Wealth from Wisdom

Keep Your Money In Your Pocket

November 10, 2018
Wealth from Wisdom
Keep Your Money In Your Pocket
Chapters
Wealth from Wisdom
Keep Your Money In Your Pocket
Nov 10, 2018
Carson Wealth
Show Notes Transcript

There is a fine line between daily monitoring your portfolio, and completely ignoring it. On this episode of Wealth From Wisdom, Paul and Jim discuss short term redemption fees, how to monitor your portfolio and how to keep your money in your pocket.

Speaker 1:
0:00
Okay, and here's the legal Mumbo jumbo. The opinions voiced and wealth and wisdom with Ron Carson or for general information only and are not intended to provide specific advice or recommendations for any individual to determine what is appropriate for you. Consult a qualified professional. All indices are unmanaged. I may not be invested into directly. Investing involves risk including possible loss of principle. No strategy assures success or protects from loss. Past performance is no guarantee of future results. Advisory Services offered through Cwm LLC, an sec registered investment advisor,
Speaker 2:
0:31
Doug market hit another old time. Records as much as $10 billion in social security benefits go unclaimed every single year. Federal Reserve announced that they will raise interest rates by 250 the skyrocketing cost of healthcare and retirement could now run 350,000 planning for retirement today is now a whole new ball game. It's loaded with challenges, obstacles, the 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 straightforward and objective advice and how you could make your money go further in retirement. And now here's your host, Ron Carson. He's the tale of two couples. They've each saved a half million dollars inside their 401k, their ages, their assets, their expenses, and then retirement dates are nearly identical. However, one couple, two specific steps to make the most out of this tax deferred account. And guess what? Hey, they're rewarded handsomely and they're living it up in retirement, having fun, traveling, going to the beach, have a nice glasses, wine going out to dinner.
Speaker 2:
1:35
The other couple, think about this. They didn't understand what they should do with their money. They missed out on opportunities to maximize their investments. The needlessly lost a significant portion of their money to taxes, penalties and fees, and now they're 401k is a small fraction of what they thought it was going to be. Hey, welcome to wealth and wisdom on Paul West. And today we're going to talk about the specific strategies that can help you make the most out of every dollar you saved inside your retirement plan. Hey, my cohost today is Jim Caldwell. Jim, welcome to the show. Thanks Paul. Yeah, I'm glad to have you on the show. I won't bring up proud of your team. Last week. Took care of my Nebraska team. Your Ohio state team was probably a bigger battle than you expected, but it was fun for everyone to watch that game.
Speaker 2:
2:18
It was a good football game. It's nice to see a Nebraska played well and I think they have great leadership with Scott Scott Frost. And you could just tell by the way they played for 60 minutes. Yeah. Um, I don't always like I'm a, I guess moral victories or no such thing as moral. No. Uh, but it, it, it was nice. Uh, I would like to us to improve the kicking game. That was quite something to see. Yeah, that was, that was a circus in itself. But we'll probably touch on that later though. We might have to. So let's spend some time, Jim today talking about retirement plans. It's so important for many of you getting to retirement and then post and what you do with them and really besides looking at your balance on your statement every month, and I'm actually, I'm thinking about this, how many people you think even look at their statement every month?
Speaker 2:
3:02
They probably don't. I know like when you're required, they'll send them out quarterly. Do you people probably look at them then, but I'd love to see statistics on how many times people are actually logging in in the quarter and the month. For those of you listening today, how many are you? I'm guessing not that many, and I'm not actually recommending you should because daily monitoring is not healthy, but ignoring isn't healthy either. We're going to talk about what the right frequency is. It really, how do you maximize those investments inside your 401k? What are you doing to minimize taxes, penalties, fees. There's some hidden things in there called short term redemption fees. You may not realize. We'll talk about that. And then ultimately, what is your strategy to withdraw this money in your retirement? Because we talk about these five things is we're really going to help you save thousands of dollars in taxes in retirement to Jim, I'd like to talk about a surprising loophole even though we're through the midterm elections here on the Trump tax plan, that could actually be a windfall for you.
Speaker 2:
4:06
And lastly, strategies we have to navigate those fun required minimum distributions. And Jimmy knows, I was thinking about today's show. A lot of people put their 401k on cruise control, right? And the set it and forget it. However, when our cruise control, when you're driving your car, did you take a nap? No. No. Well, if you do, it's not good an accident and a bad accent. It's going to happen. But you can go miles and miles on cruise control and not have to make an adjustment, right? You get in the right lane or the left lane, you're driving down. I eat here in Nebraska and you don't have to worry about it, but there are other times you run it through traffic. So even though your cruise control was on, your keep hitting in the start and stop button and your retirement plan behaves a little bit similarly.
