Wealth from Wisdom

How NOT To Invest Your Money

January 26, 2019
Wealth from Wisdom
How NOT To Invest Your Money
Chapters
Wealth from Wisdom
How NOT To Invest Your Money
Jan 26, 2019
Carson Wealth
Show Notes Transcript

You’d never let a first time contractor remodel your house, so why let an inexperienced advisor manage your money? On this episode, Paul and Jim discuss the 5 things smart investors NEVER do with their money.

Speaker 1:
0:25
Okay, and here's the legal Mumbo jumbo. The opinions voiced and wealth from wisdom with Rod 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 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 sec registered investment advisor
Speaker 2:
0:57
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 the skyrocketing cost of healthcare and retirement could now run 350,000 planning for retirement. Today is a whole new ball game. It's loaded with challenges, obstacles, and trap doors that you can do this and we can be your guide. Welcome to wealth from wisdom with Barron's hall of fame advisor run Carson and straightforward and objective advice and how you could make your money go further in retirement. And now here's your host, Ron Carson, Warren Buffet, Peter Lynch, girl icon, Charles Schwab. You know, these are some of the most successful investors in the world. They face the same challenges that you faced over the past several decades and you seen markets go up and guess what? They do go down. And we all saw that in December of 2018 he has somehow they've managed to stockpile all of this money.
Speaker 2:
1:57
How do they do it and what did they know that most of us don't? Hang on Paul West, you're listening to well for wisdom. So happy to have you today and today we're going to share five things that successful investors never do, not maybe what they do but what they don't do that ultimately can help them incrementally grow their wealth. And Macos, today's Jim Caldwell, Jim Caldwell wealth advisor here at the Carson Group. Jim, glad to have Ya. Thanks Paul. Yeah, I mean we always talk about things to do, but let's go the opposite. Talk about things you should avoid. Cause sometimes avoiding a mistake is one of the most important things you can do. And I certainly think about football last weekend that happened and you had the AFC and NFC championship games. What ultimately costs people mistakes, penalties, penalties are poor chiefs, offsides penalties and things like that. Then maybe we shouldn't have happened.
Speaker 2:
2:48
Huge mistakes. Can't blame. I guess there's some roughing the passer calls that maybe should or should not have been called or a pass interference call and that other NFC championship game, but those were all mistakes this people shouldn't have done because it costs them and ultimately then their team a chance for success and investors have, I would say Jim, the same challenges. They shouldn't do things that can cause problems, but people can't help themselves. They either a don't know or it'd be they follow the pathways of other people and I always like to follow this rule. If something seems too darn good to be true and most likely is, yeah, I look at it like, here's an example. Financing like it's not that it looks like, oh my gosh, my credit card's going to give me six months free or they're going to do this.
Speaker 2:
3:39
They're going to do that. Jim Nothings ever free in life, right? Zero, none of that. How about aware of maybe oxygen at the moment, but that's probably still not at the end of the day. Uh, and so I think about all these, you know, especially now on the Internet, you're going, you're looking at a website and you've got, oh well finance, this, finance that. Why are they trying to get you your money? They make money. You don't, right? So we've got to talk today about these successful things investors never do. And first, you know, really why they never forget the golden rule of it's not what you make. It's what you actually keep to. Why they don't take unnecessary risks. I like to call that calculated risks. And Man, I think about this jail. I mean, we've had a lot of, uh, snow and ice slightly, right? Just a touch, just a touch.
Speaker 2:
4:27
Right? Uh, I certainly can assure you parents have been trying to juggle over the last week, at least here in the Omaha Metro area, how to get kids to school or more importantly, when they were home from school for multiple snow days that have happened over the last full week. Uh, how do you get them there? What do you do? And for me, Gosh, I don't take that dodge express way all the time, Jim. But I took my son to school and I was driving in the other day and I'm like, that's a beast. I mean, that thing's got some traffic going now. And especially if you throw a little snow or freezing over night, it turns into a, it was, gosh, I don't think I've got about 15 miles per hour the other day on it,
Speaker 3:
5:04
that that is every man and woman for themselves on that road in the morning. But I will say this, uh, I head to the gym around four 30 in the morning and every time 4:30 AM we have somebody do a test to this, uh, you know, just look at me. I mean it's just, Oh yeah, here we go. No, but it's not what your heat, your Tan. Yeah, the gym. Thanks Paul. I'll get you for that. No, but what I liked is to salt trucks are out, the crews are out, they're out there working their tails off and they're trying to do everything they can, you know, very disciplined approach, which I think when we start talking here about these incredibly wealthy gentlemen here, it's, it's discipline. And you talked about turnovers, penalties in the football game. Those all happened because of lack of discipline. So I think that's very important here for today. Arcadis
Speaker 2:
5:52
and wait. So let's talk about those five things successful people don't do. And number one is they never wing it or go it alone in a category they're not familiar nor comfortable with Paul. What in the world do you mean with that? And when I look at this is, this is one of those topics that you know, is you look at life is most people read stuff to be self serving case and point. Google, anytime you want to learn something, what do you do? You Google. And, but we, what do you do? Is the Keto Diet good for me? You don't Google like, oh what you make Google, what is the Keto Diet? But then they'll go about the change of the phrase, what does the Keough diet versus is the Keto Diet good for me? And if you googled is the Keto Diet band for me, what happens? You're going to get pros on why it's good.
