S-7 E-15 Finance 103

Embark on an insightful journey through financial literacy and investment strategies as we delve into understanding different account types, including checking, savings, CDs, IRAs, and brokerage accounts. Gain practical tips on managing these accounts effectively, informed by the hosts' experiences, while emphasizing the significance of conscious spending, compound interest, and prudent financial planning. Explore the risks and rewards of trading stocks, insider trading scenarios, and the importance of cautious decision-making, amidst insights into investment opportunities and future IRA account plans.

Links for more information:
Retirement Calculator
www.bankrates.com
Fidelity
www.fidelity.com
J. P. Morgan
www.jpmorgan.com
Charles Schwab
www.scwab.com
Robinhood
www.robinhood.com

Transcript

0:00

Welcome to Adulting Decrypted. We are your hosts. I'm Gene, and I'm starting my first year of college. I'm Ashton. I'm a music performer, composer, and educator. I'm Gene, a high school senior. I'm Roscoe, the dad. Those are my three sons, and this is Adulting Decrypted, where we discuss ways to become adults and the things we need to know to be successful in life.

Dad: 0:24

Today. We're going to talk about finance 103 woot woot All right. So the first week we talked about net worth, We talked about how that's different than our personal worth. You guys remember back net worth was what

Ashton: 0:37

not equal to personal.

Dad: 0:38

That's right. But how do you do the net worth mathematical equation? It's,

Gene: 0:42

Assets minus liabilities

Ashton: 0:44

stuff assets and income minus expenses,

Dad: 0:47

just asset and liabilities. Yep. Asset minus liabilities and what you have left over is your net worth. And that's what you're working on growing, in the economy. And this week we're going to talk about different types of accounts. Because last time we met we talked about CSP. What was the CSP? We took it from Rameed.

Ashton: 1:06

Conscious Spending Plan.

Dad: 1:07

Yeah, Conscious Spending Plan. Well done. This is like a quiz almost with, class.

Ashton: 1:12

What's the prize? The prize

Dad: 1:14

is you get to record with me.

Ashton: 1:15

Oh. What do I get that's unique from Gene and Gideon? I

Dad: 1:18

You get to feel smarter than them and it's, it swells your ego a little bit more.

Ashton: 1:24

And he okay, I'll take that. I guess I would say I'm normally smarter than them. Anyway,

Dad: 1:29

I was waiting for some feedback. I guess they buy into that. They definitely agree. That's for sure. I mean,

Gene: 1:34

life experience, you got it. So

Dad: 1:37

you're giving him a few years, huh? Gene? Yeah. I'm the

Ashton: 1:40

old, but I'm not offended. Well,

Gene: 1:41

you graduated college and I haven't.

Dad: 1:44

It's true. So if that's experienced, then I've got, I've got a lot. Coming out. So we talked about the conscious spending plan. Does everybody has theirs? Did you launch it? Honestly, by the raise of hand, who's done their conscious spending plan and executing on it. So I think, go ahead, Gene.

Gene: 2:03

I did it like I filled it out. I was like, okay, sweet. This is what I would need to make. Did I make that kind of money? No,

Dad: 2:11

no, that's good. But that's a start, right? You know what you need to make because you can only take your expenses down to solo. So I'm glad that you did that. Mom and I did ours and we looked at it and when Jean we did the same thing just because I've been Underemployed for a little bit. I've learned what I need to make, you know, and it was kind of a heart It was kind of a shocking reality, what type of money I need to bring in even Now with the house paid off and some of the things paid off, but you know, we're sitting here recording in our cabin This is one of those expenses. So thank you. Anybody else has any learning from that?

Ashton: 2:43

I didn't fill it out, but what I did do is it made me more conscious of the debts that I did have. I went and did some more math, so I didn't do it on the paper, but I just kind of became more aware of, what all I had to pay for, and then, planning those out. So I did the thing, but I didn't do it through the thing. Yeah, I understand.

