Wealth from Wisdom

The Start of the 2019 Market

January 05, 2019
Wealth from Wisdom
The Start of the 2019 Market
Chapters
Wealth from Wisdom
The Start of the 2019 Market
Jan 05, 2019
Carson Wealth
Show Notes Transcript

The new year will bring an unprecedented amount of challenges for you and your money. On this episode, Paul and Erin Wood discuss how the new year affects you and your retirement plans.

Speaker 1:
0:00
Okay. And here's the legal Mumbo jumbo, the opinions voiced and well 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. I may not be invested into directly investing involves risk including possible loss of principle. No strategy assures success or protects from loss. Past performance is no guarantee of future results. Advisory Services offered through Cwm LLC, an sec registered investment advisor
Speaker 2:
0:31
does Morgan hit another all 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 ballgame. 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, Ron Carson. Straightforward and objective advice and how you could make your money go further in retirement. And now here's your host, Ron Carson, the new year, we'll bring an unprecedented number of challenges for you, you and
Speaker 3:
1:11
your money. Hey, it's 2019 one year away from 2020. Gosh, that sounds weird to say, doesn't it? Hey, on Paul West, you're listening to well from wisdom. My Co is today's Erin, would Erin, welcome to the show. Thanks for having me, Paul. 2020 oh my gosh. I can't believe that one year from now what's going to happen? I don't know. I mean we've had a lot of fun here in 18 with the stock market, so now we're at 19 and there's been a lot of challenges, probably more challenges in 2018 than we as individuals have it space from a, excuse me, experience from a financial perspective since 2008 a decade ago. And why? I think 2018 was really one of those for the record books. One, there was chaos and Wall Street volatility came roaring back. Uh, China, a little bit going on with China, some trade wars and with some other countries rising interest rates.
Speaker 3:
2:02
Have you looked at the cost of a mortgage or if you have a commercial loan right now you want to buildings and such. Have you looked at what those actually costs and what's gone up? I mean four interest rate hikes and there's some geopolitical instability and I could keep going on and on and on. Uh, our huskier started oh one six so of course that was a struggle to the year got way better. So it's a whole new ball game we have out here, Aaron. So as we talk about what's worked for you the last nine years, you found out in 2018 maybe it didn't work for you and it doesn't apply. And if you don't change the way you've managed invested your money, you could begin to pay the price. And for a lot of you, you're going to open up and see your statements here in the first quarter of 2019 for the first time in a long time where you see a dramatic move down.
Speaker 3:
2:47
Q four was it pretty? So when you see your 401k statement or your TD or your fairly statement, you're going to wonder what's happening there. And I thought in today's show would be a good idea. We're going to 2019 what are some smart money moves for our listeners? What are the things that they needed to be doing in thinking about, you know, their asset allocation and diversification, what are they going to do to help them out if we continue down this very volatile market? And then really third, what are some simple strategies that can save them thousands of dollars in taxes in retirement? But it is the beginning of the year. What happens? New Year's resolutions. Yeah, they happen. So of course, what is the number one new year's resolution people have every single year? Save more money. No lose weight, lose weight. So you know, it's just, it's fascinating to me. I'm looking actually at an article here on ink and Number One resolution for 2019 is diet or eat healthier.
Speaker 3:
3:44
71% of people who do New Year's resolutions actually list that. Now, only 60% of people actually make a new year's resolution. But here's my most favorite statistic about that is how many people are actually successful. I'm going against very few. Yeah, you're right. Less than 10, 8%. So there's always that phrase right when, um, a lot is a set or done, how much has actually said or it gets done. Well that just proves it. Only 8% of people actually follow through resolutions. They sat. So number one was diet or eat healthier. Number two was exercise more. It sounds related to me. Number three was actually lose weight. Number four, you were right on this one was spend more. Who's me? Save more and spend less. Yeah. We all want to spend board. If we could write we would. Uh, but financial tends to be really a top priority for people, but they don't set it until a new year's resolution.
Speaker 3:
4:45
That's baffling to me, Erin, on why people wait until for some reason. Oh, January 1st I better do something about it instead of paying attention to it all year long. Well exactly. And we've talked about other times how much easier it is to auto save and to set up these auto saving programs or budgeting tools. There's all sorts of things out there and people just seem to want to talk about it on January 1st and by January 2nd they're out swiping the credit card and at a bar I forgot about it. Or they want to put together like a financial game plan or a spending plan is what we like to call it. The only things we realized is, I have a lot of be words I don't like and budget is another one of those. I'll let you fill in the blank of what the rest of them are.