Speaker 2:
6:45
You're going to get cons on why it's bad. So when people wing it, you're reliant on others people's information. And what scares the world on me is so many people go online and read an article or read some content, taking someone else who wrote that article. His opinion as a master face value. Yeah. And all of a sudden they go make decisions in their life about it. So what you'll learn is then you'll hear it from successful investors and that's why it's number one here. If they don't do that, they don't wing it. They don't go look at a short, brief period of time. I don't know about you, Jim, or are Alex or producer here, but everything you read on the Internet is not true. I know it's a shocker to you there, Jim. I see your face and I was going on. But above all else, these people in these successful investors, when I start off, Warren Buffett, Charles Schwab, Peter Lynch, you name it, they got a team of people around them that they put an incredible amount of value in professional advice.
Speaker 2:
7:51
They understand the need for a financial team. They understand that it takes years in the trenches to become an expert. Give you another example. Many people, and we've looked, you know the market, the stock market, excuse me. So as I look at the equity market, and I'll call it the s and p 500 for all of our listeners, from 2009 to 2018 it went up, right? It, I mean it was up or flat and most years, but just over the whole time period, it was up. Fantastic. So what happened? People thought it was easy. And so a lot of people start doing on their own. And then we'd go get in this fourth quarter of 2018 and volatility came back or roared back and created issues and concerns for people. Most people that didn't experience the two thousands and Jim, I've got a trivia question here for you. I know you're lovely. Yeah. So it is one of our friends down and be actress, Nebraska. I hope he's listening. Is Do you think that the 2000 so the decade of Two v two thousands as we look at the stock market, was it a winning or losing decade?
Speaker 3:
8:58
Well, they talk about being the last decade, right? I mean that's what it was named. I would say. I still think it was the winning decade. So if it's called the lost decade or anything, it's called the lost package. That's just the media or somebody blowing that up. I don't know. I'm just taking the other side. It was a losing decade. There's a reason why it's called that. Ever get those questions.
Speaker 2:
9:17
Wow. That wasn't a trick one there. So, uh, is, is we look at it. But if you weren't an investor in the two thousands and then you were on the 2010, I think that's what you call it, his dad, Cade, you probably think life is easy. But if you haven't experienced the ups and the downs, and that's why this point number one is you don't go it alone. You need people who have experienced life things before. Case in point, you're going to go remodel your kitchen and you're going to ask your friend, Hey, who did you use as a contractor? And you're going to like, oh, I use so and so are you so and so a, B and c are kind of the options they give you when. But when you talk to them, you're asking did they do a good job or not?
Speaker 2:
10:00
But would you ever go hire someone that this is their second job ever? Probably not. You know, they may have done a great job the first time, but you're going to, I'm gonna for me, Jim, I'm going to have a heck of a lot of hesitation there because they've never maybe encountered the studs behind the wall were built incorrectly, or they're gonna have to change the water flow where they're gonna have to change a bunch of the electrical outlets out and move things. And all of a sudden now they're encountering a situation that breaks code or worse yet creates concern for me. If I'm remodeling my home, are they going to do something incorrect? The causes of fire down the road that becomes catastrophic. And the same thing with your finances. Are you taking advice or trusting people who are not professionals? And that's again, I go back to the buffet, the Lynch, the Schwab, the icon, all of those things.
Speaker 2:
10:55
When you have those professionals around you. And I think one of the things you have to think about is you have to have that right planning in place. So being in retirement or saving retirement is a great start. But you need a plan to maximize your social security. I plan to generate your income, a plan to reduce your taxes, a plan to stay ahead of inflation on and on and on. I could go there, Jim, but I would ask you if you ever really got a second opinion, is your financial advisor creating value for you? So if you've hired a professional, make sure they are and really providing value beyond a reasonable doubt. Are you having conversations about taxes, social security, generating income, healthcare on and on and on? I gave, go on Jim.