Dad: 3:07

Yeah, I do. Well, and that's it, right? You're conscious of it now. You know, the best part is you did it and that's part of the start is just understanding what did GI Joe knowing is half the battle, you know, so, understanding and starting somewhere is a great start that you started. So. I was thinking we're going to jump right into like the next lesson. And I realized that we probably haven't talked much about account types. You know, I started thinking, Oh, we need to talk about investing. And I'm like, wait a second. We need to maybe back up a step. So this is really going to go through some basics of what is the financial world for lack of a better term. But there's really five different types of accounts. If you think about it, the first one's a checking account, pretty basic, pretty standard. You need a place to come in. We'll talk in detail about all these different accounts. Savings account, there's a certificate of deposit, IRA, and then there's the brokerage accounts. So if we're thinking about them, there's five different accounts and I'm going to dig into them all a little bit deeper here. In a second. So maybe just a quick stat according to research that was done, and I was just reading this the other day. I thought it was pretty interesting. In 2015, 92% of the people in the US had bank accounts. In 2022, it went up to 94%. So obviously a lot of people are using bank accounts. What are bank accounts good for? And, and maybe before we jump down that path, what are some type of bank accounts? Like checking account.

Ashton: 4:28

You had a checking, caching a thing. I feel like caching account,

Dad: 4:32

I think that this is along the lines action. So you have checking, which is really cash cash equivalent. Right. Right. So I love that you say even cash. The other one I wrote down was PayPal. I think that's pretty much a checking account, right? I mean, you can like

Ashton: 4:46

any of the payment apps, like Venmo, PayPal.

Dad: 4:48

Yeah. I would think any of those that come in and go out. Oh yeah. I used Zelda the other day for the first time. I kept calling it Zillow and mom's like, no, it's Zell.

Ashton: 4:56

Zillow's the renting app.

Dad: 4:58

Yeah, exactly. so I really classified those in that whole genre and that group. Can you guys think of any other ones? Well, you have,

Ashton: 5:06

I'm opening this because I, I can get a list that I can read.

Gideon: 5:11

There's savings accounts.

Dad: 5:13

Yep, and we're gonna go into that different, you know, because the checking account is really cash cash equivalent. Would you save money in Venmo? I don't know i'm asking

Ashton: 5:21

a lot of people do I mean I leave the money in Venmo I don't always transfer it out. Okay, so it's but it's a holding spot, right? Yeah, it's it's not a savings It would be like trying to put like a retirement thing in there or anything

Dad: 5:33

Or even a return on the investment, right? It's truly just a it's an account or a cash account

Ashton: 5:38

Yep, you can have A line of credit.

Dad: 5:42

Yep. Let's. Yeah, a line of credit. Interesting. yeah, that's really more on the debt side, you know, just, and we could go through all the, all the different type of debt. That's a good idea. Would you

Ashton: 5:51

consider a credit card and account too?

Dad: 5:53

I would, but not in a, what's the right term I'm thinking of in a positive light. I'm thinking of things that are When I listed them out checking account savings account certificate of deposit ira brokerage accounts This is what do you do with the money that you're saving or that you're investing, it's not your debt accounts.

Ashton: 6:10

So it's not a blanket account. You just want net worth positive accounts.

Dad: 6:14

I like that Yeah, that's a great term ashton Yeah, that's what we're going to talk about. I do like the thought though of going through some of the different If that would be helpful, we can go through some of those other accounts. I was just trying to keep it simple on the net positive. What did you call it? Asset positive. I just said net worth positive net worth positive. Great. yeah, so really a checking account has ATMs tied to it, right? it's pretty liquid. You can get your cash. Something to think about that I thought was interesting. Have you guys heard the term FDIC? I have. Do you know what that is? No. Gene, have you heard that?

Gene: 6:46

That doesn't sound familiar.

Dad: 6:48

So what it is, it's basically because back during the Great Depression there was a run on banks, and so a lot of people's checking accounts and savings accounts were put at risk. And so they did the FDIC insured so that any FDIC. Deposit into a bank that's in an FDIC assured account. Is guaranteed by the federal government up to 250, 000. So you could put 250, 000 in a account and the federal government is insuring that money.

Ashton: 7:15

So maybe that's a better way to think about it because like your credit card, would that be FDIC?

Dad: 7:21

No.

Ashton: 7:21

Right. So.

Dad: 7:22

But, your IRA and your brokerage accounts aren't insured either.

Ashton: 7:26

I know. Would you also include like stuff like, Robin hood on this list as well.