Speaker 3:
5:25
So busy. Of course you know that one. However, when you Pete talk with people about a spending plan, it's just sounds much more palatable. I can consume it. It's easier to understand. Um, so putting together a spending plan as one of the best things you can do, but then sticking to it and what's amazing to me is again, as January 5th today, and most people are on track, you're feeling good. You're five days in the month and it, I just showed you a statistic you're shared with you, 8% of you most likely by February 5th aren't going to be following through any more. So I think we have to talk about what are those things that can help you out. Um, so the other one is, I just want to share you just from, so number five, top New Year's resolutions according to inc number five was learning a new skill or hobby.
Speaker 3:
6:12
So what new learn new thing are you going to learn this year? Uh, well, you already know I've been going to school to finish my MBA and behavioral finance, so I am going to continue down that path until I get it finished. Very Fun. So you excited? Uh, I am, you know, it, it works really well with what we talk about on this show and uh, helping people make better behavioral decisions is really important. Yeah. And I was this goal written down for you? It is. I actually have my 2019 goals on my iPad with some other things that I keep on there. The other one. Um, that one of them, I already am failing at his drink. Less caffeine. Ah, shoot. That one's not going to make my last, that's for sure. You noticed, I said drink last, not drinking and not quit. All right, good.
Speaker 3:
6:54
So I'm just trying to limit, well, quit gets into at our number six. Number six was quit smoking. Oh yeah. I think our new producer might smoke the one we're getting sued and so, but we're not sure about that. So number six was quit smoking. Number seven is read more. Number eight is find another job. Number nine, maybe you want to do this one too is drink less alcohol. So think about that. Uh, actually I've never heard someone put on their list of things to drink more alcohol. I've never heard that one on an interesting one. Yeah. And number 10, which I can't believe I actually think this one should shoot way up the list. Uh, and we talk about this actually as part of financial planning is spend more time with your family and friends. And I, you know, I think for new year's resolution, and maybe you're just fatigued, the stress of the holidays where you down, and this is why people don't do new year's resolutions about this Aaron, is I just think people need to spend more time and actually plan for more family time throughout the year and they don't do it.
Speaker 3:
7:55
And I'll give you an example. One of the things I do is I make sure I block what is family time for us throughout the year. And I'm not saying you got to go plant some extravagant vacation like overseas or Europe or things like that, but just little things like a weekend getaway or a weekend cabin or we can campaign or would those types of things, but put it on your calendar now because guess what, it's going to happen. You're going to get it done versus if you don't play on those things. And I can certainly tell you in my working career earlier, I was working so much that I wouldn't play on those things. And then all of a sudden the year went by and you're like, shoot, I forgot to take a vacation. So you have to plan those things. So plan out those events with your family or friends.
Speaker 3:
8:34
Stopped, keeps saying, I'm going to go visit so and so or I'm going to do this. Actually put a date on your calendar. Now that is something that you can really help yourself for 2019 actually, not from a financial perspective, but from a behavioral and feeling good perspective. Oh, absolutely agree. I have something similar on mine mindsets be present for that same reason. I don't want to be at home. I should be with my kids thinking about things going on at work and when I'm at work, I don't want to be thinking about, you know, what do I need to go shopping for the kids for the weekend so they're not yelling at you, mom, mom, mom, are you here? Correct? Or I'm talking to you. Are you listening? That's never happened in my household. All right, that's a lie. That's incorrect. Louie and CC and Liam can certainly attest to that.
Speaker 3:
9:17
So let's talk about this. Let's go into some seven smart money moves that you can all be making here in 2019 and the first one is, is really making sure you have this financial game plan in place. And I mean by that is you're motivated right now, you're excited, you've got your weight loss plan in place. So those of you that chose number one resolution to diet or eat healthier, you maybe drought the next 30 days, what you're going to do, you build an eating schedule or built a workout schedule. Well they're there, there's science to that. Hawaiians work, what is written down gets done. There's actually empirical evidence behind all of that. And the same thing has to go with your financial game plan. If you have something that's written down that's great, but it doesn't, it shouldn't be just on your yellow pad at home or your to do list at home or anywhere else.
Speaker 3:
10:02
It needs to continually being involved. And that's why I think the power of financial planning. So I know we shared it a couple of weeks ago on the show that those people who actually have a written document, a financial plan or 62% of them feel financially stable when people don't. It's half that. That's a huge number. Just by having a documented plan, you're twice as likely to feel financially stable and comfortable and there is no time to be without a plan. I mean we already know the volatilities happening. We already know the last quarter was an ugly one and so going through this year, having a plan so you don't make some of those foolish decisions is absolutely going to be necessary. Yeah, absolutely isn't by the way people think a plan is like for the Uber rich are the super rich. Aaron is not, I mean everyone needs a plan. I don't care what dollar amount, I mean, think about it.
