I'm not sure my son will enjoy me doing this, but I'm going to anyway, so I'm sorry. Um, so he's 16 and he works in food service.
Speaker 3:
33:24
So he was working in food service and somebody said, Hey, that's cool. You know, what do you do? You know, you know, where do you go to school? He was explaining what, what are you going to do with your money? I said, Oh, I'm just putting it away. I'm saving it for college. And this person said, well, Hey, you should really be smart and put this in a Roth IRA because you could let it grow for your lifetime as a 16 year old. And it was just the why. Why bring it up? I think it's interesting, you know, there's some challenges, but we'll talk through that in a moment. But I loved the thought process at late, so here this person was, they were sitting at a bar with food service, so maybe the, the a libations they were joined were helping the conversation, but what I loved about it was it put in my 16 year old son, Ted is, doesn't make sense.
Speaker 3:
34:04
Should I invest this for the long run versus, Hey, I'm going to go spend it on as much fast food as possible out there. Right. That's a great, that's getting them thinking about what were the other put money in that. It's powerful. Yeah. Well, I didn't think about our job is parents too, is we have to educate our children what's best and not only be trying to help get them prepared for live and prepared for if they want to have children or grandchildren down the road, that type of thing. Getting them prepared for the workforce or the real world, right as we call it. But also our jobs to get them prepared financially, help them learn. We've all made mistakes, help them learn from our mistakes, help them get set, help them begin to build that plan. Uh, and so I think it is our job to help them from a financial perspective.
Speaker 3:
34:48
And I don't mean just dollars and cents. I mean, okay, now that they start earning money, what should they do? How should they approach it and what does that look like? And I know you have children, Scott. I mean, I'm sure you had to spend some time with them helping educate them on those things. Yeah. My big son just got his first yo 40 hour plus job and my little boys four. So he's not in labor force yet. You mean oldest and youngest? Not biggest. And they're the same. The fuck they're going to 20 year old. You're saying this very nicely. Yes. So they have to think through that. And Scott, as I look at this, you know, at Carson we have to help people. It's not just the X's and the O's and the dollars or the cents, but our family relationship, we always rank as our most important thing we have. So if you need help educating your children or how to best approach it, if you want, just shoot us a note info@wealth.com it's an easy way for us to send information. It's info@carsonwealth.com ask us any question or if you want, just go to our website, [inaudible] dot com click on connect with us and we'll be glad to answer your question here on wealth from wisdom.
Speaker 2:
35:51
Have you ever wondered how do other people get away with paying fewer taxes than everyone else? Learn how you could save thousands of dollars in taxes by calling Carson wealth at (888) 419-8513 social security risk, 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.
Speaker 3:
36:18
Hey, welcome back to wealth from wisdom. Paul West joined by Scott Wood. Scott is a senior investment strategist here at Carson group. So Scott, you do a lot of traveling for us. You know, we're based in Omaha and you get to go talk to you, really, our advisors and clients across the country. You're gonna share your macro thoughts. So we've already talked about interest rates. We've talked about personal savings rates around 8%. We've talked a little bit about inflation, um, but you get a chance to get a feeling and flavor of people across the country. Is there any just themes you want to share with us that you're hearing when you're out speaking about the world and the economy?
Speaker 4:
36:54
Yeah. You know, one of them is, is that people are getting a lot more politically charged up today. Yeah. Yeah. You're surprised by that. Sit very serious about that. And it's really starting to leak into how they're seeing the overall portfolio in their opportunities. One of the things I really shared with a lot of clients over the last, uh, few months has been keep your politics out of your portfolio. Uh, one of the things I like to point out for the politically charged, uh, is that, uh, the stock market has done very, very well since president Trump has been office that's factual, whether you like them or not, but the stock market also did very well when president Obama was in offices. Uh, also, and if you're a politically engaged person and have strong opinions, odds are you didn't like both of those precedents yet. The fact is your portfolio did. And that's something to keep in mind because it's the factors that are outside of that as well as a lot of other factors that go on that really shaped those overall returns. In fact, both of those periods have been great for your portfolio. And so when you overemphasize your politics and you start to have that effect like, Oh, I think my guy's going to lose, or I don't like the direction that we're headed so I should sell out, it ends up you just really hurt yourself more than anything else.
Speaker 3:
38:03
Yeah. I, so I love the phrase and because of you, Scott and I use it in client conversations, keep your politics out of your portfolio and what's starting to happen right now, what's coming up on election year? So that noise level or the decibel level is rising right now and I'm getting the following question and or comments usually the same. Oh, it's election year coming up. I'm getting worried. Should I take all my money out of the market? Definitely not. Yeah. So, and my answer is just like you. No, because your financial plan has to have a longterm view. It doesn't have a 12 month view about who's going to be elected a year from now. Right. It doesn't. What it does have is a five year view and a 10 year view. And usually people who are asking should take the money out now are people that are emotionally charged.