Dad: 7:32

Yep. Robin hood will come down into your brokerage accounts. Okay. So yeah, awesome. Great questions. So really a checking account is FDIC insured. And that's one of the things I was going to talk about, which ones were in, which ones were right. So you can have up to 250, 000 in, a bank account and be totally secure, not need to really worry about it. And that's really what this is, is a very secure You know, it's cash cash equivalent. It's like hiding it in a safe It's under your mat probably safer than under your mattress because nobody's fdic insuring that money under your mattress it's one of the things that's why I bought the better safe that I have is because I was gonna Start holding some cash and I needed something with some long burn time in case the house caught fire Because I didn't want everything to catch fire that was in the safe. So yeah, that's checking savings accounts. What are savings accounts good for? Saving money?

Gideon: 8:22

Yeah, just putting money away that you won't use for a while and it has a higher interest rate.

Dad: 8:28

Yeah, it has an interest rate, right? A lot of checking accounts don't have any interest rate. So Gideon, I'm glad that you hit on that right out of the chute. You know, the, good thing, and this is where I put FDIC insured is, they are insured, which is a very positive. The tough part is they get like 0. 46 percent interest. You know, I think Sabrina and I were checking, I think hers at America first, it's 0. 2, you know, so it's even lower. there is some potential for some earnings, albeit very light earnings. But yeah, it's a good place to throw stuff right out of a checking account into a savings account. As a matter of fact, 89% of Americans actually regularly use their savings accounts. Emergency funds, when we talk about that, when we talked about on the CSP, Conscious Spending Plan, when we talked about saving for vacation. Saving for big expenses. This is what we're talking about is like a savings account. And you might go into the next one, which is a certificate of deposit. But, but this is where like, it's a holding spot where you might be keeping money for a couple months. That fair, any questions on savings account? I have one. Where do you guys have your savings accounts at?

Ashton: 9:34

Mine's just another branch of my checking, like my, my main.

Dad: 9:39

Yeah. So the same institution what about you again? Your savings accounts.

Gideon: 9:44

Yeah, it's the same, the same bank.

Dad: 9:47

Yeah, so I pulled up nerd wallet. Nerd wallet is a great resource at someplace that anybody can go. Any listener can just pull up and it's going to tell you there's some actually some high yield savings accounts right now. Any guesses on who's got some of the highest? You've heard some of these companies, big banks, big banks that you've heard of, or even credit units. America first is big for us. In utah to credit union, banks wells fargo chase Anybody else think of any savings account places You're just talking about like banking institutions. Yeah savings account saving places that would hold the savings account

Ashton: 10:21

well, the university of utah has their credit. Perfect. Yeah I think they call it you first credit union now. Perfect. Awesome. That's a great example places

Dad: 10:30

The reason why I'm having to think through these is because I want the listener to think of this as well and realize that there's a bunch of different places getting, I think you just pulled up some stats or something. Chase Bank. You had a, look.

Gideon: 10:40

I'm looking at my America first right now.

Dad: 10:42

What's your saving? Does it tell you your rate on your savings account?

Gideon: 10:46

Well, it's not really a savings account. It's a certificate.

Dad: 10:49

Okay. Let's hold off. Let's get to that in a second. I appreciate you wanting to share that.

Gideon: 10:52

Okay.

Dad: 10:53

On the savings, and this is, this was an eye opener for me when I was thinking, and this is why I asked you this exercise, I actually went and pulled up from nerd wallet a bunch of different banks and what their savings account rates. They varied from, you know, 0 percent roughly up to 4. 3 percent APR. That mean, and guess who that was with? It was with American express. So it's a credit card company. They actually have a savings account branch. Why do you think they want to have that? So they can loan more money. In their credit card, because if you put in a dollar, they can load up to 10 on your 1 that you put in with them. And so I always just kept my money at America First. We've already shared it, right? I've kept mine in my local branch. But I've realized that that's silly. I should be looking at ways to put my savings to work, you know, and so why not go get a higher yield savings account? So that's what I'm working on is getting some of my money transferred over into these different accounts. Yes, it's easy. It's easier under one institution, but if I spread it out, I need to go maximize my savings return on my investment. As long as what? It's FDIC insured. Right. And it's still a savings account, meaning I can, or a cash type account where I can go in and pull my money out real easy. I can transfer it either to my credit union to pay a car payment. I can transfer it to me so I can go buy food, you know, as long as it's really easy to access. That's 1 reason why I like it all in 1 place is because If I ever get close to overdraft, what do I have to do? Transfer funds. Boom. I'm on my way. Any other thoughts on savings accounts? One thing we talked about in the CSP is having an automatic transfer from your checkbook, like your check. When it comes in, let's say you get paid on the 15th or on the 16th, you'd have an automatically pull out a chunk. For your vacation a chunk for your future plans It'd be fun to have three or four different savings accounts with all of them having a name and you know what you're working towards Mom and I when we're looking for the truck We pulled money aside and we'd set it aside in a account with the number on it that we said, okay That's for the truck. So we have enough cash for the truck. We need to do that because our cars starting to get old But that way we just kept acting like we're making that payment and was sucking that money there Alright, so Gideon, you kind of pre jumped this one. What was the next one you want to talk about?