Speaker 3:
10:55
You first graduated college are so excited. You got your first job and then you're figuring out how much money do you need for your rent? How much money do you need for your car? How much do I need any food and how much money do you need it to go out to the bar or whatever it sounds about right. The right combination. But then as you continue to mature, grow up, or maybe you don't, but yeah, you get a house, you have to go, how much do you budget for that? And then the insurance pops in and then you have children, you've got a budget for school and feeding them and clothing and all these things. So look at that. Each stage you still had to have a plan in place, a monthly, a quarterly, an annual one. And again, those people who are most successful figure it out.
Speaker 3:
11:38
And that's one of our smart moves for 29 19 if you don't auto invest, do it now. Seriously. Even if it's $10 a month, $100, whatever it is, even if there's apps out there that help you round up to invest. Yeah. So there are simple tools that are available and accessible, but people don't always think about them and what they can do. And so get started. And sometimes even if it's just a $100 a month into an IRA, you haven't done it before. You can find $100 somewhere. You can figure out a way to make it happen. What we don't want you to do, and it really is, I think about this, I'm guessing you also haven't really had time over the holidays to set this up and if you need help, give us a call. (888) 419-8513 if you're the kind of person who really wants to make sure you make the most out of every dollar you've saved and you've earned, give us a call. (888) 419-8513 I'm really thinking that with the holiday season, Aaron and all the parties people have, they haven't spent any time on this and so now they're in January. They want to make it happen, but they're going to let it fade away like they normally do. (888) 419-8513 you're listening to wealth and wisdom.
Speaker 2:
12:49
Trust, transparency, accountability. These are the values that drive Ron Carson and Carson wealth. You're listening to wealth from wisdom with their entire wall of fame advisor, Ron Carson, he's a published author and has been featured in Forbes, investment news, the Wall Street Journal, CNBC, and more. Now back to, well from wisdom with Barron's hall of Fame Advisor Ron Carson, the new year 29 yeah,
Speaker 3:
13:14
scene here is going to bring an unprecedented number of challenges for you and your money. 2018 had more changes than you could ever imagine. Your taxes, oh, that stock market volatility, by the way, the fourth quarter, Aaron, was the worst quarter since 1931 31 1931 almost a hundred years ago. That's crazy to think about. That was the worst quarter of the s and P has had and you're feeling it. And if you're not yet, I have many of you are going to open your statement up here in January and you're going to feel it and you're going to get emotional. You're going to get wondering to know we should make changes and here's how I'm, I tell ya don't, or at least don't do it until you talk with a professional because you gotta make sure you're really got the right plan in place or you are already on the right plan and you're taking the right amount of risk of this is just the ups and downs that come with the stock market or do you have the wrong asset allocation plan diversification.
Speaker 3:
14:07
By the way, I wonder how many people Aaron here in 2018 are going to have positive capital gains. They've got to pay taxes on but their accounts or down in value. Ooh, a lot. I think that's going to happen to a lot of people. Do you wait and see when you start filling out your taxes, you let us know what that looks like. Hey, you're listening to well from wisdom on Paul last join with Erin would today and we're revealing seven smart money moves for the new year that can really help you in 2019 and help protect your money, help you make the most money out of your retirement. And this segment, we, you know, we first started talking about the benefit of having that financial plan in place. Really building that spending plan for yourselves, writing it down, not on the yellow pad, but it's something that's continuous and get updates for you.
Speaker 3:
14:49
And come on this segment, we're gonna talk about this turmoil that on Wall Street and fourth quarter. And is there anything else on the horizon that we should be looking out for? And even, yes, even something bigger than that. Taxes. So Aaron, let's talk about this for a minute. Let me, and we use the risk word a lot around here. We talk about diversification, we talk about asset allocation, but it's something that people continue to ignore and it just, it's amazing to me. They tend to take on Pharma more risks than they know. And what happened in quarter forests that came up and bit him and bit him hard. You know, part of the reason people end up taking more risk is there just don't know that they're doing it. Uh, over time the market was going up. And so different parts of your asset allocation, we're growing more because that part of the market was growing and so they didn't rebalance.
Speaker 3:
15:35
They missed that simple a piece of rebalancing on a quarterly or semiannual basis. And if he didn't do that for nine years, now you're really out of whack. And it did. It's going to bite some people. Yeah. So I'm gonna share these stats. There's, I look at 2018 the s and p and the Dow, they both fell for the first time in three years. Okay. And if you remember back in 2015 there was down, but not down that much. So the Nasdaq actually just snapped a six year winning streak. So if again, you were not diversified, you're like, oh, Nasdaq, Nasdaq, Nasdaq. Well, you just got snapped there. And this is the first time ever, this is weird to think about, right? Ever in the history of the market and the market, meaning the SNP here, s and p 500 declined for the year overall after rising in the first three quarters.