Speaker 2:
4:55
There are times, especially when you first set it up, you're getting up to speed. You've got the cruise control going. However, when market adjustments happened and your portfolio gets disproportionate to how you initially set it up, you have choices to make. Do you leave it alone? Do you rebalance? And this is just like adjusting the cruise control. You got to figure out what the right combination is for you without making any mistakes. Plus a lot of people. Paul, we see you talked about statements coming out. How often are you looking at it? You know, now it's basically you go online and log in so you don't get something in the mail that reminds you, hey, you might want to take a look at this. Similar to social security now were you, would you log in to social security? You got Gov. People become complacent and they really, they take their eye off the ball for a longer period of time than they should.
Speaker 2:
5:42
They absolutely do. So let's talk about strategy number one here, reducing your taxes. So if you think about the contribution part of putting money in your accounts, easy, right? It comes out of your paycheck, you don't see it. Um, and now I think a lot of employers, and by the way we do here, the Carson group, it's not like I get a paycheck on my desk every two weeks. It's all put in an electronic portal and it's up to me to go log in and look at that. And so it really, you don't always, you certainly notice it in your net effect that's ACH into your bank account, but it really seems like you don't know what's going on with it. And so you got to pay attention. And then really when you have to pay attention to the most is when the money comes out.
Speaker 2:
6:22
And if you think you hate paying taxes right now, just wait until you have to start actually paying taxes on all of this hard money you've earned over your life. So there's this phrase, Jim, we call the RMD stands for a required minimum distribution. And this is the point, you know when you turn 70 and a half, you are now forced to take your money out of your investments and withdraw money from your 401k whether you want to or not and you're never going to get this back again. So if you really think about this, this is one of the most important things you have to do in your retirement plan is figuring out how to sequence when to take this out to minimize the taxes. You may have.
Speaker 3:
7:00
Sure. A a real live story where we just had a situation last week where a gentleman was getting closer to retiring. He's 64 years old, he's got a lot of moving parts which takes a lot of tax planning and his thought process and we helped him concur with this is hey, I've got all this money in qualified accounts, IRA money going to have to take RMDs at 70 and a half. What can I do between 64 and 70 to do a couple things? Paul pushback. So security, which we're going to do for him. And number two in some cases, take that money out as distributions now live off of that money and not have this huge RMD and so security added together, which gives you a bigger tax problem in your seventies and eighties
Speaker 2:
7:41
yeah, and I mean, and what a lot of people heard, Jim, I heard you say this, oh that sounds smart, but I'll worry about it later.
Speaker 3:
7:48
Well, but here's the thing you can, you've got to start in your fifties sixties planning for that and you need a trusted professional. You just can't go to a website and figure it out. Yeah.
Speaker 2:
7:56
Yeah. I mean you could have a gate, great game plan in the works to half path. Like you just score, you're up seven nothing on Ohio state and you're going to trick them with an onside kick. What happened?
Speaker 3:
8:08
That didn't turn out real well?
Speaker 2:
8:10
No. Well your game plan went awry. Something happened and so you gotta make an adjustment and you had to get to change your whole thing. And I think about, you know, what happened in that situation and the poor guy, you know, embarrassed, you know, the social media is just, you know, punished him. Um, but that's life today is imagine though, if he didn't have a set of coaches and an advisor, you know, being Scott Frost and the special team coach and everyone else to pick him back up. I mean he could have been, you know, moral, you know, demoralized. He, you know, could have, you know, not continued on in the game, but yet he had to because he had people picking them up. I imagine this, and Jim, I'm laughing cause you're actually shared this story with me recently was like him kicking off was almost like a do it yourself investor is you can be great at doing kickoffs all the time, but when you make an adjustment in your plan and you kick off and you have a terrible decision, you pick a terrible stock or you got into apple at the wrong time of the other day when it had his big downturn and it hurts bad.
Speaker 2:
9:14
But it's what you do from there. And I call it the compounding effect. You don't want to keep compounding the problems in taxes is probably one of the biggest ways that people compound their problems when it comes to their overall retirement plan. And they need the tax planning. I mean, you can't, you can't do everything yourself. I mean, yeah, you might pick a couple of good stocks here and there. You might allocate them, you might sell at the right time by at the right time, but in the long and the short of it is you, you need some guidance and help there. Can't do it all yourself. It's just like the football game last week. And I mean, as both teams needed help, Ohio state needed Nebraska to make some mistakes and a few passes get dropped and equally Nebraska needed, um, you know, Ohio state's quarterback to not have his last game of the year fumbles here and there didn't help. You know, I mean that, that's part of the game though. Yeah. But each team had a coach and had an ability for them to figure out what to do next rather than aimlessly. And here's, here's why. I think is so interesting and you may be like, what in the world are you talking about football and investing in why there's some similarity comparison. Here's why. When you make a bad decision, how do you feel? Bad, bad case got big. Let's just use the word bad as much as possible.