Gideon: 13:10

I was going to talk about my certificate that I have.

Dad: 13:13

Yeah, talk about it a little bit. What is a certificate?

Gideon: 13:16

The one that I have is just where you put money away for a certain amount of time. I chose six months because it had the highest interest rate and the right timing for me. You just can't really touch it. And then if that's six months, you get it back and you can either put it in another one or do whatever you want with that money.

Dad: 13:32

And do you get exactly what you put in there back?

Gideon: 13:34

No, you get that plus the interest.

Dad: 13:37

Yeah. So what's your interest running out on that one? Is that what you just looked at? Yeah.

Gideon: 13:41

So right now it's I think it's 5. 1.

Dad: 13:44

Yeah. So every month they deposit 5. 1%. Interest into that into that cd and it grows over that six month period

Gideon: 13:53

I said compounding too

Dad: 13:54

Yeah which is also huge right because it's saying And when I put it in if I started with five thousand dollars at the end of that first month I'm going to have Five thousand thirty I think quick math. Maybe you're right. Maybe you're wrong Anyways, you'd have a chunk and then the next month it would roll up and the next month would roll up Yeah, certificates are awesome. You know what's wild about that? Only 6. 5 percent of Americans have a CD. Who here on this call has a CD? Gideon, you said you had one.

Gideon: 14:22

Yep, you were also raising your hand. Oh yeah, that's

Dad: 14:24

right. Gene, do you not have one now?

Gene: 14:27

I technically have an account that says it's a CD, but I used it for the two years that I was gone, and I just haven't put anything else into it for another two years, so it just, just sits there.

Dad: 14:38

yeah, but it grew, right? Yeah. So it grew while you were gone, and now you just need to make sure that it's active. Because what happens, 29 percent of Americans had one, the reason why they stopped doing it, they said it was too time consuming. And applying for one is too complicated. How hard is it really to apply for a CD?

Gene: 14:55

Didn't we just walk in to the bank and just say, Hey, do this. And they're like, okay, how long? And they're like, okay, yeah, just know there's precautions. If you take stuff out here. Okay.

Gideon: 15:06

Yep. Yeah. It's like five minutes.

Dad: 15:07

Yep. And then, and then, but you are locking that up for five, whatever it is, let's say for yours was six months, right? Good. What happens if you want to take it out on this case? Now everyone's a little bit different. On your case, do you know what happens if you have to take yours out early?

Gideon: 15:20

I think I just get deducted some, like, the last month's interest.

Dad: 15:25

Correct. So that's why I put mine in there, too, and I actually closed. So I used to ladder my CDs, meaning that because it was an emergency fund, I wanted to have access, I wanted it in cash type equivalent, so it never, it's FDIC insured, I wouldn't lose it. I would what they called ladder, so I'd get one that would be due, so I'd have one coming due and they're all about 10, 000 so that if I ever had an emergency and I could wait until that was due, because that was back when they charged me higher pullout rates and some CDs still have that. So you just got to be careful when you go sign up for a CD, say, what's my withdrawal. I was blown away. We talked about chase briefly a few minutes ago, Ashton. Yeah. I walked in and I actually took a picture and send it to your mom. You can earn 10, 000. 4. 5 percent Interest at chase, but you have to deposit a hundred thousand dollars into a CD That's a fat chunk of cash.

Ashton: 16:19

Is that yearly? No. Yeah.

Dad: 16:21

No, that interest is monthly.