Speaker 3:
16:26
So think about that the first time we'd ever been up through the first three quarters, but then the momentum drove it down so much in Q four to and uh, ended up negative for the year. And that's the first time in history, first time in history that's happened. Oh well what happened was momentum came into play for a lot of it and people got scared. So people started making irrational decisions. I can certainly tell you, um, the number of inquiries here to wealth from wisdom came up. And by the way, if you have questions and we're happy to continue to read these on the air, your questions you have, but info at Carson, wealth.com we're always happy to answer. You always get a response back to us. We're able to help you out there. But one of the big ones, like I just shared with you about the Nasdaq and SMP endow, you know, skipping a losing streak.
Speaker 3:
17:11
You also have to remember the average bear market. And we've now hit bear market territory. We're, you know, really close on the line. Did the average bear market lasts 1.4 years, not 90 days, 1.4 years? So are we in this for all of 2019? I don't know. I'm in the crystal ball. Doesn't get an answer, but what it does tell me is I better be sitting down right now and figuring out do I have the right asset location plan in place. And if I don't, I'm making a mistake. And we're talking to everybody. We're talking if you're single, if you're married, you're widowed, you're divorce, then you and I were talking, I think you got some great statistics just about gender and how gender makes decisions related to asset allocation and diversification. And Fidelity does an annual women's study every year and they just released the one for 2018 about a month ago.
Speaker 3:
18:01
And there are a couple really interesting things in there. Uh, you know, one of them was that, um, women in general are not investing. 56% are not investing at all, which I find very frightening. We know that I'm not investing, even if you're sending in cash, you're not keeping up with inflation. Um, an 80% of them that aren't investing, that's what they're doing. Um, 80% of what they have saved as in cash. And so that to me was just something why we keep doing the show, you know, helping people understand the, the risk, the risk tolerance, the different types of investments that are out there so they can make better decisions for themselves. Florida at the moment of the 80% number and cash. So I will tell you, oh, it's a good thing for them that I guess in 2018 that there were four interest rate hikes because therefore in theorem they should be paid a lot more on there.
Speaker 3:
18:55
Those are two inflation, at least not even not even think about that. Yeah. So now they're still not above inflation because inflation, you know, historically is around 2.5%. So if that's the case and they're earning less than that, you're actually losing money. Yes, I have a high yield savings account and it's just now up to 2.1 so with for inflation jumps last year, it's just now at 2.1 so there's no way you're keeping up with inflation. But I bet most people are in their standard check bank checking and savings accounts. Probably earning 0.35 or less. I would agree. Yeah. So why, no, it's the case because I get to see it all day long. I could even go look at my own financial institution and what they're, you know, I'm gonna call it entry level or standard piece. And if you don't move the chess pieces around, so there's another takeaway for you for 29 19 are you maximizing your money market payment, interest percentage you're getting from your bank?
Speaker 3:
19:55
If you're not, get it done now, write it down if you want help analyzing it. (888) 419-8513 we can help look at that for you. But I mean, I just, it's, it's amazing to me and I just go show, even if you have 5,000, 10,000, whatever the number is, $20,000 $20,000 in, you're being underpaid by 1%. That's $200 that's helps pay for Christmas. And I figured that out over a lifetime over. Yeah. And it just, it keeps compounding by the way. So the problem only gets bigger. So you need to avoid that. That's a huge mistake people make and we want you to make sure you're checking out your money market interest in what you're doing with it. But then also as your asset allocation, uh, I, my fear is for people right now is if your account fell by more than mark than the market, but your account's not going up by more than the market.
Speaker 3:
20:49
When the market's rising, you've got a bad word I call risk return profile. So no one wants to earn less than the market if you're taking full risk. And you certainly don't want to go down more than the market if you're taking less than market risk or the same amount. And I mean, I think it's, you know, I look at it this way is people will always work way harder to avoid losses. Then you're going to, to actually achieve gains because you feel that loss. It's painful. Yeah. And right now if it's painful for you, you need to have somebody look at this. And I was telling this story the other day, Aaron and you and I both love behavioral finance. Um, we talk about this profession. If you don't work with a fiduciary, somebody who has a legal and probably more importantly ethical obligation to always do what's in your best interest.
Speaker 3:
21:42
By the way, I need to get the article, I think it was in, uh, the Wall Street Journal or national article, I'll find it here. But it was actually about a, someone who was in the cable profession, the cable TV profession and hooking it up for people over how many years. And it was about the behavioral elements of dealing with people and how people, they thought we're just going to be mean. And how they answered the door turned out to be super nice and vice versa. How they thought they were going to be super nice and turned up and be mean. And the ones that complained, it always called them back. And so don't let perception and reality confuse you. But I say the same thing. People think that if you own stocks that they're going to go up all the time or that they're the right allocation for your portfolio, but they're not.