Speaker 2:
10:31
It's bad. You feel bad, you feel sick to your stomach, you feel anxious, you feel angry. You feel all of those things. What happens when you're in those moods? You don't make the right decisions. You get short with people you've ever talked to your spouse when you're in a bad mood. I tried to avoid that, but I'll do our producer, Andrew, you're shaking his head. We all try to avoid those. So now imagine, you know you're on the football field and you gotta go make all, you just made a bad play on the field and now you've got to go make the next decision for your entire team. What's driving you? The fear, the anger, the frustration, your bad mood. Well, you're probably going to compound that or accelerate another would decision because you're mad or angry or you're going to throw an all out blitz in because you're so mad.
Speaker 2:
11:19
You just missed an interception when that's actually, you should be in prevent defense and you get away from your game plan. You know, you panic, you throw your arms up. I will say this, I admire Scott Frost for how he handled that situation. He didn't, he didn't overreact. His body language was very positive. I can't say the same thing for the other sideline, which obviously I'm an Ohio state guy, but I didn't like some of the negativity coming off of that sideline in certain situations to that game that has a total effect on your thought process. Just like if we have a 5% pullback in the market and all of a sudden people to panic and sour make decisions at that are rash. Yeah. Well and I think, you know, like a well diversified football team, Jim, you got to have great Lyman. You've got to have great, you know, special team players.
Speaker 2:
12:05
You gotta have great quarterback and running back. But it's how they all work together as a team. And I've used that analogy before, but that it's no really no different than you got to have a great retirement plan for your taxes, how your IRA is going to be taxed, how's your four Hawaiian going to be taxed? How's your social security benefits going to be taxed? And this could actually create a field day for the government. So Jim, one of the things we offer to people is this tax reduction analysis. So if you want to learn how you personally could save thousands of dollars in your IRA, 401k, et Cetera, give us a call. (888) 419-8513 if you're the type of person who wants to pay way less in taxes, give us a call. (888) 419-8513 you're listening
Speaker 4:
12:47
so well from wisdom, trust, transparency, accountability. These are the values that drive Ron Carson and Carson. Well, you're listening to wealth from wisdom with bear and tall. If 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 wealth from wisdom with Barron's hall of Fame Advisor, Ron Carson, or then 52 million Americans have
Speaker 2:
13:34
saved over 4 trillion trillion in their 401k accounts. And guess what? Uncle Sam cannot wait to get their hands on this money. I mean it. Guess what? They haven't been taxed. So some point that's going to happen, but imagine this, you've saved your money and you're going to get taxed later, but there's ways to minimize how that happens. Hey, welcome back to wealth wisdom. I'm Paul West, joined by my cohost Jim Caldwell and today we're talking about five critical strategies that could help you make the most out of your Ira. Your four zero one k your four o three B. You know, we can throw out a lot of letters and numbers at you. I did was calling you your retirement accounts. So coming up in this segment, we're going to talk about the pros and cons of converting your traditional Ira and four on k into either a Roth Ira or Roth 401k and how it could potentially help save you thousands of dollars in taxes in retirement.
Speaker 2:
14:29
Uh, Jim, before we get into details on that, I'm going to go rogue here for a second because I think part of wealth from wisdom besides just sharing advice that can help everyone out there. Like today's show about taxes, we talk about investments all the time. We talk about building the plan, but I think one of the things we're good at is educating the public of what happens. Because a financial advisor is not a financial advisor. A broker is certainly not an advisor and not every advisor is a fiduciary. And so we have to educate people on what happens. And I'll never forget this. And by the way, think about this. If those of you who are listening, how do you describe your financial adviser? Do you say I work with John, I work with Jane, or do you say with, Oh, I work with UBS and my person is, I work with Meryl and my person is, I work with Carson and my person is, I think that says a lot.
Speaker 2:
15:29
Do you work with a person or do you work with a firm? And you know, and when I think about firms, it makes me think about all those firms on Wall Street gym and we're just reading another article here. Again, you know, we've shared this all the time on wealth from wisdom. So big article out over the weekend that Merrill Lynch is going to cut their broker pay. And by that I love the article says broker pay. Do you haven't heard us on the show? Huge difference between a broker and an advisor. And really more importantly, a broker and a fiduciary. A broker has no fiduciary duty to their client. That's a problem. If I'm, if I have somebody managing my wealth and giving me advice, I don't want them to have any conflicts of opinion on what's best for them versus West best for me, we should be sitting on the same side of the table at all times, not sitting across the conference table each other, and I'm trying to make as much money off of you.