Ashton: 16:23

So you're Yeah

Dad: 16:24

But but the thing is those is you is you have to have a hundred thousand dollars to put in sure Yeah, so so you're going do I really no, it can't be forty five hundred dollars. I'm going to be 450 a month. Okay Sorry, I just had to do the quick math on that because I was like, no, that'd be awesome.

Ashton: 16:39

Hey chase, how's it going?

Dad: 16:40

Yeah, but but so what they're doing is they're locking that up You know what america's first minimum was like 250 bucks and you can get what right now I think on your cd you said it was like five You 5. 1?

Gideon: 16:51

It's a certificate though. Is that different?

Dad: 16:53

Nope. CD. Certificate of deposit. That's what that CD stands for. It's a CD. It's a certificate of deposit. So Gene, I challenge you, since you've had one and you have some money there, I'd challenge you to go look at that and make sure you have an active one or renew. Cause they'll also let you do it online or call in and do the online and talk to somebody and they'll help you with it. Like I said, the, the bad is access to the money. That's what most people perceive. And so I just double check. I have one right now that I bought in a different account and I'm locked into it. And it's actually a bond. So it's a lot different. So anyway, so I actually have quite a few CDs tied up. Unfortunately I've stayed with my same bank, but this is, as I've been looking at the rates and nerd wallet. I've realized there's some other options here that I'm going to transfer my money to and actually get a little bit higher interest rate because I don't need my money. And really those are coming from online banks like American express can, I can't believe their savings rate. I'm like, dang it. I got to move a bunch of money over there so I can get that rate and then pull it back whenever I want. What's weird about CDs is they're higher now than they were because inflation was high and the cost for people to borrow money is high. And so they're saying, Hey, I need your money, Gideon. I'll give you 5%. They're going to go turn around and loan that for 14 to 15%, 20%. Maybe, I don't know. Depends what car loans are costing now. Cool. So, so we've covered a general checking account, a savings account. That was a certificate of deposit. Now we're to IRAs. And I thought IRAs would be something interesting to cover for a few different reasons. IRA stands for individual retirement accounts. these are quite different than a normal savings account or a CD. An IRA is set up. In the U. S. as a retirement plan, it's an individual, it's set up in the U. S. as an individual retirement account and you'll hear people say IRAs. They'll say a simple IRA, an IRA, traditional IRA. Those are all lumped together. There's a Roth IRA. This also though, even though we call them, that's, that's like the traditional by yourself and then companies offer a 401k or a 401, there's, there's a variety of 401Cs, 401 something, it has a different letter and they all stand for something stupid on the U. S. tax code. It's like, let's grab our best financial tool. We can come up with the dumbest name we can find for it. You know, it's like, these are great financial tools. Let's come up with a dumb name. So these are ones that you can't touch until you're 59 and a half right now. And the age will change. It'll go up to 60, 60 and a half. And really what the federal government's trying to encourage us to do here is what?

Ashton: 19:14

We'll keep working.

Dad: 19:15

Yeah. Well, maybe it's really invest in our future.