Speaker 3:
22:27
I say the same thing be about this because most people assume that you, many of you as listeners have heard this, I should be in an 80 20 portfolio, a 60 40 portfolio of 40 60 what I mean by that is 40% stock, 60% bonds, 60% stocks, 40% bonds. Pretty simple math, right? Yup. But they assume it's a straight line continuum that if I go up and add more stocks, I'm going to get more return. It's not always that way and people have to realize it's not. And so you need a professional to help you look at that, but also do explain it. And here's what I'll tell you. If you go right now and if you gave your statement to three separate financial advisors and ask them to review it, I'm going to guess you're going to get how many different answers every one of them's going to be different.
Speaker 3:
23:17
Three. Well, I don't know if that makes me really sad about the profession or if there's this matters of opinion and people applying the art to this. But I'm going to challenge you. There's science behind this as well. So in this MBA listeners, this is so important. So someone, if you ask someone to look at your portfolio and you give them a statement, they should be able to give you the quantitative metrics. How much can my portfolio go down if I keep it as it is? So if the market went down 20% over the next three months, how much would my portfolio go down in the dollars and the dollars? Yup. And they be able to explain it to you. And if they can't, guess what they don't. I'm to seem, they don't know what they're doing, but they're not giving you your numbers. What they're then doing is they're selling to you.
Speaker 3:
24:05
They're trying to tell you something that is to their benefit, where the reality of it is is you should be able to give someone all of your holdings and information and they should be able to give you a quantitative report that tells them exactly how much risk, how much risk they're taking. And so that way you don't feel like you're being sold. I agree. Yeah. I mean it's just that people don't think that way. They think, oh, I'm going to go sit down with Joe or Jane and they're an advisor and they're going to tell me what's right. Well, the reality is is ask them if they're a fiduciary and then make sure they're giving you the quantitative statistics of the analysis. And if they're not, I'd run out of the office. You don't need to be there. And if you want more help on that and what that looks like or if you want us to give you that free quantitative analysis of your statement. (888) 419-8513 that's (888) 419-8513 and when I think about that, Erin is, no one wants to be swindled. No one wants to be bamboozled or you figured out her favorite word there. You have to be cautious and I just tell this is your 2019 you just had a tough quarter. Do you have any doubt in your mind if you do give us a call? (888) 419-8513
Speaker 2:
25:20
you're listening to welcome wisdom. He seemed good times and bad times and he's got the gray hair to prove it. You're listening to wealth from wisdom with Erin's hall of Fame Advisor, Rod Carson. He's a published author and has been featured in Forbes, investment news, the Wall Street Journal, CNBC, and more. Now back to welfare. Wisdom with Barron's hall of Fame Advisor Ron Carson to the new year's going to bring an unprecedented number of challenges. I'll just
Speaker 3:
25:46
for you and your money. I mean, think about this. You have asset allocation. You have your diversification, you have taxes. By the way, you're going to be filing for the first time ever on the new system. So your 2018 taxes you file here in 2019 and you're gonna have a lot more on your mind and what you're going to be worried about here in 2019 so on today's show, we're talking about seven smart money moves. By the way, I'm Paul West, joined by cohost Aaron would and come up this segment. We're going to keep talking about what's going on, what's happening. And specifically we're gonna talk about taxes and, and its impact to you. But before we do Aaron, I got to get to this. I can't help myself. I just, our job on wealth from wisdom is to educate the consumer public. And I got to read this article from Investment News, Wells Fargo to pay states five $175 million over sales practices.
Speaker 3:
26:43
Ooh, 575 million or I think that's over half a billion if I do that math correct. Just on this fine, let alone all the other fines they have. I mean, so this is a settlement. So settlements are usually for less than value that happens. But this is because of previous, previously improper sales practices relating to opening bogus accounts for clients, charging improper mortgage rate, lock extension fees, and really forcing insurance policies on customers when they don't need them. I mean, when's enough enough, when are the consumers going to get this and be frustrated that financial institutions cannot deceive them. They can't do things that aren't in their best interest and they need to be transparent about all of this. But I mean, if I'm sitting, you know, with firms like this and now they've been fined billions of dollars, I would have been long gone. And if you don't vote, by the way, by you making a move or filing a concern, then you're just allowing these things to happen.
Speaker 3:
27:44
I mean, so that is one. And then the other article I just wanted to share with everyone, and this one too, so, and we've talked on the show, there are what we call Robo advisers. So those people you can use digitally, online, betterment, Wealthfront, Sig fig, just to name a few. So people want to do it on their own. They'll charge you less than working with a human, but you don't get a human. So I always believe that you should work with an advisor that has maximum technology, but you still want meaningful human touch. Somebody that can understand your emotions, your behaviors, those things that go with it. So Wealthfront who's leading Robo advisor according investment news also they who are regular by the sec just got charged for having false disclosures. Oh, so now you who you trusted didn't properly disclose things on their site saying about how they handled the tax situations and their accounts.