Speaker 2:
16:20
That doesn't, that doesn't feel good. There's a reason why there's that phrase, Jim, right? Win, win, win, win, win, win is when all parties win. However, a brokers in a win lose because do they want to win more? Do they want him to let their client when more, and you know what happened? So here it goes again. Merrill Lynch announces that they're going to cut their brokers pay, so they're going to take another potentially 3% they're going to raise in order to get more pay. The number of households that they bring in, and Jim, here's all I think about when I read that story. If they're taking something away from a Merrill person who's working with clients throughout the country, what does that do? Somebody's going to get paid. Somebody's got to make up the difference. Yeah, that's you. If you're, if you're with them, that's you, the listener right now, if they're going to make less, imagine right now you and your own job in your retirement plan, whether you worked for a school, your own, your own business, and all of a sudden now you're going to make less money.
Speaker 2:
17:21
How does that make you feel? Not very happy. Yeah, let's use bad at that worked. Right, and that makes you feel good. Yet here are these people are and they have a chance to make money and they're going to go try to make money off of other people. And by the way, who are their clients? So I just at the end of the day of being, we talked about this during the break, that there's only a finite amount of money out there in terms of how people are willing to pay the fees. And here again, big bad Wall Street and big bad corporate America is saying, Hey, we're going to take more from you with the thought process of well, if you're making less, you're going to go try to make more to make up to where you were before. So you're going to go try to gather more assets and make more money and sell more commissions and be the broker that came out with it.
Speaker 2:
18:12
And I just want to make sure the public understands when these things happen that is to their detriment actually. And it's not a win win scenario. So Jim, we don't have to comment any further that. Let's just really move into strategy number two. Sorry for the soapbox, but I just want to be a great communicator here on wealth from wisdom. That is why we're independent. That's why are a fiduciary. And if you can't hear my voice, why we're so darn passionate about it, I'd use a lot of other words but I don't want to be find with that. So let's talk about tax strategy number two with your retirement account. That is using a Roth conversion. So as we know, a four o one k allows tax free contributions. But when you withdraw your money, it's simple. You got to pay tax and when you're 70 and a half you are forced to pay tax.
Speaker 2:
18:59
But a Roth, you know doesn't allow these tax free Roth four o one k or Roth Ira doesn't allow tax free contributions. But it does allow zero tax when you withdraw money in retirement. I know I said the word zero there and you're thinking what I could pay zero so then you don't have to deal with an RMD. This means tax free growth and there's some rules that go around with a gym. But did you say this is probably one of the most underutilized opportunities out there in the marketplace today? I, I actually see it all the time. I mean, people, people aren't aware of of the pluses and the minuses of it because we talk about the pluses of it and there are many, and people jump on that bandwagon. But also you have to look at it from a standpoint of it might not always be a good move.
Speaker 2:
19:41
You've got to have a trusted professional run the numbers. And what I saying is let's say you have this pile of, of IRA money and you say, well, I'm going to spend it all. I'm not leaving it. I'm going to go to my grave where ending my last check. Right. Well then if you do a conversion to a Roth and you accelerate that tax liability, so it doesn't always work for everybody. You've got to get some help in that area. Yeah, no, it absolutely is. Um, in any way. I mean, and I think one of the things, if you actually know this or not, but the Roth 401k is now 12 years old. Well, I know it seems weird, doesn't it? It's almost a teenager. So it was established in 2006. Um, but these are plants that off participants, this, you know, uh, another tax advantage options.
Speaker 2:
20:29
You do have to make your contribution with after tax dollars, but then you're with withdrawals. Withdrawals are fully tax free as long as certain conditions are met. And so this type of plan, Jim, is really ideal for people who think that they may be in an even higher tax bracket in retirement than they are now. Now, uh, a pro to this is, you know, as we know, Roth Iras have an income limit, you know, and that income limit, you know, is a hundred. We know it was 2016 was 133,000 for a single 194,000 for married. So it's already a pretty high threshold. So while I think Roth four, when ks can be a great option for you, just realize you better understand what your taxes look like down the road. Um, because it has a material impact on what you think.
Speaker 3:
21:19
And the other thought there with regards to taxes is you need to be able to convert that before December 31 of a given tax year. A lot of people don't know that today's what? It's the first week of November. So shoot, you better get moving if, if you even want to have that discussion with an advisor or if you're looking for maybe a second opinion as to what you're thinking of doing this year. Tough part is you don't always know what your tax liability is going to be in a given year and there's no more mulligans any war. You're not allowed to go back and say, well, I want to undo that with the new Trump tax law.
Speaker 2:
21:53
Yeah, not going to happen. I mean, so before this year, right, we could reverse a Roth conversion, however that is gone. So it's now I'm going to tell you this, you can't go online. So many of you say, here's what you're going to do. You're going to go onto your iPad or your phone and you're going to Google this phrase, Roth conversion or Roth conversion calculator and you're going to do what I call is a self fulfilling prophecy. You're going to jigger the numbers to figure out the best scenario for you, but by just by playing with the numbers but only looking at a static point time. A Roth conversion isn't just, hey, what do I have today and what I'll have in future tax rates? Because what we see in retirement is those tax rates change and you have to figure out how to maneuver them.