Speaker 3:
11:37
If people tell me I talk too much anyway, he's, but it's all true. I mean nothing, nothing replaces experience. Paul, people that have been there done that. Okay. And you just look at the Superbowl matchup. Back to the football analogy. You've got a bill Bellacheck team and uh, an uh, maybe the greatest
Speaker 2:
11:54
quarterback of all time who's been there against a young quarterback and a young coach. So I'll be, which one? If you're putting a couple of bucks on the table, which one are you going with? Yeah, it's tough to bet against the Patriots. That's for sure. And then you look at the experience of thing and at the end of the day it's a game. So you're depending on how the ball bounces, but aren't those games ultimately decided by two things, penalties and turnovers, Bingo and Turner versus what a mistake, what a good investors do. They don't make mistakes. So I would share this with you is if you've been a good saver and you've accumulated wealth, the most important thing you can do right now is to avoid a mistake. And what I mean by that is you better pay fewer taxes with your IRA, your four o one k, you better reduce your taxes based on your social security benefits. You better pay lower medicare premiums. And I'm just getting started and what those things are. So if you want help understanding how to avoid those things and you want a private analysis, give us a call. (888) 419-8513 that's (888) 419-8513 hey, there's no cost for this. Chances are we're going to help talk to you about something to help you avoid a landmine that could derail all of your financial net worth. (888) 419-8513 you're listening to wealth from wisdom,
Speaker 4:
13:14
trust, transparency, accountability. These are the values that drive Ryan Carson and Carson wealth. You're listening to wealth from wisdom with Barron's hall of Fame Advisor, Ron Carson. He's a published author and he's been featured in Forbes, investment news, the Wall Street Journal, CNBC, and more. Now, back to welfare, from wisdom with Barron's hall of Fame Advisor, Ron Carson. If you could speak with the world's wealthiest today,
Speaker 2:
14:53
what investment vice would they give you? What are you doing that these worldclass investors would never do? And are these the very things that are preventing you from growing your wealth? And Paul West, you're listening to wealth of wisdom goes today's Jim Caldwell, and today we're talking about those five things that most successful investors never do that help them grow their wealth. And Jim, actually I think about, you know, what investment advice would you ask if you got to the table with Peter Lynch or Warren Buffett, a Charles Schwab or some of those other great investors. Really, I'm going to not say just of our time but of all time. And it makes me think about that game. People love to pay play. Like if you went to dinner and who are the five people that you would invite to dinner? And interesting. And I think especially here in the Omaha area, a lot of people tend to actually say Warren's name because it's just, it's fascinating what he's done and what he's created.
Speaker 2:
15:43
Um, you know, a lot of people go to celebrities or rock stars or presidential figures, all those types of things. But why w w w the fascinating part is like, why do they want them there for advice? They want to hear what made them successful. They're not going to ask Warren Buffet, well, hey, hey, what's the best way to play this guitar riff? They're going to go ask a guitarist, right? Or they're not going to ask Barack Obama, um, you know, about the market as much as they're going to ask him what it took to be a president of the United States and how he was successful in that role. And why you ask people to, you know, it's fun to ask. What about the dinner? Some people like to ask celebrities like, well, how'd you become a celebrity? You know, so what, what led to your fame, Nicole Kidman?
Speaker 2:
16:28
Like how did you get to where you are and how did you become one of the most successful actresses of all time? While you're going to want to hear that story about her success in her field. And I look at the same way in the financial markets here, Jim is I want to hear from people that have been successful in their field. And I think a lot of that, by the way, and this is always so fascinating to me. So, and, and again, by the way, I may have, you know, children, um, you know, some of my children have expressed interest maybe of going into the financial services field. And I look forward to that day. I think it would be really cool. However, it's not like okay they graduate from college and by the way, just a huge shout out to all of our colleges here in Nebraska.
Speaker 2:
17:09
Um, you know, we're making several announcements in the fall we announced a partnership with Creighton University here in Omaha where we provide baron subscriptions to their student, Alex being one of them. And then also an earlier this week I was down in Lincoln working with University of Nebraska Lincoln on similar type announcement of providing barons to the college of business. And Jim, I couldn't borrow, first of all, I was a graduate. I couldn't be more proud to be offering this. I didn't know enough when I was a college student about the financial services besides what you see on TV and what you learn in those types of things. And so if we can keep educating, this is next generation of student who becomes a professional to become the best. But Jim, I hear this and I know you have to and you have children in this business by the way.
Speaker 2:
17:54
Also. Why say also you do, I don't yet. Maybe we'll see. Uh, so many people say, oh well my son or daughter or my son or daughter in law just started at Edward Jones or Ameriprise. So I'm going to have them manage my money cause I just want to help them out. Mistake number one. So I get, by the way, I want to help my kids all day long, but I would never tell my children, okay, you're 23 years old, you just graduated college, congratulations. And now you're going to go manage wealth for people. How, where they've been trained, what experience they have besides listen to this show with their dad that they liked to make fun of him on, but they don't. A personal finance class, maybe in high school or a finance track in college, but the end of the day, it doesn't teach you the most important thing.