Speaker 3:
28:42
And so the SEC is charging them. So I look at, you know, these two big news articles in the last two weeks here. And again, I hope investors don't swipe this notification they got on their phone and ignore it because you need to listen to it. And that's why we run this show is we want consumers to be educated. And I hope you appreciate that you get to hear it from us besides reading the articles or where she had, I'm sure you swipe it or delete it or don't even read the article. People will tend to unfortunately go back to Facebook and Instagram and every other social media device. But be careful is all I can say. If a farmer has been fine once, twice, three times, that just tells you about the culture there. And I don't want my money, my life, and more partly my family's legacy stuck in the hands of people who behave like that.
Speaker 3:
29:30
I'm done with that soapbox here. But next, let's talk about something big that happened at the end of 2017 the tax and jobs act. And guess what? You're going to file your taxes here by April or first. Many of you sooner, hopefully do, or for many of you take extensions and do it later. But the truth is, is you look at your life taxes is actually your biggest expense. Oh yeah. Hands down. So think about how much you pay in taxes every month. And do you pay that much in your mortgage? Nope. Nope. No Way. I hope it's not even close. No. Well you've got to maybe have a different issue at that point. It's completely, and people have to think about ways to do it. So we're going to talk with you here on the show is still about some ways. So one is now that you're filing your taxes for the first time, make sure you understand some key things.
Speaker 3:
30:15
So one, the standard deduction increased significantly. So if you're married filing jointly, your standard deduction is now $24,000 so what does this really mean? So most of you like to itemize. Why did you itemize mortgage interest, charitable contributions, medical expenses, state and local taxes. They are now predicting, listen to this Aaron, that only 5% of people are going to be able to itemize. Ooh, that's even down. Or they were saying that it was 20% we're going to be able to itemize. So that number of shrunk quite a bed. Stowe. Yeah. Well cause they think what's going to happen is this, people are going to flip the years. So they're going to do a lot of charitable and other contributions one year, take a year off and then do it all the next year. So they can take advantage of the itemized approach. I think it was interesting is what they found is, uh, how many people that in 2017 that it really didn't have that much of an impact for them.
Speaker 3:
31:13
So other things to do. And so to be fiscally smart here in 2019 did you know about your health savings account contributions and where are you making the right decisions for that? Also, student loan interest, that's another tax change. They're gonna have to look at it. But I really want to focus on the show. Something you can do right now, increase your retirement plan contribution. So you're 401k that went up. So now you can actually defer $19,000 a year into your 401k. And if you have the financial game plan to do that, Aaron, and I think both would be emphatically hit the table. And even if you don't, we've talked about this before. Pretty soon most individuals are going to get the cost of living increase. You're not used to having that money. So even if you can't Max out your retirement plan, take it from 1% to 2% or 2% or 3% just doing that little bit that you can do and you won't even notice it.
Speaker 3:
32:08
Yeah, I would say I think it's higher than that. I'm going to say your minimum should be to what your employer matches. Do not miss out on free money. That's terrible. Yeah. And how I illustrate this to people is, so imagine you're sitting somewhere and you needed to put money in and let's just say you had to put in $20 for something, but a, it costs more than that. But if somebody else said, hey, I'll match you and I'll put in 22 I'll put in up to $20 if you put in $20 Yup. Every single person would do it in a heartbeat. And you know, it's funny, most of us do this in some way with our kids. That's how we teach our kids about money. If they want to spend something, then you say, you know it, you saved some of that money. And I, I'll match you.
Speaker 3:
32:46
But when we got to be adults and we looked at our retirement plans, a lot of people forgot also, if you do it yourself on your Iras, is now you can actually contribute $6,000 to an IRA. So if you have the ability to do that, do it. And by the way, if you're 50 or older, you can actually, you know, contribute $7,000 contributions. That's what they're called. So take advantage of that. Again, it's just, it's something that gets Wifi in missed by people and it, it, again, it drives me crazy because that's just look in a blind eye, that's just not paying attention to something that should be watched for you and you should be looking at all parents time. The other thing about taxes is you better be ready for when you get older, when you turn 70 and a half because you're going to get the dreaded RMD required minimum distribution.
Speaker 3:
33:34
And if you're not prepping for this now, it is just again, a huge mistake that people make because you could be wiping out thousands and thousands of dollars. And it amazes me, uh, Aaron, when people ask and we get inquiries in the show. So again, if you want to email us a question about RMDs or anything else, info@carsonwealth.com but people think they can get out of it. Like if they think, oh, I don't need to pay that. What happens? Who IRS audits are a terrible thing when they come back to you eventually you always have to pay. Yeah, well the penalty is severe. We're talking 50% plus. Yeah. So I'm sorry. Here, here at home, I'm going to pass you a hundred dollar bill, but you, you didn't want to do it. So I'm actually only going to give you 50. Yeah, no one's going to like that. That's a bad deal.