Speaker 2:
22:42
It just is. You have to figure out how do you maneuver on third and one versus third and 15 there's a, there's a big way to approach it, but in a game you're going to have third ones and you're going to have 13 and fifteens and you have to figure out how to plan, prepare, and then ultimately execute and live with the decisions you make. I mean, let's look at 2018 here, Jim, how many of you had predicted that we had a low mark in February and then in October, how many of you would have predicted what happened in October through the market?
Speaker 3:
23:14
Yeah, I mean, nobody has that crystal ball and, and, and it has a great effect on what your tax strategies and tax planning would be. And I mean, Paul, I read something the other day that October this year was the lowest. What? October, since 2011 October seems to be that, you know, in football, I mean as the worst October since 2011 and you know, they talk about, you know, in football the games that are remembered are played in November. Right. So everybody thinks of October when it comes to your portfolio, it seems like every, so we've
Speaker 2:
23:46
just gone through a tough, tough time. Yeah. But I mean at the end of the day, I will tell you for those people that had a plan in place, Jim, they weren't calling, they weren't worried, they weren't scared if they had the right investment plan in place. And I know we talk about this, but when you get near retirement you need investment strategies that have downside protection. And I'm not going to go through those on the show today is, but downside protection or what we like to call area play small capital prevent you from having to handle and stomach the troughs that occur in the market or the twisted ankles or the bear market or the bad, you know, um, onside kick, whatever those things are happen. These are ways to avoid them. When you put downside protection, your portfolio, cause the end of the day is if you've got $1 million or $2 million in your portfolio, you just, you can't survive with it dropping 50%.
Speaker 2:
24:44
I don't mean you can't be living on this earth. I just mean mentally it, it'd be very frustrating and annoying to you because that may prolong your retirement, which becomes a big deal. And that's why you have to look at converting your IRA to a Roth potentially or looking at other strategies that are available in the tax plan. And if you haven't done this, oh, I'll tell you, do have free customized tax reduction analysis. We can do this for you. (888) 419-8513 hey, there's no cost to this. Even better, right? People love the f word a free, so you've got nothing to lose. (888) 419-8513 that's (888) 419-8513 he coming up next. Jim and I are going to continue talking about different strategies and manage managing retirement plan and also we're going to share some current thoughts on what's going on the market. You're listening to the wealth from wisdom radio network.
Speaker 4:
25:40
He seemed good times and bad times and he's got the gray hair to prove it. You're listening to wealth from wisdom. Would there and tell the same 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 wealth. From wisdom with Barron's hall of Fame Advisor, Ron Carson. What are you doing to maximize the investments inside your 401k?
Speaker 2:
26:23
How are you going to minimize your taxes, your penalties and or your fees, and what does that strategy to withdraw your money in retirement that's going to work best for you. Welcome back. This is wealth of wisdom. I'm Paul West Mangi Partner Carson joined by wealth advisor, Jim Caldwell. Hey Jim Waterman. Fun today talking about a lot of different things. Talk a little football and we're also trying to figure out how do we help give advice to people. I mean I think this is part of the well from wisdom is in today there's five critical strategies that could help you make the most out of your Ira, your four o one k or your really your other retirement accounts. So in this segment, let's talk about something that really should be a no brainer. Yeah, I no brainer for you. And that is how do you take advantage of catch up contributions?
Speaker 2:
27:09
So if you're listening and you're going to be 50 years old or you are 50 or you have a friend or family or a parent or child, do you know you can actually supercharged? Yeah. I love to use that phrase, Jim, you could supercharge rev up the engine, right to do a catch up contribution. This could actually be, you know, we get asked all the time, right? What's the silver bullet for success? I think any business that's such a, you know, general phrase used by people, but a silver bullet could also lower your taxes. And that is, did you know that you can begin at age 50 making additional contributions to your retirement plan accounts? So say for example, here in 2018 you can add another $6,000 to your 401k that gets you up to $24,500. And by the way, that extra 600,000, no federal income tax paid.
Speaker 2:
28:01
Right? I like that. Let's go back to it. Is that a wind when Jim? Uh, it looks good to me so far. Yeah, we're doing all right there so far. So let's think about this. I'm a real numbers type of person, so I got out my, a super fancy, I'm not sure if fancy is right, the term HP 10 B to calculator as old as me. Uh, no, actually I used it about a new one so that you know, I passed the CFP examination earlier this year, certified financial planner and I pulled out a calculator and yeah, actually use calculators. And it's powerful because here's why I want to show you. So if you are able, and I understand not everybody's able, but if you are, and you can figure out a way, and this is why it's a silver bullet. So if you do that extra 6,000 a year for the next 20 years, so you're 50 years old, you're just turned 50 that's 6,000 at 6% I'm not going to go crazy here and say 10% I'm not going to say 2% let's choose 6% that's now worth $220,713 that's a big number.