Ashton: 19:17

Oh,

Dad: 19:18

have something there when we get to a certain age. Right when we're getting to where we it's harder to earn money. They're there for that now You can pull out some of this money based on Needing a loan for a house, a financial hardship, a medical emergency or something like that. You can pull out of your 401k or your IRA. You can always get your money. There's just tax penalties tied to it. So an IRA is done pre tax. So if you made 10, 000 and you invested 1, 000 of that, you would only be taxed on 9, 000. So there it's pre tax. That's a traditional IRA. A Roth, which is what your mom and I do. Is after tax. So if I make 10, 000, the federal government still sees 10, 000. I invest a thousand dollars. They still see 10, 000. It's like I spent it. But the cool thing about a Roth IRA, and we'll dig into this more in detail in our next episode, but a Roth IRA allows me to grow tax free. And then when I go to retire, I've already paid taxes on it, so I don't have to pay taxes on it then. On a traditional IRA, you're going to have to pay taxes on it. Traditional 401k, when you retire, you're going to have to pay taxes on it. Does that make sense? Yeah, that's a lot to digest. I think the first time you hear about Ross and 401ks and IRAs, it's like, okay, who cares? But this is the investment part that that we talk about on the conscious spending plan This is that 10 of our income we should be putting in one of these type of accounts So we have it for a rainy day Or when we get ready to retire when we need that money because we can't earn the money that we used to be able to earn That's why the federal government's really encouraging that the interesting thing about this to me Is in 2022, about 40 percent of households reported saving into a retirement account. 26 percent of those have saved more than 100, 000 and 9 percent have saved more than half a million dollars. So it's kind of promising that people are using these. Retirement tools. So what are they good for? Well, they're good for when we get older. They're good because they compound that we talked about in the CD, but some of these rates of returns can be ludicrous. Like right now, mom and I are in some high risk stuff because we're young, young ish, right? I'm, I'm, I'm 50. I will need my money in about 20 years. And so I've got my money in some accounts that I'm earning 19 to 25%. And some of them are even making more than that. I just choose not to participate in those because they are risky. They're not FDIC insured, meaning that I could lose it all. As a matter of fact, there's a lot of people that lost a lot of money in 08. There's a whole dollar cost averaging that we'll talk about. And that's a little bit more complex, but it's something that you just need to know about because if you're doing these right, you're buying in all the time. So when it's low, you're buying them cheap. When they're high and they're selling for a lot of money, you're not buying as many, but that you just keep buying in and knowing that it's going to grow over time. Is there any, thoughts or questions about how one of those works? It's a lot of, it's a deep subject. One of the advantages of these and that we've talked about is these grow fast the longer you can leave in there. So if you can leave your money in there and we can do a quick if everybody can just open up their phone real quick or their computer and do just a Retirement calculator any one of them will work, right? So just pull up a retirement calculator Oh, unless if you're dad and I'm on airplane mode so that people didn't bug me. So just Pop a retirement calculator.

Ashton: 22:44

This one says it's the best retirement. Well,

Dad: 22:46

then I would probably click on that one and we'll definitely have to show that link. Well, I'm seeing an Edwards Jones. There's fidelity, you know, you're going to have, this is all your big companies that you've heard of in these areas.

Ashton: 22:57

Current age is 25. My age of retirement is 36. Try it. Just kidding. You could try it.

Gideon: 23:05

63. Sure. What's my annual household income.

Dad: 23:10

Just make it up and you just put a number in there. Whatever you think you want

Ashton: 23:14

your retirement savings percentage, 8 percent current,

Dad: 25:14

and then do 8 percent is your, your rate of return. That's a fairly safe rate of return and just play with numbers. That don't matter. Just make them up. Like I'm going to do a hundred, a hundred dollars a month and I haven't received anything. So I just did a real easy one, right? I did. I'm 21 years old. I'm going to retire at 67. I make 35, 000 a year. Okay. I'm saving 100 a month, and this is going to do, going to calculate it, and it says based on the information you provided when you retire at 67, you may have a retirement savings of 7, 500, your estimated monthly expenses is 2, 479, and you could expect the monthly income of 25 in retirement. So 100 is probably not going to cut it.

Ashton: 25:53

Mine says my retirement savings run out at age 74.

Dad: 25:57

Based on what?

Ashton: 25:58

All my math. Gotcha. I put, I'm currently 25, I retired at 63 with an annual household income of 50 grand a year, 8%, current savings is zero, and then expected income increase was 2%. And then it said it was, I was done at

Dad: 26:15

74. So you, so you have two options, right? You can either make more money. Well, did it ask you a rate of return or did it calculate it for you?

Ashton: 26:22

It

Dad: 26:22

probably calculated

Ashton: 26:23

expected income increase.

Dad: 26:25

Yeah. So that's just saying your increase of your income over time. So you'd be in a very conservative job. So you have a couple options there, Ashton. One is you delay retirement.

Ashton: 26:34

Mm-Hmm.

Dad: 26:35

right? Or number two, you make more money. It's kind of the math. Jean, you look deep in thought

Gene: 26:40

So I put in my age retirement at 67.'cause that's what I had. The qualified savings, I put at 12, 000. So that's going to put in 223 every year. And that has the desired annual retirement income. And I just did with what it gave me of 50, 000 and it says you're on track to save 391, 435. Your total retirement goal is 1. 61 million. So it needs attention.