Speaker 3:
34:21
You're going to shake your head no and be frustrated and upset. So there's all of these things from a tax perspective that you just have to be smarter about. And by the way, it's some point when you look at many listeners, we know this in many people, so it's not just the listeners, but most people think, hey, I'll just type all my information into an online tax software and you're so happy because you're done with it. I can't tell you enough. At some point you're missing something. Yeah. And you're only looking at the current. Again, we have the technology to look at these things down the road and how are they going to impact you and looking only today we'll have a bad effect on the longterm. Absolutely. And I think when you look at doing planning, how much you reduce in your taxes is significant.
Speaker 3:
35:11
And if I think about this is I'd rather have a forward looking strategy. You don't drive out of your rear view mirror. You may look at it to learn and just make sure something doesn't surprise you. If I was driving down the river here, we'd crash. Yeah. And I look at the taxes the same way. So we actually created, you know that's cause we talk about it all the time when we're helping families throughout the country is that you can actually have some tax reduction analysis. This is actually a free complimentary tool we have here at the Carson Group. (888) 419-8513 that's (888) 419-8513 hey, if you're like Erin and me and everyone else and you want to pay the least amount of taxes as you possibly can, give us a call. (888) 419-8513 you're listening to wealth from wisdom.
Speaker 2:
35:54
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. Is it possible you could pick fewer taxes in retirement and keep this money for yourself? You could learn right here and right now. Unwelcome wisdom with Baron. Taller Boom Advisor Ron Carson in this last half of 2018
Speaker 3:
36:18
it's one for the record books and unfortunately not in a good way. Unprecedented stock market volatility, trade wars with China and other countries. We had rising interest rates. And that's just getting started. And as we think about what's happened over the last nine plus years, that's history. It's gone. And if we don't change the way we invest for the future and really manage your money, you could suffer irreversible financial consequences. Hey, I'm Paul West, I'm joined by Aaron would and today's well from wisdom show. We've, it's been a times talking about some great ideas for you for 2019 one you know, having a great game plan in place to looking at your tax situation is actually the first full year of the Trump tax bill three auto invest. Just take care of it. Get it done. Get it out of your brain. You know, I like, I went for my church here and by the way, I went to auto investing instead of writing a weekly check for the envelope.
Speaker 3:
37:13
It's done is taken care of. So hurt by the church by the way. It is absolutely cause that way if you don't show up, they're still pretty vague. Get your checkbook. Yeah. So it's, we're in this final segment, we're going to keep giving you great ideas and on 2019 and what you need to be doing, you know, I've already talked about, um, you know, if it's time to make a change, make a change your new year's resolution. So number one is personal, it's related to your health or weight loss or exercise. Number two is always financial. How to make yourself better or switching your adviser or whatever those things are. We get it done. It's January, make it happen. Commit. Set a deadline for yourself. So let's go into two more things we want to talk about. You know, one is, I'm not going to be a lot of time because you can't control it now, but you just went through your enrollment period.
Speaker 3:
38:03
If you're with a healthcare provider and you got healthcare, so when you're going into 2019, make it your conscious effort to actually review it before it's too late. So if you're a self employed business owner, there's a lot of cool things you can do. Um, I don't, I'm not going to go through all them, all the air, but if you're self employed business owner and you want to talk with me about them, I work with a lot of business owners across the country. Eight eight, eight four one nine 85, 13 just pay attention to healthcare before too late. That's the advice I can give you. Don't let it keep happening and happening again. And then you sit on the weekend having a cocktail complaining about it. Plan early for that. Next I want to talk about preparing for inflation before it's too late. And Erin, there's so many great stats we can share here.
Speaker 3:
38:47
So I'd love to hear from you just what do you think about this? Because we always call it the silent killer and people think it's a boring topic, but it's so true. It's like one of those things that just catches up and get you and it's just too late. It does. And you know, sometimes we see it all the time with, oh, here's what the price of bread used to be and people absolutely fill those things. One of the ones I was looking at recently is the inflation associated with college education. And I looked at myself personally, I have, uh, been out of school for, uh, 16 years. I think that number is right. Uh, but my school personally counting backwards, by the way, my school personally has went up inflation by 4.8%. So we talked about earlier, you know, the average inflation is about two and a half.
Speaker 3:
39:34
Uh, so schools are, are growing much more than that. And one of the charts I had seen not too long ago had school on it and it went through historically the price of a college education and also had on the chart the price of a brand new car. And a, I think this is an average brand new car and the price of an average brand new house. And it was showing them all on a chart. Historically, college education used to track the price of a brand new car. Now, over the last decade, it's closer to the price of a brand new house. And when you think about that visually, uh, you know that that's an issue. And you throw inflation of healthcare on their and longterm care. These are all things that are growing higher than the average inflation. It's like one of those things, like for me, I was talking about this, that I hadn't gone in recently to buy a pound of hamburger and I'm like, wait a minute, $6 for 93% seven pound of hamburger.