Speaker 2:
18:47
Real world experience that goes along with that. So that's a huge mistake. You don't see Warren or are other people saying, oh, I'm going to go give my niece or nephew all of these millions of dollars to manage because I want to support their family. They may want to say, hey, why don't you come learn under someone else and then you can potentially take those things over. So right now I know you want to help your family, you're actually hurting yourself. And there's a reason why I'm going to share this with the public is there's a reason why many of those companies that I've already named that they, there's this incredible burnout rate in their programs because they put sales quotas on these financial professionals to come in. And if they don't make it after 36 months, guess what? They're gone. So now where she at, and Jim, I think I saw through like those national wirehouses, so take like Merrill and Morgan and Ameriprise and all of those that it was somewhere close to 90% of their trainees aren't thereafter three years.
Speaker 2:
19:50
And again, it varies across the board. So I'm not trying to make a statement there when I am saying is it's just be careful always use professionals and I know you want to help your children or your grandchildren or your niece and your nephew, but at the end of the day, since more people don't survive those programs that do, you're ultimately hurting yourself in your own retirement and their own way you approach it. So let's talk about concept number two unless you wanted to say something there, Joe, I was just going to say it. There's a story resonates in my mind is when I was 16 I got my driver's license and my dad looked at me and said, just because you have your drivers license, don't think for one minute that you actually know how to drive. And I will never forget that as long as I live.
Speaker 2:
20:35
But when you look at, you look at some of those young kids that come out of college and go into those programs. Here's the thing, you look around and you say, who am I going to call on? Well, you've got to call on same age kids. They don't have any money. And and who that's older than you, that might have some money, what credibility do you have to even sit down with them? So that's an uphill battle. It's a tough, tough row to Hoe. It is. It is. And the thing is is we want to help our kids. I get, I do. And it's, and the thing is is like we can help them understand what they're getting into. I mean I think that's important and they want to get a job. They want to get a career, but if they want to get into a sales based job and when they get in a sales based job in financial services and then you're going to let them sell you, guess what?
Speaker 2:
21:19
The, those kids aren't getting the majority of the money from that sale. You know, who is their parent company, whoever they're affiliated with. So the winner there isn't your child. The winter, there is the commission based company that's earning that. So let's get into top five things the best investors never do. And again, the word is never today is they never take on too much risk. And that is, you know, there's the old adage, you know, too many eggs, you know all your eggs in one basket. All those times I think chase returns, that type of thing. But really what they do is, is they have the proper asset allocation, diversification. So they don't put, Oh man, I got a hot stock tip, I'm going to put a bunch of money in there. And what happens? Poof, stock tip wasn't so hot. There's actually ice cold and now they've just accelerated to the negative their losses.
Speaker 2:
22:11
Or they'll say, you know what man, this on TV, this looks really easy. I'm going to go on Hgtv, I'm going to flip houses. Look how easy that is a man. And in 45 minutes they make all this money and I'm going to do the same. And here in Omaha they go buy a house, they want to renovate it and then it turns up be more costly and they're not able to flip it. And now they've taken their savings, their emergency fund, and put themselves in a scenario. So really good investors know how much risk to take. They don't take too much. They think about what's the right amount. And Jim, I think that's something that we really need to help people think about. And so the other thing with them is they're not market timers. They're not trying to figure out when to get in and when to get out.
Speaker 2:
22:58
I mean, we've seen stories or heard stories all the time of people that got out right after or right before or right after president Trump got elected and they're still sitting on the sidelines and cash. Yeah. Came imagine that. I mean, think of how fat and that's crazy to me. So they let all this time go by and they're still sitting there. Um, and I just, you and I know this individual, um, but you know from wealth wisdom, and we've talked about this. So this individual got super scared, sold out the week before Christmas. Yeah. And now I know you and I talked to him the other day. Still hasn't got back in. No. And look at the numbers, Paul. I actually wrote them down s and p year to date up over 5% Nasdaq 5.8 and that's as of like what earlier this week, like Wednesday or so. Exactly. So I mean, what the heck?
Speaker 2:
23:42
I mean, you got to get in and stay in. Yeah. So I mean, I've shared this before and I just think it's just phenomenal statistics cause I talk about them all day long. Time in the market is so much more important than time iin the market. But if you miss the top five trading days, you lose out on potentially 45% of that year's return. Just five days. So being lazy or be getting scared, all those things, and that's where the right risk performance and I would look at rebalancing. So again, now's a great time to rebalance. You know that? Yeah. Well I think a lot of families have come in now you got your December 401k from your employer and said, Ooh, that's negative. That that hurts. It's painful. What should I do, Jim? I can't applaud these people enough. You know what, for having the courage and Udacity, uh, Aaron would or Hetero financial planning, he was on the show with me a couple of weeks ago and she talked about the number one reason why people don't talk about money is because they become embarrassed.