Speaker 2:
29:07
But what if you don't need that money at age 70 gym and you've got some other accounts and you already have money to retire plan. So let's say you can hold that another 10 years. All of a sudden now those continued contributions get you up to over 400,000, not that much, you know, pain of 6,000 extra a year. That's 500 a month. Do you have somewhere in your budget you could cut out 500 a month? I think most people can. Yeah. In whatever it is that going out to eat the latte vodka, you name a, your favorite advice, pizza, all right, whatever you want it to be. Um, and you can just supercharge it. I mean, I think that's the best way is like, I'm not a gigantic car guy, but it's like putting the additional turbo and all the things onto it that can make a big difference for you.
Speaker 2:
29:57
But here's what's interesting as well. So I know we have a lot of listeners that also own their own small business and it can be any size. So here's what's fascinate people, you know, you have your business because you have a passion for it, right? I mean, most people start a business because they love an idea. They get excited about it, whether it's owning their own floral shop or you know, running a financial services business or senior care, whatever those things are. But you as a small business owner even have other potential ways to help supercharge your retirement plan. I mean, you can actually put away a whopping $61,000 into a solo 401k 61 gym. I mean, how many small business owners know that? Minimal? Yeah, they may not want to or maybe they can't afford to. That's okay. But still they can do that.
Speaker 2:
30:50
And by the way, and their 401k four o three B and four 57 plans, they could still get that extra ketchup contribution ability of $6,000. This is, these are boosters. I mean these are like, uh, we don't have as many here in Omaha, but I think we're increasing, um, juice places like Jamba juices and place like that. They have what, what are those called in their Boosie protein, booze. Um, caffeine boost, uh, health boost. These are all just boost for your financial life. So Jim Lands, we talk about, I would like to say you know, the market for a second. So what's boosting the market or what's dragging the market? Um, you know, it was interesting. Uh, global stocks had been hurt for a while. They seem to be making a little bit of a comeback. I mean making a nice approach there. Um, but how many people out there thinking about, and you're talking with Jim, how many people are still really looking hard at the housing market? You see a lot of people still trying to buy houses.
Speaker 3:
31:47
I've, I've heard more of those conversations in the last 30 maybe 90 days, Paul, but it's really, we talked a little bit about it this morning in our meeting about how interest rates are creeping over 5% now. And how's that gonna Affect People's urgency or the ability to want to be able to finance a home. So, but I've, I've had a few people bring that up and meetings. Yes.
Speaker 2:
32:07
Yeah. I think a lot of people are talking about homes, but I agree with you. I mean, I think this 5% interest rate is going to be a mental barrier or a mental bias that many people are okay. I mean, let's think about those people who have never bought a home that all of a sudden they are going to be like, well shoot, I've never known it to be over 5%. Well I'm just going to wait then. Or they're going to be so concerned of the, you know, the famous phrase, Fomo. You know what Fomo means? No, sorry. You're gonna love that. I trick you with these types of things. This isn't a tricky one, but this may be, um, I have teenagers so I can get a lot of these quick phrases. Fomo is fear of missing out. You got it, Jack. You use that all the time.
Speaker 2:
32:49
You're taxed with that later and you're going to be Super Hip Jack. I have a digital text and you do too. Um, so, but with Fomo is actually take Fomo is going to happen with the housing market. So I think we're in a keep this spike going for a little period of time because people are going to be so concerned of missing out before interest rates potentially get to 6% plus that more people are gonna jump in. But we're gonna hit this point. I don't want to call it a cliff. That's not a fair analogy to use, but I think we're going to Oregon, we're going to hit a traffic jam where enough people got in that all of a sudden no one else is going to get in because interest rates are going to seem too high. Housing prices are going to seem too high and eventually people are just going to stop.
Speaker 2:
33:32
Um, but in the short run, when I think about many people who are going into retirement, Jim wants a, one of our favorite questions to ask people. Well, do you want a second home? Right? Sorry, what else were you going to say? We ask them all kinds of questions, but yeah, I, have you thought about downsizing? If so, what does that look like? Or do you want that cabin on the lake somewhere? How much do you want to travel? So we ask, we ask a lot of those questions that, that costs money. Yeah. Well I mean, hey, we're here in the Midwest, right? It's November. And what tends to happen, the winter coat gets pulled out. Gloves and the hat, I know you got Florida blood in new gym. So that probably happened in Nevada. I don't know. I've, I woke up a couple mornings where I left the windows open and that Florida blood is nowhere to be found.