Dad: 27:10

Yeah, you're going to need attention. So it's telling you you're falling short too. So that's just kind of a, those retirement calculators are fun to play with and to think about and say, am I on the right track? Right. And if not, what do I need to do to adjust that? And these are really going to always play very conservative because they don't want to give people a false sense of hope. So this, that's what those are good for though. So you can look at it and say, okay, Ashton did some quick math said, I probably need to save a few more dollars. You know Jean, you, you came up with tad short, so it needed some attention. You were short like half a million dollars. What's crazy about it. And I know we did it last time is just how fast money compounds and it compounds near the end. So I'll bet you, if you took that same scenario, Ashton, and you kept all your variables the same. Except you said I want to retire at 70. I'll bet you'd see that number jump. You'd still run out of money You know, but you're gonna run out of money not in 10 years But you'd probably run out of money closer to like 22 years Just because it jumps so fast right at that last end of that curve

Ashton: 28:10

says I could retire at 87 On your current trajectory. No, sorry the savings run out at 87 if I retire at 70 so they last 17 years instead of Wasn't it like

Dad: 28:21

nine years? Yeah. 12. so those three extra years got you, no, those seven extra years got you four more years or five more years. So it's just something to pay attention to. The other option is actually just marry rich. It's always a good option. It's the plan. Getting, are you still dealing numbers over here? You look

Gideon: 28:39

if I work till I'm 62, And die at 80, I'm set.

Dad: 28:46

Okay, no, that's good. That's good. Saving what? How much do you have to save a month?

Gideon: 28:51

400

Dad: 28:53

a month? Yeah. I wonder if that rate of return seems light to me. But anyway, so retirement calculators are a lot of fun something to play with something to think about but that's really what ira stands for Individual retirement accounts if you find the right job, you can get a 401k. They'll do some matching. I still recommend ross We'll talk about why and what that does And just realize that it's there To supplement social security if you're in the U S and it might or might not be there. So I would really think, how do I do this? And now some other assets you'll grow over time would be like a house and you know, some of those other things will, well, your net worth will go up. Okay. Ashton, you talked about this earlier. You want to know about brokerage accounts, brokerage accounts. How, how are they different than IRAs? Brokerage accounts are truly pure investor game, right? This is stuff that you would just be able to do to do. What are some brokerage accounts that you can think of? Ash and you threw one out earlier. Robinhood. How does Robinhood work?

Ashton: 29:47

You

Dad: 29:48

played in it a little bit, didn't you?

Ashton: 29:49

Basically you transfer money over onto your account in Robinhood, and then you can throw that money into whatever you want.

Dad: 29:56

Stocks,

Ashton: 29:57

crypto, really.

Dad: 29:59

So how do you, buy, you say throw it at whatever you want, how do you buy? What does that mean?

Ashton: 30:04

Well, you go in there, you put in like a balance. Like I think when I did it I put in like 200 bucks, and then I just searched different stocks. I had no idea what I was looking at, but like,

Dad: 30:15

But you heard you're supposed to invest.

Ashton: 30:16

Yeah, so there's stocks, and like, when a company goes public, they can put up a portion of their company in stocks as a way to raise money, but also grant ownership to the general public. And if you purchase a stock, and, well, and the stocks basically are calculated by they do math to say how much the company's worth, therefore how much a certain percentage of that company is worth. So buying stocks is buying a percentage of that company, essentially. And then, so you buy them, and then if the company gains money and increases in price, the stock that you purchased can go, will go up in value, so you can choose to sell it, or if it goes down in value, you lose money, basically. Yep, and you could lose it all, and you could gain a bunch, right? Right. So like, and then there's also cryptocurrencies where it's like the same thing, but so much more theoretical.

Dad: 31:08

Right. No, I love it. Well, it was weird for us when, when I started at Ford because Ford was top three company. And then all of a sudden we hit the dot com and some of these companies with zero value were making billions of dollars on sales. And, and we're like, wait a second, we have all these assets. Right. And, and those old formulas that they worked were working until the dot coms came and then all of a sudden everybody got in a speculative bot, drove those values out up through the sky and Ford and Exxon and some of your long stable companies were dropping in value or perceived value. And I love that you said it's all theoretical because it's a perceived value and I'm trying to time those as tough. And the other thing about these, these are all taxed. They're not FDIC insured. And it's really I have an E Trade account. That's who I do my short term investing in. I have a buddy, Brandon, who does really good at it. Because he reads, he watches, and he has some winners. He picked Apple back when it was just starting up. You know, relaunching with Steve jobs and he's made a lot of money and then other ones. He put what's called a stop loss. Once he saw it starting to tank, he sold, he's mad at himself for selling apple when he tripled his money. Not all of it, but part of it he sold and took out because he's like, well, I'm getting greedy. I want to take a little bit away. Put it over here where it's safe. And so that's really more brokerage accounts are more investor driven, where you're truly trying to be a marketplace investor versus an IRA or CD is yes, it's an investment, but you're not trying to beat a market. you're in a long term you're in a growth pattern. You're in a safety, a security of an index fund or a mutual fund where a brokerage account is like, Hey, let's go see if we can make some money off this.