Speaker 2:
24:43
Why? It's it's your fingerprint. It's your life. You have two choices. Stick your head in a hole and be embarrassed or pull it out, get some advice from a professional and move on and I got to tell you, if you surveyed everybody who moved on and there's been plenty of surveys, we've talked about the show, they are way we way, is that enough? More financially confident than anyone else. And again, that's what top investors do. They find that there's often a right way, but also there's a wrong way to diversify your portfolio. I want to address something you've talked about rebalancing, which, which I want people to understand that rebalancing your portfolio is not necessarily with the goal in mind of taking on more risk or going after returns. This is an excellent opportunity right now because every asset class across the board got hammered in 2018 there was nowhere to hide.
Speaker 2:
25:37
So there are some good opportunities to diversify your money and then potentially not just protect your downside but give you a little upside potential. Yeah, there is, I mean, and as I look at this universe, there's, you know, the market fundamentals look okay. I mean we had our quarterly market outlook. Uh, we shared it with many people. I mean again, the fundamentals of a come back down a little bit more at Earth and you know, 2019 could be a good year, but don't forget 2018 almost almost yearly. Looks like 2019 at the moment in terms of January came flying out of the gate. We then had a big movement lower in February. Then we came back really all, all summer long until September. And then that started the decline we saw and I hope people will remember that because this is really what 2018 look like January, it was great. And then we saw this slow or not actually pretty quick decline in February. And then back and forth. So don't forget that can happen now, but if you want help and looking at your investments and how you can reduce your risk. (888) 419-8513 that's (888) 419-8513 most people are afraid to call, but after they call, you will never feel as good as knowing you're on the right pathway. (888) 419-8513 that's (888) 419-8513 this as well from wisdom.
Speaker 4:
26:59
He seemed good times and bad times. Panties got the gray hair to prove it. You're listening to wealth from wisdom with Barron's hall of Fame Advisor Rod Carson. He's a published author and he's been featured in Forbes, investment news, the Wall Street Journal, CNBC, and more now back to well from wisdom with their ins hall of Fame Advisor Ron Carson. What are the Uber wealthy know about investing their money that you
Speaker 2:
28:33
not know and what do they never do that you're doing right now that could be preventing you from growing your wealth? Hey, I'm Paul [inaudible]. I'm joined by Jim Caldwell and this is wealth and wisdom. And Jim, I have a lot of fun today talking about those things people should never do. What are those ankle turning Ni Bach Lane type things that we want to help people avoid offsides penalties and football pass interference or lack of fastener interference calls and football. Ouch. That's still hurts a lot of people. So let's come up in this segment. Let's talk about what messed accessible investors aren't the lane and there's a lot of things. Um, and one is they don't prepare their own taxes, Jim, and it just, it people, they think I'm silly about this one fall, it's cheaper. Cheaper doesn't mean better. You ever thought about something you did cheaply and you regretted it for a long period of time?
Speaker 2:
29:27
I can. I'm like, Oh, I'm going to go buy the cheap version of this and the cheap version of that tires. Yeah, tires is a great time. I wanted to save 10 bucks a tire and I regret it to this day. Oh, they didn't last long. They didn't last as long as they were advertised. Yeah, I mean, and, and, and those things happen all the time. And taxes is a way that people think that they can save some money, but actually what they're doing is they're costing themselves most of the time. Now, I'm not going to say that's everyone, but the reality is, especially as people and our retirement right now, if you're over age 55 you have more control than you ever probably will in your entire life with taxes. So the rent, really the big truth is the following taxes can be and probably will be your biggest, biggest expense really in retirement.
Speaker 2:
30:20
We're actually right now in your life, if you think about it, if you're in the 25% tax bracket and you make $100,000 a year, do you spend $25,000 a year on anything else? Probably not. Maybe your home is close by, but it depends on where you are. So putting money, by the way, into your retirement, it's easy, right? Automatically comes out of your paycheck. You don't have to think about it. My statement shows up every quarter, you know, hopefully I rebalanced like we talked about the prior segment and I didn't want to get your money out. And Jim, this is one of the biggest mistakes and again this is why top investors avoid being so super unfair or shoes. It used to be super cost conscious on this that they miss out on
Speaker 3:
31:04
huge opportunities. Sure. I could give a great example. Um, we, we have a household we're working with and they've recently retired and we're starting to figure out, okay, how are we going to structure the income stream? And we do it through tax planning and initially because they've never been in this sandbox, right? They just wanted to start taking it out of their cash accounts. But they're young enough, they're in their early sixties to wear down the road. Let's say that cash could last. We figured out five years, but they still have a problem. And that is when they start taking social security, whether it be retirement age or 70 you start adding that with all the money, Paul, that's in their qualified accounts and now you have to take RMDs. When you start adding all those numbers up, they got a huge tax problem. How do you avoid that? A professional tax planner that can help them take some of that money live on it in the 60s and then in the 70s that that'll, that'll lower that tax burden in my ability.