Speaker 2:
34:15
No, it's changed that we, we get cold. So we think, oh man, I really like a place in Florida or Texas or Arizona or wherever it may be. Hey, by the way, be careful of the tax status in the state you choose California. Um, but we started to think about it this time a year especially. So here's a question I like to ask people on the financial planning process. And again, if your advisor doesn't ask you these types of things, are you with the right advisor? Is where you're living today? Is that your forever house? Is that your forever place? And the reason why is it the end of the day, I'm not concerned if it is or isn't. I am concerned on what your thoughts are because what does this tell me? This tells me what you think about a real estate, but more importantly, it tells me what your life's ambitions and goals are.
Speaker 2:
35:08
And it can be, you can be young like our producer Andrew, and it could be, hey, I own my first house because I wanted to start her house. I wanted to own something and I wanted equity. But eventually, you know, life's going to change. I may have children, I may go into a bigger house, I may need those types of things. And then, um, I may have the ability because the financial waste settled, I may be able to afford a bigger house if I so choose. Or I may only view the geographic location I'm in. I may have moved to Omaha for a job to work for somewhere for five years. So this isn't a forever house for me, but it's an investment for me. And I think that's so important. You know, as you look at your situation, but also remember there's tax. Everyone thinks that selling the house is tax free.
Speaker 2:
35:52
It's not. That is, it's not. There are many ways it can be, but that is not um, to the no actually made the norm. That's not the mandate. It doesn't always be that way. And so let's talk then about strategy number four here today. And that is, you know, how do you do the best things and be careful and run your analysis the best way you can. And if you want our help there, give us a call. (888) 419-8513. What you learned from these analysis is how do you make the most out of every dollar in your retirement? (888) 419-8513 (888) 419-8513 you're listening to well from wisdom. How could you make your money go further in retirement? Learn how next. Unwelcome wisdom with Barron's hall of Fame Advisor Ron Carson.
Speaker 4:
37:00
Is it possible you could pick fewer taxes in retirement and keep this money for yourself? You could learn right here and right now on wealth and wisdom with bear and hall of Fame Advisor, Ron Carson. When's the last
Speaker 2:
37:13
I am? You actually reviewed and updated the investments inside your 401k. You know what, if you're like most people, these investments you've been ignoring and that will be and can be a recipe for a disaster. Welcome back to welfare wisdom. I'm Paul West, started with my cohost Jim Caldwell and we have a lot of fun. Do they talk in about five critical strategies that can help you make the most out of Your Ira, your four zero oneK or other retirement accounts? And so let's really get into number five here. Jim, let's just jump into it. Uh, you know, we've been having fun talking about these different things is how do you update your investments in your asset allocation? So I think this is really the most overlooked thing that happens is because this isn't a onetime thing. If you, if you know, set up a 401k, you're 23 or you change jobs and 52 is most people think once you set it up, you don't need to do anything else with it.
Speaker 2:
38:07
But really they, this is a hugely dangerous game. That's basically like the same, same w we said with football, you create one game plan and if something goes awry, you don't care. And you, there's a little bit of like, there's an analogy, what is it called? A bull in a China shop. There we go. Yeah, it doesn't work. It's okay to be a ball, but that's not always the best way to approach it. But asset allocation and really diversification remains to be one of the most critical pillars of any financial game plan. And if you're not properly diversified, and I bet you will see this now in your account statements between October 1st and October 31st so this year is that downturns do happen and they can create fear and concern. So Jim, do you know one of the things I think we've talked about the show. So, I mean the average bull markets last nine years and we're now past that. But how long approximately do you think the average bear market occurs? One and a half years. Yeah, right about at 1.4 years. So right on. And so you have to have a diversified portfolio and if you're, if you are logging in right now, huge tip, you know, sirens going off. If you are logging in to your 401k and picking the investments that have done best and the last quarter and the last year, major mistake, personal foul against you
Speaker 3:
39:31
did. I'll tell you even better. So if you, if you're one of those that doesn't take the time to reallocate your 401k to me it's almost like playing man coverage all the time. You're going to get burned at some point. Somebody's going to get picked, somebody's going to slip and fall. Somebody is going to make a better move. To me, asset allocation is like playing zone coverage. You're going to keep everything in front of you. You're going to prevent the big play and you're going to be able to keep your eye on the quarterback.
Speaker 2:
39:57
Yeah, it is. You know what I mean? So here are events that you should use to reevaluate your diversification one your age. So as you get older, your appetite for risk changes. You probably need to lower the risk you're taking to interest rates, have created challenged investments. We'll talk about that three, a major shift in the stock market, both up or down. We're on a 10 year run right now. So if we're on a 10 year run, you probably have more allocated to longterm growth. Uh, you know, large cap growth, the s and p 500 index, I'm sure you know even this, some specific stocks, but you're overbalance, you're over allocating those areas. Now is the time you need to look at it and what you do. So actually speaking of looking at it, I just looked at October and what were the top and worst performing sectors?