Speaker 3:
40:31
That's what it is though. I mean that's, if that's what you want, that's what it's going to cost. So these things, by the way, I don't foresee them all going down either. And so those basic living needs and expenses are going to keep rising. And if you don't plan for that, and a lot of people love to do what I call his straight line math. So are you one of these people? And most people are and they're making a huge mistake. So I'm just going to give you an example here because this just happened again recently. Somebody said to me, Paul, I got $1 million. I'm 60 years old. I've saved it. So if I just take out, what was it, 50,000 that's what they want. I need 50,000 that'll last me 20 years. And I said, no, it won't. Nope. They said, yes, it will do the math.
Speaker 3:
41:15
Paul 50,000 goes into 1,000,020 times. And I said, yeah, you're correct, but have you calculated taxes in there yet? Nope. Nope. Have you accounted for inflation? No. So I saw, oh no, that doesn't matter, Paul. I'll say, okay, well you tell me. Let's go back and let's go look at what a loaf of bread cost in 1990 what did it, what was gasoline at that point in time? What was a pound of beef? I mean, there's like all those things keep adding up and you're not going to be able to purchase as much. So you can't think that way. You have to think about it at minimum, you know, we would say you need to budget for a 2.5% increased in your cost of living expenses. By the way, why did social security half to raise, there's this year because of inflation inflation. But again, social security doesn't go up with true inflation.
Speaker 3:
42:12
It goes up with or their own inflationary number that they're using on a different index. And so when you pull back in again, healthcare, healthcare grows at about six and a half percent. So there are some other ones that are much bigger than the two and a half. That two and a half I agree as an absolute minimum to you is for inflation. And I think if you're not, you know, calculating that are thinking that way. Again, I'm, I'm telling you you're making a mistake, watch out for it because it's one of them that I just, I just don't want people to struggle with. And it's 20, 19. Aaron, you know, and we talk about New Year's resolutions and we all talk about, we have our personal, we have our family goals, but finding, you know, health is one. Um, but I wouldn't say financially this is, even though it's ranked number two, I want to put in the categories we've talked about today.
Speaker 3:
43:02
It's the one that doesn't get completed. And again, was that stat I shared with everybody earlier. Only 8% of New Year's resolutions actually are carried out through completion. That's less than one in 10 so most people build a financial resolution but don't actually complete it. And if you're one of those people is now the year to actually make that change and to get that to happen. Eight eight eight four one nine 85, 13 if you want to talk to someone. And by the way Erin, I think we have to keep educating, but I shared the story about, you know, wells Fargo and that gigantic fine they had again at the end of 2007, excuse me, 18 people don't understand what a fiduciary is. A fiduciary is a firm or advisor who has a legal obligation to do what is in your best interest. Yep. So if you don't work with phone, then again, be careful.
Speaker 3:
43:55
Yup. And you know, I agree. People don't understand it. My own husband doesn't understand it. He just asked me again, what is the difference between Fendra uh, and this sec. And so I was explaining to him they're different regulatory bodies and how someone is licensed and people can either have a license to sell and make commissions or they're selling under a fiduciary where they have ethical responsibilities. Yeah, and who would you rather work with? It's pretty simple, right? It's definitely simple on my position because it's the side we fall under. It is, but I think it's a little bit, people will learn in my analogy I would give them is a lot like blockbuster at end of the day. It was simple to sell you a video from a video store, but they found out it was a lot easier to actually have you stream it.
Speaker 3:
44:39
It was easier for you and has a better client experience. And if you want a better client experience, work with a fiduciary, they're going to help give you the best opinion. If you want that from us, we will give you actually a complimentary analysis. So if you want us to review your statement or if you want us to review your taxes, just don't let it sit. Another year, (888) 419-8513 that's (888) 419-8513 hey, I'm Paul West. I was joined by Aaron would wishing everybody a wonderful and successful 2019 get it done. Get those New Year's resolutions, make them happen. Be One of those 8% that actually completes them. Hey, have a great year.
Speaker 2:
45:18
Risks, social security, income taxes, estate planning. Every week we talk about how to make your money go further in retirement. Right here on weld from wisdom with Barron's hall of Fame Advisor, Ron Carson.
Speaker 1:
45:32
Okay. And here's the legal Mumbo jumbo. The opinions voiced and wealth and 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 assures success or protects from loss. Past performance is no guarantee of future results. Advisory services offered through CW m L L C an SEC registered investment advisor.
Speaker 3:
46:06
Yeah.