Speaker 2:
32:00
Yeah. So you know, I love my pictures here, Cim and we asked the story, all of the above because we want to make the complex simple. So if you're sitting right now and listen and you got a pen and paper, I want you to do this for me. Grab that pen and the paper and do the falling. Draw a triangle. And on that triangle. On the bottom left of the triangle, I want you to do a circle and I want you to put it in the following initials and queue. They stands for non qualified or also known as taxable. In the bottom right corner, I want you to draw a circle around that corner and put it in the word queue. At the top of it, I want you to do the same thing and put in the initials, TF. So if I start on the bottom left and Q stands for your non qualified or those of your taxable, how much money do you have in your taxable accounts right now?
Speaker 2:
32:43
I want you to think about that and put that in there. And then next, let's go to the next quad. You know, next corner of our triangle that says for Q or qualified, how much money do you have in your Iras, your four zero one ks, your four zero three bs or other tax deferred vehicles minus your Roth. So then let's go up to the top try, you know, corner of the triangle. And that's called TF. That stands for tax free. So how much money do you have in there? So now as you think about your three corners, your taxable or your non qualified, you're qualified, which also means your Iras, your 401k's and then your tax free. If, if I, if you had weights on this, are you leaning heavily towards one corner? And I'm not saying it has to be perfect at 33 33 33 but what I'm saying in terms of percentages, but what I'm saying is, is when you look at someone's tax picture, you have to look at all three corners of this triangle, non qualified, qualified and tax free.
Speaker 2:
33:42
And you have to figure out the right combination. And Jim, case and point again, let me tell you is most people think, okay I have money in my portfolio and I need $100,000 to live every single year. All right, I'm retired. And that's just what I need. So what do they do? I need that money. So what do they pull cash. And then they pull dividends cause like this is great. I own the following five stocks and they pay a 3% yielding dividend. So now they pull cash, they pull dividends, um, and then they tried to do whatever they can to get up to $100,000 in income per year. Guess what? That fundamentally thinking is wrong. You know what that is? That's the easy route. What that is not, and this is where true professionals that figured this out is that is not the most tax efficient route.
Speaker 2:
34:33
And what if I told you Jim, that let's again say you're pulling out 100,000 a year and you had $2 million you had saved. What if I would tell you by figuring out how to change the sequencing of that, the 2 million instead of lasting the next 25 years could last the next 35 years, all because of taxes. How would that make you feel? Jim signed me up. Yeah. Well I just, I'll give you a case of point. Earlier this week I'm sitting down with the family. Um, you know, our financial planner or one of our advisors is families in there. So now they are retired. Their income stream obviously slow down. So we're going to help them do a Roth conversion and we actually helped them figure out the optimal amount to convert per year to keep their taxes as level as possible. This Jim, actually in this scenario, it was going to save several million dollars because of the inefficiency they had almost all their money in non qualified are taxable and they had a bunch of qualified and what we did is we showed them a pathway to do a Roth conversion that helps them and it moved money in the tax free bucket that actually extended the life of their money.
Speaker 2:
35:53
So I think about this, most people would tell you what Paul, I'm 63 years old. I'm not going to pull money out of my IRA because I don't want to pay taxes. I hate paying taxes. And then I'm able to show them actually by doing a partial Roth conversion. And I can't, I mean we got Jim, we got down to specifics here. This wasn't like a range is, but everybody's different gyms. So I can't tell everybody you should do a Roth conversion. That's just not sound fiduciary advice that we believe in here at the Carson Group. What I can tell you is is we mapped out a game plan. Can you think like if they did that on their own via turbo tax or into it or h and r block do it or you're out? No, no way. They would have just kept doing the same thing.