Speaker 2:
40:47
So the worst performing sector was small growth, followed by actually investments in China and then the foreign small and mid cap and then made cap. And then Pacific Asia, you know, without Japan. So what were the top performing sectors? Short term government. Yeah. How much of that make 0.04% for the month. Ultra short bond made point 11 commodities with precious metals made 1.87 if you know what it did really, really well in October, you may not be aware of Latin America. I know we talked about this earlier, they gym, even Brazil specifically did extremely well. So many of you probably had an international allocation, but you saw it wasn't performing well earlier this year and I hope you didn't make an adjustment because you were monitoring pass performance and many of you go look and you go talk to a financial advisor and you go say, Hey, go give me the best performing fund you have and let me review its performance.
Speaker 2:
41:52
Big Mistake. And you may say to me, Hey Paul, how else do I evaluate the financial manager, the money manager? And I don't agree that is disagree that that is one of the characters to review, but it's not all of them to review what we see Paul, a lot is an inside the four o one k number one people coming in wanting second opinions on it. How can you help me with this? And they give you a list of the funds to choose from. But inevitably what I'm seeing a lot of is people are just becoming complacent. They're putting their money in these target retirement funds. And I mean there's the good and the bad, the ugly with everything. But what these are for our listeners, is there a mix of stocks, bonds, and maybe other investments. And you can pick a year that you feel like you're going to shoot for to retire.
Speaker 2:
42:37
And as you get closer and closer to that retirement date, the allocation of bonds to stocks becoming more conservative as you get closer. The only problem with those I feel is number one, they're not portable. And in some cases they are actively managed, but in some cases are not there on set it and forget it. So if you see those in your four o one k, you know, feel free to reach out to us for, for a second opinion on that at you'd call gym at (888) 419-8513 he can help me with that. But I think the actually fidelity, I mean failure is a very well known brand. We actually use them to help custody of the assets for many of our clients and they had the following code. Rebalancing is is a key to maintaining risk levels over time and quote and then to restart it again.
Speaker 2:
43:23
The goal of diversification is not necessarily to boost performance, it won't insure gains are guaranteeing against losses, but once you target a level of risk based on your goals, time, higher isen and tolerance for volatility, diversification may provide the best potential to improve returns for that level of risk to him. I couldn't have said it better. I think fidelity says it really well there. So when people log in, I'm going to ask you to do the following. You're about ready to make a change. Here's what I'm going to ask you to say to yourself. On a scale of one to 10 how confident are you with this decision? So if you press the button or pull the trigger or click on it or type on it or whatever you want to do on a scale of one to 10 how confident are you that this is the right financial decision?
Speaker 2:
44:15
And if you're not high up on that scale, let's use 10 as the best indicator. You're not confident. And by the way, I know you can't predict the market, neither can I. I have a lot of financial analysts and investment research and people that are helping me do it, but end of the day I can't ultimately say what's going to happen. That's why it's the market. It's, it has a wonderful job of making the fools out of the majority of people. Hey Man, but why are we good at what we do and why are we ranked with Barron's? You know, again, number one ranked in Nebraska is because we put together the right asset allocation plan and I have a hundred percent conviction that if I put this plan together for both the short and long run, that people are going to be in the best situation. So if you're doing it on your own on a scale of one to 10 how are you confident that that next trade you make is absolutely the right best decision for you?
Speaker 2:
45:10
So if you're in it, by the way, if your current advisor isn't meeting with you to go over an asset allocation, change your review, you should probably look for a second opinion. Cause here's something I've also learned. No one has a monopoly on good ideas. They just don't. And so why not get that? And if you want a second opinion and you've saved over a hundred thousand retirement, we'll give that to you. Eight eight, eight four one nine 85 13 where you can learn it. Just one meeting can literally save you thousands and thousands of dollars in retirement. You call us at (888) 419-8513. Hey, through for email, you can send us a note@infoatcarsonwealth.com. Here's what I say, Jim is, don't put this off. Don't delay. Don't be impatient, um, as well. But figure out that right balance and there's nothing that feels better than somebody confirming your thoughts, right that attaboy or hey, you're down the right pathway if you want that. And making sure. (888) 419-8513 you've been listening to wealth and wisdom and we'll talk to you next week.
Speaker 5:
46:16
Risk, social security, income taxes, estate planning. Every week we talk about how to make your money go further in retirement right here on wealth from wisdom with Barron's hall of Fame Advisor, Ron Carson.
Speaker 1:
46:30
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. 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.