Speaker 3:
39:00
Right? That's a nice way of saying, yeah, but they're emotionally charged and so they're letting fear, anger, frustration guide their investing principles, which actually, and there's some great studies out there by Vanguard and so many people of course know Vanguard, but when people do their own investments and they don't work with an advisor, this Vanguard's advisor alpha says you perform 2.92% worse than if you worked with an advisor and that's net of the advisor fees. And one of the biggest reasons why is behavioral coaching, any good advisor isn't going to say, Hey, I'm going to let you pull entirely out of the market because you're worried that 2020 is an election year. Otherwise you'd be pulling your money out of the market every four years. Yeah, and that's not good. That's not good policy. But I'd be, Scott, I mean I think you just said it, but the reality is is there's no empirical evidence that says in an election year the market's going to go down.
Speaker 3:
39:57
It could. It doesn't mean it will. Vice versa. There's no guarantee that as soon as the next president gets elected that the stock market's going to shoot up the next four years. It could. And I think what you just said, and I want to, I want to reiterate, I want to make sure people understood what you said because I shared this stat on the air several weeks ago cause you gave it to me. But let me just be clear. So since essentially when Obama went in office, his first two and a half plus years at Trump went and office, the first two and a half years, the return of the stock market was who was better? Uh, I can remember this cause what's different between a nog duration? I think Trump was, wait, which one was it? Now have I backwards on that? Let's just put to the point it was Obama was slightly better.
Speaker 3:
40:41
This was, this was in September from inauguration letter from election day. Yes, that's right. But if you put them both to the same period of time, they're essentially the same. Scott, they're, they're not, one's not up 15% in ones down 15% right. They're both up and they're both up good too. They're solid numbers that you really would not want to have missed out, but you're right, people are usually in one camp or the other. So if you let your emotions charge you in one camp, you just lost out on potentially 15% of return because you let emotions actually take care of that 15% return. Cause that was a, that's an annualized rate of return. So it's actually up in that 30 plus type range. So, so painful. So yeah, you have $1 million because you let your politics drive your investment policy. You lost $300,000 ouch. What could that have done for you and for your life?
Speaker 3:
41:33
It doesn't mean you have to endorse their political stance and you have to sway from yours or just saying, I love the phrase, keep your politics out of your portfolio. And what I find is Scott, I think, you know, I work with many families across the country, but my niche is working with business owners and families that are often converting their currency from either a business into liquidity or they're changing it. And moving it from the first generation to the second generation. So I was going from mom and dad to the kids and I help them through this. But one of the things I crystal clearly see is families always take the path of least resistance. Why? We as families don't like conflict. We don't, we don't want to make mom mad. We don't want to make sister mad. We don't want make brother mad.
Speaker 3:
42:19
We don't want to do those things. And the same thing happens actually with our financial plan. We take the path of least resistance. So we tend to decide to do something and either stick with it for way too long or we don't listen or we assume it's done. And I think when when you're sorting through all these thousands of articles and data points you get every single week, your job is to say, Hey Scott, I'm sure you, your path of least resistance is he read the same sixth grade articles and as long as they're good, then I have enough. But if you did that, you'd have a bias because then your bias would be on those six article authors or contributors or data points and you wouldn't be out there looking for that potentially bus that could be hitting the market that you don't even see.
Speaker 4:
43:10
Yeah, we always want it. That's why we like multiple subscriptions, multiple people at different sides of different issues in order to get those analyzed so that we can make sure that we're presenting, I don't want to say unbiased information, but a broad range of opinions so we can have a best view of where we think things are going to head.
Speaker 3:
43:24
Yeah. I think a lot of times, um, when, when we're thinking as human beings, we all are procrastinators. At the end of the day we tend to, and you may say, Oh no, Paul, I'm not a procrastinator. The reality is we all procrastinate certain things. I think about homes. How many of us need to, uh, upgrade or update your kitchen or your bathroom or your bedroom or all those things. Oh, I'll get to it. I'll get to it. I'll get to it. Case in point, even me personally, Scott, when I moved into the home I currently live in, we moved in in 2004 when they did the home inspection, they said, Oh, your air conditioner is probably gonna make it one more year. So it's 15 years later and it's still running. I'm not sure how efficiently the coils look bad. Beat up. I've had to replace it with this Freon that's no longer even available.
Speaker 3:
44:13
It's like $200 a pound. Now what am I doing? I'm just kicking that inevitable can down the road and I'd probably just feel better if I actually bought a new air conditioner was more efficient and I didn't even have to worry about it cause I keep waiting for every night. Is that thing going to go out? Right? And and human beings, we tend to make these types of decisions because we want this path of least resistance. That's why you engage with the Scott cubies, Paul, Wes and our teams. The worlds is we're going to help you sort through this data and this information to figure out what's most relevant. So you can go spend your time being with your family, being with your friends, watching football, eating, nachos, whatever those things are that you enjoy. All of them. For me, especially the nachos there, Scott, that was for you.
Speaker 3:
44:55
So if you want help, give us a call on, it's on our website or you're very welcome to hit go to connect with our advisor there. Or if you want us just to send information, what are those key blunders? Uh, we see investors make across the country. TextUs at 33, four, four for text, the word blunders, B, L. U. N. D. E. R. S if you want to, that'll help you. We'll give you the guidance. Scott, thank you so much. Thanks Paul. Glad to have you on the show. You've been listening to wealth for wisdom
Speaker 2:
45:21
risk, 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 advisor, Ron Carson.
Speaker 1:
45:34
Okay. And here's the legal mumbo jumbo. The opinions voiced in wealth from wisdom with rod Carson are 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 and 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 and SCC registered investment advisor.
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