Speaker 2:
36:41
And Jim, I see this all the time. So if you are using TD Ameritrade or vanguard and you're pulling your own money out of your portfolio, guess what? Same problem, cash and dividends is what you're pulling out and you think that's the right thing to do. And I can show you that. It may not be. And most likely it is not because we really should we be taking some cash loss tax loss harvesting off the table every year versus pulling, you know, the dividends out or those types of things that are all creating additional income, huge mistakes that people made. So I want you to think about a Roth conversion. If you haven't or you want more info, (888) 419-8513 that's (888) 419-8513 hey Jim. And that is certainly a way the best people make more money and they avoid pitfalls is looking at tax advice
Speaker 3:
37:30
and taking it a step further. You talked about a plan, right? So I mean look at the super bowl coming up. I guarantee of both of those head coaches and their coordinators, they're going to have a plan going into that game. They'd have a plan a and plan B
Speaker 2:
37:43
on offense, defense and teams, right? There's their triangle, right
Speaker 3:
37:47
triangle. That's where on the road I was going down and so what, what we're seeing is the people that have the plan. I got a call in yesterday, a radio show listener. Long story short, when we got down to the specifics, he wants to retire a certain age, his wife, the same thing and I said to him, do you have a financial plan in place? He says, no. I said, well, we need to start there before we even address the other concerns that he has. So the plan is the key manager, risk and wealth planning.
Speaker 2:
38:15
Yeah, she's looked at your triangle, how much money you owe, tax poll, how much you have in your Iras, your foreign k's or other qualified, how Chan and tax free. It's got to be looked at. The Roth conversion actually can be a great way. Again, if you want some analysis on that, Jim, I think we're all happy to help people because it is personalized. (888) 419-8513 if you want to send us an email that's info@carsonwealth.com or (888) 419-8513 you're listening to wealth from wisdom. How could you make your money go further in retirement? Learn how next unwell from wisdom with Barron's hall of Fame Advisor Ron Carson.
Speaker 4:
39:41
Is it possible you could pay fewer taxes in retirement? Keep this money for yourself. You could learn right here and right now on wealth and wisdom with baron, telephone advisor, Ron Carson
Speaker 2:
39:54
and Paul last, welcome back to wealth wisdom. Go say Jim Caldwell it. Jim, sit in there thinking, uh, you know, that's one of my favorite quotes and that is of course we love to use Warren Buffett on the show, not just because of Omaha, uh, our base, but just life. You only have a few to do a few things right in your life. So as long as you don't do too many things wrong. And I love that gem because first of all, I will tell you over my career, I've learned more from my mistakes than I have from x successes. And I think most people would say that athletics is another way, school and learn more from that assignment you forgot to turn in or how you didn't prepare properly for a test. Got You. Ready for the next one. Investing is the same way and that's why we're talking about five things the most successful investors never do that.
Speaker 2:
40:37
Help them grow their wealth and come. In this last segment, we're going to talk about these ways that help them and number four is they don't rely on one source of income, and I know this isn't maybe necessarily you know what you think, but it doesn't have to be just from your job. It doesn't have to be just from your retirement account. It can be from your tax bill account, it can be through real estate income, it can be diversifying be a bonds or cds. Just look at all of those sources and it's, again, I go back to Africa just because we're in Nebraska where the plays is you can't run the ball every single play and it's just not going to work. Maybe it did back in the eighties and nineties but it doesn't work here in 2019 that's for sure. And I'll tell you as as a former coach on the defensive side of the ball for coach again where the Ohio State University, I'm sorry, can you edit that part out? And we did. We do. I hear that some high school ball, which I really enjoy, but I always looked
Speaker 3:
41:34
at a couple of things, you know, how do you make that team one dimensional? How do you take away the run or the past? You've got to take away one because if they're balanced, I'm going to have a problem defending that team. Same thing with your, with your income stream and your retirement income flows.
Speaker 2:
41:51
Yeah, they, they have to be an Emmy. And, and Jim, I look at this all the time, is we're building an asset allocation. So of course we look at what can go in equities, which is usually ETFs or individual stocks. For us, we look at bonds, we talk about this, you, we ladder our bonds. By the way, if you're in a bond mutual fund, you better call us because you better understand the fees and the complexities of that. Eight, eight, eight, four one nine 85, 13. I'll talk to you, give you advice that just, I'm still baffled why people use them, but that's their own choice. Uh, but then you look at a look at what I look at his other specialized investments. What makes sense for you? You know, if you're an accredited investor, um, you know, like we hear the Carson Group, we'll use some specialized investments, whether they're short term, one year holding periods are longer than that.
Speaker 2:
42:35
Of course. Unfortunately here in Omaha dops pension, you know, had some struggles with those types of investments. You gotta have the right firm and the right due diligence team in place to help you sort through those. But they can be additive because they can also bring in these other sources of income. You may have a read, you may have an annuity, you may have real estate, he can even do a reverse mortgage as necessary, but you gotta do what's right for you. So next, the other thing I would tell you a number five that's successful investors do is they 100% have a game plan for social security and they actually make it a priority. And you're like, well, Paul, why does somebody who's got millions of dollars worry about social security? You know why they got to $1 million? Because they watch their pennies and they made the right decisions along the entire pathway.