Ashton: 32:50

The one I don't understand is puts or like

Dad: 32:53

we could have a whole night on puts and calls and we'd have to find somebody different than me fair

Ashton: 32:59

enough

Dad: 33:00

because I've played with them. So when I was in college and we used to have to go get a newspaper. And I remember they said, okay, you got to pick five stocks and track them. And I'd see the stock go up and see the stock go down. And, and I'm like, I don't get it. What, what do you mean? I'm just, I'm buying a piece of paper, right? I'm not buying anything.

Ashton: 33:17

Right.

Dad: 33:18

That's what's wild about it. So I'm buying this share and the stock of funny enough was off of the cattle industry. I didn't know if you didn't know that, but a lot of things they talk about watering down stock and, but the share is, not, you know, I mean, it's the same. It's the same, but then they come up with all these complicated ways to make money. So if you have a put on a stock means it can drop at a certain rate, but I'm buying the loss. And then I'm trying to make margin. I'm trying to win on the loss as somebody else's going down. And then I call that put, you know, I'm like, Hey, I want that.

Ashton: 33:49

Yeah.

Dad: 33:49

And so the, the risk on some of that is it can become a financial risk if you're not careful because you're doing a line of credit that you're going to have to pay back.

Ashton: 33:59

Yeah. That's just the one that doesn't make sense to me, but it's funny cause I just saw like Boeing recently has plummeted in stock value because their planes suck. I mean, they're all great, but they've clearly cut some corners. But a guy who was on one of the flights. At least purportedly, he can't believe everything you see on the internet, but yeah, I know he was asking Reddit. He goes, is it considered insider trading? If I'm currently on a plane that's window just blew off to set a bunch of puts on Boeing. Cause I know this is going to tank their stock. And I was like, Yeah. Right place, right time. Yeah. No, it's because at

Dad: 34:32

that point in time, it's public knowledge, right? And that's, and if, is it in public domain right now, if he was in a boardroom and he heard that, like I've had to sign disclosure papers because I've been in certain spots in a company where I couldn't do any stocks or any trades, even at Amazon. I wasn't at no authority, but I couldn't sell my Amazon stock within 60 or 90 days of being in certain meetings.

Ashton: 34:52

Right. If only you were in Congress, you could take advantage of all of it. Oh yeah. Oh, sorry, my bad. No, if you track, no, if you

Dad: 34:58

track that, there's some, what would Nancy do? Yeah. You know, and there's, yeah, and they say, hey, you should follow just where she's investing her money and you'll make great returns. Okay, so that's a lot of conversation, a lot of talk about we'll have some good notes. We'll have some links in our episode notes. So that you can go in and do some more digging and where to put those So just be aware that there's a lot of opportunities out there fidelity jp morgan charles swab, you know, robinhood e trade You know anybody want to sponsor us out of that group? Let us know You know, we're always up to pimp out your name I have a fidelity account if you want to you know, if somebody wants to give us some kudos for that as a matter of fact In our episode 104, we're going to actually open up our first IRA accounts and start learning how to do that. So you guys can start being set up for that. Listener, thank you for your time. Gideon, do you have any thoughts or takeaways?

Gideon: 35:50

Of course. we would love to hear all your guys stories and inputs. So if you have anything that you gained from this episode that you would like to share, please message us on. Any of our social medias, DMS or email us at adultingdecrypted at gmail. com. You can find all those on our website or just look us up on your favorite social media and we should be there. We'd love to hear those and we can share them on the podcast too if you want. So even better. Thank you. We'll talk

Dad: 36:14

to you later.

36:18

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