Speaker 2:
43:26
So why would you quit? Here's the, here's great gym. So there are 2,728 rules and this whole security handbook. Have you read that book? No. Okay. Neither have I go into either. I got plenty of professionals on the team that have and have built the right consulting process and technology to help give you personalized advice. I'm never going to read it. All of it. Certainly I don't ever see myself, uh, that board or unless I want some sleeping material, no fans, social security. But there's plenty of professionals that have ran through that. So I just, I, it just, it's, it's, it's just unfathomable to me that you would go apply for social security without meeting with a financial professional who is trained and has the right people on their team to give you that advice. So again, top people don't do that. They don't not go meet with someone.
Speaker 2:
44:24
They don't listen to a family member who also filed their brother, their sister in law, and then like, oh well I filed when I was 64 and they assume immediately they should file wrong, incorrect all day long and successful people don't do that. And then you're like, well Paul, you know, if I've got millions of dollars, it doesn't really matter. It does. It can be worth hundreds of thousands of dollars to you. And if I look at all of us on this earth, at the end of the day, you have to make a choice. If you have money leftover, and I hope most people, it's not if they do, when you're not on this great earth, that money gets transferred to however you designate via your will, via your trust. And by the way, if you don't have a will or trust set up, first of all, that that's sad and scared for you at the same time.
Speaker 2:
45:18
I don't mean to sound morbid, but if something happens and you don't have this in place, first of all, the emotional trauma your family goes through for no longer being on this great earth. But then second to have to deal with probate an estate that you didn't put together when you had a chance on this earth to do it and to help them out. I mean from an emergency perspective, Jim and I was like just blocking and tackling number one that's like, I just like putting a helmet on. If you don't have a helmet on and playing football, you're making a mistake and it's like trying to
Speaker 3:
45:48
play with 10 players on the field instead of 11
Speaker 2:
45:50
yeah, it's worse than that. You're just setting yourself up for disaster. Don't do that and so you're going to help your family out. But then ultimately you saved this money. You are smart about social security, earned yourself several hundred thousand more dollars. Now think about the legacy impact you have. That's extra money that passes most likely to your kids, to your grandkids, to charity, or to where ever else you've designated it to go all because you made the right decision. So you made this whole security decision, gym and you filed and then you get spousal benefits or whatever combination you did. And I ended up making you an extra $200,000 and now you lived at 805 and you need that $200,000 aren't you darn glad and happy that you spent the time to figure out the maximum benefit and value you can get over your lifetime versus taking, I'm going to call it the easy route, going back and doing some, oh, it's simple. I'll just file instead of saying no it, it's worth an hour of my time to sit down with someone and go through my numbers, do the analysis and figuring out what's right. And at the end of the day you're going to figure out all these other things that go in conjunction with that.
Speaker 3:
47:09
So Paul, you know, we'd talk around here that we're, we're a technology firm that gives financial advice. I love it because of all the different tools that we have here. And I'm going to be honest with our listeners. It's incredible the value that we can add. And it's not just throwing something against the wall and hope it sticks. It's real, live hard numbers that you can look at and, and, and it's just invaluable. And I want to address something real quick, Paula you've talked about was, um, on CD, on CDs is one of the buckets. The rates are coming up now and folks are starting to kind of take a peek at those. And I want you to know that that's not always the greatest play because of the spreads in there, that the bank keeps a lot more than you think. But we do have solutions here that protects your downside and give you the opportunity to participate in upside a market growth.
Speaker 2:
47:58
And you know what I mean? Those are the mission approach. And I agree with you, I think is, is you look at cvs right now. Most people forget that if you're in a CD, yes it's fully liquid thing time. But if you lose six months of interest, what happens? You might as well have just been in a high pain. Money market is often way better for you. Um, we use TD and fidelity as our custodians. They help us through all of that. But do you mind give, I'll go back. She'll share a second. Cause I mean, what people have to understand, the reason why there's so much more than its decision is one, it triggers this avalanche of taxes. If you don't do it correctly too, it could double your medicare premiums and three, you could forfeit your spousal benefits. I don't know about you, but that doesn't, uh, that doesn't make the spouse happy, that's for sure. So if you want one of these analysis, Jim, I think we can give them to people. Eight eight, eight four one nine 85, 13 (888) 419-8513. Hey Jim, I've enjoyed sharing those secrets today that the top investors avoid doing to stay out of trouble and to ultimately gather more wealth for them and their family. You've been listening to wealth from wisdom
Speaker 4:
48:58
risks, 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:
49:11
Okay. And here's the legal Mumbo jumbo. The opinions voiced and Wellframe wisdom with Rod 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 assure success or protects from loss. Past performance is no guarantee of future results. Advisory Services offered through Cwm LLC, an SEC registered investment advisor.